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Fundamentals Of Corporate Finance Study Set 21

Business

Quiz 15 :

Raising Capital

Quiz 15 :

Raising Capital

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An initial public offering (IPO) occurs when a firm that is not currently publicly traded issues stock to the public.
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True False
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True

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Venture capitalists often are pension funds.
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True False
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Answer:

True

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Venture capitalists tend to be long-term investors.
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True False
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Answer:

False

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The venture capitalist's exit strategy is an important factor when choosing a venture capitalist.
True False
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Venture capitalists often are university endowment funds.
True False
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References regarding how successful the venture capitalist has been in the past is an important factor when choosing a venture capitalist.
True False
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The Western Power Company, a regional electric utility, sells 500,000 shares of common stock to investors at large. This is most likely to be a "best efforts" offering.
True False
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In regards to the cost of issuing securities, substantial economies of scale exist as related to issuance size.
True False
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Venture capital is relatively easy to acquire in today's market.
True False
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Venture capitalists often assume 40% or more ownership in a firm as a condition of financing.
True False
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Venture capitalists often hold voting preferred stock.
True False
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Venture capital firms generally pool funds from various sources.
True False
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Venture capitalists frequently assume active roles in the management of the financed firm.
True False
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Venture capitalists tend to avoid involvement in the actual running of a business.
True False
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The risk that new securities will be sold at a loss is transferred from the issuing firm to the underwriter in best efforts underwriting.
True False
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Venture capitalists are often given a 40% share in the firm's equity.
True False
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Venture capital is considered private debt.
True False
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The financial strength of the venture capitalist is an important factor when choosing a venture capitalist.
True False
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"Best efforts" underwriting is the most common type of underwriting in Canada.
True False
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Venture capitalists often are insurance companies.
True False
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