Financing a Business - Test

What is the primary purpose of financing a business?

• To maximize profits

• To minimize expenses

• To obtain necessary funds for operations and growth

• To secure a competitive advantage

Financing a business is primarily done to ______.

• maximize profits

• minimize expenses

• obtain necessary funds for operations and growth

• secure a competitive advantage

The process of funding a new business or venture by a large number of investors over the internet is called:

• Angel investors

• Crowdfunding

• Peer-to-peer lending

• Venture capital

Websites like Kickstarter.com and GoFundMe.com bring together investors and borrowers that both can benefit financially. These would be examples of:

• Commercial loans

• Crowdfunding

• Peer-to-peer lending

• Venture capital firms

Websites like Kickstarter.com and GoFundMe.com are examples of ________, which bring together investors and borrowers.

• Commercial loans

• Crowdfunding

• Peer-to-peer lending

• Venture capital firms

In addition to the financial support, one of the benefits of being funded by a venture capital firm is that it comes with:

• Full control of the business

• Guidance and advice

• Lines of credit

• The freedom to make decisions

Which of the following is NOT a source of short-term funding for a business?

• Commercial paper

• Factoring

• Selling newly issued stock

• Trade credit

Jasmine decided to sell her accounts receivable at a discount to another company. This process is known as ______.

• Factoring

• Retained earnings

• Short-term bank loans

• Trade credit

Ben’s Hardware Store receives most of its goods from suppliers without requiring payment at the time of delivery, essentially being able to “buy now, pay later.” This type of financing is called:

• Factoring

• Retained earnings

• Short-term bank loans

• Trade credit

In order to avoid negotiating a separate loan each time they need more funds, many companies work out arrangements with their bankers to obtain pre-approval so that they can draw on funds as needed. An example of this would be using:

• A factor

• A line of credit

• A trade credit

• Retained earnings