S5 Review Materials - Finals

What factors influence the choice of finance when businesses with existing borrowings find it difficult to secure additional loans due to the increased perceived risk?

• Size and legal form of business

• Amount required

• Length of time

• Existing borrowing

What factors influence the choice of finance, indicating that the longer the borrowing period, the higher the cost due to accrued interest payments?

• Size and legal form of business

• Amount required

• Length of time

• Existing borrowing

What factors influence the choice of finance, making it more challenging for sole traders and partnerships to borrow from banks and other lenders because they are perceived as being at a higher risk of not being able to repay the borrowed money?

• Size and legal form of business

• Amount required

• Length of time

• Existing borrowing

What factors influence the choice of finance, with businesses needing large capital amounts opting for share issues and debentures? In contrast, are those requiring smaller capital amounts better suited for bank loans, leasing, and hire purchases?

• Size and legal form of business

• Amount required

• Length of time

• Existing borrowing

A financing alternative involves large corporations and affluent individuals supporting a business concept by securing modest capital contributions from a broad audience, typically facilitated through online platforms and social media networks.

• Crowdfunding
• Microfinance

• Government Grants

• Crowdsourcing

An alternative source of finance where small amounts of capital loaned to entrepreneurs in countries where business finance is often difficult to obtain.

• Crowdfunding
• Microfinance

• Government Grants

• Crowdsourcing

An external source of finance where the government support business in their country by providing grants and other financial assistance.

• Crowdfunding
• Microfinance

• Government Grants

• Crowdsourcing

Which of the following is NOT a benefit of Equity Financing?

• Money has never been repaid.

• Does not change the ownership of the company.

• There is no ongoing cost.

• If the business makes a loss, it does not have to pay dividend to shareholders.

Which of the following is considered a limitation of debt financing?

• Interest is changed on the amount borrowed and this increases business costs.

• The amount borrowed must be repaid.

• Interest must be paid even if the business makes a loss.

• All of these

A long-term loan used for the purchase of land or buildings.

• Bank Loan

• Mortgage

• Debenture

• Hire Purchase