Sources of business Finance Quiz-2

Internal sources of capital are those that are

• generated through outsiders such as suppliers

• generated through loans from commercial banks

• generated through issue of shares

• generated within the business

Answer explanation

Internal sources of capital are generated within the business.

Under the factoring arrangement, the factor

• Produces and distributes the goods or services

• Makes the payment on behalf of the client

• Collects the client’s debt or account receivables

• Transfer the goods from one place to another

Answer explanation

The factor collects the client's debt or account receivables, making it the correct choice.

Under the lease agreement, the lessee gets the right to

• Share profits earned by the lessor

• Participate in the management of the organization

• Use the asset for a specified period

• Sell the assets

Answer explanation

The lessee has the right to use the asset for a specified period.

ADRs are issued in

• Canada

• China

• India

• USA

Answer explanation

ADRs are issued in the USA. ADRs, or American Depositary Receipts, represent shares of foreign companies traded on U.S. stock exchanges.

The term ‘redeemable’ is used for

• Preference shares

• Commercial paper

• Equity shares

• Public deposits

Answer explanation

The term 'redeemable' is used for Commercial paper because it refers to a short-term debt instrument that can be redeemed by the issuer on a specified date.

When one party grants the other party the right to use the asset in return for a periodic payment, it is known as __________

• Lease Financing

• Factoring

• Public Deposits

• Debts

Answer explanation

Lease financing is when one party grants the other party the right to use an asset in return for periodic payments. It is the correct choice in this scenario.

Money obtained by issue of shares is known as ___________

• Debts

• Share Capital

• Loans

• Reserve Funds

Answer explanation

Money obtained by issuing shares is known as Share Capital. Share capital represents the funds raised by a company through the sale of its shares to investors.

_____________ was the first company in India to issue convertible zero interest debentures in January 1990

• Mahindra and Mahindra

• Adani Enterprise

• Tata Motors

• Reliance Limited

Answer explanation

Mahindra and Mahindra was the first company in India to issue convertible zero interest debentures in January 1990.

Which of the following is a commercial bank?

• Canara bank

• Punjab National Bank

• State Bank of India

• All of these

Answer explanation

All of these are commercial banks as they are public sector banks in India.

The ordinary shares of a company are delivered to the depository bank, which in turn issues the depository receipts, known as _______

• Commercial banks

• ADR

• GDR

• none of these

Answer explanation

Depository receipts known as GDRs are issued by the depository bank for ordinary shares of a company.