Exam 13: Sources of Financing: Debt and Equity

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When financing a business's purchase of equipment,a bank usually lends ________ percent of the equipment's value in return for a security interest in the equipment.

(Multiple Choice)
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When evaluating a company as a potential investment target,venture capitalists look for all but which of the following?

(Multiple Choice)
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The Patriot Express Program is an SBA program that is designed to assist veterans and their spouses who want to become entrepreneurs.

(True/False)
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Equity capital represents the personal investment of the owner (or owners)in a business and is sometimes called ________ because of the potential outcome.

(Multiple Choice)
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Few companies with less than $25 million in annual sales manage to go public successfully.

(True/False)
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Most entrepreneurs are seeking ________ to launch their businesses.

(Multiple Choice)
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One of the easiest and most common methods of debt capital available is:

(Multiple Choice)
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A term loan:

(Multiple Choice)
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The average loan in the SBA's Microloan Program is $100,000 with a three-year repayment term.

(True/False)
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In inventory financing,a small business can typically borrow an amount equal to ________ percent of the inventory it pledges as collateral.

(Multiple Choice)
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SBICs,privately owned financial institutions that are licensed and regulated by the SBA,provide both debt and equity financing to small businesses.

(True/False)
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The single most important ingredient in making a successful initial public offering is selecting a capable underwriter to manage the process.

(True/False)
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Leasing is not an effective method to reduce the long-term capital requirements.

(True/False)
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The primary disadvantage of equity capital is that the entrepreneur:

(Multiple Choice)
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In a Rule 147 (intrastate)offering,a company may only sell its shares to investors in the state in which it is incorporated and does business.

(True/False)
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The biggest benefit of a public stock offering is:

(Multiple Choice)
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Explain how a typical SBA loan guarantee works.What interest rates do these loans normally carry?

(Essay)
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The ________ provides loans to entrepreneurs in communities that have experienced economic distress and viewed as high-risk borrowers.

(Multiple Choice)
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If banks refuse to lend money to a startup business,the owner usually cannot convince his or her vendors and suppliers to extend trade credit either.

(True/False)
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Even the smallest businesses find it easy to sell bonds as a source of capital.

(True/False)
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