Company Finance Loan Capital Quiz

Under the CA 2006, what power do all companies have?

• The power to declare dividends

• The power to issue shares

• The power to borrow money to raise finance

• The power to merge with other companies

When can a Ltd company start borrowing money?

• After a year of operation

• As soon as they receive Certificate of Incorporation

• Once they are listed on the stock exchange

• After they receive their trading certificate

When can a PLC start borrowing money?

• As soon as they receive Certificate of Incorporation

• After a year of operation

• Once they are listed on the stock exchange

• Until they receive their trading certificate

What does loan capital consist of?

• Short term borrowings like credit card debts

• Equity investments from shareholders

• All the long term borrowing of a company

• Profits retained within the company

Which of the following is referred to as debentures?

• Overdrafts and unsecured loans

• Loans secured on company assets

• Equity shares issued by the company

• Trade credits from suppliers

What are bonds classified as in a PLC?

• Equity securities

• Tradeable securities

• Non-tradeable assets

• Fixed assets

Who is considered a creditor of the company in the context of bonds?

• The investor

• The bond holder

• The company

• The stock market

What do bonds represent?

• A share in the company

• A contractual loan by the investor to the company

• A donation to the company

• A credit line from the bank

When traded on the stock market, what two values can bonds have?

• Face value and intrinsic value

• Book value and intrinsic value

• Nominal value and market value

• Par value and coupon value

What is a debenture?

• A short-term source of finance with a variable interest rate

• A long-term source of finance with a fixed rate of interest

• A document that transfers ownership of a company

• A legal agreement for employment