MGMT 485 Exam 2 / Final - Flashcards

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an asset as collateral

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Typically, debt financing requires:

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Equity

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________ financing does not require any collateral

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the entrepreneur's personal funds

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The most frequently used source of funds for start-ups is:

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the entrepreneur's personal resources

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Funds obtained from ____ are the least expensive in terms of cost and control.

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the amount of money is usually small, they do have an ownership position in the venture.

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When using equity financing from family and friends:

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commercial bank loans

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The most frequently used source of short-term funds when collateral is available is:

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"buys" the accounts receivables of a firm

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In a factoring arrangement, the factor:

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about 50 percent of it can be financed

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When inventory is the asset base for a loan:

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trust receipt

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When the bank advances a large percentage of the invoice price of goods and is paid on a pro-rata basis when inventory is sold this is called:

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sale-leaseback arrangement

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In ____ the entrepreneur sells equipment to the lender then arranges for its continued use.

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real-estate asset-based financing

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Mortgage financing is another term for:

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Line of credit

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Which of the following types of credit does not require the pledging of an individual's collateral or a cosigner?

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Caution

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Which of the following is not one of the five C's of lending?

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$5,000,000

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The maximum amount that can be borrowed under an SBA 7(a) loan is:

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investors looking for tax shelters

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Research and development limited partnerships provide funds for entrepreneurs in high-tech fields through:

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the sponsoring company acts as the general partner

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In limited partnerships:

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exit

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Equity partnerships, royalty partnerships, and joint ventures are used in the ___________ stage of limited partnerships to reap the benefits of the effort.

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the entrepreneur

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When a company receives an SBIR grant, any patent rights and software generated belong to:

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Small Business Technology Transfer

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Under the ____________ program, federal agencies with budgets over $1 billion are required to set aside

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directors, executive officers, and general partners of the issuing company

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Accredited investors are:

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Bootstrapping

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__________ financing involves using any possible methods for conserving cash.

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Chapter 12

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Chapter 12

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seed or start-up capital

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Early stage financing is typically:

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Public equity market

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Which type of risk-capital market is available as a funding source only for high-potential ventures?

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informal risk capital market

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The best source of funds for first-stage financing is the:

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angels

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The informal risk-capital market is made up of:

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referral sources

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Business angels usually find their deals through:

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Small business investment companies (SBICs)

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________ were authorized in 1958 to marry private capital and government funds for investment in small companies.

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general partner

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In a private venture capital firm, the _______ manages the fund in exchange for a management fee and a percentage of profits

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expects the management team to run the daily operations

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In most cases, the venture capitalist:

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Silicon Valley

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In 2011 which region received the highest level of venture capital investment?

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a business plan

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In the venture-capital process, ______ is(are) absolutely essential for preliminary screening.

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The executive summary

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Which section of the business plan is used for initial screening and provides the starting point for the venture-capital process?

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detailed review of the company's history

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The due diligence phase of the venture-capital process includes:

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due diligence

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The longest stage of the venture capital process, at 1-3 months, is:

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Future earnings capacity

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Which factor in valuing your company is the most important?

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current ratio

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The ____ is used to measure the short-term solvency of a venture.

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average collection period

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The ____ is calculated by dividing accounts receivable by average daily sales.

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inventory

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The least liquid current asset, _____, is eliminated when calculating the acid test ratio.

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debt ratio

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The ____ is calculated by dividing liabilities by total assets

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return on investment

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Dividing net profit by total assets shows a firm's:

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present value of future cash flow

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Using the __________ method of evaluating the firm, cash flow is adjusted for the time value of money.

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liquidation value

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The valuation approach that gives the lowest value of the business is:

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enhances the company's ability to obtain future funds

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Going public:

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corporate governance and disclosure requirements of public companies is subject to greater regulation.

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With the enactment of the Sarbanes-Oxley Act in 2002:

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6-12 weeks

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With regards to a public offering, once the registration statement has been filed, the SEC generally takes _________ to declare IPO registration effective:

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Use of proceeds

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Which section of the prospectus is of great interest to potential purchasers?

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red herring

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The preliminary prospectus is also called as:

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hiring an underwriter and waiting to file the registration statement

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The waiting period is the time between:

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Chapter 13

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Chapter 13

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penetration strategy

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The strategy for growth in which the entrepreneur encourages existing customers to buy more of the firm's current product is a:

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relies on taking market share from competitors

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The penetration growth strategy:

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market development

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The __________ strategy focuses on selling the firm's existing products to new groups of customers.

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Demographics

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______ are used to characterize potential customers based upon their income, education, age, sex, and so forth.

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Product development

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_______ strategies involve developing and selling new products to people who are already purchasing the firm's existing products

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Diversification

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_____ strategies involve selling a new product to a new market

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value chain

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The _________ captures the steps it takes to develop raw materials into a product and get it into the hands of customers

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Backward integration

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___________ refers to a diversification strategy that involves taking a step back (up) on the value chain toward the raw materials

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horizontal

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A firm that manufactures washing machines starts to manufacture detergent illustrates _______ integration

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participative management style

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Involving employees in the decision-making process is:

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establishing a "we" spirit, not a "me" spirit in meetings and memorandum.

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Creating a positive organization culture involves:

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Decreased job satisfaction

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Which of the following is not a benefit of time management?

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principle of desire

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The _______ requires that the entrepreneur recognize that he or she is a time waster, that time is an important resource, and that there is a need to change personal attitudes and habits regarding the allocation of time.

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Principle of effectiveness

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Which principle requires the entrepreneur to focus on the most important issues, even when under pressure?

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Principle of prioritized planning

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Which principle states that the most important issues should be attended to during the time of day that an entrepreneur is most efficient?

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raising the price of products/services

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An increase in supplier prices may require:

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balances the cost of carrying inventory with the cost of lost sales

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Inventory control:

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truck and rail transport

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The most often used method of transporting goods is:

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All of the above

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The entrepreneur has which of the following responsibilities regarding taxes?

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constrained growth

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Entrepreneurs in the _____________ quadrant of firm growth aspire to grow their businesses but do not possess the ability to do so

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Chapter 14

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Chapter 14

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joint venture

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A _________ is a separate entity that involves a partnership between two or more active participants.

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between two or more private sector companies

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The most common type of joint venture is:

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Complimenting governmental policies

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Which of the following is(are) not an advantage of an international joint venture?

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Finance and education

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Which of the following are not factors in the success of joint ventures according to the text?

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an acquisition

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One method of expanding a business is the purchase of an entire company or part of it so that the entity is completely absorbed and no longer exists as a separate company. This is called:

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Existing employees

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Which of the following would be an advantage of an acquisition?

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Established image and track record

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Which of the following is the most significant advantage of an acquisition according to the text?

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synergy

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The concept that "the whole is greater than the sum of its parts" is known as:

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direct purchase of the entire assets of a firm

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The bootstrap purchase of assets:

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Merger

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Product innovation, diversification, protection against market encroachment are some of the reasons why a company would opt for this:

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Department of Justice

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The ______ frequently issues guidelines for mergers

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leveraged buyout

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A(n) ________ occurs when an entrepreneur or an employee group uses borrowed funds to purchase an existing venture for cash

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Price-earnings ratio

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Which of the following is not a qualitative technique an entrepreneur can use to evaluate the asking price of an LBO?

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franchisor

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The person offering the franchise is known as the:

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Franchising

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________ is an arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance to standardized operating procedures

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No entry cost

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Which of the following is not an advantage of franchising?

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Newsletters and other publications reflecting new ideas and developments are continuously sent to franchisees

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Which statement about capital requirements in franchising is not true?

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offers more excitement and challenge than a proven one

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An unproven franchise:

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What are the chances of further expansion of the company?

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A potential franchisee should seek answers to all of the following questions while assessing the financial stability of the franchisor, except:

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is required by the FTC

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The disclosure document provided by the franchisor:

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Termination

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Which of the terms in a franchise agreement is the most likely cause of a lawsuit?

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integrative

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In the _________ task, the mutual benefits from the relationship are explored, making the "size of the pie" larger.

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is more beneficial than a conflict resolution approach

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The integrative aspect of negotiation:

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reservation price

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The __________ is the price at which the entrepreneur is indifferent about whether to accept the agreement or choose an alternative

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Take up a new negotiation at the end of the first

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Which is not a strategy that is used to elicit information about the other party in a negotiation?

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Chapter 15

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Chapter 15

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franchising

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Which of the following is not an exit strategy?

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12%

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Around ____ of businesses make it to the third generation

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evaluate potential successors based on how similar they are to you

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Which of the following is not an important part of a succession plan?

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70

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The U.S. Commerce Department indicates that about ___ percent of successful ventures never make it to the second generation of ownership

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is a device to transfer the business to a small group of key loyal employees.

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An ESOP:

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ESOP

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A two to three year plan to sell a business to employees is:

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10%

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Currently ESOPs account for ____ of the private sector workforce

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50%

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ESOPs account for ____ of the nation's 10 million employees

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it is relatively simple to establish

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All of the following are benefits of an ESOP except:

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50%. (half of all the new startups)

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According to the Small Business Administration, the failure rate of new businesses within the first few years is:

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Chapter 11

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In 2011 approximately 21% of business filings were:

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individual bankruptcies

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The majority of bankruptcies are:

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Chapter 7

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About 70% of the bankruptcy filings in 2011 were of this variety:

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protect creditors from undue delay of money

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Which of the following is not a purpose of the Bankruptcy Act of 1978?

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reorganization

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Chapter 11 is the type of bankruptcy that results in:

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Chapters 7 and 13

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Which methods of bankruptcy require the entrepreneur to come up with a payment plan?

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substitution

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Exchanging stock or something else for existing debt under Chapter 11 bankruptcy is called:

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Extension

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This occurs when two or more of the largest creditors agree to postpone any claims, acting as stimulus for smaller creditors to also agree to the plan

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Composition settlement

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When the debt is prorated to the creditors as a settlement in Chapter 11 this is called:

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20-25%

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What percentage of firms manage to emerge from the Chapter 11 process?

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file only after cash runs out

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Suggestions for surviving bankruptcy include all of the following except:

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Chapter 7

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The most severe form of bankruptcy is:

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lack of time

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Stress points are a result of all of the following except:

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interrelated

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The early signs of bankruptcy are most often:

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all of the above are early signs of bankruptcy

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The early signs of bankruptcy include all of the following except:

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do not have to be the end for the entrepreneur

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Given the cultural climate of the U.S., business failure and bankruptcy:

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continue starting new ventures

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From the chapter on the characteristics of an entrepreneur, we know that after the failure of a business entrepreneurs are likely to:

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continue starting new ventures

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From the chapter on the characteristics of an entrepreneur, we know that after the failure of a business entrepreneurs are likely to:

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