External Sources of Finance Quiz

What is a potential drawback of using loan capital as a source of finance?

• It is only available to public companies.

• It dilutes the control of the business.

• It involves high interest rates and possible collateral.

• It requires selling a part of the business.

How does share capital benefit a business financially?

• The business can choose its investors and avoid repayment.

• It is only available to private companies.

• The business must repay the money with interest.

• It requires collateral to secure the investment.

What is a consequence of raising finance through share capital?

• It is only available to public companies.

• The control of the business is diluted among shareholders.

• The business gains complete control over its operations.

• The business must repay the money with interest.

What is a key advantage of stock market flotation?

• It allows raising large amounts of money without repayment.

• It ensures complete control over the business.

• It is a simple and straightforward process.

• It is only available to private companies.

What is a potential risk of stock market flotation for business owners?

• The business must repay the money with interest.

• The business may lose complete control as anyone can buy shares.

• The process is simple and straightforward.

• It is only available to private companies.