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Exam 1: Introduction to Finance for Entrepreneurs

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Question 51

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Free cash exists when cash exceeds that which is needed to operate, pay creditors, and invest in assets.

A) True
B) False

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Question 52

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Private financial markets are a place where standardized contracts or securities are traded on organized securities exchanges with restrictions on how they can be transferred.

A) True
B) False

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Question 53

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An initial public offering provides a venture with a source of bridge financing.

The type of financing that occurs during the development stage of a venture's life cycle is typically referred to as:

Entrepreneurship is the process of changing ideas into commercial opportunities and creating value.

During the early-maturity stage of a venture's life cycle, the primary source of funds is in the form of:

Lindsey and Tobias have the opportunity to invest in a project that requires an investment of $3,000. In one year, there is a 35% chance of a $2,900 return; a 40% chance of a $3,400 return; and a 25% chance of a $4,500 return. Lindsey requires a 15% return on the project after the first year, but Tobias requires a return of only 12%. Using the expected rate of return:

The sharing economy refers to the cross-referencing of innovations for record-keeping purposes.

Business angels are wealthy individuals, operating as informal or private investors, who provide venture financing for small businesses.

Which of the following possible conflicts of interest increases in divergence at venture gets close to bankruptcy?

You are considering investing in two independent projects: A and B. Project A requires an initial investment of $12,000. In one year, there is a 30% chance of a $10,500 return; a 50% chance of a $12,500 return; and a 20% chance of a $14,500 return. Project B requires an initial investment of $1,000. In one year, there is a 25% chance of a $950 return; a 25% chance of a $1,000 return; and a 50% chance of a $1,200 return. If you require a 7% return on your investment after one year, you should:

Which of the following does not describe activity during the startup stage of a venture's life cycle?

Entrepreneurial finance involves:

Which of the following would not be considered a type of venture financing?

Disruptive innovation is an innovation that creates a new market or network that disrupts and displaces an existing market or network.

E-commerce refers to:

Entrepreneurs provide the financing to individuals who think, reason, and act to convert ideas into commercial opportunities and create opportunities.

An innovation that creates a new market or network that displaces an existing market or network is called a:

Which of the following advise and assist corporations on the type, timing, and costs of issuing new debt and equity securities?

Entrepreneurial opportunities can occur only when there are societal changes in the world.