EPS Mid-term exam practice test

which of the following is a question that should not be sidestepped when buying a business?

Are there hidden problems that exist in the operation?

Which of the following is considered a myth of innovation?

Creativity relies on blue sky ideas

There is a great abundance of reliable data concerning the start-up, performance, and failure of new ventures.

False

There is only a small number of informal risk capitalists in the market today.

False

The regulation D exemptions include all of the following except

Rule 503--placements of less than 500,000

most innovations result from

a conscious and purposeful search for new opportunities

approximately how many commercial banks are there in this country?

about 5,600

When this asset is purchased, the buyer should be sure to deduct those so old that they are deemed uncollectible

accounts receivable

which of the following are causes of industry and market changes?

advancements in technology

Competitor factors in a buying decision do not include

age of competition's owners

The main objective of Regulation D is to

make it easier and less expensive for small ventures to sell stock.

which of the following statements is true?

successful innovations are simple and focused

a new business faces two great dangers: the possibility that it will not find a market for its goods or services, and _______.

the chance that it will not be able to control its costs

The business plan is a critical element in a new-venture proposal

true

Two important factors classified as managerial that could be a cause for failure include human resource problems and the concept of the team approach

true

Use of debt to finance a new venture involves a payback of the funds plus an interest fee (interest) for the use of the money.

true

business brokers specialize in business opportunities and can provide leads and assistance in finding a new venture for sale.

true

perhaps the greatest advantage of buying a franchise, as compared to starting a new business or buying an existing one, that is that the franchisor will usually provide both training and guidance to the franchisee

true

P2P lenders charge fees for brokering and servicing loans and collect penalties for late payments.

true

Private placement is a method of raising capital through the private placement of securities.

true

The Franchise Disclosure Document (FDD) is legally required disclosure document that must be presented to potential franchisees during presale discussions.

true

A person can develop their own creativity by

Seeing new & different relationships in people, objects & places around them

of the following, which is more likely than the others to be deemed a potential danger of social lending?

business plan disclosure

the franchisor's responsibility does not include the providing

business relationship

The franchisor's responsibility does not include providing

business relationships

Business-related reasons for selling do not include which of the following?

changes in the product supply chain

managerial problems include which of the following?

concept of a team approach

Which of the following statements is not true?

creative ideas never come out of the blue

which of the following is considered a myth of innovation?

creativity relies on blue skies

Which of following costs add to cost of franchising pertaining to principal and interest payments?

debt services

Ray Kroc's development of McDonald's would be a good illustration of which form of innovation?

extention

It is really genius and not hard work that creates success for the entrepreneur.

false

Surprisingly, growth of sales is generally not considered a critical factor in assessing new ventures.

false

The sources of new business ideas among men and women are identical in type and proportion.

false

The venture capital pool is rapidly declining due to overfunding.

false

There are five specific phases that a new venture goes through.

false

There is a great abundance of reliable data concerning the start-up, performance, and failure of new ventures.

false

Timing has little to do with the success or failure of a new venture.

false

innovation through duplication, a product is simply copied.

false

researchers uniformly agree that the easiest step in the creative endeavor is the evaluation and implementation phase.

false

the creative climate rejects the ambiguity common in work and life

false

the sources of new business ideas among men and women are identical in type proportion.

false

there are five specific phases that a new venture goes through

false

An approach developed as a criteria selection list from which entrepreneurs can gain insights into the viability of their venture is the

feasibility criteria approach

The individual who arranges for a dealer to handle a specific product or service under certain mutually agreed upon conditions is known as the ______.

franchisor

Researchers have described a "fully developed new firm" with a number of characteristics, including:

full-time commitment

Market Feasibility analysis relies on

general economic trends and competitor data

The extra value a business can command in a sale is known as

goodwill.

Of the following, which is not typically identified as a bootstrapping technique?

hiring seasoned veterans

which of the following can help entrepreneurs carry out the evaluation and implementation stage?

increasing energy level

a common human resource problem is

inflated owner ego

Which of the following are the keys to understanding opportunity and its development for entrepreneurs?

innovation and creativity

When starting a business, which of the following sources of financing are least likely to be used?

insurance companies

Which of the following is a true statement about raising capital?

it often takes a great deal of time to raise capital.

which of the following is not one of the eight critical factors that VCs use in the evaluation of new ventures?

managerial structure

which of the following could be considered a trend that signals a shift in the current paradigm of the population?

market

Timing is especially critical in which area?

marketing

Lack of finished product availability can affect

marketing efforts

informal investors find projects through

network of friends

Appositional relationships often lead to visions that result in which of the following?

new ideas, products, and services

The ____ approach indicates the importance of people's awareness of their daily lives for developing new business ideas.

new-new

the ____ approach indicates the importance of people's awareness of their daily lives for developing new business ideas.

new-new

"piggybacking" is one's way into a new business involves using a _______ approach.

new-old

What is not considered an emerging internet opportunity?

niche consumables

Which of the following is not a true statement regarding arenas of creativity?

people are either born or not born with creativity

Three specific phases that a new venture goes through are

prestart-up, start-up, and poststart-up

When a customer sees a product that is superior to its competitors, _______ becomes less important.

price

Which of the following is not a type of debt financing?

private placement

two important components of creative problem solving are

process and people.

Which of the following is a tool that enables entrepreneurs to judge a business venture's potential?

profile analysis

Rapid technological advances in many industries cause a concern for ______ in a new venture development

rapid product obsolescence

Which of the following is not considered by entrepreneurs when examining opportunities for possible ventures?

the cost of replacing an employee

Which of the following is not an entrepreneurial motivation for starting a venture?

the organization

Who must negotiate a final deal to purchase a business?

the potential buyer

which evaluation method enables an entrepreneur to judge the potential of the business?

the profile analysis

a franchise is any arrangement where the owner has licensed other to sell goods or services by which of the following?

trademark

"intensity of competition" changes dominance of problem areas

true

Entrepreneurs are always looking for unique opportunities to fill needs or wants

true

Frugality is deemed a bootstrapping technique.

true

In negotiating a deal to purchase an existing business, it is possible to request that the seller retain a minority interest in the firm.

true

Innovation is the process by which entrepreneurs convert opportunities into marketable ideas.

true

Only new patterns of thinking lead to new ideas and innovation.

true

The cognitive ability of entrepreneurs to acquire and transform information has yet to be studied

true

The entrepreneurial motivations of individuals relate to the entrepreneur, the environment, and the venture.

true

the entrepreneurial motivations of individuals relate to the entrepreneur, the environment, and the venture

true

trade credit is given by suppliers who sell goods on account.

true

In the incubation process, ways of getting away from a problem include

working on something else

Financing includes all of the following except

equitable payback

Long-term debt is used for

a rainy day fund

Business-related reasons for selling do not include which of the following?

Changes in the product supply chain

Many entrepreneurs of new ventures lack

a unique angle for the venture

many entrepreneurs of new ventures lack

a unique angle for the venture

which of the following statements is true?

The right brain helps people understand analogies and imagine things

Which of the following is not currently cited as a trend creating business opportunities?

breakfast cereals

The maverick entrepreneur who avoids reaching out and finding help is a myth of the past.

True

informal risks capitalists are often referred to as "business angels."

True

Which of the following is not one of the most common questions typically required to be answered by entrepreneurs seeking funding?

What exact date will you repay the money?

Which of the following is not one of the most common questions typically required to be answered by entrepreneurs seeks funding?

What exact date will you repay the money?

Which of the following is not a question asked by banks of entrepreneurs?

What interest rate did you have in mind?

Evaluating franchise opportunities include finding out more about all of the following except

a franchise location