Scenario 9-1

question 70

Multiple Choice

Scenario 9-1. Jim is interested in beginning his own small business dealing with the repair and maintenance of household appliances. He has a talent for fixing these types of appliances and has been doing so as a sideline business for several years. He has acquired some of the needed tools; however, a sizeable investment will need to be made in tools and equipment in order for him to repair the appliances that will be brought to his shop for service. He would like part of his competitive advantage to be the capability to fix all appliances, not just one type. Jim has just one small problem--a lack of funds. He comes to you for advice.
-In Scenario 9-1, the primary disadvantages of using debt financing are all but which of the following?

• A) it increases risk due to the possibility of insolvency
• B) it allows a voice in management of the business
• C) it has to be repaid
• D) leverage can enable returns to be lessened

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Definitions:

Benthos

Bottom-dwelling sea organisms that fix themselves to one spot, burrow into the sediment, or simply walk about on the ocean floor.

Organisms Category

Classification of living entities into groups based on shared characteristics, such as species, genus, family, etc., to organize biological diversity.

Aquatic Biomes

Large regions of water in the environment, such as oceans, rivers, lakes, and wetlands, characterized by distinct ecological communities.

Salinity

The concentration of salts in water or soil, an important factor affecting the distribution of plant and animal life, as well as agricultural productivity.