Sources of Business Finance Test - 47

State Industrial Development Corporations were established by different states for the purpose of promoting industrial development in their respective states.

American Depository Receipts are issued by a non US company to American citizens to obtain foreign capital.These can be listed and traded on a stock exchange of USA.

Collateral is required by financial institutions and commercial banks to provide additional security for the loan. It serves as a guarantee for the lender that if the borrower defaults on the loan, the lender can seize the collateral to recover the outstanding debt amount.

The share capital is contributed by the shareholders and a share indicate how much ownersip you have in the company. Thus equity shareholders are called owners.

Equity shares entitle holders to voting rights in company decisions, allowing them to participate in corporate governance and influence strategic decisions. They do not guarantee fixed dividend payments or priority in capital repayment, unlike preference shares.

Industrial Finance Corporation of India (IFCI) was established in July 1948 as a statutory corporation under the Industrial Finance Corporation Act, 1948. It was the first development finance institution in the country to cater the needs of the industrial sector.

Bonds are debt securities typically issued by government entities (such as treasury bonds) or corporations to raise capital. While publicly traded companies may issue bonds, they are not the sole issuers. Private individuals and non-profit organizations typically do not issue bonds.

An unsecured debt is an obligation or debt that does not have specific property (like your house or car) serving as collateral for payment of the debt. If you fail to make payment on an unsecured debt, the creditor cannot take any of your property. As the debt raised through commercial paper is totally unsecured, the large and creditworthy firms having good credit rating can issue the CP.

Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 as a public limited company under the Companies Act.

Retained earnings refer to profits that are reinvested in the business for future growth and expansion rather than being distributed to shareholders as dividends. It represents accumulated earnings that are retained within the company.