1)Which of the following is false regarding the use of debt?

a. Debt decreases ROE if the use of borrowed funds is greater than the cost of capital.

b. The actual cost of debt is modified by the tax shelter aspects of interest deductibility.

c. Debt increases fixed costs and therefore affects the breakeven point.

d. Subordinated debt is not safe it is subordinated to preferred stock.

2)Which of the following are parts of the Entrepreneurial Process?

I. Development of the business opportunity (the Concept)

II. Gathering Resources

III. Raising Capital

IV. Protection of Intellectual Property

V. Managing and Building Operations

a. All are parts of the Entrepreneurial Process

b. Only I, II, and IV are parts.

c. All except IV are parts.

d. Only I, II, and V are parts.

e. None of them are parts.

3) Which of these is not a characteristic of an LLC?

a. Board of directors not required and unlimited members are allowed.

b. An LLC can be formed by a single individual, in which case it is usually referenced as a single member LLC.

c. The owners of a limited liability company are often referenced as members, as opposed to stockholders.

d. There is no recourse against owners for business liabilities.

e. Income is double-taxed with an LLC.