Sources of Business Finance Test - 3

A holder of GDR can at any time convert it into the number of shares it represents.

The holders of GDRs do not carry any voting rights but only dividends and capital appreciation.

Dividend is paid out of the profit of the company. Dividend is that part of the profit which is paid to the shareholders (Equity and Preference shareholders). Investors also see "dividend payment" as a sign of a company's strength.

Company issues a deposit receipt as acknowledgement of debt.  The rate of interest is higher than bank deposits. Therefore company can easily raise finance.

The sources for raising borrowed funds include loans from commercial banks, loans from financial institutions, issue of debentures, public deposits and trade credit.

A fixed rate of interest is paid by the borrowers on such funds.

Such sources provide funds for a specified period, on certain terms and conditions and have to be repaid after the expiry of that period.

Factors discount the bills and holds the responsibility of credit control and debt collection from the buyer.

These sources are generated by the organisation itself e.g. ploughing back of profits, collection of debtors and receivables.

Many firms issue convertible zero interest debentures in order to avoid paying interest over the period till conversion happens. After conversion, the dividend applicable on paid-up share capital will be paid.

Mahindra and Mahindra was the first company in India to issue convertible zero interest debentures in January 1990.

Lease is an agreement between two parties i.e. Lessor and Lessee for the use of asset in return of periodic payment and for a specified period.

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

ICICI assists the creation, expansion and modernisation of industrial enterprises exclusively in the private sector. The corporation has also encouraged the participation of foreign capital in the country.

The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative of the World Bank, the Government of India and representatives of Indian industry.

In the 1990s, ICICI transformed its business from a financial institution limited to development projects to a diversified financial services group.

At Present ICICI is merged with ICICI Bank. ICICI (Industrial Credit and Investment Corporation of India) is an Indian multinational banking and financial services company headquartered in Mumbai, Maharashtra, Indian, with its registered office in Vadodra.

Dividend payable to equity shareholders may keep fluctuating. Moreover It is not compulsory to pay dividend to equity shareholders.