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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






2. Letter of intent summarizing the key legal and financial terms






3. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






4. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






5. The rate at which a company expends net cash over a certain period - usually a month.






6. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






7. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.






8. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.






9. The company or entity into which a fund invests directly.






10. The way you buy stock






11. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






12. The rate of return or profit that an investment is expected to earn.






13. Term sheet for equity offering






14. 'I will buy stock at price we negotiate'






15. How you get to vote






16. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






17. Compound internal rate of return.






18. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.






19. Document between general and limited partnership of each fund spells out details of the partnership.






20. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






21. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






22. A security with limits on its transferability. Usually issued in connection with a private placement






23. An IPO that has met certain






24. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






25. This refers to obtaining capital from investors or venture capital sources.






26. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






27. 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.






28. The value at which an asset is carried on a balance sheet (the cost of the item)






29. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






30. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






31. An investment vehicle designed to invest in a diversified group of investment funds.






32. Issue of shares of a company to the public by the company (directly) for the first time.






33. 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






34. Don't talk to the market about the company






35. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project






36. The internal rate of return on an investment.






37. This refers to a synopsis of the key points of a business plan.






38. Cannot get other outside investors-No Shop






39. Date the LP's subscription is effective and they become partner






40. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






41. The total value of the company immediately prior to the latest round of financing






42. 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






43. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






44. The amount of this available to a management team for venture investments.






45. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






46. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.






47. How much the company is worth before an investment






48. 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.






49. 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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50. Money used to purchase equity-based interest in a new or existing company. A venture capitalists return usually comes from preferred stock - a share of profits - royalties or capital appreciation of common stock. Most venture capitalists look for c







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