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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. 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.






2. 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






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






4. 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






5. Term sheet for equity offering






6. The residual ownership in a company like a corporation or LLC 51%=control






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






8. 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






9. 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.






10. 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.






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






12. 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.






13. 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






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






15. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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 reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






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






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






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






22. Pre-money valuation plus the amount invested in the latest round






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






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






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






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






27. 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






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






29. Compound internal rate of return.






30. An IPO that has met certain






31. 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






32. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






33. 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






34. 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






35. 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






36. 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






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






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






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






40. 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






41. 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






42. 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






43. 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






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






45. 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






46. 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






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






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






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






50. How much the company is worth before an investment







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