Question 1

Which margin formula do banks generally apply to loans on the basis of a line of credit?

Accepted Answer

A)   10 percent of the value of accounts receivable plus 60 percent of inventory
B)   50 to 80 percent of the value of accounts receivable plus 50 percent of inventory
C)   20 percent of the value of accountants receivable plus 20 percent of inventory
D)   30 percent of the value of accounts receivable plus 15 percent of inventory B

Question 2

What entity would find trade credit useful?

Accepted Answer

A)   employees
B)   retailers
C)   investors
D)   consumers B

Question 3

Nigel decides to issue more shares to raise capital so that he can purchase a high-speed printer for his media business.What will be the repercussions of this decision?

Accepted Answer

A)   voting control will decrease
B)   voting control will be unaffected
C)   financial risk will be higher
D)   financial risk will be unaffected A

Question 4

What does the amount of trade credit available to a new company depend on?

Accepted Answer

A)   size of the company
B)   industry the company is in
C)   confidence the supplier has in the company
D)   personal collateral the owner of the company pledges

Question 5

Describe the Business Development Bank.

Accepted Answer

The answer of Describe the Business Development Bank....

Question 6

A company that has more equity than debt financing his higher financial risk.

Accepted Answer

A) True 
 B)False

Question 7

Where do over half of the funds venture capital firms raise to invest come from?

Accepted Answer

A)   overseas investors
B)   American investors
C)   Canadian investors
D)   large investment firms

Question 8

Tristan has developed a phone app and is hesitant about making an agreement with a venture capitalist willing to finance the start-up.What would make Tristan hesitant?

Accepted Answer

A)   having an exit strategy like a buyout that the venture capitalist would not be in favour of
B)   the venture capitalist wanting the company to grow too slowly
C)   the high interest to be paid on the venture capitalist's financing
D)   the control over the company the venture capitalist will exert

Question 9

Because of the high risk and relatively small amount of cash required to start his business,Graham is turned down by traditional creditors.However,a wealthy individual believing in Graham and the business agrees to finance the start-up.What is this wealthy individual called?

Accepted Answer

A)   venture capitalist
B)   business angel
C)   private bank
D)   credit specialist

Question 10

Sybil is always promoting her company.She can clearly and succinctly describe her company,the products,the target market,and the potential all within 30 seconds.What is this an example of?

Accepted Answer

A)   elevator pitch
B)   executive summary
C)   sales deck
D)   market call

Question 11

Giovani is selling common stock to raise funds for his company's growth.He is only selling stock to several family members and business acquaintances.What is this sale of stock called?

Accepted Answer

A)   private placement
B)   IPO
C)   debt financing
D)   bootstrapping

Question 12

More debt than equity financing results in higher potential return on investment for owners.

Accepted Answer

A) True 
 B)False

Question 13

Describe the four basic approaches to crowdfunding

Accepted Answer

The answer of Describe the four basic approaches to crowdfunding...

Question 14

Camilla purchases a drying machine for her floral designs and arranges an equipment loan with the supplier.The drying machine is priced at $4,000.How much down payment will be required from Camilla?

Accepted Answer

A)   $700-$800
B)   $800-$920
C)   $920-$1,000
D)   $1,000-$1,400

Question 15

Crowdfunding is the process of raising very small investments from a large number of investors via the Internet.

Accepted Answer

A) True 
 B)False

Question 16

Through which entity does the federal government provide funds to small business?

Accepted Answer

A)   venture capital companies
B)   the CSBFP
C)   business angels
D)   trust companies

Question 17

An entrepreneur prefers debt over equity financing.Where would the entrepreneur have the best chance of securing a business loan?

Accepted Answer

A)   credit card companies
B)   venture capitalists
C)   local bank
D)   credit union

Question 18

An entrepreneur with a patent on a cyber-security software system was able to get financing from a venture capitalist for his start-up.What did the venture capitalist likely evaluate about the start-up that led to the financing?

Accepted Answer

A)   start-up is in the technology industry
B)   entrepreneur has a patent
C)   projected growth rate exceeds 40%
D)   entrepreneur agreed to a loan

Question 19

Why do some lenders require a firm to "clean up" their line of credit one month each year?

Accepted Answer

A)   because such a loan can only be outstanding for a maximum of 11 months
B)   because each year a new rate of interest is applied to the outstanding balance
C)   to help the firm develop a good credit history so it can borrow larger amounts in the future
D)   to ensure the loan is being used for business purposes only

Question 20

The CSBFP is a federal government program that provides financing to small businesses through private lenders.

Accepted Answer

A) True 
 B)False

Exam 14: Sources of Financing

Which margin formula do banks generally apply to loans on the basis of a line of credit?

What entity would find trade credit useful?

Nigel decides to issue more shares to raise capital so that he can purchase a high-speed printer for his media business.What will be the repercussions of this decision?

What does the amount of trade credit available to a new company depend on?

Describe the Business Development Bank.

A company that has more equity than debt financing his higher financial risk.

Where do over half of the funds venture capital firms raise to invest come from?

Tristan has developed a phone app and is hesitant about making an agreement with a venture capitalist willing to finance the start-up.What would make Tristan hesitant?

Because of the high risk and relatively small amount of cash required to start his business,Graham is turned down by traditional creditors.However,a wealthy individual believing in Graham and the business agrees to finance the start-up.What is this wealthy individual called?

Sybil is always promoting her company.She can clearly and succinctly describe her company,the products,the target market,and the potential all within 30 seconds.What is this an example of?

Giovani is selling common stock to raise funds for his company's growth.He is only selling stock to several family members and business acquaintances.What is this sale of stock called?

More debt than equity financing results in higher potential return on investment for owners.

Describe the four basic approaches to crowdfunding

Camilla purchases a drying machine for her floral designs and arranges an equipment loan with the supplier.The drying machine is priced at $4,000.How much down payment will be required from Camilla?

Crowdfunding is the process of raising very small investments from a large number of investors via the Internet.

Through which entity does the federal government provide funds to small business?

An entrepreneur prefers debt over equity financing.Where would the entrepreneur have the best chance of securing a business loan?

An entrepreneur with a patent on a cyber-security software system was able to get financing from a venture capitalist for his start-up.What did the venture capitalist likely evaluate about the start-up that led to the financing?

Why do some lenders require a firm to "clean up" their line of credit one month each year?

The CSBFP is a federal government program that provides financing to small businesses through private lenders.