Tag: long term sources of finance

Questions Related to long term sources of finance

Which of the following are included under representation functions of a bank?
i) Payment of cheques and bills
ii) Providing remittance facilities
iii) Underwriting of securities 
iv) Advancing clean credit
v) Allowing overdrafts on current account
vi) Purchase and sale of securities

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. (i), (ii), (iii) and (iv)

  2. (iii), (iv), (v) and (vi)

  3. (vi), (v), (iv), (ii) and (i)

  4. (ii), (iii), (v) and (vi)

Show answer
Correct Option: C
Explanation:
 Banks perform certain secondary functions for the customers. These functions are also known as representation functions of a bank. Following points are included under representation functions of a bank:i) Payment of cheques and billsii) Providing remittance facilitiesiv) Advancing clean credit
v) Allowing overdrafts on current account
vi) Purchase and sale of securities.

Which among the following is not true with regard to merchant banker?
i.It can accept deposits.
ii.It can advance loans.
iii.It can do other banking activities.
iv.It can be manager to a public issue.

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. (i), (ii) and (iii)

  2. (ii), (iii) and (iv)

  3. (i), (iii) and (iv)

  4. (ii) and (iv)

Show answer
Correct Option: A
Explanation:
A merchant banker deals with international finance, business loans for companies and underwriting. Following points are not true with regard to merchant banker:i.It can accept deposits.
ii.It can advance loans.
iii.It can do other banking activities.

Which one of the following banks currently ranks number one in India in terms of market capitalization?

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. State Bank of India

  2. I.C.I.C.I. Bank

  3. U.T.I..Bank

  4. I.D.B.I. Bank

Show answer
Correct Option: A
Explanation:

 State Bank of India currently ranks number one in India in terms of market capitalization. SBI is a public sector banking company. SBI headquatered in Mumbai, Maharashtra.

SIDBI was set up as a subsidiary of IDBI to _______.

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. Take over the function of small business financing of IDBI

  2. Take over the venture capital operation of ICICI

  3. Reconstruct and rehabilitate the sick and closed industrial units financed by IDBI

  4. Facilitate finance and promote India's Foreign trade

Show answer
Correct Option: A
Explanation:

SIDBI was set up as a subsidiary of IDBI to take over the of function of small business financing of IDBI. It is set up for managing the small, micro and medium enterprises of the economy. It is set up by a special Parliamentary Act of India.

__________ is responsible for revival of public sector enterprises.

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. NTPC

  2. BIFR

  3. BRPSE

  4. MNC

Show answer
Correct Option: B
Explanation:

The government of India, in order to solve the problems of industrial sickness had set up a Board of Industrial and Financial Reconstruction under the purview of sick industrial companies act, 1985. Hence, BIFR is responsible for the revival of Public Sector Enterprises.

Share capital, banking and other financial institutions and unorganized capital markets are____________.

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. Marketing Resources

  2. Financial Factors

  3. Human resource

  4. All of above

Show answer
Correct Option: B
Explanation:

Share capital, banking and other financial institutions and unorganized capital markets are financial factors. These capital markets helps to provide financial assistance to the company mainly. These institutions also perform certain secondary functions as well.

Which of the following is a financial instrument used in international capital market?

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. Global Depository Receipts

  2. American Depository Receipts

  3. Foreign Currency Convertible Bonds

  4. All of the above

Show answer
Correct Option: D
Explanation:

There are various avenues for organizations to raise funds internationally. Modern companies depend upon sizeable borrowings from the international capital market. Financial Instruments like the Global Depository Receipts, American Depository Receipts, Foreign Currency Convertible Bonds are used in international capital market.

The FCCB's are issued in a foreign currency and carry a ________ interest rate which is ________ than the rate of any other similar non-convertible debt instrument.

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. fixed, higher

  2. fixed, lower

  3. fluctuating, lower

  4. fluctuating, higher

Show answer
Correct Option: B
Explanation:
Foreign currency convertible bonds are equity linked debt securities that are to be converted into equity or depository receipts after a specific period. The FCCB's are issued in a foreign currency and carry a fixed interest rate which is lower than the rate of any other similar non-convertible debt instrument.

FCCB's are very similar to the _________ debentures issued in India.

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. Secured

  2. Unsecured

  3. First

  4. Convertible

Show answer
Correct Option: D
Explanation:
Foreign currency convertible bonds are equity linked debt securities that are to be converted into equity or depository receipts after a specific period. Holder of FCCB's has the option of converting them into equity shares at a predetermined price or exchange rate. Hence, FCCB's are very similar to the convertible debentures issued in India.

The depository receipts denominated in US dollars are known as ______________.

organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

  1. Global Depository Receipts

  2. American Depository Receipts

  3. Foreign Currency Convertible Bonds

  4. None of the above

Show answer
Correct Option: A
Explanation:
The local currency shares of a company are delivered to the depository bank. The depository bank issues depository receipts against these shares. Such depository receipts denominated in US dollars are known as Global Depository Receipts.