Tag: sources of business finance - 2

Quizzes (14) Questions (268)

Questions Related to sources of business finance - 2

Multiple choice organisation of commerce and management sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

Debenture holders are termed as __________ of the company.

  1. debtors

  2. creditors

  3. traders

  4. consumers
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
 The debenture issued by a company is an acknowledgment that the company has borrowed a certain amount of money,which it promises to repay at a future date. Debenture holders are, therefore,termed as creditors of the company.
Multiple choice organisation of commerce and management sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

Debentures are an important instrument for raising _______ term debt capital.

  1. short

  2. long

  3. medium

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

Debentures are an important instrument for raising long term debt capital. a debenture issued by a company represents that the company has borrowed some amount of capital and the company promises to return them on a fixed rate of interest.

Multiple choice organisation of commerce and management sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

A company can raise funds through issue of debentures, which bear a ________ rate of interest.

  1. fixed

  2. fluctuating

  3. higher

  4. lower
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Debentures can be issued by a company to raise funds as long term debt capital, which the company promises to return back on a fixed rate of interest. 

Multiple choice organisation of commerce and management sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

Debenture holders are paid _________ stated amount of interest at specified intervals.

  1. fixed

  2. fluctuating

  3. higher

  4. lower
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 Debenture holders are paid a fixed stated amount of interest at specified intervals. Public issue of debentures requires that the issue be rated by a credit rating agency.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

If the stock velocity is 6, cost of goods sold is Rs.54,000 and closing stock is Rs.10,000 the opening stock is __________.

  1. Rs. 8,000

  2. Rs. 9,000

  3. Rs. 10,000

  4. Rs. 12,000

  5. Rs. 18,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Let the opening stock is x.
Stock velocity = cost of goods sold / average inventory
6 = 54,000/(10000+x)/2
hence x = Rs.8,000.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

X limited issued 10,000 equity shares of Rs.10 each at premium Rs.2 each. The company has incurred issue expenses of Rs.5,000. The equity shareholders expect dividend of $18\%$ then cost of capital is ____________.

  1. $18\%$

  2. $15.65\%$

  3. $16.65\%$

  4. $18.65\%$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

K$ _e$ = $\frac{D _1}{NP}$
Where NP i.(E) Net Proceed of shares = $\frac{1000 X12 - 5000}{10000}$
Dividend of a share (D$ _I$) = Rs. 1.8.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

Which of the following feature(s) of preference shares are similar to those of equity shares?

  1. Redeemability

  2. No obligation to pay dividend

  3. Voting rights

  4. Change over assets

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

Like in the case of equity shareholders there is no obligatory payment to the preference shareholders and the preference dividend is not tax deductable.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

The means of obtaining financial resources that involves the sale of part of the ownership of the business is called ______.

  1. bankruptcy

  2. equity financing

  3. commercial loans

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

Equity financing is the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

Equity share holders may receive ___________ on their investment.

  1. Interest

  2. Dividend

  3. Bonus

  4. (B) and (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Equity share holders may receive  dividend and bonus on their investment. Dividend refers to the sum of money which are paid out of the total profits and bonus refers to the one time payment.