Financial Instrument Exercise class 10

 

Unit-8 Lesson-7

Financial Instrument

A.  Very short answer questions.

1.  What is remittance?

Ans:- Money sent by the people from foreign country to their native country is called remittance.

2.  What are the types of share?
Ans:- The types of share are listed below:

i)  Ordinary share

ii)  Preference share

3.  What problems are created if we don’t have clean bank notes?

Ans:- The problems are created if we don’t have clean banknotes are listed below:

i)  There may be chances of tearing them.

ii)  It may not to accept in the market.

 

B.  Short answer questions.

1.  Differentiate between bank loan and security bond?

Ans:- The differences of bank loan and security bond are following:

S.n	Bank loan	Security  bond
1.	it is taken from Bank of financial institution to run the several activities	It is a financial tool to be used by the government or any company to raise required amount of money.
2.	Loan taken from the bank has to be returned after a certain period with interest.	it is a certificate issued by the security bond user promising to pay back the borrowed money with interest of a specified rate on specified date.
3.	If the loan is not paid the borrower has to pay fine along with interest.	A shareholder has his / her Siya over the loss or profit of the company in proportion to the number of shares.

 

2.  Write any four advantages of shareholding?

Ans:- The four advantages of shareholding are listed below:

i)  People can get employment opportunities.

ii)  Contributes in national development and economy.

iii)  It helps to run large scale projects.

iv)  It creates an environment of investment.

v)  People who invest in share can be benefited and source of income increases.

 

3.  What are the major sources of remittance To Nepal?

Ans:- The major sources of remittance to Nepal are listed below:

i)  The most important source in foreign employment.

ii)  Foreign trade.

iii)  Money exchange and money transfer also the source of remittance.

iv)  Subsidies provided by the foreign country.

 

4.  What is Hundi? Why it is considered as an illegal business?

Ans:- The act of sending money earn in foreign country through business person, representative or unregistered institution is called Hundi. It is not reliable. It is considered illegal business due to following reasons:

i)  Trend of acquiring unlimited commission from the money sent.

ii)  Transactions conducted in an illegal ways.

iii)  Hundii companies are not registered in government list.

iv)  They don’t pay the tax to the government.

v)  Encouragement for illegal business activities.

 

5.  Write a short note on “foreign exchange”.

Ans:- The currency of other countries is foreign currency for our country.

In Nepal, foreign currencies are obtained from various sources such as foreign assistance, exports, foreign employment, tourism etc. It is advantageous for the country to collect foreign currency. Foreign currency is useful for going to foreign countries while importing goods and services. There is high demand of foreign currency in our country as we have to import many things from abroad in high amount. It causes the Nepalese currency to be weak. If the economics of the country is a stronger, the value of currency also becomes higher. The exchange of one currency for another on the conversion of one currency into another currency is known as foreign exchange. Similarly, the rate of exchange of one currency for another is called foreign exchange rate.

 

6.  What details and documents are needed for applying for a share?

Ans:- The details and documents are needed for applying for a share are listed below:-

i)  Certified photocopy of citizenship certificate.

ii)  Address of the applicant, contact number, name of father and grandfather.

iii)  Bank account number.

iv)  Demate account number.

v)  Authorized signature.

vi)  Recently snapped photo.

 

C.  Long answer questions.

1.  What is share issue? How can profit earned by purchasing shares? Discuss.

Ans:- The notice issued by the government or private company to invest in the projects, industry, business is known as share issue. A huge amount is necessary to run big projects, industries, Bank, financial institution or hydro company. The government and the company may lack money to run it. In this situation, share is opened for public to invest. Generally, people should pay Rs.100 per share. The number of share may not be obtained as desired. It should be divided between the investors. A shareholder has his / her share over the loss or profit of the company in proportion to the new number of shares. If the company is in profit, the shareholder also gets the profit as of his investment. The share can be sold to other if the company is in profit. In this way, profit can be earned by purchasing shares.

 

2.  Any of your family or relatives might have gone for foreign employment. In which field has the remittance been used? Mention the right ways to utilize the remittance in Nepal.

Ans:- The remittance owned by my relatives is used in several fields like education health agriculture etc. the right ways to utilize the remittance in Nepal are as follows:-

i)  Formulating encouraging policy to invest remittance in productive sectors like commercial farming, industry and other entrepreneurship.

ii)  Making the provision to assure the security of investors and their industries or business activities.

iii)  Encourage the owner of the remittance to invest in education, health, transport, communication by providing subsidies or other assistance.

iv)  Providing proper orientation, training and opportunity to invest in different economic and social sectors.