Chapter 6

1. Typically called "____________", private investors will usually leave the management of the business to the owner.

• angels

• loaners

• funders

2. A friend of an entrepreneur who provides funding to a new business is a private investor. (Friend is inside circle of friends.)

• true

• false

3. Most financial institutions require that consumer loans be secured by collateral. (A classic example of collateral is a home.)

• true

• false

4. Entrepreneurs are the backbone of the American economy.

• true
• false

5. A home equity loan includes a calculation of

• total of all assets only

• total of all liabilities only

• home's net worth = home value - mortgage loan

6. Shark Tank investors are like

• venture capitalist

• regular banks

• commercial banks

7. Payroll expenses are part of start-up costs.

• true
• false

8. A commercial finance company provides loans to an average person.

• true

• false

9. What is the highest percentage of market value a home equity loan will provide?

• 80 percent
• 60 percent
• 50 percent
• 20 percent

10. Bank will offer a home equity loan of 80% of home's net worth. What is it if home's value is $200,000 and mortgage loan is $100,000.

• $100,000

• $80,000

• $200,000

• $160,000