Tag: long term sources of finance

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Questions Related to long term sources of finance

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

The owner of the assets is called the _______ while the party that used the asset is known as the ________.

  1. Lessor, lessee

  2. Lessee, lessor

  3. Trader, lessee

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

In a lease agreement, the owner of the assets is 'lessor' and the party that uses the asset is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets.

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

Simple documentation makes it easier to finance assets, is a ________ of lease financing.

  1. Function

  2. Role

  3. Merit

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

Lease financing in other words is renting of an asset for some specific period. The lessee pays a fixed periodic amount called lease rental to the lessor for the use of the asset. Therefore simple documentation makes it easier to finance assets and is a merit of lease financing.

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

_________ is deprived from the residual value of the asset.

  1. Lessee

  2. Lessor

  3. Both a and b

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

In a lease agreement, the owner of the assets is 'lessor' and the party that uses the asset is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets. The lessee never becomes the owner of the assets, it is deprived from the residual value of the asset.

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

The lessee pays a _________ periodic amount called lease rental to the lessor for the use of the asset.

  1. Fixed

  2. Fluctuating

  3. Both a and b

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

Lease financing is a contractual agreement where by  the owner of the assets is 'lessor' that provides the grant to  the party to use the assets, who is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets.

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

Which of the following is a merit of lease financing?

  1. It enables the lessee to acquire the asset with a lower investment.

  2. The risk of obsolescence is borne by the lesser.

  3. The lease agreement does not affect the debt raising capacity of an enterprise

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Few merits of lease financing are: It enables the lessee to acquire the assets with low investment, the risk of obsolescence is borne by the lessor, the lease agreement does not affect the debt raising capacity of an enterprise.

Multiple choice organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

Fund means __________.

  1. Capital

  2. Bond

  3. Assets

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

Receivable turnover ratio = Net credits sale/ Average accounts receivable = 10
and average collection period  =360
receivables turnover ratio = 36
Hence a receivable turnover ratio of 10 implies that the credit sales are 10 times the average receivables or in other words receivables are generated 10 times during the year.

Multiple choice organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

The NABARD provides refinancing facilities to _________.

  1. small industries

  2. village industries

  3. cottage industries

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

NABARD is entrusted by government for development of rural areas in India. Small industries, village industries and cottage industries are the most prevailing industries in rural parts of India, with limited amount of finances. Hence, The NABARD provides refinancing facilities to such industries.

Multiple choice organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

The depository receipts issued by a company in the USA are known as____________.

  1. Global Depository Receipts

  2. American Depository Receipts

  3. Foreign Currency Convertible Bonds

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
The depository receipts issued by a company in the USA are known as American Depository Receipts. ADRs are bought and sold in American markets like regular stocks. It is similar to Global Depository Reciepts. 
Multiple choice organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

What is the Chief feature of the group banking system?

  1. Centralised management

  2. Decentralised management

  3. Wide network of branches

  4. All the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Each member bank of the group banking system retains its separate entity and maintains its board of directors but however, the group banking system enjoy the benefits of centralized administration.