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BAM 418 BAM418 Unit 4 Exam Answers

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BAM 418 Unit 4 Exam Answers (CCU)

  1. 1)  Unlike entrepreneurs of the past, today’s entrepreneurs:

    1. have to piece their capital together from several sources

    2. nd fewer closed doors as small business start-ups have become less risky

    3. are nding more government interest and funding for business start-ups than ever before

    4. are spending nearly 75% of their time raising capital

  2. 2)  The money Earl uses to build inventory for the upcoming Christmas season would be classi ed as ________ capital.

    a. working b. xed
    c. ef ciency d. growth

  3. 3)  ________ nancing includes the personal investment of the owners and is often called “risk capital.”

    a. Asset-based b. Debt
    c. Equity
    d. Growth

  4. 4)  When looking for an angel, the key is:

    1. searching the web

    2. using business incubators’ computer matching services

    3. using the SBA as a contact point

    4. networking

  5. 5)  When taking a company public, investment bankers look for:

    1. 3 to 5 years of audited nancial statements

    2. a moderate growth rate

    3. a strong record of revenues

    4. a leading position in a stable market

  6. 6)  Under a ________ agreement, the underwriter agrees to purchase all of the shares in a com- pany’s public offering and then resells them to investors.

    1. rm commitment

    2. lock-up

    3. nal price

    4. best effort

7) A SCOR ling has a number of advantages to it, such as the fact that:

a. b.

c. d.

8) In

a. b. c. d.

it can be used by partnerships
there is no requirement for an audited nancial statement if the offering is under $500,000
a company may raise between $3 and $5 million per year
it is recognized in every state

a Regulation D–private placement Rule 505 and 506–a company:

registers its shares with the SEC
sells its shares directly to private investors “goes public” with under 10,000 shares
must be licensed to do business in all 50 states

  1. 9)  Working capital can be calculated by:

    1. Total Asset - Total Liabilities

    2. Total Asset - Current Liabilities

    3. Current Asset - Current Liabilities

    4. Total Liabilities - Total Asset

  2. 10)  These __________are wealthy individuals, often entrepreneurs themselves, who invest in business start-ups in exchange for equity stakes in the companies.

    1. Venture capitalist

    2. Rich family members

    3. Pulbic investors

    4. Angels

  3. 11)  Interstate offerings (Rule 147) governs:

    1. private placements

    2. intrastate offerings

    3. all states

    4. federal registrations

  4. 12)  Term loans impose restrictions called:

    1. nancial limits

    2. margins

    3. covenants

    4. loan boundaries

  1. 13)  When a small business is refused a loan because it is not pro table and deemed a poor credit risk, the owner can usually turn to ________ as a source of short-term funds.

    1. venture capital companies

    2. trade credit

    3. loans from insurance companies

    4. stockbrokers

  2. 14)  A federally-sponsored program which offers loan guarantees to create and expand businesses in areas with below-average income and high unemployment is called:

    a. the Farmers Home Administration
    b. the Economic Development Administration c. SBIC
    d. the Small Business Administration

  3. 15)  Grants to small businesses, made to strengthen the local economy in cities and towns that are considered economically distressed, are made by:

    1. the Farmers Home Administration

    2. a local development company

    3. the Economic Development Administration

    4. the Department of Housing and Urban Development

  4. 16)  When a bank makes enough good SBA-guaranteed loans to become a ________ lender, the SBA promises a faster turnaround time for the loan decision–typically 3 to 10 business days.

    a. LDC
    b. certi ed c. preferred d. quali ed

  5. 17)  A Section 504 program has three types of lenders involved:

    a. a local development company, the SBA, and a commercial nance company. b. a bank, the SBA, and a certi ed development company.
    c. the SBA, a private placement, and an SBIC.
    d. HUD, a bank, and an economic development company.

  6. 18)  The average interest rates on SBA-guaranteed loans is:

    1. prime-plus-2-percent

    2. 2 percent

    3. 7 percent

    4. prime-minus-2-percent

  1. 19)  Factoring:

    1. places the risk of uncollected accounts receivable on the small business owner

    2. is a type of trade credit

    3. is best used as a long-term source of capital

    4. is a more expensive method of nancing than borrowing from a bank

  2. 20)  Which of the following characteristics for selecting a city would be of greatest interest to a retail store selling ne china and collectibles?

    1. Transportation

    2. Population trends

    3. Public services

    4. Zoning

  3. 21)  One advantage to locating near competitors is found in the:

    1. localize all similar businesses close to each other

    2. the ability to in comparison shopping

    3. to keep an eye on the competitor

    4. make it easy for hiring

  4. 22)  The best way to determine where to place merchandise, what a store’s “hot” and “cold” spots are, is to:

    1. simply observe customers in the store

    2. conduct focus groups with former customers

    3. hire a market research rm to study your business

    4. conduct a kinesiology study

  5. 23)  The value of the oor space in a retail store depends upon:

    1. the merchandise in that area

    2. the number of salespeople servicing the area

    3. its proximity to aisles and entrances

    4. the type of store and customer

  1. 24)  What are two distinct factors are important for entrepreneurs analyzing the labor supply in a potential location?

    1. Minimum wage in the area and the labor’s level of education, training and experience.

    2. Minimum wage and the number of workers available in the area.

    3. Cost of transportation and minimum wage.

    4. The number of workers available in the area and their level of education, training, and

      experience.

  2. 25)  Jim wanted to start an outside café in his neighborhood. When he started the construction, the building department made him to stop since he was not in accordance to the local zone. What would be the best option for Jim?

    1. He should quit and consider another location.

    2. Joe could appeal to the local zoning commission.

    3. Joe should hire an attorney and sue the city for the money he has spent thus far.

    4. He could have the subcontractors to complete the café at night so the building department

      will not be around.

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