MGT 241 Midterm Ch. 8
Frugality is deemed a bootstrapping technique.
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
Sophisticated investors are wealthy individuals who invest more or less regularly in new and/or early- and late-stage ventures.
True
The business plan is a critical element in a new-venture proposal.
True
Venture capitalists are a valuable source of equity funding for new ventures.
True
Which of the following is not a question commonly asked by banks of entrepreneurs?
What interest rate did you have in mind?
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 would be most commonly used for short-term financing?
trade credit
The most common source of debt financing is
commercial banks.
Which of the following would be most commonly used for medium-term financing?
finance companies
Of the following, which is not typically identified as a bootstrapping technique?
hiring seasoned veterans
When starting a business, which of the following sources of financing are least likely to be used?
insurance companies
Criteria that venture capitalists use in evaluating new venture proposals include:
the characteristics of the product or service.
When starting a business, which of the following sources of financing are most likely to be used?
trade credit
Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies.
True
The average size of a social loan is around $7,000.
True
Venture capitalists are slow to invest.
True
Which of the following is not one of the most common questions typically required to be answered by entrepreneurs seeking funding?
What exact date will you repay the money?
Informal investors find projects through
a network of friends.
How many people in America have net worth in excess of $1 million?
about 500,000
Which of the following does not represent a category of angel investors?
amateur angels
Which of the following terms is not synonymous with social lending?
commercially viable lending
At start-up time, forms of financing includes all but which of the following?
equitable payback
Private placement is a method of raising capital through the private placement of securities.
True
Evaluation of new-venture proposals includes all the following processes except
a product prototype
Major trends in the venture capital field today include all of the following except
less specialized and more homogenous funds
The main objective of Regulation D is to
make it easier and less expensive for small ventures to sell stock.
Many new ventures find that debt financing is
necessary.
SBIC stands for the
small-business investment companies
Which of the following would be most commonly used for long-term financing?
insurance companies
One of the advantages of public offerings is
liquidity.
Venture capitalists are experienced professionals who provide a full range of service for new ventures including
management consulting.
The Regulation D exemptions include all of the following except:
placements in excess of $l0 million.
Which of the following is not a type of debt financing?
private placement
Regulation D defines separate exemptions that are based on the amount of money being raised. Which is not a rule that accompanies these exemptions?
rule 503
When going public specific detailed information that must be presented includes
the capital structure of the company.
Social lending sites are different from so-called microlending sites.
True
SEC stands for the
Securities and Exchange Commission.
__________ is(are) one of the disadvantages of going public.
Shareholder pressure
Which of the following statements is not true of venture capitalists?
They are interested in trying to manage firms themselves.
Which is not a stage of the evaluation process?
evaluation of the business plan
When accounts receivable are bought from a company for capital funding it is called
factoring.
Public offering is a term used to refer to corporations taking public donations to raise capital.
False
Venture capitalists are quick to invest.
False
The most common sources of debt financing are commercial banks.
True
Advantages of debt financing include all of the following except:
regular interest payments.
Equity financing is money invested in the venture with legal obligations to repay the principal amount of interest or interest rate on it.
False
Most venture capital funds later stages of venture development, not the start-up (or seed) stage.
False
Equity capital is
not a loan but a form of stock.
Short-term debt is
paid back in one year.
A disadvantage of debt financing is
regular interest payments.
When going public with public offerings an advantage might be
size of the company's capital amount.
How do informal investors find projects to invest in?
networks of friends
Which of the following is a type of equity financing?
common stock
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 is a true statement about raising capital?
It often takes a great deal of time to raise capital.
Approximately how many commercial banks are there in this country?
about 7,000
The entrepreneur should ask the venture capitalist questions.
an unlimited number of
Long-term debt is used for
both a and b.
Venture proposals are often rejected due to significant deficiencies in
both a and b.
Of the following, which is more likely than the others to be deemed a potential danger of social lending?
business plan disclosure
Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public.
False
A potential danger of social lending is the implication that social loans may be viewed as gifts and taxed accordingly.
True
When securing a bank loan an entrepreneur should be prepared to answer which of the following questions except?
What is the price of your product?
One of the most frequently used criterion in evaluating new ventures, is the ability of the entrepreneur to sustain intense effort.
True
Which of the following is (are) sources of capital for entrepreneurs?
equity
Entrepreneurs are rarely able to set up a business without investment funds or bank loans.
False
Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals.
False
The venture capital pool is rapidly declining due to overfunding.
False
There is no way for the venture capitalist adequately to evaluate a new venture.
False
There is only a small number of informal risk capitalists in the market today.
False
Venture capital firms want to own control of the firms in which they invest.
False
Venture capitalists are usually satisfied with a reasonable return on investments.
False
Venture capitalists need only basic summary information before they make funding decisions.
False
Venture capitalists, surprisingly, require little information before they make an investment.
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
Informal risk capitalists are often referred to as "business angels."
True
Equity capital is often raised through:
public stock offerings.
