FIN 300 ASU Final Exam || 100% Verified Solutions.
Bootstrapping correct answers a situation in which an entrepreneur starts a company with little
capital. He or she attempts to build a company from personal finances or from the operating
revenues of the new company
Seed financing correct answers form of securities offering in which an investor invests capital in
exchange for an equity stake in the company
Venture Capital correct answers Venture capital is funding provided by investors, ,or groups of
investors, who take partnerships in start-up firms
Angels (Angel Investors) correct answers an affluent individual who provides capital for a
business start-up, usually in exchange for convertible debt or ownership equity
Reasons why Venture Capital is different correct answers Venture capitalists focus their investing
on businesses that are in their infancies and have high growth potential.
- invest for equity in the company, not debt repaid later
- usually work with the startup to find ways to increase ROI and future equity.
Staged funding correct answers Instead of providing all the necessary capital upfront, venture
capitalists invest in stages to keep the project under control.
Staged investment allows venture capitalists to monitor the firm before they make refinancing
decisions.
Personal Investment correct answers
, Syndication correct answers a temporary professional financial services alliance formed for the
purpose of handling a large transaction that would be hard or impossible for the entities involved
to handle individually.
- allows companies to pool their resources and share risks.
- several different types of syndicates, including underwriting syndicates, banking syndicates and
insurance syndicates.
Exit Strategy correct answers a contingency plan that is executed by an investor, trader, venture
capitalist or business owner to liquidate a position in a financial asset or dispose of tangible
business assets once certain predetermined criteria for either has been met or exceeded
- to limit loss
-may be executed for the purpose of exiting a non-performing investment or closing a business
that is not generating profits
The cost of Venture Capital correct answers The cost is very high, but the high rates of return
earned by venture capitalists are not unreasonable.
A typical venture-capital fund may generate annual returns of 15-25%, compared with an
average annual return for the S&P500 of about 12%.
Initial Public Offering correct answers One way to raise larger sums of cash or to facilitate the
exit of a venture capitalist is through an initial public offering, or IPO, of the company's common
stock.
- First-time stock issues are given a special name because the marketing and pricing of these
issues are distinctly different from those of seasoned offerings.
Bootstrapping correct answers a situation in which an entrepreneur starts a company with little
capital. He or she attempts to build a company from personal finances or from the operating
revenues of the new company
Seed financing correct answers form of securities offering in which an investor invests capital in
exchange for an equity stake in the company
Venture Capital correct answers Venture capital is funding provided by investors, ,or groups of
investors, who take partnerships in start-up firms
Angels (Angel Investors) correct answers an affluent individual who provides capital for a
business start-up, usually in exchange for convertible debt or ownership equity
Reasons why Venture Capital is different correct answers Venture capitalists focus their investing
on businesses that are in their infancies and have high growth potential.
- invest for equity in the company, not debt repaid later
- usually work with the startup to find ways to increase ROI and future equity.
Staged funding correct answers Instead of providing all the necessary capital upfront, venture
capitalists invest in stages to keep the project under control.
Staged investment allows venture capitalists to monitor the firm before they make refinancing
decisions.
Personal Investment correct answers
, Syndication correct answers a temporary professional financial services alliance formed for the
purpose of handling a large transaction that would be hard or impossible for the entities involved
to handle individually.
- allows companies to pool their resources and share risks.
- several different types of syndicates, including underwriting syndicates, banking syndicates and
insurance syndicates.
Exit Strategy correct answers a contingency plan that is executed by an investor, trader, venture
capitalist or business owner to liquidate a position in a financial asset or dispose of tangible
business assets once certain predetermined criteria for either has been met or exceeded
- to limit loss
-may be executed for the purpose of exiting a non-performing investment or closing a business
that is not generating profits
The cost of Venture Capital correct answers The cost is very high, but the high rates of return
earned by venture capitalists are not unreasonable.
A typical venture-capital fund may generate annual returns of 15-25%, compared with an
average annual return for the S&P500 of about 12%.
Initial Public Offering correct answers One way to raise larger sums of cash or to facilitate the
exit of a venture capitalist is through an initial public offering, or IPO, of the company's common
stock.
- First-time stock issues are given a special name because the marketing and pricing of these
issues are distinctly different from those of seasoned offerings.
