Question 1

Small-business investment companies (SBICs)may be sponsored by the federal government.

Accepted Answer

A) True 
 B)False

Question 2

What is the MOST important source of money for new business start-ups?

Accepted Answer

A)   Banks
B)   The SBA
C)   Personal resources
D)   Government grants
E)   Venture capital

Question 3

What does an entrepreneur use to summarize his or her business strategy for a proposed new venture?

Accepted Answer

A)   Success chart
B)   Director's guideline
C)   Financial blueprint
D)   Business plan
E)   Balance sheet

Question 4

An employee stock ownership plan allows employees to join together and influence corporate managers and how they run the company.

Accepted Answer

A) True 
 B)False

Question 5

What is the MOST common type of partnership?

Accepted Answer

A)   Limited partnership
B)   Corporate partnership
C)   General partnership
D)   Sole partnership
E)   Cooperative partnership

Question 6

The U.S.Department of Commerce considers a business "small" if it has fewer than how many employees?

Accepted Answer

A)   10
B)   50
C)   100
D)   500
E)   1,500

Question 7

Many new businesses are started by people who have left big corporations.

Accepted Answer

A) True 
 B)False

Question 8

What is the advantage of forming a strategic alliance with a competitor or supplier?

Accepted Answer

A)   Mutual gain
B)   Increased shares of stock
C)   The ability to influence the price of stock
D)   To legally join the two organizations
E)   The ability to sell a section of the business but still retain control

Question 9

Which of the following is federally licensed to borrow money from the Small Business Administration to invest in or lend to small businesses?

Accepted Answer

A)   SCORE
B)   SBICs
C)   SBDC
D)   FDIC
E)   SEC

Question 10

What is formed when a corporation establishes a trust on behalf of employees for the purpose of buying shares of ownership?

Accepted Answer

A)   Institutional ownership
B)   Divestiture
C)   Strategic alliance
D)   Corporate governance
E)   Employee stock ownership plan (ESOP)

Question 11

What is considered to be a significant disadvantage of owning a franchise?

Accepted Answer

A)   Start-up costs
B)   Operational guidelines
C)   Difficulty obtaining loans
D)   Double taxation
E)   Competition

Question 12

Loans are the most important sources of money for new businesses.

Accepted Answer

A) True 
 B)False

Question 13

Which form of business ownership generates the MOST sales in the United States?

Accepted Answer

A)   Sole proprietorship
B)   General partnership
C)   Cooperative
D)   Corporation
E)   Limited partnership

Question 14

What is the MOST important advantage of general partnerships?

Accepted Answer

A)   The unlimited liability of the partnership
B)   The ability to grow with the addition of new talent and money
C)   The ease of implementing an effective control system
D)   The increased role of luck
E)   The need for minority partners

Question 15

What is the term for the profits that are distributed to all owners of a corporation?

Accepted Answer

A)   Tender
B)   Interests
C)   ESOP
D)   Dividends
E)   Yield

Question 16

What is the first step in becoming an entrepreneur?

Accepted Answer

A)   Deciding to proceed
B)   Formulating a business plan
C)   Identifying distinctive competencies
D)   Searching for capital to invest
E)   Implementing plans and opening

Question 17

What is first mover advantage?

Accepted Answer

A)   The concept that the first in the market will make the most money
B)   The concept that a firm who exploits an opportunity before others has an advantage
C)   The concept that there is an advantage in leaving a market when it becomes flooded
D)   The concept that large organizations cannot take advantage of an opportunity as quickly as an entrepreneur
E)   The concept that there is more risk being first, but also more reward, if successful

Question 18

A joint venture occurs when partners share ownership of a new enterprise.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is the MOST significant recent trend in small-business start-ups?

Accepted Answer

A)   Entrepreneurs who cross over from big business
B)   Increased opportunities for minorities
C)   Increased opportunities for women
D)   Emergence of e-commerce
E)   Global economic downturn

Question 20

What is the major drawback of accepting venture capital?

Accepted Answer

A)   Sharing company control
B)   Having to pay high interest rates
C)   Limiting expansion
D)   Facing a short repayment period
E)   Having to write proposals

Exam 3: Entrepreneurship, New Ventures, and Business Ownership

What is first mover advantage?

Correct AnswerverifiedShow Answer

The U.S.Department of Commerce considers a business "small" if it has fewer than how many employees?

Correct AnswerverifiedShow Answer

Small-business investment companies (SBICs)may be sponsored by the federal government.

Correct AnswerverifiedShow Answer

What is the MOST common type of partnership?

Correct AnswerverifiedShow Answer

What is the MOST important advantage of general partnerships?

Correct AnswerverifiedShow Answer

Loans are the most important sources of money for new businesses.

Correct AnswerverifiedShow Answer

What does an entrepreneur use to summarize his or her business strategy for a proposed new venture?

Correct AnswerverifiedShow Answer

What is the first step in becoming an entrepreneur?

Correct AnswerverifiedShow Answer

What is the advantage of forming a strategic alliance with a competitor or supplier?

Correct AnswerverifiedShow Answer

What is considered to be a significant disadvantage of owning a franchise?

Correct AnswerverifiedShow Answer

What is the term for the profits that are distributed to all owners of a corporation?

Correct AnswerverifiedShow Answer

Which of the following is the MOST significant recent trend in small-business start-ups?

Correct AnswerverifiedShow Answer

Many new businesses are started by people who have left big corporations.

Correct AnswerverifiedShow Answer

What is formed when a corporation establishes a trust on behalf of employees for the purpose of buying shares of ownership?

Correct AnswerverifiedShow Answer

What is the MOST important source of money for new business start-ups?

Correct AnswerverifiedShow Answer

What is the major drawback of accepting venture capital?

Correct AnswerverifiedShow Answer

Which form of business ownership generates the MOST sales in the United States?

Correct AnswerverifiedShow Answer

A joint venture occurs when partners share ownership of a new enterprise.

Correct AnswerverifiedShow Answer

Which of the following is federally licensed to borrow money from the Small Business Administration to invest in or lend to small businesses?

Correct AnswerverifiedShow Answer

An employee stock ownership plan allows employees to join together and influence corporate managers and how they run the company.

Correct AnswerverifiedShow Answer

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