Tag: commerce

Quizzes (249) Questions (753)

Questions Related to commerce

Multiple choice commerce sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

Which of the following is a limitation of commercial paper?

  1. The size of money that can be raised through commercial paper is limited to the excess liquidity available with suppliers of funds at a particular time.

  2. A commercial paper is sold on an unsecured basis,

  3. As it is freely transferable instrument, it has high liquidity.

  4. It provides more funds compared to other sources.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Commercial paper is an unsecured promissory note given by a firm to raise finances for a short period of time. Only financially sound and highly rated firms can raise money through commercial papers. 

The size of money that can be raised through commercial paper is limited to the excess liquidity available with the suppliers of funds at a particular time.

Multiple choice commerce sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

The cost of commercial paper to the issuing firm is ________ than the cost of commercial bank loans.

  1. lower

  2. higher

  3. equal

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Commercial Paper is issued by one firm to another business firm, Insurance company, pension funds and it is an impersonal method of raising finances. therefore the cost of commercial paper to the issuing firm is lower than the cost of commercial bank loans.

Multiple choice commerce sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

Commercial paper is an __________ method of financing.

  1. personal

  2. impersonal

  3. nominal

  4. real
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period. It is issued by one firm to another business firm, insurance companies, pension funds, and banks. Hence, Commercial Paper is an impersonal method of financing.

Multiple choice commerce sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

Commercial papers represent a new financial instrument issued for the purpose of _______________.

  1. Project financing

  2. Working capital

  3. Leasing of plant and equipment

  4. Import of capital goods
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Commercial papers are short-term debt, unsecured instrument which is issued by the companies to meet their short term obligations that is to meet their working capital requirements. They are usually issued for 15 days to 1 year.

Multiple choice commerce types of trade features of internal trade internal trade business and industry

The results of over-trading may be ____________.

  1. Overcapitalization

  2. Liquidity

  3. Technical insolvency

  4. All of the above

  5. Both (B) and (C) above
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Over-trading occurs when there is a disproportionately high turnover of assets compared to the volume of sales. The high-turnover is indicative of less amount of cash invested in current assets which can result in liquidity and might even lead to technical insolvency.

Multiple choice commerce types of trade features of internal trade internal trade business and industry

If the realized collection period is more than the terms of trade it can be said that __________________.

  1. The collection job is over

  2. The quality of debtors is poor

  3. The average daily sales are low

  4. All of the above

  5. Both (A) and (B) above
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

If the realized collection period is more than the terms of trade, then it indicates that is taking more time to convert its receivables into cash. This could be due to poor collection efforts of the firm or poor quality of the debtors. 

Multiple choice commerce types of trade features of internal trade internal trade business and industry

The phenomenon of over-trading in working capital is characterized by _______________________.

  1. Less amount of cash invested in current assets

  2. Overcapitalizatiion of the company as compared to volume of sales

  3. High amount of cash invested in current assets

  4. All of the above

  5. Both (A) and (C) above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Over-trading can be noticed from the disproportionately high turnover of assets compared to the volume of sales. This high turnover is indicative of less amount of cash invested in current assets which can create problems of liquidity at the time of making payments for current obligations.

Multiple choice commerce types of trade features of internal trade internal trade business and industry

Buying and selling of goods and services within the boundaries of a nation are referred to as __________.

  1. external trade

  2. internal trade

  3. sale transaction

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Internal trade, also known as domestic trade, refers to the buying and selling of goods and services within the geographical boundaries of a single country.

Multiple choice commerce types of trade features of internal trade internal trade business and industry

Purchase and sale of goods in relatively small quantities, generally to the ultimate consumers, is referred to as _________.

  1. wholesale trade

  2. retail trade

  3. Internal trade

  4. External trade
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Retail trade involves selling goods in small quantities directly to the final consumer, whereas wholesale trade involves selling in bulk to other businesses.