18 Questions
What is venture capital?
Capital provided by outside investors for financing of new, growing or struggling businesses
What type of investments are venture capital investments?
High risk investments with potential for above average returns
What is a venture capitalist (VC)?
A person who invests in start-up businesses
What is a venture capital fund?
A pooled investment vehicle primarily investing in risky enterprises
What are alternatives to venture capital for entrepreneurs seeking initial funding?
Angel investors or personal savings
What is the primary reason why entrepreneurs seek initial funding from angel investors?
Venture capitalists have strict requirements for potential investments
What is the practice called when start-ups seek to self-finance until they can approach outside capital providers?
Bootstraping
In which industries can businesses more cheaply raise debt to finance their growth?
Manufacturing and mining
What factor is NOT considered before making a decision to raise capital through venture?
No physical collateral is required
Why are market values preferred for computing the weighted average cost of bond interest?
They reflect the current risk level in prices
What is the total book value of bond debt in million?
$1,493
What is the weighted average cost of bond debt using market values?
7.37%
What does the practice of 'bootstrapping' help start-ups avoid?
Dilutive effects of receiving funding before claims are proven
Why do many start-ups seek to self-finance before approaching outside capital providers?
To avoid the dilutive effects of receiving funding before claims are proven
What type of investments are venture capital investments?
High risk investments
What is the primary role of a venture capitalist (VC)?
To make investments in new, growing, or struggling businesses
What is the primary purpose of a venture capital fund?
To primarily invest in enterprises too risky for standard capital markets or bank loans
What is the nature of the potential returns from venture capital investments?
Above average returns
Test your knowledge of corporate finance topics including venture capital, cost of debt, weighted average cost of debt, tax and cost of debt, cost of loans and leases, overall cost of capital, and WACC.
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