Posted: November 26th, 2015

Multiple questions

Multiple questions

Q1. The period of time allowed for the subconscious to reflect on information that has been gathered is called:
a. marination
b. reflection
c. illumination
d. incubation

Q2. The _____ specialized a business is, the _____ the likelihood that a bargain may be found.
a. more; greater
b. more; lesser
c. less; greater
d. less; lesser

Q3. In a competitive profile matrix, a factor that represents a major strength to a company would receive a rating of:
a. 1
b. 2
c. 3
d. 4

Q4. Today, home-based businesses:
a. are confined primarily to the traditional areas of arts and crafts.
b. are booming because of their low start-up costs, flexibility, and ability to take advantage of modern technology.
c. are so small that they produce negligible incomes for their owners.
d. all of the above.

Q5. Small businesses:
a. account for about 99 percent of all businesses in the United States.
b. employ 53 percent of the nation’s private sector work force.
c. create more jobs than do large companies
d. produce 51 percent of the U.S. GDP.
e. all of the above

Q6. A rule of thumb for valuation of a business is to offer the owner 2.7 times the company’s earnings.
a. true
b. false

Q7. A primary difference between an S-corporation and a C-corporation is that:
a. the C-corporation offers the advantage of limited liability to its stockholders, and an S-corporation does not.
b. the C-corporation itself pays taxes based on a corporate tax structure, and the S-corporation passes all of its profits (or losses) through to its individual shareholders where they are taxed at the individual rate.
c. the founders of an S-corporation are protected from the potential loss of control that occurs when the founders of C-corporations sell shares of stock to raise the capital needed for growth.
d. S-corporations are much easier and less expensive to form than C-corporations, which require their founders to file a certificate of incorporation with the state and to pay incorporation fees.

Q8. The Uniform Franchise Offering Circular (UFOC):
a. is not required from franchisers with fewer than 10 franchised outlets.
b. must be checked, verified, and approved by the Federal Trade Commission before franchisers can use it.
c. is designed to provide franchisees with important information about a franchise and must be given to franchisees before they sign a franchise contract or pay any money to the franchiser.
d. All of the above.

Q9. Studies of the small business failure rate suggest that after six years, about __________ percent of new businesses will have failed.
a. 33
b. 49
c. 63
d. 82

Q10. Bizcomp found the average sale price for small businesses across the United States was _____ times earnings.
a. 15
b. 25
c. 0.05 to 0.10
d. 2.7

Q11. __________ is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.
a. Innovation
b. Creativity
c. Entrepreneurship
d. Brainstorming

Q12. A company’s __________ spell(s) out the ends toward which a company is moving; its __________spell(s) out how it plans to reach those ends
a. mission, goals, and objectives; core competencies
b. strategy; core competencies
c. mission, goals and objectives; strategy
d. core competencies; strategy

Q13. _________ are negative internal factors that act as roadblocks in a company’s quest to meet its mission, goals, and objectives.
a. Strengths
b. Weaknesses
c. Opportunities
d. Threats

Q14. Which form of ownership has the greatest ability to attract capital?
a. sole proprietorship
b. partnership
c. corporation
d. S-corporation

Q15. Bennett is considering buying a business and has collected the following information: Projected net earnings for next year = $117,000; rate of return on a similar risk investment = 27%. Hoping to use the market approach, Bennett has located three similar companies, whose stock is publicly traded. Their price-earnings ratios are 2.84, 2. 95, and 3.12. Under the market approach, how much is the business worth?
a. $117,000
b. $433,333
c. $93,822
d. $347, 490

Q16. The essence of what a franchisee buys from a franchiser is ___________.
a. a steady source of capital.
b. the franchiser’s experience
c. a marketing system.
d. an efficient building design.

Q17. Locating franchised outlets in high-traffic, non-traditional locations such as airports, hospitals, zoos, sports arenas, and others is based on the principle of:
a. conversion franchising
b. intercept marketing
c. master franchising
d. piggyback franchising

Q18. The primary motivating force behind entrepreneurs is:
a. money
b. fame.
c. achievement.
d. recognition.

Q19. Approximately __________ percent of the small companies that are up for sale ever get sold.
a. 25 to 33
b. 40 to 50
c. 65 to 73
d. 80 to 85

Q20. __________ partners cannot take an active role in the operation of a business, but if the business fails, they stand to lose only what they have invested in the company.
a. General
b. Limited
c. Master
d. Insulated

Q21. The limited liability company (LLC) offers entrepreneurs
a. the tax advantages of a partnership.
b. the legal protection of a corporation.
c. maximum flexibility in the way it operates.
d. all of the above

Q22. Studies show that more than __________ percent of all business acquisitions fail to meet the buyer’s expectations.
a. 10
b. 30
c. 50
d. 70

Q23. By setting its products apart from those of competitors, Straus Family Creamery, a family business that produces organic, all-natural dairy products, is using which strategy?
a. low-cost
b. differentiation
c. focus
d. maintenance

Q24. How many of the following characteristics may a limited liability company (LLC) have: 1) limited liability, 2) continuity of life, 3) free transferability of interest, and 4) centralized management?
a. only 1
b. no more than 2
c. no more than 3
d. all 4, if the owners choose

Q25. Which element of the strategic management process addresses the first question of any business venture: “What business am I in?”
a. vision
b. mission
c. SWOT analysis
d. Strategy

Q26. Which of the following statements concerning franchising is true?
a. Franchise sales total more than $1 trillion.
b. Franchises account for 44 percent of all retail sales.
c. A new franchise opens somewhere in the world every six-and-a-half minutes
d. All of the above.

Q27. Women-owned businesses have a lower survival rate than U.S. businesses overall.
a. true
b. false

Q28. Start-up companies can expect to outgrow their capital base each time sales increase by _____ percent.
a. 10-20
b. 20-30
c. 30-40
d. 40-50

Q29. The broad, long-range attributes that a business seeks to accomplish are called:
a. goals
b. objectives
c. strategies
d. key success factors

Q30. In which of the following countries is entrepreneurial activity most prevalent?
a. Japan
b. Germany
c. Great Britain
d. United States

Q31. Which of the following statements about choosing a form of ownership is false?
a. The choice of a form of ownership can have far-reaching effects on almost every aspect of a business and its owner.
b. Each form of ownership has its own unique set of advantages and disadvantages
c. The S-corporation is the best form of ownership for entrepreneurs.
d. All of the above.

Q32. The primary reason most entrepreneurs choose to incorporate their businesses is:
a. to gain the benefit of limited liability for the corporation’s stockholders.
b. the ability of the business to continue indefinitely.
c. the ability to avoid the disadvantage of double taxation.
d. that the corporation offers the least expensive and least complex process of business formation.

Q33. _________ is the difference between an established, successful business and one that has yet to prove itself.
a. Goodwill
b. Opportunity cost
c. Equity
d. Consideration

Q34. The first rule of negotiating is never confuse price with value.
a. true
b. false

Q35. A corporation doing business in a state other than the one in which it is incorporated is called a __________ corporation
a. domestic
b. alien
c. foreign
d. closely-held

Q36. A company whose owner wants to sell to her employees by establishing an employee stock ownership plan (ESOP) should:
a. be profitable
b. have at least 15 to 20 employees
c. have an annual payroll of at least $500,000
d. all of the above

Q37. Which of the following statements concerning core competencies is false?
a. Core competencies are a unique set of capabilities that a company develops in key operational areas that allow it to vault past competitors.
b.
b. Small companies’ core competencies often originate from the advantages their size offers.

c. Entrepreneurs must constantly change their core competencies.
d. Developing core competencies does not necessarily require a company to spend a great deal of money.

Q38. Every partnership must have at least one __________ partner.
a. general
b. limited
c. silent
d. master

Q39. Which of the following factors acts as fuel to feed the nation’s entrepreneurial fire?
a. Greater opportunities for entrepreneurial education
b. The shift from an industrial economy to a service economy
c. Increasingly powerful technological advancements that are available at affordable prices.
d. All of the above.

Q40. Most entrepreneurs work ______ hours per week.
a. 1-39
b. 40-50
c. 50-60
d. more than 60

Q41. Increasingly, entrepreneurs are starting businesses because they see an opportunity to make a difference in a cause that is important to them.
a. true
b. false

Q42. You are using the excess earnings approach to determine the value of a business you have determined to be a “normal risk” business. What “years of profit” figure should you use to estimate the value of the intangible assets?
a. 1 to 2
b. 3 to 4
c. 6 to 7
d. 10 to 12

Q43. The most valuable financial resource any small business can have is:
a. cash
b. accounts receivable
c. bank line of credit
d. retained earnings

Q44. When evaluating the assets a company owns, a prospective buyer should be most interested in their __________ value.
a. book
b. par
c. market
d. stated

Q45. In most business sales,
a. the buyer pays the seller 100 percent of the purchase price at the closing of the deal.
b. the seller finances 100 percent of the purchase price over a 30-year time period.
c. the buyer makes a down payment up front with the seller financing the remaining 30 to 80 percent of the purchase price over three to ten years.
d. the actual price the buyer pays is much more important than the structure and the terms of the deal.

Q46. Which of the following factors plays a role in determining the rate of return used to value a business using one of the earnings approaches?
a. the basic, risk-free rate of return
b. an inflation premium
c. the risk allowance for investing in that particular business
d. all of the above

Q47. A paradigm is:
a. a tool used for determining the value of a business that is for sale.
b. a preconceived idea of how the world should operate.
c. a rule for overcoming the barriers to creativity.
d. a tool entrepreneurs use to launch successful business ventures.

Q48. Given the fact that most small companies lack the resources to reach a national or international market, many entrepreneurs choose to pursue a __________ strategy in which they specialize in meeting the needs of a specific target market segment.
a. low-cost
b. differentiation
c. focus
d. maintenance

Q49. The price paid for a business typically is ________ the terms on which the purchase was made.
a. more important than
b. less important than
c. about as important as
d. None of the above.

Q50. Which of the following items should be included on a business buyer?s checklist
a. Inventory
b. Tax returns
c. Lawsuits
d. All of the above

Q1. A survey by the Yellow Pages Publishers Association found that _____ percent of businesses had received bogus bills for Yellow Pages advertising.
a. 20
b. 33
c. 50
d. 80

Q2. A small music store sets the prices of most of its CDs at three levels: $12.99, $14.99, and $16.99, even using brightly-colored labels to indicate each price level. This music store is using:
a. leader pricing
b. price lining
c. uniform delivered pricing
d. bundling

Q3. __________ is a technique in which a business marks down the customary price of a popular item in an attempt to draw more customers.
a. leader pricing
b. price lining
c. uniform delivered pricing
d. bundling

Q4. Paulette Sanchez has just received an invoice for merchandise she purchased from one of her company’s suppliers. The invoice is for $1,892.78 and includes “2/10, net 30” terms, which mean that:
a. Paulette must pay the invoice within 30 days; otherwise, she will incur a 2 percent penalty for every 10 days the bill is past due.
b. Paulette must pay 2 percent of the invoice ($37.86) within 10 days and must pay the remaining balance within 30 days.
c. Paulette can pay just $1,854.92 if she pays the invoice within 10 days; otherwise, the full invoice ($1, 892.78) is due within 30 days.
d. Paulette can pay just $1,703.50 if she pays the invoice within 2 days; otherwise, the full invoice ($1, 892.78) is due within 30 days.

Q5. When a customer’s account becomes past due, a business owner should:
a. not bother the customer over the past due bill, even if it is a sizeable one, for fear of alienating the customer and losing him or her forever.
b. take immediate action in the form of either a letter or a telephone call that serves as a polite reminder that the bill is due and asks for payment.
c. immediately turn the account over to a collection agency.
d. call the “deadbeat” customer and threaten to ruin his or her credit by telling the customer’s other suppliers about the past due account.

Q6. A business plan:
a. should be at least 50 pages long to prove to potential lenders and investors that an entrepreneur has researched the business opportunity thoroughly.
b. should follow a standard format so that potential lenders and investors know where to find what they are looking for.
c. does not guarantee success, but it does improve the chance of succeeding.
d. all of the above

Q7. One extensive study of salespeople found that __________ percent of all salespeople have the ability to sell and are selling the “right” product or service.
a. 20
b. 40
c. 60
d. 80

Q8. A typical manufacturing company pays __________ percent of the value of its inventory to cover the cost of borrowed money, warehouse space, materials handling, staff, lift-truck expenses, and fixed costs.
a. 10 to 15
b. 25 to 30
c. 35 to 40
d. 50 to 55

Q9. A business plan that an entrepreneur is planning to present to someone outside the company should:
a. be visually appealing, including color charts, figures, and diagrams to illustrate key points.
b. be free of spelling and grammatical errors.
c. include a table of contents that makes it easy for the reader to navigate the plan.
d. all of the above.

Q10. Annette Tosca is planning to launch a retail gift store and has been busy gathering financial information for her business plan. If Annette knows that the net profit margin for the typical gift store is 6.3 percent, what sales level must she achieve to reach her target net income of $28,000?
a. $29,882
b. $176,400
c. $204,400
d. $444,444

Q11. __________ are a form of World Wide Web advertising that involves attaching a small program to users’ computers whenever they visit a Web site which creates an electronic footprint of users and sends pop-up ads that would be of interest to them.
a. Banner ads
b. Push technology ads
c. Cookies
d. Full-page ads

Q12. __________ involves the exchange of goods and services for other goods and services rather than for cash and is an effective way to conserve valuable cash.
a. Speculation
b. Arbitrage
c. Barter
d. Leasing

Q13. Radio advertisements reach __________ percent of all customers each week.
a. 25
b. 55
c. 75
d. 95

Q14. Although banner ads produce a click-through rate of just __________ percent, they remain a popular form of advertising on the World Wide Web
a. less than 10
b. 10 to 25
c. 25 to 50
d. more than 50

Q15. The __________ ratio expresses the relationship between the capital contributions to a company from its creditors and those of its owners; it measures what a business “owes” to what it “owns.”
a. current
b. debt
c. debt to net worth
d. times interest earned

Q16. In the __________ stage of the product life cycle, sales volume continues to rise, but profit margins peak and then begin to decline as competitors enter the market.
a. growth and acceptance
b. maturity
c. saturation
d. decline

Q17. The Downtown Hobby Shop expects net daily sales of $1200, with the cost of goods sold at $750 and total expenses of $250. Variable expenses, including cost of goods sold, is estimated at $800, with fixed expenses of $200. What is the contribution margin?
a. 33%
b. 25%
c. 27%
d. 75%

Q18. One study found that __________ percent of small business owners analyzed their companies’ financial statements as part of the managerial planning and decision making process.
a. 11
b. 21
c. 36
d. 48

Q19. To get external financing, every business plan must pass three tests. The __________ test involves proving to lenders and investors that the business offers a high probability of repayment or an attractive rate of return.
a. reality
b. competitive
c. value
d. market

Q20. The heart of the cash budget is the __________ forecast.
a. income
b. profit
c. sales
d. accounts receivable

Q21. The “big three” of cash management are:
a. sales, accounts receivable, and accounts payable
b. sales, inventory, and net income
c. inventory, accounts payable, and accounts receivable
d. accounts payable, accounts receivable, and sales

Q22. Vern Schlichter, owner of The Import Shop, a garage specializing in foreign auto repairs wants to make sure that the hourly price he charges for his company’s repair service will cover his costs and generate the desired profit. Using his most recent income statement, Vern estimates that he and his employees spent 8,465 hours repairing cars at a total cost (excluding parts) of $281,461. If Vern’s target net profit margin is 20 percent, what price per hour should he set for labor (excluding parts)?
a. $26.60
b. $39.89
c. $41.56
d. $166.25

Q23. Proving that a profitable market exists involves two steps:
a. showing customers exist and documenting their buying power.
b. showing customers are interested and documenting market claims.
c. showing customer demographics and documenting the buying cycle.
d. showing customer locations and documenting their average income.

Q24. The typical direct mail advertising campaign produces a response rate of __________ percent.
a. 2
b. 7
c. 16
d. 24

Q25. A(n) __________ is an arrangement with a company’s bank in which the bank maintains a post office box near the company’s key customers; several times each day, the bank collects payments those customers send to the post office box and deposit them immediately into an interest-bearing account for the company.
a. sweep account
b. zero balance account
c. lockbox
d. automatic stay

Q26. Stop ‘N Shop, a small convenience store, is running a special sale on candy bars from a particular maker. The candy bars normally sell for 50 cents each, but Stop ‘N Shop is pricing them at “4 for $1.75” for a limited time. Stop ‘N Shop is using which pricing technique?
a. zone pricing
b. price lining
c. multiple pricing
d. cash discount

Q27. The __________ is the first section in a business plan, but it is the last section to be written.
a. company history
b. list of goals and objectives
c. marketing strategy
d. executive summary

Q28. Breakeven analysis is an ideal for valuation because it takes into account the importance of the time value of cash flows.
a. true
b. false

Q29. Markup is:
a. the difference between the cost of a good or service and its selling price.
b. the variable expenses required to produce a product divided by the sales revenue it generates.
c. the sum of a product’s fixed costs per unit and its variable costs per unit.
d. the portion of a product’s sales price that is left over to contribute to covering its variable expenses and earning a profit after deducting its fixed expenses.

Q30. Numerous customer surveys across a variety of industries show that ___________ is the most important element of service.
a. the personal touch businesses offer them
b. technology
c. convenience
d. quality

Q31. Blending show business with the retail business, Golf Galaxy offers its customers a variety of fun features, including an in-store putting green, a driving range, and a golf simulator that lets golfers “play” any one of 32 world-famous courses, no matter what the weather outside is. Golf Galaxy is using which principle of guerrilla marketing?
a. demographic analysis
b. entertailing
c. data mining
d. time compression management

Q32. To calculate the breakeven point, a business owner should use which of the following formulas?
a. total variable expenses / contribution margin as a percentage of sales
b. total fixed expenses / contribution margin as a percentage of sales
c. (total revenue – total expenses) / total revenue
d. contribution margin as a percentage of sales / total expenses

Q33. The two-thirds rule says that:
a. only two-thirds of the entrepreneurs with a viable business venture will find financial backing.
b. of those entrepreneurs who get financing will get just two-thirds of what they initially requested.
c. getting the financing to start a business will take entrepreneurs two-thirds longer than they expected.
d. all of the above

Q34. Quick assets include assets that can be converted into cash rapidly. The simplest formula for determining quick assets is:
a. current assets – current liabilities
b. current assets – inventory
c. total assets – total liabilities
d. total assets – fixed assets

Q35. __________ define(s) where an entrepreneurs wants to take her business; __________ address(es) the question of how to get there.
a. Strategy; goals and objectives
b. Vision; goals and objectives
c. Goals and objectives; strategy
d. Strategy; vision

Q36. The Downtown Hobby Shop expects net daily sales of $1200, with the cost of goods sold at $750 and total expenses of $250. Variable expenses, including cost of goods sold, is estimated at $800, with fixed expenses of $200. What is the breakeven sales?
a. $250
b. $800
c. $1000
d. $606

Q37. __________ is the total number of people exposed to an ad at least once over a period of time, usually four weeks.
a. Audience
b. Reach
c. Cost per thousand
d. Frequency

Q38. A radio ad in which of the following time slots would be most expensive?
a. 10 am to 4 pm
b. 4 pm to 7 pm
c. 7 pm to midnight
d. 6 am to 10 am

Q39. An effective market analysis in a business plan should include:
a. a clear definition of the company’s target market.
b. the types of advertising and promotional campaigns that will reach the intended audience most effectively and efficiently.
c. market size and trends.
d. all of the above.

Q40. Many creditors look for a times interest earned ratio of at least _____ before pronouncing a company a good credit risk.
a. 1:1
b. 2.5:1
c. 4:1
d. 10:1

Q41. High prices and low perceived quality create a(n) ______ image.
a. contradictory
b. upscale
c. bargain
d. value

Q42. __________ are television viewers who flash from one channel to another, especially during commercials, posing a real threat to TV advertisers.
a. Flashers
b. Zappers
c. Spammers
d. Jammers

Q43. Studies show that businesses typically waste __________ percent of the time it takes to produce products and services without ever realizing it.
a. 10 to 20
b. 35 to 50
c. 65 to 80
d. 85 to 99

Q44. Customers use credit cards to pay for __________ out of every $100 spent on consumable goods and services.
a. $12
b. $28
c. $41
d. $52

Q45. When describing the company’s products or services in a business plan, entrepreneurs should focus on the product’s or service’s:
a. features
b. price
c. benefits
d. physical characteristics

Q46. The price range for a product or service is:
a. the final price a business owner establishes for a product or service, taking into account the company’s desired image in the market.
b. a function of a single factor: the prices competitors set for similar goods and services.
c. the area between the price ceiling defined by customers in the market and the price floor defined by a company’s cost structure.
d. the area between the price floor set by a company’s cost structure and the price ceiling determined by the prices competitors set for similar goods and services.

Q47. The first step in conducting market research is:
a. collecting the data
b. analyzing the data
c. defining the problem
d. buying a mailing list from a list broker

Q48. Small businesses should maintain a current ratio of at least:
a. 1:1
b. 2:1
c. 4:1
d. 10:1

Q49. Approximately __________ percent of the average company’s sales come from existing customers.
a. 20
b. 40
c. 50
d. 70

Q50. Which of the following statements most accurately reflects the relationship between the startup cash required for a company and its anticipated inventory turnover ratio?
a. The higher a company’s average inventory turnover, the greater the amount of startup cash it will require.
b. The higher a company’s average inventory turnover, the smaller the amount of startup cash it will require.
c. A company’s startup cash requirement is equal to its average inventory turnover times 12.
d. There is no connection between a company’s average inventory turnover and the amount of startup cash it will require

Q1. The advance rate on an asset-based loan secured by a company’s inventory typically would be __________ percent.
a. 90-100
b. 75-85
c. 55-85
d. 10-50

Q2. When evaluating a potential business investment, venture capital companies look for:
a. a competent management team.
b. a company with a competitive edge in the marketplace.
c. a growth industry.
d. All of the above

Q3. According to a study by Jupiter Communications, setting up an e-commerce site takes most companies at least __________ to complete.
a. one month
b. six months
c. one year
d. two years

Q4. Which of the following statements about an initial public offering (IPO) is true?
a. Although an IPO can generate large amounts of capital for a company, it can be an expensive, time-consuming process filled with lots of regulatory “red tape.”
b. An IPO is an excellent source of funds for an entrepreneur searching for the capital needed to launch a new business.
c. For the typical small business, the cost of making an initial public offering is just 2 percent of the capital raised.
d. All of the above

Q5. Small companies account for __________ percent of the companies involved in exporting, and they generate about __________ of the dollar value of the nation’s exports.
a. 20; one-fifth
b. 45; one tenth
c. 58; two-thirds
d. 97; one-third

Q6. Which of the following questions is illegal in an interview?
a. Do you drink alcohol?
b. Why should we hire you?
c. Have you ever been arrested?
d. Is there any limit to your ability to work overtime or to travel?

Q7. Which of the following countries represents the top market for U.S. small business exporters?
a. Japan
b. Mexico
c. Canada
d. Germany

Q8. A privacy policy is a critical component of a well-designed Internet business strategy.
a. true
b. false

Q9. Small businesses on the Web are better able to compete if they focus on a niche market.
a. true
b. false

Q10. When financing a business startup with angel financing, entrepreneurs should remember that:
a. angels are most likely to finance startups in the $5 to $10 million range.
b. angels are willing to wait no more than two years to “cash out” their investments and expect to earn at least 60 to 75 percent returns annually.
c. angels usually invest their money locally, so it is wise to look close to home for them – usually within a 50-to 100-mile radius.
d. All of the above.

Q11. In a _________ layout, a manufacturer arranges workers and equipment according to the sequence of operations.
a. process
b. product or line
c. fixed position
d. functional

Q12. Small business owners consider __________ to be lenders of first resort.
a. insurance companies
b. SBICs
c. commercial banks
d. commercial finance companies

Q13. In a _________ layout, a manufacturer groups workers and equipment according to their general function.
a. process
b. product or line
c. fixed position
d. functional

Q14. The greatest opportunities for e-commerce lie in which sector?
a. retail
b. business-to-consumer
c. business-to-business
d. information technology

Q15. Studies show that __________ percent of first-generation family businesses fail to survive into the second generation, and of those that do survive, __________ make it to the third generation.
a. 20; 81
b. 40; 75
c. 70; 12
d. 90; 24

Q16. A(n) __________ is a tax or a duty that a government imposes on goods and services shipped into that country.
a. tariff
b. quota
c. embargo
d. lateral agreement

Q17. Empowerment works best when a manager:
a. trusts workers to do their jobs well.
b. trains workers continuously to upgrade their skills.
c. listens when workers have ideas, solutions, or suggestions.
d. All of the above.

Q18. A __________ is an exemption from the Security and Exchange Commission’s full-blown registration process that is designed to make it easier and less expensive for small companies to make initial public offerings. The ceiling on this type of issue is $1 million, and the price of the shares must be at least $5.
a. Regulation S-B
b. Regulation A
c. Small Company Offering Registration (SCOR)
d. Direct Public Offering

Q19. A(n) __________ minimizes estate taxes on a business by creating two classes of stock: preferred voting stock (the value of which remains constant) for the parents, and nonvoting common stock (the value of which reflects the increased value of the business) for the children.
a. family limited partnership
b. estate freeze
c. buy/sell agreement
d. grantor retained annuity trust

Q20. A company must file a __________ describing both the company and the stock offering with the Securities and Exchange Commission (SEC) before making an initial public offering.
a. lockup agreement
b. letter of intent
c. statement of corporate standing
d. registration statement

Q21. Under NAFTA, companies have greater protection of their patents, trademarks, and copyrights across national borders.
a. true
b. false

Q22. “Cool” companies:
a. demonstrate a respect for work and life balance.
b. value diversity in the work force.
c. create and support a learning environment among employees.
d. All of the above.

Q23. __________ banks are most likely to lend money to small businesses.
a. Small
b. Large
c. International
d. Foreign

Q24. Domain names can be registered with the U.S. Patent and Trademark Office.
a. true
b. false

Q25. A movie theater with 8 screens recently opened in Knoxville, Tennessee. A short time later, two restaurants, a coffee shop, and a frozen yogurt store opened within walking distance of the theater. These businesses are using the location principle of:
a. retail consolidation
b. retail complexity
c. retail compatibility
d. retail consortium

Q26. The most important ingredient in the recipe for a successful joint venture is:
a. negotiating an iron-clad contract that binds both parties.
b. choosing the right partner.
c. seeing the joint venture for what it really is: a chance for both parties to make large profits by joining forces.
d. to build a monopoly in the target country.

Q27. This financing program spans 11 government agencies and is designed to encourage small companies to expand their research and development efforts in science and engineering and to develop new commercial products and services from those efforts.
a. Small Business Innovation Research Program
b. Small Business Technology Transfer Program
c. Certified Development Company Program
d. Urban Development Action Grant Program

Q28. Small companies can attract and retain high-quality workers by:
a. looking inside the company first with a promotion-from-within policy.
b. making their employment advertisements stand out.
c. forging relationships with schools, colleges, and other sources of workers.
d. all of the above.

Q29. When creating a Web site, the best approach is:
a. Get the site online and then tweak it, change it, and update it based on what is working best.
b. Don’t launch a Web site until it is absolutely perfect.
c. The flashier a Web site is the better it is.
d. All of the above.

Q30. The most popular estate planning technique among business owners is the:
a. buy/sell agreement.
b. grantor retained annuity trust
c. estate freeze
d. family limited partnership

Q31. __________ is a work arrangement in which employees who spend most of their time away from the office use the same office space at different times, which can greatly reduce the need for permanent offices that would sit idle much of the time.
a. Telecommuting
b. Hoteling
c. Job sharing
d. Flexplace

Q32. The Americans with Disabilities Act (ADA):
a. applies to every business, whatever its size.
b. requires companies to make expensive changes to their work environments and stores to accommodate disabled workers and customers.
c. requires most businesses to make their facilities available to physically challenged customers and workers.
d. requires businesses in all multistory buildings to have elevators.

Q33. __________ capital represents a company’s temporary funds and the need for it is created by the uneven flow of cash into and out of the business due to normal seasonal fluctuations.
a. Fixed
b. Working
c. Growth
d. Disposable

Q34. An entrepreneur trying to find a location for a sporting goods store has decided to use the index of retail saturation as a guide. She knows that Site 1 has a trading area with 42,374 potential customers who spend an average of $87.50 on sporting goods per year. The only competitor in the trading area has 16,000 square feet of selling space. Site 2 has 38,649 potential customers spending an average of $91.25 per year on sporting goods. In this trading area, two competitors occupy 17,100 square feet of space. The index of retail saturation for Site 2 is:
a. 182.86
b. 206.24
c. 231.73
d. None of the above.

Q35. A __________ is an agreement between an exporter’s bank and a foreign buyer’s bank that guarantees payment to the exporter for a specific shipment of goods.
a. bank draft
b. letter of credit
c. promissory note
d. freight draft

Q36. To finance her inventory of cars, auto dealer Sarah Ann Lopez would most likely rely on which type of loan?
a. commercial bank loan
b. line of credit
c. floor plan
d. installment loan

Q37. A survey by Arthur Andersen and National Small Business United found that __________ percent of small and medium-sized companies had used credit cards as a source of financing for their businesses.
a. 10
b. 25
c. 50
d. 67

Q38. Business incubators:
a. combine low-cost, flexible rental space with a multitude of support services for their small business residents.
b. give small companies a greater chance for success by offering them valuable business services as well as connections to funding sources and management consulting.
c. improve their residents’ survival rates;
d. All of the above.

Q39. Effective leaders:
a. create a set of values and beliefs for employees and passionately pursue them.
b. communicate with their employees.
c. value the diversity of their workers.
d. All of the above.

Q40. The best time for a business founder to name his successor as top manager is:
a. only after he steps down from the helm of the company.
b. at his retirement party.
c. well before he steps down.
d. irrelevant to the company’s survival.

Q41. Which of the following statements concerning business location is false?
a. Analyzing the characteristics of an area’s residents gives entrepreneurs the facts they need to make an informed location decision.
b. Assembling a demographic profile helps entrepreneurs determine how well a particular site measures up to their market profile.
c. Entrepreneurs should avoid locating their businesses near competitors.
d. Population density is an important location factor, especially for businesses that depend on high traffic for their success.

Q42. A(n) __________ is a combination of hardware and software operating between the Internet and a company?s computer network that allows employees to have access to the Internet but keeps unauthorized users from entering the company?s network and the programs and the data it contains.
a. virus detection program
b. firewall
c. intrusion detection program
d. hacker block

Q43. Online newsletters should be kept to about:
a. 600 words
b. 2000 words
c. 6 pages
d. 20 pages

Q44. When a company is doing business in a country that lacks the cash to pay for imported goods or whose currency is basically worthless outside that country’s borders, it:
a. should stop doing business there.
b. can use bartering.
c. can use countertrading.
d. can use bartering or countertrading.

Q45. The biggest barrier to exporting facing small companies that have never exported is:
a. not knowing how or where to start.
b. government regulations that make it nearly impossible for small companies to export.
c. the lack of products and services that would sell successfully in foreign markets.
d. intense competition in international markets from major multinational corporations.

Q46. Which of the following statements concerning e-commerce is true?
a. Once an entrepreneur launches a Web site, customers typically flock to it even without advertising and promoting the site.
b. More than 90 percent of all commercial Web sites are profitable.
c. Web retailers invest more of their revenues in marketing and advertising than traditional, “off-line” retailers do.
d. Because of the security precautions modern technology provides, customer privacy is not an important issue on the Web.

Q47. The average success rate of joint ventures is __________ percent , while its average life is __________ years.
a. 81; 20
b. 62; 10.5
c. 43: 3.5
d. 25; 1.5

Q48. The central business district (CBD) in most cities is characterized by:
a. the ability to draw customers from the entire trading area of the city.
b. traffic congestion.
c. inadequate parking facilities.
d. All of the above

Q49. Which area of a retail store would be least valuable?
a. the main floor in a multistory building
b. the intersection of two primary aisles
c. the right rear corner of a store
d. the right front corner of a store

Q50. The typical venture capital company receives more than 1,200 business plans each year, and ultimately invests in __________ of them.
a. 3 to 6
b. 15 to 20
c. 30 to 35
d. about 100

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