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






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






3. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.






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






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






6. 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






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






8. 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






9. 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






10. 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






11. How you get to vote






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






13. 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.






14. An IPO that has met certain






15. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






16. 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.






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






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






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






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






21. How you get out






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






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






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






26. It refers mainly to insurance companies - pension funds and investment companies collecting savings and supplying funds to markets - but also to other types of institutional wealth (e.g. endowments funds - foundations etc.).






27. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






28. 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






29. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






30. 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






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






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






34. The internal rate of return on an investment.






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






36. 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






37. 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) ...






38. The rate at which a company expends net cash over a certain period - usually a month.






39. 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.






40. 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






41. 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






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. 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






44. 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






45. 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.






46. 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






47. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.






48. 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






49. 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 -






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