8.2 - Chapter 15 How Corporations Issue Securities Answer...

Chapter 15 How Corporations Issue Securities Answer Key
Multiple Choice Questions
1. A business plan generally contains:
I) a description of the proposed products;
II) a description of the potential market;
III) a description of the underlying technology;
IV) a description of resources needed
A.
only
B. I and II
only
C. II and III
only
D. I, II, III, and
IV
I
Type: Easy
2. Equity investment in start-up private companies is called:
Type: Easy

3. The market for venture capital refers to the:
I) private financial marketplace for providing equity investment for small,
start-up firms;
II) bond market;
III) market for providing equity to well-established firms
Type: Easy
4. Which of the following statements is generally true of venture capital (VC)
firms?
Type: Medium
5. Arrange the following in chronological order for a typical start-up firm:
I) VC financing; II) mezzanine financing; III) stage 1, 2, 3, 4, etc., financing;
IV) IPO
A. I, II, III, and
IV
B. I, III, II, and
IV
C. IV, I, II, and
III
D. III, I, II, and
IV
Type: Difficult

6. Venture capitalists provide start-up companies:
A. all the money they will need up
front.
B. enough money at each stage so that they can reach the next stage or
major checkpoint.
C. assistance in managing the initial public
offering (IPO).
D. funding intended to buy-out the company's
founders.
Type: Medium
7. Wealthy individuals who provide equity investment for new firms are called:
I) white knights; II) red herrings; III) angel investors
I
Type: Easy
8. Generally, venture capital funds are organized as:
I
Type: Medium

9. Venture capital investment was highest in the year:
Type: Easy
10. Large technology firms like Intel, Johnson and Johnson, and Sun
Microsystems that provide equity capital to new innovative companies are
called:
A. angel
investors.
B. corporate
venturers.
C. white
knights.
D. mezzanine
financiers.
Type: Medium