Entrepreneurial Finance
Exam Questions
Course Introduction
Entrepreneurial Finance explores the financial strategies, tools, and concepts necessary for launching and growing new ventures. The course covers key topics such as sources of capital, valuation methods, financial forecasting, risk assessment, and venture capital negotiations. Students learn to evaluate business opportunities, build funding strategies, and navigate the financial challenges faced by startups and early-stage companies. Real-world case studies and interactive exercises provide hands-on experience in making informed financial decisions critical to entrepreneurial success.
Recommended Textbook
Entrepreneurship Theory Process and Practice 10th Editionby Donald F. Kuratko
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15 Chapters
444 Verified Questions
444 Flashcards
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Page 2
Chapter 1: Entrepreneurship: Evolutionary
Development-Revolutionary Impact
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) The "corridor principle" states that entrepreneurs often get stuck on one idea.
A)True
B)False
Answer: False
Q2) The displacement school of thought can be divided into which three groups?
A)political, cultural, environmental
B)cultural, environmental, and financial
C)environmental, financial, and economic
D)economic, cultural, and political
Answer: D
Q3) Michael Gerber,the author of The E-Myth,explains that the failure of most small businesses is due to:
A)owners being more technical rather than entrepreneurial
B)owners being more managerial rather than technical
C)owners being more entrepreneurial rather than managerial
D)owners being more entrepreneurial rather than technical
Answer: A
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Page 3
Chapter 2: The Entrepreneurial Mind-Set in Individuals:
Cognition and Ethics
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Which of the following is not characteristic of the "dark side" of entrepreneurship?
A)an external optimism
B)a desire for success
C)knowing when to take a vacation
D)a sense of distrust
Answer: C
Q2) Discuss the specific areas of entrepreneurial risk.
Answer: The four areas of risk are financial risk,career risk,family and social risk,and psychic risk. First,financial risk deals with the amount of savings or resources that the entrepreneur puts into venture. If the venture is not successful,the money or resources will most likely be lost. The entrepreneur will probably sign obligations that exceed his or her personal wealth. The second risk is career. The would-be entrepreneur frequently asks if he or she will be able to find a job or go back to a previous job. The new venture has no guarantees about career security. Family and social risk are also to be considered.
Q3) There is a certain psychic risk involved with entrepreneurship.
A)True
B)False
Answer: True
Page 4
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Chapter 3: The Entrepreneurial Mind-Set in Organizations: Corporate Entrepreneurship
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) Which of the following are specific factors identified by researchers,that organizations can concentrate on in structuring an entrepreneurial climate.
A)radical innovation, incremental innovation, and vision
B)skunk works, multiple approaches, and vision
C)top management support, time, resources, rewards, and organizational boundaries
D)rewards, resources, innovation, and vision
Answer: C
Q2) Individuals may avoid corporate entrepreneurial behavior due to the impact of traditional management techniques.
A)True
B)False
Answer: True
Q3) The major thrust of corporate entrepreneurship is to
A)encourage greater risk taking.
B)raise profitability.
C)encourage innovation.
D)increase morale.
Answer: C
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Chapter 4: Social Entrepreneurship and the Global
Environment for Entrepreneurship
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Methods for going international include all of the following except A)importing
B)exporting
C)licensing
D)foreign reclamation
Q2) Social responsibility consists of those obligations that society has to businesses.
A)True
B)False
Q3) Which of the following statements about social entrepreneurship is not true?
A)Social entrepreneurship is limited to the world of not-for-profit corporations.
B)Social entrepreneurship is about having a heightened sense of accountability
C)Social entrepreneurship has, in recent years, been the subject of widespread media attention.
D)Social entrepreneurship adopts some of the same principles that have been effective in successful entrepreneurship.
Q4) Licensing agreements can involve patents,trademarks,and technical know-how.
A)True
B)False
Page 6
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Chapter 5: Innovation: the Creative Pursuit of Ideas
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) One of the most helpful avenues for developing one's own creative talents is to be aware of the habits and mental blocks that stifle creativity.
A)True
B)False
Q2) Which of the following are sources of innovation?
A)unexpected occurrences and incongruities
B)duplication and processes
C)synthesis and technology
D)industry changes and extension
Q3) List and briefly explain each of the phases in the creative process.
Q4) The incubation process involves which of the following?
A)working harder
B)letting the subconscious work
C)talking with friends
D)changing jobs
Q5) Creative talents can be improved through practice and awareness of habits that can cause problems. However,there are ways to increase creativity; one area is to recognize relationships. Explain what is meant by this.
Q6) Describe the innovation process.
7
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Chapter 6: Assessment of Entrepreneurial Opportunities
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30 Flashcards
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Sample Questions
Q1) The type of venture that is expected to attract venture capital would most likely be a
A)corporate venture.
B)high-growth venture.
C)lifestyle venture.
D)smaller venture.
Q2) Market feasibility analysis relies on
A)organizational competence
B)the entrepreneur's vision
C)venture capital
D)general economic trends and competitor data
Q3) Explain three major reasons why new ventures fail.
Q4) Using the failure prediction model discussed in the chapter,the risk of failure can be reduced by:
A)using less debt as initial financing and generating revenue in the initial stages.
B)using more debt as initial financing and generating less revenue in the initial stages.
C)using more revenue to enhance more debt in the initial stage.
D)all of the above.
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8
Chapter 7: Pathways to Entrepreneurial Ventures
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) Which of the following is not a key question a prospective buyer needs to ask in buying a business?
A)Why is the owner selling?
B)What is the owner's personal net worth?
C)How many of the personnel will remain with the firm?
D)What type of competition exists?
Q2) When one designs a unique good or service,the individual is said to have used a(n) ____approach to starting the business.
A)new-new
B)old-old
C)old-new
D)new-old
Q3) The Franchise Disclosure Document (FDD) is a legally required disclosure document that must be presented to potential franchisees during presale discussions.
A)True
B)False
Q4) The Federal Trade Commission does not provide information on franchise success.
A)True
B)False
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Chapter 8: Sources of Capital for Entrepreneurs
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30 Verified Questions
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Sample Questions
Q1) Regulation D augments the regulations for reports and statements required for selling stock to private parties,friends,employees,customers,relatives,local professionals.
A)True
B)False
Q2) Advantages of debt financing include all of the following except:
A)low interest rates that justify the opportunity cost.
B)regular interest payments.
C)potential greater return on equity.
D)no relinquishment of ownership.
Q3) Private placement is a method of raising capital through the private placement of securities.
A)True
B)False
Q4) Use of debt to finance a new venture involves a payback of funds plus an interest fee for the use of the money.
A)True
B)False
Q5) Are formal firms the only source of venture capital?
Q6) How does a public offering differ from a private placement?
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Chapter 9: Legal Challenges of Entrepreneurial Ventures
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) The owner of a copyright may do all of the following except A)reproduce the work.
B)deduct the intrinsic value of the rights from one's taxes
C)perform the work publicly.
D)display the work publicly.
Q2) Three primary legal forms of organization are the sole proprietorship,the partnership,and the corporation.
A)True
B)False
Q3) A copyright provides exclusive rights to creative individuals for the protection of their artistic productions.
A)True
B)False
Q4) The two parts of a patent application are specification and claims.
A)True
B)False
Q5) What does a copyright protect?
Q6) Chapter 7,Chapter 9,and Chapter 11 are the most common forms of bankruptcy.
A)True
B)False
Page 11
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Chapter 10: Marketing Challenges for Entrepreneurial Ventures
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Identify and describe two pricing models pertinent to the social media age?
Q2) Social media marketing is the application of online collaborative media for marketing purposes.
A)True
B)False
Q3) Only major strategic decisions need to be supported through marketing research.
A)True
B)False
Q4) Pricing procedures are the same for all types of ventures.
A)True
B)False
Q5) Of the following,which does the textbook identify as critical to the marketing planning process?
A)market niche
B)market segmentation
C)marketing research
D)marketing myopia
B)False Page 12
Q6) Skimming is setting prices at such a low level that products are sold at a loss. A)True
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Chapter 11: Financial Preparation for Entrepreneurial Ventures
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Financial information is important to entrepreneurs because:
A)it pulls together all the information presented in other segments of the business.
B)it quantifies all the assumptions concerning business operations.
C)it answers all questions about the business and the entrepreneur.
D)a and b are both correct.
Q2) Comparing financial numbers in order to make decisions is referred to as: A)ratio analysis.
B)debt reduction.
C)comparable fractions.
D)descriptive statistics.
Q3) Which of the following are forms of pro forma statements?
A)income statements
B)balance sheets
C)costs of goods sold
D)a and b
Q4) The first step in the preparation of the cash flow budget is the identification and timing of cash outflows.
A)True
B)False
14
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Chapter 12: Developing an Effective Business Plan
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Sample Questions
Q1) What is the significance of a harvest strategy segment in a business plan?
A)It is important for the entrepreneur to plan for a liquidity event as an exit strategy.
B)It is important for the entrepreneur to know how to buy up troubled companies.
C)It is important for the entrepreneur to indicate how the business will increase in value.
D)It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise.
Q2) Which of the following statements would not be an appropriate guideline for successful business plan development?
A)Avoid exaggeration.
B)Orient the plan to the present.
C)Highlight critical risks.
D)Do not overdiversify.
Q3) An indicator of the planning pitfall of "failure to anticipate roadblocks" is
A)recognition of future problems.
B)making no admission of possible flaws in the plan.
C)having a contingency or alternative plan.
D)pursuing a good work force.
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Chapter 13: Strategic Entrepreneurial Growth
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30 Flashcards
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Sample Questions
Q1) Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need
A)less formal planning because of constant changes.
B)to formalize planning because there is a great deal of complexity.
C)to establish a pattern of subordinate participation.
D)to evaluate company strengths and weaknesses.
Q2) Does strategic planning pay off?
Q3) In administrative cultures,there is a need for clearly defined authority and responsibility.
A)True
B)False
Q4) During the growth stage of a venture,entrepreneurs shift into a managerial style. A)True
B)False
Q5) Many research studies suggest that strategic planning influences a venture's survival.
A)True B)False
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Chapter 14: Valuation of Entrepreneurial Ventures
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) The discounted earnings method of valuation establishes A)potential earning power.
B)an appropriate rate for replacement.
C)expectancy of the business expenses.
D)future profits.
Q2) Return on investment
A)is net profit divided by investment.
B)provides a replacement value.
C)establishes a value for the business.
D)is equal to the current prime rate.
Q3) Emotional bias is not an underlying issue in valuing a business.
A)True
B)False
Q4) One of the most common reasons for acquiring a business is developing more growth-phase products.
A)True
B)False
Q5) Adjusted tangible book value is a popular method of valuation.
A)True
B)False
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Chapter 15: Harvesting the Entrepreneurial Venture
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Sample Questions
Q1) One advantage of an early-entry strategy for the younger generation succeeding the older generation of a family business is
A)normal mistakes are viewed as incompetence.
B)perspective of the environment is broadened.
C)successor's skills are judged with more objectivity.
D)skills specifically required by the business are developed.
Q2) An exit strategy is defined as that component of the business plan where an entrepreneur describes a method by which investors can realize a tangible return on their investment.
A)True
B)False
Q3) A type of successor who is interested in efficiency,internal control,and effective use of resources would be considered a(n)
A)managerial successor.
B)entrepreneurial successor.
C)opportunistic successor.
D)family successor.
Q4) What are the four critical steps to consider in developing a succession strategy in a family business?
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