Question :
64.As a limited partner in a venture capital limited partnership, : 1325807
64.As a limited partner in a venture capital limited partnership, today you committed to investing $70 million dollars. What amount must you contribute immediately?
a.$70 million
b.$80 million
c.$90 million
d.probably less than $70 million
65.Venture capital funds typically use stage financing in order to
a.ensure that the entrepreneur is disciplined in goal achievement.
b.to minimize risk.
c.to retain an option for funding future developmental stages of the firm.
d.all of the above.
66.In order to protect the rights and the investment of the venture capital firm, the entrepreneur is usually subject to
a.a covenant spelling out what the entrepreneur must do.
b.a covenant spelling out what the entrepreneur cannot do.
c.a gentleman’s agreement.
d.both (a) and (b)
67.Most venture capital firms invest capital in order to purchase
a.equity of the entrepreneurial firm.
b.debt of the entrepreneurial firm.
c.an investment that is convertible into common stock of the entrepreneurial firm.
d.none of the above.
68.You are a venture capitalist that is going to invest $10 million dollars today in a firm that is projected to be worth $100 million four years from today when it is expected to have an initial public offering. If you require a 40% annual return on investments with this kind of risk, then what portion of the equity of the firm should you own after the investment?
a.10.00%
b.38.42%
c.40.00%
d.none of the above
69.You are a venture capitalist that is going to invest $7 million dollars today in a firm that is projected to be worth $200 million six years from today when it is expected to have an initial public offering. If you require a 35% annual return on investments with this kind of risk, then what portion of the equity of the firm should you own after the investment?
a.3.50%
b.21.12%
c.35.00%
d.none of the above
70.You are a venture capitalist who is approached by a firm that is willing to sell you 30% of the firms common stock. You believe the firm will be worth $800 million dollars when it IPOs in 5 years. If you require a 50% return on investments with this firm’s risk characteristics, what amount will you have to invest today in order to purchase 30% of the firm’s common shares?
a.$240.000 million
b.$105.350 million
c.$31.605 million
d.none of the above
71.You are a venture capitalist who can invest only $10 million dollars in a firm today. The firm is expected to be worth $100 million five years from now when it has its IPO. If you require to be a 50% owner of the firm’s common stock at the time of the IPO, then what is your annualized rate of return on this investment?
a.158.49%
b.100.00%
c.37.97%
d.none of the above
72.Which type of public market is good for the future of entrepreneurial firms as they mature into potential IPOs?
a.a healthy capital market for small stocks
b.a healthy capital market for large stocks
c.a weak small capital market
d.neither as these firms are not publicly traded yet
73.Which of the following is the most popular exit strategy that VCs use?
a.IPO
b.through sale of the portfolio company directly to another company
c.by selling the portfolio company back to the entrepreneur
d.none of the above
