Entrepreneurial Finance
Mock Exam
Course Introduction
Entrepreneurial Finance explores the financial strategies, tools, and challenges unique to starting and growing new ventures. The course covers topics such as funding sources, venture capital, angel investing, financial forecasting, valuation of startups, deal structuring, and managing cash flow. Students will learn how entrepreneurs evaluate risk and return, make investment decisions, and negotiate with investors. Case studies and real-world examples provide practical insight into resource allocation, bootstrapping, and the financial life cycle of entrepreneurial enterprises.
Recommended Textbook
Entrepreneurship 10th Edition by Robert Hisrich
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15 Chapters
1220 Verified Questions
1220 Flashcards
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Page 2
Chapter 1: Entrepreneurship and the Entrepreneurial
Mind-Set
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52 Verified Questions
52 Flashcards
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Sample Questions
Q1) Within the moral-support network,most entrepreneurs indicate that their _____ are their biggest supporters.
A)mentors
B)friends
C)parents
D)spouses
Answer: D
Q2) Which among the following aspects affects an entrepreneur's perception of feasibility?
A)Locus of control
B)Learning style
C)Perceived desirability
D)Self-efficacy
Answer: D
Q3) Comprehension questions are designed to stimulate entrepreneurs to think about their own understanding.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Entrepreneurial Intentions and Corporate
Entrepreneurship
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54 Verified Questions
54 Flashcards
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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) It is important for an entrepreneur to understand all aspects of the environment.Part of this ability is reflected in the individual's level of creativity,which generally increases with age and education in most individuals.
A)True
B)False
Answer: False
Q3) A sufficient time for top management to be committed to corporate entrepreneurship is:
A)at least one year.
B)at least two years.
C)at least three years.
D)at least ten years.
Answer: C
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Chapter 3: Entrepreneurial Strategy: Generating and Exploiting New Entries
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) Explain why an entrepreneur might adopt an imitation strategy.
Answer: Reduces the risk by:
-reducing research and development costs
-reducing customer uncertainty about the firm/established reputation
-established market demand
-protected name and products (IP)
-access to help with financial,marketing and managerial issues
Q2) When an entrepreneur pursues a new entry opportunity only to find out later that he or she had overestimated his or her ability to create customer demand it is a(n):
A)technological error.
B)window of opportunity.
C)error of omission.
D)error of commission.
Answer: D
Q3) An entrepreneurial strategy is the set of decisions,actions,and reactions that protect the firm from new entrants.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Creativity and the Business Idea
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) The entrepreneur should always design and build his own webpage to maintain strategic control.
A)True
B)False
Q2) Elon Musk is also called as the Iron Man Entrepreneur.
A)True
B)False
Q3) How many stages are in the product planning and development process?
A)Two
B)Three
C)Four
D)Five
Q4) An online company's front-end operations involve integration of customer orders with distribution channels.
A)True
B)False
Q5) The product Spanx is an example of an ordinary innovation.
A)True
B)False
Q6) List,in order,the stages of the product planning and development process.
Page 6
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Chapter 5: Identifying and Analyzing Domestic and International Opportunities
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73 Verified Questions
73 Flashcards
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Sample Questions
Q1) Define political risk analysis,and identify and briefly describe the three major types of political risk.
A.Operating risk - risk of interference with the operations of the venture
B.Transfer risk - risk in attempting to shift assets or other funds out of the country
C.Ownership risk - the largest potential risk,where the country takes over the venture's property and employees
Q2) In selecting a foreign market the selection decision should be based on both past sales and competitive positioning as well as an assessment of each foreign market alternative.
A)True
B)False
Q3) Explain the major factors an entrepreneur needs to consider in choosing the best distribution channel in a foreign country.
Q4) List the seven various aspects of culture.
Q5) There are three general classifications for exporting;direct,indirect and third-party.
A)True
B)False
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Chapter 6: Intellectual Property and Other Legal Issues for the Entrepreneur
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) Which of the following is a contract that grants the owner protection,based on the appearance of an object?
A)Utility patent
B)Design patent
C)Plant patent
D)Disclosure document
Q2) Which of the following is true regarding the Sarbanes-Oxley Act?
A)It only applies to companies that make over $10 million in gross revenue.
B)Private companies are not included in this act.
C)The act does not cover fraud via TV or radio.
D)The act only covers a narrow range of corporate governance activity.
Q3) Entrepreneurs,because of their lack of understanding of intellectual property,ignore important steps that they should have taken to protect these assets.
A)True
B)False
Q4) To prevent others from copying his or her ideas,the entrepreneur should not send drawings with the patent application.
A)True
B)False
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Chapter 7: The Business Plan: Creating and Starting the Venture
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) The tendency among many entrepreneurs is to:
A)avoid planning.
B)not take initiative.
C)not market their product or services.
D)lose focus on the business plan.
Q2) The business plan presentation for potential investors:
A)should be presented only in writing.
B)should contain no negative projections.
C)should enable the entrepreneur to "sell" his or her business concept in a designated period of time.
D)should provide the entrepreneur's own perspective.
Q3) The business plan is designed to guide the entrepreneur:
A)through the distribution process.
B)through the first year of operations.
C)in the financing process.
D)in case of a change in ownership.
Q4) The organizational plan section of the business plan should describe the venture's form of ownership.
A)True
B)False
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Chapter 8: The Marketing Plan
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) The marketing system identifies the major interacting components,both internal and external to the firm.
A)True
B)False
Q2) _____ is the process of gathering information in order to determine who will buy the product and what is the most appropriate distribution channel.
A)Market segmentation
B)Marketing planning
C)Market mixing
D)Marketing research
Q3) The four variables that affect short-term marketing decisions are referred to as the:
A)marketing mix.
B)market segment.
C)marketing plan.
D)marketing system.
Q4) Focus groups typically consist of 10-12 potential customers.
A)True
B)False
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Page 10
Chapter 9: The Organizational Plan
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) A board of directors should not:
A)have members with unlimited terms.
B)have an odd number of members.
C)be comprised of external advisors.
D)be compensated with anything other than stock.
Q2) The corporation is considered a legal person that is taxable and absorbs liability.
A)True
B)False
Q3) To build a successful organization culture the entrepreneur:
A)should focus and not try out different things.
B)needs to remember that it is easier to change a person's attitude than it is to change the person's behavior.
C)should spend extra time in the hiring process.
D)must create a workplace where communication from the top down is encourageD.
Q4) Discuss the main advantages of an LLC over an S-Corp.
Q5) The limited liability company is automatically taxed as a corporation.
A)True
B)False
Q6) What are the main characteristics of an LLC?
Page 11
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Chapter 10: The Financial Plan
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89 Verified Questions
89 Flashcards
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Sample Questions
Q1) Large positive cash flows usually occur in the first months of a new venture.
A)True
B)False
Q2) Which of the following would be a source of funds?
A)An equipment purchase
B)Retiring a long term liability
C)Inventory
D)Personal funds of founders
Q3) The _____ budget is used to evaluate expenditures that will impact the business for more than one year.
A)production
B)operating
C)depreciation
D)capital
Q4) Cash flow is the same thing as profit.
A)True
B)False
Q5) Inventory is considered a source of funds because of the revenue it brings in.
A)True
B)False
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Chapter 11: Sources of Capital
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93 Verified Questions
93 Flashcards
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Sample Questions
Q1) 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.
Q2) The most frequently used source of short-term funds when collateral is available is:
A)SBA Microloans.
B)SBA 7(a)loans.
C)R&D limited partnerships.
D)commercial bank loans.
Q3) When borrowing from friends and family,the entrepreneur should avoid putting agreements in writing to avoid future disagreements.
A)True
B)False
Q4) Long-term debt financing is normally used to provide working capital to finance inventory,accounts receivable,and operation of the business.
A)True
B)False
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Chapter 12: Informal Risk Capital, Venture Capital, and Going Public
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) After the completion of the preliminary preparation,the first public offering normally requires three to six months to prepare,print,and file the registration statement with the SEC.
A)True
B)False
Q2) The best source of funds for first-stage financing is the:
A)private venture capital companies.
B)small business investment companies.
C)informal risk capital market.
D)public equity market.
Q3) Early-stage financing is usually the least costly type of financing to obtain.
A)True
B)False
Q4) The underwriter is of critical importance in establishing the initial price for the stock of the company.
A)True B)False
Q5) The debt ratio is calculated by dividing total liabilities by total inventory. A)True B)False
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Chapter 13: Strategies for Growth and Managing the Implication of Growth
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89 Verified Questions
89 Flashcards
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Sample Questions
Q1) Horizontal integration occurs at the same level of the value-added chain but simply involves a different,but complementary,value-added chain.
A)True
B)False
Q2) What benefits can an entrepreneur receive from better time management?
Q3) Which principle requires the entrepreneur to focus on the most important issues,even when under pressure?
A)Principle of desire
B)Principle of reanalysis
C)Principle of effectiveness
D)Principle of prioritized planning
Q4) The principle of reanalysis requires the entrepreneur to categorize his or her tasks by their degree of importance and then to allocate time to tasks based on this categorization.
A)True
B)False
Q5) Most entrepreneurs could benefit from implementing time management techniques.
A)True
B)False
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Chapter 14: Accessing Resources for Growth From External Sources
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) Terminating a franchise results in more lawsuits than any other issue in franchising.
A)True
B)False
Q2) The disclosure document provided by the franchisor:
A)is required by the FTC.
B)will state a guaranteed yearly return for the franchisee.
C)is done on a voluntary basis.
D)has information that is certified by a CPA and the FTC so it is always a reliable source of data.
Q3) The bootstrap purchase of assets:
A)is a direct purchase of the entire assets of a firm.
B)means the entrepreneur purchases a small percentage of a firm for cash.
C)frequently results in a long-term capital gain to the seller.
D)results in double taxation.
Q4) The U.S.Department of Justice frequently issues guidelines for different types of mergers.
A)True
B)False
Q5) What are the 4 major factors in joint venture success?
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Chapter 15: Succession Planning and Strategies for
Harvesting and Ending the Venture
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68 Verified Questions
68 Flashcards
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Sample Questions
Q1) In 2014 both business and non-business bankruptcy filings were:
A)Below 1 million
B)About 1 million
C)About 1.5 million
D)More than 2 million
Q2) Presently there are about 11,500 ESOP companies in the United States.
A)True
B)False
Q3) Chapter 11 bankruptcy allows a firm to reorganize and prepare strategies to improve future profits.
A)True
B)False
Q4) An ESOP:
A)is a device to transfer the business to a small group of key loyal employees.
B)eliminates the need to perform a complete valuation of the venture.
C)motivates employees because they realize they are working for themselves.
D)removes the need for a continuous performance appraisal.
Q5) Bankruptcy should be a last resort for the entrepreneur.
A)True
B)False
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