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Test: Resource Mobilization- 1 - Commerce MCQ


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8 Questions MCQ Test Entrepreneurship Class 12 - Test: Resource Mobilization- 1

Test: Resource Mobilization- 1 for Commerce 2024 is part of Entrepreneurship Class 12 preparation. The Test: Resource Mobilization- 1 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Resource Mobilization- 1 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Resource Mobilization- 1 below.
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Test: Resource Mobilization- 1 - Question 1

Pradeep and Paras were not being able to agree on the method they would like to choose for issuing their shares. Pradeep said that they should issue their shares to the existing employees as this will lead to higher efficiency. On the other hand, Paras wanted to issue shares to the smaller number of sophisticated investors as this will not let the management slip from their hands. The method suggested by Paras is :

Detailed Solution for Test: Resource Mobilization- 1 - Question 1

A private placement is a sale of stock shares or bonds to pre-selected investors and institutions rather than on the open market. It is an alternative to an initial public offering (IPO) for a company seeking to raise capital for expansion.
Examples of the types of securities that may be sold through a private placement are common stock, preferred stock, and promissory notes.

Test: Resource Mobilization- 1 - Question 2

Raghav is a very creative person and has always been working on innovating products and services that can make living healthy and hygienic. He developed a design of an air conditioner with an inbuilt air purifier as well. Since he did not get any financial support from any bank, he approached Nirvana Vent (VC), a venture capitalist firm. Though VC liked the idea but it refused to help Raghav at the seeding stage and asked him to come again if needed during second round financing.
Why was seed capital not given by VC when it was ready to fund the second round financing?

Detailed Solution for Test: Resource Mobilization- 1 - Question 2

Venture capitalists are typically very selective in deciding what to invest in and as a rule of thumb:

  1. They may invest in one in four hundred opportunities presented to it,
  2. Looks for the extremely rare, yet sought after qualities, such as :
    (a) innovative technology,
    (b) potential for rapid growth,
    (c) a well-developed business model
    (d) an impressive management team.
  3. Looks for an "exit" in the time frame of typically 3-7 years.
  4. Is inclined towards ventures with exceptionally high growth potential.

The VC do not fund for seed capital as its result and return both are not sure

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Test: Resource Mobilization- 1 - Question 3

Nishtha, a professionally qualified entrepreneur decided to start ‘kids furniture’ a website of designer furniture. It was relatively an untried area involving high risk. She lacked the necessary funds and experience to give shape to her idea. She knew that if she failed to get investment from the public her idea would die down before it is tried. So, she made a detailed business plan and presented her idea to ‘FiFa Finance Ltd.’ a company run by a group of professional investors. They were impressed by her business plan and decided to fund her start-up in exchange for an equity stake in the business. The source of finance used by Nishtha is:

Detailed Solution for Test: Resource Mobilization- 1 - Question 3
  • A venture capitalist (VC) is a private equity investor that provides capital to companies exhibiting high growth potential in exchange for an equity stake. This could be funding startup ventures or supporting small companies that wish to expand but do not have access to equities markets.
  • Venture capital is a form of financing that provides funds to early-stage, emerging companies with high growth potential, in exchange for equity Stockholders EquityStockholders Equity (also known as Shareholders Equity) is an account on a company's balance sheet that consists of share capital plusor an ownership stake.
Test: Resource Mobilization- 1 - Question 4

The organisation, management, membership and functioning of stock exchanges in India are governed by the provisions of:

Detailed Solution for Test: Resource Mobilization- 1 - Question 4

The organisation, management, membership and functioning of stock exchanges in India are governed by the provisions of The Securities Contracts (Regulation) Act, 1956.
This Act permits only recognized stock exchanges to function under the rules, regulations and by laws approved by the Central Government. At present there are 24 stock exchange in India.
The stock exchanges of India have the following organisational form:

  • Voluntary non-profit making associations
  • Public limited company
  • Company limited by guarantee

The governing body is responsible for policy formulation and proper functioning of the exchange, having wide range of powers viz.

  • Elect the office bearers and set up committees
  • Admit and expel members
  • Manage the properties and finance of the exchange
  • Interpret rules, regulations and by-laws
  • Adjudicate disputes
  • Conduct the affairs of the exchange
Test: Resource Mobilization- 1 - Question 5

Which of the following terms related to stock and stock market trading means buying price?

Detailed Solution for Test: Resource Mobilization- 1 - Question 5
  • The term "bid" refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time.
  • The term ask refers to the lowest price at which a seller will sell the stock.
  • The bid price will almost always be lower than the ask or “offer,” price.
Test: Resource Mobilization- 1 - Question 6

The order get executed at your mentioned price:

Detailed Solution for Test: Resource Mobilization- 1 - Question 6

A limit order is an order to buy or sell a stock with a restriction on the maximum price to be paid or the minimum price to be received (the “limit price”). If the order is filled, it will only be at the specified limit price or better.
For example, if a trader is looking to buy XYZ's stock but has a limit of $14.50, they will only buy the stock at a price of $14.50 or lower. Limit orders can also be left open with an expiration date.

Test: Resource Mobilization- 1 - Question 7

ABC Ltd., decided to raise funds by issuing shares. the finance department felt that the company should offer the shares to existing shareholders on a pro-rata basis. Out of the following, identify the method of raising the funds being suggested by the finance department:

Detailed Solution for Test: Resource Mobilization- 1 - Question 7

Right Issue means to offer shares to the existing shareholders of the company in proportion to their existing share holding in the company for the purpose of raising fresh capital for the company. With these rights the shareholders of the company can purchase new shares at a discounted rate to the market price.

Test: Resource Mobilization- 1 - Question 8

The Securities and Exchange Board of India was established on:

Detailed Solution for Test: Resource Mobilization- 1 - Question 8

The Securities and Exchange Board of India is the regulatory body for securities and commodity market in India under the jurisdiction of Ministry of Finance, Government of India. It was established on 12 April 1992 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.

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