Finance Quiz

What is the main purpose of public deposits?

• To finance research and development

• To finance short-term working capital needs

• To finance long-term working capital needs

• To finance fixed assets

What is a merit of public deposits according to the text?

• Public deposits have no legal formalities

• Public deposits have a charge on the fixed assets of the company

• Public deposits incur high expenses compared to other methods

• Public deposits bring flexibility in the capital structure of the company

What is a limitation of public deposits mentioned in the text?

• Public deposits do not require a high credit rating

• Public deposits have no limits on the amount that can be raised

• Public deposits are always secure and safe

• Public deposits may create financial problems due to sudden withdrawals

What is an important merit of lease financing?

• Lease financing does not enable the lessee to acquire the asset with a lower investment

• Lease financing affects the debt raising capacity of an enterprise

• Lease rentals paid by the lessee are not deductible for computing taxable profits

• Lease financing provides finance without diluting the ownership or control of business

What is a limitation of leasing finance according to the text?

• Lease may result in lower payout obligation in case the equipment is not found useful

• Lease agreement allows the lessee to make any alteration or modification in the asset

• Lease renewal does not affect normal business operations

• Lessee never becomes the owner of the asset

What is the period for which companies accept public deposits?

• 1 month to 12 months

• 6 months to 36 months

• 2 years to 5 years

• 3 months to 24 months

What does public deposits not have according to the text?

• Security

• Limits on the amount that can be raised

• Legal formalities

• Charge on the fixed assets of the company

What is a risk borne by the lesser in lease financing?

• Higher payout obligation

• Lessee becoming the owner of the asset

• No risk of obsolescence

• Decreased flexibility for the lessee