VEE Finance Exam Questions And Answers Verified 100% Correct!!
1. Which of the following statements regarding SEC fil- I and II only
ings is/are true?
I. The SEC requires companies to prepare a registration
statement that provides its financial and other infor-
mation to investors prior to an IPO.
II. The red herring circulates to investors before the
stock is offered.
III. The red herring contains all the details of the IPO,
including the number of shares offered and the offer
price.
2. You are given: Underwriting
Spread=(0.07)(12)(5m)=4.2m
- Company DOTA has 10 million shares outstanding, X=60−4.2=55.8m
and the company is about to issue 5 million new shares Y=25(15m)=375m
in an IPO.
- The IPO price has been set at $12 per share. The
underwriting spread is 7%.
- The IPO is a success, and the share price rises to $25
the first day of trading.
Let X be the amount that the company raised from the
IPO and Y be the market value of the company after
the IPO.
3. Determine which of the following statements regard- E. In the subsequent 3-5
ing IPO puzzles is TRUE. years after their IPOs,
A. The average IPO seems to be priced too high. newly listed firms appear
to underperform.
B. The number of IPOs is solely driven by the demand
for capital.
C. The cost of an IPO is typically lower compared to the
, VEE Finance Exam Questions And Answers Verified 100% Correct!!
cost of other security issues such as bonds.
D. The fees for IPOs seem to be sensitive to the differ-
ence in issue sizes.
E. In the subsequent 3-5 years after their IPOs, newly
listed firms appear to underperform.
4. Christian invested $50,000 to start a company and Number of new shares for
received 3,000,000 shares of Series A common stock. Series
Since then, the company has been through 3 addition-
B=2,000,000/1.00=2,000,000
al funding rounds of financing: Number of new shares for
Series
Round Amount of Money Raised Price per Share C=1,125,000/1.50=750,000
Series B $2,000,000 $1.00 Number of new shares for
Series C $1,125,000 $1.50 Series
Series D $1,200,000 $4.00 D=1,200,000/4.00=300,000
If the company is now worth $39,325,000, determine 3,000,000+2,000,000+750,000+
the value of the Series C shares now. 39,325,000/6,050,000=6.50
6.50(750,000)=4,875,000
5. Which of the following statements regarding equity I and III only
financing is/are TRUE?
I. Angel investors typically invest in convertible notes.
II. Venture capitalists invest in more mature firms than
private equity investors.
III. Private equity firms use more debt to finance pur-
chases than other investors.
6. Determine which of the following statements regard- E. If things are not go-
ing venture capital financing terms is TRUE. ing well and the firm rais-
es new funding at a lower
, VEE Finance Exam Questions And Answers Verified 100% Correct!!
A. When a company founder decides to sell equity price than in a prior round,
to outside investors for the first time, it is common it is referred to as a "down
practice for private companies to issue common stock round."
to raise capital.
B. The preferred stock issued by young companies
typically pay regular cash dividends to the owner.
C. If the company runs into financial difficulties, the
common stockholders have a senior claim on the as-
sets of the firm relative to any preferred stockholder.
D. It is uncommon for investors in later rounds to
demand seniority over investors in earlier rounds.
E. If things are not going well and the firm raises new
funding at a lower price than in a prior round, it is
referred to as a "down round."
7. Determine which of the following statements regard- C. If the issue is a success
ing the mechanics of an IPO is TRUE. and the price rises above
the IPO otter price, the un-
A. When underwriters provide a firm commitment, derwriters will exercise the
they often intentionally overprice the IPO. greenshoe provision.
B. The over-allotment allocation is also known as red
herring.
C. If the issue is a success and the price rises above
the IPO offer price, the underwriters will exercise the
greenshoe provision.
D. During a lock-up period following an IPO, the new
, VEE Finance Exam Questions And Answers Verified 100% Correct!!
shareholders cannot sell their shares.
E. In an IPO, the service fee charged by underwriters is
known as the management fee.
8. Dan invested $100,000 to start a company and re- 1,000,000+500,000+300,000=1
ceived 1,000,000 shares of Series A common stock. X=1,800,000×3.50=,300,000
Since then, the company has been through three ad- 1,800,000+200,000=2,000,000
ditional funding rounds of financing: Y=2,000,000×3.50=7,000,000
Z=1,000,000/2,000,000=50%
Round Price Per Share Number of Shares
Series B $0.75 500,000
Series C $1.25 300,000
Series D $3.50 200,000
Let X be the pre-money valuation for the Series D fund-
ing round, Y be the post-money valuation for the Series
D funding round, and Z be the percentage of the firm
that Dan owns after the last funding round.
Determine X, Y, and Z.
9. Coaching Actuaries is going public using an auction X=1,000,000Å-
IPO. The following are the bids: 8.50=8,500,000
Y=45,000
Price ($) Number of Shares
10.00 200,000
9.75 100,000
9.50 275,000
9.25 30,000
9.00 150,000
8.75 200,000
8.50 50,000
8.25 30,000
1. Which of the following statements regarding SEC fil- I and II only
ings is/are true?
I. The SEC requires companies to prepare a registration
statement that provides its financial and other infor-
mation to investors prior to an IPO.
II. The red herring circulates to investors before the
stock is offered.
III. The red herring contains all the details of the IPO,
including the number of shares offered and the offer
price.
2. You are given: Underwriting
Spread=(0.07)(12)(5m)=4.2m
- Company DOTA has 10 million shares outstanding, X=60−4.2=55.8m
and the company is about to issue 5 million new shares Y=25(15m)=375m
in an IPO.
- The IPO price has been set at $12 per share. The
underwriting spread is 7%.
- The IPO is a success, and the share price rises to $25
the first day of trading.
Let X be the amount that the company raised from the
IPO and Y be the market value of the company after
the IPO.
3. Determine which of the following statements regard- E. In the subsequent 3-5
ing IPO puzzles is TRUE. years after their IPOs,
A. The average IPO seems to be priced too high. newly listed firms appear
to underperform.
B. The number of IPOs is solely driven by the demand
for capital.
C. The cost of an IPO is typically lower compared to the
, VEE Finance Exam Questions And Answers Verified 100% Correct!!
cost of other security issues such as bonds.
D. The fees for IPOs seem to be sensitive to the differ-
ence in issue sizes.
E. In the subsequent 3-5 years after their IPOs, newly
listed firms appear to underperform.
4. Christian invested $50,000 to start a company and Number of new shares for
received 3,000,000 shares of Series A common stock. Series
Since then, the company has been through 3 addition-
B=2,000,000/1.00=2,000,000
al funding rounds of financing: Number of new shares for
Series
Round Amount of Money Raised Price per Share C=1,125,000/1.50=750,000
Series B $2,000,000 $1.00 Number of new shares for
Series C $1,125,000 $1.50 Series
Series D $1,200,000 $4.00 D=1,200,000/4.00=300,000
If the company is now worth $39,325,000, determine 3,000,000+2,000,000+750,000+
the value of the Series C shares now. 39,325,000/6,050,000=6.50
6.50(750,000)=4,875,000
5. Which of the following statements regarding equity I and III only
financing is/are TRUE?
I. Angel investors typically invest in convertible notes.
II. Venture capitalists invest in more mature firms than
private equity investors.
III. Private equity firms use more debt to finance pur-
chases than other investors.
6. Determine which of the following statements regard- E. If things are not go-
ing venture capital financing terms is TRUE. ing well and the firm rais-
es new funding at a lower
, VEE Finance Exam Questions And Answers Verified 100% Correct!!
A. When a company founder decides to sell equity price than in a prior round,
to outside investors for the first time, it is common it is referred to as a "down
practice for private companies to issue common stock round."
to raise capital.
B. The preferred stock issued by young companies
typically pay regular cash dividends to the owner.
C. If the company runs into financial difficulties, the
common stockholders have a senior claim on the as-
sets of the firm relative to any preferred stockholder.
D. It is uncommon for investors in later rounds to
demand seniority over investors in earlier rounds.
E. If things are not going well and the firm raises new
funding at a lower price than in a prior round, it is
referred to as a "down round."
7. Determine which of the following statements regard- C. If the issue is a success
ing the mechanics of an IPO is TRUE. and the price rises above
the IPO otter price, the un-
A. When underwriters provide a firm commitment, derwriters will exercise the
they often intentionally overprice the IPO. greenshoe provision.
B. The over-allotment allocation is also known as red
herring.
C. If the issue is a success and the price rises above
the IPO offer price, the underwriters will exercise the
greenshoe provision.
D. During a lock-up period following an IPO, the new
, VEE Finance Exam Questions And Answers Verified 100% Correct!!
shareholders cannot sell their shares.
E. In an IPO, the service fee charged by underwriters is
known as the management fee.
8. Dan invested $100,000 to start a company and re- 1,000,000+500,000+300,000=1
ceived 1,000,000 shares of Series A common stock. X=1,800,000×3.50=,300,000
Since then, the company has been through three ad- 1,800,000+200,000=2,000,000
ditional funding rounds of financing: Y=2,000,000×3.50=7,000,000
Z=1,000,000/2,000,000=50%
Round Price Per Share Number of Shares
Series B $0.75 500,000
Series C $1.25 300,000
Series D $3.50 200,000
Let X be the pre-money valuation for the Series D fund-
ing round, Y be the post-money valuation for the Series
D funding round, and Z be the percentage of the firm
that Dan owns after the last funding round.
Determine X, Y, and Z.
9. Coaching Actuaries is going public using an auction X=1,000,000Å-
IPO. The following are the bids: 8.50=8,500,000
Y=45,000
Price ($) Number of Shares
10.00 200,000
9.75 100,000
9.50 275,000
9.25 30,000
9.00 150,000
8.75 200,000
8.50 50,000
8.25 30,000
