BUSN 101 Exam 2

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  1. top (5) Stock exchanges
    • NYSE Euronext
    • NASDAQ
    • London Stock Exchange
    • Tokyo Stock Exchange
    • Deutsche Borse
  2. Advantages of Issuing Stock
    • Stockholders are owners of a firm and never have to be repaid their investment
    • No legal obligation to pay dividends
    • Issuing stock can improve a firm's balance sheet stock creates no debt
  3. Disadvantages of Issuing Stock
    • Stockholders have the right to vote for board of directors
    • Issuing new shares can alter the control of the firm
    • The need to keep stockholders happy can affect management's decisions
  4. Preferred Stock can be
    • callable
    • convertible
    • cumulative
  5. Advantages of Issuing Bonds
    • Bondholders are creditors, not owners of firm and can't vote
    • Bond interest is tax deductible
    • Bonds are temporary source of funding and are eventually repaid
    • Bonds can be repaid before date of maturity if they contain a call provision
  6. Disadvantages of Issuing Bonds
    • Bonds increase debt and can affect the market's perception of the firm
    • Paying interest on bonds is a legal obligation
    • If interest isn't paid, bondholders can take legal action
    • The face value must be repaid on maturity date
  7. Callable bonds
    permit issuers to pay off the principal before the maturity date.
  8. Convertible bonds can convert into shares of ______ stock
  9. Online stock trading services
    • TD Ameritrade
    • E*Trade
    • Scottrade
  10. Investment Criteria
    • Risk
    • Yield
    • Duration
    • Liquidity
    • Tax consequences
  11. Buying stock on margin
    • Borrowing some of the stock's purchase cost from the brokerage firm.
    • Margin is the portion that the investor pays
    • Broker issues margin call and investor covers losses
  12. Mutual fund
    • organization that buys stock and bonds and sells shares in the securities to public.
    • pools money and buys according to fund's purpose.
  13. Why take entrepreneurial risk?
    • opportunity
    • Profit
    • Independence
    • Challenge
  14. What does it take to be entrepreneur?
    • Self-directed/Self-nurturing
    • Action-oriented
    • Highly energetic
    • Tolerant of uncertainty
  15. Causes of Home-based business
    • Computer technology has leveled playing field
    • Corporate downsizing has led many to venture on their own
    • Social attitudes have changed
  16. Pros of home-based business
    • Ability to start immediately
    • Minimal start-up capital
    • No rent/excessive set-up charges
    • Comfortable working conditions
    • Reduced wardrobe expenses
    • No commuting
    • Tax benefits
    • Eliminates office politics
    • Low risk for trial and error
  17. Cons of home-based business
    • Getting new customers difficult
    • Work/family tasks sometimes not separate
    • Homeowner's insurance may not cover business-related claims
    • Difficult to establish work habits/time management
    • limited support system/isolation
    • possibly limited work space
    • uncomfortable clients w/ coming to home
    • zoning restrictions/gov't ordinances
    • success is based only on efforts
  18. Affiliate marketing
    Internet-based marketing strategy in which a business rewards individuals or other businesses for each visitor who works as an entrepreneur within a corporation.
  19. intrapreneur
    • A creative person who works as entrepreneur within corporation. 
    • Use company's resources to launch new products for company.
  20. Enterprise zone
    Specific geographic areas to which governments attract private business investment by offering lower taxes and other government support.
  21. incubators
    offer new business low-cost offices with basic services
  22. business failures are lower than reported numbers because
    • owner closing a business to start another is reported as "failure"
    • Changing form of ownership is "failure"
    • Retirement is "failure"
  23. Business plan
    A detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners' qualifications
  24. A business plan does
    • forces potential owners to be specific about what they will offer
    • mandatory for talking with bankers and investors
  25. sources of capital
    • personal savings
    • relatives
    • former employers
    • banks/finance companies
    • government agencies
    • angel investors
    • venture capitalists
  26. social lending
    • Kickstarter and Lending Club connect loan seekers to potential lenders
    • interest assigned between 6.78% and 24.95% based on credit history, money needed, and ways money used
  27. Small Business Administration
    U.S. Gov't agency that advises/assists small businesses by providing management training and financial advice
  28. Small Business Investment Company
    program through which private investment companies licensed by SBA lend money to small businesses.
  29. things on SBIC
    • minimum of $5 million in capital and can borrow up to $2 from SBA for each $1 of capital it has
    • able to identify a business's trouble spots early, giving entrepreneurs advice, and rescheduling loan payments.
  30. Small Business Development Centers
    • funded jointly by federal government and individual states
    • able to evaluate feasibility of your idea, develop your business plan, and complete funding application--for no charge
  31. SBA resources
    • Small Business Investment companies
    • The Office of Innovation and Entrepreneurship
    • SCORE
    • Entrepreneurship.org
  32. Market
    • consumers with unsatisfied wants and needs who have both resources and willingness to buy
    • set out to fill market's needs by offering top quality and great service at fair price
    • Great advantage: ability to know the market and quickly adapt to market needs.
  33. Management
    • Hiring, training, motivating employees is critical
    • Employees of small companies are often more satisfied with their jobs(challenged/respected)
    • should recruit and groom employees for management positions
  34. Accounting
    • Computer simplify process of inventory control, customer records, payroll
    • Good accountant: whether to buy/lease equipment, whether to own/rent building, tax planning, financial forecasting, choosing finance sources, requesting funds
  35. Legal
    • Owners need outside consulting advice early in process
    • small/medium firms can't afford to hire expert employees
    • competent lawyer: leases, contracts, partnership agreements, protection against liabilities
  36. Marketing
    • decisions made long before introducing product/store
    • research study can: determine where to locate, whom to select as target, effective strategy for reaching markket
  37. commercial loan officer
    • design acceptable business plan
    • give financial advice
    • lend money
  38. insurance agent
    • know risks associated with business
    • how to cover risks with insurance
    • how to prevent risks with safety devices
  39. Service Corps of Retired Executives
    More than 10, 500 volunteers from industry, trade associations, and education who counsel small business at no cost
  40. Advantages of global trade for small businesses
    • overseas buyers enjoy dealing with individuals
    • small companies can begin shipping faster
    • provide variety of suppliers
    • give more personal service and attention
Card Set
BUSN 101 Exam 2
based upon my review for second exam of business 101. November 10, 2014
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