Question 1

Which of the following statements is accurate?
Love money is a form of debt financing.
Borrowing money reduces the potential for higher returns when a business is performing well.
Debt financing refers to money invested by the owner in the company.
Banks are typically risk averse.
Suppliers typically provide long term-financing.

Accepted Answer

The answer of Which of the following statements is accurate?
Love...

Question 2

Harold's father owns a plumbing business, which Harold will likely take over. However, Harold needs to know the problems that beset family businesses. Which of the following is not a problem in a family business?
Untrained and uneducated family members as personnel
Failure to respond to changing market conditions
Choosing an appropriate successor
Consistent under-financing
Disagreement among family members about the future of the business

Accepted Answer

The answer of Harold's father owns a plumbing business, which...

Question 3

An example of a debt source of funds is ________ and an example of an equity source of funds is ________.
family and friends; venture capitalists
private lenders; family and friends
private lenders; trade credit
venture capitalists; private lenders
family and friends; private lenders

Accepted Answer

The answer of An example of a debt source of...

Question 4

Which of the following is correct with regard to collateral?
It refers to business (but not personal) assets that a borrower uses to secure a loan or other credit.
It consists of tangible assets like buildings as well as intangible assets like goodwill.
Collateral can be seized by the lender if the loan is not repaid according to specified terms.
It refers to personal (but not business) assets that a borrower uses to secure a loan or other credit.
Banks are most impressed with debt investment.

Accepted Answer

The answer of Which of the following is correct with...

Question 5

Jody is a young graduate from a business program. She can either help out in the family business or work with another organization. Which of the following is not a typical advantage associated with a family business?
Highly trained individuals
Valuable community relationships
Personal sacrifices leading to financial advantage
High employee loyalty
Unified family management

Accepted Answer

The answer of Jody is a young graduate from a...

Question 6

Roger has made a list of what he considers to be advantages of buying a franchise. You tell him that one item on his list is not an advantage. Which one is it?
Improved chances of success
Access to big business management skills
Don't have to build a business step by step
Incentive of owning your own business
Low start-up costs

Accepted Answer

The answer of Roger has made a list of what...

Question 7

Molly believes that success is almost guaranteed when one buys a franchise. You point out that she should consider the costs such as
emergency needs.
operational expenses.
the franchise sales price.
training expenses.
all of these.

Accepted Answer

The answer of Molly believes that success is almost guaranteed...

Question 8

Which of the following is not likely to be provided by the seller of a franchise?
Financing help
Guarantee of success
Marketing strategy
Training for employees and managers
Management advice

Accepted Answer

The answer of Which of the following is not likely...

Question 9

Margaret has an opportunity to buy an existing business. She should be knowledgeable about all of the following issues except
the location of the business.
legal form of the business.
difficulty in determining an appropriate price for the business.
incomplete knowledge of the state of the business.
the reputation of the business.

Accepted Answer

The answer of Margaret has an opportunity to buy an...

Question 10

A business is normally at its riskiest point during the ________ phase.
preliminary
growth
start-up
maturity
conception

Accepted Answer

The answer of A business is normally at its riskiest...

Question 11

The ________ fit involves determining if the resources needed to capitalize on the opportunity can be acquired.
resource‒entrepreneur
personal‒entrepreneur
entrepreneur‒opportunity
opportunity‒resource
entrepreneur‒resource

Accepted Answer

The answer of The ________ fit involves determining if the...

Question 12

To start up a new business by operating under a license issued by a parent company to local entrepreneurs who own and manage the business is known as
a small business.
a macroenterprise.
an enterprise.
a microenterprise.
a franchise.

Accepted Answer

The answer of To start up a new business by...

Question 13

Judy is a graduate from a denturist program. Normally, graduates start up their own business, much like dentists and doctors. She has the choice of starting on her own or buying an existing practice. What is an advantage for her of starting a new business from scratch?
No problems as a result of the prior owner's errors
Odds are better to succeed
Relationship with suppliers already established
Needs and desires of customers known
The risks are lower than if she were to buy an existing practice

Accepted Answer

The answer of Judy is a graduate from a denturist...

Question 14

Ted is about to take over a family business. The issues of which he should be aware include all of the following except
assuring economic security for the retiring leader and spouse.
training the successor.
benefits for the successor.
timing the succession.
successor selection.

Accepted Answer

The answer of Ted is about to take over a...

Question 15

About one-third of all new businesses owners
buy an existing business.
start from scratch.
buy out a partner.
win the business in a draw.
inherit the business.

Accepted Answer

The answer of About one-third of all new businesses owners
buy...

Question 16

In a franchise agreement, the ________ is purchasing the right to sell the products of the ________.
franchisee; franchiser
franchiser; parent company
franchiser; franchisee
pigeon; shyster
subleaser; leaser

Accepted Answer

The answer of In a franchise agreement, the ________ is...

Question 17

All of the following are common sources of equity for new ventures except
banks.
personal savings.
love money.
private investors.
venture capitalists.

Accepted Answer

The answer of All of the following are common sources...

Question 18

The benefits of franchising the franchiser enjoys include all of the following except
more revenue.
more financing.
more involvement in the details of local operations.
advertising money is spent more efficiently.
rapid growth.

Accepted Answer

The answer of The benefits of franchising the franchiser enjoys...

Question 19

Which of the following is considered an advantage for both the franchisee and the franchisor?
Guaranteed success
Economies of scale in buying
Promotion savings
Recognition
Management assistance

Accepted Answer

The answer of Which of the following is considered an...

Question 20

Which of the following is not one of the disadvantages of owning a franchise?
High failure rates
Sacrifice of independence
Difficult to terminate
On-going payments to the parent company
High start-up costs

Accepted Answer

The answer of Which of the following is not one...

Quiz 4: Entrepreneurship, Small Business, and New Venture Creation

An example of a debt source of funds is and an example of an equity source of funds is . family and friends; venture capitalists private lenders; family and friends private lenders; trade credit venture capitalists; private lenders family and friends; private lenders

Molly believes that success is almost guaranteed when one buys a franchise. You point out that she should consider the costs such as emergency needs. operational expenses. the franchise sales price. training expenses. all of these.

Which of the following is not likely to be provided by the seller of a franchise? Financing help Guarantee of success Marketing strategy Training for employees and managers Management advice

A business is normally at its riskiest point during the ________ phase. preliminary growth start-up maturity conception

The ________ fit involves determining if the resources needed to capitalize on the opportunity can be acquired. resource‒entrepreneur personal‒entrepreneur entrepreneur‒opportunity opportunity‒resource entrepreneur‒resource

To start up a new business by operating under a license issued by a parent company to local entrepreneurs who own and manage the business is known as a small business. a macroenterprise. an enterprise. a microenterprise. a franchise.

Ted is about to take over a family business. The issues of which he should be aware include all of the following except assuring economic security for the retiring leader and spouse. training the successor. benefits for the successor. timing the succession. successor selection.

About one-third of all new businesses owners buy an existing business. start from scratch. buy out a partner. win the business in a draw. inherit the business.

In a franchise agreement, the is purchasing the right to sell the products of the . franchisee; franchiser franchiser; parent company franchiser; franchisee pigeon; shyster subleaser; leaser

All of the following are common sources of equity for new ventures except banks. personal savings. love money. private investors. venture capitalists.

The benefits of franchising the franchiser enjoys include all of the following except more revenue. more financing. more involvement in the details of local operations. advertising money is spent more efficiently. rapid growth.

Which of the following is considered an advantage for both the franchisee and the franchisor? Guaranteed success Economies of scale in buying Promotion savings Recognition Management assistance

Which of the following is not one of the disadvantages of owning a franchise? High failure rates Sacrifice of independence Difficult to terminate On-going payments to the parent company High start-up costs