A fixed _________________ is paid by the borrowers on the funds.

Dividend

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Interest rate

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Opportunity Cost

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None of the above

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Solution

The correct option is B Interest rate
Borrowed funds refer to the funds raised through loans or borrowings. These sources are raised through the commercial banks, loans from financial institutions, issue of debentures, public deposits and trade credit. A fixed rate of interest is paid by the borrowers on such funds.

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Similar questions

(a) Purchase of Shares on a Stock Exchange.	(b) Dividend received on Shares.
(c) Dividend paid on Shares.	(d) Loans given.
(e) Loans taken.	(f) Interest paid on borrowings.

A man buys 400, twenty-rupee shares at a discount of 20% and receives a return of 12% and receives a return of 12% on his money. Calculate :

(i) the amount invested by him.

(ii) the rate of dividend paid by the company.

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