WEEK 10

Question 1

funding that is secured and repaid in full within one
calendar year.

Answer 1

Short-term Funding

Question 2

usually take more than five years to accomplish and
require a disciplined saving and investing strategy over a
long time period.

Answer 2

Long-term Funds

Question 3

Involve the public issue of equity and preference shares in
the stock exchange.

Answer 3

Issue of Shares

Question 4

Involve the collection of funds by issuing debentures in
the stock exchange.

Answer 4

Issue of Debentures

Question 5

Refers to the funds that are raised from financial
institutions for financing long-term projects.

Answer 5

Term Loans

Question 6

Refers to the fund raised by the organization’s own
operations.

Answer 6

Fund from Operations

Question 7

Helps in generating funds by selling fixed assets, such as land,
buildings, plants, and machineries to finance short-term and
long- term projects.

Answer 7

Sale of Fixed Assets

Question 8

Involves selling assets, such as bills receivables and stocks.

Answer 8

Sale of Current Assets

Question 9

Refers to the reduction in the working capital either by
decreasing current liabilities or increasing current assets.

Answer 9

Decrease in Working Capital

Question 10

Helps in financing short-term projects or meeting the working
capital needs. This type of funds does not create any liability, as
these are income of the organizations.

Answer 10

Receipt of Interest, dividend,
and refund of tax

Question 11

is a tool that companies use to expand operations or to
acquire other businesses.

Answer 11

Long-term Funding

Question 12

These loans have stated terms regarding loan amounts,
interest rates and repayment length.

Answer 12

Bank Loans

Question 13

revolving loans that are available at any time
during business operations.

Answer 13

Credit Lines

Question 14

the issuance of stock by public
companies to raise funds for business investments.

Answer 14

Equity Financing

Question 15

Venture capitalists offer personal loans to companies for a
stated return percentage.

Answer 15

Venture Capital

Question 16

is a loan option offered between a seller and a
buyer.

Answer 16

Private Financing

Question 17

Is a financial resource available through
your business or personal bank. It is connected to your
bank account, and withdrawals from the credit line are
repaid per the bank’s terms by direct transfer of money
through your main bank account.

Answer 17

Line of Credit

Question 18

The terms of different retirement plans vary, but
individuals are usually able to withdraw a certain
percentage of the fund’s total.

Answer 18

Retirement Fund Withdrawal

Question 19

Payroll lenders provide short-term loans for qualified
businesses of up to $100,000. To qualify, your business must
have to have an established track record and a specific level of
proven sales revenue.

Answer 19

Payroll Financing

Question 20

a financial institutional that has formed a legal corporate
business entity to carrying on banking and other financially related
activities. They commonly referred to as bank holding companies.

Answer 20

BANKS

Question 21

one of the primary advantages of a bank is that deposited funds are
insured by the Federal Deposit Insurance Corporation. TRUE OR FALSE

Answer 21

TRUE

Question 22

Banks are very flexible in their lending standards or other policies. TRUE OR FALSE

Answer 22

FALSE ( NOT FLEXIBLE)

Question 23

provides some banking services without meeting the legal definitions of a bank, or financial institutions operating without a license. financial organizations that do not have banking licenses. They may
perform many of the same functions as a bank, yet are prohibited from
performing others, such as accepting deposits.

Answer 23

Non-Bank Finance Companies

Question 24

A nonbank can also make money by charging a fee for its services, typically as an interest
payment. True or false

Answer 24

TRUE

Question 25

non-bank lenders tend to take on riskier loans, their interest rates often are lower. TRUE OR FALSE

Answer 25

FALSE ( HIGHER)

Question 26

The lack of strong regulation increases risks, as well – for the customer, the lender, and in some cases the economy. TRUE OR FALSE

Answer 26

TRUE

Question 27

They need to find additional sources of funds such as
state and local governments, equity investors and lenders
and hybrid equity-debt investors.

Answer 27

Sources of Funds in Finance

Question 28

Companies may acquire funding–or save money–from
state or local government programs that subsidize a
particular sector or industry or offer fiscal benefits.

Answer 28

State and Local Government Subsidies

Question 29

are profits not distributed as dividends
to investors; they are retained in the firm to fund
operations, investments and expansion projects

Answer 29

Retained Earnings

Question 30

Organizations get funding also by issuing stocks–or shares of
ownership–in the capital markets.

Answer 30

Equity Issuance

Question 31

Companies may borrow by issuing bonds or other forms of debt in financial–or
capital–markets. They may also borrow directly from private institutional
investors such as banks, hedge funds, venture capital firms and brokerage
companies.

Answer 31

Debt issuance

Question 32

Investors who lend to entities are called

Answer 32

bondholders.

Question 33

Companies may raise funds by issuing financial instruments
with debt and equity features. Such instruments are called
hybrid instruments or quasi-debt.

Answer 33

Hybrid Financing