Test 3 Valuation Intermediate corporate Finance

Venture Capatalist

Always looking for an exit strategy investment ranged only a few years

Start Up

Financing for firms that start within the past year, funds likely to pay for marketing and development I

0

If the firm has annul debt obligations of $40 and generates cash flow of $30 how much will share holders receive

given priority over

In bankruptcy cases the claims of lawyers are ___ the claims of senior bond holders

SEO

Is a new issue for a company with securities that have been previously issued

lowering interest rates on the bonds increasing firm value

Protective covenants benefit shareholders by

Seed Money Stage

Small amount of money to prove a concept or develop a product

They reduce the value of the firm

What is the effect of a possible bankruptcy cost on the value of the firm

the static trade off theory of capital structure

Which theory of capital structure leads to a target debt ratio

fist round financing

additional money to begin sales and manufacturing after a firm has spent its start up funds

reduce

agency conflicts lead to agency costs which ___ the value of the firm

prospectus

contains much of the information put into the registration statement given to potential investors of the firm

third round financing

financing for a company that is at least breaking even and is contemplating an expansion

debt tax shield

firm value initially increases when the proportion of debt in the capital structure increases due to the ___

second round financing

funds earmarked for working capital for a firm that is currently selling its products but is still loosing money

the lawyers

if a firm is in financial distress who will get paid first

asymmetric

if a manager has more information than an investor about a firm that information is referred to as ____ information

angle investors

individuals who invest in start-up companies with high growth potential in exchange for a share of ownership

IPO

issued when the company decides to go public

forth round financing

money is provided for the firms that are likely to go public within half a year

negative

the possibility of bankruptcy cost has a ___ effect on the value of the firm

direct and indirect

the two broad types of costs of financial distress are ___ costs

stocks and bonds

the value of the firm depends on the value of its ___

the value of the firm increases with leverage

what do MM assert about the relationship between leverage and firms value in the presence of corporate taxes

bond covenants

what is the lowest cost solution to the shareholder - bondholder conflict