economics

Question 1

why businesses need to borrow

Answer 1

1. purchase stock
2. Expansion
3. renovations
4. payroll

Question 2

how do businesses raise money

Answer 2

1. Borrowing from family and friends
2. Banks or other financial institutions
3. Venture capitalist

Question 3

borrowing from family and friends

Answer 3

+: easier to access
-: could ruin relationships

Question 4

banks and other financial institutions

Answer 4

+: build your credit score
-: high interest rates

Question 5

Venture capitalist or silent partners

Answer 5

+: offer you more money
-: hard to reach

Question 6

bonds

Answer 6

-long term investment
-less risky than stocks
-larger companies
-if company goes bankrupt then lose all money

Question 7

stocks

Answer 7

-sell shares of companies
-gives up ownership of company
-CEOs can lose their position at any time by being voted out by trustees

Question 8

stock market

Answer 8

-secondary market
-$ goes to previous owner of stock
-purchase stocks through broker (expensive, online=cheaper)
-$ by buying low selling high, holding

Question 9

The Securities and Exchange Commission (SEC)

Answer 9

in charge of enforcing Federal rules when it comes to publicly traded companies

Question 10

SEC’s job

Answer 10

make sure that publicly traded companies are giving out required public information
no insider trading

Question 11

which one is suitable to keep control of the business

Answer 11

bank loan