Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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:

Accepted Answer

A) Accept A and reject B 
B) Accept B and reject A 
C) Accept both projects 
D) Reject both projects

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) planning 
B) funding 
C) operations 
D) valuation 
E) aand d above
F)all of the above

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) rapid growth stage 
B) maturity stage 
C) development stage 
D) survival stage 
E) startup stage

Question 10

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?

Accepted Answer

A) 10% 
B) 15% 
C) 20% 
D) 25% 
E) 30%

Question 11

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?

Accepted Answer

A) survival stage 
B) startup stage 
C) rapid growth stage 
D) maturity stage

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) owner-manager conflicts 
B) owner-employee conflicts 
C) manager-employee conflicts 
D) manager-debtholder conflicts

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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:

Accepted Answer

A) Lindsey and Tobias should both invest in the project 
B) Only Tobias should invest in the project 
C) Only Lindsey should invest in the project 
D) Lindsey and Tobias should both reject the project

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) seed financing 
B) second round financing 
C) mezzanine financing 
D) seasoned financing 
E) liquidity stage financing

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.

"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.

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?