Business Studies

Sources of Business Finance

Question:

What preferential rights are enjoyed by preference shareholders? Explain.

Answer:

Following preferential rights are enjoyed by the preference shareholders:

  • They get dividend at a fixed rate and dividend is given on these shares before any dividend on equity shares.
  • When company winds up, preference shares are paid before equity shares.
  • Preference shares also have a right to participate in excess profits left after payment being made to equity shares.
  • They also have a right to participate in the premium at the time of redemption. In lieu of these preferential rights, their voting rights are taken i.e. they are not eligible for voting.
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Sources of Business Finance

Q 1.

Write a note on international sources of finance.

Q 2.

In leasing agreement what right is given to lessee?

Q 3.

What is factoring?

Q 4.

What is a commercial paper? What are its advantages and limitations?

Q 5.

Give the full form of GDR and ADR.

Q 6.

Differentiate between a share and a debenture.

Q 7.

Explain in detail the types of debenture a company can issue.

Q 8.

Name two sources of funds under owner's fund.

Q 9.

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

Q 10.

Which deposits are directly raised from the public?

Q 11.

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

Q 12.

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

Q 13.

What do you mean by discounting of bills of exchange?

Q 14.

Why does business enterprise need finance?

Q 15.

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

Q 16.

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

Q 17.

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

Q 18.

Who regulates the acceptance of public deposits?

Q 19.

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

Q 20.

What is factoring? Discuss its pros and cons.

Q 21.

Name any three special financial institutions and state their objectives.

Q 22.

What is lease financing? Discuss its merits and demerits.

Q 23.

What are Indian depository receipts (IDRs)?

Q 24.

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

Q 25.

State various sources of short and medium term funds.

Q 26.

What are retained profits? Discuss their advantages and disadvantages.

Q 27.

Discuss the financial instruments used in international financing.

Q 28.

Why is equity share capital called Risk Capital'?

Q 29.

Retained earnings are not a good source from the values point of view as it is the right of equity shareholders. Do you agree? Justify your answer.

Q 30.

Why preferences are given to preferential shares?

Q 31.

Name zones of the Lessors and Lessees in India.

Q 32.

What are public deposits?

Q 33.

What are the two important functions of factors?

Q 34.

Describe in brief the features of equity shares.

Q 35.

What is the status of debenture holders?

Q 36.

What is debenture?

Q 37.

Who are called the owners of a company?

Q 38.

What is a trade credit?

Q 39.

What preferential rights are enjoyed by preference shareholders? Explain.

Q 40.

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

Q 41.

What are the preferences given to preference shareholders?

Q 42.

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

Q 43.

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

Q 44.

Write a short note on the features of GDRs.

Q 45.

State the merits and demerits of public deposits and retained earnings as methods of business finance.

Q 46.

What are retained earnings?

Q 47.

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

Q 48.

Describe briefly the factors responsible for selecting a source of finance.

Q 49.

Preference shares are not suitable for which kind of investors?

Q 50.

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