BAF 300 Q5

What type of bond guarantees interest and principal payment by a third party?

• Secured bond

• Guaranteed bond

• Convertible bond

• Plain bond

What is the primary risk faced by ordinary shareholders?

• Tax-deductible dividends

• High interest payments

• Lack of dividends

• Guaranteed returns

Which of the following is NOT a method of raising additional equity finance?

• Retained profit

• Rights issues

• Term loans

• Bonus shares

What is the main advantage of preference shares over ordinary shares?

• Higher voting rights

• Guaranteed dividends

• More control

• Higher risk

Which of the following factors influences a business's decision on raising new finance?

• Market trends

• Personal preferences

• Level of return

• Employee satisfaction

What is a characteristic of convertible bonds?

• They cannot be traded

• They can be converted into ordinary shares

• They have fixed interest rates

• They are always secured

What is the primary purpose of warrants?

• To give the right to buy shares

• To secure bonds

• To provide loans

• To issue dividends

Which type of lease typically requires the lessor to maintain the asset?

• Operating lease

• Term loan

• Financial lease

• Sale and leaseback

Which lease type is fully amortized and non-cancellable?

• Operating lease
  

• Financial lease
  

• Short-term lease
  

• Rental agreementTax-deductible

What is the main disadvantage of ordinary shareholders?

• They are last to claim repayment

• They have no voting rights

• They cannot sell their shares

• They receive fixed dividends