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B Com Exam  >  B Com Tests  >  Test: Sources of Business Finance - 2 - B Com MCQ

Test: Sources of Business Finance - 2 - B Com MCQ


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10 Questions MCQ Test - Test: Sources of Business Finance - 2

Test: Sources of Business Finance - 2 for B Com 2024 is part of B Com preparation. The Test: Sources of Business Finance - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Sources of Business Finance - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Sources of Business Finance - 2 below.
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Test: Sources of Business Finance - 2 - Question 1
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Which method of marketing securities involves an outright sale of a chunk of equity shares to a single sponsor or lead sponsor?

Detailed Solution for Test: Sources of Business Finance - 2 - Question 1
The method of marketing securities known as "Bought-out Deals Method" involves an outright sale of a chunk of equity shares to a single sponsor or lead sponsor. In this method, promoters of an unlisted company sell a portion of their equity shares to a single sponsor or lead sponsor, who may then form a syndicate with other merchant bankers to distribute the risk. This method allows the promoters to raise capital by selling a significant portion of their shares to a single entity.
Test: Sources of Business Finance - 2 - Question 2
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Which market is a part of the capital market and involves the issuance and trading of shares?

Detailed Solution for Test: Sources of Business Finance - 2 - Question 2
The market that is a part of the capital market and involves the issuance and trading of shares is known as the "Stock Market." It provides a platform for companies to issue shares and for investors to buy and sell those shares. The stock market is also referred to as the equity market.
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Test: Sources of Business Finance - 2 - Question 3
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Which market serves as an avenue for corporations to obtain capital by issuing both debt and equity securities?

Detailed Solution for Test: Sources of Business Finance - 2 - Question 3
The market that serves as an avenue for corporations to obtain capital by issuing both debt and equity securities is the "Bond Market." In the bond market, companies issue debt securities such as bonds and debentures to raise capital, and these securities represent a form of borrowing for the issuing companies.
Test: Sources of Business Finance - 2 - Question 4
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In which market are securities such as stocks, bonds, options, and futures traded, providing access to long-term finance?
Detailed Solution for Test: Sources of Business Finance - 2 - Question 4
Securities such as stocks, bonds, options, and futures are traded in the "Capital Market." The capital market provides access to long-term finance through both debt capital and equity capital. It includes organized platforms for exchanges and over-the-counter markets for trading these securities.
Test: Sources of Business Finance - 2 - Question 5
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Which method of marketing securities involves issuing shares to existing shareholders in proportion to the number of shares they already hold?
Detailed Solution for Test: Sources of Business Finance - 2 - Question 5
The method of marketing securities known as the "Rights Issue Method" involves issuing shares to existing shareholders in proportion to the number of shares they already hold. This method allows existing shareholders the opportunity to purchase additional shares based on their current holdings.
Test: Sources of Business Finance - 2 - Question 6
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What method of marketing securities is typically used when a company wants to make its first public offering to the general public?
Detailed Solution for Test: Sources of Business Finance - 2 - Question 6
The method of marketing securities known as "Initial Public Offers (IPOs) Method" is typically used when a company wants to make its first public offering to the general public. It is the process through which a company goes public by issuing shares to investors for the first time.
Test: Sources of Business Finance - 2 - Question 7
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In the context of employees' participation in a company, what method encourages employees to take up shares and subscribe to them?
Detailed Solution for Test: Sources of Business Finance - 2 - Question 7
The method that encourages employees to take up shares and subscribe to them is the "Stock Option Method" or Employee Stock Option Scheme (ESOP). It is a voluntary scheme where a company offers its employees the opportunity to acquire shares of the company, providing them with an incentive to stay with the company and become shareholders.
Test: Sources of Business Finance - 2 - Question 8
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Which method of marketing securities involves determining the quantum and price of securities based on bids received from prospective shareholders by lead merchant bankers?
Detailed Solution for Test: Sources of Business Finance - 2 - Question 8
The method of marketing securities known as the "Book-building Method" involves determining the quantum and price of securities based on bids received from prospective shareholders by lead merchant bankers. This method allows for the price of securities to be established through a bidding process.
Test: Sources of Business Finance - 2 - Question 9
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What is the primary purpose of the Stock Market?
Detailed Solution for Test: Sources of Business Finance - 2 - Question 9
The primary purpose of the "Stock Market" is to provide a platform for trading shares. It allows investors to buy and sell shares of publicly traded companies, providing liquidity to the ownership interests in those companies.
Test: Sources of Business Finance - 2 - Question 10
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Which method of marketing securities is considered the most economical way of raising fresh capital, as it involves no underwriting and brokerage costs?
Detailed Solution for Test: Sources of Business Finance - 2 - Question 10
The method of marketing securities known as the "Rights Issue Method" is considered the most economical way of raising fresh capital, as it involves no underwriting and brokerage costs. It allows existing shareholders to purchase additional shares directly from the company, reducing the expenses associated with underwriting and brokerage fees.
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