Types of Limited Companies

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Questions and Answers

What is a key characteristic of a private limited company in terms of source of capital?

  • It can raise capital from a wide range of sources including the public
  • It can raise capital only from banks and other financial institutions
  • It is limited to raising capital from existing shareholders (correct)
  • It can raise capital through issuing bonds and debentures

What is a major advantage of a limited company?

  • It is a type of sole proprietorship
  • It is a type of partnership
  • It has a limited liability for shareholders (correct)
  • It has a higher set-up cost

What is a key difference between a private limited company and a public limited company in terms of ownership?

  • Ownership is transferable in both private and public limited companies
  • Ownership is transferable in public limited companies but requires approval from the stock exchange (correct)
  • Ownership is not transferable in private limited companies
  • Ownership is transferable in public limited companies but requires approval from the board of directors

Why are banks more willing to lend to limited companies?

<p>Because of their better creditability (D)</p> Signup and view all the answers

What is a disadvantage of a limited company?

<p>It has a higher set-up cost (D)</p> Signup and view all the answers

What is a key characteristic of a limited company in terms of its existence?

<p>It is not affected by the death or bankruptcy of shareholders (D)</p> Signup and view all the answers

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