Lesson 2.1.1c

2.1.1c Public limited companies and finance for growing businesses Quiz: Pearson Edexcel Business, Unit 6

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 2.1.1c, Public limited companies and finance for growing businesses: 20 multiple choice questions for the Pearson Edexcel GCSE Business (1BS0), Unit 6: Growing the business, written with Revision Ninja.

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The 20 questions

  1. What does plc stand for?

    • Private limited company
    • Partnership limited capital
    • Public local company
    • Public limited company

  2. Which feature best describes a plc?

    • It is run as a co-operative owned by its customers
    • It is owned by a single sole trader with unlimited liability
    • Its shares may only be sold to members of the founding family
    • Its shares can be bought and sold on a stock market

  3. What is flotation?

    • Listing a company's shares on a stock market for the first time
    • Changing a company's name and logo on the register
    • Selling a company's surplus machinery at an auction
    • Repaying all of a company's loan capital at once

  4. Which is an internal source of finance?

    • Share capital sold on a stock market
    • Retained profit
    • A bank loan
    • A mortgage secured on the factory

  5. Which is an external source of finance?

    • Retained profit kept from earlier years
    • Loan capital borrowed from a bank
    • Selling an unused warehouse the firm owns
    • Reducing the level of stock held in the warehouse

  6. Which way of raising finance internally involves selling something the business already owns?

    • Selling surplus assets such as an old delivery van
    • Issuing new shares on a stock exchange to outside investors
    • Receiving a government grant to fund a new project
    • Taking out a loan from a bank, which must be repaid with interest

  7. Raising finance through share capital involves:

    • receiving a grant from the state that never has to be repaid
    • borrowing money that must be repaid, with interest, to the lender
    • selling goods on credit to customers who pay the business later
    • selling shares to investors, who become part-owners

  8. Which is the main disadvantage of raising finance by selling shares?

    • The business is barred from ever paying any dividends
    • The original owners may lose some control of the business
    • The business must hand its assets over to the bank
    • The business must repay the full amount within one year

  9. Loan capital is best described as:

    • Profit kept in the business from earlier years
    • Money raised by selling the company's buildings
    • Money invested by owners that never needs to be returned
    • Money borrowed that must be repaid, usually with interest

  10. A business needs £200,000. It has £50,000 of retained profit and borrows the rest from a bank. How much is the loan?

    • £200,000
    • £150,000
    • £50,000
    • £250,000

  11. A plc's share price is £4 and it issues 500,000 new shares at that price. How much capital is raised?

    • £125,000
    • £4,500,000
    • £2,000,000
    • £500,000

  12. A company has 1,000 shares, of which the owner holds 600. It issues 1,000 new shares to outside investors. What share of the company does the owner keep?

    • 50%
    • 30%
    • 60%
    • 40%

  13. A small business wants more finance without giving up any ownership. Which source best fits?

    • Taking a venture partner who gains a 40% stake
    • A share flotation on the stock exchange
    • Issuing new shares to the public
    • Retained profit

  14. A plc is considering a flotation on the stock market. Which is a likely benefit?

    • Guaranteed fixed interest payments to all investors
    • Removal of the need to publish annual reports
    • Access to a wider pool of investors and larger sums of capital
    • Exemption from paying corporation tax

  15. A business has a £100,000 bank loan at 8% interest per year. How much interest is payable in year one?

    • £800
    • £12,000
    • £80,000
    • £8,000

  16. Which is a disadvantage of a bank loan compared with retained profit?

    • Profit must be shared with the bank every year
    • The business must issue shares to repay the loan
    • Interest must be paid whatever the level of profit
    • The bank takes ownership of part of the business

  17. A plc pays a dividend of 10p per share. A shareholder owns 2,000 shares. What is the total dividend?

    • £20
    • £200
    • £2,000
    • £20,000

  18. A business needs £300,000. It raises £100,000 from retained profit and £50,000 from selling assets, and the rest from shares at £5 each. How many shares must it issue?

    • 30,000 shares
    • 60,000 shares
    • 150,000 shares
    • 3,000 shares

  19. Which combination best describes a trade-off of raising finance by stock market flotation?

    • Small sums raised with no costs and no public scrutiny at all
    • Large sums raised with no costs and no obligations to shareholders
    • Small sums raised, but full control kept and no public scrutiny
    • Large sums raised, but high costs and public scrutiny

  20. A company has 4 million shares and each is valued at £2.50 on the market. What is its market value?

    • £6.5 million
    • £10 million
    • £2.5 million
    • £1.6 million

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