Question 1

The concept of an enterprise value is that it is the combined value of all of venture's financing,typically equity plus all of the debt.

Accepted Answer

A) True 
 B)False

Question 2

If a call option can be bought for $12 and the stock's market value is $12,it's said to be "at the money".

Accepted Answer

A) True 
 B)False

Question 3

An option not currently worth exercising is said to be an out of the money option.

Accepted Answer

A) True 
 B)False

Question 4

The right to sell a specified asset at a specified price up until 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

An option is a right to buy or sell additional shares of stock.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not an input to the Black and Scholes model?

Accepted Answer

A) earnings per share 
B) stock price 
C) risk free rate 
D) volatility 
A) earnings per share 
B) stock price 
C) risk free rate 
D) volatility

Question 7

Which of the following stock can be structured to assure the shareholder that they will share in the payment of any dividends to common stockholders?

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 8

Options generally have no effect on the value of a venture capital investment.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following have the least senior claim on a venture's asset?

Accepted Answer

A) common Stock 
B) preferred stock 
C) convertible preferred stock 
D) convertible debt 
E) American-style option 
A) common Stock 
B) preferred stock 
C) convertible preferred stock 
D) convertible debt 
E) American-style option

Question 10

A preemptive right is a right for existing owners to buy sufficient shares to preserve their ownership share.

Accepted Answer

A) True 
 B)False

Question 11

When consistent assumptions are used,we

Accepted Answer

A) get the same value for equity under the enterprise and equity methods of valuation 
B) we get a higher value of equity under the equity method of valuation 
C) we get a lower value of equity under the equity method of valuation 
D) we get equity values that cannot be compared across the equity and enterprise methods of valuation 
A) get the same value for equity under the enterprise and equity methods of valuation 
B) we get a higher value of equity under the equity method of valuation 
C) we get a lower value of equity under the equity method of valuation 
D) we get equity values that cannot be compared across the equity and enterprise methods of valuation

Question 12

As the underlying stock price increases in value,a put option to sell it becomes more valuable.

Accepted Answer

A) True 
 B)False

Question 13

To calculate the enterprise valuation cash flow,one begins with which of the following items from the income statement?

Accepted Answer

A) net sales 
B) operating profit 
C) (earnings before interest and taxes)× (1 - enterprise tax rate) 
D) net income 
E) net income times the enterprise tax rate 
A) net sales 
B) operating profit 
C) (earnings before interest and taxes)× (1 - enterprise tax rate) 
D) net income 
E) net income times the enterprise tax rate

Question 14

The enterprise value includes the value of the debt,equity,and warrant pieces of a venture.

Accepted Answer

A) True 
 B)False

Question 15

The Black and Scholes model requires the inflation rate as an input.

Accepted Answer

A) True 
 B)False

Question 16

An American-style option is an option that can be exercised only at the expiration date

Accepted Answer

A) True 
 B)False

Question 17

The value of a warrant can be directly derived from the value of a call option.

Accepted Answer

A) True 
 B)False

Question 18

For American and Bermudan embedded options,the exercise price can change over time as specified in the security agreement.

Accepted Answer

A) True 
 B)False

Question 19

Convertible preferred stockholders have the right to convert a preferred share into a specified number of common shares at any time after the expiration date.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is an example of a call option which is in 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.

The concept of an enterprise value is that it is the combined value of all of venture's financing,typically equity plus all of the debt.

If a call option can be bought for $12 and the stock's market value is $12,it's said to be "at the money".

An option not currently worth exercising is said to be an out of the money option.

The right to sell a specified asset at a specified price up until a specified date is called:

An option is a right to buy or sell additional shares of stock.

Which of the following is not an input to the Black and Scholes model?

Which of the following stock can be structured to assure the shareholder that they will share in the payment of any dividends to common stockholders?

Options generally have no effect on the value of a venture capital investment.

Which of the following have the least senior claim on a venture's asset?

A preemptive right is a right for existing owners to buy sufficient shares to preserve their ownership share.

When consistent assumptions are used,we

As the underlying stock price increases in value,a put option to sell it becomes more valuable.

To calculate the enterprise valuation cash flow,one begins with which of the following items from the income statement?

The enterprise value includes the value of the debt,equity,and warrant pieces of a venture.

The Black and Scholes model requires the inflation rate as an input.

An American-style option is an option that can be exercised only at the expiration date

The value of a warrant can be directly derived from the value of a call option.

For American and Bermudan embedded options,the exercise price can change over time as specified in the security agreement.

Convertible preferred stockholders have the right to convert a preferred share into a specified number of common shares at any time after the expiration date.

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

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

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Exam 13: Security Structures and Determining Enterprise Values

The concept of an enterprise value is that it is the combined value of all of venture's financing,typically equity plus all of the debt.

If a call option can be bought for $12 and the stock's market value is $12,it's said to be "at the money".

An option not currently worth exercising is said to be an out of the money option.

The right to sell a specified asset at a specified price up until a specified date is called:

An option is a right to buy or sell additional shares of stock.

Which of the following is not an input to the Black and Scholes model?

Which of the following stock can be structured to assure the shareholder that they will share in the payment of any dividends to common stockholders?

Options generally have no effect on the value of a venture capital investment.

Which of the following have the least senior claim on a venture's asset?

A preemptive right is a right for existing owners to buy sufficient shares to preserve their ownership share.

When consistent assumptions are used,we

As the underlying stock price increases in value,a put option to sell it becomes more valuable.

To calculate the enterprise valuation cash flow,one begins with which of the following items from the income statement?

The enterprise value includes the value of the debt,equity,and warrant pieces of a venture.

The Black and Scholes model requires the inflation rate as an input.

An American-style option is an option that can be exercised only at the expiration date

The value of a warrant can be directly derived from the value of a call option.

For American and Bermudan embedded options,the exercise price can change over time as specified in the security agreement.

Convertible preferred stockholders have the right to convert a preferred share into a specified number of common shares at any time after the expiration date.

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

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