Management Entrepreneurship

Business

Quiz 9 :

Small Business Finance

Quiz 9 :

Small Business Finance

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The applicant's character is not a consideration when being evaluated by a lender.
Free
True False
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False

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A demand note allows the business to borrow and repay funds up to the maximum amount specified in the agreement throughout the year.
Free
True False
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False

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Commercial banks are the backbone of the credit market.
Free
True False
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True

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Ordinarily,the longer the maturity of the loan,the higher the rate of interest.
True False
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A positive covenant spells out what a borrower cannot do when signing a loan agreement.
True False
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The prime rate is defined as the rate of interest banks charge their "best" customers.
True False
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Capital is a function of the applicant's personal financial strength.
True False
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Until the debt is repaid,the creditor has a legal claim on a portion of the cash flows of the business.
True False
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A lender may require a compensating balance,which means that the amount of funds is reduced,causing the rate of interest to increase,since the same amount of interest is paid and fewer funds are available.
True False
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Two types of funds are available to the entrepreneur: debt and equity.
True False
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In most cases,the sheer strength of a business idea can win full funding for a venture.
True False
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A fixed-rate loan typically has a higher interest rate than the initial rate on a variable-rate loan.
True False
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"Crowdfunding" and its use of online sites to finance business start-ups was made illegal by the Business Startups Act of 2012.
True False
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Leverage can enable a small business owner to magnify the potential returns expected.
True False
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The decision to seek outside funds,either through debt or equity,is relatively unimportant and simple.
True False
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Each business must have its assets in place,which are all those things it needs to operate,before it ever opens its doors.
True False
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Most lenders are hesitant to make loans to startup businesses unless a wealthy friend or relative will cosign the loan.
True False
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Today,a credit score of 580-690 is necessary for an individual to obtain a business loan.
True False
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Simply having a good idea will not be enough to convince investors to risk their capital.A small business owner must also be able to show that he/she is a competent manager with previous business success.
True False
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Assets owned by a loan applicant that can be pledged as security for the repayment of the loan constitute collateral.
True False
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