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Venture Capital

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. The way you buy stock






2. 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






3. How you get to vote






4. 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






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






6. How you get out






7. 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






8. 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.






9. The total value of the company immediately prior to the latest round of financing






10. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






11. 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.






12. How much the company is worth before an investment






13. Letter of intent summarizing the key legal and financial terms






14. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






15. 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






16. 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






17. 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






18. Date the LP's subscription is effective and they become partner






19. 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






20. 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.






21. 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.






22. 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.






23. 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






24. 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






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






26. Term sheet for equity offering






27. 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.






28. 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






29. 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






30. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






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






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






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






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






36. Compound internal rate of return.






37. 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






38. The equity ownership in a corporation. Also has basic voting rights






39. 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.






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






41. The method by which an investor will realize an investment.






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






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






44. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






45. 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






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






47. No double tax - Limited number of investors






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






50. An IPO that has met certain