WEEK 1

1. Why is it difficult to find a potential buyer for the participation the PE owns?
A. The liquidity of the stake is very low
B. Due to the high level of liquidity it is very difficult to chose among the offers
C. The buyer may not be interested in the financing of the company

Đán án: A
2. Which of the following is a characteristic of VC?
A. VC has a higher capital gain than the one of the other PE clusters.
B. VC is not regulated as all other clusters of PE.
C. The PEI has a hands-on approach

Đáp án: C
3. Which of the following statements describes the mechanism of a PE investment?
A. The PE agrees to new conditions with banks on behalf of the VBC.
B. The PEI injects cash in the VBC and gets equity.
C. The PEI injects cash in the VBC and get debt.

Đáp án B
4. What is the twofold nature of PE?
A. PE is a source of financing and governance.
B. PE is a source of financing and investment.
C. PE is a source of financing and capital gain.

Đáp án B
5. What is the certification benefit?
A. When a PEI invests in company, the entrepreneur receives certificates listed on a Stock Exchange.
B. When a PEI invests in a company the latter is a trustworthy company.
C. When a PEI invests in company, the market knows that the PEI has got a stake in the VBC.

Đáp án B
6. What is the financial benefit for a company when financed by a PE?
A. The positive effect PE has on the cost of capital.
B. The injection in the venture backed company’s equity.
C. The increase in the equity level.

Đáp án A
7. What is the “poison pill”?
A. The PEI not finalizing the deal in the end
B. A trade of assets
C. The PEI buying a valuable asset mandatorily together with other less valuable assets

Đáp án C
8. When does the development phase occur?
A. When the company does not exist yet.
B. When the company is planning to expand itself through expansion financing.
C. When the company has just started its operations.

Đáp án A
9. Why is the put option used in startup financing as a risk mitigation tool by the PE investors?
A. In order to enhance the chances of success
B. In order to sell the shares the investor bought back to the entrepreneur
C. In order to increase the IRR

Đáp án B
10. Which of the following is a feature of seed financing?
A. The PEI has to test the assumptions of the business plan together with the management team.
B. The managerial involvement is very high: The company has to start up all operations.
C. The managerial involvement is very low: The inventor has to develop his or her ideas.

Đáp án C

WEEK 2
1. What is an AMC?
A. A financial institution managing a closed-end fund
B. A vehicle created with the unique purpose to invest in funds
C. A financial institution managed by the closed-end fund

Đáp án A
2. What is one thing that determines the approval or denial of the establishment of an AMC?
A. The country of the investors
B. Minimum requirements to operate
C. The country of the fund

Đáp án B
3. Which of the following is correct?
A. In the extra time of a closed-end fund, the PEI can undertake only one new investment.
B. After the end of the closed-end fund, the maximum extra-time allowed is three years.
C. If there is some capital that still has to be collected from the investors, the collection can be done in the extra
time of the closed-end fund.

Đáp án B
4. How does a VCF work?
A. GPs, like the AMC in a closed-end fund, are in charge of the management of the VCF.
B. LPs, like the AMC in a closed-end fund, are in charge of the management of the VCF.
C. GPs must own 98% of the equity of the limited partnership whereas LPs own 2% of it.

Đáp án A
5. What is true about remuneration in a SBIC?
A. Losses are borne by the public admin twice as much as the other shareholders.
B. Both groups of shareholders receive management fees.
C. Profits and losses are equally shared between the two groups of shareholders.

Đáp án B
6. What is a trust?
A. A vehicle operating in the UK owning the investors' assets.
B. A vehicle used to invest in PE in which the management company is played by a trustee.
C. A kind of VCF, it only operates in the UK.

Đáp án B
7. What is participation exemption?
A. A fiscal benefit by which the PEI is exempted from participating in the VBC
B. A fiscal benefit granted to the VBC
C. A fiscal benefit granted to PEIs

Đáp án C
8. Which among the following statements concerning taxation and the incentives to startup is correct?
A. Tax transparency sets a tax burden at 0% for a newly founded company.
B. The mark-down mechanism entails a reduction in the tax rate without any particular conditions.
C. The thin cap mechanism sets a limit for the company to use interest rate to reduce the fiscal burden.

Đáp án B
9. Suppose there is a fund with the following features:
- Fund Global IRR: 350%
- Hurdle Rate: 8%
- Fund Carried interest: 106%
- Final Amount: 1,929
Find the remunerations for the managers (Please round the calculation second digit)
A. 462.62
B. 584.21
C. 454.39

Đáp án C
1) committed capital: FINAL VALUE/(1+GLOBAL IRR) = 1929/(1+350%) = 428,67
2) 106% * 428,67 = 454,39
10. What does "being fully liable" mean in the management of a VCF?
A. The LPs are responsible for the liabilities of the VCF.
B. The GPs are responsible for the liabilities of the VCF.
C.The AMC is responsible for the liabilities of the VCF.

Đáp án B
WEEK 3
1. Which of the following statements about the managerial process is true?
A. Fundraising, investing, managing & monitoring, and exiting start at the same time.
B. Investing, managing & monitoring, and exiting may potentially start at the same time.
C. The managerial process is sequential and these activities follow one the other: fundraising, investing,
managing & monitoring, and exiting.

Đáp án B
2. What occurs in the investing phase?
A. Managers select the members of the AMC
B. Managers have to support the VBC in its ordinary activities
C. Managers have to deal with the valuation of potential investments

Đáp án C
3. What are the typical steps of the fundraising activity of the managerial process?
A. Creation of the business idea, selling job, debt raising, and closing
B. Creation of the fund, selling job, debt raising, and closing
C. Creation of the business idea, selling job, debt raising, and exiting

Đáp án A
4. In the managerial process, during the fundraising phase, the debt raising activity...
A. occurs before the creation of the business idea.
B. always occurs before the job selling.
C. occurs only for funds with specific features.

Đáp án C
5. What is meant by "successful closing?"
A. When the PEI can collect all the money necessary to start the PE activity.
B. Another way to call the "pure closing."
C. When the investing is made in a very profitable investment.

Đáp án A
6. Rank the following steps occurring in the decision-making phase from the most to the least expensive
and demanding for the PEI.
A. Origination, valuation and due diligence, selling job
B. Negotiation, origination, valuation and due diligence
C.Decision to invest, rating assignment, screening

Đáp án C
7. In which phase does the PEI decide the destination of the money collected over the managerial process?
A. Rating-assigment
B. Decision-making
C. Selling job

Đáp án B
8. Which among the following statements about the negotiation step in the investing phase is true?
A. The PEI has to notify the investors the numbers of shares the firm will hold.
B. The investors negotiate with the entrepreneur the value of the shares.
C. The actors involved have to calculate the number of shares the PE firm will own.

Đáp án C
9. What is meant by "managing" as a part of the managerial process?
A. The PEI has to value and select the potential investments.
B. The PEI has to make sure the company generates value and they have to take actions to create it.
C. The PEI has to protect the value generated and they have to take actions to protect value.

Đáp án B
10. What is trade sale?
A. It is the sale to a trade bank.
B. It is the sale of the stake in the VBC to another corporation or another entrepreneur.
C. It is the sale of the stake held in the VBC to another shareholder.

Đáp án B

WEEK 4
1. Why is company valuation important within PE?
A. Depending on the value of the VBC the PE will choose between the hands-on or hands-off approach.
B. Depending on the value of the VBC the PEI will choose between the US format or the EU format.
C. Depending on the value of the VBC the PEI will choose either to buy existing or newly issued shares.

Đáp án C
2. Consider the DCF model. Which among the following effects on equity value is correct?
A. The higher the WACC is, the lower the equity value is.
B. The higher the NFP is, the higher the equity value.
C. The higher the surplus assets are, the higher the equity value is.

Đáp án A
3. What is enterprise value?
A. If some conditions occur, the enterprise value is equal to the sum of the cash flow generated by the VBC at
the time of the valuation and the terminal value.
B. If some conditions occur, the enterprise value is equal to the sum of the cash flow generated by the VBC at
the time of the valuation + NFP.
C. If some conditions occur, the enterprise value is equal to the cash flow generated by the VBC at the time of
the valuation minus the terminal value.

Đáp án A
4. Which among the following multiples better expresses the capability of the company to generate gross
margin?
A. EV/Sales
B. EV/EBIT
C. EV/EBITDA
Đáp án C
5. How are cash flows called within the DCF model?
A. Free Cash flow
B. Cash flow from financing
C. Operating Cash Flow

Đáp án A
6. Use the DCF model.
Say a company has:
. total assets = 120
. equity = 40
. ẞ unlevered = 0.75
. tax burden = 20%,
find its ẞ.
A. It is not possible to say due to some missing data.
B. 1.95
C. 2.55

Đáp án B
β= 0.75*(1+(1-0.2)*(80/40)] = 1.95
Please refer to clip n.2 and slide n.20 of the fourth week.

7. Compute the Equity Value given:

Đáp án A
Equity Value = EV + SA
Please refer to clip n.2 and slide n.12 of the fourth week.

8. Why can not a PE use the DCF model at time N?

Đáp án A
9. When is the VCM used?
A. For development financing deals
B. When the IRR is unknown
C. When it is difficult to determine the percentage of the investment held by the equity investors
Đáp án C
10. Use the VCM to find the right percentage (%) of shares the PE should have:
Value of the investment=3,800,000
. IRR = 40%
- Holding Period = 4 years
. Net Income (Year N) = 2,600,000
. PE ratio = 13
A. 15.74%
B. 43.19%
C. It is not possible to say due to missing data.

Đáp án B
1) Future value of the investment = 3,800,000 (1+40%)^4 = 14,598,080
2) Terminal Value = 2,600,000 x 13 = 33,800,000
3)% shares Future Value of the investment/Terminal Value = 43.19%

FINAL TEST
1. Why should a company choose PE over a mortgage or loan?
A. It is much easier to be selected as a VCB rather than to be given a mortgage.
B. The fact that the PE is also a shareholder makes them really interested in enhancing the company's value.
C. PE firms have a much higher cash availability than banks.

Đáp án B
2. What is the knowledge effect?
A. The positive effect on the cost of capital
B. The signal of great health of the company given to the market when a company is selected as a VBC
C. Hard and soft knowledge that can be transferred to a company by a PEI

Đáp án C
3. According to the European Format, who can invest in PE?
A. Banks and AMCS
B. VCFs and Ccosed-end funds, depending on whether the managers want to leverage or not
C. Among others, banks and closed-end funds

Đáp án C
4. What is the biggest advantage of crowdfunding?
A. It is a very recent practice.
B. Investors and management companies accept to get a lower level off profits in terms of capital gains, carried
interest and management fees.
C. Those who need capital can launch an offer on the internet and see whether they are able to collect the
amount needed.

Đáp án C
5. What are some of the risks on the investors' side for which one should take actions to protect value?
A. Psychological constraints on management
B. New shareholders entrance
C. Wrong industrial management decisions

Đáp án C
6. What is the biggest drawback of the DCF?
A. You need to rely on a sound business plan.
B. You do not know the value of the assets.
C. You do not know if the VBC will make a profit in the first year, hence you do not know the first year tax
effect.

Đáp án A
7. What is the main difference between a VCF in the US and UK?
A. None of the others are true.
B. A VCF in the UK is subject to the UK supervisor.
C. There is no difference.

Đáp án C
8. Why is seed financing very risky?
A. It only deals with pharmaceutical industries, one of the riskiest industries.
B. The managerial role is very high.
C. Not every idea can generate a marketable output.

Đáp án C
9. What two moments form the investing phase?
A. Decision-making and deal-making.
B. Business idea creation and selling job
C. Origination and screenig

Đáp án A
10. Why is it difficult to find a potential buyer for the participation the PE owns?
A. The price is defined by the market and a seller could buy the shares for speculative purposes.
B. The price is not defined by the market, entailing a high difficulty in its determination.
C. The Stock Exchange authority strictly monitors PE investors.

Đáp án B