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 in the company and do not guarantee fixed dividend payments; the dividends paid to equity shareholders are typically based on the company's profitability and decisions made by the board of directors.

Correct Answer: The debentures can be exchanged for equity shares
   

Solution : The correct answer is (b) The debentures can be exchanged for equity shares

Convertible debentures are a type of debt instrument that provides the debenture holder with the option to convert the debentures into equity shares of the issuing company at a predetermined conversion ratio and within a specified time frame. This conversion option allows the debenture holder to become a shareholder of the company, potentially benefiting from any future growth in the company's share value.

Correct Answer: Primary market
 

Solution : The correct answer is (a) Primary market

If MNO Inc. is considering issuing bonds to finance its acquisition plans, it represents a primary market activity. The primary market is where new securities, such as bonds and stocks, are issued for the first time and sold directly by the issuing company to investors. In this case, MNO Inc. would issue bonds to raise funds for its acquisition plans. Investors would purchase these newly issued bonds directly from MNO Inc., and the company would receive the proceeds from the sale of these bonds. This infusion of capital from the sale of bonds would then be used to finance the acquisition of other companies, helping MNO Inc. diversify its business operations.

The secondary market, on the other hand, is where existing securities are bought and sold among investors, and the issuing company does not directly receive proceeds from these transactions. The money market primarily deals with short-term debt securities, and the capital market encompasses both the primary and secondary markets for long-term securities.

Correct Answer: The Planning Commission

Solution : The correct answer is the Planning Commission.

The era of five-year plans in India began with the establishment of the Planning Commission. The Planning Commission of India was set up in March 1950, shortly after India gained independence. It played a central role in formulating and implementing the country's five-year plans, which were comprehensive development blueprints designed to promote economic growth, industrialisation, and social welfare.

Correct Answer: Primary market
 

Solution : The correct answer is (b) Primary market

Issuing bonds to finance its entry into the healthcare industry would involve engaging in the primary market. The primary market is where new securities, like bonds, are issued and sold for the first time by the issuing company or entity to investors. In this case, LMN Corporation is issuing bonds to raise capital for its expansion into the healthcare industry.

Correct Answer: Assertion is true, but the reason is false.

Solution : The correct answer is (c) Assertion is true, but the reason is false.

The assertion is true. Financial planning involves efficiently allocating funds and resources to various activities within a business, aiming to achieve the company's financial goals and objectives.

The reason is false. Financial planning is a comprehensive process that involves the allocation of funds to various areas within a business based on the organization's goals and priorities. While marketing may be one area where funds are allocated, financial planning covers all aspects of resource allocation, not just marketing.

Correct Answer: Obtaining funds for business operations and growth

Solution : The correct answer is (d) Obtaining funds for business operations and growth

Business finance involves acquiring funds and managing financial resources to support a company's day-to-day operations, projects, expansions, or any other financial needs for achieving the company's objectives and goals. It encompasses activities related to budgeting, financial planning, investment decisions, securing loans, managing working capital, and overall financial management within a business context.

Correct Answer: It promotes environmentally friendly projects

Solution : The correct answer is (c) It promotes environmentally friendly projects

Sustainability, in the context of business finance, emphasizes environmentally responsible practices and projects that aim to minimize negative impacts on the environment and promote long-term sustainable development. Companies like UVW Industries may allocate financial resources to projects that focus on renewable energy, waste reduction, energy efficiency, and other initiatives that align with sustainability goals. These projects are often financed to ensure the company's operations are conducted in an environmentally responsible manner, which can also have positive reputational and operational benefits in the long run.

Correct Answer: International financial instruments

Solution : The correct answer is (c) International financial instruments

GDRs (Global Depository Receipts) and ADRs (American Depositary Receipts) are financial instruments that allow companies to raise capital in international markets by issuing depositary receipts. GDRs are traded outside the United States, while ADRs are traded in the United States. Both GDRs and ADRs represent ownership in the issuing company and enable companies to access a broader base of international investors and raise funds by listing and trading these instruments on international stock exchanges. This facilitates global investment in the company's shares.

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 various risks and uncertainties associated with business activities. Risks such as market fluctuations, economic changes, competition, regulatory changes, and more can impact a business's financial stability and necessitate financial planning and management to mitigate these risks.

Statement 2 is false. Financial planning aims to manage and mitigate risks but does not eliminate all uncertainties in business operations. While it helps in forecasting, budgeting, and strategizing to minimize risks, it cannot completely eliminate uncertainties, as the business environment is dynamic and subject to various unpredictable factors.