Financial Services
Question : Case Study: XYZ Ltd. - Raising Finance for Expansion
XYZ Ltd. is a growing company that manufactures electronic gadgets. The company has been successful in the market and is planning to expand its operations. To finance this expansion, XYZ Ltd. is considering various sources of business finance.
Questions : Meaning and Need for Business Finance
Which financial decision involves selecting the appropriate sources of funds for a business?
Option 1: Production planning
Option 2: Marketing strategy
Option 3: Financial planning
Option 4: Human resource management
Correct Answer: Financial planning
Solution : The correct answer is (c) Financial planning
Financial planning entails determining the company's financial goals and objectives and devising strategies to achieve them. Selecting the right sources of funds is a crucial aspect of financial planning, as it involves evaluating and choosing the most
Question : Case Study: PQR Enterprises - Funding Strategies for Diversification
PQR Enterprises is a well-established conglomerate planning to diversify its business operations. The company is evaluating various sources of business finance to support its diversification plans.
Questions : Equity Shares and Preference Shares
How can PQR Enterprises raise funds through convertible preference shares?
Option 1: By issuing shares at a discount
Option 2: By converting shares into debentures
Option 3: By allowing conversion into equity shares
Option 4: By offering fixed interest payments
Correct Answer: By allowing conversion into equity shares
Solution : The correct answer is (c) By allowing conversion into equity shares
Convertible preference shares grant the shareholder the right to convert these shares into equity shares at a predetermined conversion ratio and within a specified time frame. This allows the
Question : Case Study: ABC Corporation - Financing Growth Strategies
ABC Corporation, a leading manufacturing company, is looking to finance its growth strategies. The company is exploring various sources of business finance to achieve its expansion goals.
Questions : Business Finance and Expansion
Why might ABC Corporation need external financing for its growth plans?
Option 1: To lower operational costs
Option 2: To decrease market share
Option 3: To enhance employee satisfaction
Option 4: To fund expansion projects and investments
Correct Answer: To fund expansion projects and investments
Solution : The correct answer is (d) To fund expansion projects and investments
External financing is typically sought to fund expansion initiatives, invest in new projects, acquire assets, enter new markets, develop new products, hire additional staff, or cover increased operational expenses.
Questions : Debentures and Financial Instruments
How are GDRs and ADRs similar in function?
Option 1: Both are used to issue equity shares
Option 2: Both are issued only in the domestic market
Option 3: Both represent ownership rights in the issuing company
Option 4: Both enable companies to raise funds in international markets
Correct Answer: Both enable companies to raise funds in international markets
Solution : The correct answer is (d) Both enable companies to raise funds in international markets
GDRs and ADRs are both financial instruments that enable companies to raise funds in international markets by issuing depositary receipts. GDRs are issued
What is the meaning of business finance?
Option 1: Managing human resources in a business
Option 2: Acquiring funds for business operations and expansion
Option 3: Developing marketing strategies for business growth
Option 4: Implementing technology solutions in a business
Correct Answer: Acquiring funds for business operations and expansion
Solution : The correct answer is (b) Acquiring funds for business operations and expansion
Business finance involves acquiring the necessary funds and managing financial resources to support a company's day-to-day operations, projects, and future growth. It encompasses activities related to budgeting,
Question : Questions : Business Finance and Its Meaning
Statement 1: Need for business finance arises due to uncertainties and risks in business operations.
Statement 2: Financial planning eliminates all uncertainties in business activities.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statements 1 and 2 are true.
Option 4: Both statements 1 and 2 are false.
Correct Answer: Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.
Statement 1 is true. The need for business finance often arises due to uncertainties and risks in business operations. Businesses need financial resources
Question : Who chairs the Monetary Policy Committee in India?
Option 1: Union Finance minister
Option 2: Deputy Governor, Reserve Bank of India
Option 3: Comptroller and Auditor General of India
Option 4: Governor, Reserve Bank of India
Correct Answer: Governor, Reserve Bank of India
Solution : The correct answer is the Governor, Reserve Bank of India.
The monetary policy in India is carried out under the authority of the Reserve Bank of India. The policy often targets inflation or interest rates to ensure price stability. This
Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Business Finance and Its Meaning
Assertion: Business finance is not required for decision-making and achieving company objectives.
Reason: Financial decisions have no impact on business operations and profitability.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Both assertion and reason are false.
Correct Answer: Both assertion and reason are false.
Solution : The correct answer is (d) Both assertion and reason are false.
The assertion is false. Business finance is crucial for decision-making and achieving company objectives. Financial decisions regarding investments, capital structure, cash flow management, and financial planning directly impact a
What is the main advantage of preference shares for companies like ABC Corporation?
Option 1: No dilution of ownership
Option 2: Higher dividend payouts
Option 3: Strong voting rights
Option 4: Fixed interest payments
Correct Answer: No dilution of ownership
Solution : The correct answer is (a) No dilution of ownership
Preference shares allow companies to raise funds without diluting ownership stakes or control. Unlike issuing additional common equity shares, issuing preference shares does not dilute the ownership of existing shareholders because preference shareholders
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