Question 1

The formal underwriting agreement between the company and the underwriter is signed ________.

Accepted Answer

A)  on the last day before the registration statement becomes effective 
B)  when the statement of registration is filed 
C)  during the road show 
D)  at the time of the letter of intent 
A)  on the last day before the registration statement becomes effective 
B)  when the statement of registration is filed 
C)  during the road show 
D)  at the time of the letter of intent

Question 2

A(n) ________ is when a company raises capital by selling shares of its stock to the general public for the first time.

Accepted Answer

A)  venture capital offering 
B)  partnership 
C)  debt equity arrangement 
D)  initial public offering 
A)  venture capital offering 
B)  partnership 
C)  debt equity arrangement 
D)  initial public offering

Question 3

The biggest benefit of a public stock offering is ________.

Accepted Answer

A)  the capital infusion the company receives 
B)  the ability to use its stock to acquire other companies 
C)  a listing on a stock exchange 
D)  the ability to use its stock to attract and retain key managers and employees 
A)  the capital infusion the company receives 
B)  the ability to use its stock to acquire other companies 
C)  a listing on a stock exchange 
D)  the ability to use its stock to attract and retain key managers and employees

Question 4

Entrepreneurs are most likely to give up more equity in their businesses in the startup phase than in any other.

Accepted Answer

A) True 
 B)False

Question 5

It is extremely difficult for a startup company with no track record of success to raise money with a public stock offering.

Accepted Answer

A) True 
 B)False

Question 6

Angels are not a good source of financing for entrepreneurs seeking relatively small amounts of money, as they typically do not make investments of less than $1 million.

Accepted Answer

A) True 
 B)False

Question 7

Asset-based borrowing permits small businesses ________.

Accepted Answer

A)  to borrow up to 100 percent of the value of their inventory or their accounts receivable for the money they need for long-term goals 
B)  to use normally unproductive assets such as accounts receivable and inventory 
C)  to obtain loans more easily but with less borrowing power than using unsecured lines of credit 
D)  access to a source of funds ideally suited for long-term financing needs 
A)  to borrow up to 100 percent of the value of their inventory or their accounts receivable for the money they need for long-term goals 
B)  to use normally unproductive assets such as accounts receivable and inventory 
C)  to obtain loans more easily but with less borrowing power than using unsecured lines of credit 
D)  access to a source of funds ideally suited for long-term financing needs

Question 8

The Boat and Ski Shop, a small retail boat shop, would most likely rely on which of the following methods to finance its inventory?

Accepted Answer

A)  Discounted installment contracts 
B)  Floor planning 
C)  Installment loans 
D)  Trade credit 
A)  Discounted installment contracts 
B)  Floor planning 
C)  Installment loans 
D)  Trade credit

Question 9

Approximately ________ percent of all venture capital invested comes from corporations.

Accepted Answer

A)  2 
B)  8 
C)  17 
D)  24 
A)  2 
B)  8 
C)  17 
D)  24

Question 10

Corporate venture capital accounts for approximately 17 percent of all venture capital.

Accepted Answer

A) True 
 B)False

Question 11

Although there is no limit on the amount of stock it can buy, a typical venture capital firm will purchase less than ________ percent of the ownership in a small firm.

Accepted Answer

A)  21 
B)  50 
C)  70 
D)  80 
A)  21 
B)  50 
C)  70 
D)  80

Question 12

Equity capital is also called risk capital because these investors assume the primary risk of losing their funds if the business fails.

Accepted Answer

A) True 
 B)False

Question 13

Since their stock offerings are small, most entrepreneurs are able to take their companies public without the assistance of accountants, attorneys, and underwriters.

Accepted Answer

A) True 
 B)False

Question 14

When the SBA makes a loan guarantee, banks are willing to consider riskier deals that they normally would refuse.

Accepted Answer

A) True 
 B)False

Question 15

Before making a loan to a business startup, banks prefer to see ________.

Accepted Answer

A)  sufficient cash flow generated by the business 
B)  ample collateral for the loan amount 
C)  a SBA guarantee to insure the loan 
D)  All of the above 
A)  sufficient cash flow generated by the business 
B)  ample collateral for the loan amount 
C)  a SBA guarantee to insure the loan 
D)  All of the above

Question 16

Less than ________ percent of all U.S. companies are publicly-held corporations.

Accepted Answer

A)  1 
B)  5 
C)  10 
D)  12 
A)  1 
B)  5 
C)  10 
D)  12

Question 17

Unlike equity financing, debt financing does not require an entrepreneur to dilute her/his ownership interest in the company.

Accepted Answer

A) True 
 B)False

Question 18

Angels are an excellent source of ________ money, often willing to wait ________ years or longer to cash out their investment.

Accepted Answer

A)  immediate; 5 
B)  patient; 7 
C)  long-term; 10 
D)  passive; 20 
A)  immediate; 5 
B)  patient; 7 
C)  long-term; 10 
D)  passive; 20

Question 19

In a Regulation D stock offering, the company ________.

Accepted Answer

A)  sells its shares directly to private investors 
B)  makes a private placement without actually "going public" 
C)  does not have to register its shares with the SEC 
D)  All of the above 
A)  sells its shares directly to private investors 
B)  makes a private placement without actually "going public" 
C)  does not have to register its shares with the SEC 
D)  All of the above

Question 20

The most common method used by commercial finance companies to provide credit to small businesses is ________.

Accepted Answer

A)  asset based 
B)  insurance based 
C)  unsecured lines of credit or "character loans" 
D)  profitability based 
A)  asset based 
B)  insurance based 
C)  unsecured lines of credit or "character loans" 
D)  profitability based

The formal underwriting agreement between the company and the underwriter is signed ________.

A(n) ________ is when a company raises capital by selling shares of its stock to the general public for the first time.

The biggest benefit of a public stock offering is ________.

Entrepreneurs are most likely to give up more equity in their businesses in the startup phase than in any other.

It is extremely difficult for a startup company with no track record of success to raise money with a public stock offering.

Angels are not a good source of financing for entrepreneurs seeking relatively small amounts of money, as they typically do not make investments of less than $1 million.

Asset-based borrowing permits small businesses ________.

The Boat and Ski Shop, a small retail boat shop, would most likely rely on which of the following methods to finance its inventory?

Approximately ________ percent of all venture capital invested comes from corporations.

Corporate venture capital accounts for approximately 17 percent of all venture capital.

Although there is no limit on the amount of stock it can buy, a typical venture capital firm will purchase less than ________ percent of the ownership in a small firm.

Equity capital is also called risk capital because these investors assume the primary risk of losing their funds if the business fails.

Since their stock offerings are small, most entrepreneurs are able to take their companies public without the assistance of accountants, attorneys, and underwriters.

When the SBA makes a loan guarantee, banks are willing to consider riskier deals that they normally would refuse.

Before making a loan to a business startup, banks prefer to see ________.

Less than ________ percent of all U.S. companies are publicly-held corporations.

Unlike equity financing, debt financing does not require an entrepreneur to dilute her/his ownership interest in the company.

Angels are an excellent source of money, often willing to wait years or longer to cash out their investment.

In a Regulation D stock offering, the company ________.

The most common method used by commercial finance companies to provide credit to small businesses is ________.

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Inside the Entrepreneurial Mind: From Ideas to Reality

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Forms of Business Ownership and Buying an Existing Business

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

Exam 13: Sources of Financing: Debt and Equity

The formal underwriting agreement between the company and the underwriter is signed ________.

A(n) ________ is when a company raises capital by selling shares of its stock to the general public for the first time.

The biggest benefit of a public stock offering is ________.

Entrepreneurs are most likely to give up more equity in their businesses in the startup phase than in any other.

It is extremely difficult for a startup company with no track record of success to raise money with a public stock offering.

Angels are not a good source of financing for entrepreneurs seeking relatively small amounts of money, as they typically do not make investments of less than $1 million.

Asset-based borrowing permits small businesses ________.

The Boat and Ski Shop, a small retail boat shop, would most likely rely on which of the following methods to finance its inventory?

Approximately ________ percent of all venture capital invested comes from corporations.

Corporate venture capital accounts for approximately 17 percent of all venture capital.

Although there is no limit on the amount of stock it can buy, a typical venture capital firm will purchase less than ________ percent of the ownership in a small firm.

Equity capital is also called risk capital because these investors assume the primary risk of losing their funds if the business fails.

Since their stock offerings are small, most entrepreneurs are able to take their companies public without the assistance of accountants, attorneys, and underwriters.

When the SBA makes a loan guarantee, banks are willing to consider riskier deals that they normally would refuse.

Before making a loan to a business startup, banks prefer to see ________.

Less than ________ percent of all U.S. companies are publicly-held corporations.

Unlike equity financing, debt financing does not require an entrepreneur to dilute her/his ownership interest in the company.

Angels are an excellent source of ________ money, often willing to wait ________ years or longer to cash out their investment.

In a Regulation D stock offering, the company ________.

The most common method used by commercial finance companies to provide credit to small businesses is ________.

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Inside the Entrepreneurial Mind: From Ideas to Reality

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Forms of Business Ownership and Buying an Existing Business

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

Angels are an excellent source of money, often willing to wait years or longer to cash out their investment.