Question 1

A company's growth rate vis-à-vis its industry is not considered when using the Asset-Based valuation method.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following types of angels is usually a passive investor?

Accepted Answer

A)  Professional 
B)  Entrepreneurial 
C)  Corporate 
D)  Micromanagement 
E)  Enthusiast 
A)  Professional 
B)  Entrepreneurial 
C)  Corporate 
D)  Micromanagement 
E)  Enthusiast E

Question 3

What is the term for the event by which the investor realizes his or her investments?

Accepted Answer

A)  Crop 
B)  Gain 
C)  Exit 
D)  Yield 
E)  Cream 
A)  Crop 
B)  Gain 
C)  Exit 
D)  Yield 
E)  Cream C

Question 4

Most angel investors prefer common stock that can later be converted into preferred stock.

Accepted Answer

A) True 
 B)False

Question 5

In general, a venture capitalist should not sit on more than what number of portfolio company boards?

Accepted Answer

A)  2 
B)  6 
C)  8 
D)  10 
E)  12 
A)  2 
B)  6 
C)  8 
D)  10 
E)  12

Question 6

The first financing for your new business will come from angel investors.

Accepted Answer

A) True 
 B)False

Question 7

According to the chapter, informal investors provide $100 billion per year to startup and young businesses in the US alone.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not one of the six top factors venture capitalists evaluate in analyzing a candidate for investment?

Accepted Answer

A)  Management team 
B)  Business plan 
C)  Product/service 
D)  Investors' recommendations 
E)  Target market 
A)  Management team 
B)  Business plan 
C)  Product/service 
D)  Investors' recommendations 
E)  Target market

Question 9

Banks expect loans to be secured by positive cash flow.

Accepted Answer

A) True 
 B)False

Question 10

Venture capitalists traditionally view the potential return of four times their investment within five years as the standard, minimum threshold for investment.

Accepted Answer

A) True 
 B)False

Question 11

The present value of company is the present value of the past free cash flows, plus the residual (terminal) value of the firm.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following must be added to Operating Income when calculating Free Cash Flow?

Accepted Answer

A)  Depreciation 
B)  Principal Payments 
C)  Interest Payments 
D)  Capital Expenditures 
E)  Tax Payments 
A)  Depreciation 
B)  Principal Payments 
C)  Interest Payments 
D)  Capital Expenditures 
E)  Tax Payments

Question 13

The modified-book value method of valuation's main weakness is that it reflects the past rather than the future.

Accepted Answer

A) True 
 B)False

Question 14

Entrepreneurs should be careful not to weight employee compensation too heavily with stock options to avoid risks to morale should the share price decline significantly.

Accepted Answer

A) True 
 B)False

Question 15

The difference between a seed-stage company and a startup is that the latter, unlike the former, is already in business.

Accepted Answer

A) True 
 B)False

Question 16

What is the term for the founder's compensation to be paid a few years after the company is acquired, if the company meets certain targets?

Accepted Answer

A)  Added value 
B)  Plus value 
C)  Money on the table 
D)  Premium for excess 
E)  Earn-out 
A)  Added value 
B)  Plus value 
C)  Money on the table 
D)  Premium for excess 
E)  Earn-out

Question 17

Approximately what percent of informal investment is directed to businesses founded by the investor's relative?

Accepted Answer

A)  25% 
B)  35% 
C)  40% 
D)  50% 
E)  65% 
A)  25% 
B)  35% 
C)  40% 
D)  50% 
E)  65%

Question 18

Which factor plays the largest role in a venture receiving a second round of venture capital?

Accepted Answer

A)  Number of media mentions the start-up receives 
B)  Progress on meeting performance milestones. 
C)  Success in recruiting talented employees 
D)  None of the above 
A)  Number of media mentions the start-up receives 
B)  Progress on meeting performance milestones. 
C)  Success in recruiting talented employees 
D)  None of the above

Question 19

Going public is an expensive endeavor.

Accepted Answer

A) True 
 B)False

Question 20

The equation for the value of a company with the earnings capitalization method is:

Accepted Answer

A)  Company Value = Gross Revenue ÷ Book Value 
B)  Company Value = Net Income ÷ Capitalization Rate 
C)  Company Value = Net Income × Market price of stocks 
D)  Company Value = Sum of Cash Flow for the past five years 
E)  Company Value = Price of one share × number of shares 
A)  Company Value = Gross Revenue ÷ Book Value 
B)  Company Value = Net Income ÷ Capitalization Rate 
C)  Company Value = Net Income × Market price of stocks 
D)  Company Value = Sum of Cash Flow for the past five years 
E)  Company Value = Price of one share × number of shares

A company's growth rate vis-à-vis its industry is not considered when using the Asset-Based valuation method.

Which of the following types of angels is usually a passive investor?

What is the term for the event by which the investor realizes his or her investments?

Most angel investors prefer common stock that can later be converted into preferred stock.

In general, a venture capitalist should not sit on more than what number of portfolio company boards?

The first financing for your new business will come from angel investors.

According to the chapter, informal investors provide $100 billion per year to startup and young businesses in the US alone.

Which of the following is not one of the six top factors venture capitalists evaluate in analyzing a candidate for investment?

Banks expect loans to be secured by positive cash flow.

Venture capitalists traditionally view the potential return of four times their investment within five years as the standard, minimum threshold for investment.

The present value of company is the present value of the past free cash flows, plus the residual (terminal) value of the firm.

Which of the following must be added to Operating Income when calculating Free Cash Flow?

The modified-book value method of valuation's main weakness is that it reflects the past rather than the future.

Entrepreneurs should be careful not to weight employee compensation too heavily with stock options to avoid risks to morale should the share price decline significantly.

The difference between a seed-stage company and a startup is that the latter, unlike the former, is already in business.

What is the term for the founder's compensation to be paid a few years after the company is acquired, if the company meets certain targets?

Approximately what percent of informal investment is directed to businesses founded by the investor's relative?

Which factor plays the largest role in a venture receiving a second round of venture capital?

Going public is an expensive endeavor.

The equation for the value of a company with the earnings capitalization method is:

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Prototyping Your Ideas

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Building Your Pro Forma Financial Statements

Financing Entrepreneurial Ventures Worldwide

Debt and Other Forms of Financing

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship

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Exam 11: Raising Money for Starting and Growing Businesses

A company's growth rate vis-à-vis its industry is not considered when using the Asset-Based valuation method.

Which of the following types of angels is usually a passive investor?

What is the term for the event by which the investor realizes his or her investments?

Most angel investors prefer common stock that can later be converted into preferred stock.

In general, a venture capitalist should not sit on more than what number of portfolio company boards?

The first financing for your new business will come from angel investors.

According to the chapter, informal investors provide $100 billion per year to startup and young businesses in the US alone.

Which of the following is not one of the six top factors venture capitalists evaluate in analyzing a candidate for investment?

Banks expect loans to be secured by positive cash flow.

Venture capitalists traditionally view the potential return of four times their investment within five years as the standard, minimum threshold for investment.

The present value of company is the present value of the past free cash flows, plus the residual (terminal) value of the firm.

Which of the following must be added to Operating Income when calculating Free Cash Flow?

The modified-book value method of valuation's main weakness is that it reflects the past rather than the future.

Entrepreneurs should be careful not to weight employee compensation too heavily with stock options to avoid risks to morale should the share price decline significantly.

The difference between a seed-stage company and a startup is that the latter, unlike the former, is already in business.

What is the term for the founder's compensation to be paid a few years after the company is acquired, if the company meets certain targets?

Approximately what percent of informal investment is directed to businesses founded by the investor's relative?

Which factor plays the largest role in a venture receiving a second round of venture capital?

Going public is an expensive endeavor.

The equation for the value of a company with the earnings capitalization method is:

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Prototyping Your Ideas

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Building Your Pro Forma Financial Statements

Financing Entrepreneurial Ventures Worldwide

Debt and Other Forms of Financing

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship

Filters