ETR 210

Which is one of the seven most important questions for entrepreneurs regarding venture capitalists? a. What is it like to work with his firm? b. Is he or she a good communicator? c. Is he or she wealthy? d. is he or she good at financial computation?

a. What is it like to work with his firm?

A consumer driven marketing philosophy often relies on direct selling.

False

Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public.

False

Equity financing is money invested in the venture with legal obligations to repay the principal amount of interest or interest rate on it.

False

It is usually more expensive to gather secondary data than primary data.

False

Most firms generally gather primary data and then see if there is secondary data to supplement it.

False

Only major strategic decisions need to be supported through marketing research.

False

Pricing procedures are the same for all types of ventures.

False

The first step in marketing research is to gather primary data.

False

The venture capital pool is rapidly declining due to overfunding.

False

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

False

There is no way for the venture capitalist to evaluate the new venture.

False

Two major concerns with marketing on the Internet are unlimited target audiences and customer resistance to change.

False

Venture capital firms want to own control of the firms in which they invest.

False

Venture capitalists are quick to invest.

False

Venture capitalists are usually satisfied with a reasonable return on investments.

False

Venture capitalists need little information before they make an investment.

False

Venture capitalists need only basic summary information before they make a decision.

False

Even after marketing research is done, many entrepreneurs are unsure of how to price their products or services.

True

History and nature of the company, capital structure, and description of any material contracts are just a few examples of the specific detailed information that must be presented about a firm that is going public.

True

Informal risk capitalists are those who have already made their money and now seek to help new ventures.

True

Marketing planning is the process of determining a clear, comprehensive approach to the creation of customers.

True

Marketing research involves the gathering of information about a particular market, followed by analysis of the information.

True

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

True

Shopping goods are products that consumers will take time to examine carefully and compare for quality and price.

True

Sophisticated investors are wealthy individuals who invest more or less regularly in new and/or early- and late-stage ventures.

True

Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies.

True

The greatest potential for internet marketing is with direct marketing.

True

To find the right venture capitalist, it is important for the entrepreneur to know what working on his or her venture will be like.

True

Venture capitalists are slow to invest.

True

A market is

a group of consumers who have purchasing power and unsatisfied needs

There are four major trends in the venture capital field today. They include all of the following except a. funds are less specialized and more homogenous. b. emerging feeder funds. c. a decrease in smaller start-up investment. d. a new legal environment.

a. funds are less specialized and more homogenous.

Which of the following statements is true of the recent developments in the venture capital market? a. in 1994 VC firms invested 20.9 billion dollars. b. in 1999 the total pool of venture capital was $3 billion. c. the venture capital market is currently experiencing a downturn. d. the venture capital market peaked in 2001.

a. in 1994 VC firms invested 20.9 billion dollars.

Surveys include contact by

a. mail b. telephone c. personal interviews

Equity capital is often raised through:

a. public stock offerings.

A disadvantage of debt financing is

a. regular interest payments

Regulation D defines three separate exemptions that are based on the amount of money being raised. Which is not a rule that accompanies these exemptions? a. rule 503 b. rule 504 c. rule 505 d. rule 506

a. rule 503

When going public with public offerings an advantage might be

a. size of the company's capital amount.

Long-term debt is used for

a. start-up capital. b. funding for purchase of property or equipment.

Approximately how many commercial banks are there in this country?

b. 8,000

SEC stands for the

b. Security and Exchange Commission.

An informal risk capitalist is referred to as:

b. a business angel.

Informal investors find projects through

b. a network of friends.

All of the following techniques are used in gathering primary data except a. observational methods *b. analysis of company financial records c. surveys d. experimentation

b. analysis of company financial records

Which is not a stage of the evaluation process? a. initial screening b. evaluation of the business plan c. group discussion d. management integration

b. evaluation of the business plan

Regulation D replaces the term "sophisticated investor" with the term "accredited purchaser." Included in this second category is/are

b. institutional investors.

Short-term debt is

b. paid back in one year.

When going public some specific detailed information that must be presented includes

b. the capital structure of the company.

What percentage of "angel capital" is devoted to seed a startup venture versus growth financing?

c. 5 percent

The entrepreneur should ask the venture capitalist _____ questions.

c. an unlimited number of

AACSB Analytic | Environmental InfluenceThe most common source of debt financing is

c. commercial banks.

The key to marketing analysis is

c. marketing research

Equity capital is

c. not a loan but a form of stock.

Which of the following is a type of equity financing? a. convertible debentures b. common stock c. loan with warrants d. loan without warrants

common stock

Evaluation of new-venture proposals includes what processes except a. oral presentation b. initial screening c. evaluation of the business plan d. a product prototype

d. a product prototype

Venture proposals are often rejected due to significant deficiencies in

d. both a and b.

The SEC regulation D exemptions include all of the following except: a. placements of up to $5 million. b. placements of less than $500,000. c. placements in excess of $5 million. d. placements in excess of $l0 million.

d. placements in excess of $l0 million.

At start-up time, forms of financing includes all but which of the following.

equitable payback

Which of the following is (are) sources of capital for entrepreneurs: a. equity b. debit c. auto leasing d. credit cards

equity

A marketing information system compiles and organizes data according to a customer's sex, age, and geographic location.

False

Sales forecasting is a process of projecting future sales through educated guesses.

False

Cost is often a major obstacle to marketing research for a new venture.

True

Informal risk capitalists are often referred to as "business angels."

True

Information that has already been compiled is known as secondary data.

True

One of the most frequently used criterion in evaluating new ventures, is the ability of the entrepreneur to sustain intense effort.

True

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

True

The most common sources of debt financing are commercial banks.

True

The web allows companies to gather and disseminate market information cheaper than traditional methods.

True

There are three distinct types of marketing philosophies that exist among new ventures.

True

Venture capitalists are a valuable source of equity funding for new ventures.

True

Which is an important question for the entrepreneur to ask when evaluating the venture capitalist? a. Is the person someone with whom the entrepreneur can work? b. Is the person a close relative? c. Is the person wealthy? d. Is the person a college graduate?

a. Is the person someone with whom the entrepreneur can work?

Marketing research is sometimes irrelevant to a problem; however, it sometimes provides useful information.

a. True

Which of the following would be most commonly used for long-term financing? a. insurance companies b. trade credit c. finance companies d. leasing companies

a. insurance companies

One of the advantages of public offerings is

a. liquidity

Which of the following is not a type of debt financing? a. private placement b. trade credits c. finance companies d. accounts receivables

a. private placement

In defining research objectives, the entrepreneur should include

b. consumer tastes

Advantages of debt financing include all of the following except: a. low interest rates can justify the opportunity cost. b. regular interest payments. c. allows potential greater return on equity. d. no relinquishment of ownership.

b. regular interest payments.

Criteria for evaluating new-venture proposals include all of the following except a. the entrepreneur's personality. b. the entrepreneur's age. c. the entrepreneur's experience. d. financial considerations.

b. the entrepreneur's age.

The main objective of regulation D is to

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

Venture capitalists are experienced professionals who provide a full range of service for new ventures including

c. management consulting.

Criteria that venture capitalists use in evaluating new venture proposals include:

c. the characteristics of the product or service.

When accounts receivable are bought from a company for capital funding it is called

d. factoring.

Which of the following would be most commonly used for medium-term financing? a. insurance companies b. trade credit c. finance companies d. leasing companies

finance companies

When starting a business, which of the following sources of financing are least likely to be used? a. trade credit b. factors c. leasing companies d. insurance companies

insurance companies

Many new ventures find that debt financing is

necessary.

When starting a business, which of the following sources of financing are most likely to be used? a. trade credit b. factors c. leasing companies d. insurance companies

trade credit

Which of the following would be most commonly used for short-term financing? a. insurance companies b. trade credit c. finance companies d. leasing companies

trade credit

Public offerings is a term used to refer to corporations taking public donations to raise capital.

False

Regulation D strengthened the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals.

False

Which of the following is a true statement about raising capital? a. All capital is raised through formal sources. b. All capital is raised through debt sources. c. Capital is easy to get. d. It often takes a great deal of time.

d. It often takes a great deal of time.

Which of the following is not one of the most common questions typically required to be answered by entrepreneurs? a. What do you plan to do with the money? b. How much money do you need? c. When do you need the money? d. What exact date will you repay the money?

d. What exact date will you repay the money?

When securing a bank loan an entrepreneur should be prepared to ANS which of the following questions except? a. When do you need it? b. How do you need it? c. What do you need it for? d. What price is the price of your product?

d. What price is the price of your product?

If 40 percent of the individuals with a net worth in excess of $l million were interested in venture financing, how many millionaires would be available?

c. 200,000

How many people in America have net worth in excess of $1 million?

c. 500,000

SBIC stands for the

c. Small Business Investment Co.

Which of the following statements is not true about venture capitalists? a. They want the entrepreneur and the management to run the company. b. They expect high return on investments. c. They are more interested in trying to manage the firm themselves than in as or products. d. They take a long time to raise venture capital.

c. They are more interested in trying to manage the firm themselves than in as or products.

Which of the following is not a question commonly asked by banks of entrepreneurs? a. What do you plan to do with the money? b. How much do you need? c. What interest rate did you have in mind? d. How will you repay the loan?

c. What interest rate did you have in mind?

Secondary data consists of

c. existing information

Which of these forms are not required by SEC? a. proxy statements b. form 8-K c. form 4-V d. form 10-Q

c. form 4-V

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

True