7/16/2019 Assessed Quiz 3

 ▶ FM202_201803 ▶ Assessed Quiz 3

Started on Tuesday, 16 October 2018, 6:37 PM

State Finished
Completed on Tuesday, 16 October 2018, 6:56 PM
Time taken 18 mins 31 secs
Mark 11.0 out of 15.0 (73%)

Question 1
Correct

Mark 1.0 out of 1.0

Business angels are typically self-made older people who invest both for
profit and interest in the range of up to a few hundred thousand dollars
often in local businesses. Business angels do not carry the same
fiduciary responsibility that larger investment funds do and can often be
more flexible in their arrangements.

Select one:

a. True

b. False

The correct answer is: True

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7/16/2019 Assessed Quiz 3

Question 2
Correct

Mark 1.0 out of 1.0

 ▶ FM202_201803 ▶ Assessed Quiz 3

Where collateral is not available it is likely that banks will either not
lend or will require more information from small enterprises and/or seek
to limit risks by including covenants in loan agreements.

Select one:

a. False

b. True


The correct answer is: True

Question 3
Incorrect

Mark 0.0 out of 1.0

Capital structure decisions are constrained for small enterprises

because of their access to the stock market. This means that issues of
equity to third parties are practical.

Select one:

a. False

b. True

The correct answer is: False

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7/16/2019 Assessed Quiz 3

Question 4
Incorrect

Mark 0.0 out of 1.0

 ▶ FM202_201803 ▶ Assessed Quiz 3

Venture capital contracts should eliminate all the potential for conflict
between the original owner-managers and the incoming part owners
(venture capitalists).

Select one:

a. False

b. True

The correct answer is: False

Question 5
Correct

Mark 1.0 out of 1.0

Venture capitalists often lack the expertise in helping businesses

acquire a stock market listing. The role of the venture capitalist,
therefore, does not extend beyond the provision of finance.

Select one:

a. True

b. False


The correct answer is: False

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7/16/2019 Assessed Quiz 3

Question 6
Incorrect

Mark 0.0 out of 1.0

 ▶ FM202_201803 ▶ Assessed Quiz 3

Liquidity (if determined following a minimal consideration of accounting

rules) considers the timing of the event that gives rise to revenues or
expenditures.

Select one:

a. True

b. False

The correct answer is: False

Question 7
Correct

Mark 1.0 out of 1.0

The disadvantages of retained earnings are that they restrict the

amount available to pay dividends and they may not be adequate in
times of rapid growth.

Select one:

a. False

b. True


The correct answer is: True

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7/16/2019 Assessed Quiz 3

Question 8
Correct

Mark 1.0 out of 1.0

 ▶ FM202_201803 ▶ Assessed Quiz 3

The term investment ready means that small enterprise owner-

managers are both willing and able to meet the requirements for
investment by third parties. It is used in the context of there being a
demand-side finance gap.

Select one:

a. True

b. False

The correct answer is: True

Question 9
Correct

Mark 1.0 out of 1.0

The major advantages of a stock market flotation flow from the

marketability of the enterprise’s shares. This enables the owner-
managers to harvest their investment in the enterprise by selling all or
part of their holding.

Select one:

a. True

b. False

The correct answer is: True

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7/16/2019 Assessed Quiz 3

Question 10
Correct

Mark 1.0 out of 1.0

 ▶ FM202_201803 ▶ Assessed Quiz 3

A demand-side gap occurs when small enterprise owner-managers are

either not willing or able to meet the requirements for funding, for
example, because they do not wish to give up any control of the
business.

Select one:

a. True

b. False

The correct answer is: True

Question 11
Incorrect

Mark 0.0 out of 1.0

It might be easy to distinguish between debt and equity for a small

enterprise regardless of the intertwined nature of the business and its
owner(s).

Select one:

a. False

b. True

The correct answer is: False

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7/16/2019 Assessed Quiz 3

Question 12
Correct

Mark 1.0 out of 1.0

 ▶ FM202_201803 ▶ Assessed Quiz 3

Liquidity is particularly important for small enterprises because they

have constrained access to capital markets compared to large firms.

Select one:

a. False

b. True


The correct answer is: True

Question 13
Correct

Mark 1.0 out of 1.0

Venture capitalists need to be sure that the firm has growth potential in
order for them to make a good return on their investment. High returns
are required because many venture capital investments result in poor or
negative returns and so the few successful investments have to make
up for the rest.

Select one:

a. True

b. False

The correct answer is: True

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7/16/2019 Assessed Quiz 3

Question 14
Correct

Mark 1.0 out of 1.0

 ▶ FM202_201803 ▶ Assessed Quiz 3

Trade creditors are a flexible way of financing, particularly for growth

small enterprises but can’t always be relied on especially if suppliers
come under financial pressure themselves and require prompter
payment.

Select one:

a. False

b. True


The correct answer is: True

Question 15
Correct

Mark 1.0 out of 1.0

Other things being equal, the higher the level of debtors, the higher will
be the amount of funds available for other investment in the enterprise.

Select one:

a. True

b. False


The correct answer is: False

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7/16/2019 Assessed Quiz 3

 ▶ FM202_201803 ▶ Assessed Quiz 3

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