MCQs for Business Studies Class 11 with Answers Chapter 8 Sources of Business Finance
Students of class 11 Business Studies should refer to MCQ Questions Class 11 Business Studies Sources of Business Finance with answers provided here which is an important chapter in Class 11 Business Studies NCERT textbook. These MCQ for Class 11 Business Studies with Answers have been prepared based on the latest CBSE and NCERT syllabus and examination guidelines for Class 11 Business Studies. The following MCQs can help you to practice and get better marks in the upcoming class 11 Business Studies examination
Chapter 8 Sources of Business Finance MCQ with Answers Class 11 Business Studies
MCQ Questions Class 11 Business Studies Sources of Business Finance provided below have been prepared by expert teachers of grade 11. These objective questions with solutions are expected to come in the upcoming Standard 11 examinations. Learn the below provided MCQ questions to get better marks in examinations.
Question. Which source of finance is preferred by investors who want fixed income at lesser risk
(a) Debentures
(c) Preference shares
(b) Equity shares
(d) Bank loan
Answer
A
Question. Which of the following denotes the feature of Indian Depository Receipt :
(a) It is issued only to American citizens
(b) It is purchased and sold only by NRI‟s
(c) It is traded in American Stock Exchange
(d) It is issued to Indian citizens only
Answer
D
Question. Which of the following is an external source of finance?
(a) Retained earnings
(b) Equity shares
(c)Preference shares
(d) Debentures
Answer
D
Question. Retained earnings is a :
(a) Permanent source of funds
(b) Temporary source of funds
(c) Fixed source of funds
(d) Expensive source source of funds
Answer
A
Question. What does Debenture holders get in return of their debt in company
(a) Dividend
(b) Interest
(c) Profit
(d) Loss
Answer
B
Question. Companies generally invite public deposits for a period upto:
(a) 5years
(b) 4years
(c) 3years
(d) 10 years
Answer
C
Question. Which type of funds are equity linked debt securities that are to be converted into equity or depository receipts after a specific period
(a) Foreign currency convertible bonds
(b) ADR
(c) Equity shares
(d) GDR
Answer
A
Question. Financial institutions aim at promoting the industrial development of a country, these are also called ?
(a) Children banks
(b) Development banks
(c) Rural banks
(d) urban banks
Answer
B
Question. Internal sources of capital are those that are:
(a) generated through outsiders
(b) generated through loans such as suppliers from commercial banks
(c) generated through issue
(d) generated within of shares the business
Answer
D
Question. Preference shareholders are called :
(a) Partners of the company
(b) Owners of the company
(c) Executives of the company
(d) Guardians of the company
Answer
B
Question. Public deposits are the deposits that are raised directly from
(a) The public
(b) The directors
(c) The auditors
(d) The owners
Answer
A
Question. The Financial Institutions are established by:
(a) Both State and Central Govt.
(b) State Govt.
(c) Central Govt.
(d) Municipal Corporation
Answer
A
Question. Which one of the following is not the feature of preference shares:
(a) Provides fixed rate of return
(b) Provides voting rights
(c) Get Preference over equity shares
(d) Part of owner‟s capital
Answer
B
Question. On the basis of period the different sources of funds can be categorized into :
(a) Two parts
(b) Three parts
(c) Four parts
(d) Five parts
Answer
B
Question. The term redeemable is used for :
(a) Commercial papers
(b) Equity shares
(c) Preference shares
(d) Public deposits
Answer
C
Question. Short term funds are those funds which are required for a period not exceeding:
(a) Three years
(b) Two years
(c) One year
(d) Five years
Answer
C
Question. Retained earnings is also known as:
(a) Residual owners of the company
(b) Loan capital of the company
(c) Short term capital of the company
(d) Ploughing back of profits
Answer
D
Question. Trade Credit is granted to those customers who have reasonable amount of:
(a) Funds in their Bank A/c
(b) Financial standing and goodwill
(c) Weakness
(d) Zero Balance in their A/c
Answer
C
Question. External sources of capital are those that are :
(a) Generated through outsiders
(b) Generated through loans from commercial banks
(c) Generated through issue of shares
(d) Generated within the business
Answer
A
Question. ADRs are issued in:
(a) Canada
(b) China
(c) India
(d) USA
Answer
D
Fill in the Blanks:
Question. Debentures are an important instrument for raising ———– term debt capital.
Answer
long
Question. ………………. are also known as residual owners ,since they receive what is left after all the other claims of the company‟s income and assets have been settled.
Answer
Equity shareholders
Question. Internal sources of funds are those that are generated from ………… the business.
Answer
within
Question. Trade credit is used as a source of finance.
Answer
Short-Term
Question. The loan is repaid either in or in installments.
Answer
lump sum
Question. Debentures bear a——— rate of interest.
Answer
Fixed
Question. Debenture issued by a company is a written ———– of debt taken from public.
Answer
Acknowledgment
Question. Short term funds are those which are required for a period not exceeding ……… year.
Answer
one
Question. Each company has certain ————– capacity to take the debts.
Answer
Borrowing
Question. Retain earning does not involve ……………. cost in the form of interest, dividend or floatation cost.
Answer
explicit
Question. Bank Credit is not a source of funds.
Answer
Permanent
Question. Equity capital serves a permanent capital as it is to be repaid only at the time of ………….. of the company.
Answer
liquidation
Question. Funds required to purchased ………….. is called fixed capital requirement.
Answer
fixed assets
Question. Funds needed for the day to day operations is called ………… capital.
Answer
working
Question. The borrower is required to provide before a loan is sanctioned by the bank.
Answer
Security
Question. External sources of funds include those sources that lie …………….. an organization.
Answer
outside
Question. Payment of …………….. to the shareholders is not compulsory.
Answer
dividend
Question. The rate of interest on the Inter Corporate Deposits is than, that of banks.
Answer
Higher
Question. Preference shareholders have a …………….. right of repayment over equity shareholders in the event of liquidation of a company.
Answer
preferential
Question. Loan from bank is a source of finance.
Answer
Flexible
True and False:
Question. Debentures don‟t put a permanent burden on the earnings of a company.
Answer
False
Question. Commercial banks are not playing the vital role in the capital market for providing funds.
Answer
False
Question. Debentures carry voting rights
Answer
False
Question. The procedure of obtaining funds from commercial banks is complex.
Answer
True
Question. A GDR holder can at any time convert his holdings into the number of shares it represents.
Answer
True
Question. FCCB‟s are listed and traded in foreign stock exchanges
Answer
True
Question. The rate of dividend on preference shares is generally lower than the rate of interest on debentures.
Answer
False
Question. The equity share capital is a prerequisite to the creation of a company.
Answer
True
Question. The medium term sources of funds fulfill the financial requirements of an enterprise for a period exceeding five years.
Answer
False
Question. Preference shareholders generally do not enjoy any voting rights.
Answer
True
Question. Financial Institutions are also known as Development Banks.
Answer
True
Question. The rate of interest charged by banks depends on various factors such as the characteristics of the firm and the level of interest rates in the economy.
Answer
True
Question. Funds required for purchasing current assets is an example of lease financing.
Answer
False
Question. Assets, which are mortgaged, with the commercial banks can‟t be used in the business.
Answer
False
Question. ADR‟S are issued only to American citizens.
Answer
True
Question. The FCCB‟s are issued in any foreign currency
Answer
True
Question. Equity shareholders are also called partners of the company.
Answer
False
Question. Standard Chartered PLC was the first company that issued Indian Depository Receipt in India securities market in June 2010.
Answer
True
Question. Financing through debentures is less costly.
Answer
True
Question. The dividend paid to shareholders is deductible from profits as expense.
Answer
False
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We hope the above multiple choice questions for Class 11 Business Studies for Chapter 8 Sources of Business Finance provided above with answers based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS are really useful for you. Sources of Business Finance is an important chapter in Class 11 as it provides very strong understanding about this topic. Students should go through the answers provided for the MCQs after they have themselves solved the questions. All MCQs have been provided with four options for the students to solve. These questions are really useful for benefit of class 11 students. Please go through these and let us know if you have any feedback in the comments section.