Please refer to Sources of Business Finance HOTs Class 11 Business Studies provided below with Sources of Business Finance. All HOTs for Class 11 Business Studies with answers provided below have been designed as per the latest syllabus and examination petter issued by CBSE, NCERT, KVS. Students of Standard 11 Business Studies should learn the solved HOTS for Class 11 Business Studies provided below to gain better marks in examinations.
Sources of Business Finance Class 11 Business Studies HOTs
Question. Risk capital is defined as which type of capital?
Answer : Risk capital is defined as equity share capital.
Question. Give one feature of retained earnings that the other source of finance does not have.
Answer : Retained earnings save a portion of the net incomes for future use is retained earnings. The retained earnings have the ability to self-finance and it doesn’t involve any explicit cost.
Question. Mention one similar function between preference share capital and equity share capital.
Answer : The one similar function between preference share capital and equity share capital are that both capitals are a part of the owner’s share.
Question. In the business sector which organization provides both medium and long term loans and has been set up by both the state and central government.
Answer : The organization which provides both medium and long term loans and has been set up by both the state and central government is the development bank.
Question. Mention two rights of preference shareholder.
Answer : The two rights of preference shareholder are
• Getting a fixed rate of dividend from the net profit of an organization, before declaring any dividends for equity stockholder.
• At the time of liquidation, receiving funds after the organization creditor’s claim has been resolved.
Question. Mention two factors the differentiate share and debenture.
Answer : The two factors the differentiate share and debenture are
• Shares/stocks are associated with owner’s fund whereas, a debenture is funds that are borrowed.
• In share, there is a return in interest whereas, a debenture has a fixed rate of interest which is paid to the company.
Question. Explain the three advantages of retained earnings.
Answer : The three advantages of retained earnings are
• It doesn’t include any direct cost in terms of dividend, interest, and floatation cost.
• It has a flexible operation.
• It increases business capacity to absorb unexpected losses.