Sources of business finance

Which of the statements about retained profits is false?

• You have unlimited amounts of money available

• Shareholders and employees could be frustrated because there is less profit to be 'shared out'

• You do not have to pay interest

• You are free to use it for any purpose

Which of the following is NOT usually considered a personal source of finance.

• Savings

• Redundancy payments

• Crowdfunding

• Credit card

Which of the following statements about personal sources of finance is false?

• Often cheaper in the long-term

• Less 'red tape' or delay in getting the cash

• Less personal financial risk for the entrepreneur

• May be harder to raise large amounts

An amount of money that is paid back within an agreed amount of time, with interest

• Bank loan

• Angel investment

• Overdraft

• Retained profit

What do Angel Investors and Crowdfunders have in common?

• They require something in return for their investment

• They charge interest on money invested in the buisness

• They become part-owners of the business

• They are incredibly wealthy

Case study: Apple plans to develop a prototype for an iPhones with a flexible display. Which of the following sources of finance would be most appropriate?

• Retained profits

• Selling shares

• Crowdfunding

• Bank loan

To focus on producing one thing to improve productivity is known as:

• Specialization
• International trade
• Absolute Advantage
• Supply and Demand

Japan increased its tariff on U.S. made cars by 50%. The U.S. raised the tariffs on Japan’s products such as cameras. Which of the following would result from the change in tariffs on cars and cameras?

• The standard of living would remain the same.

• The standard of living would decrease.

• The standard of living would be unpredictable.

• The standard of living would increase.

Which of the following statements about overdrafts is not true?

• Short term source of finance

• It's really a small, short term loan

• It's flexible, in that it can be used whenever it is needed

• Cheap - the interest rate is usually lower than that of a long-term bank loan

What is an advantage of owners' funds?

• There will be little or no interest
• You can pay in smaller installments
• They take a long time to arrange
• You don't have to pay it back