Category: Class 11

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 27 Facilitators of International Business Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 27 Facilitators of International Business

11th Commerce Guide Facilitators of International Business Text Book Back Questions and Answers

I. Choose the Correct Answer

Question 1.
General Agreement on Tariff and Trade was signed on …………………….
a. 30-October-1947
b.29-October-1947
c. 28-October-1947
d. 26-October-1947
Answer:
a. 30-October-1947

Question 2.
WTO was established on ……………………
a. 1-1-1996
b.1-1-1997
c. 1-1-1995
d.1-1-1994
Answer:
c. 1-1-1995

Question 3.
The headquarter of WTO is located at ………………..
a. New York
b.London
c. Geneva
d.Brazil
Answer:
c. Geneva

Question 4.
The day to day administration of WTO is entrusted with
a. Executive Council
b. General Council
c. Administrative Council
d. General Body
Answer:
b. General Council

Question 5.
World bank is located at …………………
a. Washington DC
b. New York
c. Tokyo
d. Hongkong
Answer:
a. Washington DC

II. Very Short Answer Questions

Question 1.
What is WTO?
Answer:
The World Trade Organisation (WTO) was established on 1st January 1995. The GATT was renamed as WTO with some changes.

Question 2.
What do you mean by World Bank?
Answer:
International Bank for Reconstruction and Development is commonly known as World Bank. It was set up in 1944 in order to reconstruct and rehabilitate the first world war-affected countries of Europe and assist in the development of developing countries. It is located in Washington DC. It has offices all over the world.

Question 3.
What are Special Drawing Rights?
Answer:
Special Drawing Rights (SDR) was created by the IMF in the year 1969 as a supplementary international reserve asset. It is described as paper gold.

Question 4.
What is SAARC?
Answer:
South Asian Association for Regional Cooperation is the regional inter-governmental organization and geopolitical union of nations in South Asia. The member countries include Afghanistan, Bangladesh, Bhutan, India, Nepal, Sri lanka, Pakistan and Maldives. It was established on 8th December 1985. It was founded at Dhaka in Bangladesh.

Question 5.
What is GATT?
Answer:
The General Agreement on Tariffs and Trade. (GATT) was signed at Geneva on 30th October 1947 by 23 countries. It came into effect on 1st January 1948.

III. Short Answer Questions

Question 1.
What is the primary motive for the establishment of WTO?
Answer:
The primary motive of WTO is to ensure global trade commences smoothly, freely and predictably. It concentrates on governing trade, settling trade disputes among countries, stimulating economic growth, and creating overall peace and stability in economic transactions.

Question 2.
Name the affiliate of World Bank:
Answer:

1. International Development Association (IDA)
2. International Financial Corporation (IFC)
3. Multinational Investment Guarantee Agency (MIGA)
4. International Centre for Settlement of Investment Disputes (ICSID)

Question 3.
What are the criticisms of the World Bank?
Answer:
The main critics of the world bank is the conditionality imposed in the borrower countries.

• It fails to resolve the economic problems of the countries
• The undemocratic governance structure, which is dominated by industrialized countries affects the working nature of the world bank.

Question 4.
How is the value of SDR determined currently?
Answer:
From 1st October 2016 SDR basket consists of the US dollar, Euro, the Chinese Renminbi, Japanese Yen, and British Pound sterling. The value of SDR is regularly posted daily in the IMF website. IMF members can exchange SDR for freely usable currencies by voluntary exchange or as per IMF instructions. Besides members can borrow from IMF at a favorable rate of interest to correct the imbalance in the balance of payments.

Question 5.
Mention the functions of SAARC.
Answer:
Functions of SAARC are highlighted

• Monitoring and coordinating the development programme
•  Determining inter-sectorial priorities
• Mobilizing cooperation within and outside the region.
• Dealing with modalities of financing

IV. Long Answer Questions.

Question 1.
Point out the objectives of WTO:
Answer:

1. Improving the standard of living of people in member countries
2. Making optimum utilization of the world’s resources for sustainable development of member countries.
3. Promoting an integrated more viable and durable trading system in the sphere of international business
4. Expansion of trade in goods and services.
5. Ensuring full employment and large steady growth volume of real income and effective demand.
6. Protecting the environment.

Question 2.
Write down the functions of WTO.
Answer:
Meaning:
The World Trade Organisation (WTO) was established on 1st January 1995. The GATT was renamed as WTO with some changes. WTO has 164 member countries as on 29th July 2016. The ministerial conference consisting of the representatives of all the member countries is the highest decision-making authority of WTO.
WTO performs the following functions

• It is a forum for negotiation and formalization of a trade agreement among the member countries.
• It settles disputes and grievances relating to trade among the member countries.
• It frames a commonly acceptable code of conduct in order to reduce trade barriers.
• It holds consultations with IMF and World Bank(IBRD) and its affiliates to bring about a greater understanding and co-operation in global economic policymaking.
• It supervises the operations of the agreement relating to the General Agreement on Tariffs and Trade (GATT) and Trade-Related Intellectual Properties Rights (TRIPS)
• It regulates trade between participating countries.

Question 3.
Describe the benefits of WTO:
Answer:

1. WTO is promoting international peace and creating a conducive environment for conducting international trade.
2. It settles the trade disputes amicably among the member countries.
3. It promotes the standard of living of people by increasing their income level from free trades.
4. WTO has removed quantitative restrictions and non – tariff barriers. It has facilitated free flow of foreign trade among the member countries. The countries can impose import restrictions only to correct balance of payments difficulties and not otherwise.
5. It stimulates economic growth of developing countries by providing them with much needed capital and giving them preferential treatment in trade-related matters.
6. WTO organizes periodical regional and international conference. Thus developing countries get opportunity to learn the technicalities, rules and regulations governing world, trade, technical assistance available globally, trade potentials in member countries and so on.
7. WTO gives people across the world a wider choice of goods and broader range of qualities of goods to choose from by promoting free trade among the member countries.
8. WTO has lowered trade barriers and thereby allowed trade to flourish across the world. The increase in trade contributes to increase in national income and personal income of people
9. WTO provides a platform for member countries to establish trade links with one another. In the absence of WTO member countries may have to enter many multilateral agreement with so many countries across the world. It provides a greater access to all nations under one roof.
10. WTO is committed to protecting free trade. It has framed rules on subsidies and dumping.

Question 4.
Highlights the functions of IBRD :
Answer:
Meaning:
International Bank for Reconstruction and Development is commonly known as World Bank. It was set up in 1944 in order to reconstruct and rehabilitate first world war-affected countries of Europe and assist in the development of developing countries. It is located at Washington DC. It has its offices all over the world.
Functions Of IBRD The main functions of the world bank are stated below

• Assisting reconstruction of war-affected countries
• Promoting economic growth and balanced growth of the international business
• Promoting infrastructural facilities like energy and transportation, road development, etc. in member countries.
• Encouraging  agricultural and industrial development in developing countries by providing adequate resources
• Providing resources for promoting sanitation, education, health care, and small scale enterprises in member countries
• Improving the standard of living of people of member countries by providing assistance by removing poverty, raising productivity, providing technical support, and conducting research and development

Question 5.
Write down the functions of IMF Meaning:
Answer:

1. It acts as short term credit institution at the international level.
2. It provides machinery for ordinary adjustments of exchange rates.
3. It has a reservoir of currencies of the member countries from which a borrower can borrow currencies of other nations.
4. It promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies.
5. It offers technical assistance and training to help member countries strengthen and implement effective policies. Technical assistance is offered in formulating banking, fiscal, monetary, and exchange policies.
6. It helps member countries correct their imbalance in the balance of payment.

Question 6.
Explain how far India has benefited from IMF
Answer:
Free Convertibility of Indian Rupee Indian rupee has become independent after the establishment of IMF. Earlier it was linked with the pound sterling. Its value is now determined in terms of Gold. Hence it is freely convertible.
Loan For Development Activities:
India got several loan facilities from IMF for its several development projects

Ability To Purchase Foreign Currency:
The government of India is able to purchase foreign currencies from time to time to meet the ever-growing requirement of development activities.

Expert Advice:
India used to get expert advice from IMF for solving the economic problems. It has given valuable advice to India with regard to financing -its 5-year plan.

Timely Help:
India has received timely help from IMF many a time to eliminate the deficit in its balance of payments. India got help from IMF during 1966 in the aftermath of the war with Pakistan. It received assistance from IMF for combating oil shock. Between 1980 and 1983 India got assistance from IMF to manage the global economic recession.

Financial Assistance during Natural Calamity:
India has got a lot of financial assistance from IMF to solve the economic crises arising from natural calamities like floods, famine, earthquakes, aggressions of Chinese and Pakistan, etc. It gets technical assistance fro/n IMF.

Membership in World Bank:
By virtue of its membership in IMF India could become a member of the World Bank.

Help during 1991 Economic Crisis:
During 1990, India faced a serious economic j crisis. Indian Government was almost nearing bankruptcy. It got assistance from IMF by pledging its gold reserve with it to solve its balance of payments crisis.

11th Commerce Guide Facilitators of International Business Additional Important Questions and Answers

I. Choose the Correct Answer

Question 1.
The main function of the World Trade Organisation (WTO) is ……………….
a. Enforcing of Uruguay Round agreements
b. Administering trade dispute settlement procedures
c. Facilitating multi-lateral trade relations of member countries and reviewing trade policies.
d. None of the above
Answer:
c. Facilitating multi-lateral trade relations of member countries and reviewing trade policies.

Question 2.
Which Indian City has been chosen by the World Bank for setting up its back-office operations?
a.Bangalore
b.Chennai
c.Kolkata
d. New Delhi
Answer:
b.Chennai

Question 3.
Regarding the International Monetary Fund, which one of the following statements is correct?
a. It can grant loans to any country
b. It can grant loans to only developed countries
c. It grants loans to only member countries
d. It can grant loans to the central bank of a country
Answer:
d. It can grant loans to the central bank of a country

Question 4.
The headquarters of IMF and World Bank are located at ………………
a. Geneva & Montreal
b. Geneva & Vienna
c.  New York & Geneva
d.  Washington
Answer:
d.  Washington

Question 5.
Special Drawing Rights (SDR) facility is available at …………….
a. World Bank (IBRD)
b. International Monetary Fund (IMF)
c. International Development Association (IDA)
d. Organisation of Economic Cooperation and Development
Answer:
b. International Monetary Fund (IMF)

Question 6.
SAARC was established on ………………
a.1985
b. 1895
c. 1858
d. 1958
Answer:
a.1985

Question 7.
International Centre for Settlement of Investment Disputes was set up in the year ………..
a. 1956
b. 1986
c. 1966
d. 1933
Answer:
c. 1966

Question 8.
The headquarters of International Finance Corporation was situated in ……………..
a. Europe
b.Washington
c.Chennai
d.Florida
Answer:
b.Washington

Question 9.
The number of countries as members in IFC are ……………
a. 164
b.148
c.185
d. 184
Answer:
d. 184

Question 10.
SAARC has been established for promoting the welfare of people of …………………
a. America
b. Africa
c. Asia
d. Europe
Answer:
c. Asia

II. Very Short Answer Questions:

Question 1.
Write the meaning Agreement of Agriculture: (AOA)
Answer:
This agreement was made to ensure free and fair trade in agriculture. This agreement made the developed countries reduce customs duties on their imports and subsidies on the export of agricultural products. But developing countries were exempted from making reciprocal offers keeping in view of the high dependence of these countries on agriculture.

Question 2.
What is IFC?
Answer:
International Financial Corporation (IFC) is an international financial institution that offers advisory services to build up the private sector in developing countries. It is headquartered at Washington DC. It was established in the year 1956. There are 184 countries on the membership list.

It aims at lifting the standard of people of developing and least developed countries by removing poverty, improving education and healthcare, investing in infrastructure development and sustainable agricultural opportunities therein.

III. Short Answer Questions:

Question 1.
Explain TRIPS.
Answer:
This agreement sets out seven minimum standards of protection to be accepted by parties in respect of seven intellectual properties namely, copyright, trademark, geographical indication, industrial design, patent, layout design of integrated circuits, and undisclosed information.

Question 2.
Write a short note on MIGA:
Answer:
This is one of the International Financial Institutions offering political risk insurance and credit enhancement guarantees. The guarantee provided by this institution protects foreign direct investments against the political and non-commercial risks in developing countries. It is headquartered in Washington. It promotes the flow of foreign direct investment (FDI) into developing countries.

Question 3.
What are the objectives of IMF?
Answer:

• Promoting international monetary cooperation
• Ensuring balanced international trade
• Ensuring exchange rate stability

IV. Long Answer Questions:

Question 1.
Write any five criticisms on WTO:
Answer:
The following are the criticisms on World Trade Organisation:
Free Trade Benefits:
Developed Countries more than Developing Countries need some sort of trade protection to develop their new industries. Many developed countries had once used this protection to nurture their infant industries in their development stage. In this context prevention of developing countries from defending their infant industries altogether through restriction is unfair. It is suspected to be a conspiracy to indirectly favor MNC’s.

Most Favoured Nation Principles:
This is the core of WTO rules. Under this rule member countries are advised not to discriminate among the home enterprises, multi-nationals and foreign enterprises. In other words WTO prevents developing countries from favouring their emerging companies. This move is supposed to give unfair advantage to multinational companies.

Failure to Reduce Tariffs on Agriculture:
WTO failed to convince the USA and European Unions to eliminate the high tariffs on agriculture. In other words, it defends high tariff on agriculture in USA and EU. This would undoubtedly hurt the farmers in developing countries.

Neglect of Farmers Interest in Developing Countries:
Developing Countries specialize in producing primary products, i.e. agricultural products. They need some sort of protection to diversify into other sectors of the economy at least in the short term. Many developed nations used this tariff protection in the process of their development. In this context, WTO is criticized for being unfair and neglecting the interest of farmers in developing countries.

Neglect Environmental Considerations:
WTO encourages imports from certain countries that produce the product on a larger scale at the cost of the environment. WTO pushes for achieving an increase in GDP without any regard for the environment. In the current environment of global warming and ever-increasing environmental disaster, utmost priority given by WTO on maximizing GDP at the cost of the environment is misplaced.

Question 2.
Explain the objectives of SAARC:
Answer:
The following are the main objectives of SAARC:

• Promoting the welfare of the people of Asia
• Achieving economic growth, social programme, and cultural development in member countries.
• Strengthening self-reliance among the members
• Strengthening co-operation among the members as well as with other developing countries and international and regional organizations.
• Maintaining peace among the member nations in the region.

Question 3.
Explain LERMS:
Answer:
Liberalized Exchange Rate Management System (LERMS) was introduced in the budget 1992-93. Under the LERMS, Exporters of goods and services and those who are recipients of remittances from abroad could sell the bulk of their foreign exchange receipts at market-determined rates.

Similarly, those who need to import goods and services or undertake travel abroad could buy foreign exchange to meet such needs, at market-determined rates from the authorized dealers, subject to their transactions being eligible under the liberalized exchange control system. However, in respect of certain specified priority imports and transactions, provisions were made in the scheme for making an available foreign exchange at the official rate by the Reserve Bank of India.

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 26 Export and Import Procedures Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 26 Export and Import Procedures

11th Commerce Guide Export and Import Procedures Text Book Back Questions and Answers

I. Choose the Correct Answer

Question 1.
EPC stands for ……………….
a) Export processing commission
b) Export Promotion Council
c) Export Carriage council
d) Export Promotion Congress
Answer:
b) Export Promotion Council

Question 2.
STC is expansion for ……..
a) State Training Centre
b) State Training Council
c) State Trading Centre
d) State Trading Corporation
Answer:
d) State Trading Corporation

Question 3.
An ……………. is document prepared by importer an sent to the exporter to buy the goods
a) Invoice
b) Indent
c) Enquiry
d) Charter Party
Answer:
b) Indent

Question 4.
The ………………… receipt is an acknowledgement of receipt of goods on the ship issued by the Captain
a) Shipping Bill
b) Bill of Lading
c) Mate’s Receipt
d) Consular Invoice
Answer:
b) Bill of Lading

Question 5.
The Exporters appoint the …………… agent to fulfil the customs formalities
a) Clearing Agent
b) Forwarding Agent
c) Commission Agent
d) Factor
Answer:
b) Forwarding Agent

II. Very Short Answer Questions:

Question 1.
What is meant by Indent?
Answer:
An indent actually points to an order received from abroad for export of goods, i.e. sale of goods. The indent contains the details in the box.

Question 2.
Write any two export promotion institutions.
Answer:

1. Export Promotion Council (EPC)
2. Export and Credit Guarantee Corporation (ECGC).

Question 3.
What is meant Charter Party?
Answer:

1. Open Indent
2. Closed Indent
3. Confirmatory Indent

Question 4.
Write a short note on Mate’s receipt?
Answer:
Letter of Credit (LC) is an undertaking by its issuer (importer’s bank) that bills of exchange drawn by the foreign dealer on the importer will be honoured upon its presentation by the exporter’s bank up to a specified amount.

Question 5.
What is Bill of Lading?
Answer:
Bill of Lading, refers to a document signed by the shipowner or to his agent mentioning that goods specified have been received and it would be delivered to the importer or his agent at the port of destination if good condition subject to terms and conditions mentioned therein.

IV. Long Answer Questions

Question 1.
What are the procedures relating to Export trade?
Answer:

1. Receiving Trade Enquiry : Exporter receives trade enquiry (written request) from the importer / his agent who intends fir buy the product.

2. Receiving Indent and Sending Confirmation : After the scrutiny of quotation / proforma invoice, the buyer who intends to buy the goods sends an indent to exporter. The latter may either receive the order directly from the importer or through an agent who acts as an intermediary between the exporter and the importer.

3. Arranging Letter of Credit : Under this stage exporter intends to satisfy himself/herself about the trust worthiness of the importer. In this case the exporter is requested to arrange a letter of credit in his favour.

4. Obtaining Importer Exporter Code (IEC) and RBI Code Number : Exporter has to apply in Ayaat Niryatt Form 2 A (ANF2A) to the Regional Authority of the Director General of Foreign Trade (DGFT) in the region where the registered office of the company is located. Exporter has to mention the number in all the shipping documents.

5. Obtaining Registration cum Membership Certificate (RCMC) from Export Promotion Council/Commodity Board : An Exporter is required to obtain RCMC from Export Promotion Councils/Commodity Board/Development Authority in order to avail himself/herself of export incentives, concessions, and other facilities offered by Government.

6. Manufacturing/Procuring Goods and Packing items : Exporters steps into manufacturing and procuring of goods required by the importer.

7. Export Inspection Certificate : After the goods have been packed as per the specifications of importer, the exporter has to apply to the Export Inspection Agency (EIA).

8. Insurance of Goods : Exporter has to arrange for getting the goods insured to protect them against the various risks like deterioration.

9. Certificate of Origin : Import regulation of foreign countries may require that all this import consignments must accompany a certificate of origin.

10. Consular Invoice : Where the customs duties are charged on the basis of value of goods at import’s port (ad – valorem basis), the customs officers are empowered to open the consignment to calculate duties.

Question 2.
Distinguish between Bill of Lading and Charter Party:
Answer:

Question 3.
What are the documents used in Export Trade?
Answer:
1. Documents Related to Goods

• Indent
• Certificate of Origin
• Certificate of Inspection

2. Documents Related to Shipment

• Mate’s receipt
• Shipping Bill
• Shipping Order
• Bill of Lading
• Marine Insurance Policy
• Consular Invoice
• Railway receipt/Lorry receipt

3. Documents Related to Payment

• Letter of Credit
• Commercial Invoice
• Bills of Exchange
• Bank Certificate Payment

Question 4.
Explain the various functions of Export Trading Houses.
Answer:
The functions of the export house are mentioned below

• Identifying a potential market for a product
• Finding buyers and their agents and eliciting then the response for export proposal.
• Establish product specifications in the light of market’-heeds, standards, and regulations in accordance with supplier’s capabilities.
• Determining appropriate mode of transportation and routing keeping in mind the cost, quality of service and security.
• Preparing the goods for delivery at destination
• Determining buyer’s creditworthiness
• Negotiating the transactions
• Arranging proper insurance coverage against maritime risks and currency fluctuations
•  Financing the transactions and paying for goods and services received.
• Preparing document for international trade
• Settling claim.

11th Commerce Guide Export and Import Procedures Additional Important Questions and Answers

I. Choose the Correct Answer:

Question 1.
The EXIM Bank was set up in the year ………………..
a. 1981
b.1982
c.1886
d.1892
Answer:
b.1982

Question 2.
The Indent which gives complete freedom to the exporter is known as …………………
a. Open Indent
b.Closed Indent
c.Confirmatory Indent
d. None
Answer:
a. Open Indent

Question 3.
Expand RCMC …………………
a. Registration cum Membership Council
b.Registration cum Manufacturing council
c. Registration cum Membership Certificate
d. Registration commodity manufacturing council
Answer:
c. Registration cum Membership Certificate

Question 4.
The hiring of the entire ship for a specific time period is called ……………..
a.Shipping order
b.Voyage Charter
c.Charter Party
d.Time Charter
Answer:
d.Time Charter

Question 5.
Dock Receipt is also called as ……………..
a. Port Trust Receipt
b. Shipping Bill Receipt
c. Bill of Lading
d. None of the above
Answer:
a. Port Trust Receipt

II. Very Short Answer Questions:

Question 1.
What.do you mean by EXIM bank?
Answer:
Export and Import Bank is one the specialized financial institutions wholly owned by the Government of India was set up in the year 1982 for financing, facilitating, and promoting foreign trade of India.

Question 2.
What is the main objective of EXIM Bank?
Answer:
The main objective of EXIM Bank is to co-ordinate the various activities of institutions and banks engaged in financing foreign trade.

Question 3.
Who is a forwarding agent?
Answer:
A forwarding agent is appointed by the exporter to fulfill the customs and shipping related formalities and certain logistic functions.

III. Short Answer Questions:

Question 1.
Write a short note on Consular Invoice:
Answer:
It is a document certifying a shipment of goods and shows information such as the consignor, consignee, and the value of the shipment. A consular invoice can be obtained through a consular representative of the country in which the shipping is done.

Question 2.
Who is a Commission Agent?
Answer:
Commission Agent is an international agent who is paid a certain percentage of commission for the order booked by him abroad. He offers products to potential customers in the territory allotted to him in accordance with the terms and conditions specified by the principal. However, there is no employment relationship between the agent and the principal and the relationship is purely temporary. The agents get commission only at the end of the deal.

Question 3.
What is the purpose of the establishment of the export trading house?
Answer:
Export Trading House has been established to increase the export, strengthen the global market, capacity and get necessary facilities for increasing the export performance of our country.

Question 4.
Who are all the parties involved in Export Trading House?
Answer:
It consists of merchants, exporters, trading companies, export-oriented units, units located in export processing zones, electronic hardware technology park, etc.

Question 5.
What are all the documents used in import trade?
Answer:

• Import License
• Indent
• Letter of Credit
• Bill of Entry
• Bill of sight
• Port Trust Dues Receipt
• Bill of Lading
• Bill of Exchange
• Advice Note

IV. Long Answer Questions

Question 1.
What are all the main functions of EXIM bank?
Answer:
The main Functions of EXIM Bank are listed below:

• It provides direct financial assistance to exporters of plant, machinery, and related services.
• It underwrites the shares, debentures, and bonds of the companies engaged in exports
• It provides a re-discount facility in respect of export bills for a period not exceeding 90 days against short-term export bills discounted by a commercial bank.
• It gives overseas buyer credit to foreign exporters for the import of Indian capital goods which are used for manufacturing export products.
• It finances export-oriented industries.
• It collects and provides market and credit information about foreign trade to those engaged in international business.

Question 2.
Briefly explain the financial assistance provided by commercial banks:
Answer:
Commercial Banks provide financial assistance in the following two ways:

1. Pre-Shipment Financial Assistance: This is the type of assistance given to enable exporters to purchase raw materials process them and create finished goods for the purpose of export. This credit is given on the basis of export orders and letters of credit opened in favour of the overseas buyers.

2. Post-Shipment Financial Assistance: Post-shipment financial assistance is assistance granted in the form of advances on the basis of bills of exchange and shipping documents drawn under letters of credit. This type of export finance is granted right from the date of shipment of the goods to the date of realization collection of export proceeds for the purpose of meeting a capital need, paying insurance charges. ECGC premium commission and brokerage to agent export promotion expenses and so on and so forth.

Question 3.
Briefly explain the objectives of Export Trade: (Any five):
Answer:
The important objectives of the export include the following:

1. Facilitating selling of goods to countries which desperately need such goods
2. Expanding the market for goods by producing them on a large scale.
3. Earning foreign exchange through exports
4. Helping a country increase the national income
5. Creating employment opportunities in a country by promoting export-oriented and export-related enterprises.

Question 4.
Briefly explain the objectives of Import Trade:
Answer:
Achieving Rapid:
Industrialization Developing countries can achieve rapid industrialisation by importing advanced technology scarce raw materials, capital goods like machinery equipment, etc., and talents from other countries.

Meeting Consumer Demand:
Certain goods are either not available or cannot be manufactured/produced adequately to meet the growing demand in the home country. Hence import is necessary to meet the short supply of those goods.

Upgrading Standard of Living of the People:
Consumers are able to use a wide variety of goods like cell phones, car laptops, television audio systems, washing machines, perfume, soaps, etc., manufactured in foreign countries and enhance their standard of living through import trade.

Meeting Shortage Situation:
During famine, earthquake, flood drought, tsunami, and abnormal price-increase situations, and so on food grains, vegetables, and other essential commodities are imported from foreign countries and the bad situation arising from the above situations are thus overcome.

Strengthening Defence:
Many countries around the world import defense equipment for their armed force. Such imports enable the country to ensure its sovereignty and territorial integrity.

Question 5.
Explain the intermediaries in Import Trade:
Answer:
Indent Houses/ Import Agent: This intermediary is specialized in a particular trade. He charges fees for his service. The importer has to enter into a contract with the indent house to avail himself of his service.

Clearing Agent: Clearing Agent is specialised in clearing the goods from the port of discharge destination and transport them over to the importer. They fulfill the various custom formalities on behalf of the importer and get the goods cleared from the port. They charge a commission for their service.

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 25 International Business Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 25 International Business

11th Commerce Guide International Business Text Book Back Questions and Answers

I. Choose the Correct Answer

Question 1.
Movement of goods, services, intellectual property, human assets, technology and so on among the countries.
(a) International Trade
(b) International business
(c) Entrepot Trade
(d) Internal trade
Answer:
(a) International Trade

Question 2.
Goods are imported for purpose of re-export to another country is termed as ………………………
(a) Import Trade
(b) Export Trade
(c) Entrepot Trade
(d) International trade
Answer:
(c) Entrepot Trade

Question 3.
Movement of goods, services among the countries.
(a) International Trade
(b) International business
(c) Entrepot Trade
(d) Internal trade
Answer:
(b) International business

Question 4.
Selling of goods from home country to a foreign country is called
(a) Home Trade
(b) Entrepot Trade
(c) Foreign Trade
(d) Joint Venture
Answer:
(c) Foreign Trade

II. Very Short Answer Questions

Question 1.
What do you mean by international business?
Answer:
International business denotes all those business activities which take place beyond the geographical limits of the country.

Question 2.
What is meant by Export Trade?
Answer:
When the firm of a country sells goods and services to a firm of another country it is called export trade. Export trade indicates the selling of goods and services from the home country to a foreign country. Example: the sale of handicrafts, leather products, etc.

Question 3.
What is meant by Import Trade?
Answer:
When the business firm of a country purchases goods from the firm of another country it is called import trade. Importing means the purchase of foreign products and bringing them into one’s home country.

Question 4.
What is meant by Entrepot Trade?
Answer:
When the firm of country imports goods for the purpose of exporting the same goods to the firms of some other country with or without making any change in the goods meant for export it is known as entrepot trade. For example. If an Indian company imports crude oil from Iran and exports it as petroleum after refining it in India; Nepal, it is called Entrepot trade.

Question 5.
Give any two reasons for International Business.
Answer:

1. Unequal Distribution of Natural Resources.
2. Uneven Availability of Factors of Production.

III. Short Answer Questions

Question 1.
Describe the importance of external trade to an economy;
Answer:
The economic environment of countries involved in international business differs significantly in terms of legal framework, institutional set – up, monetary fiscal and commercial policy, resources availability, production techniques, etc.

Question 2.
What is the necessity for entrepot trade?
Answer:
A country cannot import goods directly from others because of the following reasons:

• The country may not have any accessible trade routes connecting the importing country, The good imported may require further processing or finishing before exporting, and these facilities may be lacking in the exporting or importing country.
• There may not have any bilateral trade agreement between both the country.
• Importer and exporter may not share good economic relations with each other. So it is necessary for the nation to enter into entrepot trade.

Question 3.
What are the limitations of international business?
Answer:

1. Economic Dependence: International trade is more likely to make the country too much dependent on imports from foreign countries.
2. Inhibition of Growth of Home Industries: International business may discourage the growth of the indigenous industry.
3. Import of Harmful Goods: International business may lead to the import of luxurious goods, spurious goods, dangerous goods, etc. It may harm the well-being of people.

IV. Long Answer Questions

Question 1.
List out the advantages of international trade.
Answer:

1. Geographical Specialization: Countries across the world differ significantly in terms of natural resources, capital equipment, manpower, technology and land, and so on.
2. Optimum use of Natural Resources: International business operates on a simple principle that a country which can produce more efficiently and trade the surplus production with other countries has to procure what it cannot produce more efficiently.
3. Economic Development: International business helps the developing countries greatly in achieving rapid economic development by importing machinery, equipment, technology, talent, and so on.
4. Generation of Employment: International business generates employment opportunities by assisting the expansion and growth of agricultural and industrial activities.
5. Higher Standard of Living: On account of international business, the citizens of the country can buy more varieties of goods and services which cannot be produced cost-effectively within the home country.
6. Price Equalisation: International business helps to stabilize the prices of various commodities which are fluctuating on a daily basis in the world market.
7. Prospects for Higher Profit: International business helps the firms which produce goods in excess to sell them at a relatively higher price to various countries in the international market.
8. Capacity Utilisation: International business enables firms across the country to sell their goods and services on a large scale in the international market.
9. International Peace: International business makes countries across the world become inter-dependent while these countries are independent in their functioning.

Question 2.
Enumerate the disadvantages of international trade:
Answer:
Economic Dependence:
International trade is more likely to make the country too much dependent on imports from foreign countries. The former may not take any efforts to produce goods and services indigenously to substitute imported goods and thus becoming self-sufficient. As a result, the importing country may become economically slave to exporting country and end up becoming a colony of the exporting country.

Inhibition of Growth of Home Industries:
International business may discourage the growth of the indigenous industry. Unrestricted imports and severe competition from foreign companies may ruin the home industries altogether.

Import of Harmful Goods:
International business may lead to the import of luxurious goods, spurious goods, dangerous goods, etc. It may harm the well-being of people.

Shortage of Essential Goods in Home Country:
Moreover, the export of essential commodities out of the greed of earning more foreign exchange may result in an absolute shortage of these goods at the home country and people may have to buy these commodities at an exorbitant prices in the local market.

Misuse of Natural Resources:
Excessive export of scarce natural resources to various countries across the world may lead to faster depletion of the resources in the exporting countries. This in turn may bring about ecological disaster in the country from which it is exported.

Political Exploitation:
International business may create economic dependence among the countries which may threaten their political independence. The MNCs may influence the policy decision of the government to their favour. In due course of time, they may dictate terms to administrators of the nation by the sheer strength of their money power. For example, Britishers came to many countries as mere traders and ultimately colonized those countries and ruled them for centuries.

Rivalry among the Nations:
Acute competition for exports may lead to rivalry among the nations. This may lead to a conflict of interest among the countries and end up in wars among them.

Invasion of Culture:
International business may result in an invasion of a country’s culture. The younger generation is more likely to imitate foreign culture and buy goods and services beyond their means to gain acceptance in the affluent section of society. This will ruin the conventional lifestyle of the society.

Question 3.
Distinguish between internal and international trade:
Answer:

11th Commerce Guide International Business Additional Important Questions and Answers

I. Choose the Correct Answer

Question 1.
IBRD is also known as ……………….
a. EXIM Bank
b.World Bank
c. International Monetary Fund
d. International Bank
Answer:
b.World Bank

Question 2.
In due course ………………. was replaced by on 1st January 1995.
a. GATO, WTO
b. WTO, GATT
c. GATT, WTO
d. IMF, GATT
Answer:
c. GATT, WTO

Question 3.
Which of the following is not an Indian Multinational Company?
a.Unilever
b.Asian Paints
c. Wipro
d. Piramal
Answer:
a.Unilever

Question 4.
The first step in the internationalization process is …………….
a. License
b. Foreign Investment
c. Sales
d.Export
Answer:
a. License

Question 5.
WTO stands for ……………..
a. World Technology Association
b.World Time Organisation
c. World Trade Organisation
d. World Tourism organization
Answer:
c. World Trade Organisation

II. Very Short Answer Questions

Question 1.
What do you mean by Contract Manufacturing (or) Outsourcing?
Answer:
It connotes a type of international business where a firm enters into a contract with one or a few local manufacturers in foreign countries in order to get certain components of goods produced according to its specifications. It is also called as outsourcing or contract manufacturing.

Question 2.
What is a Joint Venture?
Answer:
A Joint venture is a business agreement wherein parties agree to develop a new entity and assets subscribing to equity shares and thereby exercising control over the enterprise and consequently sharing revenues, expenses, and assets.

Question 3.
What is FDI?
Answer:
FDI means investment made by a company or individual in one country’ in the business interest in another country m the form of either establishing new business operations or acquiring business assets in the other country.

Question 4.
What do you mean by Licensing?
Answer:
Licensing is a contractual agreement wherein one firm grants access to its plants, trade secrets or technology to another firm in a foreign country, for a fee called royalty, e.g. McDonald. Pisa Hut, etc.. The firm which grants such permission is called Licensor or Franchisor and another firm to whom the license is granted is called Licensee or Franchisee.

III. Short Answer Questions:

Question 1.
What are all the routes of International Business before the 18th century?
Answer:
1. Salt Route – India to Egypt
2. Silk Route – China so India
3. Spice Route India to Europe

Question 2.
Define International Business:
Answer:
According to John D. Daniels and Fee IF Rade Baugh, “International business is all business transactions-private and. governmental- that involve two or more countries’’

Question 3.
What are all the three ways under which a joint venture can take place?
Answer:
It can be established in three different ways namely,

1. Foreign Investors buying an interest in a local company
2. Local firm acquiring an interest in the existing foreign firm
3. Both the foreign and local firms jointly forming a new enterprise

Question 4.
What are all the features of Entrepot Trade?
Answer:
The following are the special features of Entrepot trade

• Import duty is not levied on such goods
• These goods are reprocessed and repacked for re-export
• Such goods are kept in the Bonded warehouse till they are re-exported.

IV. Long Answer Questions:

Question 1.
What are all the features of International Business?
Answer:
The following are the features of international business
Involvement of Countries:
International business can take place only when transactions occur across different countries.

Use of Foreign Exchange:
Where countries trade with one another, it has to exchange the goods and services on the basis of foreign currency.

Legal Obligations:
Foreign trade is to be conducted strictly in accordance with the export and import policy of the country concerned. The consent of the government is to be mandatorily obtained with reference to export and import of certain goods and services.

Exposure to Risk:
International business imposes huge risks on the parties thereto due to long distances, fluctuation of the value of currency, obsolescence, sanctioned, war, etc.,

Heavy Documentation Work
International business necessitates the fulfillment of a lot of formalities. Parties to international business have to execute a number of documents in the matters of conducting International business.

The difference in Economic Environment:
The economic environment of countries involved in international business differs significantly in terms of legal framework, institutional setup, monetary fiscal and commercial policy, resources availability, production techniques, etc.,

Question 2.
Explain the Types of International Business?
Answer:
On the basis of sale and purchase of goods and services, international trade can be divided into three kinds. They are export trade, import trade and entrepot trade.

Export Trade:
When the firm of country sells goods and services to a firm of another country it is called export trade. Export trade indicates selling of goods and services from the home country to a foreign country. For Example; the sale of handicraft, leather products, electronic goods, herbal products, etc., by Indian companies to other countries is known as export trade.

Import Trade:
When the business firm of a country purchases goods from the firm of another country it is called import trade. Importing means the purchase of foreign products and bringing them into one’s home country. For example when Indian enterprise purchases petroleum products, electrical goods, machinery, and medical equipment’s etc., from other countries, it is termed as Import Trade

Entrepot Trade:
When the firm of country imports goods for the purpose of exporting the same goods to the firms of some other country with or without making any change in the goods meant for export it is known as entrepot trade For example, If an Indian company imports crude oil from Iran and exports it as petroleum after refining it in India, to Nepal it is called Entrepot trade. In this context crude is converted into petrol and exporter as petrol to Nepal.

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 24 Retailing Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 24 Retailing

11th Commerce Guide Retailing Text Book Back Questions and Answers

I. Choose the Correct Answer

Question 1.
Retailers deal in ……………. quantity of goods
a) Small
b) Large
c) Medium
d) Limited
Answer:
a) Small

Question 2.
Small scale Fixed retailers include …………….
a) General stores
b) Pedlars
c) Cheap Jacks
d) Hãwkers
Answer:
a) General stores

Question 3.
Small shops which deal in a particular line of products are called as ……………
a) Market traders
b) Single line stores
c) Sugar market
d) Street stalls
Answer:
b) Single line stores

Question 4.
………………. are mobile traders who deal in low priced articles with no fixed place of business.
a) Shopping malls
b) Super markets
c) Street stalls
d) Itinerant traders
Answer:
d) Itinerant traders

II. Very Short Answer Questions

Question 1.
What is retailing?
Answer:
Retailing is the process of selling goods and services directly to the ultimate consumers in small quantities.

Question 2.
State the meaning of multiple shops.
Answer:
A number of identical retail shops with similar appearance normally deal in standardized and branded consumer products established in different localities owned and operated by manufacturers or intermediaries are called as Chain stores or Multiple shops.

Question 3.
Mention any two benefits of Vending machines.
Answer:
An automatic vending machine is a new form of direct selling. It is a machine operated by coins or tokens.

Question 4.
What are specialty stores?
Answer:
Speciality Stores deal in a particular type of product under one product line only. For example, Sweets shop specialized in Tirunelveli Halwa, Bengali Sweets, etc.

III. Short Answer Questions

Question 1.
Explain the features of general stores.
Answer:
General Stores sell a wide variety of products under one roof, most commonly found in a local market and residential areas to satisfy the day – to – day needs of the customers residing in nearby localities. They remain open for long hours at convenient timings and often provide credit facilities to their regular customers.

Question 2.
Give any four points of distinction between hire purchase system and instalment system of selling.
Answer:

Question 3.
Explain the characteristics of super markets.
Answer:

1. Supermarkets are generally situated at the main shopping centres.
2. The goods kept on racks with the clearly labeled price and quality tags in such stores.
3. The customers move into the store to pickup goods of their requirements, bring them to the cash counter, make payments and take home delivery.

Question 4.
What is meant by email order retailing’?
Answer:
Mail order houses are the retail outlets that sell their merchandise through mail. There is generally no direct personal contact between the buyers and the sellers in this type of trading.

IV. Long Answer Questions

Question 1.
State the features of Departmental stores.
Answer:

1. Large Size: A department is a large scale retail showroom requiring a large capital investment by forming a joint-stock company managed by a board of directors.
2. Wide Choice: It acts as a universal provider of a wide range of products from low priced to very expensive goods (Pinto Car) to satisfy all the expected human needs under one roof.
3. Departmentajly organised: Goods offered for sale are classified into various departments.
4. Facilities provided: It provides a number of facilities and services to the customers such as restaurants, restrooms, recreation, packing, free home delivery, parking, etc.
5. Centralised purchasing: All the purchases are made centrally and directly from the manufacturers and operate separate warehouses whereas sales are decentralised in different departments.

Question 2.
What is meant by Consumer Cooperative Store? Explain its merits in brief.
Answer:
A consumers cooperative store is a retail organisation owned, managed and controlled by the consumers themselves to obtain products of daily use at reasonable low prices. Its objective is to eliminate profits to middlemen by establishing a direct contact with the manufacturers. People belonging to middle and low income groups , at least 25 persons have to come together to form a voluntary association and get it registered under the Cooperative Societies Act.

The capital of a cooperative store is raised by issuing shares to members. The management of the store is democratic and entrusted to an elected managing committee, where one man ‘ one vote is the rule. The cooperative stores are very famous in Tamilnadu. For example, Kamadhenu and Chinthamani cooperative supermarkets in Chennai, Karpagam in Vellore, etc.

Question 3.
Describe the ‘role of chambers of commerce in promotion of internal trade.
Answer:

1. Transportation or interstate movement of goods: The Chambers facilitate registration of vehicles, surface transport policies, construction of highways and roads in promoting the interstate movement of goods.
2. Harmonisation of CGST and SGST structure.
3. Marketing of agro products and related issues: The associations of agriculturists and other federations interact with farming cooperatives to streamline local subsidies and formulate marketing policies for selling agro products.
4. Weights and measures and prevention of duplication of brands: They help the Government in the formulation and implementation of uniform policies in weights and measures and prevention of duplication of brands.
5. Promoting sound infrastructure: They interact with Government to construct roads, ports, electricity, railways, etc.
6. Labour legislation: They interact with the Government on regular basis and the issues related to labour laws, retrenchments, compensation, etc., so that the industry can run efficiently, generate employment, and achieve maximum productivity.

11th Commerce Guide Retailing Additional Important Questions and Answers

I. Choose the Correct Answer

Question 1.
The other name for Itinerant trader Is ………………
a. Mobile Trader
c. Hawkers
b.Peddlers
d.Market Traders
Answer:
a. Mobile Trader

Question 2.
The retailers who have indèpendent shops 0f temporary nature is known as ……………….
a. Mobile Trader
b.Peddlers
c. Cheap Jacks
d.Market Traders
Answer:
c. Cheap Jacks

Question 3.
The process of paying the price amount of product not on initially but in installments is known as …………..
a. Loan
b. Hire Purchase
c. deferred payment system
d. Credit system
Answer:
c. deferred payment system

Question 4.
In retailing there is a direct interaction with ………………….
a. Producer
b. Wholesaler
c. Consumer
d. All of these
Answer:
d. All of these

Question 5.
Retailing creates ………………..
a. Ownership Utility
b. Place Utility
c. Time Utility
d. All the above
Answer:
d. All the above

Question 6.
…………………. is a key task of large and small retailers.
a. Risk management
b. Stock management
c. Crisis management
d. All the above
Answer:
d. All the above

Question 7.
Retailing is a marketing function which ……………….
a. sells products to other sellers
b. sells products to a company that resells them
c. sells products to final consumers
d. sells products for one’s own use.
Answer:
c. sells products to final consumers

Question 8.
Retailer is a person who sells the goods in a …………………..
a. Large quantities
b.Small quantities
c. both (a) & (b)
d. None of the above
Answer:
c. both (a) & (b)

II. Very Short Answer Questions:

Question 1.
Who are called as Itinerant traders?
Answer:
The traders who have no fixed place of sale are called Itinerants.

Question 2.
Write any two Associations or Chambers in Tamil Nadu.
Answer:
Madras Chamber of Commerce, Chennai. Tamil Nadu Traders Associations.

Question 3.
What do you mean by super market?
Answer:
A Super market is a large retail store selling a wide variety of consumer goods on the basis of low price appeal, wide variety and assortment, self-service and heavy emphasis on merchandising appeal.

Question 4.
Who are Fixed shop Retailers?
Answer:
The retailers who maintain permanent establishment to sell their goods are called Fixed Shop Retailers. They do not move from place to place to serve their customers.

III. Short Answer Questions :

Question 1.
Discuss any three limitation of Multiple shops:
Answer:

1. Limited variety: Multiple shops deal only in limited range of products.
2. Absence of services: Customers do not get credit, home delivery and other facilities.
3. Lack of personal touch: The owner loses direct personal contact with the customers. The paid staff do not take a personal interest in each and every customer.

Question 2.
Write a short note on Mail-order Houses.
Answer:
Mail order houses are the retail outlets that sell their merchandise through the mail. There is generally no direct personal contact between the buyers and the sellers in this type of trading. The customers may be asked to make full payment in advance or at the time of receiving the goods In this arrangement, there is no risk of bad debt. Perishable goods like milk are not suitable for sale by mail order. Suitable goods are books, watches, etc.
Procedure for Mail order houses:

• Advertisements provide information about the products to consumers.
• Order receiving and processing On receiving the orders, the goods are sent to the customers through the post office, by Value Payable Post (VPP).
• Receiving Payments

Question 3.
What do you mean by telephonic marketing?
Answer:
Potential Customers are contacted through telephone or mobile to provide information about the products. Willing customers visit the office and place the orders. This method is useful for loan, financing, insurance services, credit card, etc. No middlemen in this marketing and cost reduced accordingly.

Question 4.
How do business done through Internet Marketing?
Answer:
The manufacturers or the intermediaries place the advertisement of their products on different media of internet like e-mail, portal and browser. Sometimes, they have their own website like Flipkart, Amazon, Snapdeal. etc. The customers compare the products competitors by observing such advertisements and select the product through internet and make the payment through online or cash on delivery. Because of the absence of middlemen, showroom expenses, etc. products are available at cheaper price in comparison to local market. Customers also get after-sales services.

Question 5.
What are all the functions of Chamber of Commerce?
Answer:

• hey act as national guardians of trade, commerce and industry.
• They act as a catalyst in strengthening the internal trade of the country.
• Interact with Government with regard to formulation and implementation of related policies.

IV. Long Answer Questions:

Question 1.
Explain the -types of Mobil traders:
Answer:
The types of Itinerants are as follows:
a. Peddlers and Hawkers:
Peddlers are individuals who sell their goods by carrying on their head or shoulders moving from place to place on foot. Hawkers are petty retailers who sell their goods at various places such as bus stop, railway station, Public Park and gardens, residential areas and other public places using a convenient vehicle to carry goods from place to place.

b. Street Vendors:
The traders sit on the footpath of the road or at the end of the road (pavement) and sell their goods such as fruits, vegetables, books, etc. are called Street vendors.

c. Market Traders:
Small traders open their shops at different places on fixed days or dates such as every Sunday or alternative Wednesdays and so on ( Varasandhai – weekly market). They deal in one particular line of merchandise and in low priced consumer items of daily use. Examples Pollachi, Manapparai, Ranipet, etc.

d. Cheap Jacks:
Those retailers who have independent shops of temporary nature in a business locality are depending upon the potentiality of the area. They deal in consumer goods and services such as shoes and chappals, plastic items, repair of watches, etc.

Question 2.
Explain the types of Fixed Shop small retailers:
Answer:
Street Stalls:
These small shop-keepers are commonly found at street crossings or other busy street comers attract floating customers and deal in cheap variety of goods like hosiery products, toys, soft drinks, etc. They get their supplies from local suppliers and wholesalers.

General Stores:
General Stores sell a wide variety of products under one roof, most commonly found in a local market and residential areas to satisfy the day-to-day needs of the customers residing in nearby localities. They remain open for long hours at convenient timings and often provide credit facilities to their regular customers. For example, a provision store deals in grocery, bread, butter, toothpaste, soaps, washing powder, soft drinks, confectionery, stationery, cosmetics, etc

Single-line Stores:
Single-line Stores are small shops which deal in a particular line of products such as garments, stationery, textiles, medicines, shoes, etc. They are generally situated in market places and deal in a variety of goods in that line of product.

Specialty Stores:
Specialty Stores deal in a particular type of product under one product line only. For example, Sweets shop specialised in TirunelveliHalwa, Bengali Sweets, etc.

Seconds Shops:
These shops deal with second-hand goods or used articles in a low price, such as books, furniture, utensils, clothes, automobiles, etc. mid also new defective goods.

Question 3.
Explain the advantages of Departmental Stores:
Answer:
Convenience in buying:
The departmental stores provide great convenience to all the members in a family in buying almost all goods of their requirements at one place. A large variety of goods available in all the departments enable customers to save time and no need to run from one place to another to complete their shopping.

Attractive services:
It aims at providing maximum services and facilities to the customers such as home delivery of goods, execution of telephone orders, rest rooms, restaurants, salons, children game centres, etc.

Central location:
These stores are usually located in central places so that more people can approach easily.

Elimination of Middleman:
A departmental store combines both the functions of retailing as well as warehousing. They purchase directly from manufacturers and operate separate warehouses. It helps in eliminating undesirable middlemen between the producers and the consumers.

Economies of Large Scale Operations:
The Departmental stores are organised at a large scale i.e., buy goods in bulk, therefore they enjoy the benefit of special discount. In turn, the customers get their goods in quality and lower price.

Question 4.
Explain the features of chain stores:
Answer:
Location:
shopping i.e., in the selection and choice of their goods as per the tastes.

Nature of product:
These shops deal in a particular product – line and specialise in the same product i.e, standardised and branded consumer products.

Centralised management:
The manufacturing or procurement of goods for all the retail units is centralised at the head office, from where the goods are despatched to each of these shops.

Fixed price:
The prices of goods are fixed and all sales are made on a cash basis.

Role of Sales personnel:
The sales persons play an active role in helping the consumers to complete their shopping i.e., in the selection and choice of their goods as per the tastes.

Question 5.
What are all the advantages of chain stores?
Answer:

• Economies of large scale: Multiple shops are owned and operated by manufacturers or intermediaries. Centralised and bulk buying, results in lower costs. These shops are located in fairly populous localities where sufficient number of customers can be approached.
• Nature of product: These shops deal in a particular product ‘line and specialise in the same product i.e, standardised and branded consumer products.
• Centralised management: The manufacturing or procurement of goods for all the retail units is centralised at the head office, from where the goods are despatched to each of these shops.
• Fixed price: The prices of goods are fixed and all sales are made on cash basis.
• Role of Sales personnel: The sales persons play an active role in helping the consumers to complete their
• Elimination of middlemen: Goods are sold in multiple shops at relatively low prices. By selling directly to the consumers, it is able to eliminate unnecessary middlemen.
• No bad debts: All the sales are made in these shops on a cash basis only. So, no bad debts will arise and no reduction of working capitals.
• Convenience in shopping: Shops are located in all important areas. Therefore, customers are not required to travel long distances for making purchases.
• Public confidence: Multiple shops enjoy public confidence due to fixed prices, standard quality, uniform appearance and selection of goods with the help of salesmen.

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 23 Channels of Distribution Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 23 Channels of Distribution

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 23 Channels of Distribution

I. Choose the Correct Answer

Question 1.
Trade middleman who acts as a link between wholesaler and customers refers to a ………………
a. Producer
b. Broker
c. Retailer
d. Customer
Answer:
c. Retailer

Question 2.
Who is the first middleman in the channel of distribution?
a. Wholesaler
b. Producer
c. Retailer
d. Customer
Answer:
a. Wholesaler

Question 3.
………………. buy the goods from the producer and sell it to the retailers.
a. Manufacturer
b. Wholesaler
c. Retailer
d. consumer
Answer:
b. Wholesaler

Question 4.
……………….. are agents who merely bring the buyer and the seller into contact.
a. Broker
b. Commission agent
c. Selling agent
d. stockist
Answer:
a. Broker

Question 5.
Merchant middlemen can be classified into …………………… categories.
a. Three
b. Two
c. Five
d. Four
Answer:
b. Two

Question 6.
Wholesalers deal in ………………. quantity of goods.
a. Small
b. Large
c. Medium
d. Limited
Answer:
b. Large

Question 7.
A …………………….. is a mercantile agent to whom goods are entrusted for sale by a principal and takes physical possession of the goods but does not obtain ownership.
a. Broker
b. Factor
c. Warehouse-keeper
d. Commission agent
Answer:
b. Factor

II.Very Short Answer Questions
Question 1.
Who is a middleman?
Answer:
The term ‘Middlemen’ refers to all those who are in the link between the primary producer and the ultimate consumer in the exchange of goods or services.

Question 2.
Define Wholesaler
Answer:
According to Cundiff and still “Wholesaler buys from the producer and sell merchandise to the retailers and other merchants and not to the – consumers”.

Question 3.
Define Retailer.
Answer:
According to S. Evelyn Thomas, “the retailer is the last of the many links in the economic chain whereby the consumer’s wants are satisfied smoothly and efficiently by retailers”.

Question 4.
Who is a broker?
Answer:
A Broker is one who bargains for another and receives a commission for his service. He is paid ‘brokerage’ for his services.

Question 5.
What are the classifications of the merchant middlemen?
Answer:
Merchant middleman can be further subdivided into:

1. Wholesaler
2. Retailer

Question 6.
Who are the mercantile agents?
Answer:
A businessman appoints a person to buy and sell goods on his behalf and gives him the right to borrow money on the security of goods. He is known as a mercantile agent.

III. Short Answer Questions

Question 1.
What do you understand by channels of distribution?
Answer:
A channel is a route through which the goods are passed on to the ultimate consumer. There are direct channels or routes of distribution without middlemen. The indirect channel consists of one or more middlemen performing different functions. Middlemen help in the flow of goods towards the lakhs of crores of consumers.

Question 2.
Who is a factor?
Answer:
A factor is a mercantile agent to whom goods are entrusted for sale by a principal. He takes physical possession of the goods, though he does not obtain ownership of the goods. A factor sells goods in his own name without revealing the name of his principal. He can sue or be sued for his contracts. He has a right of lien on goods in his possession for his unpaid charges.

Question 3.
Explain the types of mercantile agents.
Answer:
Kinds of Mercantile Agents or Agent Middlemen:

1. Brokers
2. Factors
3. Commission Agents
4. Del – credere Agents
5. Auctioneers
6. Warehouse keepers.

Question 4.
Explain any three characteristics of wholesalers.
Answer:

1. Wholesalers buy goods directly from producers or manufacturers.
2. Wholesalers buy goods in large quantities and sell in relatively smaller quantities.
3. Wholesalers sell different varieties of a particular variety of products.

Question 5.
What are the services rendered by the wholesalers to the manufacturers?
Answer:
Services to Producers or Manufacturers:

1. Economies in Large Scale
2. Assistance in Distribution
3. Warehousing Facility
4. Forecasting of Demand
5. Publicity of Goods
6. Financial Assistance
7. Risk – bearer
8. Link

IV. Long Answer Questions

Question 1.
What are the characteristics of retailers?
Answer:
Meaning:
A trading intermediary engaged in the distribution of goods to the ultimate consumer is known as retailer. Following are the characteristics of retail traders ® Retailer generally involves dealing in a variety of items. A retailer makes purchases from producers or wholesalers in bulk for sale to the end consumers in small quantities.

• Retail trade is normally carried on in or near the main market area.
• Generally, retailers involve buying on credit from wholesalers and selling for cash to consumers.
• A retailer has indirect relation with the manufacturer (through wholesalers) but a direct link with the consumers.

Question 2.
What are the functions of Wholesalers?
Answer:
Following are the functions of wholesalers:

1. Collection of Goods: Wholesaler collects the goods from manufacturers or producers in bulk.
2. Storage of Goods: Wholesaler collects and stores them safely in warehouses, till they are sold out.
3. Distribution: Wholesaler sells goods to different retailers. Thus he performs the function of the distribution.
4. Financing: Wholesalers provide financial support to producers and manufacturers by providing money in advance to them.
5. Risk Taking: Wholesaler buys finished goods from the producer and keeps them in the warehouses till the time they are sold and assumes the risk arising from price, spoilage of goods, and changes in demand.
6. Grading Packing and Packaging: Wholesaler classifies the goods into different categories.
7. Providing Information: Wholesalers provide valuable information to retailers and producers.
8. Transportation: A wholesaler arranges for the transport of goods from producers to his warehouse and from the warehouse to retailer.

Question 3.
What are the functions of Retailers?
Answer:
The following are the functions of retailers.
Functions of Retailers:
Buying:
A retailer buys a wide, variety of goods from different wholesalers after estimating customer’s demand. He selects the best merchandise from each wholesaler and brings all the goods under one roof. So, he performs the twin functions of buying and assembling goods.

Storage:
A retailer maintains a ready stock of goods and displays them in the shop.

Selling:
The retailer sells the goods in small quantities according to the demand taste and preference of consumers. He employs efficient methods of selling to increase his sales turnover.

Grading and Packing:
The retailer grades the goods which are not graded by manufacturers and wholesalers. He packs goods in small lots for the convenience of consumers

Risk-bearing:
A retailer always keeps stock of goods in anticipation of demand and bears the risk of loss due to fire, theft, spoilage, price fluctuations, etc.

Transportation:
Retailers often carry goods from manufacturers to their retail outlets.

Financing:
Some retailers grant credit facilities to their customers and provide the facility of return or exchange of goods. Door delivery and after-sale service are provided by retailers.

Question 4.
Explain the services rendered by wholesalers to retailers.
Answer:

1. Financial Assistance: Wholesalers provide financial assistance to retailers by selling goods on credit.
2. Meeting the Requirements: Due to limited capital and lack of space in his facility, a retailer cannot hold a large variety of products.
3. Introduction of New Products: Wholesalers bring new products and their uses to the notice of retailers.
4. Price Stability: Wholesalers reduce price fluctuations by adjusting supply and demand and save the retailers from loss arising from price fluctuations.
5. The economy in Transport: A wholesaler often delivers goods at the doorsteps of retailers and save their time and cost of transport.
6. Regular Supply: Wholesalers keep a large stock of varieties of goods and provide a regular supply of goods as per the retailer’s need.

Question 5.
What are the services rendered by retailers to wholesalers?
Answer:
Retailers provide the following services to manufacturers and wholesalers.
Help in Distribution:
Retailers relieve the manufacturers and wholesalers of the burden of collecting and executing a large number of small orders from various consumers.

Market Information:
Retailer supply valuable information to wholesalers about changes in tastes, preferences, fashion etc. of consumers

Large Scale Operation:
The manufacturers and wholesalers are freed from the trouble of making individual sales to consumers in small quantities. This enables them to operate on, a relatively large scale and thereby fully concentrate on their other activities

Help in Promotion:
Retailers participate in the promotional activities carried by manufacturers and wholesalers such as short-time offers, coupons, free gifts, sales contests, etc. Retailers help in promoting the sale of the products.

Personal Attention:
The retailer is able to provide more personal attention to his customers than the wholesaler is, He gives special services on the spot when the articles require minor repairs.

Question 6.
Explain the services rendered to consumers by Retailers.
Answer:

1. Regular Supply of Goods: Retailers maintain ready stock of various products of different manufacturers for sale to consumers.
2. New Products Information: The retailers provide important information about the new arrival of products through their personal.
3. Credit Facilities: Sometimes retailers provide credit facilities to their customers and enable them to increase their level of consumption.
4. Wide Selection: Retailers generally keep stock of a variety of products of different manufacturers.
5. Miscellaneous Services:
   • Retailers provide free door delivery services to the customers.
   • They provide after-sale service to customers.
   • They allow cash discounts on their sales.

Question 7.
What are the factors affecting a channel of distribution?
Answer:
The factors determining the suitability of a channel for product distribution are as follows:
Product Characteristics:
Seasonal, products are distributed through less layer of middlemen. Non-standardized products that are made according to customer specifications may be delivered directly. But standardized products may be passed on through middlemen.

Trucks which are heavily needed to be distributed with fewer layers of distribution. The life of perishable products is limited and should reach the consumer at the earliest. e.g. Flowers and milk. Technical products which require pre-sale and post-sale advice from technicians should be directly distributed by the producer or with middlemen. e.g: Air-conditioners, Washing machine.

Market Characteristics:
The size of the market for the goods is a major factor while selecting the route for distribution of products. Distribution in large geographical areas requires more middlemen. Middlemen are nòt required to distribute products in a limited area.

Number of Consumers:
Làrge purchases made by few consumers require centralized distribution. Large number of consumers making purchases in small quantities requires more middlemen.

The capacity of the Manufacturer:
A financially strong producer may select a high technology oriented channel which will reduce cost in the long run. Manufacturers with large volume of production may open direct branches in cities and towns where there is more sales.

They can also provide more services expected by consumers. Small and medium producers require the services of middlemen for selling their products. A producer offering wide range of products can have a long channel as he can defray the cost of distribution over more number of products.

Cost and Time Involved in the Channel of Distribution:
The channel cost should go along with the quality of service provided by middlemen.
Ordinary goods are routed through economical channel even though the time taken by the channel for delivery is more.

Services Required along with the Product:
Machinery or equipment which needs to be installed and demonstrated should be sold with the shorter channel. Technical Services can be provided by manufacturers or by their trained technicians. Therefore a shorter channel is preferred for sales.

Life Cycle of the Product:
An established product can select an ordinary channel. But a new product entering into the market should be carefully promoted by experienced middlemen.

11th Commerce Guide Channels of Distribution Additional Important Questions and Answers

I. Choose the Correct Answer:

Question 1.
With respect to a channel of distribution, the number of intermediary levels within the channel indicated the ……………….. of a channel.
a. Width
b. Depth
c. Length
d. Similarity
Answer:
c. Length

Question 2.
A large marketing intermediary, but not as large as a sole selling agent in terms of dimension, resources, and area of operation is known as ……………..
a. Wholesaler
b. Sole selling agent
c. Direct marketing channel
d. Semi-wholesalers
Answer:
a. Wholesaler

Question 3.
Mr. X is studying the potential for selling his company’s products in the USA. As part of his analysis, he is assessing the number, types and availability of wholesalers and retailers. Mr. X is studying the countries…………………
a. Social and Cultural norms
b.Legal and political structure
c. Distribution channel structure
d. Technological study
Answer:
c. Distribution channel structure

Question 4.
The purchases and sales between the producers and wholesalers, and from the wholesalers to retailers are called as ………………
a. D₂C
b. B₂C
c. M₂C
d. B₂B
Answer:
d. B₂B

Question 5.
The person who guarantees to the principal regarding the collection of cash from credit sales is called………….
a. Agent
b. Del-credere Agent
c. Factor
d. Commission Agent
Answer:
b. Del-credere Agent

II. Very Short Answer Questions:

Question 1.
What is meant by Mail-order Business?
Answer:
The manufacturer collects orders from the consumers through post by mail or phone and delivers the products themselves. This kind of business is known as Mail-order or Phone- order business.

Question 2.
What do you mean by B₂B transactions?
Answer:
All purcháses and sales between the producers and wholesalers,and from the wholesalers to retailers,etc. are called Business to Business (B₂B) transactions.

Question 3.
What do you mean by B₂C transactions?
Answer:
All businesš transactions between the producers or wholesalers or retailers on the one side and consumers on the other side are called Business to Consumers(B₂C).

III. Short Answer Questions:

Question 1.
Define Channel of Distribution:
Answer:
According to Cundiff E.W and Still, a channel of distribution may be defined as “a path traced in the direct or indireët transfer of title to a product as it moves from the producer to ultimate consumers”.

Question 2.
List the types of channel of distribution:
Answer:
The types of channel of distribution are as follõws:

• Channels based on the middlemen
• Channels based on the type of goods and services
• Channel based on the national and international market

Question 3.
Write short notes on ‘Auctioneers’:
Answer:
Auctioneers are agents who sell goods by auction on behalf of their principals. The auction sale is made through a notification to the public. The notice clearly mentions the date, time, place and details of goods which will be widely published through newspapers, posters, leaflets and announcements etc., Auction sale may be “WITH RESERVE” and “WITHOUT RESERVE”. In case of auction “WITH RESERVE” no sale can take place below the minimum price fixed by the seller, which is known as “Reserve Price”.

In case of auction “WITHOUT RESERVE” the auctioneer is bound to sell the product to the highest bidder. The price for which the bid is accepted is called “knocked down price”. Striking a hammer on the desk indicates the acceptance of a bid by auctioneer. After the highest bid is accepted, the auctioneer becomes the agent for both the seller and the buyer. For his services, the auctioneer is entitled to receive a commission, which is a certain percentage of the sale proceeds.

IV. Long Answer Questions:

Question 1.
Write a note on VAR:
Answer:
The VARs receive the products from the manufacturers, incorporate them as if their own products by adding value-enhanced service and sell them to customers. VARs provide highly skilled technical support so that the customer can have world-class satisfaction.

Microsoft India has appointed Avnet and Redington as VARs in India. A solar panel producer may have builders as VARs and the builders offer solar panel as additional facility to the buyers of flats, etc.

Question 2.
Explain the types of Mercantile Agents:
Answer:
Brokers:
A Broker is one who bargains for another and receives a commission for his service. He is paid ‘brokerage’ for his services. He brings the buyer and the seller to the negotiating process and arranges for finalizing contracts between them. The principal businessman does not pass on either possession of goods or the ownership of goods to the broker. The broker is not personally liable for the contracts concluded. A real estate agent acts for both the buyer and the seller.

Factors:
A factor is a mercantile agent to whom goods are entrusted for sale by a principal. He takes physical possession of the goods, though he does not obtain ownership of the goods. A factor sells goods in his own name without revealing the name of his principal. He may even sell them on credit and other usual terms. He is entitled to receive payment for the goods sold and he gives valid receipts. He is liable for his action. He can sue or be sued for his contracts. He has a right of lien on goods in his possession for his unpaid charges.

Commission Agent or Consignees:
A commission agent buys and sells goods on behalf of the principal for a fixed rate of commission for all his transactions. All risks connected with his transactions are borne by the principal. His functions are more varied than a broker and he takes decision over the prices and terms of the sale. He has expert knowledge of the goods and trends in the market. He takes possession of the goods without title over them and sells in his own name.

Delcreder Agents:
The agent who guarantees to the principal the collection of cash from credit sales is called belvedere agent’. If they do not pay, the agent would bear the loss himself. He is given an additional commission known as belvedere commission for bearing the risk. He carefully selects the buyers to whom credit can be extended based on their honesty and reliability.

Auctioneers:
Auctioneers are agents who sell goods by auction on behalf of their principals. Auction sale is made through a notification to the place and details of goods which will be widely published through newspapers, posters, leaflets and announcements etc., Auction sale may be “WITH RESERVE” and “WITHOUT RESERVE”.

Warehouse keeper:
A Warehouse keeper accepts goods for the purpose of storage in his warehouse. He should exercise reasonable care and diligence in the storage of goods. He is entitled to payment for his services. He will have a lien on the goods in case the payments for his services remain unpaid.

The warehouse keeper delivers to the owner of the goods a receipt known as warehouse keeper’s receipt or. certificate. It is an acknowledgement issued by warehouse keeper for the receipt of goods by him for the purpose of storage. It is not a document of title to goods. He may issue a ‘Warehouse warrant’, which is a document of title to goods.

Question 3.
Differentiate Wholesaler and Retailer:
Answer:

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Physics Guide Pdf Chapter 6 Gravitation Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Physics Solutions Chapter 6 Gravitation

11th Physics Guide Gravitation Book Back Questions and Answers

I. Multiple choice questions:

Question 1.
The linear momentum and position vector of the planet is perpendicular to each other at:
(a) perihelion and aphelion
(b) at all points
(c) only at perihelion
(d) no point
Answer:
(a) perihelion and aphelion

Hint:
At aphelion Potential Energy is more and Kinetic energy is less.
At perihelion Potential Energy is less and Kinetic Energy is more.

Question 2.
If the masses of the Earth and Sun suddenly double, the gravitational force between them will:
(a) remain the same
(b) increase 2 times
(c) increase 4 times
(d) decrease 2 times
Answer:
(c) increase 4 times

Hint:

Question 3.
A planet moving along an elliptical orbit is closest to the Sun at distance r₁ and farthest away at a distance of r₂. If v₁ and v₂ are linear speeds at these points respectively. Then the ratio \(\frac{v_{1}}{v_{2}}\) is: (NEET 2016)
(a) \(\frac{r_{2}}{r_{1}}\)
(b) (\(\frac{r_{2}}{r_{1}}\))²
(c) \(\frac{r_{1}}{r_{2}}\)
(d) (\(\frac{r_{1}}{r_{2}}\))²
Answer:
(a) \(\frac{r_{2}}{r_{1}}\)

Hint:
v = rw
∴ v ∝ r
\(\frac{v_{1}}{v_{2}}\) = \(\frac{r_{1}}{r_{2}}\)

Question 4.
The time period of a satellite orbiting Earth in a circular orbit is independent of:
(a) Radius of the orbit
(b) The mass of the satellite
(c) Both the mass and radius of the orbit
(d) Neither the mass nor the radius of its orbit
Answer:
(b) The mass of the satellite
Hint:
T= 2π\(\sqrt{\frac{\mathrm{RE}}{g}}\)
Since there is no mass in the expression, time period is independent of mass.

Question 5.
If the distance between the Earth and Sun were to be doubled from its present value, the number of days in a year would be:
(a) 64.5
(b) 1032
(c) 182.5
(d) 730
Answer:
(b) 1032

Question 6.
According to Kepler’s second law, the radial vector to a planet from the Sun sweeps out equal areas in equal intervals of time. This law is a consequence of:
(a) conservation of linear momentum
(b) conservation of angular momentum
(c) conservation of energy
(d) conservation of kinetic energy
Answer:
(a) conservation of linear momentum

Hint:
Kepler’s second law is a consequence of conservation angular momentum.

Question 7.
The gravitational potential energy of the Moon with respect to Earth is:
(a) always positive
(b) always negative
(c) can be positive or negative
(d) always zero
Answer:
(b) always negative

Hint:
Because when two masses come together slowly from infinity work is done on the system.

Question 8.
The kinetic energies of a planet in an elliptical orbit about the Sun, at positions A, B and C are K_A, K_B and K_c respectively. AC is the major axis and SB is perpendicular to AC at the position of the Sun S as shown in the figure. Then: (NEET 2018)

(a) K_A > K_B > K_C
(b) K_B < K_A < K_C
(c) K_A < K_B < K_C
(d) K_B > K_A > K_C
Answer:
(a) K_A > K_B > K_C

Hint:
Kinetic energy depends on the velocity of a planet. Planets travel fast when they are nearer to the sun and slower when they are farther from it.

Question 9.
The work done by the Sun’s gravitational force on the Earth is:
(a) always zero
(b) always positive
(c) can be positive or negative
(d) always negative
Answer:
(c) can be positive or negative

Question 10.
If the mass and radius of the Earth are both doubled, then the acceleration due to gravity g’:
(a) remains same
(b) y
(c) \(\frac { g }{ 2 }\)
(d) 4 g
Answer:
(b) y

Hint:
g = \(\frac{\mathrm{GM}}{\mathrm{R}^{2}}\)
M’ = 2M
R’ = 2R
g’ = \(\frac{\mathrm{GM}^{\prime}}{\left(\mathrm{R}^{\prime}\right)^{2}}\)
= \(\frac{G \times 2 M}{(2 R)^{2}}\)
= \(\frac{\mathrm{GM}}{\mathrm{2R}^{2}}\)
= \(\frac { g }{ 2 }\)

Question 11.
The magnitude of the Sun’s gravitational field as experienced by Earth is:
(a) same over the year
(b) decreases in the month of January and increases in the month of July
(c) decreases in the month of July and increases in the month of January
(d) increases during day time and decreases during night time.
Answer:
(c) decreases in the month of July and increases in the month of January

Hint:
Gravitational field \(\vec { E }\) = – \(\frac{\mathrm{GM}}{\mathrm{R}^{2}}\)\(\hat{r}\)
It depends on the distance r that vary from January to July.

Question 12.
If a person moves from Chennai to Trichy, his weight:
(a) increases
(b) decreases
(c) remains same
(d) increases and then decreases
Answer:
(a) increases

Hint:
W = mg
g = \(\frac{\mathrm{GM}}{\mathrm{R}^{2}}\)
∴ W = \(\frac{\mathrm{GMm}}{\mathrm{R}^{2}}\)
Weight depends on distance ‘r’.

Question 13.
An object of mass 10 kg is hanging on a spring scale which is attached to the roof of a lift. If the lift is in free fall, the reading in the spring scale is:
(a) 98 N
(b) zero
(c) 49 N
(d) 9.8 N
Answer:
(b) zero

Hint:
If the lift is free fall then a = g.
∴ N = m(g – g) = 0
∴ The reading will be zero.

Question 14.
If the acceleration due to gravity becomes 4 times of original value, then escape speed:
(a) remains same is directly proportional to the product of
(b) 2 times of original value masses and inversely proportional to square
(c) becomes halved of the distance between the masses.
(d) 4 times of original value 3. Will the angular momentum of a planet be
Answer:
(b) 2 times of original value masses and inversely proportional to square

Question 15.
The kinetic energy of the satellite orbiting around the Earth is:
(a) equal to potential energy
(b) less than potential energy
(c) greater than kinetic energy
(d) zero
Answer:
(b) less than potential energy

II. Short Answer Questions:

Question 1.
State Kepler’s three laws.
Answer:

1. Law of Orbits: Each planet revolves moves around the Sun in an elliptical orbit with the Sun at one of the foci of the ellipse.
2. Law of area: The radial vector line joining the Sun to a planet sweeps equal areas in equal intervals of time.
3. Law of period: The square of the time period of revolution of a planet around the Sun in its elliptical orbit is directly proportional to the cube of the semi-major axis of the ellipse.

Question 2.
State Newton’s Universal law of gravitation.
Answer:
The gravitational force between two masses is directly proportional to the product of masses and inversely proportional to square of the distance between the masses.

Question 3.
Will the angular momentum of a planet be conserved? Justify your answer.
Answer:
The torque experienced by the Earth due to the gravitational force of the Sun is given by,

It implies that angular momentum \(\vec { L }\) is constant vector. Hence L is conserved.

Question 4.
Define the gravitational field. Give its unit.
Answer:
The gravitational field intensity \(\overrightarrow{\mathrm{E}}_{1}\) at a point is defined as the gravitational force experienced by unit mass at that point. It’s unit N kg^-1.

Question 5.
What is meant by superposition of gravitational field?
Answer:
The total gravitational field at a point due to all the masses is given by the vector sum of the gravitational field due to the individual masses.

Question 6.
Define gravitational potential energy.
Answer:
Potential energy of a body at a point in a gravitational field is the work done by an external agent in moving the body from infinity to that point.

Question 7.
Is potential energy the property of a single object? Justify.
Answer:
No, potential energy is not the property of a single system. It is due to the position of the object. Because, potential energy depends on two masses and the distance between them.

Question 8.
Define gravitational potential.
Answer:
The gravitational potential is defined as the amount of work required to bring unit mass from infinity to that point.

Question 9.
What is the difference between gravitational potential and gravitational potential energy?
Answer:

Question 10.
What is meant by escape speed in the case j of the Earth?
Answer:
The escape speed is independent of the direction in which the object is thrown. Irrespective of whether the object is thrown vertically up, radially outwards or tangentially it requires the same initial speed to escape Earth’s gravity force. This can be written as, v_e = \(\sqrt{2 g R_{E}}\).

Question 11.
Why is the energy of a satellite (or any other planet) negative?
Answer:
The negative sign of the total energy implies that satellite is bound to the Earth’s gravitational force. So it cannot escape from the Earth. At large distances satellite is not bound to Earth. It is completely free from gravitational force of the Earth.

Question 12.
What are geostationary and polar satellites?
Answer:
Geostationary Satellite: It is the satellite which appears at a fixed position and at a definite height to an observer on earth.
Polar Satellite: It is the satellite which revolves in polar orbit around the earth.

Question 13.
Define weight.
Answer:
The weight is defined as the downward force whose magnitude ‘w ’ is equal to that of upward force that must be applied to the object to hold it at rest or at constant velocity relative to the Earth.

Question 14.
Why is there no lunar eclipse and solar eclipse every month?
Answer:
If the orbits of the Moon and Earth lie on the same plane, during full Moon of every month, we can observe lunar eclipse. If this is so dining new Moon we can observe solar eclipse. But Moon’s orbit is tilted 5° with respect to Earth’s orbit. Due to this 5° tilt, only during certain periods of the year, the Sun, Earth and Moon align in straight line leading to either lunar eclipse or solar eclipse depending on the alignment.

Question 15.
How will you prove that Earth itself is spinning?
Answer:
When the position of a star is observed over a night, it appears to move in circular motion about the pole star. This fact proves that Earth itself is spinning.

III. Long Answer Questions:

Question 1.
Discuss the important features of the law of gravitation.
Answer:
(i) Because of inverse dependence on square of the distance the distance between two masses increases, the strength of the force tends to decrease.

(ii) Because Uranus is at larger distance from the Sun compared to the Earth, the planet Uranus experiences less gravitational force from the Sun than the Earth.

(iii) The gravitational forces between two particles always constitute an action- reaction pair. From this, it is known that gravitational force exerted by the Sun on the Earth is always towards the Sun. The reaction-force is exerted by the Earth on the Sun. The direction of reaction is towards Earth.

(iv) The torque experienced by the Earth due to the gravitational force of the Sun is given by,

It implies that angular momentum \(\vec { L }\) is a constant vector. The angular momentum of Earth about the Sun is constant throughout the motion. It is true for all the planets.

(v) The expression \(\vec { F }\) = \(\frac{\mathrm{GM}_{1} \mathrm{M}_{2}}{r^{2}} \hat{r}\). Here it was assumed that both Earth and Sun are treated as point masses.

(vi) This assumption is a good approximation because the distance between the two bodies is very much larger than their diameters.

(vii) The force of attraction between a hollow sphere of mass M with uniform density and point mass m kept outside the hollow sphere is calculated by replacing the hollow sphere of mass M as equivalent to a point mass M located at the centre of the hollow sphere.

The force of attraction between the hollow sphere of mass M and point mass ‘m’ can be calculated by considering the hollow sphere also as another point mass. It is shown in the Figure below.

(viii) If we place another object of mass ‘m ’ inside a hollow sphere of mass M as in Figure below, the force experienced by this mass ‘m ’ will be zero.

(ix) The success of the law of gravitation is that it concludes that the mango that is falling down and the Moon orbiting the Earth are due to the same gravitational force.

Question 2.
Explain how Newton arrived at his law of gravitation from Kepler’s third law.
Answer:
Newton considered the orbits of the planets as circular. For circular orbit of radius r, the centripetal acceleration towards the centre is

Here v is the velocity and r, the distance of the planet from the centre of the orbit.
The velocity in terms of known quantities r and T, is
v = \(\frac { 2πr }{ T }\)              … (2)
Here T is the time period of revolution of the planet. Substituting this value of ‘v’ in equation (1) we get,

Substituting the value of ‘a’ from (3) in Newton’s second law, F = ma where ‘m’ is the mass of the planet.
F = – \(\frac{4 \pi^{2} m r}{\mathrm{r}^{2}}\) … (4)
From Kepler’s third law,
\(\frac{r^{3}}{\mathrm{~T}^{2}}\) = k (constant) … (5)
\(\frac{r}{\mathrm{~T}^{2}}\) = \(\frac{k}{r^{2}}\) … (6)
By using equation (6) in the force expression, we can arrive at the law of gravitation.
F = – \(\frac{4 \pi^{2} m k}{\mathrm{r}^{2}}\) … (7)
Here negative sign implies that the force is attractive and it acts towards the centre. He equated the constant 4π²k to GM which turned out to be the law of gravitation.
F = – \(\frac{\mathrm{GMm}}{r^{2}}\)

Question 3.
Explain how Newton verified his law of gravitation.
Answer:
The gravitational force experienced by the apple due to Earth.
F = – \(\frac{\mathrm{GM}_{\mathrm{E}} \mathrm{M}_{\mathrm{A}}}{\mathrm{R}^{2}}\)
M_A – Mass of the apple
M_E – Mass of the Earth
R – Radius of the Earth.
Equating the above equation with Newton’s second law, we get
M_Aa_A = – \(\frac{\mathrm{GM}_{\mathrm{E}} \mathrm{M}_{\mathrm{A}}}{\mathrm{R}^{2}}\)
Simplifying the above equation we get,
a_A = – \(\frac{\mathrm{GM}_{\mathrm{E}}}{\mathrm{R}^{2}}\)
a_A is the acceleration of apple that is equal to ‘g’.
Similarly the force experienced by Moon due to Earth is given by
F = – \(\frac{\mathrm{GM}_{\mathrm{E}} \mathrm{Mm}}{\mathrm{R}_{m}^{2}}\)
R_m – distance of the Moon from the Earth.
M_m – Mass of the Moon.
The acceleration experienced by the Moon is given by,
a_m = – \(\frac{\mathrm{GM}_{\mathrm{E}}}{\mathrm{R}_{m}^{2}}\)
The ratio between the apple’s acceleration to Moon’s acceleration is given by
\(\frac{a_{\mathrm{A}}}{a_{m}}=\frac{\mathrm{R}_{m}^{2}}{\mathrm{R}^{2}}\)
From the Hipparchrus measurement, the distance to the Moon is 60 times that of Earth radius.
R_m = 60R.
\(\frac{a_{\mathrm{A}}}{a_{m}}=\frac{(60 \mathrm{R})^{2}}{\mathrm{R}^{2}}\)
The apple’s acceleration is 3600 times the acceleration of the Moon.
The same result was obtained by Newton using his gravitational formula.

Question 4.
Derive the expression for gravitational potential energy.
Answer:
Consider two masses m₁ and m₂ are initially separated by a distance r’. m₁ is assumed to be fixed in its position.

To move the mass m₂ through an infinitesimal displacement \(\vec { dr }\) from \(\vec { r }\) to \(\vec { r }\) + \(\vec { dr }\) (shown in the Figure above), work has to be done externally. This infinitesimal work is given by

Hence the total work done for displacing the particle from r’ to r is

Question 5.
Prove that at points near the surface of the Earth, the gravitational potential energy of the object is U = mgh.
Answer:
Let us consider the Earth and mass system, with r, the distance between the mass ‘nr and the Earth’s centre. Then the gravitational potential energy,
U = \(\frac{\mathrm{GM}_{e} m}{r}\) … (1)
Here r = R_e + h, where R_e is the radius of the Earth, h is the height above the Earth’s surface.
U = – G \(\frac{\mathrm{M}_{e} m}{\left(\mathrm{R}_{e}+h\right)}\) … (2)
If h << R_e, equation (2) can be modified as

By using Binomial expansion and neglecting the higher order terms, we get
U = – \(\mathrm{G} \frac{\mathrm{M}_{e} m}{\mathrm{R}_{e}}\left(1-\frac{h}{\mathrm{R}_{e}}\right)\) … (4)
We know that, for a mass m on the Earth’s surface,
G\(\frac{\mathrm{M}_{e} m}{\mathrm{R}_{e}}\) = mgR_e … (5)
Substituting equation (5) in (4) we get,
U = mgR_e + mgh … (6)
In the equation (6) the first term can be omitted or taken to zero. Thus it can be stated that the gravitational potential energy stored in the particle of mass m at a height h from the surface of the Earth is U = mgh.

Question 6.
Explain in detail the idea of weightlessness using lift as an example.
Answer:
Freely falling bodies experience gravitational force only. As they fall freely, they are not in contact with any surface. When a lift falls with downward acceleration a = g, the person inside the lift is in the state of free fall or weightlessness. The normal force acting on the object is zero. In this case, the downward acceleration is equal to the acceleration due to the gravity of the Earth. i.e., (a = g). From equation,
N = m(g – a)
we get,
a= g
∴ N = m(g – g) = 0.
This is called the state of weightlessness.

Example: When the lift falls (when the lift wire cuts) with downward acceleration a = g, the person inside the elevator is in the state of weightlessness or free fall.

Question 7.
Derive an expression for escape speed.
Answer:
Consider an object of mass M on the surface of the Earth. When it is thrown up with an initial speed v_i the initial total energy of the object is
E_i = \(\frac { 1 }{ 2 }\)Mv_i² – \(\frac{\mathrm{GMM}_{\mathrm{E}}}{\mathrm{R}_{\mathrm{E}}}\) … (1)

Where, M_E is the mass of the Earth and R_E – the radius of the Earth. The term \(\frac{\mathrm{GMM}_{\mathrm{E}}}{\mathrm{R}_{\mathrm{E}}}\) is the potential energy of the mass M.

When the object reaches a height far away from Earth and as approaching infinity, the gravitational potential energy becomes zero [U(∞) = 0] and the kinetic energy becomes zero as well. Hence the final total energy of the object becomes zero. It holds good for minimum energy and for minimum speed to escape. Otherwise Kinetic energy can be non-zero.
E_f = 0
According to the law of energy conservation,
E_i = E_f … (2)
Substituting (1) in (2) we get,

The minimum speed required by an object to escape Earth’s gravitational field is escape speed. Hence v_i is replaced v_e. i.e.,

Question 8.
Explain the variation of ‘q’ with latitude.
Answer:
An object is on the surface of the Earth, experiences a centrifugal force that depends on the latitude of the object on Earth. If the Earth were not spinning, the force on the object would have been mg. An additional centrifugal force due to spinning of the Earth, is experienced by the object.

This centrifugal force is given by mω²R’.
R’= R cos λ,
where λ is the latitude. The component of centrifugal acceleration experienced by the object in the direction opposite to acceleration due to gravity is

Question 9.
Explain the variation of ‘g’ with altitude.
Answer:
Let us consider an object of mass m at a height h from the surface of the Earth. Acceleration experienced by the object due to Earth is

If h << Re
Using Binomial expansion and taking the terms upto first order.

We find that g’

Question 10.
Explain the variation of g with depth from the Earth’s surface.
Answer:
Let us consider a particle of mass m which is in a deep mine on the Earth. Let the depth of the mine as d. To calculate g’ at a depth d, consider the following points.

The part of the Earth that is above the radius (R_e – d) do not contribute to the acceleration. The result is proved earlier and is given as GM
g’ = \(\frac{\mathrm{GM}^{\prime}}{\left(\mathrm{R}_{e}-d\right)^{2}}\)
M’ is the mass of the Earth of radius (R_e – d)
Assuming the density of Earth p to be constant,
ρ = \(\frac { M }{ V }\)
Where M is the mass of the Earth and V its volume, Thus,

Here also g'< g. As depth increases, g’ decreases.

Question 11.
Derive the time period of satellite orbiting the Earth.
Answer:
The distance covered by the satellite during one rotation in its orbit is equal to 2π(R_E + h) and time taken for it is the time period, T. Then

Equation (3) implies that a satellite orbiting the Earth has the same relation between time and distance as that of Kepler’s law of planetary motion. For a satellite orbiting near the surface of the Earth, h is negligible compared to the radius of the Earth R_E. Then,

Question 12.
Derive an expression for energy of satellite.
Answer:
The total energy of the satellite is the sum of its kinetic energy and the gravitational potential energy. The potential energy of the satellite is,
U = – \(\frac{\mathrm{GM}_{\mathrm{S}} \mathrm{M}_{\mathrm{E}}}{\left(\mathrm{R}_{\mathrm{E}}+h\right)}\) … (1)
Here M_s – Mass of the satellite, M_E – Mass of the Earth, R_E – Radius of the Earth.
The Kinetic energy of the satellite is
K.E = \(\frac { 1 }{ 2 }\)M_s … (2)
Here v is the orbital speed of the satellite and is equal to
v = \(\sqrt{\frac{\mathrm{GM}_{\mathrm{E}}}{\left(\mathrm{R}_{\mathrm{E}}+h\right)}}\) … (3)
Substituting the value of v in (2), the kinetic energy of the satellite becomes,

Question 13.
Explain in detail thegeo-stationary and polar satellites.
Answer:
Geo-stationary satellite is the satellite which revolves around the Earth with same speed and in the same direction as the Earth rotates.
R_E + h = \(\left(\frac{\mathrm{GM}_{\mathrm{E}} \mathrm{T}^{2}}{4 \pi^{2}}\right)\) … (1)
By substituting the values for the time period, mass and radius of the Earth, in equation (1) h turns out to be 36,000 km. Such satellites are called “geo – stationary satellites”, since they appear to be stationary when seen from Earth. INSAT group of satellites that are basically geo – stationary satellites used for the purpose of telecommunication.

A Polar satellite covers a small strip of area from pole to pole during one revolution. In the next revolution it covers a different strip of area. Since the Earth would have moved by a small angle. In this way polar satellites cover the entire surface area of the Earth.

Question 14.
Explain how geocentric theory is replaced by heliocentric theory using the idea of retrograde motion of planets.
Answer:
(i) During the observation of motion of the planets it is in the night sky by naked eyes over a period of a few months, it can be seen that the planets move eastwards and reverse their motion for a while and return to eastward motion again. This is called “retrograde motion” of planets.

(ii) Ptolemy introduced the concept of “epicycle” in his geocentric model. To explain this retrograde motion, according to this theory, while the planet orbited the Earth, it also underwent another circular motion termed as “epicycle”. A combination of epicycle and circular motion around the Earth gave rise to retrograde motion of the planets with respect to Earth.

(iii) But Ptolemy’s model became more and more complex as every planet was found to undergo retrograde motion.

(iv) According to heliocentric model, the Sun is at the centre of the solar system and all planets orbited the Sun. The retrograde motion of planets ‘with respect to Earth is due to the relative motion of the planet with respect to Earth. The retrograde motion from the heliocentric point of view.

The Earth orbits around the Sun faster than Mars. Due to the relative motion between Mars and Earth, Mars appears to move backwards from July to October. In the same way the retrograde motion of all other planets was explained successfully by the Copemicus model. The heliocentric model slowly replaced the geocentric model, because of its simplicity.

Question 15.
Explain in detail the Eratosthenes method of finding the radius of Earth.
Answer:

Eratosthenes observed that during noon time of summer solstice the Sun’s rays cast no shadow in the city Syne. It was located 500 miles away from Alexandria. At the same day and same time he found that in Alexandria the Sun’s rays made an angle 7.2 degree with local vertical as shown in the figure. He realized that this difference of 7.2 degree was due to the curvature of the Earth.
The angle 7.2 degree is equivalent to \(\frac { 1 }{ 8 }\) radian. So θ = \(\frac { 1 }{ 8 }\) rad.
If S is the length of the arc between the cities of Syne and Alexandria, and if R is radius of Earth, then,
S = Rθ = 500 miles
So, the radius of the Earth.
R = \(\frac { 500 }{ θ }\) miles
R = 500 \(\frac { miles }{ 1/8 }\)
R = 4000 miles
1 mile is equal to 1.609 km. So, he measured the radius of the Earth to be equal to R = 6436km, which is amazingly close to the correct value of 6378km.

Question 16.
Describe the measurement of Earth’s shadow (umbra) radius during total lunar eclipse.
Answer:

It is possible to measure the radius of the shadow of the Earth at the point where the Moon crosses. When the Moon exits from the umbra shadow, it appears red in color. As soon as the Moon exits from the umbra shadow, it appears in a crescent shape.
By knowing the apparent radii of the Earth’s umbra shadow and the Moon, the ratio of these radii can be calculated.
The apparent radius of Earth’s umbra shadow = R_s = 13.2cm.
The apparent radius of the Moon = R_m = 5.15 cm.
The ratio \(\frac{\mathrm{R}_{s}}{\mathrm{R}_{m}}\) ≈ 2.56
The radius of the Earth’s umbra shadow is,
R_s = 2.56 x R_m
The radius of Moon R_m = 1737km
The radius of the Earth’s umbra shadow is,
R_s = 2.56 x 1737 km ≅ 4446km.
The correct radius is 4610km.

IV. Conceptual Questions:

Question 1.
According to Kepler, planet move in
(a) Circular orbits around the Sun
(b) Elliptical orbits around the Sim with Sun at the exact centre
(c) Straight lines with constant velocity
(d) Elliptical orbits around the Sun with Sun at one of its foci.
Answer:
(d) Elliptical orbits around the Sun with Sun at one of its foci.

Question 2.
The work done by Sun on Earth in one year will be:
(a) zero
(b) non-zero
(c) positive
(d) negative
Answer:
(d) negative

Question 3.
Rockets are launched in an eastward direction to take advantage of …..
(a) the clear sky on the eastern side
(b) Earth’s rotation
(c) the thinner atmosphere on this side
(d) Earth’s tilt
Answer:
(b) Earth’s rotation
Hint:
Because of Earth rotation from west to east direction.

Question 4.
If a comet suddenly hits the Moon and imparts energy which is more than the total energy of the Moon, what will happen?
Answer:
A comet with small velocity and high mass, doesn’t trigger the moon much. It just makes a circular-shaped impact. The moon is ment for the protection for life on earth and to attain stability for the earth rotation. But a comet with large mass and with large velocity may destroy the moon completely or its impact makes the moon, go out of its orbit.

Question 5.
If the Earth’s pull on the Moon suddenly disappears, what will happen to the Moon?
Answer:
Earth’s pull is,
F = \(\frac{\mathrm{GM}_{\mathrm{E}} \mathrm{M}_{m}}{\mathrm{R}_{m}^{2}}\)
The moon will move away with largest distance of approach. Motion of the moon would cease.

Question 6.
Define orbital velocity.
Answer:
Orbital velocity is the velocity required to put the satellite into its orbit around the earth.

Question 7.
A student was asked the question why are there summer and winter for us’? He replied as ‘since Earth is orbiting in an elliptical orbit, when the Earth is very far away from the Sun(aphelion) there will be winter when the Earth is nearer to the Sun(perihelion) there will be winter’. Is this answer correct? if not, what is the correct explanation for the occurrence of summer and winter?
Answer:
Early astronomers proved that Earth is spherical in shape by looking at the shape of the shadow cast by Earth on the Moon during a lunar eclipse.

Question 8.
The following photographs are taken from the recent lunar eclipse which occurred on January 31, 20.18. Is it possible to prove that Earth is a sphere from these photographs?
Answer:

From the photograph, the apparent radii of the Earth’s umbra shadow and the radius of the Moon, and the apparent radius of Earth can be calculated. By looking at the shape of the shadow caused by Earth on the Moon during lunar eclipse. We can confirm that Earth is spherical in shape.

V. Numerical Problems:

Question 1.
An unknown planet orbits the Sun with distance twice the semi-major axis distance of the Earth’s orbit, if the Earth’s time period is T₁ what is the time period of this unknown planet.
Answer:
Given: a₁ = 2a₁
To find: T₂ = ??
Formula: T² ∝ a³ => T ∝ (a)^3/2
T₂ ∝ (2a₁)^3/2
∝ (2)^3/2 (a₁)^3/2
T2 ∝ 2\(\sqrt{2}\) T₁
∴ T₂ = (2/\(\sqrt{2}\))T₁.

Question 2.
Assume that you are in another solar system and provided with the set of data given below consisting of the planet’s semi major axes and time periods. Can you infer the relation connecting semi-major axis and time period?
Answer:

Time period T² ∝ a³
T₁ = 2; a₁ = 8
a₁ = 2² x 2 = 2T₁ (T₁ = 2)
a₂ = 3² x 2 = 2T₂² (T₂ = 3)
a₃ = 4² x 2 = 2T₃² (T₃ = 4)
a₄ = 5² x 2 = 2T₄² (T₄ = 5)
a₅ = 6² x 2 = 2T₅² (T₅ = 6)
∴ a ∝ 2T²

Question 3.
If the masses and mutual distance between the two objects are doubled, what is the change in the gravitational force between them?
Given:
m₁‘ = 2m₁
m₂‘ = 2m₂
r₁ = 2r
Formula:

There is no change in the gravitational force.

Question 4.
Two bodies of masses m and Am are placed at a distance r. Calculate the gravitational potential at a point on the line joining them where the gravitational field is zero.
Answer:
Given: m₁ = m
m₂ = 4m
distance = r
To find: V = ??

Question 5.
If the ratio of the orbital distance of two planets \(\frac{d_{1}}{d_{2}}\) = 2, what is the ratio of gravitational field experienced by these two planets?
Given: \(\frac{d_{1}}{d_{2}}\) = 2
Formula:
Gravitational field,

Question 6.
The Moon lo orbits Jupiter once in 1.769 days. The orbital radius of the Moon lo is 421700 km. Calculate the mass of Jupiter?
Answer:

Question 7.
If the angular momentum of a planet is given by \(\vec{L}\) = 5t²\(\hat{i}\)-6t\(\hat{f}\)+3\(\hat{k}\). What is the torque experienced by the planet? Will the torque be in the same direction as that of the angular momentum?
Answer:

Question 8.
Four particles, each of mass M and equidistant from each other, move along a circle of radius R under the action of their mutual gravitational attraction. Calculate the speed of each particle.
Answer:
Force acting on a particle

Since particle, moving circular path experience centripetal force,

Question 9.
Suppose unknowingly you wrote the universal gravitational constant value as G = 6.67 x 10¹¹ instead of the correct value G = 6.67 x 10^-11, what is the acceleration due to gravity g’ for this incorrect G? According to this new acceleration due to gravity, what will be your weight W?
Answer:
Incorrect value of G = 6.67 x 10¹¹

If mass m = 1
then weight W’ = mg’- 9.8 x 10²²
W’ = 9.8 x 10²²W

Question 10.
Calculate the gravitational field at point O due to three masses m₁, m₂ and m₃ whose positions are given by the following figure. If the masses m₁ and m₂ are equal what is the change in a gravitational field at point O?
Answer:

The distance of masses m₁ and m₂ from the origin in the X-axis is ‘a’ and m₃ in y-axis also ‘a’

Question 11.
What is the gravitational potential energy of the Earth and Sun? The Earth to Sun distance is around 150 million km. The mass of the Earth is 5.9 x 10²⁴ kg and the mass of the Sun is 1.9 x 10³⁰ kg.
Answer:
Given: r = 150 million km
r = 150 x 10⁶ km
= 150 x 10⁹m
M_e = 5.9 x 10²⁴ kg
M_s = 1.9 x 10³⁰kg
To find: Potential energy = ??
Formula:

Question 12.
Earth revolves around the Sun at 30 km s¹. Calculate the kinetic energy of the Earth. In the previous example, you calculated the potential energy of the Earth. What is the total energy of the Earth in that case? Is the total energy positive? Give reasons.
Answer:
Given: V=30km/s

Formula:
\(\left.\begin{array}{l}
\text { Kinetic } \\
\text { energy(K.E) }
\end{array}\right\}\) = \(\frac { 1 }{ 2 }\)mv²
= \(\frac { 1 }{ 2 }\) x 5.9 x 10²⁴ x 30 x 30 x 10³²
= \(\frac { 1 }{ 2 }\) x 5.9 x 3 x 3 x 10³²
K.E = 26.55 x 10³² J.
∴ T.E = K.E + P.E
T.E = 26.55 x 10³² – 49.84 x 10³²
T.E = – 23.29 x 10³²J.
Total energy is negative. It implies Earth is bounded with Sun.

Question 13.
An object is thrown from Earth in such a way that it reaches a point at infinity with non-zero kinetic energy, with what velocity should the object be thrown from Earth?
Answer:
From the law of conservation of energy

Question 14.
Suppose we go 200 km above and below the surface of the Earth, what are the g values at these two points? In which case, is the value of g small?
Answer:
Given: depth (d) = height(A) = 200 km
We know that R – 6400 km
Formula:

Question 15.
Calculate the change in g value in your district of Tamilnadu.
(Hint: Get the latitude of your district of Tamilnadu from the Google). What is the difference in g values at Chennai and Kanyakumari?
Answer:
g’ = g – ω² Rcos² λ
Latitude of g at Chennai λ = 13°
ω²R = ( \(\frac { 1 }{ 2 }\) )²R
= \(\left(\frac{2 \times 3.14}{24 \times 60 \times 60}\right)^{2}\) x 6400 x 10³
ω²R = 3.4 x 10^-2ms^-2
13°= 0.2268 rad
g_Chennai = 9.8 – (3.4 x 10^-2) x (cos 0.2268)²
g_Chennai = 9.7667 ms^-2 = 9.767 ms^-2
Latitude of g at Kanyakumari = 8.08°

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 22 Types of Trade Text Book Back Questions and Answers, Notes

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 22 Types of Trade

11th Commerce Guide Types of Trade Text Book Back Questions and Answers

I. Choose the Correct Answer

Question 1.
The purchase of goods from a foreign country is called ………………..
a. Import
b. Export
c. Entrepot
d. Re-export
Answer:
a. Import

Question 2.
When goods are imported for the purpose of export it is called as …………..
a. Foreign Trade
b. Home Trade
c. Entrepot
d. Trade
Answer:
c. Entrepot

Question 3.
………………… acts as a connective link between the producer and the consumer.
a. Trade
b. Industry
c. Commerce
d. Business
answer:
a. Trade

Question 4.
The aim of home trade is ……………………
a. To raise the standard of living
b.To provide the essential goods and services economically
c. To raise the national income
d.To obtain all types of goods.
Answer:
b.To provide the essential goods and services economically

Question 5.
Internal trade can be classified into ……………… categories
a. Three
b. Four
c. Two
d. Five
Answer:
c. Two

II. Very Short Answer Questions

Question 1.
Give the meaning of Trade?
Answer:
The buying and selling of goods and services consist of trade. Trade is conducted in order to earn a profit.

Question 2.
What is Internal Trade?
Answer:
Buying and selling of goods and services within the boundaries of a nation are called internal trade. It takes place between buyers and sellers in the same locality, village, town or city or in different states, but definitely within the same country.

Question 3.
Mr.Vikram who runs a textile industry regularly procures cotton from Germany. Name the type of trade he is engaged in.
Answer:
This is Import trade because Mr. Vikram procures (purchases) cotton from Germany Import means buying of goods from a foreign country for domestic use.

Question 4.
When Vikram of India sells cotton shirts to Amal of England, what type of trade he is engaged in?
Answer:
It is called Export Trade.

Question 5.
How do you classify Trade?
Answer:
On the basis of the geographical location of buyers and sellers, trade can be broadly classified into two categories

1. Internal trade
2. External trade

Question 6.
What are the classifications of internal trade?
Answer:
Internal trade can be classified into Wholesale trade and Retail Trade.

Question 7.
What is import trade?
Answer:
Import trade means buying goods from a foreign country for domestic use.
Example. India imports petroleum products from Gulf Countries.

Question 8.
Explain the meaning of the Entrepot trade.
Answer:
Entrepot trade means importing goods from one country and exporting the same to foreign countries. It is also known as ‘Re-export trade’.

Question 9.
TVS is selling motorbikes in Europe. Under which type of trade can this be classified?
Answer:
TVS is selling motorbikes in Europe. This trade can be classified under Foreign trade.

Question 10.
What is the currency used in India in internal trade?
Answer:
The currency used in India for internal trade is RUPEE.

III. Short Answer Questions

Question 1.
What is the classification of Foreign trade?
Answer:
Types of Foreign Trade:

1. Import Trade: Import trade means buying goods from a foreign country for domestic use.
2. Export Trade: Export trade means the sale of domestic goods to foreign countries.
3. Entrepot Trade: Entrepot trade means importing goods from one country and exporting the same to foreign countries.

Question 2.
Give two examples of Entrepot trade.
Answer:
Indian diamond merchants in Surat import uncut raw diamonds from South Africa. They cut and polish the diamonds in their units in India and re-export them to the International Diamond Market in Amsterdam. An Indian Company imports rubber from Thailand and exports it to Japan.

Question 3.
What do you mean by Export trade?
Answer:
Export trade means the sale of domestic goods to foreign countries. Export trade is necessary to sell domestic surplus goods, to make better utilization of resources, to earn foreign exchange, to increase national income, to generate employment, and to increase Government revenue.

Question 4.
What is Wholesale trade?
Answer:
“Purchase of goods in bulk from the manufacturers and selling them in smaller quantities to other intermediaries” is known as wholesale trade.

Question 5.
State the meaning of Retail trade.
Answer:
Retail trade deals with the distribution of goods in small quantities to consumers.

Question 6.
Name any three retail traders in your locality
Answer:
Sree Akshaya Traders, Hari Traders, and Thomas Traders. (Any three)

Question 7.
State the main aim of trade.
Answer:
The essence of trade is to make goods and services available to those persons who need them and are able and willing to pay for them. Trade is conducted in order to earn a profit.

IV. Long Answer Questions

Question 1.
What are the features of Internal trade?
Answer:

1. The buying and selling of goods take place within the boundaries of the same country.
2. Payment for goods and services is made in the currency of the home country.
3. It involves transactions between the producers, consumers, and middlemen.
4. It consists of a distribution network of middlemen and agencies engaged in an exchange of goods and services.
5. In-home trade, the risk of transportation is very less when compared to foreign trade.
6. In-home trade, the laws prevailing in that country only have to be followed.
7. The aim of home trade is to provide goods and services economically.
8. The goods must be a part of domestic production.
9. Goods must be purchased from an individual or a firm established within a country.
10. Goods can be delivered using locally available modes of transport.
11. It does not involve any custom/import duty, but buyers need to pay the taxes to the Government.

Question 2.
Explain briefly the different types of Foreign trade?
Answer:
Meaning:
Foreign trade is a trade between a seller and buyer of different countries. It involves the exchange of goods and services of one country with another country.
Types of Foreign Trade
A. Import Trade:
Import trade means buying goods from a foreign country for domestic use. Example. India imports petroleum products from Gulf Countries. India imports machinery, equipment, materials, etc. It is necessary to speed-up industrialization, meet consumer demands, and improve the standard of living.

B. Export Trade:
Export trade means the sale of domestic goods to foreign countries.

Examples:

1. Export of Iron ore from India to Japan
2. Selling of Tea from India to England.
3.  Export of jasmine flowers from Madurai to Singapore.

11th Commerce Guide Types of Trade Additional Important Questions and Answers

I. Choose the Correct Answer :

Question 1.
……………… trade is a trade between a seller and buyer of different countries.
(a) Foreign
(b) Export
(c) Entrepot
(d) Home
Answer:
(a) Foreign

Question 2.
The internal trade is also called…………….
a. Wholesale Trade
b. Retail Trade
c. Entrepot Trade
d. Home Trade
Answer:
d. Home Trade

Question 3.
Selling of Tea from India to England – What type of trade is this?
Answer:
(a) Export
(b) Import
(c) Entrepot
(d) Home
Answer:
(a) Export

Question 4.
India imports petroleum products from Gulf countries. This is the example for ………………….
a. Wholesale Trade
b. Retail Trade
c. Entrepot Trade
d. Import Trade
Answer:
d. Import Trade

Question 5.
Hero pens produced in China and sold in India is an example for ……………… trade.
(a) Foreign
(b) Home
(c) Export
(d) Entrepot
Answer:
(a) Foreign

II. Very Short Answer Questions:

Question 1.
Where does Internal Trade take place?
Answer:
Internal takes place between the buyers and sellers in the same locality, village, town, or city or in different states but with the same country.

III. Short Answer Questions:

Question 1.
Write a short note on Entrepot Trade:
Entrepot trade means importing goods from one country and exporting the same to foreign countries. It is also known as ‘Re-export trade’.

E.g. Indian diamond merchants in Surat import uncut raw diamonds from South Africa. They cut and polish the diamonds in their units in India and re-export them to the International Diamond Market in Amsterdam.

IV. Long Answer Questions
Question 1.
Explain the types of Internal Trade
Answer:
Home trade consists of two main subdivisions namely

1. Wholesale trade: “Purchase of goods in bulk from the manufacturers and selling them in smaller quantities .to other intermediaries” is known as wholesale trade.
2. Retail Trade: Retail trade deals with the distribution of goods in small quantities to consumers.

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 21 Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs) Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 21 Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs)

11th Commerce Guide Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs) Text Book Back Questions and Answers

I. Choose the Correct Answer

Question 1.
MSMED Act was enacted in the year ……………………..
(a) 2004
(b) 2007
(c) 2006
(d) 2008
Answer:
(c) 2006

Question 2.
MSMEs are important for the nation’s economy because they significantly contribute to
(a) Industrial production
(b) exports
(c) employment
(d) all the above
Answer:
(d) all the above

Question 3.
Self-help groups convert the savings into a common fund known as
(a) Common fund
(b) Group corpus fund
(c) Group fund
(d) none of the above
Answer:
(b) Group corpus fund

Question 4.
There are …………… distinct modes of credit to Self Help Groups.
(a) 1
(b) 2
(c) 3
(d) 4
Answer:
(c) 3

Question 5.
Investment limit of a micro enterprise under manufacturing sector does not exceed ……………….. lakhs
(a) 10
(b) 20
(c) 25
(d) 50
Answer:
(c) 25
II. Very Short Answer Questions

Question 1.
What do you understand by the manufacturing enterprises?
Answer:
Manufacturing Enterprises refer to the enterprises engaged in the manufacturing or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951. The manufacturing enterprises are defined in terms of investment in plant and machinery.

Question 2.
Give some examples for micro-enterprises.
Answer:
SIPCOT and TANSIDCO are the government micro-enterprises in Tamil Nadu.

Question 3.
What is the aim of NEEDS?
Answer:
The government of Tamil Nadu launched the “New Entrepreneur – cum – Enterprise Development Scheme (NEEDS)” with a view to encouraging the educated youth to become the first generation entrepreneurs. The Scheme usages providing entrepreneurship development training to educated young entrepreneurs, preparing business plans, and helping them to tie up with financial institutions to set up new business ventures besides linking them with major industrial clients.

Question 4.
What is a Self Help Group?
Answer:
Self Help Group is a small informal voluntary association created for the purpose of enabling members to reap economic benefit out of mutual help, solidarity, and joint responsibility.

Question 5.
State the investment limit for small enterprises in the manufacturing and service sectors.
Answer:

• Manufacturing Sector – More than 25 lakhs but not exceeding 5 crores.
• Service Sector – more than 10 lakhs but not exceeding 2 crores.

III. Short Answer Questions

Question 1.
State the investment limit for medium enterprises engaged in the manufacturing and service sector.
Answer:

• Manufacturing Sector – More than 5 crores but not exceeding 10 crores.
• Service Sector – More than 2 crores but not exceeding 5 crores.

Question 2.
List out the products produced by MSME in Tamil Nadu?
Answer:
In Tamil Nadu, the MSMEs sector produces a wide variety of products in almost all fields. The prominent among them are the textile, electronic products, engineering products, auto ancillaries, leather products, chemicals, plastics, garments, jewellery etc.

Question 3.
What is the role and significance of MSMEs in Indian Economy?
Answer:
The MSME Sector contributes about 8% to Gross Domestic Product (GDP) besides 45% to the total manufacturing output and 40% to the exports from the country on the production of more than 6000 products. This Sector consists of 36 million units and provides employment to over 8 crore people.

Question 4.
Explain any three features of the Self Help Group.
Answer:

1. The motto of every group members should be “saving first – credit later”
2. Self Help Group is homogeneous in terms of economic status.
3. The ideal size of a Self Help Group ranges between 10 and 20 members.

Question 5.
What are the different ways in which banks fund Self Help Groups?
Answer:
There are three different ways by which banks fund SHGs. They are:

1. Banks lend directly to the SHGs. ‘
2. Banks provide loans to the NGOs for onward lending to the SHGs and ultimately to micro-entrepreneurs.
3. Banks extend credit to the SHGs with the NGOs serving as facilitators.

IV. Long Answer Questions

Question 1.
What is the definition of MSME?
Answer:
In accordance with the provisions of the Micro, Small and Medium Enterprises Development Act 2006, the micro, small and medium enterprises are classified into two classes. Entrepreneurship is the key to the economic development of any country By empowering entrepreneurs, the MSME sector provides more employment opportunities to the people of India. It helps towards the industrialization of rural and backward areas. This sector reduces regional imbalances. It provides an equitable distribution of national income and wealth.

A. Manufacturing Enterprises:
They refer to the enterprises engaged in the manufacturing or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951. The manufacturing enterprises are defined in terms of investment in plant and machinery.

B. Service Enterprises:
They refer to the enterprises engaged in providing or rendering services.

Question 2.
Explain the advantages of MSMEs?
Answer:
1.Employment Potential:
MSMEs generate more employment opportunities than large business concerns.
They are mostly labour intensive, thus they provide more employment opportunities to a larger number of people in India.

2.Low Production Cost:
MSMs do not require skilled labourers or professionals to run the organisation. It employs cheap labor and thus minimizes the overhead. These units are more cost-efficient than large-scale units, thus facilitates the production of goods at low cost.

3. Low Investment:
MSMEs do not require a huge capital to start the unit. h can employ locally available resources within the reach of the owner. They help to perfect and promote traditional family skills and handicrafts. These induštries facilitate the growth of local entrepreneurs and self-employed professionals in small towns and villages.

4. Quick Decision Making:
MSMEs need not hire professional managers to run the management on a day to day basis. In most cases, the owner himself manages the enterprises. license, timely decision making becomes easy and effective.

5. Supplementary Role:
MSMEs pray a complementary role to serve as a feeder to large-scale industries. They supply accessories, spare parts, and components to large scale industries.

6. Establishment of Socialistic Pattern of Society:
MSME sector contributes towards the establishment of socialistic pattern of society by redùcing the concentration of income and. wealth. ¡t enables and empowers people of small means to take up a gainful industrial activity, and thereby helps to achieve equitable distribution of wealth.

7. Balanced Regional Development:
By encouraging MSMEs in industrially backward areas of India, . balanced development can be achieved across all regions. It will also help greatly in preventing people from migrating to cities and towns in pursuit of employment.

8. Promotion of Self Employment and Self Reliance Spirit:
MSMEs help a great deal in developing a class of entrepreneurs. It promotes self-employment and a spirit of self-reliance in society, thereby contributing to an increase in per capita income or economic development.

9. Higher Contribution to Manufacturing and Export:
MSMEs contribute 45% to the total manufacturing output and 40% to the exports from the country. It helps in earning precious foreign exchange in various countries across the world.

Question 3.
What are the objectives of SHGs?
Answer:

1. Focusing on the empowerment of women.
2. Saving people from the clutches of money lenders
3. Building capacity of women and enabling them to participate in generating activities.
4. Creating the habit of saving in the minds of the people who are economically backward.
5. Promoting entrepreneurship skills among women.
6. Creating awareness about the importance of credit circle or revolving credit and the payment of the circle.
7. Elevating the economic standard of the member’s families.
8. Developing skills and facilitating credit linkages for eventual economic empowerment.
9. Promoting awareness among the members about finding solutions for their economic problems.
10. Identifying the common interest of the group members and carrying out their operations in the most efficient and economic way.
11. Enabling the members to overcome all social and economic barriers.
12. Promising and ensuring human rights to women at all stages of their life cycle.

11th Commerce Guide Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs) Additional Important Questions and Answers

I. Choose the Correct Answer

Question 1.
Tamil Nadu Corporation for Development of Women Limited (TNCDW) was established in the year …………….
(a) 1983
(b) 1984
(c) 1985
(d) 1995
Answer:
(a) 1983

Question 2.
The process of manufacturing enterprises is specified in the first schedule to the ……….
a. CA2013
b. MSMED 2006
c. IDRA 1951
d. PA1932
Answer:
c. IDRA 1951

Question 3.
MSME supplies …………………………. to large scale industries.
a. Accessories
b. Spare Parts
c. Components
d. All the above
Answer:
d. All the above

Question 4.
The registered number of units of MSMEs in Tamilnadu as of 12.12.2017 ……….
a. 13.24 lakhs
b. 18.86 lakhs
c. 19.24 lakhs
d. 12.94 lakhs
Answer:
d. 12.94 lakhs

Question 5.
Which one of the following regional rural banks provides financial assistance to MSME start-ups.?
a. Pandian Rural Bank
b. Pallavan Rural Bank
c. Vallalar Rural Bank
d. All the above
Answer:
c. Vallalar Rural Bank

II. Very Short Answer Questions

Question 1.
What are all the activities engaged by Microenterprises?
Answer:
Micro enterprises are engaged in low-scale activities such as clay pot making, fruits and vegetable vendors, transport (three-wheeler tempos and autos), repair shops, cottage industries, small industries, handlooms, handicraft works, etc.

Question 2.
Give examples for Public Sector Banks.
Answer:
State Bank of India, Indian Bank, Indian Overseas Bank, Canara Bank.

III. Short Answer Questions

Question 1.
Define Self Help Group:
Answer:
National Bank for Agricultural & Rural Development (NABARD) has defined Self Help Group as “a homogenous group of rural poor voluntarily formed to save whatever amount they can conveniently save out of their earnings and mutually agree to contribute to a common fund of the group to be lent to the members for meeting their productive and emergent credit needs”

Question 2.
Write a short note on MUDRA bank:
Answer:
The Government of India has launched MUDRA Bank with a capital amount of 20,000 crores, and a credit guarantee corpus of 3,000 crores, to help Micro Small and Medium Enterprises (MSMEs) and startups resolve problems relating to financing. MUDRA Bank refinances micro-Finance Institutions through a PradhanMantriMudraYojana (PMMY).

Question 3.
Write a note on the activities of Self Help Groups in India:
Answer:
In December 2017 there were 45,67,090 SHGs in India. The total number of members in SHGs during the same period stood at 5,02,65,933 at all Indian levels. The five-year plans of the government of India have given due recognition to the relevance of the Self-help group concept to implement developmental schemes at the grassroots level.

IV. Long Answer Questions:

Question 1.
Briefly explain the limit of investment by MSME in the Manufacturing sector and Service sector:
Answer:

Question 2.
Write a note on NEEDS:
Answer:
The government of Tamil Nadu launched the “New Entrepreneur-cum-Enterprise Development Scheme (NEEDS)” with a view to encouraging the educated youth to become the first generation entrepreneurs.

The Scheme envisages providing entrepreneurship development training to educated young entrepreneurs, preparing business plans, and helping them to tie up with financial institutions to set up new business ventures, besides linking them .with major industrial clients.

Question 3.
Explain the institutional sources of finance for MSMEs:
Answer:
There are many Banks and Financial institutions which provide financial assistance to Micro Small and Medium Enterprises and start-ups.
A. Commercial Banks

• Public sector banks (e.g) State Bank of India, Indian Bank, Indian Overseas Bank Canara Bank
• Private sector banks (e.g) ICICI, Axis Bank, City Union Bank, HDFC, KarurVasya Bank, Tamilnadu Mercantile Bank

B. Regional Rural bank

• Pandian Rural bank,
• Pallavan Rural Bank,
• Vallalar Rural Bank.

C.Co operative Banks
TNSC Bank, District Central Co-operative Banks
D. Micro Finance Institutions (e.g) MUDRA Bank
E. Non-Banking Finance Institutions

• National. Small Industries Corporation Ltd (NSIC)
• Small Industries Development Bank of India (SIDBI)

Question 4.
Explain the features of Self Help Groups:
Answer:

• The motto of every group members should be “saving first – credit latter”
• Self Help Group is homogeneous in terms of economic status.
• The ideal size of a Self Help Group ranges between 10 and 20 members.
• The groups need not be registered.
• Groups are non-political, voluntary associations and follow a democratic culture. ,
• Each group should have only one member from one single family.
• A group is to be formed with only men or only with women.
• Self Help Group holds weekly meetings mostly during non-working hours, and full attendance is made mandatory for better participation.
• The groups have transparency among themselves and they have collective accountability in respect of financial transactions.
• Every group provides a platform to its members for the exchange of their views and ideas freely.

Question 5.
Explain the functions of Self-help groups:
Answer:

• Developing and enhancing the decision-making capacity of members
• Increasing general awareness on literacy among members.
• Equipping the poor with basic skills for understanding monetary transactions.
• Maintaining books and registers to ensure proper accounts.
• Providing necessary training in the chosen field.
• Submitting the accounts for annual audit by a qualified auditor.
• Deciding the loan amount be sanctioned to the group members.

Question 6.
Write a note on SHGs in Tamil Nadu:
Answer:
In Tamil Nadu, Tamil Nadu Corporation for Development of Women Limited (TNCDW) was established in the year 1983 with the prime objective of socio-economic development and empowerment of rural women. The Government of Tamil Nadu spearheaded the Self Help Group concept in the country by forming SHGs in the Dharmapuri district with the assistance of the International Fund for Agricultural Development (IFAD) in September 1989. The success of the IFAD project paved way for the now popularly called “MahalirThittam” project.

which was launched during 1997-98 with the State Government funding and was progressively extended to all the 30 districts. The SHG movement has now emerged as a powerful and vibrant movement illuminating the lives of many poor women in the state.

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 20 International Finance Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 20 International Finance

11th Commerce Guide International Finance Text Book Back Questions and Answers

I. Choose the Correct Answer

Question 1.
An instrument representing ownership interest in securities of a foreign issuer is called ………………..
a. an ownership certificate
b. a depositary receipt.
c. an ownership receipt
d. None of the above.
Answer:
b. a depositary receipt.

Question 2.
Issuance of DRs is based on the increase of demand in the ……………….
a. International market
b. Local market
c. Existing shareholders
d. All of the above
Answer:
a. International market

Question 3.
ADRs are issued in ……………
a. Canada
b. China
c. India
d. The USA
Answer:
d. The USA

Question 4.
Depositary receipts that are traded in an international market other than the United States are called ……………..
a. Global Depositary Receipts
b. International Depositary Receipts.
c. Open Market Depositary Receipts
d. Special Drawing Rights.
Answer:
a. Global Depositary Receipts

Question 5.
………………….. bond is a special type of bond issued in a currency other than the home currency.
a. Government Bonds
b. Foreign Currency Convertible Bond
c. Corporate Bonds
d. Investment Bonds
Answer:
b. Foreign Currency Convertible Bond

II. Very Short Answer Questions:

Question 1.
Who are Foreign Institutional Investors?
Answer:
The Foreign Institutional Investors (FII) can be defined as an investment made by a Non-resident in the equity of a domestic company without the intention of acquiring management control.

Question 2.
What is a Depository Receipt?
Answer:
A depository receipt is a negotiable financial instrument issued by a bank to represent a foreign company’s equity shares or securities.

Question 3.
What is a GDR (Global Depository Receipt)?
Answer:
GDR is an instrument issued abroad by a company to raise funds in some foreign currencies and is listed and traded on a foreign stock exchange.

Question 4.
What is an American Depositary Receipt (ADR)?
Answer:
ADR is a dollar-denominated negotiable certificate representing a non-US company in the US market which allows US citizens to invest in overseas securities.

Question 5.
What is a Foreign Currency Convertible Bond?
Answer:
A foreign currency convertible bond is a special type of bond issued in a currency other than the home currency. In other words, companies issue foreign currency convertible bonds to raise money in foreign currency.

III. Short Answer Questions:

Question 1.
Explain the importance of international finance.
Answer:

• International finance helps in calculating the exchange rates of various currencies of nations and the relative worth of each and every nation in terms thereof.
• It helps in comparing the inflation rates and getting an idea about investing in international debt securities.
• It helps in ascertaining the economic status of the various countries and in judging the foreign market.

Question 2.
What are Foreign Currency Convertible Bonds?
Answer:
A foreign currency convertible bond is a special type of bond issued in a currency other than the home currency. Companies issue foreign currency convertible bonds to raise money in foreign currency.

Question 3.
Explain any three disadvantages of FDI:
Answer:

1. Exploiting Natural Resources: The FDI Companies deplete natural resources like water, forest, mines, etc. As a result, such resources are not available for the usage of the common man in the host country.
2. Heavy Outflow of capital: Foreign companies are said to take away huge tunes in the form of dividends, royalty fees, etc. This causes a huge outflow of capital from the host country.
3. Not Transferring Technology: Some foreign enterprises do not transfer the technology to developing countries. They mostly transfer second-hand technology to the host country.

Question 4.
State any three features of ADR:
Answer:
ADRs are denominated only in US dollars. They are issued only to investors who are American residents. The depository bank should be located in the US.

Question 5.
State any three features of GDR:
Answer:

1. It is a negotiable instrument and can be traded freely like any other security.
2. GDRs are issued to investors across the country. It is denominated in any acceptable freely convertible currency.
3. GDR is denominated in any foreign currency but the underlying shares would be denominated in the local currency of the issuer.

IV. Long Answer Questions

Question 1.
Describe the importance of international finance?
Answer:

1. International finance helps in calculating the exchange rates of various currencies of nations and the relative worth of each and every nation in terms thereof.
2. It helps in comparing the inflation rates and getting an idea about investing in international debt securities.
3. It helps in ascertaining the economic status of the various countries and in judging the foreign market.
4. International Financial Reporting System (IFRS) facilitates comparison of financial statements made by various countries.
5. It helps in understanding the basics of international organisations and maintaining the balance among them.

Question 2.
Distinguish between GDR and ADR.
Answer:

Question 3.
State any five features of FCCB.
Answer:

1. FCCB is issued by an Indian company in foreign currency.
2. These are listed and traded in the foreign stock exchange and similar to the debenture.
3. It is a convertible debt instrument. It carries an interest coupon. It is unsecured.
4. It gives its holders the right to convert for a fixed number of shares at a predetermined price.
5. It can be converted into equity or depository receipt after a certain period.

Question 4.
Explain any five advantages of FDI.
Answer:
International Finance:
1. Achieving Higher Growth in National Income Developing countries get much-needed capital through FDI to achieve a higher rate of growth in national income.

2. Help in Addressing BOP Crisis FDI provides an inflow of foreign exchange resources into a country. This helps the country to solve the adverse balance of payment position.

3. Faster Economic Development FDI brings technology, management, and marketing skills along with it. These are crucial for achieving faster economic development in developing countries.

4. Generating Employment Opportunities: FDI generates a lot of employment opportunities in developing countries, especially in high-skill areas.

5. Encouraging Competition in Host Countries Entry of FDI into developing countries promotes healthy competition therein. This leads to enterprises in developing countries operating efficiently and effectively in the market. Consumers get a variety of products of good quality at a market-determined price which usually benefits the customers.

11th Commerce Guide International Finance Additional Important Questions and Answers

Choose the Correct Answer:

Question 1.
…………….. is a section of financial economics that deals with the monetary interactions that occur between two or more countries.
(a) International finance
(b) Business finance
(c) DR
(d) GDR
Answer:
(a) International finance

Question 2.
If the local currency is in variable form and foreign currency is in fixed form quotation will be …………….
a. Indirect
b. direct
c. Local Form
d. Foreign form
Answer:
a. Indirect

Question 3.
………………. is an instrument issued abroad by a company to raise funds in some foreign currencies and is listed and traded on a foreign stock exchange.
(a) GDR
(b) DR
(c) FDI
(d) FII
Answer:
(a) GDR

II. Very Short Answer Questions:
Question 1.
Define Foreign Direct Investment (FDI).
Answer:
Foreign direct investment (FDI) is an investment made by a company or an individual in one country with business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.

Question 2.
Expand the following:
Answer:

1. GDR: Global Depositary Receipt
2. ODB: Overseas Depository Bank
3. DCB: Domestic Custodian Bank
4. ECB: External Commercial Borrowing

III. Short Answer Questions:

Question 1.
What are International capital markets?
Answer:
Modem organisations including multinational companies depend upon sizeable borrowings in rupees as well as in foreign currencies. Prominent financial instruments used for this purpose are Depository Receipts.

Question 2.
What are all the forms of Foreign Direct Investment?
Answer:
Foreign direct investments take the following forms:
Establishment of a new enterprise in a foreign country. Expansion of existing branch or subsidiary in a foreign country. Acquisition of enterprise located in a foreign country.

IV. Long Answer Questions:

Question 1.
What are all the disadvantages of FDI?
Answer:
The following are the disadvantages of FDI:
Exploiting Natural Resources:
The FDI Companies deplete natural resources like water. forest, mines, etc. As a result, such resources are not available for the usage of the common man in the host country.
Heavy Outflow of capital:
Foreign companies are said -to take away huge funds in the form of dividends, royalty fees etc. This causes a huge outflow of capital from the host country.

Not Transferring Technology:
Some foreign enterprises do not transfer the technology to developing countries. They mostly transfer second-hand technology to the host country. They keep the fundamental aspects of technology with the parent company. In such a case, the host country may not get the advantage of technology transfer and consequently economic development.

Exploiting Cheap Labour:
Foreign enterprises employ a cheap labour force at lower pay in developing countries. They do not employ local people for higher posts in the management. Further, they do not extend the privileges they usually give to the employees in their home country to the employees of the host country. Thus they are stated to exploit the labour in developing countries.

Creating Monopolistic Environment:
Multi-National Companies (MNCs) which enter the host country through the FDI route create monopolistic conditions in the host countries through their market power. They may not create a competitive environment in the host country. Contrarily they may affect the competition altogether and establish supremacy.

Question 2.
Write a note on FII:
Answer:
The FII can be defined as an investment made by a Non-resident inequity of a domestic company without the intention of acquiring management control. Fils are the investments made by an individual investor or an investment fund, into the financial markets of another nation. Organizations like hedge funds, insurance companies, pension funds, and mutual funds can be called institutional investors.

Foreign Institutional Investors play a very important role in the Indian economy. From 1992, Foreign Institutional Investors (FIIs) have been allowed to invest in all securities traded on the primary and secondary markets, including shares, debentures, and warrants issued by companies. Over 1450 foreign institutional investors have registered their names with the Securities and Exchange Board of India (SEBI), the regulator for the securities market in India.

Question 3.
Explain the international sources from where funds can be generated?
Answer:
Commercial Banks:
Most of the commercial banks extend foreign currency loans for promoting business opportunities. The loans and services of various types, provided by banks differ from country to country.

International Agencies and Development Banks:
International agencies and Development banks play an important role to promote international trade and business. They provide term loans and grants to promote the development of economically backward areas in the world. International Finance Corporation (IFC), EXIM Bank, and Asian Development Bank are the agencies operating at the International level to meet the needs of international finance.

International Capital Markets:
Modem organisations including multinational companies depend upon sizeable borrowings in rupees as well as in foreign currencies. Prominent financial instruments used for this purpose are Depository Receipts.

Question 4.
Explain the procedure for issuing ADR:
Answer:

• First of all, a company hands over the shares to a Domestic Custodian Bank (DCB)
• Then DCB requests the American Depository Bank (ADB) to issue the shares in the form of ADRs
• ADB converts the issue which are in rupees into US dollars
• Finally, ADB issues them to the intending investors.

Question 5.
Explain the process of issuing GDR:
Answer:

• The company issuing GDRs hands over its shares to one Domestic Custodian Bank (DCB).
• The DCB requests the Overseas Depository Bank (ODB) situated in the foreign country for issuing the shares as GDR.
• The ODB converts the shares shown in rupees into GDR which are denominated in US dollars.
• Finally, ODB issues them to the intending investors.

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 19 Sources of Business Finance Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 19 Sources of Business Finance

11th Commerce Guide Sources of Business Finance Text Book Back Questions and Answers

I. Choose the Correct Answer:

Question 1.
What is defined as the provision of money at the time when it is required?
a. Finance
b. Bank
c. Cash management
d. None of these
Answer:
a. Finance

Question 2.
Internal sources of capital are those that are ……………
a. Generated through outsiders such as suppliers
b. Generated through loans from commercial banks
c. Generated through the issue of shares
d. Generated within the business
Answer:
d. Generated within the business

Question 3.
Debenture holders are entitled to a fixed rate of …………..
a. Dividend
b. Profits
c. Interest
d. Ratios
Answer:
c. Interest

Question 4.
Public deposits are the deposits which are raised directly from …………………….
a. The public
b. The directors
c. The auditors
d. The owners
Answer:
a. The public

Question 5.
Equity shareholders are the ……………………… of a company
a. Creditors
b. Owners
c. Debtors
d. Employees
Answer:
c. Debtors

Question 6.
Funds required for purchasing current assets is an example for
a. Fixed Capital Requirement
b. Ploughing Back of Profits
c. Working Capital Requirement
d. Lease Financing
Answer:
c. Working Capital Requirement

Question 7.
Which of the following holder is given voting right?
a. Debentures
b. Preference Shares
c. Equity shares
d. Bonds
Answer:
c. Equity shares

Question 8.
It may be wise to finance fixed assets through ……………….
a. Creditors
b. Long term debts
c. Bank Overdraft
d. Bills Discounting.
Answer:
b. Long term debts

II. Very Short Answer Questions:

Question 1.
Write short notes on debentures:
Answer:
Debentures are an important instrument for raising long term debt capital. A company can raise funds through the issue of debentures which bear a fixed rate of interest.

Question 2.
What do you mean by public deposits?
Answer:
It is a method of inviting public deposits by giving advertisements in the media by the companies. It offers deposit schemes for a longer tenure. The interest rates offered by companies on public companies are higher than the bank.

Question 3.
Name any two sources of funds classified under borrowed funds.
Answer:

1. Debentures
2. Loan from banks

Question 4.
Name any two internal sources of business finance.
Answer:
Capital by the owners (start-up or additional capital); Debt Collection.

Question 5.
State any two factors that affect the choice of source of finance.
Answer:

1. Cost
2. Financial capacity to the firms

III. Short Answer Questions:

Question 1.
Define Business finance.
Answer:
In the words of R.C.Os born, “ The finance function is the process of acquiring and utilizing funds by a business”.

Question 2.
What is a pledge?
Answer:
A customer transfers the possession of an article with the creditor (banker) and receives loan. Till the repayment of loan, the article is under the custody of the borrower. If the debtor fails to refund the loan, creditor (banker) will auction the article pawned and adjust the outstanding loan from the sale proceeds.

Question 3.
List sources of raising long-term and short-term finance
Answer:
Sources of Short-term finance:

1. Loans and Advances
2. Bank Overdraft
3. Discounting Bills of Exchange
4. Trade credit
5. Pledge
6. Hypothecation
7. Mortgage
8. Loans Against the Securities
9. Clear loan
10. Commercial paper (CP)
11. Hire purchase finance.
12. Factoring

Sources of Long – Term Finance:

1. Shares
2. Debentures
3. Retained earnings
4. Public deposits
5. Long term loan from commercial banks
6. The loans from financial institutions

Question 4.
For which purpose fixed capital is needed in business?
Answer:
Business enterprises need finance for fixed and working capital requirements. Fixed capital requirements include the purchase of plant, machinery, furniture, fixtures, vehicles, and so on.

Question 5.
What do you mean by the working capital requirement of a business?
Answer:
Working capital is nothing but the amount which is needed for meeting the day to j day expenses of the business. The working capital requirements include the purchase of I raw materials, payment of salary and wages,  incurring operating expenses like telephone bills, carriage inward and outward, electricity charges, premium, stationery, etc.

IV. Long Answer Questions

Question 1.
List out the various sources of financing.
Answer:
The various sources of business finance can be classified into three categories on the basis of the following:
Period basis: On the basis of the period, The different sources of finance can be further grouped into three categories on the basis of period

1. Short term finance
2. Medium-term finance
3. Long term finance

Ownership basis: On the Basis of Ownership, Business finance can be divided into two categories based on ownership of funds.

1. Owner’s Fund
2. Borrowed Fund

Source of generation basis: On the Basis of Generation of Funds, The sources of funds can be grouped into two categories based on generation.

1. Internal sources
2. External sources

Question 2.
What are the different types of short term finances given by commercial banks?
Answer:
1. Loans and Advances:
Loan is a direct advance made in a lump sum which is credited to a separate loan account in the name of the borrower. The borrower can withdraw the entire amount in cash immediately.

2. Bank Overdraft:
Bank overdraft refers to an arrangement whereby the bank allows the customers to overdraw the required amount from its current deposit account within a specified limit.

3. Discounting Bills of Exchange:
When goods are sold on credit, the suppliers generally draw bills of exchange upon customers who are required to accept it.

4. Trade Credit:
Trade credit is the credit extended by one trader to another for the purpose of purchasing goods and sendees. Purchaser need not pay money immediately after the purchase.

5. Pledge:
A customer transfers the possession of an article with the creditor (banker) and receives loan. Till the repayment of loan, the article is under the custody of the borrower. If the debtor fails to refund the loan, the creditor (banker) will auction the article pawned and adjust the outstanding loan from the sale proceeds.

6. Hypothecation:
This is a loan taken by depositing a document of title to the property with the banker. Of course, the physical possession of asset property is with the borrower. If the borrower fails to repay the loan amount, the article hypothecated will be sold in auction by the banker concerned.

Question 3.
Write short notes on :
Answer:
Retained Earnings:
Retained earnings refer to the process of retaining a part of net profit year after year and reinvesting them in the business. It is also termed as ploughing back of profit. An individual would like to save a portion of his/ her income for meeting the contingencies and growth needs.

Similarly profit making company would retain a portion of the net profit in order to finance its growth and expansion in near future. It is described to be the most convenient and economical method of finance.

Lease financing:
Lease financing denotes procurement of assets through lease. Leasing here refers to the owning of an asset by any individual or a corporate body which will be given for use to another needy business enterprise on a rental basis. The firm which owns the asset is called ‘Lessor’ and the business enterprise which hires the asset is called ‘Lessee’. The contract is called ‘Lease’.

The terms and conditions like lease period, rent fixed, mode of payment and allocation of maintenance, are mentioned in the lease contract.

Question 4.
Write short notes on

1. Owner’s funds
2. Borrowed funds

Answer:
1. Owner’s Funds:
Owner’s funds mean funds which are provided by the owner of the enterprises who may be an individual or partners or shareholders of a company. The profits reinvested in the business (ploughing back of profit or retained earnings) come under the owner’s funds. These funds are not required to be refunded during the lifetime of a business enterprise. It provides the owner the right to control the management of the enterprise.

2. Borrowed Funds:
The term ‘borrowed funds’ denotes the funds raised through loans or borrowings. For example debentures, loans from banks and financial institutions, public deposits, trade credit, lease financing, commercial papers, factoring, etc., represent borrowed funds.

These borrowed sources of funds provide a specific period before which the fund is to be returned. The borrower is under legal obligation to pay interest at given rate at regular intervals to the lender. Generally borrowed funds are obtained on the security of certain assets like bonds, land, building, stock, vehicles, machinery, documents of title to the goods, and the like.

Question 5.
Explain any four personal investment avenues.
Answer:
1. Public Provident Fund (PPF): It is the safest long-term investment option for investors in India. It is totally tax-free. PPF account can be opened in a bank or post office. The money deposited cannot be withdrawn before 15 years and an investor can earn compound interest from this account. PPF investor can take a loan against PPF account when he/she experiences financial difficulties.

2. Mutual Funds: An individual investor who wants to invest in equities and bonds with a balance of risk and return generally can invest in mutual funds. Nowadays people invest in stock markets through a mutual fund. A systematic investment plan is one of the best investment options in India.

3. Unit Linked Insurance Plans (ULIP): ULIP is a life insurance-linked product, which provides risk cover for the policyholder along with investment options to invest in any number of qualified investments such as stocks, bonds, or mutual funds.

4. Post Office Saving Schemes: There are different types of postal small savings schemes namely Post Office Savings Account, Post Office Recurring Deposit Account (RD), Post Office Fixed Deposit Account (FD/TD), Post Office Monthly Income Account Scheme (MIS), Senior Citizens Saving Scheme (SCSS) Public Provident Fund Account (PPF), National Savings Certificates (NSC), Kisan Vikas Patra (KVP), SukanyaSamriddhi Account (SSA). Investors can choose the appropriate postal schemes as per their needs. Postal investment schemes are the safest investments.

11th Commerce Guide Sources of Business Finance Additional Important Questions and Answers

I. Choose the Correct Answer:

Question 1.
Long term finance ………………
(a) more than 5 years
(b) above I year but below 5 years
(c) more than one year but below 3 years
(d) within one year
Answer:
(a) more than 5 years

Question 2.
Funds required for purchasing current assets is an example of ………………
a. Fixed Capital requirement
b. Ploughing back of profit
c. Working capital requirement
d. Lease financing
Answer:
c. Working capital requirement

Question 3.
Business people hypothecate goods or equipment to get ……………… type of loan. It is a loan taken on the security of movable assets.
(a) Hypothecation
(b) Pledge
(c) Trade credit
(d) Bank overdraft
Answer:
(a) Hypothecation

Question 4.
Debentures are treated as ………………………….
a. Fixed Capital
b. Permanent Capital
c. Fluctuating Capital
d. Loan Capital
Answer:
d. Loan Capital

Question 5.
Source of Medium Term Finance is ………………
(a) share
(b) debentures
(c) Bank overdraft
(d) lease finance
Answer:
(d) lease finance

Question 6.
…………………………. is an unsecured money market instrument in the form of the promissory note.
a. Pledge
b. Trade Credit
c. Commercial paper
d. Mortgage
Answer:
c. Commercial paper

Question 7.
Which one are the owner’s funds?
(a) Debentures
(b) Loan from banks
(c) Equity shares
(d) Commercial papers
Answer:
(c) Equity shares

Question 8.
Which of the following holder are not having voting rights?
a. Debentures
b. Equity Shares
c. Preference Shares
d. Bonds
Answer:
c. Preference Shares

Question 9.
Which one of the following is the tax-free investment option?
a. Equity Share Purchase
b. Real Estate.
c. Investments in Gold
d. Public Provident Fund
Answer:
d. Public Provident Fund

Question 10.
The period for opening a Recurring Deposit is …………………
a. 1-10 years
b. 1 year only
c. 5-10 years
d. 10 years only
Answer:
a. 1-10 years

II. Very short Answer Questions

Question 1.
What do you mean by Bonds?
Answer:
Bonds are one of the ideal investment options for those investors who would like to invest their hard-earned money safely. Bonds are issued both by government and public and private sector companies and financial institutions.

Question 2.
What is Trade Credit?
Answer:
Trade credit is the credit extended by one trader to another for the purpose of purchasing goods and services. It is a very simple and convenient method of raising short-term finance.

Question 3.
What is Commercial Paper (CP)?
Answer:
Commercial paper (CP) is an unsecured money market instrument in the form of a promissory note. It was introduced in India in 1990 under Section 45 W of the Reserve Bank of India Act.

Question 4.
What are the three important terms used in the process of Lease Financing?
Answer:
The firm which owns the asset is called ‘Lessor’ and the business enterprise which hires the asset is called ‘Lessee’. The contract is called ‘Lease’. These are the three important terms used in the process of Lease Financing.

Question 5.
Define Share:
Answer:
The Indian Companies Act 2013 defines a share as “To be a share in the share capital of a company”.

Question 6.
Who is called a shareholder?
Answer:
The person holding a share is called a shareholder who has an interest in the assets and profits of the company.

Question 7.
Define Savings:
Answer:
Saving is defined as the difference between income and consumption.

III. Short Answer Questions

Question 1.
Mention any three significance of business finance.
Answer:

1. A firm with adequate business finance can easily start any business venture.
2. Business finance helps the business organization to purchase raw materials from the supplier easily to produce goods.
3. The business firm can meet financial liabilities like prompt payment of salary and wages, expenses, etc., in time with the help of sound financial support.

Question 2.
Write a short note on Commercial paper (CP).
Answer:
Commercial paper (CP) is an unsecured money market instrument in the form of a promissory note. Corporates, Primary Dealers (PD), and All India Financial Institutions are eligible to issue Commercial Paper. It was introduced in India in 1990 under Section 45 W of the Reserve Bank of India Act. It is issued by a firm to raise funds for a short period. It can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue.

Question 3.
Explain the types of shares:
Answer:
There are two types of shares namely Equity Shares and Preference Shares.

1. Equity Shares: Equity share is the most important source of raising long-term capital by a company. These shares do not carry any special or preferential rights in the matter of payment of annual dividend and repayment of capital at the time of winding up. Equity shareholder enjoys more voting rights in proportion to a number of shares held by them. They took part in the management of the company.

2. Preference Shares: Preference shares are those shares which enjoy priority regarding payment of dividend at a fixed rate out of the net profits of the company. They will get their dividend every year before any dividend is paid to equity shareholders. They will have a right to get their settlement before the claims of equity shareholders are settled at the time of liquidation of the company. They do not have voting rights.

Question 4.
What is meant by preference shares?
Answer:
The fund raised by the issue of preference shares is called preference share capital. Preference shares are those shares which enjoy priority regarding payment of dividend at a fixed rate out of the net profits of the company. They will get their dividend every year before any dividend is paid to equity shareholders.

They will have a right to get their settlement before the claims of equity shareholders are settled at the time of liquidation of the company. However, they do not have voting rights.

IV. Long Answer Questions:

Question 1.
Briefly explain the features of Business finance.
Answer:
The following are the main features of Business Finance:

• Business finance comprises of all types of funds namely short, medium and long term used in business.
• The volume of business finance required varies from one business enterprise to another depending upon its nature and size. In other words, small and medium enterprises require a relatively lower level of business finance than large scale enterprises.
• The amount of business finance required differs from one period to another. In other words, the requirement of business finance is heavy during the peak season while it is at a low level during the dull season.
• The amount of business finance determines the scale of operations of business enterprises.

Question 2.
What are the differences between the internal and external sources of raising funds?
Answer:

Question 3.
What is the significance of Business Finance?
Answer:
The following are the importance/significance of Business Finance:

• A firm with adequate business finance can easily start any business venture.
• Business finance helps the business organization to purchase raw materials from the supplier easily to produce goods.
• The business firm can meet financial liabilities like prompt payment of salary and wages, expenses, etc., in time with the help of sound financial support.
• The sound financial support enables the enterprises to meet any unexpected or uncertain risks arising from the business environment efficiently. For example economic slowdown, trade cycles, severe competition, a shift in consumer preference, etc.
• Sound financial position empowers the enterprise to attract talented manpower and introduce the latest technology.

Question 4.
“Saving leads to the economic development of a country” Justify the statement.
Answer:
Yes. The money invested in various attributes helps in the economic development of a country.
The following are the reasons:

• Money invested in bank deposits facilitates employment generation in various sectors of the economy and poverty alleviation.
• The savings invested in bank deposits lead to credit creation in the country which in turn promotes industrial and agricultural development in a country.
• Savings invested in government bonds and various institutions help in great measure in building in strengthening the infrastructure facilities in a country.
• The country with higher savings can easily face the consequences of economic recession.
• The bad consequences of inflation can be met easily with strong savings. As a result, the evil effect of soaring prices can be controlled.

Question 5.
Explain any five factors influencing the choice of Business Finance:
Answer:
The factors influencing the choice of business finance are as follows:
1. Cost: Business enterprises have to analyze the cost of mobilizing and utilizing the funds. For instance, where the interest rate is relatively lower, public deposits, debentures, term loan,s etc. may be desirable options.

2. Financial Capacity of the Firm: Financially sound enterprises have the capacity to pay interest promptly and return the capital at the stipulated time. Such enterprises can go for borrowed sources. On the other hand, if the firm is not financially stable, it has to depend on owned sources of funds.

3. Time Period: The period for which business finance is required determines the suitable source. For instance, where funds are required for a shorter period, bank finance like an overdraft, cash credit, bill discounting, mortgage, pledge, leasing, hire purchase, factoring, and so on, are suitable sources. Funds required for a longer period can be tapped from the issue of shares, debentures, bonds, term loans and the like.

4. Control: Equity shareholders are real owners of corporate enterprises. They exercise complete control over the management of the company. If the existing shareholders do not like to lose their control, they must not issue more equity shares to supplement the financial resources. Contrarily borrowed sources of funds will not disturb the control exercised by the company management. Hence borrowed source is suitable for maintaining the administrative control of the company.

5. Stage of Development: A new business enterprise finds it hard to mobilize business finance than an established firm. Therefore it may have to rely on owned sources in the initial stage. Once the business enterprise has established itself in the business world, it can tap borrowed sources of funds and offer its assets as security therefor.

6. Credit Worthiness of Firms: Some sources of funds like debentures and creditors require the business firms to mortgage the assets. This hurts the creditworthiness of the business concern in the financial market,  Contrarily business concerns do not have to mortgage their assets when they mobilize funds through sources like share capital, retained; earnings, unsecured loans, etc., and thereby maintaining a good image in the financial market.