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 key feature distinguishes a public limited company (plc) from a private limited company?

    • Obligation to pay dividends
    • Shares traded publicly
    • Limited liability status
    • Appointed board of directors

  3. What term describes listing a company shares on a stock market for the first time?

    • Acquisition
    • Flotation
    • Liquidation
    • Diversification

  4. Which of the following is an internal source of finance?

    • Share capital
    • Bank loan
    • Trade credit
    • Retained profit

  5. Which of the following is an external source of finance?

    • Bank loan
    • Retained profit
    • Selling assets
    • Owner savings

  6. Which internal finance method involves selling items the business already owns?

    • Share issue
    • Asset sale
    • Bank overdraft
    • Retained profit

  7. Raising finance by selling shares gives investors what status in the business?

    • Part-owners
    • Creditors
    • Suppliers
    • Debtors

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

    • Dilution of ownership
    • Higher interest rates
    • Loss of brand identity
    • Fixed monthly repayments

  9. What is the key characteristic of loan capital?

    • Dividends paid instead
    • Provided by shareholders
    • Repaid with interest
    • Never requires repayment

  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. Which finance source avoids giving up any business ownership?

    • Venture capital
    • New investors
    • Retained profit
    • Ordinary shares

  14. What is a major benefit of a stock market flotation for a plc?

    • Zero regulatory costs
    • Access to capital
    • Guaranteed high profits
    • Complete owner privacy

  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 disadvantage applies to a bank loan compared with retained profit?

    • Asset ownership given
    • Mandatory interest
    • Voting rights lost
    • Voluntary dividends

  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 trade-off is associated with a stock market flotation?

    • Debt versus liquidity
    • Savings versus borrowing
    • Capital versus scrutiny
    • Revenue versus profit

  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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