Financial Services
Question : Delhi-based Zamato Ltd. produces electronics products. It deals in both laptops and mobile phones in addition to products like books, musical instruments, videotapes, etc. The business was organised functionally, with separate divisions for production, marketing, and finance. The products were being looked after by all the functional heads, while occasionally their tasks crossed over. Conflicts between departments and issues with cooperation resulted from this. Ramesh, the CEO of the company, chose to categorise laptops and mobile phones under "consumer electronics" and books, musical instruments, and videotapes under "Media" to facilitate specialisation. Ramesh has completed a step in the process of one of the managerial function while doing this. Identify the step.
Option 1: Identifying and dividing the work
Option 2: Departmentalisation
Option 3: Assignment of duties to job positions
Option 4: Estabilisation reporting relationships
Correct Answer: Departmentalisation
Solution : Departmentalization: Departmentalisation means a grouping of activities similar in nature a department. Hence, the correct option is 2.
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 : Debentures and Financial Instruments
What is the primary difference between debentures and equity shares?
Option 1: Debentures provide ownership rights
Option 2: Equity shares pay fixed interest
Option 3: Debentures are issued to employees only
Option 4: Equity shares require repayment at maturit
Correct Answer: Debentures provide ownership rights
Solution : The correct answer is (a) Debentures provide ownership rights
Debentures represent a form of debt where the holders (debenture holders) are creditors to the company and do not possess ownership rights in the company. They are entitled to receive a fixed rate
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.
What distinguishes debentures from equity shares in terms of ownership and returns?
Option 2: Debentures pay fixed dividends
Option 3: Equity shares have fixed interest rates
Option 4: Equity shares are a form of long-term borrowing
Correct Answer: Debentures pay fixed dividends
Solution : The correct answer is (b) Debentures pay fixed interest
Debentures pay fixed interest to the debenture holders, as they are a form of debt and represent a loan from the debenture holder to the issuing company. In contrast, equity shares represent ownership
Question : Case Study 5:
LMN Corporation is a multinational conglomerate looking to manage its currency exposure effectively.
Question :
If LMN Corporation decides to issue short-term debt to finance its international operations, which money market instrument might it use?
Option 1: Corporate bond
Option 2: Call money
Option 3: Treasury bill
Option 4: Commercial paper
Correct Answer: Commercial paper
Solution : The correct answer is (d) Commercial paper
If LMN Corporation decides to issue short-term debt to finance its international operations, it might use commercial paper as a money market instrument. Commercial paper is a short-term unsecured promissory note issued by corporations and financial institutions
How are GDRs and ADRs similar in terms of their purpose?
Option 1: Both represent debt securities
Option 2: Both are issued in domestic markets
Option 3: Both allow companies to raise funds in their home country
Option 4: Both enable companies to raise capital in international markets
Correct Answer: Both enable companies to raise capital in international markets
Solution : The correct answer is (d) Both enable companies to raise capital in international markets
GDRs and ADRs allow companies to access international capital markets by issuing their shares in the form of depository receipts. GDRs are traded
Questions : Equity Shares and Preference Shares
Why would XYZ Ltd. choose to issue preference shares rather than equity shares?
Option 1: To gain voting control
Option 2: To avoid paying dividends
Option 3: To secure higher interest payments
Option 4: To raise funds without diluting voting rights
Correct Answer: To raise funds without diluting voting rights
Solution : The correct answer is (d) To raise funds without diluting voting rights
Preference shares allow companies to raise funds from investors without diluting the voting control or ownership of the existing shareholders. Unlike equity shares, preference shares usually do
Hi aspirant,
There are several prestigious institutions in India that provide an online MBA in finance. Here is a list of a few of the reputed institutions offering this course:
1. Xavier School of Management (XLRI)
2. Management Development Institute (MDI)
3. Indian Institute of Foreign Trade (IIFT)
4. Indian
Question : Case Study 22:
DEF Ltd. is a well-established company planning to expand its global operations through acquisitions.
To finance its acquisition plans, DEF Ltd. is evaluating short-term financing options. Which money market instrument might it use?
Option 1: Commercial paper
Option 4: Corporate bond
Solution : The correct answer is (a) Commercial paper
Commercial paper is a short-term unsecured promissory note issued by corporations to raise funds quickly. It is a common choice for businesses looking for short-term financing to support various operational needs, including acquisitions. It provides a quick
The Monetary and Credit Policy is announced by which of the following?
Option 1:
Ministry of Finance in Center
Option 2:
Reserve Bank of India
Option 3: State Bank of India
Option 4: Planning Commission of India
Correct Answer:
Solution : The correct option is Reserve Bank of India.
The Reserve Bank of India (RBI) announces the Monetary and Credit Policy. The RBI uses it as a key policy instrument to control the money supply and credit availability in the economy. Inflation control,
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