quiz 4
Which of the following is not a myth about Venture Capitalists?
A good management team is more important than a good idea to a Venture Capitalist
An informal risk capitalist is referred to as:
Angel Investor
Of the following, which is more likely than the others to be deemed a potential danger of social lending
Business plan disclosure
The most common source of debt financing is:
Commercial banks
Which of the following terms is not synonymous with social lending?
Commercial lending
Which of the following is not a danger of social lending?
Cost and complexity of setting up the solicitation site.
When accounts receivable are bought from a company for capital funding it is called:
Factoring
Which of the following would be commonly used for medium-term financing?
Finance companies
The use of debt to finance a new venture involves a payback of the funds plus _______________?
Interest
If the Return on Investment (ROI) ratio is negative, the cost of the investment
Is greater than the gains.
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?
Using a leveraged break-even strategy, higher debt means that
It will take longer to break-even.
One of the advantages of public offerings is:
Liquidity
Which of the following is not a disadvantage of debt financing?
Low interest rates reduce the opportunity cost of borrowing
Venture capitalists are experienced professionals who provide a full range of service including:
Management consulting
Many new ventures find that debt financing is:
Necessary
Which of the following is an advantage of debt financing?
No relinquishment of ownership is required.
Which of the following are not capital assets?
Perishables.
Equity capital is often raised through:
Public stock offerings
Finance companies are asset-based lenders who lend money against all of the following assets except:
Real estate.
A disadvantage of debt financing is:
Regular interest payments
One of the disadvantages of equity financing is:
Requires sharing the ownership and profits with the funding source.
When going public (public offering of stock) an advantage might be:
Size of the company's capital amount
Under a conservative break-even strategy
The company uses its equity to help pay for regular operating expenses.
Which of the following is not a characteristic of an Angel Investor? Select one:
They invest only in high tech industries.
Which of the following would be most commonly used for short-term financing?
Trade Credit
Contribution Margin is
What is left of the price to pay for fixed costs after paying variable costs
Short-term debt is:
Paid back in one year or less
_________________ is one of the disadvantages of going public:
Shareholder pressure
If Return on Investment is negative in year one, what does this tell you about the investment?
The costs must be greater than the gain realized in year one
Opportunity Cost is
The highest value surrendered when a decision to invest is made
Factoring is:
The sale of accounts receivable at discounted values.
Which of the following is not a characteristic of a Venture Capitalist?
They only invest in businesses in their local geographical area.
Breakeven is defined as the point where
Total costs are paid by the income from sales.
Cash Flow measures what activity in a business?
Income and expenses