Sources of Finance Quiz - CBSE Class 12 Business Studies
Free practice quiz: Sources of Finance (CBSE Class 12 Business Studies). 19 multiple-choice questions with answers and explanations. Play online, no sign-up needed.
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Which of the following is a primary source of finance?
- Bank loans
- Equity shares
- Debentures
- Public deposits
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Answer: B. Equity shares
Equity shares are a primary source of finance as they involve raising funds directly from owners of the business, while the other options are forms of borrowed or secondary sources of finance.
What is the primary advantage of using retained earnings as a source of finance?
- No dilution of control
- Immediate availability
- Tax benefits
- Secured funding
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Answer: A. No dilution of control
Retained earnings allow a business to use its own profits for funding without diluting the control of existing shareholders.
Which source of finance does not incur any obligation to repay?
- Loans
- Equity share capital
- Debentures
- Trade credit
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Answer: B. Equity share capital
Equity share capital represents ownership in the company and does not require repayment, as opposed to loans and debentures which are obligations.
What is a characteristic feature of public deposits?
- They are negotiable instruments
- They attract a high rate of interest
- They are always secured
- They have a fixed maturity
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Answer: D. They have a fixed maturity
Public deposits usually come with a fixed maturity period wherein the organization agrees to repay the depositors at a specific time.
Which factor is crucial in choosing a source of finance?
- Control of ownership
- Interest rates
- Funds required
- All of the above
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Answer: D. All of the above
When selecting a source of finance, businesses must consider various factors, including control of ownership, interest rates, and the amount of funds required.