Private Equity and Venture Capital Week 2 Quiz Answer (2024)

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Private Equity and Venture Capital Week 2 Quiz Answer Week 2 Quiz Ans Private Equity and Venture Capital

Private Equity and Venture Capital Week 2 Quiz Answer (1)

Private Equity and Venture Capital Week 2 Quiz Answer

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Week 2 Quiz Ans

Question 1)

What is an AMC?

  • A vehicle created with the unique purpose to invest in funds
  • A financial institution managing a closed-end fund
  • A financial institution managed by the closed-end fund

Question 2)

Who can invest in a closed-end fund?

  • Governments, insurance companies, and AMCs
  • Banks, insurance companies, and pension funds
  • Banks, insurance companies, and AMCs

Question 3)

Which of the following is correct?

  • After the end of the closed-end fund, the maximum extra-time allowed is three years.
  • 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.
  • In the extra time of a closed-end fund, the PEI can undertake only one new investment.

Question 4)

What is a VCF?

  • A US instrument investing in venture capital.
  • An Anglo-Saxon instrument investing in any kind of PE.
  • An instrument operating in the US, investing in any kind of PE.

Question 5)

Which of the following concerning SBICs is true?

  • SBIC is a form of joint venture.
  • 50% of SBIC debt can be collected at a very low and yearly fixed rate from the federal government
  • 50% of SBIC equity must be owned by a public company.

Question 6)

How do banks usually participate in PE?

  • They always directly invest in PE.
  • They invest in closed-end fund and so that they can participate in PE activities.
  • They only engage in hedge funds to invest in PE.

Question 7)

Which among the following statements about the incentive related to the D/E ratio for the investors and the vehicle is correct?

  • There is no such incentive.
  • There is an incentive for investors and vehicles called thin cap.
  • There is an incentive for investors and the vehicles called double income taxation.
See Also
The growing private equity marketReview private equity firm BGFUS Pension Funds To Dive Into Risky Direct Private Equity InvestingVenture Capital And Private Equity Industry Updates

Question 8)

What is true about private debt funds?

  • These vehicles must operate together with the banking system.
  • In this case the same vehicles usually investing in private equity decide to invest in private debts rather than in PE.
  • These funds can invest in public companies, whose amount of debt is very high.

Question 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)

  • 462.62
  • 454.39
  • 584.21

Question 10)

Whom are the fiscal incentives to startup considered relevant to?

  • The investors investing in PE
  • The vehicles investing in PE
  • The venture-backed company

Question 11)

What is an AMC?

  • One of three players involved in PE investing with the creation of a closed-end fund
  • One of two players involved in asset management for high net worth individuals
  • A management company dealing with rasing debt thanks to its network

Question 12)

How does a VCF work?

  • GPs must own 98% of the equity of the limited partnership whereas LPs own 2% of it.
  • LPs, like the AMC in a closed-end fund, are in charge of the management of the VCF.
  • GPs, like the AMC in a closed-end fund, are in charge of the management of the VCF.

Question 13)

Which of the following concerning SBICs is true?

  • SBICs differ from PPPs in that the latter involves a public company.
  • SBICs involve a public admin that must hold 50% of its equity.
  • 50% of the SBIC equity must be owned by a public company.

Question 14)

What is a trust?

  • A kind of VCF, it only operates in the UK.
  • A vehicle operating in the UK owning the investors' assets.
  • A vehicle used to invest in PE in which the management company is played by a trustee.

Question 15)

See Also
The Whys and Hows of Becoming a Private Equity Professional

What is participation exemption?

  • A fiscal benefit by which the PEI is exempted from participating in the VBC
  • A fiscal benefit granted to the VBC
  • A fiscal benefit granted to PEIs

Question 16)

Which among the following statements concerning taxation and the incentives to startup is correct?

  • Tax transparency sets a tax burden at 0% for a newly founded company.
  • The mark-down mechanism entails a reduction in the tax rate without any particular conditions.
  • The thin cap mechanism sets a limit for the company to use interest rate to reduce the fiscal burden.

Question 17)

What is one thing that determines the approval or denial of the establishment of an AMC?

  • Minimum requirements to operate
  • The country of the fund
  • The country of the investors

Question 18)

What is an LLP?

  • A vehicle created in the US managed by GPs which invest in the VCF
  • A legal entity working like an AMC in Europe created by the GPs in order to protect themselves
  • It has the same function as a Closed-end Fund in Europe

Question 19)

What is true about remuneration in a SBIC?

  • Losses are borne by the public admin twice as much as the other shareholders.
  • Profits and losses are equally shared between the two groups of shareholders.
  • Both groups of shareholders receive management fees.

Question 20)

You invested in a fund whose carried interest rate is 28%. After hard work and very tough choices the fund, over its 10-year lifetime, invests in 3 different VBCs. It generates a final value of 1,825 starting from a commitment capital of 375. Calculate the Carried Interest yielded by the fund considering a Hurdle Rate at 8% and the global IRR approach.

(Round to the second digit.)

  • 35.34%
  • 108.08%
  • 106.03%

Question 2)

Which among the following is a requirement for an AMC operating in a closed-end fund environment?

  • It must own 1% of the funds in which it plans to invest.
  • the AMC must own in every fund, which must be equal to 2% of the fund
  • It can create a joint venture and invest 50% in the fund.

Question 3)

Which of the following can happen in the fundraising phase of a closed-end fund?

  • The Closed-end fund may not obtain the approval of the authority.
  • Collection can last more than 18 months, for some specific and particular projects.
  • Collection can come to an end before 18 months, the maximum allowed by law.

Question 10)

What does "being fully liable" mean in the management of a VCF?

  • The LPs are responsible for the liabilities of the VCF.
  • The GPs are responsible for the liabilities of the VCF.
  • The AMC is responsible for the liabilities of the VCF.

Question 3)

How does the remuneration work in CEF?

  • The AMC receives a yearly management fee whereas the investors receive a carried interest.
  • The investors receive a yearly fee and a carried interest at the end of the life of the closed-end fund..
  • The AMC receives a yearly management fee and a carried interest at the end of the life of the closed-end fund.

Question 7)

What is participation exemption?

  • A mechanism by which a taxation equal to 0% is granted to investors receiving capital gain
  • A mechanism in which a lower level of taxation is granted to investors for capital gains without any particular conditions
  • A mechanism in which there is a lower level of taxation on capital gain when some conditions occur

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Private Equity and Venture Capital Week 2 Quiz Answer (2024)
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