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2.Most of those who invest in startups limit their investing to firms with potentially high returns in a _____ period.a.6-12 monthb.1-2 yearc.3-5 yeard.5-10 yearANS:DPTS:1REF:p. 310OBJ:12-1 TYPE: C3.When entrepreneurs "bootstrap" their financing, this means that they arePTS:1REF:p. 312OBJ:12-1 TYPE: D4.Typical venture capitalists invest approximately _____ of their investment in later-stage businesses.PTS:1REF:p. 312OBJ:12-1 TYPE: C5.When bankers look for evidence of whether a business will be able to repay a loan, they usually base their assessment of this onPTS:1REF:p. 312OBJ:12-1 TYPE: A6.When it comes to financing a company, a banker looks at two kinds of assets:a.direct and indirect.b.tangible and intangible.c.those founded upon past performance and those depending on future performance.d.industry-specific and firm-specific.ANS:BPTS:1REF:p. 312OBJ:12-1 TYPE: C7.As long as a firm’s rate of return is greater than the cost of the debt (interest rate) the owner’s rate of return on equity will _____ as the firm uses more debt.PTS:1REF:p. 315OBJ:12-2 TYPE: C
8.The return on the owner’s investment (equity) is a better measure of performance thanPTS:1REF:p. 314OBJ:12-2 TYPE: A9.The tradeoffs that must be understood between debt or equity financing include the following exceptPTS:1REF:p. 312OBJ:12-2 TYPE: C10.Louise Piper plans to sell stock in her company in order to raise capital. One of the benefits of issuing stock as a source of funds isa.reduced risk to the enterprise.b.sharing success potential.c.confidentiality.d.periodic reporting requirements.ANS:APTS:1REF:p. 316OBJ:12-2 TYPE: A