Question 1

Building,equipment,land,and patents are which of the following?

Accepted Answer

A)   Short-term assets
B)   Long-term assets
C)   Capital assets
D)   Financial assetsE) C) and D)
F) B) and C)

Question 2

Upon obtaining a $100,000 business loan from his local bank,Arthur was informed that he must keep at least $10,000 on deposit with the bank.This is referred to as a/an

Accepted Answer

A)   Effective rate of interest
B)   Compensating balance
C)   Required dividend
D)   Maturity requirementE) None of the above
F) A) and D)

Question 3

The more compounding periods,the ____ the effective rate of interest.

Accepted Answer

A)   Lower
B)   No effect on
C)   Higher
D)   BetterE) B) and C)
F) A) and D)

Question 4

Until the debt is repaid,the creditor has a legal claim on a portion of the cash flows of the business.

Accepted Answer

A) True 
 B)False

Question 5

A finance company will generally purchase the accounts receivable or lend small businesses somewhere between ____ percent of the face value of the accounts receivable being factored.

Accepted Answer

A)   40 and 60
B)   45 and 70
C)   55 and 80
D)   70 and 90E) B) and C)
F) A) and D)

Question 6

The amount of money paid for the use of borrowed funds is known as

Accepted Answer

A)   Interest
B)   Principal
C)   Maturity length
D)   DebtE) None of the above
F) B) and D)

Question 7

Micromanagement angels own and operate their own business and are looking for ways to diversify their portfolios.

Accepted Answer

A) True 
 B)False

Question 8

If a potential lender says "no",what are some actions that a small business manager should take?

Accepted Answer

∙Thank the lender and do not show resentment
∙Ask what specific information counted against you
∙Ask for specific recommendations or advice
∙Give the bank a reason to make a loan
∙Ask whether the bank can rework the application

Question 9

Two types of funds are available to the entrepreneur: debt and equity.

Accepted Answer

A) True 
 B)False  True

Question 10

What type of loan requires collateral as security for the lender?

Accepted Answer

A)   Lateral loan
B)   Unsecured loan
C)   Secured loan
D)   Installment loanE) B) and D)
F) C) and D) C

Question 11

In Scenario 9-1 above,the primary disadvantages of using debt financing are all but which of the following?

Accepted Answer

A)   It increases risk due to the possibility of insolvency.
B)   It allows a voice in management of the business.
C)   It has to be repaid.
D)   Leverage can enable returns to be lessened.E) A) and B)
F) A) and C)

Question 12

Each business must have its assets in place,which are all those things it needs to operate,before it ever opens its doors.

Accepted Answer

A) True 
 B)False

Question 13

Interest rates for small business owners are normally made up of the ____ plus an additional percentage.

Accepted Answer

A)   Discount rate
B)   Federal funds rate
C)   Prime interest rate
D)   Annual percentage ratesE) A) and C)
F) All of the above

Question 14

Leverage can enable a small business owner to magnify the potential returns expected.

Accepted Answer

A) True 
 B)False

Question 15

In Scenario 9-1 above,all but which of the following are choices Jim could use if he chooses debt financing?

Accepted Answer

A)   Commercial banks
B)   Factoring accounts receivable
C)   Insurance companies
D)   Venture capitalE) A) and B)
F) A) and C)

Question 16

A short-term loan where both principal and interest must be repaid in a lump sum at maturity is known as a/an

Accepted Answer

A)   Unsecured loan
B)   Secured loan
C)   Line of credit
D)   Demand noteE) A) and D)
F) All of the above

Question 17

Assets that will be converted into cash within one year are called

Accepted Answer

A)   Short-term assets
B)   Long-term assets
C)   Capital assets
D)   Financial assetsE) None of the above
F) B) and C)

Question 18

Each year,Alexandra receives a payment for the stock she owns within the company where she is employed.The amount of the annual payment fluctuates based on the company's net profits.This is referred to as

Accepted Answer

A)   An asset
B)   A liability
C)   A dividend
D)   EquityE) A) and B)
F) A) and C)

Question 19

Describe three sources of debt financing for a small business owner.

Accepted Answer

∙Commercial banks
∙Commercial ...

Question 20

Approximately what percentage of U.S.businesses are partnerships?

Accepted Answer

A)   2
B)   10
C)   20
D)   30E) A) and D)
F) A) and B)

Exam 9: Small Business Finance

Building,equipment,land,and patents are which of the following?

Correct AnswerverifiedShow Answer

Upon obtaining a $100,000 business loan from his local bank,Arthur was informed that he must keep at least $10,000 on deposit with the bank.This is referred to as a/an

Correct AnswerverifiedShow Answer

The more compounding periods,the ____ the effective rate of interest.

Correct AnswerverifiedShow Answer

Until the debt is repaid,the creditor has a legal claim on a portion of the cash flows of the business.

Correct AnswerverifiedShow Answer

A finance company will generally purchase the accounts receivable or lend small businesses somewhere between ____ percent of the face value of the accounts receivable being factored.

Correct AnswerverifiedShow Answer

The amount of money paid for the use of borrowed funds is known as

Correct AnswerverifiedShow Answer

Micromanagement angels own and operate their own business and are looking for ways to diversify their portfolios.

Correct AnswerverifiedShow Answer

If a potential lender says "no",what are some actions that a small business manager should take?

Correct Answerverified∙Thank the lender and do not show resentment ∙Ask what specific information counted against you ∙Ask for specific recommendations or advice ∙Give the bank a reason to make a loan ∙Ask whether the bank can rework the application

Two types of funds are available to the entrepreneur: debt and equity.

Correct AnswerverifiedTrue

What type of loan requires collateral as security for the lender?

Correct AnswerverifiedC

In Scenario 9-1 above,the primary disadvantages of using debt financing are all but which of the following?

Correct AnswerverifiedShow Answer

Each business must have its assets in place,which are all those things it needs to operate,before it ever opens its doors.

Correct AnswerverifiedShow Answer

Interest rates for small business owners are normally made up of the ____ plus an additional percentage.

Correct AnswerverifiedShow Answer

Leverage can enable a small business owner to magnify the potential returns expected.

Correct AnswerverifiedShow Answer

In Scenario 9-1 above,all but which of the following are choices Jim could use if he chooses debt financing?

Correct AnswerverifiedShow Answer

A short-term loan where both principal and interest must be repaid in a lump sum at maturity is known as a/an

Correct AnswerverifiedShow Answer

Assets that will be converted into cash within one year are called

Correct AnswerverifiedShow Answer

Each year,Alexandra receives a payment for the stock she owns within the company where she is employed.The amount of the annual payment fluctuates based on the company's net profits.This is referred to as

Correct AnswerverifiedShow Answer

Describe three sources of debt financing for a small business owner.

Correct Answerverified∙Commercial banks∙Commercial ...View AnswerShow Answer

Approximately what percentage of U.S.businesses are partnerships?

Correct AnswerverifiedShow Answer

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∙Thank the lender and do not show resentment ∙Ask what specific information counted against you ∙Ask for specific recommendations or advice ∙Give the bank a reason to make a loan ∙Ask whether the bank can rework the application

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True

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C

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∙Commercial banks
∙Commercial ...
View Answer

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