Bus 302

Which of the following helps minimize possible difficulties in funding from family and friends?

Restricting the business arrangements to strictly business

The financing method that involves an interest-bearing instrument, usually a loan, the payment of which is not directly related to the sales and profits of the venture is referred to as _____.

debt financing

Obtaining funds for a company in exchange for ownership is referred to as _____.

equity financing

Commercial banks provide funds in the form of _____.

debt financing

Identify a true statement about personal funds.

They are vital in attracting outside funding.

Which of the following statements are true about internal funding of new ventures? (Check all that apply.)

Short-term, internal funds can be used to fund short-term assets. Collecting bills more quickly is a method of internally generating funds.

Which of the following are key factors involved in favoring the use of one type of financing over another? (Check all that apply.)

The availability of funds Assets of the venture The prevailing interest rates

Which of the following bases need to be evaluated by an entrepreneur for choosing alternative sources of external funding for his or her venture? (Check all that apply.)

The costs involved The terms of the contract The length of time the funds are available

True or false: The risk in a venture increases with the increase in the amount of leverage.

True

Unlike short-term debts, long-term debts _____.

are dependent on the requirement of a collateral