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Test your basic knowledge |
Venture Capital
Start Test
Study First
Subject
:
industries
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The equity ownership in a corporation. Also has basic voting rights
secondary purchase
capital under management
Common Stock
Private Equity
2. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Preferred Stock
Capital
exit
equity offerings
3. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
equity financing
Capital
Book Value
Market Capitalization
4. Term sheet for equity offering
lock-up period
Conversion Rights
Term Sheet
Book Value
5. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.
syndication
term sheet
Capital Call 'Drawdown'
lead investor
6. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c
small business investment companies (SBIC)
Limited Partner
Liquidation
Pre-Money Valuation
7. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Restricted Stock
Senior Stock
IPO(initial public offerings)
Common Equity
8. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.
Closing
follow-on
Capital
Outstanding Stock
9. Letter of intent summarizing the key legal and financial terms
Term Sheet
Deal Structure
Market Capitalization
mezzanine financing
10. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in
NDA (Non-disclosure agreement)
Common Stock
Pre-Money Valuation
Liquidation Preference
11. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
series a preferred stock
IRR
PPM
12. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
secondary public offering
Subordinated Debt
buyout
small business investment companies (SBIC)
13. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
No Shop/Confidentiality
small business investment companies (SBIC)
Internal Rate of Return
14. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.
Limited Partner
Deal Structure
corporate venturing
Subordinated Debt
15. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment
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16. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the
S Corporation
going private
Common Stock
IPO(initial public offerings)
17. Selling an interest in your business to an outside party to raise money.
PPM
series a preferred stock
debt financing
equity financing
18. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Bridge Financing
equity offerings
IPO(initial public offerings)
buyout
19. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid
equity offerings
Outstanding Stock
secondary public offering
Elevator Pitch
20. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
going private
fund of funds
secondary public offering
institutional investors
21. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
corporate venturing
due diligence
debt financing
lock-up period
22. Assets are subject to double taxation - Unlimited number of investors
venture capital
Capital Commitment
C Corporation
Pre-Money Valuation
23. Cannot get other outside investors-No Shop
Cash-out election
Series A Preferred Stock
No Shop/Confidentiality
Subordinated Debt
24. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Subordinated Debt
Senior Stock
Due Diligence
Anti-Dilution Protections
25. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.
Post-Money Valuation
capital gain
lead investor
IPO (Initial Public Offering)
26. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Common Stock
Limited Partnership Agreement
return on investment (ROI)
27. The internal rate of return on an investment.
equity offerings
Initial Public Offering
return on investment (ROI)
Confidentiality
28. Compound internal rate of return.
IRR
seed capital
Lead Investor
Post-Money Valuation
29. An IPO that has met certain
Qualified IPO
Series A Preferred Stock
due diligence
seed capital
30. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap
Seed Money
Common Equity
Market Capitalization
Internal Rate of Return
31. The method by which an investor will realize an investment.
Anti-Dilution Protections
Preferred Stock
Common Stock
exit route
32. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.
Business Summary
mezzanine financing
Limited Partner
Membership Interest
33. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
closing
Book Value
buyout
Term Sheet
34. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet
Membership Interest
Post-money
Cash-out election
angel investors
35. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
buyout
Warrants
term sheet
Liquidity Event
36. This refers to a synopsis of the key points of a business plan.
executive summary
Term Sheet
Restricted Stock
follow-on
37. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Closing
acquisition
return on investment (ROI)
38. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Due Diligence
Voting Rights
leverage buy-out(LBO)
portfolio compaay
39. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Qualified IPO
Lead Investor
Term Sheet
Conversion Rights
40. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
management buy-out (MBO)
recapitalization
Voting Rights
Anti-Dilution Protections
41. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no
bridge loans
Bridge Financing
Term Sheet
private equity
42. The way you buy stock
Bridge Financing
PPM
Voting Rights
equity offerings
43. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
minority enterprise small business investment companies (MESBICS)
Business Summary
Private Equity
bridge loans
44. A study of the background and financial reliability of the company - management team and industry.
fund of funds
benchmarks
Due Diligence
limited partnerships
45. How much the company is worth before an investment
acquisition
venture capital
Equity
Pre-Money Valuation
46. How you get to vote
Voting Rights
Corporation (Limited liability and taxation)
Liquidation
Venture Capitalist
47. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
leverage buy-out(LBO)
mezzanine financing
Liquidity Event
48. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation
Dividends
portfolio compaay
Voting Rights
secondary public offering
49. The residual ownership in a company like a corporation or LLC 51%=control
Cash-out election
Equity
Liquidity Event
Subordinated Debt
50. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t
Burn Rate
Corporation (Limited liability and taxation)
small business investment companies (SBIC)
Series A Preferred Stock