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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. 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.






2. 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






3. 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.






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






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






6. 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.






7. Partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment






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






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






10. 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






11. How you get to vote






12. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






13. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






14. 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.






15. Assets are subject to double taxation - Unlimited number of investors






16. 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






17. How much the company is worth before an investment






18. 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






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






20. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






21. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






22. A form of equity ownership in a corporation that contains preferences over common stock - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights






23. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






24. 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






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






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






27. 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 -






28. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






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






30. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri






31. The method by which an investor will realize an investment.






32. Cannot get other outside investors-No Shop






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






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






35. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






36. 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






37. An IPO that has met certain






38. Term sheet for equity offering






39. No double tax - Limited number of investors






40. 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.






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






42. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell






43. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






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






45. 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) ...






46. 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






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






48. The party that manages a limited partnership and is liable for the debts of the company






49. Investments by a private equity fund in a publicly traded company - usually at a discount.






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







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