Entrepreneurship introduces students to the fundamental concepts, skills, and mindset required to identify, develop, and launch new business ventures. The course explores the entrepreneurial process, from idea generation and market research to business planning and financing. Students will learn about risk assessment, innovation strategies, and the importance of adaptability and leadership in a dynamic business environment. Through case studies, interactive projects, and guest lectures from experienced entrepreneurs, students gain practical insights into creating and sustaining successful enterprises in various industries.
Recommended Textbook
Entrepreneurial Finance 4th Edition by
J. Chris Leach
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15 Chapters
1018 Verified Questions
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Page 2
Chapter 1: Introduction and Overview
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Sample Questions
Q1) A project requires an initial investment of $1,000,000.In one year,there is a 40% chance of a $950,000 return;a 50% chance of a $1,200,000 return;and a 10% chance of a $2,000,000 return.What is the project's expected return one year from now?
A)12.8%
B)15.5%
C)18.0%
D)38.3%
Answer: C
Q2) Environmental commerce,or e-commerce,involves the use of electronic means to conduct business online.
A)True
B)False
Answer: False
Q3) In 1982,Harry Dent identified several major or megatrends shaping U.S.society and the world.
A)True
B)False
Answer: False
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3
Chapter 2: From the Idea to the Business Plan
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Q1) SWOT analysis should at the very least consider which of the following areas:
A)experience/expertise
B)reputation value
C)first mover
D)a and b
E)a,b,and c
Answer: E
Q2) Determine the return on assets (ROA)for a venture with the following financial information: revenues = $500,000;net profit = $70,000;and asset turnover =2.00 times.
A)10%
B)14%
C)20%
D)28%
E)34%
Answer: D
Q3) Business changes resulting in higher net profit always increases ROA.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Organizing and Financing a New Venture
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Q1) Which of the following numbers of shareholders is allowed in a Subchapter S (or S)corporation business form?
A)74
B)125
C)130
D)500
Answer: A
Q2) The average tax rate for a corporation with taxable income of $75,000 would be:
A)15.0%
B)18.3%
C)20.0%
D)22.7%
E)25.0%
Answer: B
Q3) The highest marginal income tax rate for taxable personal income is 45 percent.
A)True
B)False
Answer: False
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Chapter 4: Measuring Financial Performance
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Sample Questions
Q1) Startup financing (e.g. ,financing from business angels and venture capitalists)usually occurs during the development stage in a new venture's life cycle.
A)True
B)False
Q2) "Contribution profit margin" is the portion of the sale of a product that contributes to covering the cash fixed costs.
A)True
B)False
Q3) Which of the following is not a characteristic of marketable securities?
A)short-term
B)illiquid
C)high-quality
D)interest-bearing
Q4) Long-term,non-cancelable leases whereby the owner receives payments that cover the cost of the equipment plus a return on investment in the equipment is known as a capital lease.
A)True
B)False
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Chapter 5: Evaluating Financial Performance
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Sample Questions
Q1) Commercial banks are important users of financial ratios and measures during the development and startup stages of ventures.
A)True
B)False
Q2) Which of the following is measured by dividing the average daily cost of goods sold into the average inventory?
A)sale-to-cash conversion period
B)inventory-to-sale conversion period
C)purchase-to-payment conversion period
D)cash conversion cycle
Q3) Investment bankers are users of financial ratios and measures of ventures primarily during the rapid-growth stage relative to the development and startup stages.
A)True
B)False
Q4) "Net cash burn" occurs when cash burn exceeds cash build in a specified time period.
A)True
B)False
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Chapter 6: Financial Planning:short Term and Long Term
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Q1) Increases in accounts payable and notes payable are examples of spontaneously generated funds.
A)True
B)False
Q2) Determine a venture's sustainable growth rate based on the following information:sales = $1,000,000;net income = $150,000;common equity at the end of last year = $520,000;and the dividend payout percentage = 20%.
A)10%
B)16%
C)20%
D)24%
E)30%
Q3) Seed financing is generally associated with which one of the following life cycle stages:
A)development stage
B)startup stage
C)survival stage
D)rapid-growth stage
E)maturity stage
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Page 8
Chapter 7: Types and Costs of Financial Capital
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Q1) Corporate bonds might involve which of the following types of "premiums."
A)inflation premium
B)default risk premium
C)liquidity premium
D)maturity premium
E)all of the above
F)none of the above
Q2) Which of the following describes the interest rate charged by banks to their highest quality customers?
A)real rate
B)nominal rate
C)risk-free rate
D)prime rate
E)inflation rate
Q3) Which of the following is an example of rent on financial capital?
A)interest on debt
B)dividends on stock
C)collateral on equity
D)a and b
E)a,b,and c
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Chapter 8: Securities Law Considerations When Obtaining Venture Financing
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Sample Questions
Q1) In the Ninth Circuit Court of Appeals decision on SEC v.Murphy,all of the following were considerations in determining an offering to be a private placement except:
A)there must be an arm's length relationship between the issuer of the security and the prospective purchaser
B)the number of offerees must be limited
C)the size and the manner of the offering must not indicate widespread solicitation
D)the offerees must be sophisticated
E)some relationship between the offerees and the issuer must be present
Q2) The efforts to regulate the trading of securities takes place under which of the following securities laws?
A)Securities Act of 1933
B)state "blue-sky" laws
C)Securities and Exchange Act of 1934
D)Investment Company Act of 1940
E)Investment Advisers Act of 1940
Q3) A Regulation D Rule 505 offering is limited to 35 accredited investors.
A)True
B)False
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Chapter 9: Valuing Early-Stage Ventures
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Sample Questions
Q1) "Required cash" is?
A)the cash needed to pay interest expense
B)a valuation method for early stage ventures
C)cash needed to cover a venture's day-to-day operations
D)cash available to pay as a dividend
Q2) The purpose of the stepping stone year is?
A)to assure that there is sufficient required cash
B)to assure that future dividends are constant
C)to assure that investment flows are consistent with terminal growth rates
D)to allow for a final year of higher-than-sustainable growth
Q3) Estimate a venture's cash flow expected next year based on the following information:current year's net sales = $400,000;terminal value = $500,000;constant future growth rate = 10%;and venture investors' required rate of return = 20%.
A)$20,000
B)$40,000
C)$50,000
D)$60,000
E)$80,000
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Chapter 10: Venture Capital Valuation Methods
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Q1) In staged financing,the expected effect of future dilution is borne by both founders and the investors currently seeking to invest.
A)True
B)False
Q2) To obtain the percent ownership to be sold in order to expect to provide the venture investor's target return,one must consider the:
A)cash investment today and the cash return at exit multiplied by the venture investor's target return,thendivide today's cash investment by the venture's NPV B)cash investment today and the cash return at exit discounted by the venture investor's target return,thendivide today's cash investment by the venture's NPV
C)cash investment today and the cash return at exit discounted by the venture investor's target return,thenmultiply today's cash investment by the venture's NPV
Q3) The VSCS is like a post-money version of the DDA.
A)True
B)False
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Chapter 11: Professional Venture Capital
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Q1) Internet financing led the record level of venture investing in the 1999-2000 time period.
A)True
B)False
Q2) "Due diligence," in venture investing context,is the process of ascertaining the viability of a business plan.
A)True
B)False
Q3) Which of the following is not one of the four likely outcomes of the venture firm's screening process?
A)seek the lead investor position
B)seek a non-lead investor position
C)close the capital fund
D)refer the venture to more appropriate financial market participants
E)issue a standard letter of rejection
Q4) Individuals and families are more important suppliers of venture capital relative to finance and insurance firms.
A)True B)False
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Chapter 12: Other Financing Alternatives
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Q1) The 7(a)loan traditionally has been the SBA's primary loan program
A)True
B)False
Q2) Small Business Investment Companies (SBICs)are lenders in which of the following SBA credit programs?
A)7(a)loan
B)504 loan
C)microloan
D)venture capital loan
E)credit card loan
Q3) Commercial banks,credit unions,and/or financial services firms are lenders in which of the following SBA credit programs?
A)7(a)loan
B)504 loan
C)microloan
D)venture capital loan
E)credit card loan
Q4) The Small Business Administration was created by an Act of Congress in 2003.
A)True
B)False
Page 14
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Chapter 13: Security Structures and Determining Enterprise
Values
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Q1) As the underlying stock price increases in value,a put option to sell it becomes more valuable.
A)True
B)False
Q2) An option that can be exercised only at a specific set of dates is called a:
A)forward contract
B)lookback option
C)American-Style option
D)European-Style option
E)Bermuda-Style option
Q3) Which of the following stock can be structured to assure the shareholder that they will share in the payment of any dividends to common stockholders?
A)paid in kind preferred stock
B)cumulative preferred stock
C)participating preferred stock
D)convertible preferred stock
E)non-cumulative preferred stock
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Page 15
Chapter 14: Harvesting the Business Venture Investment
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Q1) A leveraged buyout (LBO)takes place when the purchase price of a firm is financed largely with debt financial capital.
A)True
B)False
Q2) If venture investors invest $1,000,000 now,will receive 50% of the exit value,and expect a 20% compounded rate of return on their investment,what will be the amount of the exit value at the end of two years?
A)$1,000,000
B)$1,440,000
C)$2,880,000
D)$5,000,000
E)$5,760,000
Q3) The difference between what the investment bank gets from selling securities to public investors and what they pay to the issuing firm is known as:
A)IPO underpricing
B)due diligence
C)firm commitment
D)best efforts
E)underwriting spread
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