Question 1

For an IPO,most investment bankers look for:

Accepted Answer

A) consistently high growth rates & strong record of earnings. 
B) three to five years of audited financial statements & a solid position in rapidly growing markets. 
C) a sound management team and a strong board of directors. 
D) All of the above 
A) consistently high growth rates & strong record of earnings. 
B) three to five years of audited financial statements & a solid position in rapidly growing markets. 
C) a sound management team and a strong board of directors. 
D) All of the above

Question 2

If an entrepreneur is not willing to risk funds in a business venture,other potential investors and lenders are not likely to provide capital either.

Accepted Answer

A) True 
 B)False

Question 3

Under a ________ agreement,the underwriter agrees to purchase all of the shares in a company's public offering and then resells them to investors.

Accepted Answer

A) best effort 
B) lock-up 
C) final price 
D) firm commitment 
A) best effort 
B) lock-up 
C) final price 
D) firm commitment

Question 4

A typical venture capital company seeks to purchase 20 percent to 40 percent of a business.

Accepted Answer

A) True 
 B)False

Question 5

The purpose of the ________ is to promote interest among potential underwriters in the IPO.

Accepted Answer

A) road show 
B) registration 
C) best efforts agreement 
D) filing Regulation A 
A) road show 
B) registration 
C) best efforts agreement 
D) filing Regulation A

Question 6

Outline and briefly describe the common sources of equity capital.

Accepted Answer

The most common source of financing a bu

Question 7

The largest single source of external equity capital for small businesses is:

Accepted Answer

A) angels. 
B) venture capitalists. 
C) Small Business Administration loans. 
D) commercial bankers. 
A) angels. 
B) venture capitalists. 
C) Small Business Administration loans. 
D) commercial bankers.

Question 8

Most "angel" investments:

Accepted Answer

A) are for growth or fixed capital. 
B) are for between $10,000 and $2,000,000. 
C) come from international or foreign investors. 
D) are seeking a high and quick return on their investment. 
A) are for growth or fixed capital. 
B) are for between $10,000 and $2,000,000. 
C) come from international or foreign investors. 
D) are seeking a high and quick return on their investment.

Question 9

When receiving investment money from friends and relatives entrepreneurs should:

Accepted Answer

A) use a clear verbal contract to ensure no misunderstandings. 
B) only borrow from close friends and relatives who won't cause them trouble. 
C) discuss all the details of the investment up front. 
D) not borrow more than 30% of the necessary capital from them. 
A) use a clear verbal contract to ensure no misunderstandings. 
B) only borrow from close friends and relatives who won't cause them trouble. 
C) discuss all the details of the investment up front. 
D) not borrow more than 30% of the necessary capital from them.

Question 10

One of the reasons for the significant drop in the number of public offerings since 2001 is:

Accepted Answer

A) the U.S.economic crisis. 
B) the global economic meltdown. 
C) the Quattrone Act,2002. 
D) the Sarbanes-Oxley Act,2002. 
A) the U.S.economic crisis. 
B) the global economic meltdown. 
C) the Quattrone Act,2002. 
D) the Sarbanes-Oxley Act,2002.

Question 11

The first step in the IPO process is:

Accepted Answer

A) negotiating a letter of intent. 
B) preparing the registration statement. 
C) choosing the underwriter. 
D) doing the road show. 
A) negotiating a letter of intent. 
B) preparing the registration statement. 
C) choosing the underwriter. 
D) doing the road show.

Question 12

Private investors,or "angels," seek 60-75% annual return-on-investment and tend to take a 51%+ share of the business.

Accepted Answer

A) True 
 B)False

Question 13

Growth capital,unlike working capital,is not related to the seasonal fluctuations of a small business.

Accepted Answer

A) True 
 B)False

Question 14

________ capital is the pool of temporary funds of the business used to support the normal operation of the business on a short-term basis.

Accepted Answer

A) Growth 
B) Fixed 
C) Equity 
D) Working 
A) Growth 
B) Fixed 
C) Equity 
D) Working

Question 15

Most letters of intent include a lock-up agreement.

Accepted Answer

A) True 
 B)False

Question 16

"Angels":

Accepted Answer

A) are hard investors to please.Nearly 70% are dissatisfied with their investment. 
B) tend to be easy to get money from as they accept nearly 60% of the opportunities presented. 
C) have an average of $150,000 invested in 3.5 firms at any given time. 
D) only finance deals requiring over $1 million in capital. 
A) are hard investors to please.Nearly 70% are dissatisfied with their investment. 
B) tend to be easy to get money from as they accept nearly 60% of the opportunities presented. 
C) have an average of $150,000 invested in 3.5 firms at any given time. 
D) only finance deals requiring over $1 million in capital.

Question 17

The owner of a small retail shoe store and the owner of a small furniture manufacturer would likely have very different capital requirements.

Accepted Answer

A) True 
 B)False

Question 18

Tien is looking for capital to purchase new buildings and equipment for her small manufacturing company.Tien is looking for ________ capital.

Accepted Answer

A) working 
B) fixed 
C) growth 
D) asset-based 
A) working 
B) fixed 
C) growth 
D) asset-based

Question 19

The reason Joe Falsetti couldn't get investors interested in an IPO for his ROM Tech was his unwillingness to disclose key financial information.

Accepted Answer

A) True 
 B)False

Question 20

What is the cardinal rule that an entrepreneur should follow when borrowing venture money from friends and relatives?

Accepted Answer

Family members and friends are more pati

Exam 16: Sources of Equity Financing

For an IPO,most investment bankers look for:

If an entrepreneur is not willing to risk funds in a business venture,other potential investors and lenders are not likely to provide capital either.

Under a ________ agreement,the underwriter agrees to purchase all of the shares in a company's public offering and then resells them to investors.

A typical venture capital company seeks to purchase 20 percent to 40 percent of a business.

The purpose of the ________ is to promote interest among potential underwriters in the IPO.

Outline and briefly describe the common sources of equity capital.

The largest single source of external equity capital for small businesses is:

Most "angel" investments:

When receiving investment money from friends and relatives entrepreneurs should:

One of the reasons for the significant drop in the number of public offerings since 2001 is:

The first step in the IPO process is:

Private investors,or "angels," seek 60-75% annual return-on-investment and tend to take a 51%+ share of the business.

Growth capital,unlike working capital,is not related to the seasonal fluctuations of a small business.

________ capital is the pool of temporary funds of the business used to support the normal operation of the business on a short-term basis.

Most letters of intent include a lock-up agreement.

"Angels":

The owner of a small retail shoe store and the owner of a small furniture manufacturer would likely have very different capital requirements.

Tien is looking for capital to purchase new buildings and equipment for her small manufacturing company.Tien is looking for ________ capital.

The reason Joe Falsetti couldn't get investors interested in an IPO for his ROM Tech was his unwillingness to disclose key financial information.

What is the cardinal rule that an entrepreneur should follow when borrowing venture money from friends and relatives?

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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