Question 1

A call option is the obligation to purchase a specific asset at a pre-determined price.

Accepted Answer

A) True 
 B)False  False

Question 2

A round of financing where shares sell for a lower price than previous rounds is known as a:

Accepted Answer

A) down round 
B) recessive round 
C) reset round 
D) a and c 
A) down round 
B) recessive round 
C) reset round 
D) a and c D

Question 3

Warrant valuation (as presented in this text)is similar to option valuation except that one applies a dilution factor to the option value to arrive at a warrant value.

Accepted Answer

A) True 
 B)False  True

Question 4

The right to buy a specified asset at a specified price on a specified date is called:

Accepted Answer

A) a forward contract 
B) an American-style put option 
C) an American-style call option 
D) a European-style call option 
E) a European style put option 
A) a forward contract 
B) an American-style put option 
C) an American-style call option 
D) a European-style call option 
E) a European style put option

Question 5

Preferred stock is the equity claim senior to common stock providing preference on dividends but not liquidation proceeds.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is never a component of a preferred stock's security structure?

Accepted Answer

A) the right to participate in any dividends paid to common stock shareholders 
B) payment of dividends in the form of additional shares of preferred stock 
C) the option for the holder to convert preferred stock into common stock 
D) the option for the venture to call outstanding preferred stock 
E) none of the above;all of these may be included in the structure of
Preferred stock 
A) the right to participate in any dividends paid to common stock shareholders 
B) payment of dividends in the form of additional shares of preferred stock 
C) the option for the holder to convert preferred stock into common stock 
D) the option for the venture to call outstanding preferred stock 
E) none of the above;all of these may be included in the structure of
Preferred stock

Question 7

Which of the following is an example of a call option which is out of the money?

Accepted Answer

A) The option to sell at $11,the stock is worth $12. 
B) The option to buy at $13,the stock is worth $12. 
C) The option to buy at $12,the stock is worth $12. 
D) The option to sell at $13,the stock is worth $12. 
E) The option to buy at $11,the stock is worth $12. 
A) The option to sell at $11,the stock is worth $12. 
B) The option to buy at $13,the stock is worth $12. 
C) The option to buy at $12,the stock is worth $12. 
D) The option to sell at $13,the stock is worth $12. 
E) The option to buy at $11,the stock is worth $12.

Question 8

An option granting the right to sell a stock at $10 when that stock currently has a market price $8 is "in the money."

Accepted Answer

A) True 
 B)False

Question 9

The enterprise method of valuation can be executed with either an after-tax or before-tax weighted cost of capital as long as the rate is applied to the appropriate enterprise cash flows.

Accepted Answer

A) True 
 B)False

Question 10

N(h)in the Black and Scholes model involves the use of

Accepted Answer

A) the number of shares issued 
B) the next time that a venture capitalist will invest money 
C) the normal distribution cumulative density function 
D) the number of times that the venture will have to raise money 
A) the number of shares issued 
B) the next time that a venture capitalist will invest money 
C) the normal distribution cumulative density function 
D) the number of times that the venture will have to raise money

Question 11

For preferred noncumulative stock,all previously unpaid preferred dividends must be paid before any common stock dividend is paid.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an example of a put option which is out of the money?

Accepted Answer

A) The option to sell at $11,the stock is worth $12. 
B) The option to buy at $13,the stock is worth $12. 
C) The option to buy at $12,the stock is worth $12. 
D) The option to sell at $13,the stock is worth $12. 
E) The option to buy at $11,the stock is worth $12. 
A) The option to sell at $11,the stock is worth $12. 
B) The option to buy at $13,the stock is worth $12. 
C) The option to buy at $12,the stock is worth $12. 
D) The option to sell at $13,the stock is worth $12. 
E) The option to buy at $11,the stock is worth $12.

Question 13

Which of the following requires that all previously unpaid preferred dividends must be paid prior to any common dividend?

Accepted Answer

A) paid in kind preferred stock 
B) cumulative preferred stock 
C) participating preferred stock 
D) convertible preferred stock 
E) non-cumulative preferred stock 
A) paid in kind preferred stock 
B) cumulative preferred stock 
C) participating preferred stock 
D) convertible preferred stock 
E) non-cumulative preferred stock

Question 14

Which of the following is not a type of option?

Accepted Answer

A) call option 
B) put option 
C) warrant 
D) LBO 
A) call option 
B) put option 
C) warrant 
D) LBO

Question 15

An option that can be exercised only at its expiration date is called a:

Accepted Answer

A) forward contract 
B) lookbackoption 
C) American-Style option 
D) European-Style option 
E) Bermuda-Style option 
A) forward contract 
B) lookbackoption 
C) American-Style option 
D) European-Style option 
E) Bermuda-Style option

Question 16

If a share of preferred stock has a $10 par value,and the stock has a 2:1 conversion ratio,then the conversion price would be $5.

Accepted Answer

A) True 
 B)False

Question 17

The Black and Scholes model requires the stock price as an input.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an example of a put option which is at the money?

Accepted Answer

A) The option to sell at $11,the stock is worth $12. 
B) The option to buy at $13,the stock is worth $12. 
C) The option to sell at $12,the stock is worth $12. 
D) The option to sell at $13,the stock is worth $12. 
E) The option to buy at $11,the stock is worth $12 
A) The option to sell at $11,the stock is worth $12. 
B) The option to buy at $13,the stock is worth $12. 
C) The option to sell at $12,the stock is worth $12. 
D) The option to sell at $13,the stock is worth $12. 
E) The option to buy at $11,the stock is worth $12

Question 19

Owning a put option on a stock is the same as selling a call option on that same stock.

Accepted Answer

A) True 
 B)False

Question 20

An option that can be exercised at any time until its expiration is called a:

Accepted Answer

A) forward contract 
B) lookback option 
C) American-style option 
D) European-style option 
E) Bermuda-style option 
A) forward contract 
B) lookback option 
C) American-style option 
D) European-style option 
E) Bermuda-style option

A call option is the obligation to purchase a specific asset at a pre-determined price.

A round of financing where shares sell for a lower price than previous rounds is known as a:

Warrant valuation (as presented in this text)is similar to option valuation except that one applies a dilution factor to the option value to arrive at a warrant value.

The right to buy a specified asset at a specified price on a specified date is called:

Preferred stock is the equity claim senior to common stock providing preference on dividends but not liquidation proceeds.

Which of the following is never a component of a preferred stock's security structure?

Which of the following is an example of a call option which is out of the money?

An option granting the right to sell a stock at $10 when that stock currently has a market price $8 is "in the money."

The enterprise method of valuation can be executed with either an after-tax or before-tax weighted cost of capital as long as the rate is applied to the appropriate enterprise cash flows.

N(h)in the Black and Scholes model involves the use of

For preferred noncumulative stock,all previously unpaid preferred dividends must be paid before any common stock dividend is paid.

Which of the following is an example of a put option which is out of the money?

Which of the following requires that all previously unpaid preferred dividends must be paid prior to any common dividend?

Which of the following is not a type of option?

An option that can be exercised only at its expiration date is called a:

If a share of preferred stock has a $10 par value,and the stock has a 2:1 conversion ratio,then the conversion price would be $5.

The Black and Scholes model requires the stock price as an input.

Which of the following is an example of a put option which is at the money?

Owning a put option on a stock is the same as selling a call option on that same stock.

An option that can be exercised at any time until its expiration is called a:

Introduction and Overview

From the Idea to the Business Plan

Organizing and Financing a New Venture

Measuring Financial Performance

Evaluating Financial Performance

Financial Planning:short Term and Long Term

Types and Costs of Financial Capital

Securities Law Considerations When Obtaining Venture Financing

Valuing Early-Stage Ventures

Venture Capital Valuation Methods

Professional Venture Capital

Other Financing Alternatives

Harvesting the Business Venture Investment

Financially Troubled Ventures: Turnaround Opportunities

Filters

Exam 13: Security Structures and Determining Enterprise Values

A call option is the obligation to purchase a specific asset at a pre-determined price.

A round of financing where shares sell for a lower price than previous rounds is known as a:

Warrant valuation (as presented in this text)is similar to option valuation except that one applies a dilution factor to the option value to arrive at a warrant value.

The right to buy a specified asset at a specified price on a specified date is called:

Preferred stock is the equity claim senior to common stock providing preference on dividends but not liquidation proceeds.

Which of the following is never a component of a preferred stock's security structure?

Which of the following is an example of a call option which is out of the money?

An option granting the right to sell a stock at $10 when that stock currently has a market price $8 is "in the money."

The enterprise method of valuation can be executed with either an after-tax or before-tax weighted cost of capital as long as the rate is applied to the appropriate enterprise cash flows.

N(h)in the Black and Scholes model involves the use of

For preferred noncumulative stock,all previously unpaid preferred dividends must be paid before any common stock dividend is paid.

Which of the following is an example of a put option which is out of the money?

Which of the following requires that all previously unpaid preferred dividends must be paid prior to any common dividend?

Which of the following is not a type of option?

An option that can be exercised only at its expiration date is called a:

If a share of preferred stock has a $10 par value,and the stock has a 2:1 conversion ratio,then the conversion price would be $5.

The Black and Scholes model requires the stock price as an input.

Which of the following is an example of a put option which is at the money?

Owning a put option on a stock is the same as selling a call option on that same stock.

An option that can be exercised at any time until its expiration is called a:

Introduction and Overview

From the Idea to the Business Plan

Organizing and Financing a New Venture

Measuring Financial Performance

Evaluating Financial Performance

Financial Planning:short Term and Long Term

Types and Costs of Financial Capital

Securities Law Considerations When Obtaining Venture Financing

Valuing Early-Stage Ventures

Venture Capital Valuation Methods

Professional Venture Capital

Other Financing Alternatives

Harvesting the Business Venture Investment

Financially Troubled Ventures: Turnaround Opportunities

Filters