Question 1

Angel investment frequently precedes formal venture capital.

Accepted Answer

A) True 
 B)False  True

Question 2

The rarest source of capital for nascent entrepreneurs is______.

Accepted Answer

A)  friends
B)  family
C)  venture capital
D)  financial advisors
E)  foolhardy investors C

Question 3

In general, trade sales produce nearly as big a capital gain as IPOs.When a company executes a trade sale, it almost always has the option of an IPO, as well.

Accepted Answer

A) True 
 B)False  False

Question 4

If a venture capital fund is successful, as measured by the financial return to the limited partners, the general partners usually raise another fund ______ years later.

Accepted Answer

A)  1 - 3 years
B)  4 - 6 years
C)  7 - 9 years
D)  10 - 12 years
E)  13 - 16 years

Question 5

Eighty percent of the venture capital invested in the United States finances hi-tech companies; by contrast only 29 percent of the venture capital invested in other G7 nations is in hi-tech companies.

Accepted Answer

A) True 
 B)False

Question 6

Nations with higher taxes on individuals have ___ rates of informal investing, as high tax rates ___ informal investing.

Accepted Answer

A)  higher; benefit
B)  lower; inhibit
C)  higher; inhibit
D)  lower; benefit
E)  none of above

Question 7

If venture capital in the United States dried up, what would be the effect?

Accepted Answer

The answer of If venture capital in the United States...

Question 8

Almost every new business raises its initial money from the founders themselves and what we call informal investors, including:

Accepted Answer

A)  Venture capitalists.
B)  Family members.
C)  Private equity firms.
D)  Institutional investors.
E)  All of the above.

Question 9

Entrepreneurs in search of startup funding should target self-made entrepreneurs with high incomes.More specifically, they should first talk with entrepreneurs among their relatives, friends, and neighbors.

Accepted Answer

A) True 
 B)False

Question 10

According to Figure 9.5, an R2 of 0.78 indicates that 78% of the variation in annual amount per informal investor is explained by:

Accepted Answer

A)  amount of startup funding
B)  total entrepreneurial activity (TE
A)  
C)  Income per capita
D)  GDP per capita
E)  Expected IRR

Question 11

The amount of informal investment as a percent of GDP correlates positively with two TEA indices; _______.

Accepted Answer

A)  necessity and high job growth potential
B)  Opportunity and market expansion potential
C)  the amount of investment and high job growth potential
D)  consumer preference and high job growth potential
E)  opportunity and market expansion potential

Question 12

In 1976 Muhammad Yunus, an economist, started what today is the Grameen Bank.

Accepted Answer

A) True 
 B)False

Question 13

The highest return on a venture capital investment is produced when the company has a management buyout.

Accepted Answer

A) True 
 B)False

Question 14

The companies are often not up and running before ____ is raised.

Accepted Answer

A)  the first venture capital
B)  the second venture capital
C)  trade credit
D)  the investment from family and friends
E)  the investments from IPO

Question 15

Although there is no direct link between classic venture capital investment and taxation, there is an indirect link via informal investors, who are influenced by how much they pay in taxes.

Accepted Answer

A) True 
 B)False

Question 16

The general partners' share of investment returns is called carried interest.

Accepted Answer

A) True 
 B)False

Question 17

Which three component TEA indices have a positive correlation with the prevalence of informal investors?

Accepted Answer

A)  The amount of investment, consumer preference, and population
B)  Taxes, consumer preference, and high job growth potential
C)  Opportunity, market expansion potential, and consumer preference
D)  Opportunity, the amount of investment, and high job growth potential
E)  Social mobility, market expansion potential, and high job growth potential

Question 18

The expected internal rate of return or IRR (compound annual return on investment)is calculated from the expected payback time and the times return for formal investors and entrepreneurs who reported both.

Accepted Answer

A) True 
 B)False

Question 19

In general, venture capital is invested in companies that are already in business.

Accepted Answer

A) True 
 B)False

Question 20

Usually, businesses started by men require less capital than those started by women.

Accepted Answer

A) True 
 B)False

Exam 9: Facing Entrepreneurial Ventures Worldwide

Angel investment frequently precedes formal venture capital.

The rarest source of capital for nascent entrepreneurs is______.

In general, trade sales produce nearly as big a capital gain as IPOs.When a company executes a trade sale, it almost always has the option of an IPO, as well.

If a venture capital fund is successful, as measured by the financial return to the limited partners, the general partners usually raise another fund ______ years later.

Eighty percent of the venture capital invested in the United States finances hi-tech companies; by contrast only 29 percent of the venture capital invested in other G7 nations is in hi-tech companies.

Nations with higher taxes on individuals have _ rates of informal investing, as high tax rates _ informal investing.

If venture capital in the United States dried up, what would be the effect?

Almost every new business raises its initial money from the founders themselves and what we call informal investors, including:

Entrepreneurs in search of startup funding should target self-made entrepreneurs with high incomes.More specifically, they should first talk with entrepreneurs among their relatives, friends, and neighbors.

According to Figure 9.5, an R² of 0.78 indicates that 78% of the variation in annual amount per informal investor is explained by:

The amount of informal investment as a percent of GDP correlates positively with two TEA indices; _______.

In 1976 Muhammad Yunus, an economist, started what today is the Grameen Bank.

The highest return on a venture capital investment is produced when the company has a management buyout.

The companies are often not up and running before ____ is raised.

Although there is no direct link between classic venture capital investment and taxation, there is an indirect link via informal investors, who are influenced by how much they pay in taxes.

The general partners' share of investment returns is called carried interest.

Which three component TEA indices have a positive correlation with the prevalence of informal investors?

The expected internal rate of return or IRR (compound annual return on investment)is calculated from the expected payback time and the times return for formal investors and entrepreneurs who reported both.

In general, venture capital is invested in companies that are already in business.

Usually, businesses started by men require less capital than those started by women.