When Using Equity Financing from Family and Friends

question 3

Multiple Choice

When using equity financing from family and friends:

• A) business arrangements should be in good faith.
• B) details such as terms of the investment and rights of the investor need not be in writing.
• C) they can be more patient than other investors in when they expect a return on investment.
• D) since the amount of money is usually small, they do not have an ownership position in the venture.

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Definitions:

Disposable Income

The available financial amount for households to use in saving or spending after accounting for income tax.

Saving

The action of setting aside a portion of one's income or resources for future use or investment.

Disposable Income

The financial resources that households can allocate towards savings and expenditures after income tax deductions.

Saving

The portion of income not spent on current consumption, often put aside for future use or investments.