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Entrepreneurship > Module 8 > Flashcards

Module 8 Flashcards

1
Q

Why does the global monetary system matter?

A

It matters for born globals and in the context of foreign exchange (provides credits in different currencies)

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2
Q

Which one is not a function of foreign exchange (FX)?
a. Transfer purchasing power
b. Provide credit
c. Provide different currencies
d. Provide hedging facilities against foreign exchange risks

A

c.

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3
Q

Which ones are primary trading centers?
a. London
b. Paris
c. New York
d. Tokyo
e. Hong Kong

A

a.c.d.

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4
Q

Which one is not a secondary trading center?
a. Frankfurt
b. Hong Kong
c. Paris
d. San Francisco
e. Singapore
f. Sydney
g. None of the above

A

g.

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5
Q

True or false. FX market is not always open.

A

False. It is always open.

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6
Q

True or false. FX market helps international entrepreneurs to mitigate exchange rate.

A

False. It helps international entrepreneurs to mitigate exchange rate risks.

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7
Q

In 2021, the price for coffee in Germany is of 1 Euro, when in Turkey it is of 18 TL.

What is the nominal exchange rate (E)?
What is the real exchange rate (R)?

A

E = 18TL/1E
R = 1

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8
Q

Knowing that the price for coffee in 2021 was of 1 Euro in Germany and of 18 TL in Turkey, in which country should you buy your coffee in 2022 if the one in Germany is of 1 Euro?

A

Without the price in the country, you cannot decide in which country you can buy. You need all the informations.

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9
Q

What is the formula to fin the real exchange rate (R)?

A

R = E(p/p’)
R (real exchange rate)
E (nominal exchange rate)
p (domestic price level)
p* (foreign price level)

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10
Q

If the real exchange rate is higher than 1, is it better to buy in your own country or in a foreign country?

A

In its own country

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11
Q

If the real exchange rate is lower than 1, is it better to buy in your own country or in a foreign country?

A

In a foreign country

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12
Q

What are the 2 main ways of financing a company?

a. Debt and equity financing
b. Debt and marketing financing
c. Equity and marketing financing

A

a.

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13
Q

Type of financing:
1. Debt financing
2. Equity financing

a. Obtaining funds for the company in exchange for ownership.
b. Obtaining borrowed funds for the company.
c. Asset-based financing, requires some asset to be used as a collateral.
d. Does not require collateral.
e. Offers investor some form of ownership position.
f. Borrowed funds plus an interest rate need to be paid back.

A

1.b.c.f.
2.a.d.e.

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14
Q

What are some factors affecting type of financing?

a. Assets of the venture
b. Interest rates
c. Equity
d. Communication

A

a.b.c.

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15
Q

Which ones are not a source of funds?

a. Self
b. Family and friends
c. Commercial banks
d. Private banks
e. R&D limited partnerships
f. Government loan programs
g. Sponsorships
h. Grants
i. Venture capital
j. Private placement

A

d.g.

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16
Q

Which ones are sources for internal funds?

a. Profits or sale of assets
b. Working capital reduction
c. Collecting bills more quickly
d. Bootstrap financing
e. Personal funds

A

a.b.c.d.

17
Q
  1. Personal funds
  2. Family and friends
  3. Commercial bank loans
  4. Private placement

a. Funding from private investors (angels). Investor can influence nature and direction of the business to some extent, even be involved in the business operation.
b. Easy to obtain money but direct input into operations of venture. Impact on personal relationships.
c. Collateral valued at more than the amount of money borrowed versus standard way to lend money to companies
d. Least expensive funds in terms of cost and control. Essential to attract external funding.

A

1d
2b
3c
4a

18
Q

What should a formal agreement with family and friends include?

a. Amount of money involved
b. Terms of the money
c. Rights and responsabilities of the investor
d. Consequences in case of business failure
e. All of the above

A

e.

19
Q

Place in order a ‘bank shopping’ procedure

a. Evaluate alternative banks
b. Carefully present the case for the loan
c. Complete an application format
d. Borrow the maximum amount possible
e. Select one with a positive loan experience in the business ares
f. Set an appointment

A

c.a.e.f.b.d.

20
Q

Going public:
1. Advantages
2. Disadvantages

a. Raise equity
b. Expensive
c. Regulation
d. Disclosure of information
e. Liquidity
f. Pressure
g. Valuation
h. Prestige
i. Personal wealth
j. Loss of control

A

1.a.e.g.h.i.
2.b.c.d.f.j.

Entrepreneurship (10 decks)

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