#1
Which of the following is considered an external source of financial funding for a business?
Bank loan
ExplanationExternal borrowing from financial institutions.
#2
Which financial institution is responsible for regulating and supervising banks in the United States?
Federal Reserve
ExplanationCentral bank overseeing monetary policy.
#3
What is the primary purpose of a business obtaining trade credit?
To delay payment for goods or services received
ExplanationDeferred payment arrangement for purchased goods or services.
#4
What is the primary function of a financial intermediary?
To facilitate the flow of funds between savers and borrowers
ExplanationConnecting surplus funds with deficit units.
#5
In the context of financial markets, what does the term 'liquidity' refer to?
The ease of converting an asset into cash without significant loss of value
ExplanationDegree of ease in converting assets to cash.
#6
What is the primary function of venture capital in financial funding?
Investing in startups and high-growth companies
ExplanationInvestment in early-stage companies for growth.
#7
In the context of financial funding, what does the term 'IPO' stand for?
Initial Public Offering
ExplanationFirst sale of shares to the public.
#8
What is the main purpose of crowdfunding as a source of financial funding?
Collecting small amounts of money from a large number of people
ExplanationRaising capital from a broad pool of investors.
#9
In the context of mergers and acquisitions, what is a 'leveraged buyout' (LBO)?
A buyout funded primarily by debt
ExplanationAcquisition financed mainly through borrowing.
#10
In financial terms, what does the acronym ROI stand for?
Return on Investment
ExplanationMeasure of investment profitability.
#11
Which type of financing involves a company selling its accounts receivable to a third party at a discount?
Factoring
ExplanationSelling receivables to obtain immediate cash.
#12
Which financial instrument represents a form of debt financing?
Corporate bonds
ExplanationBorrowing through bond issuance.
#13
What is the concept of mezzanine financing in the context of financial funding?
A hybrid of debt and equity financing
ExplanationCombination of loan and equity investment.
#14
What is the role of angel investors in providing financial funding to startups?
Investing personal funds in startups
ExplanationIndividuals investing their own capital in startups.
#15
What financial concept involves spreading investments across different assets to reduce risk?
Diversification
ExplanationRisk management through portfolio variety.
#16
What is the purpose of a financial guarantor in the context of bond issuance?
To ensure timely payment of interest and principal
ExplanationGuaranteeing bond repayment obligations.
#17
In the realm of personal finance, what does the term '401(k)' typically refer to?
A retirement savings plan
ExplanationTax-advantaged retirement investment account.