Tag: sources of business finance - 2

Quizzes (14) Questions (268)

Questions Related to sources of business finance - 2

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

Commercial paper may vary from _____ days to ______ days.

  1. 90, 150

  2. 90, 300

  3. 90, 364

  4. 90, 363
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Commercial paper emerged as a source of short-term finance in our country in the early nineties. Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period, varying from 90 days to 364 days.

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

The amount raised by commercial paper is generally very _______.

  1. large

  2. small

  3. equal

  4. both (a) and (b)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period, varying from 90 days to 364 days. It is issued by one firm to another business firm. The amount raised by commercial papers is very large as the debt is totally unsecured.
Multiple choice commerce sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

As commercial paper is a freely transferable instrument, it has ________ liquidity.

  1. High

  2. Low

  3. Medium

  4. Equal
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

Commercial paper is an unsecured _________ note issued by the firm to raise funds for a short-term period.

  1. Promissory

  2. Debit

  3. Credit

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

Commercial paper emerged as a source of short-term finance in our country in the early nineties. Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period, varying from 90 days to 364 days.

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

The regulation of commercial paper comes under the preview of the ____________.

  1. Central Bank

  2. Reserve Bank of India

  3. State Government

  4. Central Government
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, varying from 90 days to 364 days. It is issued by one firm to another business firm, insurance companies, pension funds, and banks. The amount issued by commercial papers is generally very large. The regulation of commercial paper comes under the purview of Reserve Bank of India.

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

Commercial Paper emerged as a source of __________ finance in our country in the early _________.

  1. short-term, sixties

  2. short-term, seventies

  3. long-term, eighties

  4. short-term, nineties
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Commercial paper emerged as a source of short-term finance in our country in the early nineties. Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period, varying from 90 days to 364 days.

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

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

  1. limited

  2. unlimited

  3. equal

  4. higher
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. 

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 articles of association contains the _________.

  1. rules

  2. regulations

  3. by-laws

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Articles of Association are the rules regarding internal management of a company.These rules are subsidiary to the Memorandum of Association and hence, should not contradict or exceed anything stated in the Memorandum of Association. The Article of Association contains rules, regulations, by-laws, etc.
Multiple choice commerce sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

A commercial paper provides a __________ source of funds.

  1. Smaller

  2. Continuous

  3. Larger

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
A commercial paper provides a continuous source of funds. This is because their maturity can be tailored to suit the requirements of the issuing firm. Further, maturing commercial paper can be repaid by selling new commercial paper.
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.