Types of finance

Crowdfunding is an ​ (a)   type of finance

• External
• Internal

A mortgage is a ​ (a)   source of finance

• long term
• short term

What is short-term finance?

• Funds required for a period exceeding one year

• Funds needed to cover operational expenses within the next year

• External funding obtained from shareholders

• Funds acquired from selling company assets

Which of the following is an example of short-term finance?

• Taking out a 10-year loan for expansion

• Utilising a bank overdraft to cover payroll

• Issuing bonds to raise capital

• Obtaining venture capital for a start-up

What is long-term finance?

• Funds needed for a period exceeding one year

• Funds required to cover operational expenses within the next year

• External financing from banks

• Funds generated internally from profits

Which of the following is an example of long-term finance?

• Using trade credit to purchase inventory

• Issuing equity shares to raise capital for a new project

• Obtaining a short-term loan to meet payroll

• Selling off excess equipment to generate funds

Question 5: External finance refers to funds obtained from:

• Internal sources within the organisation

• Sources outside the organisation

• Government grants

• Loans from the employees

An advantage of external finance is:

• Lower interest rates compared to internal financing

• Greater control over the organisation

• No need to repay the funds

• Faster access to funds for short-term needs

Internal finance is derived from:

• Loans from banks and financial institutions

• Funds generated within the organisation

• Contributions from shareholders

• External investors

An advantage of internal finance is:

• Lower interest rates compared to external financing

• Decreased control over the organisation's decision-making

• Slower access to funds for long-term investments

• No need to repay the funds