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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. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






2. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






3. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






5. The maximum amount of cash that a partner is required to contribute under the terms






6. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






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






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






9. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






10. A business owned by stockholders who share in its profits but are not personally responsible for its debts






11. 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.






12. 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






13. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






14. The way you buy stock






15. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






16. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.






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






18. 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






19. 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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20. Cannot get other outside investors-No Shop






21. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.






22. 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






23. 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






24. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






25. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s






26. How you get to vote






27. 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.






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






29. The practice of a large company taking a minority equity position in a smaller company in a related field.






30. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo






31. 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 -






32. 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.






33. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






34. How much the company is worth before an investment






35. 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






36. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






37. The first round of stock offered during the seed or early stage round by a portfolio company to the venture investor or fund. This stock is convertible into common stock in certain cases such as an IPO or the sale of the company. Later rounds of pref






38. 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) ...






39. 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






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






41. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






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






43. 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.






44. An IPO that has met certain






45. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






46. The equity ownership in a corporation. Also has basic voting rights






47. How you get out






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






49. 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






50. Selling an interest in your business to an outside party to raise money.