Question 1

Private placements are direct sales of stock positions to private investors without SEC registration and with minimal restrictions.

Accepted Answer

Private placements are exempt from registration with the SEC under certain rules and regulations, and are typically limited to accredited investors or a small number of sophisticated investors. They may also have some restrictions on transferability of the shares.

Question 2

Trade credit has only been around for a short time and is not very useful to financing resources.

Accepted Answer

Trade credit has been used for many years as a financing resource for businesses. It allows a company to purchase goods and services on credit from a supplier, with payment due at a later date. This can be a helpful way for businesses to manage their cash flow and obtain the resources they need to operate.

Question 3

Lines of credit usually carry higher interest rates than do credit cards.

Accepted Answer

Credit cards typically have higher interest rates than lines of credit due to their unsecured nature and the convenience and flexibility they offer for borrowing.

Question 4

A supplier is someone that the entrepreneur will have to rely on for prompt deliveries, undamaged goods, and extended credit in times of emergency; therefore, you should not just pick any first supplier.

Accepted Answer

Choosing reliable and trustworthy suppliers is important for the success of the business as they play a crucial role in the supply chain process.

Question 5

Sharing or borrowing equipment is a good example of bootstrap financing.

Accepted Answer

Bootstrap financing refers to the practice of starting a business with minimal external investment and instead relying on the entrepreneur's personal resources or creative solutions to raise necessary funds. Sharing or borrowing equipment is an example of such creative solutions, as it allows a business to avoid the expense of purchasing new equipment and instead utilize existing resources.

Question 6

Home equity loans are not available as bootstrap financing.

Accepted Answer

Home equity loans can be used as a form of bootstrap financing, where homeowners borrow against the equity of their home to fund their business or personal projects.

Question 7

The SBA lends business owners money directly.

Accepted Answer

The SBA does not directly lend money to business owners, but rather guarantees loans made by participating lenders, such as banks and credit unions.

Question 8

Many states offer incentives for entrepreneurs to put roots down and create jobs.

Accepted Answer

Many states offer a variety of incentives such as tax breaks, grants, and loans to encourage entrepreneurs to start businesses and create jobs in their communities.

Question 9

One exception to the entrepreneurial manager not having to come up with their own funding to start a new venture is the spin-off, which must generally be bought from the parent company.

Accepted Answer

Generally, a spin-off is a new venture that is created from a larger enterprise or parent company. In this case, the entrepreneurial manager may not have to come up with their own funding because the funds may come from the parent company or the sale of the new venture to outside investors. However, in order to acquire the assets and intellectual property of the spin-off, the entrepreneurial manager may have to buy them from the parent company.

Question 10

_______ capital is funds that are borrowed for less than one year.

Accepted Answer

Short-term capital refers to funds that are borrowed for less than one year. Long-term capital refers to funds that are borrowed for more than one year. Interim capital and initialized capital are not commonly used terms in finance. Bootstrapping refers to starting a business with little to no external funding.

Question 11

A/n _______ is an individual willing to invest in promising start-up opportunities.

Accepted Answer

An angel investor is an individual who invests their own money in a promising start-up opportunity.

Question 12

What is MBDA, and how can it help in small businesses?

Accepted Answer

The answer of What is MBDA, and how can it...

Quiz 11: Sources of Funds: Where Do You Get the Money