chap 3

Question 1

external sources of finance

Answer 1

ada 8:
loan capital
crowdfunding
business angels
overdraft
microfinance provider
leasing
share capital
trade credit

Question 2

share capital

Answer 2

finance raised through shares via stock exchange (stock market; bursa malaysia)
long term source of finance for limited liability company
1st time jual, dipanggil IPO (initial public offering)
exp: Alibaba
only plc je boleh jual shares dkt stock market, private limited company takleh sbb shares dorg tak jual secara public

main functions of stock market:
raise share capital
oversees the IPO of new plc

advantages:
no interest payments to shareholder

disadvantages:
shareholder need to pay dividents to buyer
only plc can trade their shares in stock market

Question 3

loan capital

Answer 3

bank loan

mortgage
long term loan
ada collateral

debentures
no collateral

corporate bonds
debt securities
bondholders takde ownership

advantages:
repay in regular instalments
lower rate of interest

disadvantages:
fixed or variable interest rate (both ada pro and con)
kalau fixed nilai dia tinggi, kalau variable nilai dia tak tentu tapi bergantung kepada ekonomi negara waktu tu;kadar opr negara mcm mana
collateral (cagaran;rampas aset company if failure to repay loan)

Question 4

overdraft

Answer 4

short term liqiduity needs

advantages:
easy to obtain
emergency funds (paying wages when liquidity problem)
flexibility for business (bila2 je boleh mintak)

disadvanatages:
high interest rates
need to be repaid at short notice
usuallu small amount of money

Question 5

trade credit

Answer 5

mcm abt ngan abb
customers buys goods and services but pay later
no interest charges

Question 6

crowdfunding

Answer 6

non profit social enterprise
raising money from people to fund particular business project
supporters known as ‘crowd’
business entity refer to ‘fundraiser’

all or nothing funding model
berlaku jika business tak capai target, business akan pulangkan balik duit kepada crowd

donation based crowdfunding
duit tak dapat balik kpd crowd

advantages:
avoid dealing with commercial bank to make loan
crowd dont take controlling interest
less cost than being listed in public stock exchange (dua2 dapat duit;crowdfunding guna duit bantuan, kalau stock exchange guna shares tapi kena bayar nak masuk)

disadvantages:
transparent disclosure of legal documents (annual general meeting)
crowdfunding scams

Question 7

business angels

Answer 7

wealthy people who risk their money in a business venture that has high growth potential
often come from private equity firms

advantages:
small business and inexperienced entrepreneur

disadvantages:
extremely high risk
no guarentee for business angels to get satisfactory ROI
dilute the firm’s control and ownership

Question 8

microfinance provider

Answer 8

for profit social enterprise
exp:Grameen Bank (bangladesh)
provide financial support (for poor start up)

advantages:
lower interest rate than commercial bank
disad

Question 9

leasing

Answer 9

lessee (customer)
leesor(leasing company)
to use particular non current assets
mcm pinjam abs tapi tak beli untuk business

advantages:
lessor takes responsibility for the maintainance
leasing is suitable for short term period

disadvantages:
never owns the assets
leasing can be more expensive than buying outright of the asset, over a period of time