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Exam 12: A Firms Sources of Financing

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Question 21

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Pieter owns a construction company and would like to purchase a mobile construction office.The bank would likely offer him a _____ mortgage.

A) chattel
B) real estate
C) revolving
D) term

E) A) and B)
F) C) and D)

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Question 22

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List the "5 Cs of Credit" and explain their impact on borrowing ability.

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The "5 Cs of credit" are:
∙
The borrower...

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Question 23

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A business with potential for large profits, as opposed to high growth potential, has many more possible sources of financing than does a business that offers only unattractive returns.

Kamogelo's customers have been a little slow in paying their invoices, and he is short on cash to pay his quarterly taxes.Kamogelo should consider:

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -The sale of a business's equity to select individuals.

The main advantage of using credit cards for financing is the relatively low interest rate compared to bank loans.

Crowdfunding works strictly with individual donations made over the Internet.

For entrepreneurial ventures with the potential for becoming significant businesses, initial public offerings have been the fastest-growing source of financing over the past two decades.

Companies that have business dealings with a new business are possible sources of funds for financing inventory and equipment.

Match the term with its definition. a.Asset-based loan b.Basis point c.Chattel mortgage d.Equipment loan e.JIBAR (Johannesburg Inter-Bank Agreed Rate) f.Line of credit g.Prime rate h.Purchase-order financing i.Term loan -An informal agreement between a borrower and a bank as to the maximum amount of funds the bank will provide at any one time.

Small businesses frequently run into problems when:

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -What are the four basic factors that determine how a business is financed?

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -Private individuals who invest in others' entrepreneurial ventures.

Match the term with its definition. a.Asset-based loan b.Basis point c.Chattel mortgage d.Equipment loan e.JIBAR (Johannesburg Inter-Bank Agreed Rate) f.Line of credit g.Prime rate h.Purchase-order financing i.Term loan -An instalment loan from a seller of machinery used by a business.

Commercial investors are sometimes called business angels.

A line of credit is the _____ amount of credit a bank will provide a borrower at any one time.

JIBAR is _____ the prime rate.

Sibusiso left the corporate rat race to start his own business that will allow him to earn a small income while providing plenty of time to pursue his love of pottery making.He does not expect either growth or high profits.Sibusiso's prospects for attracting outside financing are:

Suzaan has decided to raise working capital for her upscale boutique business which currently has four locations and is considering franchising the concept in the next few years.Because of the current company organisation and anticipated future plans, the most likely form of financing would be ________.

Before accepting money from a business angel, the entrepreneur should: