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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. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
Senior Stock
S Corporation
Preferred Stock
2. 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) ...
Equity
Initial Public Offering
Venture Capital Financing
Post-money
3. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
seed capital
exit route
capital gain
Liquidation
4. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Dividends
angel investors
Lead Investor
5. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
Venture Capital Financing
raising capital
Business Summary
executive summary
6. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally
Book Value
Pre-Money Valuation
Liquidation Preference
Confidentiality
7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Pre-money valuation
equity offerings
executive summary
Internal Rate of Return
8. Letter of intent summarizing the key legal and financial terms
Capital Commitment
portfolio compaay
Preferred Stock
Term Sheet
9. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Due Diligence
institutional investors
series a preferred stock
buyout
10. No double tax - Limited number of investors
Liquidation
S Corporation
equity offerings
syndication
11. 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
Closing
Cash-out election
Liquidity Event
equity offerings
12. This refers to a synopsis of the key points of a business plan.
Capital Call 'Drawdown'
Closing
minority enterprise small business investment companies (MESBICS)
executive summary
13. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Common Stock
Term Sheet
Stock Price Agreement
14. 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.
lock-up period
Confidentiality
angel investors
mezzanine financing
15. 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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16. Document between general and limited partnership of each fund spells out details of the partnership.
Business Summary
Limited Partnership Agreement
leverage buy-out(LBO)
equity offerings
17. 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
benchmarks
IRR
Preferred Stock
Common Stock
18. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Capital Commitment
General Partner (GP)
Warrants
IPO (Initial Public Offering)
19. The total value of the company immediately prior to the latest round of financing
Business Plan
Pre-money valuation
capital under management
going private
20. 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.
Capital
seed capital
institutional investors
acquisition
21. Don't talk to the market about the company
Confidentiality
Limited Partnership Agreement
Restricted Stock
exit
22. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Conversion Rights
Warrants
Liquidity Event
management buy-out (MBO)
23. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
IPO(initial public offerings)
liquidation
secondary purchase
24. 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
Limited Partner
Dividends
Bridge Financing
IPO (Initial Public Offering)
25. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
turnaround
recapitalization
mezzanine financing
26. Assets are subject to double taxation - Unlimited number of investors
C Corporation
management buy-in (MBI)
Preferred Stock
buyout
27. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Conversion Rights
Voting Rights
due diligence
syndication
28. 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.
Initial Public Offering
recapitalization
Due Diligence
PPM
29. The company or entity into which a fund invests directly.
Anti-Dilution Protections
Bridge Financing
portfolio compaay
debt financing
30. The method by which an investor will realize an investment.
Bootstrapping
institutional investors
exit route
raising capital
31. This refers to obtaining capital from investors or venture capital sources.
Liquidation Preference
Liquidity Event
Pre-Money Valuation
raising capital
32. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
equity financing
capital gain
PPM
33. 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
General Partner (GP)
Liquidation
Pre-money valuation
going private
34. The total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public
capital under management
minority enterprise small business investment companies (MESBICS)
IPO(initial public offerings)
Market Capitalization
35. 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
Preferred Stock
bridge loans
recapitalization
buyout
36. 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.
Liquidation Preference
fund of funds
management buy-out (MBO)
Restricted Shares
37. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Capital Call 'Drawdown'
debt financing
Liquidation Preference
Angel Financing
38. A business owned by stockholders who share in its profits but are not personally responsible for its debts
capital gain
Corporation (Limited liability and taxation)
Liquidation
Common Stock
39. The rate of return or profit that an investment is expected to earn.
Closing
Internal Rate of Return
venture capital
Common Equity
40. The way you buy stock
Capital
Limited Partnership Agreement
PPM
Closing
41. 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
series a preferred stock
Business Plan
Lead Investor
Senior Stock
42. An IPO that has met certain
Qualified IPO
corporate venturing
Common Equity
Initial Public Offering
43. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
management buy-out (MBO)
Closing
Elevator Pitch
44. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Elevator Pitch
minority enterprise small business investment companies (MESBICS)
follow-on
secondary purchase
45. 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
private equity
debt financing
term sheet
Restricted Stock
46. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
PPM
Lead Investor
capital gain
follow-on
47. 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
Post-Money Valuation
Pre-Money Valuation
executive summary
Liquidation Preference
48. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
due diligence
Initial Public Offering
bridge loans
Adjusted Book Value
49. 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.
IRR
Bridge Financing
capital under management
Common Equity
50. 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
Common Equity
Post-Money Valuation
Private Equity
management buy-out (MBO)