NCERT Solutions for Class 11 Business Studies Chapter 8

Sources of Business Finance Class 11

Chapter 8 Sources of Business Finance Exercise Solutions

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Multiple choice questions : Solutions of Questions on Page Number : 205

Q1 :  

Equity shareholder are called

(a) Owners of the company

(b) Partners of the company

(c) Executives of the company

(d) Guardian of the company


Answer :

The equity shareholders of a company are called its owners. They are also known as residuals claimants, or residual owners, as the dividends which they receive are the part of profits which is left after making or settling all the other claims of the company.

Hence, the correct answer is option (a).

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Q2 :  

The term 'redeemable' is used for

(a) Preference shares

(b) Commercial paper

(c) Equity shares

(d) Public deposits


Answer :

The term 'redeemable' is related to preference shares. It implies the amount of preference shares which is repaid by a company after a certain specified period of time. Such repayment to preference shareholders is made in accordance with the terms specified in Section 80 of the Companies Act, 1956.

Hence, the correct answer is option (a).

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Q3 :  

Funds required for purchasing current assets is an example of

(a) Fixed capital requirement

(b) Ploughing back of profits

(c) Working capital requirement

(d) Lease financing


Answer :

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Q4 :  

ADRs are issued in

(a) Canada

(b) China

(c) India

(d) USA


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Q5 :  

Public deposits are deposits that are raised directly from

(a) The public

(b) The directors

(c) The auditors

(d) The owners


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Q6 :  

Under the lease agreement, the lessee gets the right to

(a) Share profits earned by the lessor

(b) Participate in the management of the organisation

(c) Use the asset for a specific period

(d) Sell the assets


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Q7 :  

Debentures represent

(a) Fixed capital of the company

(b) Permanent capital of the company

(c) Fluctuating capital of the company

(d) Loan capital of the company


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Q8 :  

Under the factoring arrangement, the factor

(a) Produces and distributes the goods or services 

(b) Makes the payment on behalf of the client

(c) Collects the client's debt or account receivables

(d) Transfer the goods from one place to another


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Q9 :  

The maturity period of a commercial paper usually ranges from

(a) 20 to 40 days

(b) 60 to 90 days

(c) 120 to 365 days

(d) 90 to 364 days


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Short answerslong answersmultiple choice questions : Solutions of Questions on Page Number : 206

Q1 :  

What is business finance? Why do businesses need funds? Explain.


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Q2 :  

Explain trade credit and bank credit as sources of short-term finance for business enterprises.


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Q3 :  

List sources of raising long-term and short-term finance.


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Q4 :  

Discuss the sources from which a large industrial enterprise can raise capital for financing modernisation and expansion.


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Q5 :  

What is the difference between the internal and external sources of raising funds? Explain.


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Q6 :  

What advantages does issue of debentures provide over the issue of equity shares?


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Q7 :  

What preferential rights are enjoyed by preference shareholders? Explain.


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Q8 :  

State the merits and demerits of public deposits and retained earnings as methods of business finance.


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Q9 :  

Name any three special financial institutions and state their objectives.


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Q10 :  

Discuss the financial instruments used in international financing.


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Q11 :  

What is the difference between GDR and ADR? Explain.


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Q12 :  

What is a commercial paper? What are its advantages and limitations.


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Q13 :  

Internal sources of capital are those that are

(a) generated through outsiders such as suppliers

(b) generated through loans from commercial papers

(c) generated through issue of shares

(d) generated within the business


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Business Studies : CBSE NCERT Exercise Solutions for Class 11th for Sources of Business Finance will be available online in PDF book form soon. The solutions are absolutely Free. Soon you will be able to download the solutions.

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