Chap015 - Chapter 15 - Small Business Finance: Using...

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Chapter 15 - Small Business Finance: Using Equity, Debt and Gifts Chapter 15 Small Business Finance: Using Equity, Debt and Gifts True / False Questions 1. (p. 485) In the U.S., government programs is the number one source of small business financing. FALSE Difficulty: Hard 2. (p. 485) A legal obligation to pay money in the future is called equity capital. FALSE Difficulty: Easy 3. (p. 485) More forms of financing are available to existing firms than to start-ups. TRUE Difficulty: Medium 4. (p. 486) Profits consistent with risk is a financial management need in both financing for growth and financing for operations phase of business. TRUE Difficulty: Hard 5. (p. 486) Angel investors generally provide financing during the financing for operations phase of business. FALSE Difficulty: Hard 15-1
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Chapter 15 - Small Business Finance: Using Equity, Debt and Gifts 15-2
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Chapter 15 - Small Business Finance: Using Equity, Debt and Gifts 6. (p. 489) You can sell ownership in your business only if it is organized as a corporation. TRUE Difficulty: Medium 7. (p. 489) Limited liability companies' primary advantage is that owners may easily choose whether to be taxed as an entity or have tax items pass through. TRUE Difficulty: Hard 8. (p. 490) A charge for the use of money, usually figured as a percentage of principal is called a dividend. FALSE Difficulty: Easy 9. (p. 491) From the point of view of an existing owner, financing with equity is expensive and guaranteed to create problems of control and decision making. TRUE Difficulty: Medium 10. (p. 492) The most common source of capital for established ongoing small businesses is borrowed funds. TRUE Difficulty: Medium 15-3
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Chapter 15 - Small Business Finance: Using Equity, Debt and Gifts 11. (p. 492) The four Cs of borrowing are character, capacity, collateral and community. FALSE Difficulty: Medium 12. (p. 493) There are four primary CRAs: Equifax, Experian, Trans Union and E-Trade. FALSE Difficulty: Hard 13. (p. 494) The capacity of the business is the most important single factor for being able to borrow significant amounts of money. TRUE Difficulty: Medium 14. (p. 496) One of the largest governmental grant programs specifically intended for small business is called the RFP. FALSE Difficulty: Medium 15. (p. 497) Grants from foundations are primarily made for-profit businesses. FALSE Difficulty: Medium 16. (p. 499) Giving a gift has tax implications. TRUE Difficulty: Easy 15-4
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Chapter 15 - Small Business Finance: Using Equity, Debt and Gifts 17. (p. 500) A measure of the amount of debt relative to total investment is called cost of capital. FALSE Difficulty: Medium 18. (p. 500) A study reported in 2003 found that few small businesses raised capital by selling equity to outsiders that no statistical analysis could be done. TRUE
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This note was uploaded on 11/21/2009 for the course MNGT 422X taught by Professor Godsey during the Spring '09 term at UNL.

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Chap015 - Chapter 15 - Small Business Finance: Using...

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