Class 12 Finance Important Chapter 17 Venture Capital and Factoring

Class 12 Finance Important Chapter 17 Venture Capital and Factoring Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Finance Important Solutions in English and select need one. AHSEC Class 12 Finance Additional Notes Download PDF. HS 2nd Year Banking Additional Solutions.

Class 12 Finance Important Chapter 17 Venture Capital and Factoring

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Banking Additional Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Finance Important Solutions English Medium for All Chapters, You can practice these here.

Venture Capital and Factoring

Chapter: 17

IMPORTANT QUESTION AND ANSWER

Short Questions and Answers: 

1. What is venture capital?

Ans: Venture capital is a form of financial investment provided to high-risk, high-potential start-up firms and small businesses that specialize in innovative ideas or new technologies. The main aim is to achieve high returns, and the investment usually involves equity participation and long-term commitment from investors.

2. State one main feature of venture capital.

Ans: The main feature of venture capital is equity participation, where investors provide funds in exchange for ownership shares in the company. They often take an active interest in the management and growth of the business, helping to steer it toward success.

3. Define factoring in finance.

Ans: Factoring in finance is a service where a business sells its accounts receivable to a third party, known as a factor, in order to receive immediate cash. This helps the business manage its short-term liquidity needs more efficiently.

4. Name two parties involved in factoring.

Ans: The two main parties involved in factoring are the corporate client (the seller of receivables) and the factor, which is usually a financial institution or intermediary that purchases the receivables and manages collection.

5. What is non-recourse factoring?

Ans: Non-recourse factoring is a type of factoring arrangement where the factor bears the risk of bad debts. If the customer fails to pay, the factor cannot recover the money from the seller, making it riskier for the factor but safer for the seller.

6. How does factoring help improve liquidity?

Ans: Factoring helps improve liquidity by providing immediate cash to businesses. By selling their receivables to a factor, companies convert future payments into present funds, which supports smoother and more flexible business operations.

7. Mention one advisory service offered by factors.

Ans: One advisory service offered by factors is the analysis of the creditworthiness of buyers. This service helps businesses make more informed decisions about extending credit to their customers and reduces the risk of bad debts.

8. What is seed capital in venture capital financing?

Ans: Seed capital is the initial funding provided by venture capitalists to test a new concept or develop a prototype. This type of funding is given before large-scale production begins and is critical for launching innovative ideas.

9. State one benefit of factoring for corporate clients.

Ans: One benefit of factoring for corporate clients is that it relieves them from the burden of collecting debts from customers. This allows businesses to concentrate on their core activities, such as production and sales, rather than debt recovery.

10. What is disclosed factoring?

Ans: Disclosed factoring is a factoring arrangement in which the factor’s involvement is clearly mentioned on the invoice. The buyer is instructed to make payments directly to the factor, ensuring transparency in the transaction process.

Fill in the Blanks:

1. Venture capital is a financial investment in ________ projects with high growth potential.

Ans: High-risk.

2. The main mode of investment in venture capital is ________ participation.

Ans: Equity.

3. Factoring is a financial service in which a business sells its ________ to a third party for immediate cash.

Ans: Accounts receivable.

4. The financial institution that purchases receivables in factoring is called a ________.

Ans: Factor.

5. In non-recourse factoring, the risk of bad debts is borne by the ________.

Ans: Factor.