350 chapter 15
IPO stand for: Question 6 options: A) "investment pricing organization" B) "initial public offering" C) "institutional pricing overhead" D) "immediate pricing opportunity"
"initial public offering"
Assume that a venture is expected to have an EBITDA of $1,500,000 at the end of five years from now. If the venture's value is expected to be $12,000,000, what valuation multiple was being assumed? Question 9 options: A) 12 times B) 4 times C) 8 times D) 10 times
8 times (12/1.5)
Based on the following information, estimate the percentage appreciation on stock bought by the founders: founders' purchase price = $1.00; venture investors' purchase price = $2.00; current stock price = $10.00; founders' holding period = 5 years; and venture investors holding period = 3 years. Question 10 options: A) 100% B) 400% C) 600% D) 900%
900% ($10-$1(founder price))x100=900%
Which of the following is not a way to harvest a venture? Question 7 options: A) systematic liquidation B) outright sale C) Chapter 11 bankruptcy D) going public
Chapter 11 bankruptcy
The distribution of the venture's cash flows directly to the owners is a venture harvesting process known as: Question 6 options: A) a systematic liquidation B) an outright sale C) Chapter 11 bankruptcy D) going public
a systematic liquidation
The acquisition of the venture by family members, managers, or outside buyers is a venture harvesting process known as: Question 8 options: A) a systematic liquidation B) an outright sale C) Chapter 11 bankruptcy D) going public
an outright sale
Which of the following is the premium that would be applied to venture valuation due to an investor's majority ownership of a venture? Question 9 options: A) proxy premium B) control premium C) influence premium D) liquidity premium
control premium
In an outright sale of a venture, the venture can be sold to: Question 9 options: A) family members and managers B) managers and employees C) employees and outside (external) buyers D) family members, managers, employees, and outside (external) buyers
family members, managers, employees, and outside (external) buyers
In the investment banking process, which of the following is a duty of the investment bank? Question 7 options: A) be the targeted investors for a firm's securities B) provide banking services, such as checking accounts, to firms C) find buyers for a firm's securities D) market only founder shares
find buyers for a firm's securities
Registering equity and selling it via an IPO of new shares followed by a secondary offering of existing shares is a venture harvesting process known as: Question 10 options: A) a systematic liquidation B) an outright sale C) Chapter 11 bankruptcy D) going public
going public
Shares registered with the Securities and Exchange Commission and state securities regulators and sold to the public are known as a(n): Question 7 options: A) primary offering B) secondary offering C) initial public offering D) shelf offering
initial public offering
The sale of new securities is known as a(n): Question 6 options: A) primary offering B) secondary offering C) initial public offering D) shelf offering
primary offering
A venture can be harvested in which of the following ways? Question 8 options: A) systematic liquidation, outright sale, and going public B) outright sale, going public, and acquisition C) going public and acquisition D) acquisition and systematic liquidation
systematic liquidation, outright sale, and going public
An initial public offering (IPO) involves a: Question 8 options: A) sale of new securities to private investors B) sale of used securities to the public C) venture's first offering of SEC-registered securities to the public D) venture's reoffering of its publicly traded securities
venture's first offering of SEC-registered securities to the public
