2.1.2 - external finance

Question 1

Overdrafts : Budgeting is made easier

Accepted Answer

False

Question 2

PLCs and LTDs can raise finance through share capital

Accepted Answer

True

Question 3

What is the final SOURCE of finance ?

Accepted Answer

Other businesses

Question 4

What are business angels ?

Accepted Answer

Wealthy individuals who make personal investments for a share

Question 5

Loans: what happens regardless of the business' performance ?

Accepted Answer

Interest has to be paid

Question 6

What is a loan ?

Accepted Answer

A fixed amount of money that is borrowed and paid back with interest

Question 7

What are overdrafts ?

Accepted Answer

Whereby a business can withdraw money that's not there, From banks and building societies

Question 8

What is peer-to-peer funding ?

Accepted Answer

Individuals lending to other individuals who they DON'T know

Question 9

Why would another business invest ?

Accepted Answer

To recieve a return on their investment, To gain some control, To support a supplier/customer, To influence decision making

Question 10

Define venture capital

Accepted Answer

investment from an established business in return for percentage equity

Question 11

What do business angels offer which family and friends don't ?

Accepted Answer

Support and expertise

Question 12

What is the most common source of finance for all different types of businesses

Accepted Answer

Banks

Question 13

Peer-to-peer funding operates in person

Accepted Answer

False

Question 14

Only PLCs can use share capital

Accepted Answer

False

Question 15

What is leasing ?

Accepted Answer

When an asset is still owned by the leasing company, When a business can use an asset without buying it outright

Question 16

There is a difference between a source of finance and a method of finance

Accepted Answer

True

Question 17

Loans are never secured against assets

Accepted Answer

False

Question 18

Leasing : What is payed ?

Accepted Answer

A set of instalments over a period of time

Question 19

What is trade credit ?

Accepted Answer

Paying suppliers after the goods are received

Question 20

Overdrafts are good in the short term

Accepted Answer

True

Question 21

What is a 'method of finance' defined as ?

Accepted Answer

the way in which a provider gives finance

Question 22

How does crowd funding work ?

Accepted Answer

Online, A large number of people, who all give different (often small) amounts, Whereby the investor only contributes if the total amount is raised

Question 23

What is a 'source of finance' defined as ?

Accepted Answer

the provider of the finance

Question 24

Interest of a loan is often based on the level of risk

Accepted Answer

True

Question 25

Select TWO benefits of using family and friends as a source of finance

Accepted Answer

They will have flexible terms, They are already known to the entrepreneur

Question 26

Select TWO cons of sourcing with family and friends

Accepted Answer

The amount that can be borrowed may be limited, Pressure could be placed on the relationship

Question 27

and finally... What are grants ?

Accepted Answer

Fixed amounts provided by the gov or organisations to fund projects

Question 28

What is a con of share capital ?

Accepted Answer

Complex and costly, Loss of full ownership, Hostile takeover

Question 29

How is finance raised through share capital ?

Accepted Answer

through the sale of shares

Question 30

How many SOURCES of finance are there ?

Accepted Answer

6

2.1.2 - external finance

Questions 30

2.1.2 - external finance

Questions 30