Factors influencing the choice of finance:

• Selling assets is an internal source of finance.


  True
• Match the source of finance with its description:

  Retained profits ↔️ Earnings saved from past profits

  Sale of assets ↔️ Selling unneeded assets

  Loans ↔️ Borrowing from financial institutions

  Crowdfunding ↔️ Raising funds online
• What is a key advantage of loans as a source of finance?

  Flexible repayment terms
• What is the effect of lower interest rates on loan attractiveness?

  Makes loans more attractive
• Aligning finance with business needs can improve financial stability and growth potential
• Choosing the right source of finance is vital for achieving business objectives.


  True
• A tech start-up may seek venture capital to cover start-up costs and hire experts.


  True
• Selling unused assets is an example of an internal source of finance.

  True
• Crowdfunding involves raising funds from a large number of people online.


  True
• What are three factors that influence a business's choice of finance?

  Size, amount needed, risk
• Order the factors influencing finance selection from most general to most specific:

  1️⃣ Size of the business

  2️⃣ Amount needed

  3️⃣ Length of time required

  4️⃣ Interest rates

  5️⃣ Risk
• A tech start-up might attract venture capital to scale
• Aligning finance with business needs improves financial stability
• Bank loans have moderate interest rates and require collateral
• What are legal and regulatory restrictions affecting finance?

  Securities laws, lending regulations
• Corporate tax laws indirectly affect retained profits available for reinvestment.

  True
• Aligning finance with risk tolerance supports the long-term goals of the organization.


  True
• Retained profits are an example of an internal
• Money borrowed from banks is categorized as a loan
• Loans require collateral and interest, making them less suitable for high-risk ventures
• Smaller business needs can often be met by retained profits or overdrafts
• What type of financing is typically used for capital needs in a business?

  Loans, venture capital
• Aligning finance with business needs can improve financial stability and growth potential
• Loans, venture capital, and retained profits are typical financing options for capital
• Retained profits are earnings saved up from past profits
• Venture capital firms specialize in funding start-ups
• Venture capital dilutes ownership and requires strong growth potential
• Lower interest rates make loans more attractive
• What type of projects is venture capital willing to invest in?

  High-risk projects
• What are typical financing options for capital needs?

  Loans, venture capital, retained profits
• What does the cost of finance include?

  Interest rates, fees, equity dilution
• A new restaurant might prefer a bank loan due to its lower initial cost.


  True
• What can crowdfunding regulations affect?

  Types of campaigns allowed
• Entrepreneurs with low risk tolerance may prefer loans to maintain full ownership
• What are the two main categories of sources of finance?

  Internal and external
• What is one advantage of crowdfunding as a source of finance?

  Builds customer engagement
• What is a disadvantage of retained profits as a source of finance?

  May delay dividends
• Retained profits do not require interest payments.


  True
• Higher-risk ventures often seek loans rather than venture capital.

  False
• Choosing the right source of finance is vital for the success of the business.


  True