Question 1

A _____ is a contract that permits use of someone else's property for a specified time period.

Accepted Answer

A)  trade credit 
B)  bond 
C)  lease 
D)  bill of lading 
A)  trade credit 
B)  bond 
C)  lease 
D)  bill of lading

Question 2

Small firms use debt financing because interest payments are tax-deductible expenses.

Accepted Answer

A) True 
 B)False

Question 3

Small business investment companies tend to make very small investments.

Accepted Answer

A) True 
 B)False

Question 4

Employing a fixed charge to increase the return to common stockholders is known as financial leverage.

Accepted Answer

A) True 
 B)False

Question 5

In the context of small businesses, which of the following is true of a line of credit?

Accepted Answer

A)  It permits a business to borrow up to a set amount without red tape. 
B)  It represents ownership in a corporation. 
C)  It permits use of someone else's property for a specified time period. 
D)  It is an owner's share of the assets of a company. 
A)  It permits a business to borrow up to a set amount without red tape. 
B)  It represents ownership in a corporation. 
C)  It permits use of someone else's property for a specified time period. 
D)  It is an owner's share of the assets of a company.

Question 6

A _____ is a long-term debt that is secured by real estate property.

Accepted Answer

A)  mortgage loan 
B)  bond 
C)  lease 
D)  asset-based loan 
A)  mortgage loan 
B)  bond 
C)  lease 
D)  asset-based loan

Question 7

Why do small firms use debt financing despite the risks involved?

Accepted Answer

With debt financing principal and intere

Question 8

Describe credit cards and insurance companies as sources of debt financing for small businesses.

Accepted Answer

A form of credit line is the use of cred

Question 9

Which of the following is true of venture capital firms?

Accepted Answer

A)  They rely more heavily on the business plan than on the executive summary in making investment decisions. 
B)  They are a source of debt financing. 
C)  They prefer to back fast-growth industries. 
D)  They are engaged in assisting disadvantaged businesses. 
A)  They rely more heavily on the business plan than on the executive summary in making investment decisions. 
B)  They are a source of debt financing. 
C)  They prefer to back fast-growth industries. 
D)  They are engaged in assisting disadvantaged businesses.

Question 10

Common stockholders have a legally enforceable claim to dividends.

Accepted Answer

A) True 
 B)False

Question 11

In the context of small businesses, what is financial leverage?

Accepted Answer

A)  Making a financial claim to the profit left after all other claims against the business have been met 
B)  Employing a form of debt security with a standard denomination 
C)  Financing the extension of credit to customers 
D)  Using fixed-charge financing to fund a business's operation 
A)  Making a financial claim to the profit left after all other claims against the business have been met 
B)  Employing a form of debt security with a standard denomination 
C)  Financing the extension of credit to customers 
D)  Using fixed-charge financing to fund a business's operation

Question 12

Debt represents an owner's share of the assets of a company.

Accepted Answer

A) True 
 B)False

Question 13

The purpose of business incubators is to shelter failing enterprises by providing financial services.

Accepted Answer

A) True 
 B)False

Question 14

From an investor's point of view, debt investments should have a higher financial return than common stock investments.

Accepted Answer

A) True 
 B)False

Question 15

Small company offering registration is the sale of common stock to the public through a regulated board, such as Nasdaq.

Accepted Answer

A) True 
 B)False

Question 16

Professional venture capital firms provide more investment capital for small businesses than angel capitalists.

Accepted Answer

A) True 
 B)False

Question 17

In the context of small businesses, what is trade credit?

Accepted Answer

Trade credit refers to purchases of inve

Question 18

John, who needs funding for his small business, approaches a few lenders for funds. Which of the following will be true in this situation?

Accepted Answer

A)  The lenders should have a voice in managing his business. 
B)  John's ability to attract money does not depend on the lender's perception of his character. 
C)  John's credit history will not be checked when he requests funding, because his business is small. 
D)  Since the money being borrowed is for an existing business, the lender(s) will typically look at its track record. 
A)  The lenders should have a voice in managing his business. 
B)  John's ability to attract money does not depend on the lender's perception of his character. 
C)  John's credit history will not be checked when he requests funding, because his business is small. 
D)  Since the money being borrowed is for an existing business, the lender(s) will typically look at its track record.

Question 19

Venture capitalists will invest in a small firm with the expectation of ultimately selling the company.

Accepted Answer

A) True 
 B)False

Question 20

The real owners of a firm are the _____.

Accepted Answer

A)  common stockholders 
B)  preferred stockholders 
C)  commercial banks 
D)  insurance companies 
A)  common stockholders 
B)  preferred stockholders 
C)  commercial banks 
D)  insurance companies

A _____ is a contract that permits use of someone else's property for a specified time period.

Small firms use debt financing because interest payments are tax-deductible expenses.

Small business investment companies tend to make very small investments.

Employing a fixed charge to increase the return to common stockholders is known as financial leverage.

In the context of small businesses, which of the following is true of a line of credit?

A _____ is a long-term debt that is secured by real estate property.

Why do small firms use debt financing despite the risks involved?

Describe credit cards and insurance companies as sources of debt financing for small businesses.

Which of the following is true of venture capital firms?

Common stockholders have a legally enforceable claim to dividends.

In the context of small businesses, what is financial leverage?

Debt represents an owner's share of the assets of a company.

The purpose of business incubators is to shelter failing enterprises by providing financial services.

From an investor's point of view, debt investments should have a higher financial return than common stock investments.

Small company offering registration is the sale of common stock to the public through a regulated board, such as Nasdaq.

Professional venture capital firms provide more investment capital for small businesses than angel capitalists.

In the context of small businesses, what is trade credit?

John, who needs funding for his small business, approaches a few lenders for funds. Which of the following will be true in this situation?

Venture capitalists will invest in a small firm with the expectation of ultimately selling the company.

The real owners of a firm are the _____.

Starting Your Small Business

Family-Owned Businesses

Forms of Ownership of Small Businesses

Maintaining Good Government Relations and Business Ethics

Becoming the Owner of a Small Business

Planning, Organizing, and Managing a Small Business

Developing Marketing Strategies

Promoting and Distributing

How to Obtain and Manage Human Resources and Diversity in Small Companies

How to Maintain Relationships With Your Employees and Their Representatives

Obtaining and Laying Out Operating Facilities

Purchasing, Inventory, and Quality Control

Basic Financial Planning

Budgeting and Controlling Operations and Taxes

Using Computer Technology in Small Businesses

Risk Management, Insurance, and Crime Prevention

Filters

Exam 7: How to Obtain the Right Financing for Your Business

A _____ is a contract that permits use of someone else's property for a specified time period.

Small firms use debt financing because interest payments are tax-deductible expenses.

Small business investment companies tend to make very small investments.

Employing a fixed charge to increase the return to common stockholders is known as financial leverage.

In the context of small businesses, which of the following is true of a line of credit?

A _____ is a long-term debt that is secured by real estate property.

Why do small firms use debt financing despite the risks involved?

Describe credit cards and insurance companies as sources of debt financing for small businesses.

Which of the following is true of venture capital firms?

Common stockholders have a legally enforceable claim to dividends.

In the context of small businesses, what is financial leverage?

Debt represents an owner's share of the assets of a company.

The purpose of business incubators is to shelter failing enterprises by providing financial services.

From an investor's point of view, debt investments should have a higher financial return than common stock investments.

Small company offering registration is the sale of common stock to the public through a regulated board, such as Nasdaq.

Professional venture capital firms provide more investment capital for small businesses than angel capitalists.

In the context of small businesses, what is trade credit?

John, who needs funding for his small business, approaches a few lenders for funds. Which of the following will be true in this situation?

Venture capitalists will invest in a small firm with the expectation of ultimately selling the company.

The real owners of a firm are the _____.

Starting Your Small Business

Family-Owned Businesses

Forms of Ownership of Small Businesses

Maintaining Good Government Relations and Business Ethics

Becoming the Owner of a Small Business

Planning, Organizing, and Managing a Small Business

Developing Marketing Strategies

Promoting and Distributing

How to Obtain and Manage Human Resources and Diversity in Small Companies

How to Maintain Relationships With Your Employees and Their Representatives

Obtaining and Laying Out Operating Facilities

Purchasing, Inventory, and Quality Control

Basic Financial Planning

Budgeting and Controlling Operations and Taxes

Using Computer Technology in Small Businesses

Risk Management, Insurance, and Crime Prevention

Filters