Exam 12: A Firms Sources of Financing

Asset-based lending is a type of financing secured by assets such as equipment and inventory.

For entrepreneurial ventures with the potential for becoming significant businesses, initial public offerings have been the fastest-growing source of financing over the past two decades.

Match the definition with its term. -A lender that uses funds from federal, state, and private sources to provide financing to small businesses in low-income communities

LIBOR is _____ the prime rate.

Violet's Catering is growing rapidly. A new customer has requested the company cater a retirement luncheon for 500 people, resulting in Violet's Catering needing a large order from the company's primary food vendor. Although the company is experiencing growth, cash flow is a concern. What would be the best financing option?

The main advantage of using credit cards for financing is the relatively low interest rate compared to bank loans.

Companies that have business dealings with a new firm are possible sources of funds for financing inventory and equipment.

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 as long as his firm's rate of return on assets is greater than the cost of the debt, his rate of return on equity will _____ as the firm uses more debt.

It's been George's "baby" from the beginning, and he really doesn't want to be accountable to any outsider for the decisions he makes in his business. In George's case, he should seek initially to secure _____ financing.

One factor that influences the choice between debt and equity is the

Discuss two methods of selling stock.

Qualified small businesses that cannot obtain business loans through normal lending channels can get loans directly from the SBA through its 7(a) Loan Guaranty Program.

Elena plans to open a nonprofit child-care center in her depressed neighborhood. She may qualify for an SBA loan program that provides loans of up to $50,000 known as the

Miracle Fund is a venture capitalist. In exchange for providing venture capital, Miracle Fund

Match the definition with its term. -Funds provided by wealthy private individuals to high-risk ventures

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.

Sondra is a business angel who is looking for a startup company in which to invest. Which of the following companies would she most likely invest in based on current research?

Carla is a loan analyst at the bank. When Cameron applied for a loan, Carla looked at his balance sheet for _____ to evaluate a possible loan for his company's financing.

A chattel mortgage is a loan for which real property, such as land or a building, serves as collateral.

The amount of trade credit available to a new company depends on the supplier's confidence in the firm and not the type of business.