Practice Test Chapter 10

Practice Test Chapter 10 - CHAPTER 10 Getting Funding or...

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CHAPTER 10 Getting Funding or Financing MULTIPLE-CHOICE QUESTIONS The Importance of Getting Financing or Funding Answer: E Medium Page: 231 1. A company’s __________ rate is the rate at which it is spending its capital until it reaches profitability. A. liquidity B. utilization C. intensity D. usage E. burn Answer: A Medium Page: 231 2. Joe Camp is the founder of a company in the medical products industry. Joe’s firm is still in the feasibility analysis state, and doesn’t have a product that is ready to sell. The company is spending about $50,000 per month, and expects to maintain that level of spending until it reaches profitability. The $50,000 a month is Joe’s: A. burn rate B. consumption rate C. utilization rate D. usage rate E. liquidity rate Answer: B Medium Page: 231 3. For startup firms, the cost of buying real estate, building facilities, and purchasing equipment often exceeds the firms’ ability to provide funds for those needs on their own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example? A. lengthy product development cycles B. capital investments C. costs associated with building a brand D. cash flow challenges E. personnel costs
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Chapter 7: Assessing A new Venture’s Financial Strength And Viability Answer: C Medium Page: 231 4. In startup firms, inventory must be purchased, employees must be trained and paid, and advertising must be paid for before cash is generated from sales. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example? A. capital investments B. lengthy product development cycles C. cash flow challenges D. personnel costs E. costs associated with incorporating Answer: B Medium Page: 231 5. For startup firms, some products are under development for years before they generate earnings. The up-front costs often exceed a firm’s ability to fund these activities on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example? A. cash flow challenges B. lengthy product development cycles C. capital investments D. personnel costs E. marketing costs Answer: D Medium Page: 231 6. Karen Jenkins owns an electronic games company. Although Karen’s game designers and programmers are very good, it takes 2-3 years to develop a good electronic game. This example illustrates the need for funding or financing referred to as: A. cash flow challenges B. capital investments C. costs associated with building a brand D. lengthy product development cycles E. personnel costs Answer: A Easy Page: 232 7. According to our textbook, the seed money that gets a company off the ground typically comes from: A. the founders of the firm B. angel investors C. venture capitalists D. commercial banks E. governmental agencies 2
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Chapter 7: Assessing A New Venture’s Financial Strength And Viability Answer: E Medium Page: 232 8. All founders contribute __________ to their ventures, which
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Practice Test Chapter 10 - CHAPTER 10 Getting Funding or...

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