Question 1

Amex Inc.is a worldwide company that specializes in high growth industries.It acts as a global marketer for small manufacturers of medical products, telecommunications products, and data management products.Amex Inc.is an example of a(n):

Accepted Answer

Amex Inc. is described as a global marketer for small manufacturers, which aligns with the role of an export management company that helps manufacturers export their products by handling the logistics, marketing, and sales in foreign markets.

Question 2

Navim Jain sold stock to investors in order to finance Sparkart, LLC, a company that markets software to track how many times music is played and shared among peers.Jain used _____ financing.

Accepted Answer

Selling stock to investors to finance a company is a form of equity financing. This involves exchanging partial ownership of the company (in the form of stock) for capital.

Question 3

Marc Adler is the owner of Macquarium, a multimillion-dollar communications company that does everything from video productions to creating Web sites to public relations campaigns.Macquarium has done this sort of work for BellSouth and SnapOn Tools.Even though these companies could have prepared their videos and created their Web sites in-house, these tasks were:

Accepted Answer

These tasks were outsourced to Macquarium, a communications company, indicating that BellSouth and SnapOn Tools chose to have an external company handle these services rather than doing them in-house.

Question 4

International trade specialists that buy goods at a discount from small businesses and resell them abroad are called:

Accepted Answer

Export trading companies are firms that buy goods at a discount from small businesses and resell them abroad, facilitating international trade.

Question 5

_____ is at the core of most business failures.

Accepted Answer

Poor cash flow is the most common reason for business failures.

Question 6

Venture capital:

Accepted Answer

Venture capital refers to financing that comes from firms or individuals who invest in young, high-potential companies in exchange for equity, or partial ownership of the company. These investment firms specialize in supporting small, high-growth companies with the capital they need to develop and expand.

Question 7

After graduating from college, Joseph Tantillo decided to start a retail Web site that specializes in personalized Greek apparel.To fund his Web site, he borrowed money from his parents (who expect to be repaid with interest).In other words, he used _____ financing.

Accepted Answer

Joseph Tantillo borrowed money from his parents expecting to repay it with interest, which is a characteristic of debt financing. Debt financing involves borrowing funds that must be repaid over time, typically with interest.

Question 8

Who provides the start-up financing for the majority of new small businesses?

Accepted Answer

The majority of new small businesses are primarily financed by the business owner along with contributions from family and friends. This is often due to the difficulty in securing loans from banks or investment from venture capitalists at the early stages of a business.

Question 9

One way to ease the burden of managing a business is to:

Accepted Answer

Hiring outside consultants can provide expertise and support, allowing business owners to focus on core activities and reduce the burden of managing all aspects of the business themselves.

Question 10

In buying an existing business, the prospective buyer should ask questions about the operation of the business.Which of the following would be an appropriate question to ask?

Accepted Answer

All of the questions listed are appropriate for a prospective buyer to ask when considering the purchase of an existing business. They help in understanding the financial health, potential challenges, reasons for sale, and customer loyalty associated with the business.

Question 11

Jill Hansom borrowed $40,000 from a credit union to start a company that makes and sells peach salsa.Hansom used _____ financing.

Accepted Answer

Jill Hansom borrowed money to start her company, which means she is obligated to repay the borrowed amount. This is characteristic of debt financing, where funds are raised through loans that must be repaid with interest.

Question 12

Jeff Arnold and Reggie Bradford created WebMD, an Internet provider of health care information.During the development of this high-growth company, Arnold and Bradford attracted a group of investors who purchased stock in their company and provided them with ______ financing.

Accepted Answer

Equity financing involves raising capital through the sale of shares in a company, which is what Arnold and Bradford did by attracting investors who purchased stock in WebMD.

Question 13

_____ is financing obtained from investment firms that specialize in financing small, high-growth companies and receive an ownership interest and a voice in management in return for their money.

Accepted Answer

Venture capital is specifically designed to provide financing to small, high-growth companies in exchange for equity and often involves participation in management decisions.

Question 14

Angel investors:

Accepted Answer

Angel investors are known for providing funding to start-up businesses, often in exchange for equity in the company. They are typically individuals who invest their own money into emerging companies at an early stage.

Question 15

Once small businesses hire employees, they can _____ to increase job satisfaction and retain their employees.

Accepted Answer

All the options listed (providing comfortable working conditions, offering flexible working hours, providing employee benefit programs, and sharing profits with employees) are strategies that small businesses can employ to increase job satisfaction and retain their employees.

Question 16

One way to ease the burden of managing a business is to hire an outside consultant.Which of the following is an example of an outside consultant that might be useful to a small interior design company?

Accepted Answer

All the options listed are examples of outside consultants that could be useful to a small interior design company. Each provides a specialized service that can help manage different aspects of the business, such as marketing, financial management, and legal issues.

Question 17

Businesses close down for many reasons.Which of the following is NOT a typical reason for a business failure?

Accepted Answer

Expenses being lower than expected is generally not a reason for business failure. In fact, lower expenses can contribute to a business's success by increasing profitability. Most business failures are attributed to factors such as inadequate knowledge, lack of management expertise, poor planning, and external economic factors like high interest rates, which can increase the cost of borrowing money.

Question 18

Jeff Arnold and Reggie Bradford created WebMD, an Internet provider of health care information.Early in the development of this high-growth company, Arnold and Bradford attracted a group of investors who provided them with money needed to acquire other Internet companies with similar missions.The investment group is called:

Accepted Answer

Angel investors are individuals or a group of investors who provide capital for start-ups or early-stage companies in exchange for ownership equity or convertible debt. In the context of WebMD, as described, the investors who provided money for acquisitions and growth at an early stage would be considered angel investors.

Question 19

_____ are individual investors or groups of experienced investors who provide funding for start-up businesses.

Accepted Answer

Angel investors are individuals or groups who provide capital for start-up businesses, often in exchange for ownership equity or convertible debt. They are typically affluent individuals who offer financial backing for small startups or entrepreneurs, often at an early stage where risks are higher.

Question 20

In buying an existing business, the prospective buyer should ask questions about the operation of the business.Which of the following would be an inappropriate question to ask?

Accepted Answer

Asking about what the seller will do with the down payment is inappropriate because it concerns the seller's personal financial decisions, which are irrelevant to the business's operation and value.

Quiz 5: Entrepreneurship: Starting and Managing Your Own Business

Amex Inc.is a worldwide company that specializes in high growth industries.It acts as a global marketer for small manufacturers of medical products, telecommunications products, and data management products.Amex Inc.is an example of a(n) :