Advanced Entrepreneurial Finance
Exam Materials
Course Introduction
Advanced Entrepreneurial Finance delves into the complex financial concepts and strategies needed to launch, manage, and scale innovative ventures. The course covers advanced topics such as venture capital financing, deal structuring, valuation of startups, risk and return assessment, term sheet negotiation, and exit strategies. Through case studies, simulations, and real-world applications, students learn how to evaluate funding options, manage financial growth, and make investment decisions in uncertain environments. Emphasis is placed on fostering the analytical and practical skills essential for entrepreneurs and investors navigating the dynamic world of entrepreneurial finance.
Recommended Textbook
Entrepreneurial Finance 4th Edition by
J. Chris Leach
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15 Chapters
1018 Verified Questions
1018 Flashcards
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Chapter 1: Introduction and Overview
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) The Office of Advocacy of the U.S.Small Business Administration documents that "employer firm births" have approached 600,000 annually in recent years.
A)True
B)False
Answer: True
Q2) "Fads" are not predictable,have short lives,and do not involve macro changes.
A)True
B)False
Answer: True
Q3) Successful entrepreneurs exhibit which of the following traits?
A)recognize and seize commercial opportunities
B)economic pessimism
C)tend to be doggedly optimistic
D)both a and b
E)both a and c
Answer: E
Q4) The second stage in a successful venture's life cycle is the startup stage.
A)True
B)False
Answer: True
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Chapter 2: From the Idea to the Business Plan
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Sample Questions
Q1) The first two requirements of a sound business model are:
A)generate revenues,make profits
B)make profits,produce free cash flows
C)produce free cash flows for creditors and owners of the venture
Generate revenues and produce free cash flows
Answer: A
Q2) A SWOT analysis should consider as potential strengths or weaknesses whether there are unfilled customer needs and the extent to which intellectual property rights exist.
A)True
B)False
Answer: True
Q3) For ventures that first get to market or create intellectual property rights,it's common to price new products or services at high markups or profit margins.
A)True
B)False
Answer: True
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Chapter 3: Organizing and Financing a New Venture
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79 Verified Questions
79 Flashcards
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Sample Questions
Q1) Which form of business organization is characterized as having unlimited life?
A)proprietorship
B)limited partnership
C)limited liability corporation
D)subchapter S corporation
E)general partnership
Answer: D
Q2) Based on 2009 tax laws,the highest possible marginal tax table rate is higher for corporations than for individuals.
A)True
B)False
Answer: True
Q3) The dollar amount of income taxes paid by a corporation with taxable income of $50,000 would be:
A)$1,500
B)$6,250
C)$7,500
D)$8,500
E)$10,850
Answer: C
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Chapter 4: Measuring Financial Performance
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Sample Questions
Q1) "Cost of goods sold" is the cost of materials,labor,and advertising incurred to produce the products that were sold.
A)True
B)False
Q2) What is the survival revenues breakeven based on: cash fixed costs = $400,000 and a variable cost revenue ratio = .65?
A)$460,500
B)$615,385
C)$1,142,857
D)$2,000,334
E)$4,000,667
Q3) Which of the following is not a characteristic of inventories?
A)raw materials
B)finished products
C)goods sold but not yet shipped
D)work-in-process
Q4) "Variable expenses" are costs or expenses that vary directly with revenues.
A)True
B)False
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Chapter 5: Evaluating Financial Performance
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72 Flashcards
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Sample Questions
Q1) The total-debt-total-asset ratio for Runs and Goses is?
A)0.48
B)0.71
C)0.27
D)0.53
E)0.82
Q2) Which of the following is used to compare a venture's performance against another firm at the same point in time?
A)qualitative analysis
B)trend analysis
C)cross sectional analysis
D)industry comparable analysis
Q3) The part of a venture's interest payment that is subsidized by the government because of the deductibility of interest is called the interest tax shield.
A)True
B)False
Q4) Cross-sectional analysis is used to examine a venture's performance over time.
A)True
B)False
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Chapter 6: Financial Planning:short Term and Long Term
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66 Flashcards
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Sample Questions
Q1) A venture's common equity was $50,000 at the end of last year.If the venture's common equity at the end of this year was $60,000,what was its sustainable sales growth rate?
A)5%
B)10%
C)15%
D)20%
E)25%
Q2) Increases in accounts receivable and accounts payable that accompany sales increases are called "spontaneously generated funds".
A)True
B)False
Q3) A sales growth rate based on the retention of profits is referred to as the:
A)real sales growth rate
B)sustainable sales growth rate
C)spontaneous sales growth rate
D)nominal sales growth rate
E)weighted average sales growth rate
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8
Chapter 7: Types and Costs of Financial Capital
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Sample Questions
Q1) Find a venture's "economic value added" (EVA)based on the following information:EBIT = $200,000;financial capital used = $500,000;WACC = 20%;effective tax rate = 30%.
A)$20,000
B)$25,000
C)$30,000
D)$40,000
E)$50,000
Q2) Which one of the following components is not used when estimating the cost of risky debt capital?
A)real interest rate
B)inflation premium
C)default risk premium
D)market risk premium
E)liquidity premium
Q3) A nominal interest rate is an observed or stated interest rate.
A)True
B)False
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9
Chapter 8: Securities Law Considerations When Obtaining Venture Financing
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77 Flashcards
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Sample Questions
Q1) The U.S.federal law that impacts the creation and sales of securities is:
A)Securities Exchange Act of 1934
B)Securities Act of 1933
C)Investment Company Act of 1940
D)Investment Advisers Act of 1940
Q2) The Securities Act of 1933 provides a very narrow definition as to what constitutes a security.
A)True
B)False
Q3) The efforts to regulate the trading of securities takes place under which of the following securities laws?
A) Securities Act of 1933
B) state blue-sky laws
C) Securities and Exchange Act of 1934
D) Investment Company Act of 1940
E) Investment Advisers Act of 1940
Q4) The securities Exchange act of 1934 provides for the regulation of securities exchanges and over-the-counter markets.
A)True
B)False
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Chapter 9: Valuing Early-Stage Ventures
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62 Flashcards
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Sample Questions
Q1) In a wildly successful first year in business that started and ended with no required cash,your firm has operating income of $989,000,net income of $637,000,current assets of $900,000,current liabilities of $659,000,net capital expenditures were $690,000,and depreciation was $460,000.The firm has never financed itself with debt.What is your equity valuation cash flow?
A)$648,000
B)$900,000
C)$2,028,000
D)$166,000
Q2) Pre-money valuation is the present value of a venture prior to a new money investment.
A)True
B)False
Q3) When estimating the terminal value of a cash flow perpetuity,which one of the following is not a component?
A)the next period's cash flow
B)a constant discount rate
C)a constant growth rate
D)the payback period
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Page 11
Chapter 10: Venture Capital Valuation Methods
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Sample Questions
Q1) Which of the following financing rounds dilutes the ownership founders?
A)first-round
B)second-round
C)incentive ownership round
D)a and b
E)a,b,and c
Q2) The basic venture capital method estimates a venture's value using only terminal/exit flows to all the venture's owners.
A)True
B)False
Q3) What is the percent ownership of our venture that must be sold in order to provide the venture investor's target return?
A)33.33%
B)75.94%
C)12.76%
D)15.00%
Q4) The VSCS is like a post-money version of the DDA.
A)True
B)False
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Chapter 11: Professional Venture Capital
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57 Flashcards
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Sample Questions
Q1) Professional venture capital,as we know it today,did not exist before World War II.
A)True
B)False
Q2) In a Venture Capital Fund Placement Memorandum,all of the following are included in the summary of terms except?
A)indemnification
B)objective
C)liquidation
D)valuation
E)expenses
Q3) SLOR stands for "standard letter of recognition."
A)True
B)False
Q4) Internet financing led the record level of venture investing in the 1999-2000 time period.
A)True
B)False
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13
Chapter 12: Other Financing Alternatives
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Sample Questions
Q1) The SBA's venture capital credit program works through Community Development Financial Institutions (CDFIs).
A)True
B)False
Q2) When assessing the creditworthiness of new entrepreneurs,lending institutions review the "Five C's".The ability of the entrepreneur to repay borrowed funds is known as:
A)capacity
B)capital
C)collateral
D)conditions
E)character
Q3) By an act of Congress,the Small Business Administration (SBA)was created in which one of the following years?
A)1953
B)1968
C)1973
D)1985
E)1993
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Chapter 13: Security Structures and Determining Enterprise
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Sample Questions
Q1) Convertible debt is debt that converts into preferred stock.
A)True
B)False
Q2) An option that can be exercised at any time until its expiration is called a:
A)forward contract
B)lookback option
C)American-style option
D)European-style option
E)Bermuda-style option
Q3) Which of the following is an example of a put option which is in the money?
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.
Q4) An American-style option is an option that can be exercised only at the expiration date
A)True
B)False
Page 15
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Chapter 14: Harvesting the Business Venture Investment
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66 Flashcards
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Sample Questions
Q1) In the aftermarket trading for the venture's securities,an order that converts to a market order once a certain price is achieved is known as a:
A)put order
B)market order
C)limit order
D)stop order
Q2) Which of the following is the premium that would be applied to venture valuation due to an investor's majority ownership of a venture?
A)proxy premium
B)control premium
C)influence premium
D)liquidity premium
E)illiquidity premium
Q3) An initial public offering (IPO)involves:
A)sale of new securities to private investors
B)sale of used securities to the public
C)a venture's first offering of SEC-registered securities to the public
D)all of the above
E)none of the above
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Page 16
Chapter 15: Financially Troubled Ventures: Turnaround Opportunities
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67 Verified Questions
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Sample Questions
Q1) Which of the following refers to the legal process used by creditors to try to collect amounts owed on loans in default?
A)insolvency
B)loan default
C)acceleration provision
D)cross default provision
E)foreclosure
Q2) Which of the following provides that defaulting on one loan places all loans in default?
A)insolvency
B)loan default
C)acceleration provision
D)cross default provision
E)foreclosure
Q3) A private workout is a voluntary agreement between a venture's owners and its shareholders that provides for a financial restructuring of the venture's outstanding debt.
A)True
B)False
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