Correct Answer: The advantage of equity finance for a company ? raising money by selling shares ? is that this money does not have to be repaid However, new shareholders usually get to have a say in how the company is run Despite these rights, equity is often seen as a risky choice for investors as they will lose all their money if the company doesn?t prosper If it does well, on the other hand, they may see their stake multiply in value many times over Debt finance ? money raised through loans ? must be repaid eventually by a company, usually with interest, but lenders won?t be able to exert as much influence as shareholders over how the company does business The debt of a reliable company is usually seen as a safe investment, but fixed repayment schedules means that there are few opportunities for large returns

Correct Answer: Bank Rate is the interest rate at which the RBI allows finance to commercial banks By Bank Rate, we mean bank can regulate the level of economic activity

Correct Answer: a) Checking Account: You can access the account as the saving account but, unlike saving account, you cannot earn interest on this account The benefit of this account is that there is no limit for withdrawal b) Saving Account: You can save your money in such account and also earn interest on it The number of withdrawal is limited and need to maintain the minimum amount of balance in the account to remain active c) Money Market Account: This account gives benefits of both saving and checking accounts You can withdraw the amount and yet you can earn higher interest on it This account can be opened with a minimum balance d) CD (Certificate of Deposits) Account: In such account you have to deposit your money for the fixed period of time (5-7 years), and you will earn the interest on it The rate of interest is decided by the bank, and you cannot withdraw the funds until the fixed period expires

Correct Answer: Overdraft protection is a service that is provided by a bank to their customer For instance, if you are holding two accounts, saving and credit account, in the same bank Now if one of your accounts does not have enough cash to process the cheques, or to cover the purchases The bank will transfer money from one account to another account, which does not have cash so to prevent check return or to clear your shopping or electricity bills

Correct Answer: The repayment of the loan by instalment to cover principal amount with interest is known as ?Amortization?

Correct Answer: Foreign draft is an alternative to foreign currency; it is generally used to send money to a foreign country It can be purchased from the commercial banks, and they will charge according to their banks rules and norms People opt for ?foreign draft? for sending money as this method of sending money is cheaper and safer It also enables receiver to access the funds quicker than a cheque or cash transfer

Correct Answer: ?Endorsing cheque? ensures that the cheque get deposited into your account only It minimizes the risk of theft Normally, in endorsing cheque, the cashier will ask you to sign at the back of the cheque The signature should match the payee The image over here shows the endorsed cheque

Correct Answer: In ?Bill Purchase? the loan will be created for the full value of the draft and the interest will be recovered when the actual payment comes For example, a ?Sight draft? is presented for which the loan is created for 100% of the draft value The money is received after 7 days, and then the interest will be recovered for 7 days along with the principal amount

Correct Answer: ACH stands for Automated Clearing House, which is an electronic transfer of funds between banks or financial institutions

Correct Answer: Line of credit is an agreement or arrangement between the bank and a borrower, to provide a certain amount of loans on borrower?s demand The borrower can withdraw the amount at any moment of time and pay the interest only on the amount withdrawn For example, if you have $5000 line of credit, you can withdraw the full amount or any amount less than $5000 (say $2000) and only pay the interest for the amount withdrawn (in this case $2000)