Exam 12: A Firms Sources of Financing

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -Bank-imposed restrictions on a borrower that enhance the chance of timely repayment.

Karen is planning to launch her first business.She will most likely acquire her initial financing from:

People like Sibusiso who 'bootstrap' company financing are:

The age of a company has little impact on the types of financing available to it.

In addition to the interest rate on his business loan, Paul should also give attention to:

Irwin has applied for a loan from an asset-based lending company.As security he will offer:

A drawback to "going public" is:

Lines of credit are legal obligations to provide capital.

National and local governments are becoming less involved in financing new businesses.

Venture capitalists restrict their investment in start-up companies.

When considering a loan application, bankers will consider:

Assets such as the quality of a business's employees are considered tangible in nature and thus have substantial value as collateral.

Which financing source has the greatest advantage of speed?

Many venture capitalists:

Both wholesalers and equipment manufacturers/suppliers can be used as sources of funds.

A loan covenant is very likely to require:

Alice is starting a purse business and has been approached by Renee, a business angel, about investing in the company.Discuss items Alice should consider before going into business with Renee.

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -A loan for which items of inventory or other movable property serve as collateral.

Match the term with its definition. a.Asset-based loan b.Basis point c.Chattel mortgage d.Equipment loan e.JIBAR (Johannesburg Inter-Bank Agreed Rate) f.Line of credit g.Prime rate h.Purchase-order financing i.Term loan -The interest rate charged by commercial banks on loans to their most creditworthy customers.

Luke has a new company and is considering equity financing.Currently, Luke is the only owner and source of equity for the business and makes all executive decisions for daily operations.What effect could the addition of other investors have?