Sources of Finance Quiz

Which of the following is a common form of equity financing?

• Bank loans

• Issuing bonds

• Issuing shares

• Leasing

Which of the following is a disadvantage of equity financing?

• Regular interest payments

• Loss of control

• Increased debt burden

• Fixed repayment schedule

Which of the following is a benefit of issuing common stock as a form of equity financing?

• Guaranteed dividends

• No obligation to repay principal

• Fixed interest payments

• Priority in bankruptcy

What is a common disadvantage of using venture capital as a source of equity financing?

• High interest rates

• Loss of business control

• Short repayment period

• Fixed dividend payments

What is a common reason companies choose equity financing?

• To avoid interest payments

• To increase debt levels

• To maintain full ownership

• To reduce shareholder base

Which of the following is typically considered a short-term debt financing option?

• Issuing bonds

• Trade credit

• Venture capital

• Preferred stock

Which of the following is a potential risk of debt financing?

• Dilution of ownership

• Increased financial leverage

• Loss of voting rights

• Reduced tax benefits

Which of the following is a characteristic of debt financing?

• Ownership dilution

• Fixed interest payments

• Dividend payments

• Voting rights