Self Studies
Self Studies
Self Studies
Self Studies

Sources of Business Finance Test - 45

Result Self Studies

Sources of Business Finance Test - 45
  • Score

    -

    out of -
  • Rank

    -

    out of -
TIME Taken - -
Self Studies

SHARING IS CARING

If our Website helped you a little, then kindly spread our voice using Social Networks. Spread our word to your readers, friends, teachers, students & all those close ones who deserve to know what you know now.

Self Studies Self Studies
Weekly Quiz Competition
  • Question 1
    1 / -0
    When one party grants the other, the right to use its assets in the return for a periodic payment, it is known as ___________.
    Solution
    A lease is a contractual agreement whereby one party, the owner of an asset, grants the other party the right to use the asset in return for a periodic payment. The lessee pays a fixed periodic amount called 'lease rental' to the lessor (owner) for the use of the asset.
  • Question 2
    1 / -0
    Which of the following is/are internal source(s) of finance?
    Solution

    Internal sources of finance refer to money that comes from within a business. There are several internal financing methods that a business can use including, retained profit and selling assets. On the other hand, share capital and debt funds are external sources of funds because they are raised from outside the business.

  • Question 3
    1 / -0
    Business finance is needed to
    Solution
    Money required for carrying out business activities is called business finance. Almost all business activities require some finance. Finance is needed to establish a business, to run it, to modernise it, to expand, or diversify it.
  • Question 4
    1 / -0
    ___________ have the controlling power over a company.
    Solution
    Equity shareholders have control over the activities of the company. The equity shareholders have voting rights. The equity shareholders elect the Board of Directors who manages the day-to-day affairs of the company.
  • Question 5
    1 / -0
    Which of the following sources of capital should not be selected by a business if its fixed cost is high?
    Solution
    Debt refer to the finance raised through debentures or other forms. Interest on debt have to be paid regardless of whether or not a firm has earned a profit. Also, the borrowed funds have to be repaid at a fixed time. The risk of default on payment is known as financial risk which has to be considered by a firm likely to have insufficient shareholders to make these fixed payments.
  • Question 6
    1 / -0
    Bill of Exchange is an instrument for availing _________.
    Solution
    Trade credit refers to an arrangement whereby a manufacturer/trader is granted credit from the supplier of raw materials, finished goods, etc. In trade credit, the buyer generally issues a bill of exchange.
  • Question 7
    1 / -0
    Which deposits are directly raised from the public?
    Solution
    Public deposits refer to unsecured deposits invited from the public. Only a public ltd. company can invite such deposits up to a maximum of 25% of the share capital of the company.
  • Question 8
    1 / -0
    When the stock market index is rising, a company may issue                   in order to meet its financial requirements.
    Solution
    Equity shares are the most potent source of financing. It provides substantially large amount of capital without involving the company and management in any fixed obligations. New equity shares are often issued via an initial public offering (IPO), allowing investors to buy the stock of a previously private company for the first time.
  • Question 9
    1 / -0
    Tax-rate is relevant and important for calculation of specific cost of capital of ____________.
    Solution
    In case of debenture, interest payable is the cost of capital. Interest on debenture is tax deducible and charged to profit & loss account as an expense. It reduces the tax liability of the business. 
    Tax rate is relevant and important for calculation of cost of capital for debenture. 
  • Question 10
    1 / -0
    Advantage of debt financing is:
    Solution
    Advantages of Debt Financing over equity are:
    1) Tax advantage: The amount you pay in interest is tax deductible.
    2) Retains Ownership- With debt financing you don't have togive out a stake in your company.
    3) Reduces WACC- The cost of debt is the interest rate applied on loans borrowed from bank and Non-banking financial institutions. A company can reduce its WACC by cutting debt financing costs.

Self Studies
User
Question Analysis

  • Correct -

  • Wrong -

  • Skipped -

My Perfomance
  • Score

    -

    out of -
  • Rank

    -

    out of -
Re-Attempt Weekly Quiz Competition
Self Studies Get latest Exam Updates
& Study Material Alerts!
No, Thanks
Self Studies
Click on Allow to receive notifications
Allow Notification
Self Studies
Self Studies Self Studies
To enable notifications follow this 2 steps:
  • First Click on Secure Icon Self Studies
  • Second click on the toggle icon
Allow Notification
Get latest Exam Updates & FREE Study Material Alerts!
Self Studies ×
Open Now