Q&A Hero

Q: Which stage in the venture life cycle is characterized by creating and building value, obtaining additional financing, and examining opportunities?a. survival stageb. startup stagec. rapid-growth staged. early-maturity stage

Q: The sharing economy involves: a. the traditional distribution model b. peer-to-peer arrangements c. hierarchical arrangements involving a third intermediary party d. peer-to-peer and hierarchical arrangements

Q: The last three stages of a successful venture's life cycle occur in the following order: a. startup, development, rapid-growth b. startup, survival, rapid-growth c. survival, rapid-growth, early-maturity d. development, startup, survival

Q: Which of the following possible conflicts of interest is usually minimized through the use of equity incentives? a. ownermanager conflict b. owneremployee conflict c. manageremployee conflict d. ownerdebtholder conflict

Q: The first three stages of a successful venture's life cycle occur in the following order: a. development, startup, survival b. development, rapid-growth, survival c. startup, development, rapid-growth d. survival, rapid-growth, early-maturity

Q: Which of the following countries engage in democratic capitalism? a. United States b. United States, France, and Germany c. France and Germany d. United States and France

Q: Which of the following is considered to be an agency conflict?a. ownermanager conflictb. stockholdermanager conflictc. stockholderdebtholder conflictd. ownerdebtholder conflict

Q: The type of financing that occurs during the development stage of a venture's life cycle is typically referred to as: a. seed financing b. startup financing c. second-round financing d. mezzanine financing

Q: Which of the following is not a major source of startup financing for a venture's startup stage? a. the entrepreneur's assets b. business operations c. family and friends d. venture capitalists

Q: Entrepreneurs provide the financing to individuals who think, reason, and act to convert ideas into commercial opportunities and create opportunities.a. Trueb. False

Q: 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

Q: Financial causes, such as excessive debt and insufficient financial capital, are not major contributors to business failures. a. True b. False

Q: The me-first economy reflects the willingness of individuals to share their assets with others to provide a new way of distributing goods and services. a. True b. False

Q: One principle of entrepreneurial finance is risk and expected reward go hand in hand." a. True b. False

Q: The gig economy involves individuals working as independent contractors and accepting short-term jobs or assignments, rather than being full-time employees. a. True b. False

Q: It is estimated that more than one million new businesses are started in the United States each year. a. True b. False

Q: The boomers generation applies to people born in the United States during the 19461964 time period. a. True b. False

Q: Three of the major megatrends discussed in Chapter 1 include: societal trends or changes, demographic trends or changes, and technological trends or changes. a. True b. False

Q: Entrepreneurial opportunities can occur only when there are societal changes in the world. a. True b. False

Q: The rapid-growth stage directly follows the startup stage. a. True b. False

Q: Disruptive innovation is an innovation that creates a new market or network that disrupts and displaces an existing market or network. a. True b. False

Q: Capitalism is a market-oriented system that prohibits private ownership of physical and financial assets. a. True b. False

Q: Although the risks associated with starting a new entrepreneurial venture are large, there is always room for one more success. a. True b. False

Q: Fads are not predictable, have short lives, and do not involve macro changes. a. True b. False

Q: Entrepreneurial finance is the application and adaptation of financial tools and techniques to the planning, funding, operations, and valuation of an entrepreneurial venture. a. True b. False

Q: Free cash flows are adjusted for risk and the time value of money when used to calculate the value of a venture. a. True b. False

Q: While cash is the language of business, accounting is the currency. a. True b. False

Q: Fads are large societal, demographic, or technological trends or changes that are slow in forming but, once in place, continue for many years. a. True b. False

Q: The dot.com or Internet bubble burst in 2008. a. True b. False

Q: Technological change may be the most important source of entrepreneurial opportunities. a. True b. False

Q: Perhaps the most important invention in shuttling us from an industrial society to an information society was the computer chip. a. True b. False

Q: Venture character and reputation can be assets or liabilities. a. True b. False

Q: A venture's financial objective is to survive. a. True b. False

Q: Ownermanager (agency) conflicts are differences between a manager's self-interest and that of the owners who hired the manager. a. True b. False

Q: Mark Twain once said, I was always able to see an opportunity before it became one. a. True b. False

Q: Free cash flow is the net income forecasted to be available to the venture's owners over time. a. True b. False

Q: Business angels are wealthy individuals, operating as informal or private investors, who provide venture financing for small businesses. a. True b. False

Q: Nine principles of entrepreneurial finance are identified and explored in this textbook. a. True b. False

Q: Environmental commerce, or e-commerce, involves the use of electronic means to conduct business online. a. True b. False

Q: An entrepreneur is an individual who thinks, reasons, and acts to convert ideas into commercial opportunities and to create value. a. True b. False

Q: In the broadest context, societal change reflects the evolution of humanity over time. a. True b. False

Q: The millennials generation consists of people born in the United States after 1996. a. True b. False

Q: The time value of money is an important component of the rent one pays for using someone else's financial capital. a. True b. False

Q: A market-oriented economic system provides an environment that fosters the formation, development, and transformation of ideas into useful products and services. a. True b. False

Q: The ownerdebtholder conflict is the divergence of the owners' and lenders' self-interests as the firm gets close to going public. a. True b. False

Q: Crises and "'bubbles' and emerging economies and global change are considered to be sources of entrepreneurial opportunities. a. True b. False

Q: An initial public offering provides a venture with a source of bridge financing. a. True b. False

Q: Free cash exists when cash exceeds that which is needed to operate, pay creditors, and invest in assets. a. True b. False

Q: Reasonable estimates place nonemployer (e.g., single person or small family) businesses started each year at less than 100,000. a. True b. False

Q: A venture, if organized as a corporation, may desire to provide venture investor liquidity by establishing a public market for its equity. a. True b. False

Q: The housing asset bubble burst in 2006. a. True b. False

Q: The sharing economy refers to the cross-referencing of innovations for record-keeping purposes. a. True b. False

Q: A study of the U.S. Census Bureau's Characteristics of Business Owners database suggests that about two-thirds of closed businesses were successful at closure. a. True b. False

Q: Democratic capitalism exists where a country or state organized as a democracy adopts a capitalistic economic system. a. True b. False

Q: The entrepreneurial process involves: developing opportunities, gathering resources, and managing and building operations, all with the goal of creating value. a. True b. False

Q: Early-stage ventures include firms in their development, startup, or survival life cycle stages. a. True b. False

Q: Around two-thirds of new employers survive at least two years, and only about one-half survive for at least five years. a. True b. False

Q: Mezzanine financing is temporary financing needed to keep the venture afloat until the next offering. a. True b. False

Q: Entrepreneurship is the process of changing ideas into commercial opportunities and creating value. a. True b. False

Q: The second stage in a successful venture's life cycle is the startup stage. a. True b. False

Q: Free cash is all of the cash available to cover operating expenses. a. True b. False

Q: Nearly half of business failures are due to economic factors such as inadequate sales, insufficient profits, and industry weakness. a. True b. False

Q: In the early 1970s, Harry Dent recognized that the U.S. economy centered on the creation and distribution of information. a. True b. False

Q: In Chapter 1, five megatrend categories are identified as sources of entrepreneurial opportunities. a. True b. False

Q: Indicate whether the statement is true or false.The financial objective of increasing value is inconsistent with developing positive character and reputation.a. Trueb. False

Q: Which of the following advise and assist corporations on the type, timing, and costs of issuing new debt and equity securities? a. brokerage firms b. venture law firms c. specialist firms d. investment banking firms

Q: The time value of money concept is associated with which of the following principles of entrepreneurial finance? a. real, human, and financial capital must be rented from owners b. risk and expected reward go hand in hand c. while accounting is the language of business, cash is the currency d. it is dangerous to assume that people act against their own self-interests

Q: One study of successful entrepreneurs indicated that a majority felt that the most important factor in the long-term success of their ventures was: a. being greedy b. having high ethical standards c. working hard d. taking frequent vacations

Q: The last stage in a successful venture's life cycle is called the: a. rapid-growth stage b. early-maturity stage c. development stage d. survival stage

Q: You have the opportunity of making a $5,000 investment. The outcomes one year from now will be either $4,500 or $6,000, with an equal chance of either outcome occurring. What is the expected outcome? a. $4,500 b. $6,000 c. $5,250 d. $5,750

Q: E-commerce refers to: a. environmental commerce b. electronic commerce c. economic commerce d. exploratory commerce Supplementary Questions (may require basic knowledge of probability and/or prior introductory accounting and business concepts)

Q: Which of the following individuals once said, I was seldom able to see an opportunity, until it ceased to be one. a. Mark Twain b. Bill Gates c. Steve Jobs d. Jeff Bezos

Q: Which stage of a venture's life cycle is best characterized by the period when revenues start to grow and when cash flows from operations begin covering cash outflows?a. survival stageb. startup stagec. rapid-growth staged. early-maturity stage

Q: Which of the following possible conflicts of interest increases in divergence at venture gets close to bankruptcy? a. ownermanager conflict b. owneremployee conflict c. manageremployee conflict d. ownerdebtholder conflict

Q: The dot.com or Internet bubble burst in: a. 1990 b. 2000 c. 2006 d. 2008

Q: Fads: a. are not predictable b. have short lives c. do not involve macro changes d. are not predictable, have short lives, and do not involve macro changes

Q: Mezzanine financing is associated with which of the following life cycle stages? a. development stage b. startup stage c. survival stage d. rapid-growth stage

Q: Entrepreneurial finance involves: a. planning b. planning and funding c. planning, funding, and operations d. planning, funding, operations, and valuation

Q: What is the number of principles of entrepreneurial finance that are emphasized in this textbook? a. three b. five c. seven d. nine

Q: Harry Dent documented major generation waves in the United States during the twentieth century in: a. 1972 b. 1982 c. 1993 d. 2003