ENTR 101 Chapter 8
53. According to Forbes, the net worth of the richest _____ Americans was $2.29 trillion ($5.73 billion per person).
400
7. Frugality is deemed a bootstrapping technique.
True
9. Trade credit is given by suppliers who sell goods on account.
True
52. An informal risk capitalist is referred to as
a business angel.
56. Financing includes all of the following except
equitable payback.
35. Which of the following is a source of capital for entrepreneurs?
equity
71. Informal investors find projects to invest in through
networks of friends.
41. Equity capital is
not a loan but a form of stock.
37. Which of the following terms is synonymous with social lending?
peer-to-peer (P2P) lending
51. A disadvantage of debt financing is
regular interest payments.
75. When going public with public offerings an advantage might be the
size of the company's capital amount.
54. SBIC stands for
small-business investment companies.
44. Which of the following is not a major trend that has occurred in venture capital over the last few years?
stronger small start-up investments
28. The business plan is a critical element in a new
venture proposal. - True
50. Approximately how many commercial banks are there in this country?
about 5,500
31. Which of the following is a type of equity financing?
common stock
68. One of the advantages of public offerings is
image.
46. Which of the following would be most commonly used for intermediate term financing?
leasing companies
77. Major trends in the venture capital field today include all of the following except
less specialized and more homogenous funds.
72. According to the text, which of the following could be considered a "deal killer" by a venture capitalist?
the excessive founder salaries
45. Longterm debt is used for
the purchase of property or equipment.
62. Which of the following would be most commonly used for short term financing?
trade credit
33. _____ bank loans are made on a discounted value of the receivables pledged.
Accounts receivable financing
1. Corporate venture capital can offer strategic and tactical advice, an operating budget, and credibility but started to decline in 2017, and this trend is expected to continue.
False
17. Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, and local professionals.
False
19. The venture capital pool is rapidly declining due to overfunding.
False
2. Only a small number of informal risk capitalists are in the market today.
False
3. Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public.
False
30. Large ventures often use private placements as a method of raising capital.
False
6. Entrepreneurs with new ventures often use debt financing out of choice, not necessity.
False
8. Peer to-peer lenders are friends of the entrepreneur who want to invest in the new venture.
False
79. Which of the following is an important question for the entrepreneur to ask when evaluating the venture capitalist?
How many deals has the firm actually made in this field?
74. Which of the following statements about raising capital is true?
It often takes a great deal of time to raise capital.
34. Regulation D defines separate exemptions that are based on the amount of money being raised. Which of the following is not a rule that accompanies these exemptions?
Rule 503
32. SEC stands for the
Securities and Exchange Commission.
78. Which of the following statements is not true of venture capitalists?
They are interested in managing firms themselves.
10. Sources of debt financing include trade credit, accounts receivable financing, factoring, and finance companies.
True
12. A good idea is important, but a good management team is even more important.
True
13. The average size of social loans is around $17,000.
True
14. Innovation has become more global and is no longer the exclusive domain of Silicon Valley and Route 128 in Boston.
True
15. A method of raising capital is through the private placement of securities.
True
18. Informal risk capitalists are those who have already made their money and now seek to help new ventures.
True
23. When using P2P lending, one potential danger may be an uncertain regulatory environment.
True
24. P2P lenders charge fees for brokering and servicing loans and collect penalties for late payments.
True
29. The most common sources of debt financing are commercial banks.
True
4. Use of debt to finance a new venture involves a payback of the funds plus an interest fee (interest) for the use of the money.
True
5. Informal risk capitalists are often referred to as business angels.
True
59. Which of the following is one of the most important questions for entrepreneurs to ask regarding venture capitalists?
What is it like to work with their firm?
49. Which of the following is not a stage of the evaluation process?
beta-testing
21. Common stock is the least basic form of ownership.
False
22. Public offering is a term used to refer to corporations taking public donations to raise capital.
False
16. Venture capitalists are quick to invest.
False
25. Venture capitalists, surprisingly, require little information before they make an investment.
False
27. Equity financing is money invested in the venture with legal obligations to repay the principal amount or pay interest on it.
False
67. _____ is one of the disadvantages of going public.
Shareholder pressure
55. Advantages of debt financing include all of the following except
regular interest payments.
70. Which of the following is not a type of debt financing?
private placement
61. 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?
20. Sophisticated investors are wealthy individuals who invest more or less regularly in new or early
and late-stage ventures. - True
48. Which of the following was a significant contributor to job growth, with the creation of 263,950 new jobs in the United States in 2016?
angel investments
60. Which of the following is more likely than the others to be deemed a potential danger of social lending?
business plan disclosure
63. Short term debt is paid back
in one year.
47. Which of the following would be most commonly used for long-term financing?
insurance companies
76. When starting a business, which of the following sources of financing is least likely to be used?
insurance companies
36. The main objective of Regulation D is to
make it easier and less expensive for small ventures to sell stock.
43. Venture capitalists are experienced professionals who provide a full range of services for new ventures including
management consulting.
40. Which of the following is not one of the eight critical factors that venture capitalists use in the evaluation of new ventures?
managerial structure
57. Financial equity instruments, which give investors a share of the ownership, may include
preferred stock.
11. Crowdfunding provides entrepreneurs with access to beta
testing and market feedback. - True
58. Many new ventures find that debt financing is
necessary.
64. When securing a bank loan, which of the following is not a question an entrepreneur should be prepared to answer?
What is the price of your product?
73. Evaluation of new-venture proposals includes all the following processes except
a product prototype.
39. Which of the following is not typically identified as a bootstrapping technique?
hiring seasoned veterans
80. Which of the following does not represent a category of angel investors?
technology angels
42. The Regulation D exemptions include all of the following except
Rule 503—placements of less than $500,000.
66. The most common source of debt financing is
commercial banks.
26. Social lending sites are different from so
called microlending sites. - True
69. Because of how they are structured, traditional industries such as textiles, furniture manufacturing, and clothing manufacturing commonly use which of the following debt financing sources?
factoring
65. Venture capital in the United States has been highest in which of the following?
health care
38. Which of the following is not a question commonly asked by banks of entrepreneurs?
What interest rate did you have in mind?