Tag: sources of business finance - 2

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Questions Related to sources of business finance - 2

Multiple choice organisation of commerce and management sources of business finance - 2 equity and preference shares equity shares and preference shares non-institutional sources - long-term

Companys owners are shareholders. So the company property belongs to the share holders. Do you agree with this statement?

  1. Yes

  2. No

  3. Sometimes yes

  4. Sometimes no
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Company owners are not ordinary share holders but equity share holders, which is also known as owner's share capital. So the company property belongs to the equity share holders.

Multiple choice organisation of commerce and management sources of business finance - 2 equity and preference shares equity shares and preference shares non-institutional sources - long-term

For a company to be subsidiary the other company should hold _____% of its shares.

  1. more than 50

  2. more than 40

  3. more than 30

  4. more than 20
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

For a company to be subsidiary the other company should hold 50% of its shares. Subsidiary company is also known as the nominee of the holding company.

Multiple choice organisation of commerce and management sources of business finance - 2 equity and preference shares equity shares and preference shares non-institutional sources - long-term

If the guarantee company having share capital, the liability of shareholders will be ___________.

  1. guarantee + unpaid value of shares

  2. unpaid value of shares

  3. unlimited

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

A guarantee company is a type of corporation designed to protect members from liability. Guarantee companies often form when non-profit organizations wish to attain corporate status. If the guarantee company having share capital, the liability of share holders is guarantee plus the unpaid value of shares.

Multiple choice commercial studies sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

The debentures which are duly recorded in the register of debenture holders maintained by the company and which can be transferred only through a regular instrument of transfer are called as _________ debentures.

  1. Secured

  2. Unsecured

  3. Convertible

  4. Registered
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Registered debentures are duly recorded in the register of debenture holders. It is maintained by the company and which can be transferred only through a regular instrument of transfer.

Multiple choice commercial studies sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

___________ debentures are which create a charge on the assets of the company, thereby mortgaging the assets of the company.

  1. Registered

  2. Bearer

  3. Secured

  4. Unsecured
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Secured debentures are debentures secured by a charge on the fixed assets of the issuer company. For instance, mortgage debentures secured on land of the company. When the issuer company fails on payment of either the principal or interest amount, the assets of the company can be sold to repay the liability to the investors.

Multiple choice commercial studies sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

__________ debentures are those debentures that can be converted into equity shares after the expiry of a specified period.

  1. Secured

  2. Unsecured

  3. Registered

  4. Convertible
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debentures are an important instrument to raise long term debt capital. They are issued by a company and bear a fixed rate of interest and the company promises to pay the debt at a future date. The debentures that can be converted into equity shares within a specified period of time are known as convertible debentures.

Multiple choice commercial studies sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

The debentures that are transferable by mere delivery are called as __________ debentures.

  1. Secured

  2. Unsecured

  3. Convertible

  4. Bearer
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The debentures which are payable to bearer and whose names do not appear in the register of debenture holders are known as “Bearer Debentures”. Coupons for interest are attached to the document and interest is paid to the holders as it falls due. Bearer Debentures are transferable by mere delivery.

Multiple choice commercial studies sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

___________ debentures are those that do not carry any charge or security on the assets of the company.

  1. Secured

  2. Registered

  3. Unsecured

  4. Convertible
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Unsecured debentures are debentures that are not supported by a collateral security. No specific assets will be set aside against unsecured debentures. It is basically a loan with out any protection. They are backed only by the general creditworthiness of the issuer.

Multiple choice commercial studies sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

Debentures that are repaid before other debentures are repaid are known as ________ debentures.

  1. convertible

  2. non-convertible

  3. first

  4. second
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Debentures that are repaid before other debentures are repaid are known as first debentures. First debenture holders have the right over the company's asset at first.

Multiple choice commercial studies sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

The debentures which cannot be converted into equity shares are called ___________ debentures.

  1. Secured

  2. Unsecured

  3. Convertible

  4. Non-convertible
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debentures are given out to the creditors as a promise to repay the debt held by the company at a fixed rate of interest. Some of the debentures are convertible and non-convertible. The debentures which cannot be converted into equity shares are called as non-convertible debentures.