Understanding Finance for Students

What are the two main types of finance sources?

• Short-term finance and long-term finance

• Debt finance and equity finance

• Public finance and private finance

• Internal finance and external finance

Define internal sources of finance.

• Funds borrowed from external lenders

• Internal sources of finance are funds generated within a business, such as retained earnings and depreciation.

• Investment from venture capitalists

• Government grants and subsidies

What is an example of an external source of finance?

• Bank loan

• Government grant

• Personal savings

• Crowdfunding

What is the difference between short-term and long-term finance?

• Short-term finance is only for personal loans; long-term finance is only for business loans.

• Short-term finance is for less than one year; long-term finance is for more than one year.

• Short-term finance is for less than six months; long-term finance is for six months to two years.

• Short-term finance is for more than one year; long-term finance is for less than one year.

Why might a business choose short-term finance?

• To reduce overall debt levels

• To improve employee benefits

• To secure long-term investments

• To address immediate cash flow needs and take advantage of short-term opportunities.

What is a common use for long-term finance?

• Paying off existing debts

• Acquiring fixed assets such as buying a house

• Investing in stocks

• Funding short-term projects

How does money play a role in business operations?

• Money is irrelevant to customer satisfaction.

• Money has no impact on business growth.

• Money is crucial for funding operations, purchasing resources, and managing cash flow in business.

• Money is only needed for employee salaries.

What are the advantages and disadvantages of globalisation for small businesses?

• Globalisation provides small businesses with opportunities for growth and access to international markets, but it also exposes them to intense competition and economic fluctuations.

• Globalisation has no impact on small businesses.

• Globalisation only poses challenges for small businesses without any benefits.

• Globalisation simplifies operations for small businesses by reducing competition.

How can globalisation affect a company's finance?

• Globalisation guarantees higher profit margins without risks.

• Globalisation eliminates the need for financial planning.

• Globalisation reduces a company's operational costs significantly.

• Globalisation affects a company's finance by increasing market access, introducing foreign competition, influencing exchange rates, and impacting supply chain costs.

What is foreign currency exchange?

• The process of trading stocks for cash.

• The act of transferring goods between countries.

• A method of investing in real estate abroad.

• Foreign currency exchange is the process of converting one currency into another.