Question:
Debentures are good from debenture holders point of view but not for business. Do you agree? Explain.
Answer:
Debentures are similar to shares, however, debenture holders do not have voting rights on how the business is run.
Debentures have certain merits and demerits from business as well as debenture holders point of view. These are explained below:
Advantages to Debenture Holders
- They receive annual interest/ benefits (VIP status or free passes) regardless of whether or not the business is making money.
Disadvantages to Debenture Holders
- No say in how the business will run.
- Greatly depends on the business’ success to reuse it’s value.
Advantages to Business
- Provides good long-term finance without losing control of the business.
Disadvantages to Business
- Firm increases the amount of long-term liabilities raising the amount of interest payments to the lenders.
Sources of Business Finance
Q 1.
Write a note on international sources of finance.
Q 2.
Differentiate between a share and a debenture.
Q 3.
Give the full form of GDR and ADR.
Q 4.
In leasing agreement what right is given to lessee?
Q 5.
Explain in detail the types of debenture a company can issue.
Q 7.
What is a commercial paper? What are its advantages and limitations?
Q 8.
Name two sources of funds under owner's fund.
Q 9.
Which deposits are directly raised from the public?
Q 10.
Explain trade credit and bank credit as sources of short term finance for business enterprises.
Q 11.
Why does business enterprise need finance?
Q 12.
What advantage does issue of debentures provide over the issue of equity shares?
Q 13.
State two factors affecting the working capital requirement of a firm.
Q 14.
What do you mean by discounting of bills of exchange?
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.
What is factoring? Discuss its pros and cons.
Q 19.
State the meaning of finance. What factors determine working capital and fixed capital requirements of a business?
Q 20.
Name any three special financial institutions and state their objectives.
Q 21.
Who regulates the acceptance of public deposits?
Q 22.
What are Indian depository receipts (IDRs)?
Q 23.
What is lease financing? Discuss its merits and demerits.
Q 24.
What are retained profits? Discuss their advantages and disadvantages.
Q 25.
Why is equity share capital called Risk Capital'?
Q 26.
Discuss the financial instruments used in international financing.
Q 27.
State various sources of short and medium term funds.
Q 28.
What are public deposits?
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.
Name zones of the Lessors and Lessees in India.
Q 31.
What preferential rights are enjoyed by preference shareholders? Explain.
Q 32.
What is the status of debenture holders?
Q 33.
Why preferences are given to preferential shares?
Q 34.
What is a trade credit?
Q 35.
Explain different types of preference shares which can be issued by a company.
Q 36.
Describe in brief the features of equity shares.
Q 38.
Who are called the owners of a company?
Q 39.
What are the two important functions of factors?
Q 40.
State two factors affecting the fixed capital requirement of a firm.
Q 41.
State various sources of long term funds.
Q 42.
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 43.
List sources of raising long-term and short term finance.
Q 44.
Preference shares are not suitable for which kind of investors?
Q 45.
What is the difference between GDR and ADR? Explain.
Q 46.
What are the preferences given to preference shareholders?
Q 47.
What are retained earnings?
Q 48.
List different types of finance.
Q 49.
Write a short note on the features of GDRs.
Q 50.
State the merits and demerits of public deposits and retained earnings as methods of business finance.
