Stock Valuation and Financing

<p>Covenants (C)</p> Signup and view all the answers

<p>Private equity investors (A)</p> Signup and view all the answers

<p>Special acquisition acquisition (B)</p> Signup and view all the answers

<p>Initial public offering (IPO) (C)</p> Signup and view all the answers

<p>Factors related to founders, business structure, and perceived risk (D)</p> Signup and view all the answers

<p>Private equity investors focused on startups (A)</p> Signup and view all the answers

<p>An agreement outlining when and how investors can exit their investment (D)</p> Signup and view all the answers

<p>They are wealthy individuals investing in early-stage companies (C)</p> Signup and view all the answers

<p>Initial public offering (IPO) (C)</p> Signup and view all the answers

<p>Attractive growth prospects (B)</p> Signup and view all the answers

<p>Access to new public equity capital (A)</p> Signup and view all the answers

<p>Venture capital involves investing in early-stage startups while angel investing can involve various stages (A)</p> Signup and view all the answers

<p>To gain access to necessary funds for expansion (D)</p> Signup and view all the answers

<p>Original founders' common stock investment (D)</p> Signup and view all the answers

<p>They will invest only if the founders have a personal stake. (C)</p> Signup and view all the answers

<p>Issuing stock to a broader group (C)</p> Signup and view all the answers

<p>All passed dividends must be paid before common stock dividends. (A)</p> Signup and view all the answers

<p>The issuer can retire the shares at a specified price. (D)</p> Signup and view all the answers

<p>Founders' investment indicates commitment to the business. (D)</p> Signup and view all the answers

<p>Noncumulative stock does not allow for unpaid dividends to accumulate. (A)</p> Signup and view all the answers

<p>To offer initial financing to new firms. (A)</p> Signup and view all the answers

Privately raised external equity capital used to fund early-stage companies with attractive growth prospects.

Formal businesses that invest in early-stage companies, provide oversight, and have clear exit strategies.

Wealthy individuals who invest in promising early-stage companies for equity ownership.

Legal contracts between founders and VC funds, outlining responsibilities, ownership, and exit strategies.

Conditions or clauses in a venture capital contract that manage the VC's risk. These can include milestones and performance targets.

The method by which a VC exits an investment, such as selling shares to the public or another company.

The first public sale of a company's stock, offering shares to the general public.

A method of raising capital by offering new shares directly to existing shareholders.

Equity capital is owned by the company's shareholders, who are essentially owners of the firm. They have a say in management, but their claims to income and assets come after creditors. Dividends paid to stockholders aren't tax-deductible, and there's no specific maturity date for equity investments.

Debt capital is the money borrowed by a company from lenders, who are essentially creditors. They have priority claim on the company's income and assets, interest payments are tax-deductible, and have a fixed maturity date.

Common stock represents ownership in a company and gives holders voting rights in corporate decisions, but dividends are not guaranteed. Each share represents a small portion of company ownership.

Preferred stock is a type of stock with a fixed dividend payment. Preferred stockholders have priority over common stockholders regarding dividend payments and asset distribution, but they typically do not have voting rights.

When a company issues new shares of common stock, existing shareholders have the right to buy a proportionate amount of these new shares to avoid dilution of their ownership.

A proxy allows a shareholder to transfer their voting rights to another party, usually a representative or another shareholder.

An IPO (Initial Public Offering) marks the first time a company offers shares of its stock to the public. This allows the company to raise capital from a broader market.

Venture capitalists (VCs) are private investors who provide funding to startup companies with high growth potential. Their goal is to invest in companies that can generate large returns.

Preferred stock with no stated face value but with a stated annual dollar dividend.

Preferred stock is considered quasi-debt because it specifies a fixed periodic payment (dividend) similar to interest on debt.

Unlike debt, preferred stock has no maturity date, meaning it doesn't have a specific date when it must be repaid.

Preferred stockholders have a fixed claim on the firm's income that takes precedence over common stockholders, making them less risky than common stockholders.

Preferred stockholders typically don't have voting rights, but may be allowed to elect a board member in certain cases.

Preferred stock with a feature that allows the issuer to retire the shares within a certain period and at a specified price.

Preferred stock that allows holders to convert each share into a stated number of shares of common stock.

Preferred stock for which all passed (unpaid) dividends in arrears, along with the current dividend, must be paid before dividends can be paid to common stockholders.