Question 1

Working capital can be calculated by:

Accepted Answer

A)  Current Asset - Current Liabilities.
B)  Total Asset - Current Liabilities.
C)  Total Liabilities - Total Asset.
D)  Total Asset - Total Liabilities.

Question 2

To justify the cost of investigating the offers they receive,venture capitalists typically seek investments in the $200,000 to $500,000 range.

Accepted Answer

A) True 
 B)False

Question 3

________ are typically wealthy individuals or entrepreneurs themselves.

Accepted Answer

A)  Venture capitalists
B)  Seed funders
C)  Venture funders
D)  Angels

Question 4

Layered financing is the process of piecing start-up capital together from a variety of sources rather than relying on a single source of funds.

Accepted Answer

A) True 
 B)False

Question 5

A small company needs fixed capital to expand and grow the business.

Accepted Answer

A) True 
 B)False

Question 6

The largest single source of external equity capital for small businesses is:

Accepted Answer

A)  angels.
B)  venture capitalists.
C)  Small Business Administration loans.
D)  commercial bankers.

Question 7

Private "angel" investors tend to:

Accepted Answer

A)  take 80% ownership by the time the company goes public.
B)  provide seed money and less than $500,000.
C)  look for returns of 60-75%.
D)  only finance projects within their local area or region.

Question 8

Probably the biggest disadvantage of "going public" to the entrepreneur is the:

Accepted Answer

A)  dilution of ownership interest.
B)  diminished corporate image.
C)  future threat of being acquired through the use of stock.
D)  loss of key employees.

Question 9

An entrepreneur should not take advantage of offers from family and friends to lend or invest money for the business venture.

Accepted Answer

A) True 
 B)False

Question 10

A lock-up agreement prevents the sale of "insider" shares for a specific time period-often 12 to 36 months-after an initial public offering.

Accepted Answer

A) True 
 B)False

Question 11

The first place entrepreneurs should look for startup money is from their family and friends.

Accepted Answer

A) True 
 B)False

Question 12

Private investors,or "angels," are often:

Accepted Answer

A)  wealthy individuals.
B)  entrepreneurs.
C)  persons who invest in business startups in exchange for equity stakes in the companies.
D)  All of the above

Question 13

________ is a key criteria that most venture capitalists look for.

Accepted Answer

A)  Intangible factor
B)  High working capital
C)  Fair ROI
D)  None of the above

Question 14

One of the fastest growing sources of capital for small businesses is the use of the Internet to offer stock to investors.

Accepted Answer

A) True 
 B)False

Question 15

Direct public offerings work best for companies that have a single product or related product lines,a base of customers who are loyal to the company,good name recognition,and annual sales between $3 million and $25 million.

Accepted Answer

A) True 
 B)False

Question 16

A highly possible source of funding for a start-up and early business is:

Accepted Answer

A)  Venture capital and Private Placement.
B)  Personal savings and retained earnings.
C)  Personal savings and partners.
D)  IPO and Regulation A.

Question 17

It is easier for a start-up company to attract and retain quality employees than after a market emerges for a public company's stock.

Accepted Answer

A) True 
 B)False

Question 18

Most "angel" investments:

Accepted Answer

A)  are for growth or fixed capital.
B)  are for between $10,000 and $2,000,000.
C)  come from international or foreign investors.
D)  are seeking a high and quick return on their investment.

Question 19

An advantage of DPOs is that the cost is a little less than half that of a traditional stock underwriting effort.

Accepted Answer

A) True 
 B)False

Question 20

Equity capital is also called:

Accepted Answer

A)  equity money.
B)  stock money.
C)  risk capital.
D)  None of the above

Exam 14: Sources of Equity Financing

A highly possible source of funding for a start-up and early business is:

Correct AnswerverifiedShow Answer

The first place entrepreneurs should look for startup money is from their family and friends.

Correct AnswerverifiedShow Answer

A lock-up agreement prevents the sale of "insider" shares for a specific time period-often 12 to 36 months-after an initial public offering.

Correct AnswerverifiedShow Answer

________ is a key criteria that most venture capitalists look for.

Correct AnswerverifiedShow Answer

Private investors,or "angels," are often:

Correct AnswerverifiedShow Answer

The largest single source of external equity capital for small businesses is:

Correct AnswerverifiedShow Answer

An advantage of DPOs is that the cost is a little less than half that of a traditional stock underwriting effort.

Correct AnswerverifiedShow Answer

________ are typically wealthy individuals or entrepreneurs themselves.

Correct AnswerverifiedShow Answer

Most "angel" investments:

Correct AnswerverifiedShow Answer

Equity capital is also called:

Correct AnswerverifiedShow Answer

To justify the cost of investigating the offers they receive,venture capitalists typically seek investments in the $200,000 to $500,000 range.

Correct AnswerverifiedShow Answer

Layered financing is the process of piecing start-up capital together from a variety of sources rather than relying on a single source of funds.

Correct AnswerverifiedShow Answer

Direct public offerings work best for companies that have a single product or related product lines,a base of customers who are loyal to the company,good name recognition,and annual sales between $3 million and $25 million.

Correct AnswerverifiedShow Answer

A small company needs fixed capital to expand and grow the business.

Correct AnswerverifiedShow Answer

An entrepreneur should not take advantage of offers from family and friends to lend or invest money for the business venture.

Correct AnswerverifiedShow Answer

Working capital can be calculated by:

Correct AnswerverifiedShow Answer

One of the fastest growing sources of capital for small businesses is the use of the Internet to offer stock to investors.

Correct AnswerverifiedShow Answer

It is easier for a start-up company to attract and retain quality employees than after a market emerges for a public company's stock.

Correct AnswerverifiedShow Answer

Private "angel" investors tend to:

Correct AnswerverifiedShow Answer

Probably the biggest disadvantage of "going public" to the entrepreneur is the:

Correct AnswerverifiedShow Answer

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