Ques #1 How much is the value of a start-up for which the entrepreneur puts in $2 million and a venture capitalist invests $6 million of seed money owning 60% interest in the firm?
Ques #2 Which of the following reason may explain why entrepreneurs donate their personal funds to start a new business?
A) The contribution serves as a signal to venture capitals
B) The contribution provides incentive to expend efforts
C) The contribution retains a portion of the firm's equity
D) All of the above
Ques #3 One of the primary reasons for organizing venture-capital firms as closed-end mutual funds is:
A) To reduce tax liabilities
B) To take advantage of centralization
C) To provide stability
D) To increase the importance of the limited partners
Ques #4 In return for providing funds for buyouts, venture capitals receive
A) Long-term bonds of the firm
B) Short-term bonds of the firm
C) An equity position in the firm
D) Ownership of the entire firm
Ques #5 What can be said if a mutual fund trades at a discount?
A) It means that investors in the fund value their investments at more than the net asset values owned by the fund
B) It means that the mutual fund is increasing in value
C) It means that the value of the mutual fund on the mutual market is less than the net value of the assets in the fund
D) It means that the mutual fund has restrictions in investment
Ques #6 Ford Credit (Canada) is an example of
A) Captive finance company
B) Business credit institution
C) Floor plan finance company
D) Personal credit institution
Ques #7 Which of the following fund would offer the investor the least risk of capital loss?
A) Fixed income funds
B) Equity funds
C) Balanced funds
D) Money market funds
Ques #8 On average, you have a bank deposit of $3,000 earning an annual interest of 2%. However, on any given day, the actual balance may either be 20% or 200% of the average amount with an equal probability. Being allowed for three free transactions every month, you pay $0.35/transaction beyond the limit. You normally have 10 transactions in each month. The administrative cost to the bank is $0.2/transaction. How much does your deposit cost the bank annually? No minimum balance is required.
A) 1.16%
B) 1.78%
C) 2.20%
D) 2.62%
Ques #9 A universal bank is an institution that
A) Utilizes the economies of scale and scope
B) Combines commercial banking, securities activities and insurance services
C) Makes long-term loans to, and buys shares of, the same clients
D) All of the above
Ques #10 Examples of off-balance-sheet activities for banks include
A) Trading in financial futures
B) Loan sales
C) Issuing letters of credit
D) All of the above