State True or False (Weightage 5 Marks)
1. Introduction to Corporate Finance
Ans:- True
2. Business firm gives green signal to the project only when it is profitable.
Ans:- True
3. Corporate finance brings co-ordination between various business activities.
Ans:- True
4. Fixed capital is also referred as circulating capital.
Ans:- False
5. Working capital stays in the business almost permanently.
Ans:- False
6. The business will require huge funds, if assets are acquired on lease basis.
Ans:- False
7. The business dealing in luxurious products will require huge amount of working capital.
Ans:- True
8. A firm with large scale operations, will require more working capital.
Ans:- True
9. Liberal credit policy creates a problem of bad debts.
Ans:-True
10. Financial institutions and banks cater to the working capital requirement of business.
Ans:- True
2. Sources of Corporate Finance
1. Equity share capital is known as venture capital.
Ans: True
2. Equity shareholders enjoy fixed rate of dividend.
Ans: False
3. Equity shareholders are described as ‘shock absorber’ when company has financial crisis.
Ans: True
4. Debenture holders have right to vote at general meeting of the company.
Ans: False
5. Bond holders are owners of the company.
Ans: False
6. Depository bank stores the shares on behalf of GDR holder.
Ans: True
7. Financial institutions underwrite the issue of securities.
Ans: True
8. Cash credit is given against hypothecation of goods or any security.
Ans: True
9. Trade credit is major source of long term finance.
Ans: False
3. Issue of Shares
1. Only fully paidup shares can be forfeited.
Ans:-False
2. The member transferring shares is called as transferor.
Ans:-True
3. Share certificate is issued for partly or fully paid up shares.
Ans:-True
4. Allotment of shares must be done within one month of receipt of application money.
Ans:-False
5. Sweat Equity shares are offered to Directors or employees of a company.
Ans:-True
6. Bonus Shares are issued at a discounted price to the Equity shareholders.
Ans:-True
7. Floor price is the highest bid price under Book Building method.
Ans:-False
8. Calls not paid by shareholder is called as calls in arrears.
Ans:- True
9. Shares not offered to the public for subscription is called as subscribed capital.
Ans:- False
10. Authorised capital is mentioned in capital clause of Memorandum of Association.
Ans:- True
4. Issue of Debentures
1. Debenture holders have no voting rights.
Ans:- True
2. Company cannot issue non-convertible debentures.
Ans:- False
3. Special Resolution is needed to issue convertible debentures.
Ans:- True
4. Debentures holders are paid interest.
Ans:- True
5. Debenture Trustees can not approach NCLT to redress grievances of debenture holders.
Ans:- False
6. All secured debentures should be redeemed within 20 years from date of its issue.
Ans:- False
7. Company has to create a charge on its assets when it issues secured debentures.
Ans:- True
8. Debenture trustees are appointed to protect the interest of shareholders.
Ans:- False
9. Debenture certificate is issued within 6 six months of allotment of debentures.
Ans:- True
10. After allotment of Debentures their names are entered in the register of members.
Ans:- True
5. Deposits
1. Return of deposit must be filed every year on or before 31st March.
Ans: – False
2. Eligible public company can collect deposits from its members.
Ans:- True
3. Government company can collect deposits from its members.
Ans:- False
4. A private company can collect deposits from public.
Ans: – False
5. Deposit can be accepted for a maximum of 36 months.
Ans:- True
6. Eligible public company can collect deposits from public not exceeding 35% of its paid-up share capital and free reserves.
Ans:- False
7. For secured deposits, company has to create a charge on its tangible assets.
Ans:- True
8. Deposit Receipt is issued within 21 days of receipt of deposits.
Ans:- True
9. Company appoints Credit Rating Agency to protect the interest of depositors.
Ans:- False
10. Deposit Trust Deed is an agreement between company and Deposit Trustee.
Ans:- True
6. Correspondence with Members
1. Bonus shares are issued to existing equity shareholders.
Ans:- True
2. Building fund is used for issue of bonus shares.
Ans:- False
3. Bonus shares means capitalisation of reserve fund.
Ans:- True
4. Registered shareholder gets dividend through dividend coupons.
Ans:- False
5. Dividend is the portion of the profits of the company which is allotted to the holders of the debentures of the company.
Ans:- False
6. Every company must issue or despatch a share certificate to the allottee within three months after allotment of shares .
Ans:- False
7. A complaint letter should not be replied promptly.
Ans:- False
7. Correspondence with Debentureholders
1. Debenture holders get regular dividend.
Ans:- False
2. Debenture is a loan capital of the company.
Ans:-True
3. Convertible Debentures can be converted into equity shares.
Ans:- True
4. Interest on debentures is paid notwithstanding the volume of profit.
Ans:- True
5. Debenture holders enjoy full membership rights of the company.
Ans:- False
6. Dividend warrants are used to pay interest to the debenture holders.
Ans:- False
7. All types of debentures are eligible for conversion into equity shares.
Ans:- False
8. Debentures are never redeemed by the company.
Ans:- False
9. Debenture holders are the owners of the company.
Ans:- False
10. Debentures are always fully paid-up.
Ans: – True
8. Correspondence with Depositors
1. Fixed deposit is a short term source of finance for the company.
Ans- True
2. Fixed Deposit holder is creditor of the company.
Ans:- True
3. Deposits are invited by the company without issuing statutory advertisement.
Ans:- False
4. Fixed Deposit holders are entitled to receive dividend.
Ans:- False
5. A Private Company cannot accept the deposits from the general public.
Ans:- True
6. Depositors are given voting rights.
Ans:- False
9. Depository System
1. Physical mode of holding securities is risky.
Ans:- True
2. Allotment of securities take longer time when in physical mode.
Ans:- True
3. Transfer of securities is easier in electronic mode.
Ans:- True
4. Bad delivery is likely in Depository System.
Ans:- False
5. Depository system began in the USA for the first time in the world.
Ans:- False
6. India has a multi Depository System.
Ans:- True
7. Depository system is very similar to banking system.
Ans:- True
8. DP is a constituent of Depository System.
Ans:- True
9. DP is an agent of Depository.
Ans:- True
10. A Bank can work as a DP.
Ans:- True
11. DRF is required for conversion from physical to electronic.
Ans:– True
12. ISIN is a unique code given to the specific securities.
Ans:- True
10. Dividend and Interest
1. Dividend is paid to registered shareholders of the company.
Ans:- True
2. Dividend is decided by the Board.
Ans:- True
3. Dividend is decided by the shareholders.
Ans:- False
4. Dividend once declared cannot be revoked.
Ans:- True
5. Dividend cannot be paid out of capital.
Ans:- True
6. Shareholders decide about the rate and amount of profit to be given as dividend.
Ans:- False
7. All categories of shareholders get a fixed rate dividend.
Ans:- False
8. IEPF is the fund created by company.
Ans:- False
9. Interest is a liability for company.
Ans:- True
10. Interest is paid to shareholders of company.
Ans:- False
11. Financial Market
1. A Financial Market is a market in which people trade financial securities and derivatives at high transaction costs.
Ans:- False
2. Money market is the market for the long term funds.
Ans:- False
3. Capital market is the market for the long term funds.
Ans:- True
4. Primary market is also known as new issue market.
Ans:- True
5. Secondary market is commonly known as stock market.
Ans:- True
6. Commercial paper is a secured promissory note.
Ans:- False
7. Treasury bills are issued by commercial banks.
Ans:- False
12. Stock Exchange
1. A stock exchange is a reliable barometer to measure the economic condition of a country.
Ans:- True
2. Bombay Stock Exchange is the oldest stock exchange in India.
Ans:- True
3. A broker is a dealer in stock exchange who carries on trading of securities in his own name.
Ans:- False
4. Bear is a speculator who expects the prices of shares rise in the future.
Ans:- False