WorksheetsMFS Module 4 - Quiz on Fund Based Financial Services
Total questions: 20
Worksheet time: 10mins
What is factoring primarily used for?
To pay off debts
To finance receivables
To purchase real estate
To invest in stocks
Which of the following is NOT a function of a factor?
Providing insurance
Maintenance of accounts
Collection of debts
Financing trade debts
What is the main difference between recourse and non-recourse factoring?
Non-recourse allows for debt recovery from the client
Recourse is more expensive
Non-recourse is faster
Recourse allows for debt recovery from the client
In advance factoring, what percentage of the receivables is typically paid in advance?
75% to 90%
100%
30% to 40%
50% to 60%
What is the primary purpose of forfaiting?
To purchase inventory
To finance domestic trade
To finance receivables in international trade
To provide loans to individuals
Which of the following is a feature of forfaiting?
Is a short-term financing
Includes ledger administration
Involves a series of promissory notes
Requires collateral
What is a key advantage of factoring?
Requires collateral
High interest rates
Time savings in collections
Long-term commitment
What is the main characteristic of an operating lease?
Ownership transfers to the lessee
Requires a large down payment
Is a long-term agreement
Lessor retains ownership
Which of the following is a disadvantage of leasing?
Ownership of the asset
Complex documentation process
Immediate tax benefits
High initial capital investment
In a hire purchase agreement, when does ownership transfer to the buyer?
At the start of the agreement
After the first payment
After all payments are made
At the end of the lease term
What is a key difference between leasing and hire purchase?
Hire purchase is a rental agreement
Leasing does not require a down payment
Leasing involves ownership transfer
Hire purchase is always more expensive
What is the primary benefit of using hire purchase?
No maintenance responsibility
Fixed interest rates
Immediate ownership of the asset
High upfront costs
Which type of factoring involves disclosing the factor's name to the debtor?
Non-recourse factoring
Recourse factoring
Disclosed factoring
Undisclosed factoring
What is a disadvantage of hire purchase?
Immediate ownership
Higher total cost over time
No fixed payments
No tax benefits
What is the role of the lessor in a leasing agreement?
To manage the asset's depreciation
To provide the asset for use
To maintain the asset
To pay the lease payments
What is the main purpose of a lease agreement?
To allow use of an asset for a fee
To sell an asset
To transfer ownership immediately
To provide a loan
Which of the following is a type of lease?
Equity lease
Finance lease
Cash lease
Debt lease
What is a common feature of both factoring and forfaiting?
Both require collateral
Both involve the purchase of receivables
Both are long-term financing options
Both are only for domestic trade
What is the primary focus of advisory services provided by a factor?
Asset maintenance
Customer perception and audit
Debt collection
Financial reporting
What is the main risk associated with non-recourse factoring?
Loss of control over receivables
Risk of default by the factor
Higher fees
No risk of default by the client
