Chapter 8 : Sources of Business Finance

Tick () the correct answer out of the given alternatives

1. Equity shareholder are called
(a) Owners of the company
(b) Partners of the company
(c) Executives of the company
(d) Guardian of the company
(a) Owners of the company

2. The term ‘redeemable’ is used for
(a) Preference shares
(b) Commercial paper
(c) Equity shares
(d) Public deposits
(a) Preference shares

3. Funds required for purchasing current assets is an example of
(a) Fixed capital requirement
(b) Ploughing back of profits
(c) Working capital requirement
(d) Lease financing
(c) Working capital requirement

4. ADRs are issued in
(a) Canada
(b) China
(c) India
(d) USA
(d) USA

5. Public deposits are deposits that are raised directly from
(a) The public
(b) The directors
(c) The auditors
(d) The owners
(a) The public

6. Under the lease agreement, the lessee gets the right to
(a) Share profits earned by the lessor
(b) Participate in the management of the organisation
(c) Use the asset for a specific period
(d) Sell the assets
(c) Use the asset for a specific period

7. Debentures represent
(a) Fixed capital of the company
(b) Permanent capital of the company
(c) Fluctuating capital of the company
(d) Loan capital of the company
(d) Loan capital of the company

8. Under the factoring arrangement, the factor
(a) Produces and distributes the goods or services 
(b) Makes the payment on behalf of the client
(c) Collects the client’s debt or account receivables
(d) Transfer the goods from one place to another

(c) Collects the client’s debt or account receivables

9. The maturity period of a commercial paper usually ranges from
(a) 20 to 40 days
(b) 60 to 90 days
(c) 120 to 365 days
(d) 90 to 364 days

(d) 90 to 364 days

10. Internal sources of capital are those that are
(a) generated through outsiders such as suppliers
(b) generated through loans from commercial papers
(c) generated through issue of shares
(d) generated within the business
(d) generated within the business