Sometimes Small Businesses Have to Use Debt Financing Instead of Equity

question 105

Multiple Choice

Sometimes small businesses have to use debt financing instead of equity financing.When they do,they discover that:

• A)banks give them a lower interest rate because of their closeness to the customer and better management practices.
• B)finance companies are their primary source for debt funding.
• C)the cost of debt financing is often less than the cost of equity financing.
• D)there are fewer lenders than investors in the marketplace,but the money is easier to get from lenders.

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Definitions:

Collective Bargaining

Collective bargaining is a process where employers and employees negotiate terms and conditions of employment, usually through labor unions.

Right-to-Work Laws

Legislation that prohibits union security agreements, ensuring that employment is not conditional upon union membership or fees.

Taft-Hartley Act

A 1947 federal law that restricts the activities and power of labor unions in the United States.

National Labor Relations Act

A foundational American law enacted in 1935 that protects workers' rights to organize and bargain collectively with their employers.