ch15 - 1 Most businesses are started when an entrepreneur...

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1. Most businesses are started when an entrepreneur is given a vision for a new business or product by institutional investors. A) True B) False Ans: B Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 2. The process by which many entrepreneurs raise “seed” money and obtain other resources necessary to start their businesses is often called bootstrapping . A) True B) False Ans: A Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 3. The initial “seed” money usually comes from the entrepreneur or other founders. A) True B) False Ans: A Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 4. The bootstrapping period usually lasts about five years. A) True B) False Ans: B Page 1
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Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 5. Venture capitalists are individuals or firms that help privately held businesses go public. A) True B) False Ans: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 6.Angel investors are investors who come to the rescue of firms threatened by takeovers. A)TrueB)FalseAns: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 7.A significant number of venture capital firms focus on high-technology investments. Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 8.A significant number of venture capital firms focus on mature businesses.
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9. Traditional sources of funding work for new or emerging businesses despite the presence of only intangible assets. A) True B) False Ans: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 10.The key idea behind staged funding is that each funding stage gives the venture capitalist an opportunity to reassess the management team and the firm's financial performance. Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 11.A principal way for venture capitalists to exit is to sell part of the firm's equity back to the entrepreneur. A)TrueB)FalseAns: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 12.A venture capitalist may exit an investment by selling common stock in an initial public offering. Page 3
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Format: True/False Learning Objective: LO 3 Level of Difficulty: Easy
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