BA109 Chapter 4 - Practice Exam Questions With Verified Answers
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Course
BA109
Institution
BA109
BA109 Chapter 4 - Practice Exam Questions
With Verified Answers.
T/F The executive summary of a business plan should summarize all of the relevant points of the
proposed venture and should be concise-no more than two pages. - answerTrue
T/F The executive summary serves as the thesis statement f...
BA109 Chapter 4 - Practice Exam Questions
With Verified Answers.
T/F The executive summary of a business plan should summarize all of the relevant points of the
proposed venture and should be concise-no more than two pages. - answer✔True
T/F The executive summary serves as the thesis statement for the entire business plan. -
answer✔False
T/F The higher a small business scores on the 5 C's of credit, the greater its chances will be of
receiving a loan. - answer✔True
T/F To get external financing, an entrepreneur's business plan must pass the reality test, the
competitive test, and the value test with potential lenders and investors. - answer✔True
T/F An entrepreneur should prepare a single set of "most likely" financial forecasts for one year
into the future as part of the business plan. - answer✔False
T/F The plan of operation section of the business plan should address how the business plans to
retain key managers and employees. - answer✔True
T/F After presenting the business plan to a group of potential lenders and investors, an
entrepreneur should sit back and wait to hear from those who might be interested in the venture. -
answer✔False
T/F The most common reasons banks give for rejecting small business loan applications are
undercapitalization and too much debt. - answer✔True
T/F The "two-thirds rule" says that only two-thirds of the entrepreneurs with a sound new
business venture will get financing, that they will get only two-thirds of what they need, and that
it will take them two-thirds longer to get it than they anticipated. - answer✔True
T/F Capital requirements, estimate earnings, and return on investment are three aspects of the
financial feasibility analysis. - answer✔True
T/F Because the entrepreneur is the driving force behind a business idea, he or she should also be
the driving force behind the business plan. - answer✔True
T/F The loan proposal portion of the business plan should include a realistic timetable for
repayment or for investors to exit. - answer✔True
________ are broad, long-range statements of what a company plans to achieve in the future that
guide its overall direction and addresses the question, "Why am I in business?" - answer✔Goals
T/F Before presenting a business plan to potential lenders and investors, an entrepreneur must be
well informed and well prepared. - answer✔True
T/F The competitive test that a business plan must pass in order to attract financing for lenders
and investors involves proving to them that the venture offers a high probability of repayment or
an attractive rate of return. - answer✔False
T/F The "C" of the 5 C's of Credit that is synonymous with cash flow is capital. - answer✔False
The ________ serves as the "thesis statement" for the entire business plan and is the broadest
expression of a company's purpose and defines the direction in which it will move. -
answer✔mission statement
T/F In a business plan, both company goals and objectives should relate to the company's
mission. - answer✔True
Proving that a profitable market exists involves: - answer✔proving that customers in the
marketplace need or want the good or service and are willing to pay for it and documenting
claims about market size and growth rates with as much factual information as possible only
Which of the following is true about the preparation of a business plan? - answer✔The elements
of the plan may be standard, but the content should reflect the unique aspects of the business and
the excitement of the entrepreneur.
A synonym for capacity is: - answer✔cash flow.
The higher a small business scores on the 5 C's of credit, the greater its chances will be of
receiving a loan. - answer✔True
A business plan that fails to assess a company's competitors realistically makes the entrepreneur
appear to be poorly prepared. - answer✔True
The business and industry profile section of the business plan should cover existing and
anticipated profitability of firms in the targeted market segment and any significant entry or exit
of firms. - answer✔True
The second essential purpose for creating a business plan is: - answer✔to attract lenders and
investors.
In the business and industry profile section of the business plan, the entrepreneur should provide
information on the size of the market, growth trends, and the relative economic and competitive
strength of the industry's major players. - answer✔True
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