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 : Equity Shares and Preference Shares
If XYZ Ltd. issues cumulative preference shares, it means that:
Option 1: The shares cannot be redeemed
Option 2: Dividends on these shares must be paid before any arrears
Option 3: These shares cannot be traded in the stock market
Option 4: The company is required to pay dividends at a fixed rate
Correct Answer: Dividends on these shares must be paid before any arrears
Solution : The correct answer is (b) Dividends on these shares must be paid before any arrears
Cumulative preference shares entitle the shareholders to receive their fixed dividends before any dividends are paid to equity shareholders. If the
Question : Who is the regulator of Micro Finance Institutions in India?
Option 1: SEBI
Option 2: RBI
Option 3: NABARD
Option 4: SBI
Correct Answer: RBI
Solution : The correct option is RBI.
The microfinance industry is governed by the Reserve Bank of India (RBI), which also has the authority to impose a cap on MFIs' margins and interest rates.
MFIs are institutions that offer remittance services, pension or insurance services, thrift
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 : Business Finance and Diversification
What is the primary objective of financial planning for PQR Enterprises?
Option 1: Maximizing market share
Option 2: Achieving diversification
Option 3: Achieving long-term financial goals
Option 4: Meeting short-term operational needs
Correct Answer: Achieving long-term financial goals
Solution : The correct answer is (c) Achieving long-term financial goals
Financial planning involves formulating strategies to manage finances effectively to attain long-term financial objectives. It encompasses various aspects such as budgeting, forecasting, investment planning, risk management, and aligning financial activities with the company's
Question : Case Study 32
UVW Inc. is a technology startup aiming to raise funds for its innovative projects. The company's management is considering different methods of raising capital from the capital market.
Question:
If UVW Inc. chooses to issue new shares to the public, what is this process called?
Option 1: IPO (Initial Public Offering)
Option 2: Follow-on Public Offering (FPO)
Option 3: Private Placement
Option 4: Rights Issue
Correct Answer: IPO (Initial Public Offering)
Solution : The correct answer is (a) IPO (Initial Public Offering)
An IPO is the first sale of a company's shares to the public, allowing the company to raise capital by selling ownership stakes to a wide range of investors. It's a significant event
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
Which financial decision involves choosing the appropriate sources of funds for business activities?
Option 1: Marketing strategy
Option 2: Inventory management
Option 3: Financial planning
Option 4: Human resource allocation
Correct Answer: Financial planning
Solution : The correct answer is (c) Financial planning
Financial planning is the process of determining the company's financial goals and objectives and developing strategies to achieve them. It includes decisions related to choosing the right sources of funds to support business activities, manage operational costs,
Question : The Modi Government at the Central has formed NITI Aayog by replacing which one of the following?
Option 1: Fiscal Commission
Option 2: Finance Commission
Option 3: Agricultural Price Commission
Option 4: Planning Commission
Correct Answer: Planning Commission
Solution : The correct answer is the Planning Commission.
The Planning Commission was established on March 15th, 1950, an advisory body whose primary goal was to create 5-year plans for the nation in line with the USSR. After Prime Minister Narendra Modi's significant announcement on
Question : Case Study 34
ABC Ltd. is a conglomerate planning to expand its operations. The company's management is considering the roles of SEBI in the financial market.
Question :
Which of the following is not a function of SEBI?
Option 1: Regulatory functions
Option 2: Protective functions
Option 3: Allocation of resources
Option 4: Developmental functions
Correct Answer: Allocation of resources
Solution : The correct answer is (c) Allocation of resources
Allocation of resources is not a function of SEBI. SEBI primarily focuses on regulatory, protective, and developmental functions within the securities market. The allocation of resources is a broader economic concept related to efficient distribution
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
Question : Union Finance Minister Nirmala Sitharaman, while presenting Union Budget for 2022- 23 announced a programme called ‘Parvatmala’. This programme was announced to develop _______.
Option 1: smart houses in hilly areas
Option 2: ropeways in hilly areas
Option 3: hospitality culture in hilly areas
Option 4: roads in hilly areas
Correct Answer: ropeways in hilly areas
Solution : The correct answer is ropeways in hilly areas.
During the presentation of the Union Budget for 2022–2023, Smt. Nirmala Sitharaman, the Union Finance Minister, revealed the National Ropeways Development Programme, or "Parvatmala," which will be implemented under the "PPP" (public-private partnership) model.
Assertion: Uncertainty and risks in business operations do not necessitate the need for finance.
Reason: Business finance only addresses short-term funding requirements.
The assertion that "Uncertainty and risks in business operations do not necessitate the need for finance" is false. Uncertainty and risks in business operations often increase the need for
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