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apex economics financing a business

Seed capital pays for which of the following?
Funding for research and development of a business idea
Startup capital pays for which of the following?
Operating expenses for the first year of a new business
Which of the following best states the difference between seed capital and startup capital?
Seed capital is for research and planning while startup capital is for operating expenses.
Match each type of financing with its source
Venture capital: Group of investors;
Angel investment: Wealthy individual; Business loan: Private bank.
Match each type of financing with the method used to obtain it.
Debt financing: Taking a loan from a bank.
Equity financing: Selling ownership in the company.
Public offering: Selling shares of stock on the open market.
Match each type of financing with its purpose.
Seed capital: Funding for research and development of a business idea;
Angel investment: Funding to get a new
business up and running;
Venture capital: Investment to achieve high returns quickly
Which of the following is a disadvantage of debt financing?
Banks are usually unwilling to fund a business in its early stages of development.
Which of the following best states one of the disadvantages of equity financing?
Selling stock gives the shareholders some control over the company.
Which of the following is an advantage of equity financing over debt financing?
It’s possible to raise more money than a loan can usually provide.
Which of the following is generally not required to get a business loan from a bank?
A wealthy startup investor
Which of the following best describes the purpose of angel capital?
To fund companies at the startup stage of development
Which of the following best states the expectations of venture capitalists?
Large returns in a short period of time
Which of the following enterprises would be most likely to attract an angel investor?
A brand new database design company
Which of the following enterprises would be most likely to attract a venture capitalist?
A one-year-old e-commerce company
Which of the following enterprises would be most likely to secure a large business loan?
A well-established real-estate developer
Which of the following happens when a company goes public?
It begins selling shares of stock in a public stock market
Which of the following accurately describes an initial public offering (IPO)?
The first sale of stock to the public
Which of the following best describes the purpose of an initial public offering
(IPO)?
To raise money to fund a company’s activities
Which of the following is one advantage for a company that goes public?
Money is raised without going into debt
Which of the following is one disadvantage for a company that goes public?
The pressure to make profits is increased.
Which of the following is one disadvantage for a company that goes public?
The company faces more government regulations
Put the steps in chronological order that a company goes through to make an
initial public offering.
1. Disclosure documents
are drawn up; 2. Paperwork is filed with the SEC; 3. Bankers recruit brokers to sell the stock; 4. Stock is sold to the public.
Put the steps in chronological order that a company goes through to make an
initial public offering.
1. The company’s lawyers prepare to disclose the company’s financial position; 2. The company files its prospectus with the Securities and Exchange Commission; 3. The company conducts an advertising campaign to hype the company to stock brokers; 4. The company’s stock is sold to the public in a stock exchange.
Put the steps in chronological order that a company goes through to make an initial public offering.
1. A prospectus is prepared; 2. The SEC is notified; 3. Investment bankers are recruited; 4. Stock is sold to the public.
Which of the following factors would be most likely to lead to an unsuccessful IPO?
Bearish market conditions
Which of the following factors would be most likely to lead to a successful IPO?
A history of good profits
Which of the following factors would be most likely to lead to an unsuccessful IPO?
A history of debt
Which of the following does not help explain why the Google IPO was successful?
Google’s history of borrowing large sums of money
Which of the following does not help explain why 800.com canceled its IPO?
It needed a lot of money to finance its operations.
Which of the following helps explain why Google’s IPO was successful while 800.com’s was not?
The timing of Google’s IPO was much better as investor confidence was higher

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