1.
Directors own the money of incorporated firms and use these on behalf of shareholders.
2.
Government grants and subsidies are a form of external financing.
3.
Personal finance is the cheapest source of finance.
4.
Share issues by a company are considered to be internal sources of finance.
5.
Collateral acts as security to a lender in case debtors default on their loans.
6.
Capital expenditure is used to pay for the working capital of an organization.
7.
High loan capital means the business is likely to suffer during times of rising interest rates.
8.
Overdrafts are easier to obtain than most other forms of external finance.
9.
Permanent capital is equal to the value of shareholders' funds; i.e. share capital and reserves.
10.
It is best if a business reduces obtaining finance from a variety of sources simply because it raises its financial risks.
11.
Venture capitalists tend to invest their money in medium to large-sized businesses since they have the best investment track record.
12.
A firm which issues debentures at a fixed rate of 12% for five years will benefit if overall interest rates in an economy fall.
13.
If interest rates in an economy increase, dividend payments to shareholders will also have to increase.
14.
For a large book publishing firm, classify bank interest receivable as being:
A. 
B. 
C. 
D. 
15.
For a large book publishing firm, classify bank loans as being:
A. 
B. 
C. 
D. 
16.
For a large book publishing firm, classify bank overdrafts as being:
A. 
B. 
C. 
D. 
17.
For a large book publishing firm, classify debentures as being:
A. 
B. 
C. 
D. 
18.
For a large book publishing firm, classify insurance premiums as being:
A. 
B. 
C. 
D. 
19.
For a large book publishing firm, classify motor vehicles as being:
A. 
B. 
C. 
D. 
20.
For a large book publishing firm, classify rent accruals as being:
A. 
B. 
C. 
D. 
21.
Which of the following is the most feasable reason for using personal finance
A. 
Insufficient internal sources of finance
B. 
Insufficient external sources of finance
C. 
There is no interest obligation
D. 
To please the owners/shareholders of a company
22.
Advantages of growth through share issue include all those listed below except:
A. 
Less risk due to the spreading of risks amongst shareholders
B. 
C. 
Control of the company is diluted
D. 
Form of motivation for employees who own shares in a company
23.
Which of the following is a drawback to a business that issues debentures?
A. 
There is dilution of control
B. 
There is dilution of ownership
C. 
Lenders do not have any voting rights
D. 
The value of liabilities increases
24.
Which of the following is a drawback to a business that issues debentures?
A. 
There is dilution of control
B. 
There is dilution of ownership
C. 
Lenders do not have voting rights
D. 
The value of liabilities increases
25.
An advantage of using internal funds to purchase a new office building could include
A. 
Limited impact on a firm's working capital
B. 
C. 
D. 
Increased value of fixed assets