question

Use of debt to finance a new venture involves a payback of funds plus an interest fee for the use of the money.

answer

True

question

The most common sources of debt financing are commercial banks.

answer

True

question

Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies.

answer

True

question

Equity financing is money invested in the venture with legal obligations to repay the principal amount of interest or interest rate on it.

answer

False

question

Public offering is a term used to refer to corporations taking public donations to raise capital.

answer

False

question

Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public.

answer

False

question

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.

answer

True

question

Private placement is a method of raising capital through the private placement of securities.

answer

True

question

Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals.

answer

False

question

Sophisticated investors are wealthy individuals who invest more or less regularly in new and/or early- and late-stage ventures.

answer

True

question

Venture capitalists are a valuable source of equity funding for new ventures.

answer

True

question

The venture capital pool is rapidly declining due to overfunding.

answer

False

question

Venture capitalists are quick to invest.

answer

False

question

Venture capitalists, surprisingly, require little information before they make an investment.

answer

False

question

The business plan is a critical element in a new-venture proposal.

answer

True

question

There is no way for the venture capitalist adequately to evaluate a new venture.

answer

False

question

The average size of a social loan is around $7,000.

answer

True

question

Social lending sites are different from so-called microlending sites.

answer

True

question

A potential danger of social lending is the implication that social loans may be viewed as gifts and taxed accordingly.

answer

True

question

Venture capital firms want to own control of the firms in which they invest.

answer

False

question

Venture capitalists are usually satisfied with a reasonable return on investments.

answer

False

question

Venture capitalists are slow to invest.

answer

True

question

Venture capitalists need only basic summary information before they make funding decisions.

answer

False

question

One of the most frequently used criterion in evaluating new ventures, is the ability of the entrepreneur to sustain intense effort.

answer

True

question

There is only a small number of informal risk capitalists in the market today.

answer

False

question

Informal risk capitalists are those who have already made their money and now seek to help new ventures.

answer

True

question

Informal risk capitalists are often referred to as "business angels."

answer

True

question

Entrepreneurs are rarely able to set up a business without investment funds or bank loans.

answer

False

question

Frugality is deemed a bootstrapping technique.

answer

True

question

Most venture capital funds later stages of venture development, not the start-up (or seed) stage.

answer

False

question

At start-up time, forms of financing includes all but which of the following?

answer

equitable payback

question

Which of the following is (are) sources of capital for entrepreneurs?

answer

equity

question

Many new ventures find that debt financing is

answer

necessary.

question

Approximately how many commercial banks are there in this country?

answer

about 7,000

question

Which of the following is not a question commonly asked by banks of entrepreneurs?

answer

What interest rate did you have in mind?

question

When starting a business, which of the following sources of financing are least likely to be used?

answer

insurance companies

question

When starting a business, which of the following sources of financing are most likely to be used?

answer

trade credit

question

Which of the following would be most commonly used for short-term financing?

answer

trade credit

question

Which of the following would be most commonly used for medium-term financing?

answer

finance companies

question

Which of the following would be most commonly used for long-term financing?

answer

insurance companies

question

When accounts receivable are bought from a company for capital funding it is called

answer

factoring.

question

Which of the following is not a type of debt financing?

answer

private placement

question

A disadvantage of debt financing is

answer

regular interest payments.

question

Short-term debt is

answer

paid back in one year.

question

Which of the following is a type of equity financing?

answer

common stock

question

The most common source of debt financing is

answer

commercial banks.

question

Advantages of debt financing include all of the following except:

answer

regular interest payments.

question

Long-term debt is used for

answer

both a and b.

question

When securing a bank loan an entrepreneur should be prepared to answer which of the following questions except?

answer

What is the price of your product?

question

SEC stands for the

answer

Securities and Exchange Commission.

question

When going public with public offerings an advantage might be

answer

size of the company's capital amount.

question

SBIC stands for the

answer

small-business investment companies

question

Equity capital is

answer

not a loan but a form of stock.

question

Evaluation of new-venture proposals includes all the following processes except

answer

a product prototype

question

One of the advantages of public offerings is

answer

liquidity.

question

__________ is(are) one of the disadvantages of going public.

answer

Shareholder pressure

question

The Regulation D exemptions include all of the following except:

answer

placements in excess of $l0 million.

question

The main objective of Regulation D is to

answer

make it easier and less expensive for small ventures to sell stock.

question

Which of the following is not one of the most common questions typically required to be answered by entrepreneurs seeking funding?

answer

What exact date will you repay the money?

question

Equity capital is often raised through:

answer

public stock offerings.

question

When going public specific detailed information that must be presented includes

answer

the capital structure of the company.

question

Regulation D defines separate exemptions that are based on the amount of money being raised. Which is not a rule that accompanies these exemptions?

answer

rule 503

question

Of the following, which is not typically identified as a bootstrapping technique?

answer

hiring seasoned veterans

question

Venture capitalists are experienced professionals who provide a full range of service for new ventures including

answer

management consulting.

question

Major trends in the venture capital field today include all of the following except

answer

less specialized and more homogenous funds

question

Which of the following terms is not synonymous with social lending?

answer

commercially viable lending

question

Of the following, which is more likely than the others to be deemed a potential danger of social lending?

answer

business plan disclosure

question

Which of the following statements is not true of venture capitalists?

answer

They are interested in trying to manage firms themselves.

question

Criteria that venture capitalists use in evaluating new venture proposals include:

answer

the characteristics of the product or service.

question

Venture proposals are often rejected due to significant deficiencies in

answer

both a and b.

question

Which is not a stage of the evaluation process?

answer

evaluation of the business plan

question

Which is an important question for the entrepreneur to ask when evaluating the venture capitalist?

answer

Is the person someone with whom the entrepreneur can work?

question

The entrepreneur should ask the venture capitalist questions.

answer

an unlimited number of

question

Which is one of the most important questions for entrepreneurs to ask regarding venture capitalists?

answer

What is it like to work with their firm?

question

Which of the following is a true statement about raising capital?

answer

It often takes a great deal of time to raise capital.

question

How many people in America have net worth in excess of $1 million?

answer

about 500,000

question

How do informal investors find projects to invest in?

answer

networks of friends

question

An informal risk capitalist is referred to as:

answer

a business angel.

question

Informal investors find projects through

answer

a network of friends.

question

Which of the following does not represent a category of angel investors?

answer

amateur angels

MGT 241 Midterm Ch. 8 – Flashcards

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