John and Ruby Couch Just Opened a Computer Store in a Small

question 56

Multiple Choice

John and Ruby Couch just opened a computer store in a small community. Before opening the store, they listened to their SBA counselor's warnings about the importance of having balanced experience―that is, marketing, finance, and personnel experience―in the computer-store business because

• A) their business is unlikely to grow and earn large business profits.
• B) the computer-store business is a fad.
• C) management know-how is insignificant to small-business success.
• D) small businesses survive large businesses by three years.
• E) about two out of three small firms close within five years of their founding.

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Definitions:

Average Return

The arithmetic mean of a series of returns generated over a period of time.

Treasury Bills

Short-term government securities issued at a discount from the face value and mature at par, representing a safe and liquid investment option.

Canadian Common Stocks

Equity shares issued by Canadian corporations, representing ownership in the company and entitling holders to dividends and voting rights.

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows.