Planning
Question : Case Study 3:
MNO Inc. is a well-known conglomerate that is planning to diversify its business operations by acquiring other companies.
Question :
To finance its acquisition plans, MNO Inc. is considering issuing bonds. What type of market activity does this represent?
Option 1: Primary market
Option 2: Secondary market
Option 3: Money market
Option 4: Capital market
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
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 do preference shares differ from equity shares in terms of dividend payments?
Option 1: Preference shares pay higher dividends
Option 2: Equity shares pay fixed dividends
Option 3: Preference shares have no voting rights
Option 4: Equity shares have no redemption option
Correct Answer: Preference shares pay higher dividends
Solution : The correct answer is (a) Preference shares pay higher dividends
Preference shares typically have fixed dividend rates, and shareholders holding preference shares are entitled to receive these fixed dividends before any dividends are distributed to equity shareholders. This characteristic often makes
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
What is the primary purpose of financial planning for a business like XYZ Ltd.?
Option 1: Maximizing profits at any cost
Option 2: Meeting short-term operational needs only
Option 3: Achieving long-term financial goals and stability
Option 4: Reducing the company's workforce
Correct Answer: Achieving long-term financial goals and stability
Solution : The correct answer is (c) Achieving long-term financial goals and stability
Financial planning in a business involves creating a comprehensive strategy to manage financial resources efficiently, allocate funds effectively, and achieve both short-term and long-term financial objectives. It's about ensuring
Question : Case Study: PQR Software Solutions
PQR Software Solutions is a startup that provides innovative software solutions. The company is planning to introduce a new customer support system.
Question:
To overcome the limitations of planning, PQR Software Solutions can focus on:
Option 1: Incorporating flexibility in the plans
Option 2: Relying solely on top management's decisions
Option 3: Limiting employee involvement
Option 4: Adopting a reactive approach
Correct Answer: Incorporating flexibility in the plans
Solution : The correct answer is (a). Incorporating flexibility in the plans
Planning inherently involves uncertainties, and rigid plans may not be adaptable to changes in the dynamic business environment. By incorporating flexibility in the plans, PQR Software Solutions can better respond to
Question : Case Study: ABC Educational Institute
ABC Educational Institute is a reputed school with a large student population. The management is planning to introduce a new curriculum to meet the changing educational needs. Question: One of the characteristics of effective planning that ABC Educational Institute should adopt is:
Option 1: Lack of employee involvement
Option 2: Ambiguous objectives
Option 3: Measurable and specific goals
Option 4: Ignoring external opportunities
Correct Answer: Measurable and specific goals
Solution : The correct answer is (c) Measurable and specific goals
Effective planning involves setting clear, measurable, and specific goals. This clarity in objectives allows for better decision-making, resource allocation, and performance evaluation. Measurable and specific goals provide a basis for tracking progress and
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
Question : Case Study 13:
XYZ Corporation is a conglomerate planning to diversify its operations by entering the renewable energy sector.
XYZ Corporation is diversifying into the renewable energy sector. What type of financial instrument might it use to raise capital for this new venture?
Option 1: Commercial paper
Option 2: Equity share
Option 3: Debenture
Option 4: Treasury bill
Correct Answer: Equity share
Solution : The correct answer is (b) Equity share
Equity shares are a type of security that represents ownership in a company. When a company sells equity shares, it is raising capital from investors. Equity shares are a good option for companies that are looking to
Question : Case Study 72
OPQ Corporation is a conglomerate planning to trade its shares on a stock exchange. The company's management is reviewing the roles of stockbrokers.
OPQ Corporation has engaged a broker to facilitate its share trading. What is the role of a broker in the stock market?
Option 1: Listing companies on stock exchanges
Option 2: Setting interest rates
Option 3: Matching buy and sell orders
Option 4: Issuing new sharess
Correct Answer: Matching buy and sell orders
Solution : The correct answer is (c) Matching buy and sell orders
A broker in the stock market facilitates the buying and selling of securities by acting as an intermediary between buyers and sellers. Their primary role is to match buy and sell
Question : Assertion: The planning process begins with the setting of objectives.
Reason: Objectives are set after the planning process is completed.
Option 1:
Both assertion and reason are correct, and the reason is a correct explanation.
Option 2: Both assertion and reason are correct, and the reason is not correct explanation.
Option 3: Assertion is false, but the reason is correct.
Option 4: Assertion is correct, but the reason is false.
Correct Answer:
Solution : The correct answer is (a) Both assertion and reason are correct, and the reason is a correct explanation.
The assertion is correct as the planning process typically begins with the setting of objectives.
Question : Case Study 2:
XYZ Ltd. is a well-established pharmaceutical company that is planning to diversify its product range. The HR department is faced with the challenge of sourcing and training employees for the new divisions. Evaluate the following scenarios and choose the correct option:
XYZ Ltd. plans to hire experienced professionals from other companies to bring in new perspectives. What source of recruitment is being utilized here?
Option 1: Employee referrals
Option 2: Internal sources
Option 3: External sources
Option 4: Campus placements
Correct Answer: External sources
Solution : The correct answer is (c) External sources
When XYZ Ltd. plans to hire experienced professionals from other companies to bring in new perspectives, it is utilizing external sources of recruitment. External recruitment involves attracting and hiring individuals from outside the organization. This strategy allows
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