CAIE IGCSE Business Studies 5.1.2 sources of finance
Practise finance-source questions by defining sources, applying cost and risk factors, and choosing the best option for the case.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- Define finance sources such as crowd-funding, overdrafts, loans or retained profit.
- Explain debt problems such as interest costs, repayment pressure or limited future borrowing.
- Choose a finance source by considering amount, time period, cost, ownership and risk.
5.1.2—The main sources of finance question 1
[Maximum number: 6]
Amir and Carla are business partners. They own a luxury hotel which operates in a niche market. The business has a short hierarchical structure. Amir and Carla use Herzberg's theory of motivation to keep their 5 employees well motivated. Amir and Carla are considering opening another hotel in a different city. They will need to identify a suitable source of finance if they decide to expand. Secondary market research can be used to help a business decide whether it should expand.
Explain two sources of finance Amir and Carla could use if they decide to expand.
Source 1:
Explanation:
Source 2:
Explanation:
Award 1 mark for each relevant source of finance [max 2].
Award 1 mark for each relevant reference to this business [max 2].
Award 1 mark for each relevant explanation [max 2].
Points might include:
- Retained profits [k] from the hotel [app] as does not need to pay it back [an]
- Bank loans [k] to obtain a large amount of money/varying length of time to repay/quick to arrange [an] for the luxury service [app]
- Own(er) savings [k] from the 2 partners [app] as may be readily accessible/no interest to pay [an]
- Crowdfunding [k] as no interest to pay [an]
Other appropriate responses should be credited.
To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.
The following words are likely to be appropriate for this question:
- (New) hotel or related words such as rooms
- (2) partners/partnership
- Luxury
- Niche market
- Different city
- Market research
Other appropriate examples can be credited.
All question bank results loaded