40) John wants to start a new business and prefers to keep the paperwork simple and avoid large
legal fees. Further, he does not want his personal property attached to the business. In this
scenario, John should start his business as a ________.
a) corporation
b) partnership
c) limited liability corporation
d) sole proprietorship
41) Borrowing money from another person, a bank, or a financial institution to start a business is
called ________.
a) equity financing
b) initial public financing
c) debt financing
d) leasing
42) Leela wants to raise money for her business. However, she does not want to give its
ownership shares to outsiders. Which of the following ways of financing should Leela choose for
her business?
a) Angel investor
b) Venture capitalist
c) Debt financing
d) Initial public offering
43) ________ gives ownership shares to outsiders in return for their financial investments.
a) Debt financing
b) Initial public financing
c) Asset financing
d) Equity financing
44) The form of financing called ________ requires collateral that pledges business assets or
personal assets as security in case of default.
a) equity financing
b) venture capital
c) debt financing
d) initial public offering
45) ________ make large investments in new ventures in return for an equity stake in the
business.
a) Venture capitalists
b) Equity investors
c) Bankers
d) Start-up managers
46) A wealthy private individual who invests in return for equity in a new venture is called a(n)
________.
a) equity investor
b) angel investor
c) new venture manager
d) banker
47) An angel investor who invests in a new venture is involved in ________.
a) debt financing
b) partnership financing
c) restricted financing
d) equity financing
48) A(n) ________ is the first time that a company sells its shares of stock to the public.
a) stock exchange
b) initial public offering
c) private exchange
d) stock auction
49) The payoff for venture capitalists is during the ________.
a) maturity of the investment
b) commencement of the venture
c) business closure
d) initial public offering
50) Sadie is the president of Sadie’s Stuff LLC. She owns 200,000 shares of the company. Sadie
will earn a huge profit if the company has a successful ________.
a) general partnership
b) joint venture
c) equity investor
d) initial public offering
Question type: True/False
51) Women-owned businesses in the U.S. have declined in recent years.
52) When it comes to finance, women have far more access to capital than men.
53) Research suggests that a college degree is necessary to be a successful entrepreneur.
54) Research shows that entrepreneurs are born, not made.
55) A small business is one with 500 or fewer employees.
56) In the maturity stage of business development, an entrepreneur experiences market success
and financial stability but also has to face competitive challenges in a dynamic environment.
57) In a limited partnership, only the general manager is involved in the day-to-day operations;
however, all partners share in the profits.
58) A limited liability corporation (LLC) is a hybrid structural form that has the advantages of
sole proprietorships and partnerships for taxes and of corporations for liability protection.
59) Equity financing provides finance to a business owner that has to be repaid eventually.
Question type: Text Entry
60) ___ pursue business opportunities they spot as mothers.
61) A(n) ___ starts and runs businesses and nonprofits over and over again, moving from one
interest and opportunity to the next.
62) A(n) ___ occurs when a firm moves faster than its competitors in spotting and exploiting a
new market or previously unrecognized niche in an existing one.
63) The ___ in entrepreneurship includes strong organizational skills and tolerance for risk.
64) When an entrepreneur is forced to open a business due to conditions like layoffs from
previous jobs, a low likelihood of employment, the inability to grow in the current career, or
simply to put food on the table, he or she is engaged in ___.
65) ___ involves developing a business to solve pressing societal needs at home or abroad.
66) In addition to the normal operational challenges of small businesses, family businesses face
the risk of ___.
67) A facility that offers services to help new businesses get established is called a(n) ___.
68) ___ offer guidance to entrepreneurs and small business owners on how to set up and manage
business operations.
69) The document that describes the goals of a firm, outlines how it intends to operate, and lays
out the financial strategies is called a(n) ___.
70) Most ___ are set up with legal and written agreements that document what each party
contributes as well as how profits and losses are to be shared.
71) A(n) ___ has a life of its own and separates the owners from personal liability.
72) The ___ is a corporate form for businesses whose stated goals are to combine making a profit
with benefiting society and the environment.
73) ___ limit the liability of one partner in case of negligence by any others.
74) When you provide ownership shares in exchange for capital that does not have to be repaid,
you are using ___.
75) Individuals or groups who make money by providing funds to new companies in exchange
for equity stakes are called ___.
76) In ___, new ventures go online to get start-up financing for their businesses from crowds of
investors.
Question type: Essay
77) How would you evaluate your “fit” as an entrepreneur?
78) Compare and contrast the various structural options open to a small business organization.
79) Define and characterize the various stages of a business life cycle.
80) State the main causes of small business failures.
81) What are the various means to fund new ventures? Define them and describe their
advantages and disadvantages.
