Entrepreneurial Finance Final Exam
Course Introduction
Entrepreneurial Finance explores the fundamental financial concepts, tools, and strategies essential for launching and scaling new ventures. The course covers topics such as opportunity recognition, business modeling, funding sources, valuation, financial forecasting, capital structure, and the unique financial challenges faced by startups and high-growth companies. Students will analyze case studies, develop financial plans, and learn how entrepreneurs make critical decisions when securing venture capital, angel investment, or alternative financing. By the end of the course, students will be equipped to assess venture viability, understand investor perspectives, and effectively manage the financial growth of entrepreneurial enterprises.
Recommended Textbook
Entrepreneurship 11th Edition by Robert D Hisrich
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15 Chapters
1225 Verified Questions
1225 Flashcards
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Chapter 1: The Entrepreneurial Mind-Set
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52 Verified Questions
52 Flashcards
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Sample Questions
Q1) Perceived desirability refers to the degree to which an individual has a favorable or unfavorable evaluation of the potential entrepreneurial outcomes.
A)True
B)False
Answer: True
Q2) Previous start-up experience is a good predictor of starting subsequent businesses.
A)True
B)False
Answer: True
Q3) Entrepreneurial Opportunities are defined as:
A) new market entry through entrepreneur action.
B) the entrepreneur's mental processes in deciding whether or not to act on a potential opportunity.
C) a feasibility assessment.
D) situations in which new goods, services, raw materials and organizing methods can be sold at greater than their production cost.
Answer: D
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Chapter 2: Corporate Entrepreneurship
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Sample Questions
Q1) Corporate ventures are totally independent units,hence the equity portion of the compensation is particularly difficult to handle.
A)True
B)False
Answer: False
Q2) For an organization with a traditional environment,it is best to facilitate an external process to establish an entrepreneurial environment.
A)True
B)False
Answer: True
Q3) An entrepreneur's recovery from grief is detrimental to society.
A)True
B)False
Answer: False
Q4) Generally,independent,venture-capital-based start-ups by entrepreneurs tend to outperform corporate start-ups significantly.
A)True
B)False Answer: True
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Chapter 3: Generating and Exploiting New Entries
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97 Flashcards
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Sample Questions
Q1) ________ are used to protect the owner of the technology from people imitating the technology.
A) Franchises
B) Switching costs
C) Patents
D) Distributors
Answer: C
Q2) Which of the following is not one of the three key stages of an entrepreneurial strategy
A) The generation of a new entry opportunity
B) Risk reduction strategies
C) A feedback loop
D) The exploitation of a new entry opportunity
Answer: B
Q3) The period of time when the environment is favorable for entrepreneurs to exploit a particular new entry is called the window of opportunity.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Creativity and the Business Idea
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Sample Questions
Q1) The Gordon method,like most other methods,begins with group members not knowing the exact nature of the problem.
A)True
B)False
Q2) The drawback with problem inventory analysis is that it is not effective in relating known products to suggested problems.
A)True
B)False
Q3) In the product development stage,consumer reaction to the physical product/service is determined.
A)True
B)False
Q4) Creativity tends to decrease with age.
A)True
B)False
Q5) Members of the distribution channel are usually good sources of ideas for new products.
A)True
B)False
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Chapter 5: Identifying and Analyzing Domestic and International Opportunities
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Sample Questions
Q1) According to the text,the most prevalent reason for mergers is:
A) taxation.
B) economies of scale.
C) currency fluctuations.
D) to combine complementary resources.
Q2) ________ has the main disadvantages of high transportation costs,trade barriers,and problems with local marketing agents.
A) Exporting
B) Turn-key projects
C) Licensing
D) Franchising
Q3) List the seven various aspects of culture.
Q4) The laws governing business arrangements have been standardized over 150 international legal systems.
A)True
B)False
Q5) There are three general classifications for exporting; direct,indirect and third-party.
A)True
B)False
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Chapter 6: Protecting the Idea and Other Legal Issues for the Entrepreneur
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Sample Questions
Q1) The three major parts of a patent application are the introduction,description and warranty sections.
A)True
B)False
Q2) A trademark is a distinguishing word,name,or symbol used to identify a product.
A)True
B)False
Q3) Licensing has significant value as a marketing strategy to holders of patents,trademarks,or copyrights.Describe licensing agreements in each of the three intellectual property facets: patents,trademarks,and copyright.
Q4) What type of agreement must always be in writing in order to be a legally binding contract
A) Client
B) Distributor
C) Supplier
D) Real estate
Q5) A trade secret is protected by state law.
A)True
B)False
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Chapter 7: The Business Plan: Creating and Starting the Venture
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Sample Questions
Q1) The introductory page of the business plan should contain the amount of financing needed.
A)True
B)False
Q2) Keep the goals and objectives as general as possible to make the business plan easier to control and implement.
A)True
B)False
Q3) The organization plan describes the business':
A) physical plant and machinery layout.
B) location as well as its plant(s).
C) system of distribution.
D) form of ownership.
Q4) List some of the advantages of using the Internet as a resource tool.
Q5) In writing the business plan,an entrepreneur should consider four perspectives: the investor,the customer,the employees,and themselves.
A)True
B)False
Q6) Identify the most common reasons why business plans fail.
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Chapter 8: The Marketing Plan
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Sample Questions
Q1) Focus groups:
A) should be led by the entrepreneur.
B) consist of 20 to 30 potential customers.
C) discuss information in a formal and standardized procedure.
D) are an informal method of gathering market information.
Q2) When making decisions about pricing strategy,the entrepreneur should consider only costs directly associated with the product and ignore overhead.
A)True
B)False
Q3) Which survey method results in the worst response rate
A) Telephone
B) Mail
C) Personal
D) Internet
Q4) Interviewing or surveying is the most common approach used to gather primary market data.
A)True
B)False
Q5) Describe the steps in the marketing plan flowchart.
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Chapter 9: The Organizational Plan
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Sample Questions
Q1) The corporation has the most continuity of the forms of business.
A)True
B)False
Q2) Sole proprietors can access two sources of capital-personal contributions from the entrepreneur and sale of stock.
A)True
B)False
Q3) The corporation can be created only by statute.
A)True
B)False
Q4) In a limited liability company:
A) laws governing its formation differ from state to state.
B) members may transfer their interests at any time.
C) members are not allowed to share income, profit, expense, deduction, loss and credit among themselves.
D) owners are called shareholders.
Q5) In an LLP,the transfer of interest of one limited partner is typically not allowed.
A)True
B)False
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Chapter 10: The Financial Plan
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Sample Questions
Q1) Negative cash flow:
A) results when cash receipts exceed cash payments.
B) can cause a firm to fail.
C) is included in the pro forma income statement.
D) is uncommon in new ventures.
Q2) Assets represent the net worth of the firm.
A)True
B)False
Q3) ________ is(are)added back to the pro forma sources and applications of funds statement because it does not represent and out-of-pocket expense.
A) Inventory
B) Depreciation
C) Dividends
D) Equipment purchases
Q4) ________ is the volume of sales needed to cover total variable and fixed costs.
A) Cash flow
B) Depreciation
C) Revenue
D) Break-even
Q5) Explain negative cash flow.How can a profitable firm have negative cash flow
Page 12
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Chapter 11: Sources of Capital
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Sample Questions
Q1) When a company receives an SBIR grant,any patent rights and software generated belong to:
A) the Federal Government.
B) the bank securing the loan.
C) the Small Business Administration.
D) the entrepreneur.
Q2) Most established R&D limited partnerships:
A) allow a minimum amount of equity dilution.
B) are successful.
C) increase, to some extent, the risks involved in the venture.
D) have weak financial statements due to lack of outside capital.
Q3) Briefly define debt financing and equity financing.Which key factors favor one type of financing over another
Q4) The most frequently used source of funds for start-ups is:
A) the entrepreneur's personal funds.
B) bank loans.
C) credit cards.
D) SBA loans.
Q5) Explain and define the four types of asset backed loans.
Q6) Identify and explain the three types of loans used for cash flow financing.
Page 13
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Chapter 12: Informal Risk Capital, Venture Capital, and Going Public
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Sample Questions
Q1) Venture capitalists tend to avoid investment proposals that are referred from lawyers and accountants.
A)True
B)False
Q2) Dividing net profit by total assets shows a firm's:
A) current ratio.
B) debt ratio.
C) net profit margin.
D) return on investment.
Q3) Early-stage financing is usually the least costly type of financing to obtain.
A)True
B)False
Q4) The securities of certain smaller companies going public must also be qualified under the ________ of each state where the securities will be offered.
A) Securities and Exchange Commission
B) Markets Improvement Act
C) Internal Revenue Service
D) blue sky laws
Page 14
Q5) Identify the main advantages and disadvantages of going public.
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Chapter 13: Strategies for Growth and Managing the Implication of Growth
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Sample Questions
Q1) Most entrepreneurs could benefit from implementing time management techniques.
A)True
B)False
Q2) The ________ strategy focuses on selling the firm's existing products to new groups of customers.
A) penetration
B) market development
C) product development
D) diversification
Q3) What benefits can an entrepreneur receive from better time management
Q4) The most often used method of transporting goods is:
A) air transport.
B) truck and rail transport.
C) barge transport.
D) tanker transport.
Q5) As a firm grows,higher volume increases production efficiency and increases its bargaining power with suppliers.
A)True
B)False
Q6) Explain the four types of entrepreneurs and firm growth. Page 15
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Page 16
Chapter 14: Accessing Resources for Growth From External Sources
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Sample Questions
Q1) Most ventures that are up for sale have good to very successful profit records.
A)True
B)False
Q2) A ________ is an arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance to standardized operating procedures.
A) joint venture
B) franchise
C) merger
D) leveraged buyout
Q3) Which of the following is the most significant advantage of an acquisition according to the text
A) Established image and track record
B) Location
C) Cost
D) Existing employees
Q4) A key concern in any merger or acquisition is the legality of the purchase.
A)True
B)False
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Chapter 15: Succession Planning and Strategies for
Harvesting and Ending the Venture
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Sample Questions
Q1) All of the following are benefits of an ESOP except:
A) the company can deduct contributions to an ESOP.
B) it offers a planned exit in writing.
C) it offers a unique incentive to employees.
D) it is relatively simple to establish.
Q2) The first principle in any successful turnaround is aggressive hands-on management.
A)True
B)False
Q3) An exit strategy should be put in place during the ________ stage of the business.
A) decline
B) maturity
C) expansion
D) start-up
Q4) Passing the business to an employee ensures the new principal is familiar with the business and the market.
A)True
B)False
Page 18
Q5) Explain the advantages and disadvantages of an ESOP.
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