Question 1

Small business investment companies (SBICs)

Accepted Answer

A) are licensed and regulated by the Federal Trade Commission. 
B) may lend funds or supply equity funds. 
C) obtain part of their capital from local governments at attractive interest rates. 
D) provide only short-term financing. 
A) are licensed and regulated by the Federal Trade Commission. 
B) may lend funds or supply equity funds. 
C) obtain part of their capital from local governments at attractive interest rates. 
D) provide only short-term financing. B

Question 2

Goodwill is considered a intangible asset and is highly valued when securing a loan.

Accepted Answer

A) True 
 B)False  False

Question 3

For entrepreneurial ventures with the potential for becoming significant businesses,initial public offerings have been the fastest-growing source of financing over the past two decades.

Accepted Answer

A) True 
 B)False  False

Question 4

The main advantage of using credit cards for financing is the relatively low interest rate compared to bank loans.

Accepted Answer

A) True 
 B)False

Question 5

Frankie is looking for sources of financing for his new tour company.At this time,he would like to keep his financing close to home but eventually apply for bank financing.What are Frankie's financial support options?

Accepted Answer

Frankie could use the following three so

Question 6

Glenda is trying to decide between the use of debt and the use of equity to finance her young business.She should remember that:

Accepted Answer

A) her return on assets will be less if she uses debt financing. 
B) using other people's money to finance one's business is seldom a good idea. 
C) the lender will have partial control of the business. 
D) debt must be repaid even if the company does not make a profit. 
A) her return on assets will be less if she uses debt financing. 
B) using other people's money to finance one's business is seldom a good idea. 
C) the lender will have partial control of the business. 
D) debt must be repaid even if the company does not make a profit.

Question 7

Match the term with its definition.
a.Balloon payment
b.Business angels
c.Chattel mortgage
d.Crowdfunding
e.Factoring
f.Initial public offering
g.Loan covenants
h.Private placement
i.Real estate mortgage
j.Venture capitalist
-Obtaining cash by selling accounts receivable to another firm

Accepted Answer

The answer of Match the term with its definition.
a.Balloon payment
b.Business...

Question 8

Floyd's income statement showed for the current year his company had an operating income of $45,000 and his balance sheet showed total assets of $300,000.His return on assets is _________ percent.

Accepted Answer

A) 30 
B) 15 
C) 12 
D) 6 
A) 30 
B) 15 
C) 12 
D) 6

Question 9

The amount of trade credit available to a new company is dependent on the supplier's confidence in the firm and not the type of business.

Accepted Answer

A) True 
 B)False

Question 10

Ben left the corporate rat race to start his own business that will allow him to earn a small income while providing plenty of time to pursue his love of pottery making.He does not expect either growth or high profits.Ben's prospects for attracting outside financing are:

Accepted Answer

A) plentiful. 
B) limited. 
C) moderate. 
D) nonexistent. 
A) plentiful. 
B) limited. 
C) moderate. 
D) nonexistent.

Question 11

Business angels,as opposed to venture capitalists,provide

Accepted Answer

A) asset-based loans. 
B) factoring. 
C) informal venture capital. 
D) trade credit. 
A) asset-based loans. 
B) factoring. 
C) informal venture capital. 
D) trade credit.

Question 12

Violet's Catering is growing rapidly.A new customer has requested the company cater a retirement luncheon for 500 persons resulting in Violet's Catering needing a large order from the company's primary food vendor.Although the company is experiencing growth,cash flow is a concern.What would be the best financing option?

Accepted Answer

Violet's Catering needs to determine if

Question 13

People like Ben who "bootstrap" company financing are

Accepted Answer

A) enhancing the "corporate image" of the enterprise by the way they raise capital. 
B) depending on their own initiative to obtain the capital necessary to start up and grow. 
C) subordinating future capital formation to short-term financial performance. 
D) waiting to establish a reputation in the marketplace before raising the bulk of the needed capital. 
A) enhancing the "corporate image" of the enterprise by the way they raise capital. 
B) depending on their own initiative to obtain the capital necessary to start up and grow. 
C) subordinating future capital formation to short-term financial performance. 
D) waiting to establish a reputation in the marketplace before raising the bulk of the needed capital.

Question 14

Discuss two methods of selling stock.

Accepted Answer

*One way to sell stock is through privat

Question 15

Common stock can be sold to underwriters,but they do not guarantee the sale of securities.

Accepted Answer

A) True 
 B)False

Question 16

Penelope is planning to launch her first business.She will most likely acquire her initial financing from:

Accepted Answer

A) venture capitalists. 
B) personal savings. 
C) wealthy individuals. 
D) the securities market. 
A) venture capitalists. 
B) personal savings. 
C) wealthy individuals. 
D) the securities market.

Question 17

If a firm finances with equity rather than with debt,it will bear no interest expense and thus yield greater net income.

Accepted Answer

A) True 
 B)False

Question 18

Match the term with its definition.
a.Asset-based loan
b.Basis point
c.Chattel mortgage
d.Equipment loan
e.LIBOR (London InterBank Offered Rate)
f.Line of credit
g.Prime rate
h.Purchase-order financing
i.Term loan
-1/100th of 1 percent when quoting an interest rate

Accepted Answer

The answer of Match the term with its definition.
a.Asset-based loan
b.Basis...

Question 19

Match the definition with its term.
a.7(a)Loan Guaranty Program
b.7(m)Microloan Program
c.Certified Development Company (CDC)Loan Program
d.Community-based financial institution
e.Formal venture capitalists
f.Informal venture capital
g.Loan covenants
h.Small Business Innovative Research (SBIR)Program
i.Small business investment companies (SBICs)
-An SBA loan program that provides long-term financing for small businesses to acquire real estate or machinery and equipment

Accepted Answer

The answer of Match the definition with its term.
a.7(a)Loan Guaranty...

Question 20

The federal government primarily provides funds to small businesses through

Accepted Answer

A) venture capital companies. 
B) the Small Business Administration. 
C) business angels. 
D) the Securities and Exchange Commission. 
A) venture capital companies. 
B) the Small Business Administration. 
C) business angels. 
D) the Securities and Exchange Commission.

Exam 12: A Firms Sources of Financing

Small business investment companies (SBICs)

Goodwill is considered a intangible asset and is highly valued when securing a loan.

For entrepreneurial ventures with the potential for becoming significant businesses,initial public offerings have been the fastest-growing source of financing over the past two decades.

The main advantage of using credit cards for financing is the relatively low interest rate compared to bank loans.

Frankie is looking for sources of financing for his new tour company.At this time,he would like to keep his financing close to home but eventually apply for bank financing.What are Frankie's financial support options?

Glenda is trying to decide between the use of debt and the use of equity to finance her young business.She should remember that:

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -Obtaining cash by selling accounts receivable to another firm

Floyd's income statement showed for the current year his company had an operating income of $45,000 and his balance sheet showed total assets of $300,000.His return on assets is _________ percent.

The amount of trade credit available to a new company is dependent on the supplier's confidence in the firm and not the type of business.

Ben left the corporate rat race to start his own business that will allow him to earn a small income while providing plenty of time to pursue his love of pottery making.He does not expect either growth or high profits.Ben's prospects for attracting outside financing are:

Business angels,as opposed to venture capitalists,provide

People like Ben who "bootstrap" company financing are

Discuss two methods of selling stock.

Common stock can be sold to underwriters,but they do not guarantee the sale of securities.

Penelope is planning to launch her first business.She will most likely acquire her initial financing from:

If a firm finances with equity rather than with debt,it will bear no interest expense and thus yield greater net income.

Match the term with its definition. a.Asset-based loan b.Basis point c.Chattel mortgage d.Equipment loan e.LIBOR (London InterBank Offered Rate) f.Line of credit g.Prime rate h.Purchase-order financing i.Term loan -1/100th of 1 percent when quoting an interest rate

The federal government primarily provides funds to small businesses through

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, ethics, and Social Entrepreneurship

Starting a Small Business

Franchises and Buyouts

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, legal Structures, alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Business

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firms Assets

Managing Risk

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