Chapter 07: Assignment

Audrey launched a start-up called Baintley Inc. Steven, her wealthy friend, believes that her company has high growth potential. He invests in Baintley Inc. in exchange for a share of ownership. In this scenario, Steven is a(n) _____. a. angel investor b. alternative lender c. corporate philanthropist d. venture capitalist

a. angel investor

In the context of the U.S. economy, small businesses: a. comprise more than 99% of inner-city business establishments. b. generate about 10% of total employment in American inner cities. c. display more bureaucracy than large businesses. d. provide more health insurance coverage benefits to employees than large businesses.

a. comprise more than 99% of inner-city business establishments.

Lindsay is planning to start a new seafood restaurant. She has considered the opinions of many consultants, friends, and family members about her business idea. Despite overwhelming negativity, Lindsay has faith in her abilities as she possesses five years of experience in this field. In this scenario, Lindsay displays the entrepreneurial characteristic of _____. a. confidence b. risk aversion c. failure tolerance d. uncertainty avoidance

a. confidence

Tyron needs financing for his new business venture. He feels that the best way to obtain the funds would be to tap his personal financial resources. In the context of this scenario, the most appropriate source of personal finance for Tyron would be: a. First Reserve, Tyron's local bank, where he has banked for years. b. Bob, Tyron's rich uncle with whom he has a close relationship. c. Chris Poulson, a businessman who charges high-interest rates on loans. d. Albert Anthony, a well-known venture capitalist who Tyron has met once.

b. Bob, Tyron's rich uncle with whom he has a close relationship.

Which of the following is a similarity between angel investors and venture capital firms? a. Both are components of crowdfunding. b. Both put in money in exchange for a share of ownership. c. Both restrict themselves to funding only large corporations. d. Both are used to fund nonprofits that run independent of government aids.

b. Both put in money in exchange for a share of ownership.

Sheila wants to start her own business that would specialize in fashion accessories. However, she decides to continue with her current job at Potters Fashion Inc. as a fashion consultant for another three years to get to know the industry better. Which of the following entrepreneurial strategies is Sheila executing? a. Avoiding uncertainty b. Gaining experience c. Implementing a visionary plan d. Developing an external locus of control

b. Gaining experience

Which of the following scenarios illustrates entrepreneurship? a. Diane is a banker who has had a very fulfilling 30 years at the same branch of First Lenders Bank and is nearing her much-awaited retirement. b. Jill who has a degree in landscaping has started her own landscaping service business and has hired several employees under her supervision. c. Harry lives on the beach and whenever he needs money, he simply opens his guitar case and starts playing beside a boardwalk. d. Tommy works for the Bureau of Land Management but also paints house exteriors on weekends for a little extra income.

b. Jill who has a degree in landscaping has started her own landscaping service business and has hired several employees under her supervision.

Which of the following is an advantage for small businesses? a. Easily available loans b. Lower overhead costs c. Smaller regulatory burdens d. Lower health insurance costs

b. Lower overhead costs

In the context of various strategies that can help you become a successful entrepreneur, which of the following is a difference between Small Business Development Centers (SBDCs) and the Service Corps of Retired Executives (SCORE)? a. SBDCs have volunteers who work for them, whereas SCORE has only permanent salaried employees. b. SBDCs provide a range of free services for small businesses, whereas SCORE provides free counseling for small businesses. c. SBDCs assist only small businesses, whereas SCORE assists only large corporations. d. SBDCs have a common online platform for small businesses, whereas SCORE does not have a website for itself.

b. SBDCs provide a range of free services for small businesses, whereas SCORE provides free counseling for small businesses.

Two companies offer Gayle a job. The first is a successful, venture capital-backed, competently led start-up that has been operating for over a year. The second is a well-established corporation that has been running operations for 50 years. Gayle, after considering factors such as his family, decides to join the well-established corporation. This is most likely because: a. start-ups have high overhead costs. b. start-ups find it difficult to provide health insurance coverage to their employees. c. start-ups operate in generic markets with many competitors. d. corporations tend to have more scope for personalized customer service.

b. start-ups find it difficult to provide health insurance coverage to their employees.

Which of the following nations is most likely to have the lowest percentage of entrepreneurs? a. A nation with a low per capita income b. A nation with a business-supportive socio-political culture c. A nation that places complex regulations on businesses d. A nation that provides a low level of employment protection

c. A nation that places complex regulations on businesses

Which of the following is a similarity between buying an established business and buying a franchise? a. Both have challenging logistics. b. Both need a lot of time to establish a customer base. c. Both find getting financing less challenging. d. Both have high first-year failure rates.

c. Both find getting financing less challenging.

In the context of how small businesses have contributed to the U.S. economy, in which of the following ways do small firms allow new thinking to take hold? a. By specializing in mass production b. By refraining from producing patents c. By displaying a refreshing lack of bureaucracy d. By reapplying an existing idea to a business plan

c. By displaying a refreshing lack of bureaucracy

Which of the following is an advantage of starting one's own business? a. Steady and fixed income b. Minimal workload c. Independence d. Minimal risk

c. Independence

In the context of various strategies to become a successful small business owner, which of the following statements is true of an effective business plan? a. It should not compute the initial capital required. b. It is less than five pages. c. It takes about six months to write. d. It should not consider the competitive market involved.

c. It takes about six months to write.

Derek, after retiring as the CEO of Solitaire Graces Inc., decides to donate his time and expertise to assist newly established small businesses. He learns about an organization called the Service Corps of Retired Executives (SCORE), which is supported by the Small Business Administration (SBA), and joins as a volunteer. As a SCORE volunteer, in which of the following activities is Derek expected to be involved? a. Assisting small businesses in clearing their debts with commercial banks b. Offering loans with low interest rates to small businesses c. Providing free business counseling and mentoring for small business owners d. Investing in small businesses with high growth potential

c. Providing free business counseling and mentoring for small business owners

Small businesses have contributed to the U.S. economy by: a. specializing in mass production. b. increasing its customer base. c. fueling innovation. d. embracing existing markets.

c. fueling innovation.

Colleen lost an important business project. According to her, she would not have lost the project if she had been organized in her work approach. This scenario indicates that Colleen most likely has a(n) _____. a. low tolerance of risk b. high tolerance of risk c. internal locus of control d. external locus of control

c. internal locus of control

Adrian recently lost his job and has been unsuccessful in finding a new one. To sustain himself and his family, he decides to open a small café. He believes that the café is his only economic option. Adrian is now trying to acquire funds from family and friends to open his café. In this scenario, Adrian is a(n) _____. a. angel investor b. preferred stockholder c. necessity entrepreneur d. venture capitalist

c. necessity entrepreneur

Eugene Playem, a small firm that develops games, wants to raise capital to develop a new expensive video game. The firm's finance team plans to find several video game enthusiasts online, who can afford to invest money for the video game's development. In this scenario, which of the following funding options has Eugene Playem planned? a. Personal resources b. Micro-laundering c. Bootstrap d. Crowdfunding

d. Crowdfunding

In the context of funding options for small businesses, which of the following statements is true of the U.S. Small Business Administration (SBA)? a. It grants interest-free loans to entrepreneurs. b. It rents out resources and utilities to start-up businesses. c. It seeks ownership in business firms in return for financing. d. It lends microloans through community nonprofit organizations.

d. It lends microloans through community nonprofit organizations.

In the context of small business opportunities, which of the following statements is true of market niches? a. They are ideal for firms that incur high overhead costs. b. They are uniquely positioned to exploit large corporations. c. They encourage high levels of competition. d. They offer more than enough potential for small, specialized companies.

d. They offer more than enough potential for small, specialized companies.

Greg started a business of tire shops and one by one opened several shops in various parts of his hometown. However, he had to shut down all the shops because they failed to make profits. At 65 years of age, he raised capital and started Gregton Inc., which is now a well-known two-wheeler manufacturing firm in his country. Which of the following entrepreneurial traits most likely contributed to Greg's success? a. An external locus of control b. Tolerance of uncertainty c. Visionary knowledge d. Tolerance of failure

d. Tolerance of failure

Entrepreneurs with an internal locus of control tend to: a. have trouble learning from past mistakes and end up repeating those mistakes. b. put too much faith in the ability of others to act and decide about their own fate. c. deny the acceptance of personal responsibility for actions that cause failure. d. feel that their success or failure is largely the result of their own actions.

d. feel that their success or failure is largely the result of their own actions.