Question 1

Taking a company public is a simple process.

Accepted Answer

A) True 
 B)False

Question 2

When filing with the SEC,the initial registration statement:

Accepted Answer

A) prohibits a "road show." 
B) is filed without share price,proceeds,or commissions listed. 
C) signals the time to sign the formal underwriting agreement. 
D) is generally accepted without corrections by the SEC. 
A) prohibits a "road show." 
B) is filed without share price,proceeds,or commissions listed. 
C) signals the time to sign the formal underwriting agreement. 
D) is generally accepted without corrections by the SEC.

Question 3

Most venture capitalist companies prefer to finance start-up companies to maximize their return.

Accepted Answer

A) True 
 B)False

Question 4

Entrepreneurs bootstrap their companies.

Accepted Answer

A) True 
 B)False

Question 5

Most venture capitalists purchase ownership in a small business through:

Accepted Answer

A) a common stock or convertible preferred stock. 
B) an ESOP. 
C) loans with an option to buy stock. 
D) a general partnership. 
A) a common stock or convertible preferred stock. 
B) an ESOP. 
C) loans with an option to buy stock. 
D) a general partnership.

Question 6

The IPO process requires maximum disclosure.

Accepted Answer

A) True 
 B)False

Question 7

________ financing includes the personal investment of the owners and is often called "risk capital."

Accepted Answer

A) Equity 
B) Asset-based 
C) Debt 
D) Growth 
A) Equity 
B) Asset-based 
C) Debt 
D) Growth

Question 8

Typically,________ is needed to purchase the business's permanent or fixed assets.

Accepted Answer

A) working capital 
B) growth capital 
C) fixed capital 
D) None of the above 
A) working capital 
B) growth capital 
C) fixed capital 
D) None of the above

Question 9

Unlike entrepreneurs of the past,today's entrepreneurs:

Accepted Answer

A) are finding more government interest and funding for business start-ups than ever before. 
B) find fewer closed doors as small business start-ups have become less risky. 
C) have to piece their capital together from several sources. 
D) are spending nearly 75% of their time raising capital. 
A) are finding more government interest and funding for business start-ups than ever before. 
B) find fewer closed doors as small business start-ups have become less risky. 
C) have to piece their capital together from several sources. 
D) are spending nearly 75% of their time raising capital.

Question 10

The most common source of equity funds used to start a small business is an SBA loan.

Accepted Answer

A) True 
 B)False

Question 11

Equity capital is also called:

Accepted Answer

A) equity money. 
B) stock money. 
C) risk capital. 
D) None of the above 
A) equity money. 
B) stock money. 
C) risk capital. 
D) None of the above

Question 12

Private investors,or "angels," are often:

Accepted Answer

A) wealthy individuals. 
B) entrepreneurs. 
C) persons who invest in business startups in exchange for equity stakes in the companies. 
D) All of the above 
A) wealthy individuals. 
B) entrepreneurs. 
C) persons who invest in business startups in exchange for equity stakes in the companies. 
D) All of the above

Question 13

Venture capitalists look for ________ as the most important ingredient in the success of any business.

Accepted Answer

A) innovation 
B) a growth industry 
C) a competitive edge 
D) competent management 
A) innovation 
B) a growth industry 
C) a competitive edge 
D) competent management

Question 14

In an IPO candidate,investment bankers look for scalability.

Accepted Answer

A) True 
 B)False

Question 15

Venture capital companies are typically not-for-profit organizations.

Accepted Answer

A) True 
 B)False

Question 16

A firm commitment agreement outlines the details of the IPO deal.

Accepted Answer

A) True 
 B)False

Question 17

In a public offering,the underwriter:

Accepted Answer

A) advises the owner as to the best structure of the business going into the sale. 
B) serves as an adviser and consultant to the small business in preparing the registration statement for the SEC. 
C) is bound to the offering until it is executed. 
D) is listed as one of the officers of the company. 
A) advises the owner as to the best structure of the business going into the sale. 
B) serves as an adviser and consultant to the small business in preparing the registration statement for the SEC. 
C) is bound to the offering until it is executed. 
D) is listed as one of the officers of the company.

Question 18

________ is when a company raises capital by selling shares of its stock to the general public for the first time.

Accepted Answer

A) Preferred stock selling 
B) Rule 157 Offerings 
C) IPO 
D) All of the above 
A) Preferred stock selling 
B) Rule 157 Offerings 
C) IPO 
D) All of the above

Question 19

Angels fill a significant gap in the ________ capital market.

Accepted Answer

A) working 
B) fixed 
C) seed 
D) later stage 
A) working 
B) fixed 
C) seed 
D) later stage

Question 20

When looking for an angel,the key is:

Accepted Answer

A) networking. 
B) using the SBA as a contact point. 
C) searching the web. 
D) using business incubators' computer matching services. 
A) networking. 
B) using the SBA as a contact point. 
C) searching the web. 
D) using business incubators' computer matching services.

Exam 16: Sources of Equity Financing

Taking a company public is a simple process.

When filing with the SEC,the initial registration statement:

Most venture capitalist companies prefer to finance start-up companies to maximize their return.

Entrepreneurs bootstrap their companies.

Most venture capitalists purchase ownership in a small business through:

The IPO process requires maximum disclosure.

________ financing includes the personal investment of the owners and is often called "risk capital."

Typically,________ is needed to purchase the business's permanent or fixed assets.

Unlike entrepreneurs of the past,today's entrepreneurs:

The most common source of equity funds used to start a small business is an SBA loan.

Equity capital is also called:

Private investors,or "angels," are often:

Venture capitalists look for ________ as the most important ingredient in the success of any business.

In an IPO candidate,investment bankers look for scalability.

Venture capital companies are typically not-for-profit organizations.

A firm commitment agreement outlines the details of the IPO deal.

In a public offering,the underwriter:

________ is when a company raises capital by selling shares of its stock to the general public for the first time.

Angels fill a significant gap in the ________ capital market.

When looking for an angel,the key is:

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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