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CA Inter Sources of Finance — practice questions — page 3

Explore 83 free Sources of Finance questions in CA Inter Financial Management. Open each question or exercise to read its content, reference answers and available explanation.

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Sources of Finance questions and exercises with answers

Showing questions 61–83 of 83.

Commercial paper is typically used to finance which need?Read the answer and worked solution →Commercial paper belongs to which segment of the financial market?Read the answer and worked solution →How do issuers keep commercial paper funding going for years?Read the answer and worked solution →In what form is venture capital invested in a business?Read the answer and worked solution →How does a lender differ from a venture capitalist in return?Read the answer and worked solution →Why is venture funding considered an expensive source of capital?Read the answer and worked solution →Which venture round is the earliest one, used to prove a new idea?Read the answer and worked solution →Which rounds make up early stage venture funding?Read the answer and worked solution →Growth capital in venture financing typically includes which rounds?Read the answer and worked solution →What is bridge financing in venture capital?Read the answer and worked solution →Through which route can a venture capitalist exit an investment?Read the answer and worked solution →What does an IPO turn a privately held company into?Read the answer and worked solution →In an IPO primary offering, newly issued share money goes directly to whom?Read the answer and worked solution →In an IPO, which document discloses the details of the offering to buyers?Read the answer and worked solution →What is the fee retained by underwriters out of IPO proceeds called?Read the answer and worked solution →A greenshoe option usually lets underwriters raise the offering by up to what percentage?Read the answer and worked solution →In a Dutch auction IPO, what do all successful bidders pay?Read the answer and worked solution →Historically, how have many IPOs been priced relative to market demand?Read the answer and worked solution →Who is typically the legal owner of the asset during a finance lease?Read the answer and worked solution →How does capitalising a finance lease affect the balance sheet?Read the answer and worked solution →Under the IFRS approach, when is a lease a finance lease?Read the answer and worked solution →Under operating lease treatment, what happens to leverage ratios?Read the answer and worked solution →What is the usual outcome at the end of a finance lease, as in hire purchase?Read the answer and worked solution →

Worked practice questions

Commercial paper is typically used to finance which need?

  1. Payroll and inventories
  2. Purchase of land plots
  3. Purchase of machinery
  4. Building construction
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Correct answer: A. Payroll and inventories

It funds short-term needs such as payroll, inventories and receivables, not fixed assets.

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Commercial paper belongs to which segment of the financial market?

  1. Capital market
  2. Commodity market
  3. Money market
  4. Forex market
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Correct answer: C. Money market

It is a short-term security issued by large corporations, so it is a money-market security.

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How do issuers keep commercial paper funding going for years?

  1. Convert maturing paper to equity
  2. Roll over with new issues
  3. Issue ten-year maturities
  4. Repay from retained earnings
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Correct answer: B. Roll over with new issues

Individual issues are short, so as each matures it is replaced with a newly issued one under a rolling programme.

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