Question 1

The biggest benefit of going public is the capital infusion the company receives.

Accepted Answer

A) True 
 B)False

Question 2

The typical letter of intent prevents an underwriter from withdrawing a company's stock offering before it is executed.

Accepted Answer

A) True 
 B)False

Question 3

Lenders of fixed capital expect the assets purchased to increase the borrowing firm's efficiency,profitability,and cash flows.

Accepted Answer

A) True 
 B)False

Question 4

Define and describe the importance of the following types of capital.
∙ fixed capital
∙ working capital
∙ growth capital

Accepted Answer

Capital is any form of wealth employed t

Question 5

Foreign corporations invest in U.S.small businesses through strategic partnerships in order to gain access to new technology,new products,and U.S.markets.

Accepted Answer

A) True 
 B)False

Question 6

A highly possible source of funding for a start-up and early business is:

Accepted Answer

A) venture capital and private placement. 
B) personal savings and retained earnings. 
C) personal savings and partners. 
D) IPO and Regulation A. 
A) venture capital and private placement. 
B) personal savings and retained earnings. 
C) personal savings and partners. 
D) IPO and Regulation A.

Question 7

The majority of venture capital firms that provide capital to small businesses strive to not be involved in running the business.

Accepted Answer

A) True 
 B)False

Question 8

In a(n)________,a company raises capital by selling shares of its stock to the general public for the first time.

Accepted Answer

A) angel offering 
B) secondary offering 
C) venture capital sale 
D) IPO 
A) angel offering 
B) secondary offering 
C) venture capital sale 
D) IPO

Question 9

The primary advantage of equity capital is that it does not have to be repaid with interest.

Accepted Answer

A) True 
 B)False

Question 10

The most common source of equity funds used to start a small business is:

Accepted Answer

A) private investors or "angels." 
B) loans from commercial banks. 
C) the entrepreneur's pool of personal savings. 
D) public stock issues. 
A) private investors or "angels." 
B) loans from commercial banks. 
C) the entrepreneur's pool of personal savings. 
D) public stock issues.

Question 11

Venture capital companies are private,for-profit organizations that purchase equity positions in young businesses they believe have high-growth and high-profit potential,producing annual returns of 300 to 500 percent over five to seven years.

Accepted Answer

A) True 
 B)False

Question 12

A firm commitment agreement guarantees that the company will receive the required funds.

Accepted Answer

A) True 
 B)False

Question 13

Some suggestions for maintaining family relationships and friendships when borrowing for a business are:

Accepted Answer

A) keep the arrangement strictly family. 
B) borrow as much as you can. 
C) an oral contract is as good as a written contract. 
D) treat the money as "bridge financing." 
A) keep the arrangement strictly family. 
B) borrow as much as you can. 
C) an oral contract is as good as a written contract. 
D) treat the money as "bridge financing."

Question 14

One of the things that underwriters look for in a company that wants to go public is:

Accepted Answer

A) presence in a mature industry. 
B) filing fees with the SEC. 
C) strong bankers. 
D) a clear organizational structure. 
A) presence in a mature industry. 
B) filing fees with the SEC. 
C) strong bankers. 
D) a clear organizational structure.

Question 15

Venture capital companies are an important source of equity funding for small businesses.Discuss their policies,ownership,control,and investment preferences when it comes to funding small businesses.

Accepted Answer

Venture capital companies (VCs)are priva

Question 16

________ are typically wealthy individuals or entrepreneurs themselves.

Accepted Answer

A) Venture capitalists 
B) Seed funders 
C) Venture funders 
D) Angels 
A) Venture capitalists 
B) Seed funders 
C) Venture funders 
D) Angels

Question 17

What is a "road show" and what is its purpose?

Accepted Answer

A road show is a gathering of potential

Question 18

The two factors that make a deal attractive to venture capitalists are:

Accepted Answer

A) effective marketing strategies and networking opportunities. 
B) high returns and a convenient (and profitable)exit strategy. 
C) high returns and networking opportunities. 
D) a convenient and (profitable)exit strategy and effective marketing strategies. 
A) effective marketing strategies and networking opportunities. 
B) high returns and a convenient (and profitable)exit strategy. 
C) high returns and networking opportunities. 
D) a convenient and (profitable)exit strategy and effective marketing strategies.

Question 19

The first place entrepreneurs should look for startup money is from their family and friends.

Accepted Answer

A) True 
 B)False

Question 20

Private "angel" investors tend to:

Accepted Answer

A) take 80% ownership by the time the company goes public. 
B) provide seed money and less than $500,000. 
C) look for returns of 60-75%. 
D) only finance projects within their local area or region. 
A) take 80% ownership by the time the company goes public. 
B) provide seed money and less than $500,000. 
C) look for returns of 60-75%. 
D) only finance projects within their local area or region.

Exam 16: Sources of Equity Financing

The biggest benefit of going public is the capital infusion the company receives.

The typical letter of intent prevents an underwriter from withdrawing a company's stock offering before it is executed.

Lenders of fixed capital expect the assets purchased to increase the borrowing firm's efficiency,profitability,and cash flows.

Define and describe the importance of the following types of capital. ∙ fixed capital ∙ working capital ∙ growth capital

Foreign corporations invest in U.S.small businesses through strategic partnerships in order to gain access to new technology,new products,and U.S.markets.

A highly possible source of funding for a start-up and early business is:

The majority of venture capital firms that provide capital to small businesses strive to not be involved in running the business.

In a(n)________,a company raises capital by selling shares of its stock to the general public for the first time.

The primary advantage of equity capital is that it does not have to be repaid with interest.

The most common source of equity funds used to start a small business is:

Venture capital companies are private,for-profit organizations that purchase equity positions in young businesses they believe have high-growth and high-profit potential,producing annual returns of 300 to 500 percent over five to seven years.

A firm commitment agreement guarantees that the company will receive the required funds.

Some suggestions for maintaining family relationships and friendships when borrowing for a business are:

One of the things that underwriters look for in a company that wants to go public is:

Venture capital companies are an important source of equity funding for small businesses.Discuss their policies,ownership,control,and investment preferences when it comes to funding small businesses.

________ are typically wealthy individuals or entrepreneurs themselves.

What is a "road show" and what is its purpose?

The two factors that make a deal attractive to venture capitalists are:

The first place entrepreneurs should look for startup money is from their family and friends.

Private "angel" investors tend to:

Entrepreneurs: the Driving Force Behind Small Business

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

New Business Planning Process: Feasibility Analysis,business Modeling,

Building a Bootstrap Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Creating a Solid Financial Plan

Managing Cash Flow

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

The Legal Environment: Business Law and Government Regulation

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