Sources of Business Finance 2

State the merits and demerits of public deposits and retained earnings as methods of business finance.

Discuss the financial instruments used in international financing.

• Global Depository Receipts (GDR’s)

• American Depository Receipts (ADRs)

• Indian Depository Receipt (IDRs)

• Foreign Currency Convertible Bonds (FCCBs)

What is commercial paper? What are its advantages and limitations?

ADRs are issued in

• Canada

• China

• India

• the USA

Funds required for purchasing current assets is an example of

• Fixed capital requirement

• Ploughing back of profits

• Working capital requirement

• Lease financing

Public deposits are the deposits that are raised directly from

• The public

• The directors

• The auditors

• The owners

The maturity period of a commercial paper usually ranges from

• 20 to 40 days

• 60 to 90 days

• 120 to 365 days

• 90 to 364 days

The term ‘redeemable’ is used for

• Preference shares

• Commercial paper

• Equity shares

• Public deposits

Debentures represent

• Fixed capital of the company

• Permanent capital of the company

• Fluctuating capital of the company

• Loan capital of the company

What advantages does the issue of debentures provide over the issue of equity shares?

• Reduction of ownership of a firm

• Fixed rate of interest

• Fixed rate of return

• Tax-deductible interest payment