Chapter 3: Finance company review

   Which of the following is not a source of funding for finance companies?

• Bank loans

• Commercial papers

• Bonds

• Deposits

Suppose that you are currently unemployed, however, you spend your time by engaging yourself in painting and realistic sketching. You want to borrow 5000 Dirhams to build a painting studio in your house. You approached your bank for a 5,000 loan to buy tools that help you build an art corner at your house, but your bank has declined your application. Your friend advised you about Jais Finance that provides loan for individuals. What type of finance company is Jais Finance?

• Sales finance

• Business finance

• Personal

• Credit card finance

You want to buy Lexus UX 200 2023 Premier on loan. You approached your bank for a 160,000 loan to buy the car. However, your bank has declined your application. Your friend advised you about an auto dealer that sells cars on loan. What type of finance company is the auto dealer?

• Sales finance

• Business finance

• Personal finance

• Credit card finance

Which of the following is true about finance companies

• They charge lower interest rate on loans than DIs

• They charge higher interest rate on loans than DIs

• They pay lower interest rate on deposits than DIs

• Finance companies customers are less risky that the customers of DIs

How does a finance company make money?

• By borrowing at lower rate and lending at higher rate

• By borrowing at higher rate and lending at lower rate

• By using deposits as source of funds to make loans

• None of the above

_______ is the type of finance companies that focuses on lending for personal consumption.

• Business finance

• Personal finance

• Mortgage finance

• None of the above

A type of finance companies which is generally associated with a retail or manufacturing company is called ________

• Business finance

• Sales finance

• Personal finance

• None of the above

_________ is the type of finance company that provides secured loans or equipment lease finance to companies

• Business finance

• Sales finance

• Personal finance

• None of the above

Finance companies charge higher interest rate on loans, because _______

• They borrow their funds at higher interest rates

• They pay higher interest rate on deposits

• They have higher overhead costs

• They provide loans to riskier customers

Which of the following is the advantage of finance companies over commercial banks

• They are less regulated

• They are willing to accept risky customers

• They have lower overhead costs

• All of the above are the advantages of finance companies