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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. How much the company is worth before an investment
Closing
Pre-Money Valuation
IRR
Business Plan
2. 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.
acquisition
Closing
turnaround
Term Sheet
3. 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
Limited Partner
Capital Call 'Drawdown'
liquidation
IPO(initial public offerings)
4. The company or entity into which a fund invests directly.
recapitalization
NDA (Non-disclosure agreement)
portfolio compaay
Initial Public Offering
5. 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
Warrants
Seed Money
closing
Conversion Rights
6. 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
bridge loans
venture capital
Term Sheet
follow-on
7. The internal rate of return on an investment.
Equity
IPO (Initial Public Offering)
equity financing
return on investment (ROI)
8. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
NDA (Non-disclosure agreement)
Warrants
Capital Call 'Drawdown'
9. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Capital
Venture Capitalist
Initial Public Offering
equity offerings
10. Assets are subject to double taxation - Unlimited number of investors
return on investment (ROI)
Common Equity
C Corporation
management buy-in (MBI)
11. 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
capital gain
Adjusted Book Value
Pre-money valuation
bridge loans
12. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
management buy-out (MBO)
capital gain
Initial Public Offering
Dividends
13. 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.
Dividends
mezzanine financing
Senior Stock
secondary public offering
14. 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
Preferred Stock
private equity
S Corporation
Equity
15. 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
limited partnerships
term sheet
Private Equity
Dividends
16. 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.
Pre-money valuation
management buy-out (MBO)
fund of funds
equity financing
17. 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
debt financing
closing
IPO (Initial Public Offering)
Initial Public Offering
18. 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
Capitalization Table
Common Stock
Pre-Money Valuation
Capital Commitment
19. The rate of return or profit that an investment is expected to earn.
Liquidity Event
Internal Rate of Return
Qualified IPO
NDA (Non-disclosure agreement)
20. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
turnaround
Seed Money
Senior Stock
exit route
21. The equity ownership in a corporation. Also has basic voting rights
IRR
Common Stock
bridge loans
debt financing
22. 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.
Venture Capital Financing
leverage buy-out(LBO)
minority enterprise small business investment companies (MESBICS)
Due Diligence
23. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
raising capital
Market Capitalization
Due Diligence
management buy-in (MBI)
24. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Business Summary
Corporation (Limited liability and taxation)
angel investors
Seed Money
25. 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
Market Capitalization
turnaround
Post-Money Valuation
leverage buy-out(LBO)
26. 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
follow-on
Private Equity
Angel Financing
27. 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
leverage buy-out(LBO)
Deal Structure
Lead Investor
Closing
28. 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.
Bootstrapping
Liquidation Preference
IPO (Initial Public Offering)
capital under management
29. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Term Sheet
return on investment (ROI)
secondary purchase
30. Term sheet for equity offering
Seed Money
executive summary
Capitalization Table
Term Sheet
31. The way you buy stock
venture capital
PPM
equity financing
portfolio compaay
32. 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 -
Liquidation Preference
limited partnerships
Term Sheet
Liquidation Preference
33. 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
Pre-Money Valuation
Common Equity
leverage buy-out(LBO)
Bridge Financing
34. Issue of shares of a company to the public by the company (directly) for the first time.
Venture Capital Financing
capital under management
Post-money
IPO(initial public offerings)
35. 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
Elevator Pitch
Capital
bridge loans
Series A Preferred Stock
36. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Voting Rights
Term Sheet
debt financing
exit
37. The practice of a large company taking a minority equity position in a smaller company in a related field.
C Corporation
Bootstrapping
corporate venturing
Common Stock
38. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
exit
Subordinated Debt
lock-up period
Warrants
39. 'I will buy stock at price we negotiate'
Stock Price Agreement
Liquidation
Venture Capitalist
Qualified IPO
40. 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.
Cash-out election
Equity
Elevator Pitch
lock-up period
41. Selling an interest in your business to an outside party to raise money.
Liquidation Preference
PPM
Capital Commitment
equity financing
42. Don't talk to the market about the company
due diligence
private investment in public equities (PIPE)
management buy-out (MBO)
Confidentiality
43. How you get to vote
Capitalization Table
Pre-money valuation
Voting Rights
IPO(initial public offerings)
44. 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
Liquidation Preference
Capital Commitment
Preferred Stock
Due Diligence
45. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Initial Public Offering
Business Summary
exit route
Outstanding Stock
46. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Equity
angel investors
Initial Public Offering
Post-money
47. 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.
Outstanding Stock
exit route
follow-on
recapitalization
48. The amount of this available to a management team for venture investments.
capital under management
series a preferred stock
Dividends
IPO (Initial Public Offering)
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. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Capitalization Table
series a preferred stock
closing