Financial Aspects of Business (Entre)

Which of the following is a disadvantage of equity capital?

• You must contend with the investor as a co-owner of the business

• You must repay or face the possibility of bankruptcy

• Your credit standing may be lowered by the use of equity capital

• You must offer collateral in the form of valuable property

Which of the following best describes a credit union?

• A members-only cooperative created by labor unions or groups of employees

• A public establishment for the custody, loan and exchange of funds

• A community organization providing business owners with education and donations

• A government foundation created to improve people’s credit, particularly the credit of business owners

Colin is borrowing money from his uncle to start his business. In order to help avoid misunderstandings regarding the loan, Colin should do which of the following?

• Hire a lawyer

• Involve other family members as witnesses

• Hire his uncle as the financial director of the business

• Put all agreements in writing

Which of the following are the largest lending agencies in the United States?

• Business owners

• Suppliers

• Banks

• Credit unions

Which of the following best describes capital?

• The monetary funds invested in a project

• What equipment a business needs

• What a business is worth

• The level of experience the manager of a business has

Which of the following is NOT a type of business risk?

• Human risk

• Economic risk

• Routine risk

• Natural risk

Some businesses avoid risks by doing which of the following?

• Keeping records of all transactions and customers

• Considering market research

• Purchasing multiple insurance policies

• Only doing business online

Employee screening and training are considered which method of handling risk?

• Risk transfer

• Risk avoidance

• Risk retention

• Risk prevention and control

Which of the following is TRUE of external theft?

• It is a routine risk which is always preventable

• It is an economic risk and should be covered by insurance

• It is the costliest human risk to businesses

• It is the only risk which businesses have full control over

Which type of risks occur from fluctuations in business conditions?

• Routine risks

• Economic risks

• Human risks

• Natural risks