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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. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Corporation (Limited liability and taxation)
IPO(initial public offerings)
Restricted Stock
secondary purchase
2. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
secondary public offering
Anti-Dilution Protections
Due Diligence
No Shop/Confidentiality
3. Pre-money valuation plus the amount invested in the latest round
exit route
Post-money
Liquidity Event
S Corporation
4. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
Limited Partnership Agreement
Common Stock
S Corporation
5. The practice of a large company taking a minority equity position in a smaller company in a related field.
exit route
lead investor
Closing
corporate venturing
6. Letter of intent summarizing the key legal and financial terms
equity financing
Senior Stock
leverage buy-out(LBO)
Term Sheet
7. 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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8. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
secondary purchase
Confidentiality
Warrants
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.
term sheet
private investment in public equities (PIPE)
bridge loans
Initial Public Offering
10. Selling an interest in your business to an outside party to raise money.
Subordinated Debt
No Shop/Confidentiality
equity financing
due diligence
11. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s
minority enterprise small business investment companies (MESBICS)
exit route
NDA (Non-disclosure agreement)
Capitalization Table
12. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
IRR
benchmarks
Conversion Rights
Liquidation
13. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
mezzanine financing
buyout
S Corporation
14. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Anti-Dilution Protections
venture capital
Capital Call 'Drawdown'
15. The equity ownership in a corporation. Also has basic voting rights
Liquidity Event
Limited Partnership Agreement
liquidation
Common Stock
16. 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
Corporation (Limited liability and taxation)
private equity
No Shop/Confidentiality
Dividends
17. 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
debt financing
S Corporation
Common Stock
Business Plan
18. 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.
portfolio compaay
equity offerings
acquisition
Restricted Stock
19. 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
Bootstrapping
Private Equity
capital under management
Cash-out election
20. 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
term sheet
secondary public offering
No Shop/Confidentiality
going private
21. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Liquidity Event
executive summary
Senior Stock
liquidation
22. 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.
S Corporation
secondary public offering
Venture Capital Financing
Pre-Money Valuation
23. This refers to obtaining capital from investors or venture capital sources.
acquisition
raising capital
Due Diligence
lead investor
24. 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.
Preferred Stock
management buy-out (MBO)
institutional investors
corporate venturing
25. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
raising capital
seed capital
Capitalization Table
26. 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.
Liquidation Preference
Deal Structure
Due Diligence
S Corporation
27. 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
Senior Stock
Preferred Stock
Limited Partner
Initial Public Offering
28. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
closing
Membership Interest
Business Summary
C Corporation
29. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Limited Partner
IRR
small business investment companies (SBIC)
30. The internal rate of return on an investment.
management buy-out (MBO)
Limited Partnership Agreement
return on investment (ROI)
Capital Commitment
31. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
Preferred Stock
Conversion Rights
Private Equity
32. 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
buyout
Market Capitalization
Conversion Rights
33. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
Adjusted Book Value
Bridge Financing
Liquidation Preference
34. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Book Value
bridge loans
NDA (Non-disclosure agreement)
Conversion Rights
35. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
Deal Structure
leverage buy-out(LBO)
Series A Preferred Stock
36. 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.
Series A Preferred Stock
IPO(initial public offerings)
leverage buy-out(LBO)
Bootstrapping
37. 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
Limited Partner
equity financing
Liquidation
Term Sheet
38. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Pre-Money Valuation
Capital
Adjusted Book Value
Business Summary
39. 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
Angel Financing
Preferred Stock
institutional investors
Seed Money
40. 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
private investment in public equities (PIPE)
Burn Rate
NDA (Non-disclosure agreement)
debt financing
41. 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.
Common Equity
Equity
General Partner (GP)
secondary public offering
42. 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
Outstanding Stock
seed capital
Warrants
Venture Capitalist
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
PPM
benchmarks
Capital
leverage buy-out(LBO)
44. This refers to a synopsis of the key points of a business plan.
Due Diligence
executive summary
Qualified IPO
IRR
45. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Private Equity
Cash-out election
Series A Preferred Stock
Liquidation
46. Don't talk to the market about the company
exit route
turnaround
Post-Money Valuation
Confidentiality
47. The company or entity into which a fund invests directly.
portfolio compaay
corporate venturing
equity financing
Preferred Stock
48. The method by which an investor will realize an investment.
Membership Interest
exit route
Common Stock
Anti-Dilution Protections
49. 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
Capital
Liquidation
acquisition
Lead Investor
50. 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.
lead investor
turnaround
Term Sheet
Post-money