Entrepreneurship Quiz 6
Fair Credit Reporting Act
US federal legilsation specifying consumers rights vis-a-vis credit reporting agencies
credit reporting agency
a business that collects, collates, and reports information concerning an entity's use of debt
interest
a charge for teh use of money, usually figured as a percetage of the principal
economic development agency
a government organization that works to increase economic activity in teh form of job opportunities within a specific geographic area
tax abatement
a legal reduction in taxes by a government
financial leverage
a measure of the debt relative to total investment
foundation
an institution to which private wealth is contributed and from which private wealth is distributed for public purposes
community development organization
an organization by teh SBA to make insured loans to small businesses that are expected to increase economic activity within a specific geographic area
accelerator
an organization that supports start-up technology businesses by providing inexpensive office space, a variety of support services, and resources; most accelerators are associated with universitities
tax credits
direct reductions in teh amount of taxes that must be paid, dependent upon meeting some legal criteria
grants
gifts of money to a business for a specific purpose
dividends
payments of profits to the owners of corporations
small business investment companies
private businesses that are authorized to amke SBA unsured loans to start-ups and small businesses
collateral
something of value given or pledged as security for paymetn of a loan; collateral may conssit of financial instruments, such as stocks, bonds, and negotiable paper, or of physical goods, such as trucks, machinery, land or buildings
risk
teh level of probability hat an investment will not produce expected gains
gain on investment
teh percetange amount that the payout of an investment differs from original cost: calculated as (payout-investment+dividends)/investment
profit, profitability
the cmount that revenues exceed expenses
weighted average cost of capital
the expected average future cost of funds
cost of capital
the percentage cost of obtaining future funds
optimum capital structure
the ratio of debt to equity that provides the maximum level of profits
return on equity
the ratio of profits to owner investment in a business
diversify
to invest multiple investments of differing risk profles for the purpose of reducing overall investment risk
financial risk
uncertainty of returns; the probability of losing money