ENT 396 CH.8

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

Venture capitalists, surprisingly, require little information before they make an investment.

False

Which is an important question for the entrepreneur to ask when evaluating the venture capitalist?

Is the person someone with whom the entrepreneur can work?

Which of the following statements is not true of venture capitalists?

They are interested in trying to manage firms themselves.

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

True

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

True

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

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

Which is one of the most important questions for entrepreneurs to ask regarding venture capitalists?

What is it like to work with their firm?

An informal risk capitalist is referred to as:

a business angel

Which of the following does not represent a category of angel investors?

amateur angels

The entrepreneur should ask the venture capitalist _____ questions.

an unlimited number of

The most common source of debt financing is

commercial banks

Which of the following terms is not synonymous with social lending?

commercially viable lending

Major trends in the venture capital field today include all of the following except

less specialized and more homogenous funds

One of the advantages of public offerings is

liquidity

The main objective of Regulation D is to

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

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

private placement

A disadvantage of debt financing is

regular interest payments

Advantages of debt financing include all of the following except:

regular interest payments

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

False

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

True

Which of the following is a type of equity financing?

common stock