Exam 1: Introduction and Overview

Owner-manager (agency)conflicts are differences between manager's self-interest and that of the owners who hired the manager.

Environmental commerce,or e-commerce,involves the use of electronic means to conduct business online.

The Office of Advocacy of the U.S.Small Business Administration documents that "employer firm births" have approached 600,000 annually in recent years.

Studies by Phillips and Kirchhoff,and by Headd,found that about 38%-40% of new firms survived six years of operation.

You are considering investing in two independent projects "A" and "B".Project A requires an initial investment of $12,000.In one year,there is a 30% chance of a $10,500 return;a 50% chance of a $12,500 return;and a 20% chance of a $14,500 return.Project B requires an initial investment of $1,000.In one year,there is a 25% chance of a $950 return;a 25% chance of a $1,000 return;and a 50% chance of a $1,200 return.If you require a 7% return on your investment after one year,you should:

"Fads" are large societal,demographic,or technological trends or changes that are slow in forming but once in place continue for many years.

Entrepreneurial finance is the application and adaptation of financial tools and techniques to an entrepreneurial venture.Entrepreneurial finance involves:

Bill Gates once said: "I was seldom able to see an opportunity,until it ceased to be one."

The stage that precedes the middle stage in a successful venture's life cycle is called the:

You have the opportunity of making a $5,000 investment.The outcomes one year from now will be either $5,000 or $6,000 with an equal chance of either outcome occurring.What is the expected rate of return?

At which stage of the venture's life cycle stage is best characterized by the period when revenues start to grow and when cash flows from operations begin covering cash outflows?

The second stage in a successful venture's life cycle is the startup stage.

Which one of the following possible conflicts of interest is usually minimized through the use of equity incentives?

In 1982,Harry Dent identified several major or megatrends shaping U.S.society and the world.

The owner-debtholder conflict is the divergence of the owners' and lenders' self-interest as the firm gets close to going "public."

Entrepreneurship is the process of changing ideas into commercial opportunities and creating value.

Perhaps the most important invention shuttling us from an industrial society to an information society is the computer chip.

4.Lindsey and Tobias have the opportunity to invest in a project that requires an investment of $3,000.There is a 35% chance of a $2,900 return;a 40% chance of a $3,400 return;and a 25% chance of a $4,500 return one year from now.Lindsey requires a 15% return on the project after the first year,but Tobias requires a return of only 12%.Using the expected rate of return:

Although the risks associated with starting a new entrepreneurial venture are large,there is always room for one more success.

During a venture's rapid growth stage,funds for plant expansion,marketing expenditures,working capital,and product or service improvements is obtained through?