BUSN 101 Exam 2
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BUSN 101 Exam 2
exam BUSN 101
based upon my review for second exam of business 101. November 10, 2014
top (5) Stock exchanges
London Stock Exchange
Tokyo Stock Exchange
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
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
Preferred Stock can be
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
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
permit issuers to pay off the principal before the maturity date.
Convertible bonds can convert into shares of ______ stock
Online stock trading services
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
organization that buys stock and bonds and sells shares in the securities to public.
pools money and buys according to fund's purpose.
Why take entrepreneurial risk?
What does it take to be entrepreneur?
Tolerant of uncertainty
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
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
Eliminates office politics
Low risk for trial and error
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
Internet-based marketing strategy in which a business rewards individuals or other businesses for each visitor who works as an entrepreneur within a corporation.
A creative person who works as entrepreneur within corporation.
Use company's resources to launch new products for company.
Specific geographic areas to which governments attract private business investment by offering lower taxes and other government support.
offer new business low-cost offices with basic services
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"
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
A business plan does
forces potential owners to be specific about what they will offer
mandatory for talking with bankers and investors
sources of capital
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
Small Business Administration
U.S. Gov't agency that advises/assists small businesses by providing management training and financial advice
Small Business Investment Company
program through which private investment companies licensed by SBA lend money to small businesses.
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.
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
Small Business Investment companies
The Office of Innovation and Entrepreneurship
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
: ability to know the market and quickly adapt to market needs.
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
Computer simplify process of inventory control, customer records, payroll
: whether to buy/lease equipment, whether to own/rent building, tax planning, financial forecasting, choosing finance sources, requesting funds
Owners need outside consulting advice early in process
small/medium firms can't afford to hire expert employees
: leases, contracts, partnership agreements, protection against liabilities
decisions made long before introducing product/store
research study can
: determine where to locate, whom to select as target, effective strategy for reaching markket
commercial loan officer
design acceptable business plan
give financial advice
know risks associated with business
how to cover risks with insurance
how to prevent risks with safety devices
Service Corps of Retired Executives
More than 10, 500 volunteers from industry, trade associations, and education who counsel small business at no cost
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