Question

1.What is the watermark for good VC performance?

A.100x return on fund

B.$100m return

C.3x return on fund

D.10% return

2.VCs charge their LP's a 2% management fee. Why?

A.Investments take several years to generate a return.

B.VC's need to pay operating expenses while they wait for returns.

C.Everybody else does it.

D.All of the Above

E.A & B

3.When remedying a breach of contract, when does it not make sense to remedy the breach with cash?

A.When the contract breach was immoral.

B. When the contract was for a wholly unique item.

C. When the contract was for services.

D.When the contract was not in writing.

4.Why does a VC fund limit the amount of money it takes from LPs?

A.To create scarcity

B.To preserve return rates

C.To block the haters

D.To reduce management fees

5.U.S. Congrress proclaims that any restaurant that displays a pro-America sign is exempt from any State regulation. The Consitution does not grant U.S. Congress such powers, and this proclamation is therefore unconstistutional. Why?

A.Federal authority is limited to its enumerated powers

B.Restaurants have freedom of speech

C.There must be separation of church and state

D.The U.S. is a free market.

6.Why is the legal purpose of a corporation to "maximize stockholder value?”

A.Because we live in capitalism

B.Money is objectively measurable

C.Corporations are greedy

D.Money is subjectively measurable

7.A classmate offers you the chance to invest into a businesses opportunity wherein you would pay $60 for nutritional supplements and are responsible for re-selling those supplements to other students. Any revenue you make is yours to keep.

- There is a 75% chance you cannot sell the supplements and you lose $60.
- There is a 25% chance you sell the supplements for $80.

What is the expected return of this investment?

A.-$25

B.-$60

C.$80

8.A classmate offers you the chance to invest into a businesses opportunity wherein you would pay $60 for nutritional supplements and are responsible for re-selling those supplements to other students. Any revenue you make is yours to keep.

- There is a 75% chance you cannot sell the supplements and you lose $60.
- There is a 25% chance you sell the supplements for $80.

Is this a good investment?

Y.Yes

N.No

12

Which special rights does a debtholder have that stockholder doesn't?

A.Appoints directors to board

B.Receives dividends

C.Priority in liquidation

D.Votes at quarterly meetings

D

$20

Answer 1

Answer 1.

A VC fund needs a 3x return to achieve a “venture rate of return” and be considered a good investment.

2. VC's charge 2% management fees because:
Investments take several years to generate a return.

Traditionally, the GP (i.e. the fund manager) is compensated through a combination of a “management fee” and a “carried interest”. The management fee is an annual percentage of the funds committed to the VC that is used to pay the salaries and overhead of the GP. Expenses associated with creating and operating the fund, however, will normally be borne by the LPs (that is, is over and above the management fees). Most VC firms will charge a management fee ranging from 2% to 2.5% per year though some firms charge no fee at all.

3. When remedying a breach of contract, it does not make sense to remedy the breach with cash : When the contract was for services.

4. A VC fund limit the amount of money it takes from LPs to preserve the return rates,
Since, Limited Partners haveto be paid on time as they have limited liability.

5. U.S. Congrress proclaims that any restaurant that displays a pro-America sign is exempt from any State regulation. The Consitution does not grant U.S. Congress such powers, and this proclamation is therefore unconstistutional because:

A. Federal authority is limited to its enumerated powers.

6. The legal purpose of a corporation is to "maximize stockholder value” because:

B. Money is objectively measurable.
Maximization of Shareholder's wealth is a broader concept.

7. Option A. 25 is correct answer - 80*25% = 20/80 = 25

8. No. This is nota good investment,sinceloosing percentageis more.

12. Which special rights does a debtholder have that stockholder doesn't:

C.Priority in liquidation.

Shareholder's priority comes in the end.