Ten questions on how businesses are structured and financed, each translated into plain language.
This quiz covers the mechanics of enterprise: what shares represent, how companies raise money, what the common abbreviations stand for, and how goods reach customers. It is descriptive throughout and contains no financial advice or recommendation. The explanations give the plain meaning of each term and flag the ones that get used far more loosely in conversation than their definitions allow.
Every question in this quiz is listed below with its correct answer and the reasoning behind it. Play first if you would rather not see the answers — or read through as a study sheet.
Play it insteadAnswer: D. Part ownership of the company
Why: Shareholders own a portion of the company and any claim on its profits. Bondholders, by contrast, have lent money and are owed repayment.
Answer: C. Initial Public Offering
Why: An IPO is the first sale of a company's shares to the public. It raises capital and lets earlier investors sell their holdings.
Answer: C. Selling to other businesses rather than consumers
Why: B2B companies serve organisations, while B2C sell directly to individuals. Sales cycles in B2B are typically longer and involve more decision-makers.
Answer: B. Revenue minus costs
Why: Profit is what remains after costs are subtracted from revenue. A business can grow revenue rapidly while remaining unprofitable.
Answer: D. Funding growth from savings and revenue rather than outside investment
Why: Bootstrapped founders retain full ownership and control but usually grow more slowly. It trades speed for independence.
Answer: B. Operate a business under an established brand and system
Why: The franchisee pays fees for the brand, methods and support. Much of the fast food and hotel sector operates this way.
Answer: D. Overseeing management on behalf of shareholders
Why: The board sets direction and holds executives accountable. Day-to-day running is the job of the management team.
Answer: B. The sequence of steps taking a product from raw materials to the customer
Why: It covers sourcing, manufacture, transport and delivery. Disruption at any single stage can halt the whole sequence.
Answer: C. Someone who starts and runs a venture, taking on its risk
Why: The defining feature is bearing the risk of the venture. Success and failure both fall disproportionately on the founder.
Answer: A. Profit as a proportion of revenue
Why: Margin shows how much of each unit of revenue is kept as profit. Two businesses with identical revenue can have very different margins.
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The English word "salary" comes from the Latin word for which substance?