Goyal Brothers Prakashan solutions for Commercial Studies [English] Class 10 ICSE chapter 10 - Sources of Finance [Latest edition]

Equity shareholders are called ______. 

Debentures represent ______.

In which source of finance company has to give fixed rate of interest?

Which kind of investment, gives investors voting rights, for choosing management people in the organisation?

Which of the following is not a feature of debentures?

For which of the following company has to keep it’s assets on mortgage?

______ have the last claim but full voting rights.

Issue of ______ is the most important source of raising long-term finance.

______ market is thus an institutional arrangement by which savings generated in the country are channelised into avenues of long-term investment.

Which of the following is/are the characteristics of capital market?

Capital market is also called a ______.

The major components of capital market are ______.

Dividend on equity shares is paid out of the profits ______ paying interest on debentures and ______ dividend on preference shares.

The ______ holders are the main risk bearers. They provide risk capital because when the company fails and is closed, equity shareholders may lose their entire investment.

Which of the following is also known as hybrid financing?

This implies procuring cash from a bank in exchange for credit instruments.

It is a formal and revolving credit agreement under which the borrower is allowed to borrow upto the specified limit.

______ are generally secured by assets or guarantees.

They are known as creditorship securities.

In ______ only buying of securities takes place while in ______ both buying and selling of securities takes place.

______ is attractive to bold and adventurous investors whereas ______ appeals to conservative and orthodox investors.

______ shareholders are the real risk bearers who enjoy voting rights.

The capital of the company is divided into equal parts called ______.

Which of the following are the features of preference shares?

Which of the following are the features of debentures?

Which of the following are the functions of capital market?

How do Retained Earnings impact the growth potential of a company?

What is the key difference between Cash Credit and Overdraft?

What is the main advantage of Discounting Bills of Exchange for the seller?

ASSERTION: The capital market is an organised market consisting of the suppliers and users of funds and the agencies and institutions which assist in the flow of funds.

REASONING: Owned funds refer to the funds raised through debentures and loans from banks, financial institutions, and public deposits.

Preference shares are those shares which carry certain preferential or priority rights. Which of the following reason justify this statement?

1. At the time of winding up the company, capital is repaid to preference shareholders prior to the return of equity capital.
2. They do not carry voting rights.
3. They are entitled to receive what is left after all prior claims have been satisfied.
4. Dividend at a fixed rate is payable on these shares before any dividend is paid on equity shares.

Debenture is known as creditorship securities. State the reason:

Which of the following is NOT a function of Capital Market?

A well-developed capital market brings about rational allocation of funds and thereby helps to avoid wastage of the country’s financial resources.

Avantika is a Preference shareholder. What benefit does she has as a Preference shareholder?

If interest and borrowed sum are not paid to debenture holders in time, they can take legal action (including winding up) against the company.

Preference shares are a hybrid form of financing because ______.

Observe the image and state the source of finance whose characteristic is depicted in the image.

Observe the given image and identify the correct explanation for the given image.

Central bank provide short-term finance to business concerns by discounting their bills of exchange, promissory notes and hundies.

Interest is payable to Debenture holder every year irrespective of whether there are profits or not.

Observe the image and identify its benefit.

ASSERTION: Overdraft implies procuring cash from a bank in exchange for credit instruments.

REASONING: The holder of the Discounting of Bills of Exchange remains liable to the bank if the instrument is dishonoured on maturity.

Preference shares have the characteristics of both equity shares and debentures.

ASSERTION: Market for trading long-term financial instruments such as shares and debentures is known as capital market.

REASONING: A capital market provides liquidity to investment in securities.

ASSERTION: Loans are generally secured by assets or guarantees. The borrower may be asked to repay in lump sum or in instalment.

REASONING: Bold investors do not like preference shares.

Which of the following is NOT the feature of a debenture?

1. Has the right to elect directors
2. Have a residual claim in the company
3. Debentures generally carry no voting rights
4. Represent borrowed funds

Rahim has given a loan of ₹ 5 lakhs to a fertilizer company. The company pays him interest regularly and the company has promised to return his amount after 5 years. Rahim has invested in ______.

Debenture holders are creditors of the company.

Assertion (A): Preference shares are a hybrid form of financing.

Reason (R): Preference shares have characteristics of both equity shares and debentures.

Define business finance.

Differentiate between owned funds and borrowed funds.

Distinguish between equity shares and preference shares.

Distinguish between shares and debentures.

What is a Capital Market?

What are Preference Shares?

Write short note on Equity shares.

State any three sources of borrowed funds.

Name three sources of owned funds for a business.

State any three advantages of debenture issue as a source of finance.

Name any two main financial institutions in India.

Explain Debentures.

Write a short note discounting of bills of exchange.

What is an overdraft?

What is Cash Credit?

What is a Capital Market?

Explain any two functions of Capital Market.

What are the sources of long-term finance for a business enterprise? Explain.

Describe the characteristics of different kinds of shares which a public company can issue.

Discuss the importance of equity shares as sources of long-term finance.

Discuss the importance of preference shares as sources of long-term finance.

Distinguish between shares and debentures.

What are the various sources of raising borrowed funds for a business?

Which source is the best for raising borrowed funds for a business? And why?

Discuss the importance of debentures as sources of medium and short-term finance.

Discuss the importance of public deposits as sources of medium and short-term finance.

A company has to meet its short-term financial needs. It is considering whether it should raise loans from commercial banks or invite public deposits. Discuss the merits and demerits of each form.

The directors of a company have decided to modernise the plants and machinery at an estimated cost of Rs. one crore, but could not decide whether to issue preference shares or debentures for this purpose. As finance manager of the company, advise the directors whether to issue preference shares or debentures in the interest of the company.

The directors of a company have decided to modernise the plant and machinery at an estimated cost of rupees one crore. State the merits and demerits of issuing equity shares for the purpose.

What are the various sources of raising borrowed funds for a business?

Distinguish between equity shares and preference shares.

Briefly explain the functions of Capital Market.

Distinguish between the following:

Primary market and Secondary market

What is meant by Equity Shares?

Explain the advantages of equity shares as a source of long-term finance.

Explain the disadvantages of equity shares as a source of long-term finance.

What are Preference Shares?

Discuss the importance of preference shares as sources of long-term finance.

Explain the disadvantages of preference shares.

Explain Debentures.

State any three advantages of debenture issue as a source of finance.

State the various forms of borrowing from commercial banks.

What are the advantages of borrowing from commercial banks?

What are the disadvantages of borrowing from commercial banks?

Write a short note on Debentures.

Naved says, he is a bold investors so he does not like preference shares he therefore bought Equity Shares. What are the risks associated with it?

Distinguish between shares and debentures.

Explain in brief Discounting of bills of exchange.

A market is used for trading long-term securities. Identify the market and explain any four functions of the above.