Explain why people who own a small business may not enjoy pure independence.
> Discuss the advantages of dealing through a business broker. What precautions should one take when dealing with a business broker?
> Should one ever consider purchasing a presently unsuccessful business (that is, a business with relatively low or no profits)? Explain.
> What are some arguments for buying an established business rather than starting one yourself?
> What do you think will be the growth areas (in products, services, and geographic areas) for franchises in the near future?
> What is the difference between a franchise, a franchisee, and a franchisor?
> Explain how a franchise could be considered a partnership. What makes a franchise agreement simpler than a partnership that you would start with another individual?
> If you are the franchisee of a bookstore and you are offered twice the business’s book value to sell it to a third party, should you or the franchisor collect the additional money? Take a position and justify it.
> You are worried that someone else will buy a specific franchise in your area before you do. Would it be all right to sign the franchise agreement before talking to your lawyer or accountant if you intend to meet with them later? Explain.
> What are the potential sources of conflict between franchisees and franchisors?
> After reading about the topics included in a franchise agreement, who do you think controls most of the power in a franchise: the franchisee or the franchisor? Explain.
> Why are small businesses more likely than large businesses to be innovative?
> Is the disclosure statement the only source of information you need to check out a potential franchise? Why or why not?
> What is a royalty fee?
> What do you expect to get in return for paying a franchise fee?
> What are the biggest advantage and the biggest disadvantage of franchising? Justify your answer.
> How would you explain the difference between franchises and other forms of business ownership?
> What is the difference between a pull system and a push system of inventory control?
> After you have read about entrepreneurship in Chapter 2, would you consider someone who buys a franchise to be an entrepreneur? Does franchising stifle entrepreneurship?
> What is the difference between product-distribution franchises and business-format franchises? Give an example for each that has not been cited in the text.
> Consider the make-or-buy decision. Give three examples of situations when a business should make rather than buy. Give three examples of situations when a business should buy rather than make.
> How would the computer industry be different today if there were no businesses under 500 employees? Would personal computers exist?
> Aside from reducing inventory levels, what does the just-in-time philosophy promote?
> What factors should be considered when purchasing for a small business?
> When would an ABC inventory system be appropriate?
> Assume that you are the owner of the sporting goods store used in the example of economic order quantity inventory control You typically sell 14,500 sweatshirts per year. Your ordering costs are $10 per order. Holding costs are $0.60 per sweatshirt per y
> How can shrinkage affect an inventory system?
> Explain how the Pareto rule is important to a small business owner.
> Purchasing products or materials is obviously an important part of running a small business. What are the pros and cons of developing a relationship with a single vendor from whom to purchase most of your products versus using multiple vendors and not de
> Many small businesses are built around one product. What risks does this approach impose? How can small business owners minimize those risks? How can a small business develop new products?
> What factors should be considered when purchasing for a small business?
> When would forming a limited-liability company be more advantageous than creating a C corporation or a partnership?
> The chapter discussed the evolution of small business in the American economy. On the heels of the rapid growth in the popularity of Internet businesses in the late 1990s and the ensuing bust in 2000, and now the trend away from online and toward mobile
> Under what conditions would you consider joining a partnership? Why would you avoid becoming a partner?
> Sole proprietorships make up 76 percent of all U.S. businesses and generate 6 percent of all business revenue. Only 18 percent of all sole proprietorships are incorporated, but they generate 90 percent of all revenue. What do these statistics tell you ab
> After startup, what is the single most important tool the small business owner has at his or her disposal for ensuring the success of the business? Why is it so crucial?
> Discuss the legal ramifications of starting your own business. Where should the new entrepreneur go to get information and advice regarding laws that govern the type of business that is being promoted?
> What are some of the tangible resources that the new entrepreneur might need in order to go into business initially? What are some options for obtaining capital for a business that is brand new and therefore has no financial history?
> Is a business plan really necessary even for a very small startup business? How much market analysis and competitive analysis should the new entrepreneur conduct prior to startup?
> Give some examples of things the new entrepreneur should immediately investigate in order to ensure to the maximum extent possible that the business will “get off the ground.”
> What criteria do you see as most critical when differentiating an idea from an opportunity?
> What are some examples of consumer preferences and values? What are some examples of things the new business owner can do to ensure capturing some of the market for the good or service being produced?
> Entrepreneurs get their ideas for business startups from various sources. Elaborate on these sources, and analyze which ones are the most reliable indicators for the new business owner with regard to future success.
> Is creative destruction just another economic theory for the foundation of capitalism? Build a case supporting your answer.
> Explain the concept “window of opportunity” as it relates to new startups from idea conception through the final decision about whether or not to turn the idea into a reality.
> Many entrepreneurs test the waters of a market by starting a sideline business. What are the advantages and disadvantages of selling items on Internet auctions like eBay? Is a person who regularly has 20 or 25 items for sale at any given time an entrepre
> Define “hypergrowth” companies, and evaluate the reasons for their phenomenal rate of growth. What are the most valid explanations for the rate of success found in these companies?
> Compare and contrast the advantages and disadvantages of starting a business from the ground up. Be sure to include the different types of businesses in your analysis.
> Think of an activity that you love to do; it could be a personal interest or a hobby. How could you turn your passion for this activity into a business? What questions would you have to answer for yourself before you took this step? What triggering event
> If personal characteristics or personality traits do not predict who will be a successful entrepreneur, why are they significant to the study of entrepreneurship or small business management? Which characteristics do you think are most important?
> If a friend told you that entrepreneurs are high risk takers, how would you set the story straight?
> Why might personality characteristics may be good predictors of who will be a successful entrepreneur?
> Define “at-will” employment status.
> What financial risks would Mighty Leaf take by pursuing a supermarket strategy? 2. How could they moderate cash flow problems? 3. What would you recommend Mighty Leaf do? Be sure to justify your recommendation?
> Explain the four components of an effective disciplinary system.
> What factors influence the type and amount of employee benefits that a small business can offer?
> List the advantages of a flexible benefit package to employees and to the employer.
> Review the section on training new employees. Give examples of types of jobs that would best lend themselves to each training method.
> What are the advantages and disadvantages of giving content away? 2. What if the new strategy didn’t work and the content was now free? 3. What would you advise Skurman to do and still have a viable company?
> Could a new CEO do better? 2. Would you recommend the Mirzas hire their own boss? What would that new job description include? 3. If hiring a CEO is not the answer, what should they do to get their business to the next level?
> Hoffman's gut told him to litigate aggressively. But do you think that was a smart move? 2. Should he settle? Or should he press his case before a judge? 3. Put yourself in Hoffman's place. What would you do?
> Why is the executive summary the most important section of the business plan?
> Why wouldn’t a 100-page business plan be four times better than a 25-page business plan?
> Why do some prospective business owners refuse to plan?
> Is workforce diversity as important to small businesses as it is to big businesses? Why or why not?
> What are your personal screen inspirations? What lessons do these or other movies provide in running a small business? 2. In addition to the movies cited in this case, think of other titles for business lessons such as Risky Business, Pirates of Silicon
> Describe applications of artificial intelligence and machine learning in the financial services industry.
> What is a difference between Bitcoin and Ethereum?
> What are the risks associated with DLT?
> What is the duration of a 20-year 8 percent coupon (paid semiannually) Treasury bond (deliverable against the Treasury bond futures contract) selling at par? b. What is the predicted impact on the Treasury bond price based on its duration if interest
> Calculate the leverage-adjusted duration gap of an FI that has assets of $1 million invested in 30-year, 10 percent semiannual coupon Treasury bonds selling at par and whose duration has been estimated at 9.94 years. It has liabilities of $900,000 fi
> What is the duration of a two-year bond that pays an annual coupon of 10 percent and whose current yield to maturity is 14 percent? Use $1,000 as the face value. b. What is the expected change in the price of the bond if interest rates are expected to
> FirstBank has the following balance sheet (in millions of dollars): Calculate the NSFR for FirstBank.
> WallsFarther Bank has the following balance sheet (in millions of dollars). Cash inflows over the next 30 days from the FI’s performing assets are $5.5 million. Calculate the LCR for WallsFarther Bank.
> Calculate the following ratios for Lake of Egypt Marina Inc. as of year-end 2022. Using these ratios for Lake of Egypt Marina Inc. and the industry, what can you conclude about Lake of Egypt Marina’s financial performance for 2022? (Ra
> How might we determine whether these ratios reflect a well-managed, creditworthy company?
> How does distributed ledger technology (DLT) work? What is blockchain?
> Use the balance sheet and income statement below to construct a statement of cash flows for 2022 for Clancy’s Dog Biscuit Corp.
> In 2021, Webb Sports Shop had cash flows from investing activities of $2,567,000 and cash flows from financing activities of $3,459,000. The balance in the firm’s cash account was $950,000 at the beginning of 2021 and $1,025,000 at the end of the year. C
> Consider the following income statement for Watchover U Savings Inc. (in millions): a. What is WatchoverU’s expected net interest income at year-end? b. What will be the net interest income at year-end if interest rates rise by 2 perc
> XYZ Inc. has issued 10 million new shares of stock. An investment bank agrees to underwrite these shares on a best efforts basis. The investment bank is able to sell 8.4 million shares for $27 per share, and it charges XYZ $0.675 per share sold. How m
> What is the amount of the annuity purchase required if you wish to receive a fixed payment of $200,000 for 20 years? Assume that the annuity will earn 10 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment ann
> The average daily net transaction accounts of a local bank during the most recent reserve computation period is $325 million. The amount of average daily reserves at the Fed during the reserve maintenance period is $24.60 million, and the average dai
> City Bank has estimated that its average daily net transaction accounts balance over the recent 14-day computation period was $225 million. The average daily balance with the Fed over the 14-day maintenance period was $8 million, and the average daily
> Two depository institutions have composite CAMELS ratings of 1 or 2 and are “well capitalized.” Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Further, the institutions
> Two depository institutions have composite CAMELS ratings of 1 or 2 and are “well capitalized.” Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Further, the institutions
> Financial Fitness Bank reported a debt-to-equity ratio of 1.75× at the end of 2021. If the firm’s total assets at yearend were $25 million, how much of its assets are financed with debt? How much with equity?
> What is fiat currency? Is Bitcoin a fiat currency?
> Financial analysts forecast Safeco Corp. (SAF) growth for the future to be 10 percent. Safeco’s recent dividend was $1.20. What is the fair present value of Safeco stock if the required rate of return is 12 percent?
> You have been asked to analyze First Union Bank. You have only the following information on the bank at year-end 2021: Net income is $250,000, total debt is $2.5 million, and the bank’s debt ratio is 55 percent. What is First Union Bank’s ROE for 202
> A preferred stock from Duquesne Light Company (DQUPRA) pays $2.10 in annual dividends. If the required rate of return on the preferred stock is 5.4 percent, what is the fair present value of the stock?
> How many ExxonMobil May 2020 $40.00 put options were outstanding at the open of trading on March 13, 2020? b. What was the settlement price of a 10-year Treasury note May 138.00 futures call option on March 13, 2020? c. What was the closing price of a
> Refer to Table 10–4. a. What was the settlement price on the September 2020 2-year U.S. Treasury notes futures contract on March 13, 2020? b. How many five-year Treasury note futures contracts traded on March 13, 2020? c. What is the
> What was the closing price on the CVS 5.050 percent coupon bonds on January 10, 2020? b. What was the S&P bond rating on Las Vegas Sands Corp 3.200 percent coupon bonds maturing in 2024 on January 10, 2020? c. What was the closing price on Petrole
> Refer to Table 6–7. Verify the yield of 3.984 percent on the Viacom Inc. bonds with a coupon of 4.375 percent and a maturity date of March 15, 2043.
> The overnight fed funds rate on December 19, 2019, was 1.55 percent. Compute the bond equivalent rate and the effective annual return on the fed funds as of December 19, 2019.
> Jones Bank has been borrowing in the U.S. markets and lending abroad, thereby incurring foreign exchange risk. In a recent transaction, it issued a one-year $5 million CD at 4 percent and is planning to fund a loan in yen at 6 percent for a 2 percent
> Suppose that, instead of funding the $200 million investment in 10 percent German loans with U.S. CDs, the FI manager in Problem 10 funds the German loans with $200 million equivalent one-year euro CDs at a rate of 7 percent. Now the balance sheet of
> What are the three purposes of money? Does cryptocurrency fulfill these purposes?
> On March 13, 2020, you convert 500,000 U.S. dollars to Japanese yen in the spot foreign exchange market and purchase a six-month forward contract to convert yen into dollars. How much will you receive in U.S. dollars at the end of six months? Use the
> Refer to the stock market quote in Table 8–1. a. What was the closing stock price for Genprex Inc. on February 21, 2020? b. What was the dollar change in Oncolytics Biotech's stock price from February 20, 2020, and February 21, 2020?
