Business Studies

Sources of Business Finance

Question:

Why is equity share capital called Risk Capital'?

Answer:

Equity shareholders get return only when profits is left after paying interest on debentures and fixed return on preference shares. Therefore, it is called risk capital as it bears maximum risk.

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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 a commercial paper? What are its advantages and limitations?

Q 4.

Name two sources of funds under owner's fund.

Q 5.

What is factoring?

Q 6.

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

Q 7.

Which deposits are directly raised from the public?

Q 8.

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

Q 9.

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

Q 10.

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

Q 11.

Differentiate between a share and a debenture.

Q 12.

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

Q 13.

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

Q 14.

What is lease financing? Discuss its merits and demerits.

Q 15.

Give the full form of GDR and ADR.

Q 16.

Why does business enterprise need finance?

Q 17.

What is factoring? Discuss its pros and cons.

Q 18.

Discuss the financial instruments used in international financing.

Q 19.

Why is equity share capital called Risk Capital'?

Q 20.

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

Q 21.

Who regulates the acceptance of public deposits?

Q 22.

What do you mean by discounting of bills of exchange?

Q 23.

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

Q 24.

Name any three special financial institutions and state their objectives.

Q 25.

What are Indian depository receipts (IDRs)?

Q 26.

State various sources of short and medium term funds.

Q 27.

What are public deposits?

Q 28.

Describe in brief the features of equity shares.

Q 29.

Why preferences are given to preferential shares?

Q 30.

What is the status of debenture holders?

Q 31.

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

Q 32.

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 33.

Name zones of the Lessors and Lessees in India.

Q 34.

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 35.

What are the two important functions of factors?

Q 36.

Who are called the owners of a company?

Q 37.

What are the preferences given to preference shareholders?

Q 38.

What preferential rights are enjoyed by preference shareholders? Explain.

Q 39.

What are retained profits? Discuss their advantages and disadvantages.

Q 40.

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

Q 41.

What is a trade credit?

Q 42.

What is debenture?

Q 43.

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

Q 44.

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

Q 45.

Preference shares are not suitable for which kind of investors?

Q 46.

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

Q 47.

Write a short note on the features of GDRs.

Q 48.

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

Q 49.

Classify internal and external sources on the basis of time.

Q 50.

State various sources of long term funds.