FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Sources of Financing: Debt and Equity

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Before making a loan to a business startup, banks prefer to see ________.

A) sufficient cash flow generated by the business
B) ample collateral for the loan amount
C) a SBA guarantee to insure the loan
D) All of the above

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Asset-based borrowing permits small businesses ________.

A) to borrow up to 100 percent of the value of their inventory or their accounts receivable for the money they need for long-term goals
B) to use normally unproductive assets such as accounts receivable and inventory
C) to obtain loans more easily but with less borrowing power than using unsecured lines of credit
D) access to a source of funds ideally suited for long-term financing needs

Correct Answer

verified

Show Answer

Question 33

True/False

Review LaterAdd Note

It is extremely difficult for a startup company with no track record of success to raise money with a public stock offering.

Equity capital is also called risk capital because these investors assume the primary risk of losing their funds if the business fails.

Since their stock offerings are small, most entrepreneurs are able to take their companies public without the assistance of accountants, attorneys, and underwriters.

Entrepreneurs are most likely to give up more equity in their businesses in the startup phase than in any other.

Approximately ________ percent of all venture capital invested comes from corporations.

A(n) ________ is when a company raises capital by selling shares of its stock to the general public for the first time.

Angels are an excellent source of ________ money, often willing to wait ________ years or longer to cash out their investment.

When the SBA makes a loan guarantee, banks are willing to consider riskier deals that they normally would refuse.

In a Regulation D stock offering, the company ________.

Less than ________ percent of all U.S. companies are publicly-held corporations.

Corporate venture capital accounts for approximately 17 percent of all venture capital.

The biggest benefit of a public stock offering is ________.

The Boat and Ski Shop, a small retail boat shop, would most likely rely on which of the following methods to finance its inventory?

Unlike equity financing, debt financing does not require an entrepreneur to dilute her/his ownership interest in the company.

The formal underwriting agreement between the company and the underwriter is signed ________.

The most common method used by commercial finance companies to provide credit to small businesses is ________.

Angels are not a good source of financing for entrepreneurs seeking relatively small amounts of money, as they typically do not make investments of less than $1 million.

Although there is no limit on the amount of stock it can buy, a typical venture capital firm will purchase less than ________ percent of the ownership in a small firm.