Theme 2.1 (evaluation)

Question 1

What are two advantages and two disadvantages of Bank overdraft?

Answer 1

1. Flexible - Use as much as necessary
2. Relatively easy to arrange
3. Can be withdrawn at short notice
4. Higher interest rate than a bank loan

Question 2

What are two advantages and two disadvantages of Bank loan?

Answer 2

1. Lower interest rates than a bank overdraft
2. Greater certainty of funding, providing terms of loan are complied with
3. Requires security (collateral)
4. Harder to arrange

Question 3

What are two advantages and two disadvantages of venture capital?

Answer 3

1. Business benefits from specialist investor support
2. Brings better business discipline to business management and strategy
3. Venture capitalist requires a high rate of return
4. Loss control of some of the business - venture capitalist may take a majority share in the business