BA109 Quiz 13 UPDATED Exam Questions
and CORRECT Answers
The U.S. Department of Agriculture's Rural Business Co-op Service provides financial
assistance to businesses that create nonfarm employment opportunities in rural areas. -
Correct Answer- True
The largest single source of external equity capital for small businesses is: - Correct Answer-
angels.
Rather than piecing together their startup capital from multiple sources as they have in the
past, entrepreneurs now are relying on a single source of funding. - Correct Answer- False
Asset-based loans are an expensive method of financing because of the cost of originating
and maintaining them and the higher risk involved. - Correct Answer- True
Not only must a company meet SEC requirements for a public offering, but it also must meet
securities laws in all states in which the issue is sold. - Correct Answer- True
In startup companies, raising capital can easily consume as much as one-half of the
entrepreneur's time and take many months to complete. - Correct Answer- True
Entrepreneurs needing between $100,000 and $3 million in the current financial environment
will likely find acquiring financing to be: - Correct Answer- challenging.
If banks refuse to lend money to a startup business, the owner usually cannot convince his or
her vendors and suppliers to extend trade credit either. - Correct Answer- False
In discounted accounts receivable financing, a small business can typically borrow an amount
equal to ________ percent of its receivables it pledges as collateral. - Correct Answer- 55 - 85
The majority of the loans a commercial finance company makes are unsecured by collateral. -
Correct Answer- False
, Savings and loan associations typically specialize in loans for: - Correct Answer- real
property.
The goal of the SEC's Regulation S-B and S-K is: - Correct Answer- to open the doors to
capital markets to smaller companies by cutting the paperwork and the costs normally
required to make a public offering.
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. - Correct
Answer- False
An option for acquiring equity capital is for the entrepreneur to take on partner(s); however, it
is important that he consider the impact of giving up some personal control over operations
and of sharing profits with others. - Correct Answer- True
SBIC financing would be attractive to an entrepreneur whose primary concern is maintaining
majority ownership in her business, as SBICs are prohibited from obtaining a controlling
interest in the companies in which they invest. - Correct Answer- True
Two factors that make a deal attractive to venture capitalists include high returns and a
convenient and profitable exit strategy. - Correct Answer- True
SBICs provide financing to small businesses that are at least 51 percent owned by minorities,
or socially or economically disadvantaged people. - Correct Answer- True
If the value of the borrower's collateral drops, a stockbroker can make a ________, requiring
the borrower to provide more collateral for his margin loan. - Correct Answer- margin call
A ________ is a hybrid between a conventional loan and a bond; at its heart it is a bond, but
its terms are tailored to the borrower's individual needs, as a loan would be. - Correct
Answer- private placement
Lending practices at credit unions are very much like those at banks, but credit unions usually
are willing to make smaller loans and will loan only to their members. - Correct Answer-
True
and CORRECT Answers
The U.S. Department of Agriculture's Rural Business Co-op Service provides financial
assistance to businesses that create nonfarm employment opportunities in rural areas. -
Correct Answer- True
The largest single source of external equity capital for small businesses is: - Correct Answer-
angels.
Rather than piecing together their startup capital from multiple sources as they have in the
past, entrepreneurs now are relying on a single source of funding. - Correct Answer- False
Asset-based loans are an expensive method of financing because of the cost of originating
and maintaining them and the higher risk involved. - Correct Answer- True
Not only must a company meet SEC requirements for a public offering, but it also must meet
securities laws in all states in which the issue is sold. - Correct Answer- True
In startup companies, raising capital can easily consume as much as one-half of the
entrepreneur's time and take many months to complete. - Correct Answer- True
Entrepreneurs needing between $100,000 and $3 million in the current financial environment
will likely find acquiring financing to be: - Correct Answer- challenging.
If banks refuse to lend money to a startup business, the owner usually cannot convince his or
her vendors and suppliers to extend trade credit either. - Correct Answer- False
In discounted accounts receivable financing, a small business can typically borrow an amount
equal to ________ percent of its receivables it pledges as collateral. - Correct Answer- 55 - 85
The majority of the loans a commercial finance company makes are unsecured by collateral. -
Correct Answer- False
, Savings and loan associations typically specialize in loans for: - Correct Answer- real
property.
The goal of the SEC's Regulation S-B and S-K is: - Correct Answer- to open the doors to
capital markets to smaller companies by cutting the paperwork and the costs normally
required to make a public offering.
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. - Correct
Answer- False
An option for acquiring equity capital is for the entrepreneur to take on partner(s); however, it
is important that he consider the impact of giving up some personal control over operations
and of sharing profits with others. - Correct Answer- True
SBIC financing would be attractive to an entrepreneur whose primary concern is maintaining
majority ownership in her business, as SBICs are prohibited from obtaining a controlling
interest in the companies in which they invest. - Correct Answer- True
Two factors that make a deal attractive to venture capitalists include high returns and a
convenient and profitable exit strategy. - Correct Answer- True
SBICs provide financing to small businesses that are at least 51 percent owned by minorities,
or socially or economically disadvantaged people. - Correct Answer- True
If the value of the borrower's collateral drops, a stockbroker can make a ________, requiring
the borrower to provide more collateral for his margin loan. - Correct Answer- margin call
A ________ is a hybrid between a conventional loan and a bond; at its heart it is a bond, but
its terms are tailored to the borrower's individual needs, as a loan would be. - Correct
Answer- private placement
Lending practices at credit unions are very much like those at banks, but credit unions usually
are willing to make smaller loans and will loan only to their members. - Correct Answer-
True
