Question
Question 9 Which of the following statements is incorrect about financing small and medium businesses: Small and medium businesses can use non-equity finance such as bank overdrafts, term loans, hire purchase and leasing. Venture capital is a long-term finance provided by certain institutions to small and medium -sized businesses in order to exploit relatively high-risk opportunities. A business angel is an individual who supplies finance to start-up businesses or small businesses wishing to expand. Obtaining a public listing on the Stock Exchange is a popular source of finance for small businesses due to its low cost. 3 pts
Answer
4.4
(263 Votes)
Tilda
Elite · Tutor for 8 years
Answer
The incorrect statement is "Obtaining a public listing on the Stock Exchange is a popular source of finance for small businesses due to its low cost."
Explanation
## Step1: We will evaluate each statement against known sources or facts.## Step2: First one: "Small and medium businesses can use non-equity finance such as bank overdrafts, term loans, hire purchase and leasing." - This is true. These mentioned methods are commonly used methods financed for businesses in general.## Step3:Second one: "Venture capital is a long-term finance provided by certain institutions to small and medium-sized businesses in order to exploit relatively high risk opportunities." Yes, this is true that venture capital is usually for business opportunities that usually consider to be high risk.## Step4:Third one: "A business angel is an individual who supplies finance to start-up businesses or small businesses wishing to expand." Factually correct. Business angels are typically experienced entrepreneurs who themselves want to invest in other companies, usually in return for equity shares. ## Step5:Fourth one: "Obtaining a public listing on the Stock Exchange is a popular source of finance for small businesses due to its low cost." This is not as common or 'popular' among small businesses primarily due to the extensive prerequisites and the complications involved. Also, cost associated in the process such as, accountant’s fees for producing documents in strict accordance with regulations, legal and PR consultants, etc. acquired labor can be actually quite substantial.