Tag: public deposits

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Questions Related to public deposits

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

Renewal facility enables companies to use public deposits as medium-term finance.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Renewal facility enables companies to use public deposits as medium-term finance- this is a true statement.Public deposits refers to the unsecured securities which is invited from the public. It is mainly used to finance the working capital of the company.

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

Public deposits of a company cannot exceed _____ per cent of its share capital and free reserves. 

  1. 15

  2. 20

  3. 25

  4. 30
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Public deposits refers to the unsecured securities which is invited from the public. It is mainly used to finance the working capital of the company. Public deposits of a company cannot exceed 25 per cent of its share capital and free reserves.

Multiple choice commerce sources of business finance - 2 public deposits non-institutional sources - medium-term financing lease financing
State the following statement is True or False:
A document issued to public for collection of capital is prospectus.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A document issued to public for collection of capital is prospectus- this is a true statement.The invitation to public for capital subscriptions is through prospectust. Prospectus provide details about the offer of sale to the public. It is issued by SEBI.

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

State the following statement is True or False:
The invitation to public for capital subscriptions is through prospectus.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The invitation to public for capital subscriptions is through prospectus- this a true statement. Prospectus provide details about the offer of sale to the public. It is issued by SEBI.

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

Public deposits takes care of both _________ and _________-term financial requirements of a business.

  1. Large, medium

  2. Medium, short

  3. Large, short

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Public deposits can take care of both medium and short-term financial requirements of a business. 
The deposits are beneficial to both the depositor as well as to the organisation. While the depositors get higher interest rate than that offered by banks.
Multiple choice commercial studies sources of business finance - 2 public deposits non-institutional sources - medium-term financing lease financing

Companies generally invite public deposits for a period upto ________ years.

  1. One

  2. Two

  3. Three

  4. Four
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
The deposits that are raised by organisations directly from the public are known as public deposits. The organization in return issues a deposit receipt as acknowledgement of the debt. Public deposits can take care of both short-term or medium-term financial requirements. Companies generally invite public deposits for medium-term period upto three years.
Multiple choice commercial studies sources of business finance - 2 public deposits non-institutional sources - medium-term financing lease financing

Cost of public deposits is generally _______ than the cost of borrowings from banks and financial institutions.

  1. Higher

  2. Lower

  3. Equal

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
The deposits that are raised by organisations directly from the public are known as public deposits. Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions.
Multiple choice commercial studies sources of business finance - 2 public deposits non-institutional sources - medium-term financing lease financing

The deposits that are raised by organisations directly from the public are known as __________.

  1. Lease finance

  2. Public deposits

  3. Commercial paper

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

The deposits that are raised by organisations directly from the public are known as public deposits. Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions. Public deposits are beneficial to both depositor as well as the organization. 

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

Rates of interest offered on public deposits are usually _________ than that offered on bank deposits.

  1. Higher

  2. Lower

  3. Equal

  4. Both a and b
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
The deposits that are raised by organisations directly from the public are known as public deposits. Rates of interest offered on public deposits are usually higher than that offered on bank deposits. 

Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. The organisation in return issues a deposit receipt as acknowledgment of the debt.
Multiple choice commercial studies sources of business finance - 2 public deposits non-institutional sources - medium-term financing lease financing

Collection of public deposits may prove difficult, particularly when the size of deposits required is _________.

  1. Large

  2. Small

  3. Medium

  4. Both a and b
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The deposits that are raised directly from the public are public deposits. Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. the cost of deposits to the company is less than the cost of borrowings from banks. But Collection of public deposits may prove difficult, particularly when the size of deposits required is large.