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

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 

Question. Which of the following is an external source of finance?     
(a) Retained earnings
(b) Equity shares
(c)Preference shares
(d) Debentures 

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 

Question. What does Debenture holders get in return of their debt in company   
(a) Dividend
(b) Interest
(c) Profit
(d) Loss 

Question. Companies generally invite public deposits for a period upto:   
(a) 5years
(b) 4years
(c) 3years
(d) 10 years

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

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

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

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 

Question. Public deposits are the deposits that are raised directly from   
(a) The public
(b) The directors
(c) The auditors
(d) The owners

Question. The Financial Institutions are established by:   
(a) Both State and Central Govt.
(b) State Govt.
(c) Central Govt.
(d) Municipal Corporation

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

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 

Question. The term redeemable is used for :     
(a) Commercial papers
(b) Equity shares
(c) Preference shares
(d) Public deposits 

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 

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 

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

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 

Question. ADRs are issued in:   
(a) Canada
(b) China
(c) India
(d) USA 

Fill in the Blanks:

Question. Debentures are an important instrument for raising ———– term debt capital.

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.

Question. Internal sources of funds are those that are generated from ………… the business.

Question. Trade credit is used as a source of finance.

Question. The loan is repaid either in or in installments.

Question. Debentures bear a——— rate of interest.

Question. Debenture issued by a company is a written ———– of debt taken from public.

Question. Short term funds are those which are required for a period not exceeding ……… year.

Question. Each company has certain ————– capacity to take the debts.

Question. Retain earning does not involve ……………. cost in the form of interest, dividend or floatation cost.

Question. Bank Credit is not a source of funds.

Question. Equity capital serves a permanent capital as it is to be repaid only at the time of ………….. of the company.

Question. Funds required to purchased ………….. is called fixed capital requirement.

Question. Funds needed for the day to day operations is called ………… capital.

Question. The borrower is required to provide before a loan is sanctioned by the bank.

Question. External sources of funds include those sources that lie …………….. an organization.

Question. Payment of …………….. to the shareholders is not compulsory.

Question. The rate of interest on the Inter Corporate Deposits is than, that of banks.

Question. Preference shareholders have a …………….. right of repayment over equity shareholders in the event of liquidation of a company.

Question. Loan from bank is a source of finance.

True and False:

Question. Debentures don‟t put a permanent burden on the earnings of a company.

Question. Commercial banks are not playing the vital role in the capital market for providing funds.

Question. Debentures carry voting rights

Question. The procedure of obtaining funds from commercial banks is complex.

Question. A GDR holder can at any time convert his holdings into the number of shares it represents.

Question. FCCB‟s are listed and traded in foreign stock exchanges

Question. The rate of dividend on preference shares is generally lower than the rate of interest on debentures.

Question. The equity share capital is a prerequisite to the creation of a company.

Question. The medium term sources of funds fulfill the financial requirements of an enterprise for a period exceeding five years.

Question. Preference shareholders generally do not enjoy any voting rights.

Question. Financial Institutions are also known as Development Banks.

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.

Question. Funds required for purchasing current assets is an example of lease financing.

Question. Assets, which are mortgaged, with the commercial banks can‟t be used in the business.

Question. ADR‟S are issued only to American citizens.

Question. The FCCB‟s are issued in any foreign currency

Question. Equity shareholders are also called partners of the company.

Question. Standard Chartered PLC was the first company that issued Indian Depository Receipt in India securities market in June 2010.

Question. Financing through debentures is less costly.

Question. The dividend paid to shareholders is deductible from profits as expense.

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.