Question 1

Match the term with its definition.
-The interest rate charged by London banks on loans to other London banks

Accepted Answer

A)  Asset-based loan
B)  Basis point
C)  Chattel mortgage
D)  Equipment loan
E)  LIBOR (London InterBank Offered Rate) F) Line of creditG) Prime rateH) Purchase-order financingI) Term loanJ) C) and H)
K) B) and E)

Question 2

Borrowing money rather than issuing common stock typically increases the potential for higher rates of return to owners.

Accepted Answer

A) True 
 B)False

Question 3

Guaranty loans are

Accepted Answer

A)   made by private lenders.
B)   guaranteed up to 50 percent by the SBA.
C)   made through foreign banks.
D)   limited to $100,000.E) B) and D)
F) A) and D)

Question 4

Nancy has decided to raise working capital for her upscale boutique business which currently has four locations and is considering franchising the concept in the next few years. Because of the current company organization and anticipated future plans, the most likely form of financing would be ________.

Accepted Answer

A)   large corporations
B)   private placement
C)   public sale
D)   underwritingE) B) and C)
F) All of the above

Question 5

Venture capitalists restrict their investment in startup companies.

Accepted Answer

A) True 
 B)False

Question 6

What are the tradeoffs between profitability, risk, and control that should be considered when choosing between debt and equity?

Accepted Answer

Borrowing money rather than issuing comm...

Question 7

Chuck, Marie and Tommy are a group of friends who have formed a LLC to raise capital for an investment in 20 franchises of Rigby's, a new sports bar concept. Tommy will be the general partner; Chuck and Marie will be limited partners. These three are:

Accepted Answer

A)   business angels.
B)   formal venture capitalists.
C)   creditors.
D)   informal venture capitalists.E) None of the above
F) All of the above

Question 8

Venture capital companies

Accepted Answer

A)   are often limited partnerships that raise capital from other investors.
B)   provide for the financing needs of large companies only.
C)   are corporations or partnerships that operate as liquidation groups.
D)   no longer operate in the U.S. market.E) A) and B)
F) A) and C)

Question 9

Will has decided to invest $10,000 into his neighbor's new company. The money will be used in the early stages of development. Will is considered a

Accepted Answer

A)   venture capitalist.
B)   business angel.
C)   business contributor.
D)   loan specialist.E) None of the above
F) A) and B)

Question 10

Violet's Catering is growing rapidly. A new customer has requested the company cater a retirement luncheon for 500 persons resulting in Violet's Catering needing a large order from the company's primary food vendor. Although the company is experiencing growth, cash flow is a concern. What would be the best financing option?

Accepted Answer

Violet's Catering needs to determine if ...

Question 11

One factor that influences the choice between debt and equity is the

Accepted Answer

A)   returns anticipated from the enterprise.
B)   risk of nationalization.
C)   degree of control the owners hope to retain.
D)   state of the owners' estate plan.E) All of the above
F) None of the above

Question 12

The main advantage of using credit cards for financing is the relatively low interest rate compared to bank loans.

Accepted Answer

A) True 
 B)False

Question 13

A drawback to "going public" is

Accepted Answer

A)   large profit potential resulting in increased taxation.
B)   numerous SEC requirements.
C)   national recognition causing increased exposure.
D)   additional working capital.E) B) and C)
F) A) and B)

Question 14

In groups of business angels,

Accepted Answer

A)   all angels must agree to invest or the deal is off.
B)   a majority of angels favoring investment obligates all angels to the deal.
C)   individual angels make personal decisions about whether or not to invest.
D)   no angel can invest unless all angels invest.E) B) and C)
F) A) and C)

Question 15

Granville owns a construction company and would like to purchase a mobile construction office. The bank would likely offer him a _____ mortgage.

Accepted Answer

A)   chattel
B)   real estate
C)   revolving
D)   termE) All of the above
F) B) and D)

Question 16

The basic factors that determine how a firm is financed are restricted to the firm's past economic performance, the nature of its assets, and the personal preferences of owner(s) with respect to the marketing mix.

Accepted Answer

A) True 
 B)False

Question 17

Match the term with its definition.
-The sale of a firm's capital stock to select individuals

Accepted Answer

A)  Balloon payment
B)  Business angels
C)  Chattel mortgage
D)  Crowdfunding
E)  FactoringF) Initial public offeringG) Loan covenantsH) Private placementI) Real estate mortgageJ) Venture capitalistK) I) and J)
L) H) and J)

Question 18

Elyse wants to calculate her return on equity but has forgotten the formula. You tell her that return on equity equals

Accepted Answer

A)   net income divided by owners equity.
B)   owners equity divided by net income.
C)   total assets divided by owners equity.
D)   owners equity divided by total assets.E) C) and D)
F) All of the above

Question 19

Match the term with its definition.
-The process of raising very small investments from a large number of investors via the Internet

Accepted Answer

A)  Balloon payment
B)  Business angels
C)  Chattel mortgage
D)  Crowdfunding
E)  FactoringF) Initial public offeringG) Loan covenantsH) Private placementI) Real estate mortgageJ) Venture capitalistK) B) and I)
L) A) and E)

Question 20

When considering a loan application, bankers will consider:

Accepted Answer

A)   the credit score of the applicant.
B)   the four Cs of credit
C)   the five Cs of credit.
D)   the applicant's character only.E) All of the above
F) A) and C)

Exam 12: A Firms Sources of Financing

When considering a loan application, bankers will consider:

Correct Answer
verified

The basic factors that determine how a firm is financed are restricted to the firm's past economic performance, the nature of its assets, and the personal preferences of owner(s) with respect to the marketing mix.

Correct Answer
verified

One factor that influences the choice between debt and equity is the

Correct Answer
verified

Correct Answer
verified
Violet's Catering needs to determine if ...
View Answer

Match the term with its definition. -The sale of a firm's capital stock to select individuals

Correct Answer
verified

Match the term with its definition. -The process of raising very small investments from a large number of investors via the Internet

Correct Answer
verified

The main advantage of using credit cards for financing is the relatively low interest rate compared to bank loans.

Correct Answer
verified

Will has decided to invest $10,000 into his neighbor's new company. The money will be used in the early stages of development. Will is considered a

Correct Answer
verified

In groups of business angels,

Correct Answer
verified

Venture capitalists restrict their investment in startup companies.

Correct Answer
verified

Chuck, Marie and Tommy are a group of friends who have formed a LLC to raise capital for an investment in 20 franchises of Rigby's, a new sports bar concept. Tommy will be the general partner; Chuck and Marie will be limited partners. These three are:

Correct Answer
verified

Correct Answer
verified

A drawback to "going public" is

Correct Answer
verified

Elyse wants to calculate her return on equity but has forgotten the formula. You tell her that return on equity equals

Correct Answer
verified

What are the tradeoffs between profitability, risk, and control that should be considered when choosing between debt and equity?

Correct Answer
verified
Borrowing money rather than issuing comm...
View Answer

Venture capital companies

Correct Answer
verified

Borrowing money rather than issuing common stock typically increases the potential for higher rates of return to owners.

Correct Answer
verified

Granville owns a construction company and would like to purchase a mobile construction office. The bank would likely offer him a _____ mortgage.

Correct Answer
verified

Match the term with its definition. -The interest rate charged by London banks on loans to other London banks

Correct Answer
verified

Guaranty loans are

Correct Answer
verified

Exam 12: A Firms Sources of Financing

When considering a loan application, bankers will consider:

Correct AnswerverifiedShow Answer

The basic factors that determine how a firm is financed are restricted to the firm's past economic performance, the nature of its assets, and the personal preferences of owner(s) with respect to the marketing mix.

Correct AnswerverifiedShow Answer

One factor that influences the choice between debt and equity is the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedViolet's Catering needs to determine if ...View AnswerShow Answer

Match the term with its definition. -The sale of a firm's capital stock to select individuals

Correct AnswerverifiedShow Answer

Match the term with its definition. -The process of raising very small investments from a large number of investors via the Internet

Correct AnswerverifiedShow Answer

The main advantage of using credit cards for financing is the relatively low interest rate compared to bank loans.

Correct AnswerverifiedShow Answer

Will has decided to invest $10,000 into his neighbor's new company. The money will be used in the early stages of development. Will is considered a

Correct AnswerverifiedShow Answer

In groups of business angels,

Correct AnswerverifiedShow Answer

Venture capitalists restrict their investment in startup companies.

Correct AnswerverifiedShow Answer

Chuck, Marie and Tommy are a group of friends who have formed a LLC to raise capital for an investment in 20 franchises of Rigby's, a new sports bar concept. Tommy will be the general partner; Chuck and Marie will be limited partners. These three are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A drawback to "going public" is

Correct AnswerverifiedShow Answer

Elyse wants to calculate her return on equity but has forgotten the formula. You tell her that return on equity equals

Correct AnswerverifiedShow Answer

What are the tradeoffs between profitability, risk, and control that should be considered when choosing between debt and equity?

Correct AnswerverifiedBorrowing money rather than issuing comm...View AnswerShow Answer

Venture capital companies

Correct AnswerverifiedShow Answer

Borrowing money rather than issuing common stock typically increases the potential for higher rates of return to owners.

Correct AnswerverifiedShow Answer

Granville owns a construction company and would like to purchase a mobile construction office. The bank would likely offer him a _____ mortgage.

Correct AnswerverifiedShow Answer

Match the term with its definition. -The interest rate charged by London banks on loans to other London banks

Correct AnswerverifiedShow Answer

Guaranty loans are

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Violet's Catering needs to determine if ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Borrowing money rather than issuing comm...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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