Jamie Applies for a Small-Business Loan from the SBA

question 61

Multiple Choice

Jamie applies for a small-business loan from the SBA.If he is approved for the loan, where will the money actually come from?

• A) the government
• B) private lenders
• C) venture capitalists
• D) the Small Business Administration
• E) other small businesses

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Definitions:

Optimal Capital Structure

The best mix of debt, preferred stock, and common equity that maximizes a company’s stock price while minimizing its cost of capital.

Stock Price

The current market price of a company's shares, as bought and sold by investors on stock exchanges.

Cost of Capital

The mandatory rate of gain a business must realize on its investment schemes to maintain its market identity and attract funds.

Return on Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently equity is used to generate profits.