Sources of Finance

What are the two main categories of sources of finance for business enterprises?

• Internal and external sources of finance.

• Short-term and long-term sources of finance.

• Public and private sources of finance.

• Debt and equity sources of finance.

What is the significance of maintaining certain financial ratios in debt contracts?

• To ensure the borrower remains financially healthy and can meet repayment obligations.

• To increase the interest rates on the loan.

• To allow the lender to take ownership of the borrower's assets immediately.

• To simplify the loan application process.

What is the primary internal source of finance for a business?

• Sales of inventories or services.

• Bank loans and credit facilities.

• Investment from external shareholders.

• Government grants and subsidies.

What is the role of the Securities Commission in P2P lending?

• To regulate and oversee P2P platforms to ensure compliance and protect investors.

• To provide loans directly to consumers through P2P platforms.

• To facilitate the marketing of P2P platforms to potential investors.

• To manage the financial assets of P2P lending companies.

What is the relationship between business risk and the choice of financing?

• Firms with low business risk are likely to rely more on debt financing.

• Firms with high business risk are likely to rely more on debt financing.

• Firms with low business risk are likely to rely more on equity financing.

• Firms with high business risk are likely to rely more on equity financing.

What is an example of a company that liquidated its capital assets to obtain cash?

• Malaysia Airlines Bhd. sold six Airbus A380s.

• Singapore Airlines sold its fleet of Boeing 747s.

• Qantas Airways sold its maintenance facilities.

• Emirates Airlines sold its catering services.

What is the typical interest payment structure for bonds?

• One-time lump sum payment at maturity

• Periodic coupon interest payments, usually semi-annually or annually.

• Monthly interest payments only

• No interest payments, only principal repayment

What is the typical use of funds raised through crowdfunding?

• To support startups and small businesses with innovative ideas.

• To fund government projects and initiatives.

• To provide loans to individuals with bad credit.

• To invest in real estate properties.

What is a bank loan?

• A type of investment that generates interest.

• A monetary loan that is repaid in regular payments over a set period.

• A gift of money that does not need to be repaid.

• A loan that is only available to businesses.

What is the importance of timing in IPO exercises?

• Timing affects the likelihood of shares being undersubscribed or having unfavorable prices.

• Timing has no impact on the success of an IPO.

• Timing is only important for large companies.

• Timing determines the number of shares issued.