business studies - sources of business finance

Class 11 - Business Studies

Sources of Business Finance

MCQ
Q&A
Question:

Explain different types of preference shares which can be issued by a company.

Answer:

Different types of preference shares are discussed below:

  1. Cumulative and Non-cumulative: The preference shares which enjoy the right
    to accumulate unpaid dividends in future years if it is not paid during a year are termed as cumulative preference shares. On the contrary, a non-cumulative preference share is one in which dividend is not accumulated if it is not paid in the particular year. .
  2. Participating and Non-participating Preference Shares: Those preference shares which have a right to participate in further surplus of a company’s shares which after dividend at certain rate has been paid on equity shares are called participating preference shares. Those preference shares which do not have a right to participate in further surplus of a company's shares which after dividend at certain rate has been paid on equity shares are called non-participating preference shares.
  3.  Convertible and Non-convertible Preference Shares: Those preference shares which can be converted into equity shares within a specified period of time are called convertible preference shares. On the contrary, preference shares which cannot be converted into equity shares within a specified period of time are called non-convertible preference shares.


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Questions and Answers


Sources of Business Finance - Questions
1.

What is business finance? Why do businesses need funds? Explain.


Answer
2.

List sources of raising long-term and short term finance.


Answer
3.

What is the difference between GDR and ADR? Explain.


Answer
4.

What advantage does issue of debentures provide over the issue of equity shares?


Answer
5.

Discuss the financial instruments used in international financing.


Answer
6.

Give the full form of GDR and ADR.


Answer
7.

State various sources of short and medium term funds.


Answer
8.

Name two sources of funds under owner's fund.


Answer
9.

Who are called the owners of a company?


Answer
10.

Which deposits are directly raised from the public?


Answer
11.

What are the two important functions of factors?


Answer
12.

In leasing agreement what right is given to lessee?


Answer
13.

Preference shares are not suitable for which kind of investors?


Answer
14.

Name the two Indian companies which have raised money through issue of GDRs.


Answer
15.

Who regulates the acceptance of public deposits?


Answer
16.

What is factoring?


Answer
17.

What are retained earnings?


Answer
18.

What are public deposits?


Answer
19.

What do you mean by discounting of bills of exchange?


Answer
20.

What is a trade credit?


Answer
21.

What is debenture?


Answer
22.

Why preferences are given to preferential shares?


Answer
23.

Why is equity share capital called Risk Capital'?


Answer
24.

State two factors affecting the working capital requirement of a firm.


Answer
25.

State the meaning of finance. What factors determine working capital and fixed capital requirements of a business?


Answer
26.

Why does business enterprise need finance?


Answer
27.

Preference shares are preferred by company but not by investors. Why?


Answer
28.

What are the differences between Equity Shares and Preference Shares?


Answer
29.

Write a short note on the features of GDRs.


Answer
30.

Name zones of the Lessors and Lessees in India.


Answer
31.

Classify internal and external sources on the basis of time.


Answer
32.

Write a note on international sources of finance.


Answer
33.

Mr. John has ? 1,00,000 for investment purposes. Should he invest in equity shares, preference shares, public deposits or debentures? Justify your answer.


Answer
34.

Name any three special financial institutions and state their objectives.


Answer
35.

What are the preferences given to preference shareholders?


Answer
36.

What are Indian depository receipts (IDRs)?


Answer
37.

Specify the objective of I.D.B.I.


Answer
38.

State two factors affecting the fixed capital requirement of a firm.


Answer
39.

Differentiate between:
(a) Fixed Capital and Working Capital
(b) Short Term Finance and Long Term finance
(c) Owner's Funds and Borrowed Funds
(d) Internal Sources and External Sources


Answer
40.

What is factoring? Discuss its pros and cons.


Answer
41.

Explain different types of preference shares which can be issued by a company.


Answer
42.

Describe in brief the features of equity shares.


Answer
43.

Differentiate between a share and a debenture.


Answer
44.

What is lease financing? Discuss its merits and demerits.


Answer
45.

As a source of finance retained profit is better than other sources. Do you agree with this view? Give reasons for your answer.


Answer
46.

What preferential rights are enjoyed by preference shareholders? Explain.


Answer
47.

Explain trade credit and bank credit as sources of short term finance for business enterprises.


Answer
48.

Discuss the sources from which a large industrial enterprise can raise capital for financing modernisation and expansion.


Answer
49.

List different types of finance.


Answer
50.

What are retained profits? Discuss their advantages and disadvantages.


Answer
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