When Using Equity Financing from Family and Friends

question 20

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 have an ownership position in the venture.

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Definitions:

Analytical Reasoning

The process of evaluating information to solve problems through logical thinking and analytical skills.

B. F. Skinner

An influential American psychologist known for his work in behaviorism and development of operant conditioning – a method of learning that occurs through rewards and punishments.

Reinforcement

In psychology, a process in which a behavior is strengthened or increased by a consequence, such as a reward or a removal of an unpleasant stimulus.

Shaping

An educational strategy where reinforcing actions that progressively mimic the sought-after behavior are employed.