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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. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Restricted Stock
Initial Public Offering
Common Equity
Liquidation Preference
2. 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.
corporate venturing
Restricted Stock
Outstanding Stock
S Corporation
3. The amount of this available to a management team for venture investments.
Book Value
capital under management
Restricted Stock
Equity
4. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
General Partner (GP)
seed capital
Common Equity
Business Summary
5. 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
Subordinated Debt
Preferred Stock
equity financing
private equity
6. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Corporation (Limited liability and taxation)
lead investor
No Shop/Confidentiality
Stock Price Agreement
7. 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
Venture Capitalist
Qualified IPO
follow-on
going private
8. 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
seed capital
Internal Rate of Return
Capital Commitment
Liquidation
9. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
mezzanine financing
Capital
going private
secondary public offering
10. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.
Burn Rate
Lead Investor
liquidation
Confidentiality
11. Assets are subject to double taxation - Unlimited number of investors
C Corporation
Dividends
fund of funds
Voting Rights
12. 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 -
Outstanding Stock
limited partnerships
lock-up period
turnaround
13. The maximum amount of cash that a partner is required to contribute under the terms
buyout
seed capital
Capital Commitment
executive summary
14. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Capitalization Table
Qualified IPO
fund of funds
15. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi
Voting Rights
benchmarks
Liquidation
Elevator Pitch
16. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Senior Stock
Pre-Money Valuation
Capital Commitment
17. 'I will buy stock at price we negotiate'
follow-on
private investment in public equities (PIPE)
limited partnerships
Stock Price Agreement
18. How you get out
Liquidation Preference
raising capital
equity offerings
Subordinated Debt
19. The method by which an investor will realize an investment.
exit route
Common Equity
secondary public offering
Capital
20. An IPO that has met certain
S Corporation
recapitalization
secondary purchase
Qualified IPO
21. Compound internal rate of return.
buyout
secondary purchase
seed capital
IRR
22. 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
Closing
Liquidation Preference
private equity
turnaround
23. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
PPM
Corporation (Limited liability and taxation)
capital gain
management buy-in (MBI)
24. An investment vehicle designed to invest in a diversified group of investment funds.
Venture Capitalist
Pre-Money Valuation
fund of funds
closing
25. 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
exit route
Business Plan
Lead Investor
equity offerings
26. 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.
Restricted Stock
venture capital
Business Plan
lock-up period
27. The rate of return or profit that an investment is expected to earn.
Dividends
Bridge Financing
Internal Rate of Return
equity financing
28. The company or entity into which a fund invests directly.
limited partnerships
IPO (Initial Public Offering)
Stock Price Agreement
portfolio compaay
29. 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.
Due Diligence
mezzanine financing
bridge loans
Pre-Money Valuation
30. This refers to obtaining capital from investors or venture capital sources.
raising capital
bridge loans
equity financing
Subordinated Debt
31. 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.
acquisition
closing
term sheet
Post-money
32. 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.
Membership Interest
Limited Partnership Agreement
syndication
management buy-in (MBI)
33. Term sheet for equity offering
Liquidation Preference
Senior Stock
Preferred Stock
Term Sheet
34. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Capital Commitment
buyout
Private Equity
acquisition
35. Date the LP's subscription is effective and they become partner
benchmarks
Closing
institutional investors
Initial Public Offering
36. No double tax - Limited number of investors
seed capital
S Corporation
Angel Financing
Subordinated Debt
37. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Restricted Shares
raising capital
Liquidation
Adjusted Book Value
38. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Liquidity Event
Deal Structure
Pre-Money Valuation
39. 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
Restricted Stock
venture capital
Preferred Stock
equity offerings
40. Cannot get other outside investors-No Shop
Common Stock
No Shop/Confidentiality
debt financing
Post-money
41. How you get to vote
Liquidation
Voting Rights
IPO (Initial Public Offering)
Common Stock
42. Issue of shares of a company to the public by the company (directly) for the first time.
mezzanine financing
minority enterprise small business investment companies (MESBICS)
IPO(initial public offerings)
Bridge Financing
43. 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
Book Value
IPO(initial public offerings)
capital gain
series a preferred stock
44. 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.
raising capital
private investment in public equities (PIPE)
Bootstrapping
Closing
45. Letter of intent summarizing the key legal and financial terms
Term Sheet
Book Value
leverage buy-out(LBO)
Burn Rate
46. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.
Preferred Stock
Common Stock
turnaround
fund of funds
47. The practice of a large company taking a minority equity position in a smaller company in a related field.
exit route
leverage buy-out(LBO)
corporate venturing
portfolio compaay
48. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
lock-up period
raising capital
Adjusted Book Value
lead investor
49. 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
Stock Price Agreement
Term Sheet
Cash-out election
liquidation
50. 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.
Preferred Stock
Bridge Financing
Term Sheet
syndication