Exam 12: A Firms Sources of Financing

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Williams Alternative Power,Inc.a company developing solar panels,is applying for a loan.The research the company has done for the manufacturing process would be a(n)_____ asset for the loan evaluation.

(Multiple Choice)
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Isaac is looking for a business angel.His best chance of finding one is through:

(Multiple Choice)
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A source of early-stage capital financing for a company is financing from commercial banks.

(True/False)
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Guaranty loans are

(Multiple Choice)
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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) -A lender that uses frunds from federal,state,and private sources to priovide financing to small businesses in low-income communities

(Essay)
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Martina wants to expand her business.She will need to buy a larger facility and equip it with additional machinery.She should look into the SBA loan program that provides long-term financing for small businesses to acquire real estate or machinery and equipment called the:

(Multiple Choice)
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If the firm's rate of return on its assets is _____ than the cost of borrowing,then the owners' rate of return on equity will _____ as the firm uses _____ debt.

(Multiple Choice)
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Miracle Fund LLC is a venture capitalist.In exchange for providing venture capital,Miracle Fund:

(Multiple Choice)
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Generally,as long as a firm's operating income return on its assets in greater than the cost of debt,the owners' return on equity investment will decrease as the firm uses more debt.

(True/False)
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If he holds true to the average,Donald Trump likely invests approximately _____ of his investment in later-stage businesses.

(Multiple Choice)
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In his presentation to his banker when he applies for a business loan to purchase additional equipment,Alan should emphasize:

(Multiple Choice)
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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 -An informal agreement between a borrower and a bank as to the maximum amount of funds the bank will provide an any one time

(Essay)
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A source of short-term funds for many small companies with inventories is

(Multiple Choice)
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Maguire was considering selling stock as a source of funds but was concerned about:

(Multiple Choice)
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Debt financing as opposed to equity financing allows owners to retain voting control of the company.

(True/False)
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In groups of business angels,

(Multiple Choice)
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Instead of borrowing money from suppliers to purchase equipment,an increasing number of small businesses are

(Multiple Choice)
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David is trying to decide whether to add capital through investing more of his own money or through borrowing money from the bank.To help him decide,you remind him that ss long as his firm's rate of return on its assets is greater than the cost of the debt,his rate of return on equity will _____ as the firm uses more debt.

(Multiple Choice)
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In addition to the interest rate on his business loan,Paul should also give attention to:

(Multiple Choice)
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Sandy is using a governmental program to help finance her new business.Her company is not eligible for a loan through a normal lending channel and is receiving $120,000 with the SBA guaranteeing 85 percent of the loan.She also had to submit a loan application to the lender.Ellie is participating in the

(Multiple Choice)
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