Match each financing concept with its most specific description.
List I: A. Mezzanine capital; B. Private equity buyout; C. Global Depository Receipt; D. Venture capital.
List II:
I. Privately negotiated equity investment to acquire an established business.
II. Risk capital directed toward young businesses with high growth potential.
III. An overseas depositary instrument representing underlying securities held through a custodian.
IV. Subordinated financing between senior debt and common equity, often involving equity-linked features.
A - IV, B - I, C - III, D - II
The match is A–IV, B–I, C–III, D–II. Mezzanine capital is subordinated financing; a private-equity buyout acquires an established business; a GDR represents underlying securities; venture capital commonly finances young growth businesses. These definitions do not promise unusually rapid funding or classify exchange trading as OTC trading.
Important Questions from Capital Market
The following two statements relate to receivables management. Choose the correct code for the statements being correct or incorrect.
Statement I: The major controllable decision variables for deciding the credit policy are the credit standards and analysis and the credit terms only.
Statement II : Factoring is a popular mechanism of managing, financing and collecting receivables.
The following two statements relate to financial derivatives. Choose the correct code for the statements being correct or incorrect.
Statement I: When an option is allowed to be exercised only on the maturity date, it is called an American option.
Statement II : If the option holder does not lose or gain whether he exercises his option or buys or sells the asset from the market, the option is said to be at-the-money.
The given statements are related to financial derivatives. Choose the correct code for the statements being correct or incorrect.
Statement I: A speculator will gain, if he sells foreign currency under a forward contract, when the spot price is higher than the forward price.
Statement II : In currency futures, intra currency spread exists when a speculator buys/sells the same currency for two delivery dates.
Indicate the correct code for the following two statements of Assertion (A) and Reasoning (R):
Assertion (A): Investors in the capital market now have a higher inclination for investment in debentures.
Reasoning (R): Debentures have active secondary markets now.
Authorised capital of a company is Rs. 5 lacs; 40% of it is paid up. Loss incurred during the year is Rs. 50,000. Accumulated loss carried from last year is Rs. 2 lac. The company has a Tangible Net Worth of:
