INSTRUCTION: Select the letter for the correct answer:

1. It is an ownership or interest in an entity that is not publicly listed or traded.

A. Investment Banks C. Growth Capital
B. Hedge Funds D. Private Equity
2. The process of restructuring a company's debt and equity mixture, often to stabilize a
company's capital structure.
A. Hedge Funds C. Recapitalization
B. Growth Capital D. Merger
3. It is a form of valuation in business that focuses on the value of a company's assets or the fair
market value of its total assets after deducting liabilities.
A. Income-base method C. Market-based method
B. Asset-based method D. Market price method
4. Allocation of resources, usually money, with the expectation of earning an income or profit.
A. Due diligence C. Financing
B. Investment D. Valuation
5. Acquisition of another company using a significant amount of borrowed money (bonds or
loans) to meet the cost of acquisition.
A. Initial Public Offering C. Recapitalization
B. Leverage buyout D. Venture Capital
6. It is a reasonable step taken by a person in order to satisfy a legal requirement, especially in
buying or selling something.
A. Valuation C. Area of focus
B. Legal Issues D. Due diligence
7. It is a valuation method that involves comparing the financial metrics and market prices of
similar assets to determine their value.
A. Income-based method C. Market-based method
B. Asset-based method D. Market price method
8. It is a way of describing the perceived or true value of an asset.
A. Intrinsic value C. Capitalization
B. Relative valuation D. Extrinsic value
9. The following is what the investor is looking for, except:
A. Extraordinary items C. Innovative idea
B. Business model D. Top executive team
10. It refers to the process of offering shares of a private corporation to the public in a new stock
issuance for the first time.
A. Initial public offering C. Recapitalization
B. Leverage buyout D. Venture capital
11. Which of the following is not a legal issue in due diligence?
A. Licenses and permissions C. Environmental permissions
B. Employees, consultants, and labour relations D. Intellectual property
12. It is a semi- professional investor. Often invest with their gut and tend to invest in their
professional niche.
A. Financial investor C. Friends and family
B. Angel investor D. Venture capitalist
13. The process of reconfiguring a company's hierarchy, internal structure, or operations
procedures.
A. Corporate restructuring C. Swap Ratio
B. Voluntary assessment D. Conversion rate
14. This phase involves achieving goals that should enhance the initial valuation of the firm.
A. Pre-IPO Transformation Stage C. Post-IPO Transaction Stage
B. IPO Transaction Stage D. Due Diligence Stage
15. The following are key areas of focus in due diligence except:
A. Litigation C. Supplies
B. Sales strategy D. Systems
16. Treats the investment in an economic matter and invests in almost any niche, as long as the
opportunity is good.
A. Financial Investor C. Friends and family
B. Angel Investor D. Venture capitalist
17. A business transaction that occurs when one company purchases and gains control over
another company.
A. Consolidation C. Acquisition
B. Leverage buyout D. Merger
18. It is a limited partnership of private investors whose money is managed by professional fund
managers who use a wide range of strategies, including leveraging or trading of non-
traditional assets, to earn above-average investment returns.
A. Investment banks C. Growth capital
B. Hedge funds D. Private equity
19. A private equity investor that provides capital to companies with high growth potential in
exchange for an equity stake.
A. Accelerators C. Government grants
B. Industrial investors D. Venture capitalist
20. It is a method used to estimate the value of a company based on its expected future income
streams.
A. Intrinsic value C. Capitalization
B. Relative valuation D. Income-based method
21. S1: Private equity can also come from high-net-worth individuals (HNWI) who are eager to
see outsized returns.
S2: Private equity is an ownership or interest in an entity that is publicly listed or traded.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
22. S1: Venture capital funds the fill the gap between an entrepreneur’s personal resources and
funds that may eventually be raised from credit institutions or shares from private
corporation.
S2: Venture capitalist joins entrepreneur as a co-promoter in projects and share the risks and
rewards of the enterprise with the objective of long-term capital appreciation.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
23. S1: Start-up Financing provides funds to companies for use in product development and
initial marketing.
S2: Acquisition Financing provides financing to obtain control, possession, or ownership of a
private portfolio company.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
24. S1: Don’t start approaching investors until you have a company, it’s unprofessional.
S2: Don’t assume you have a brilliant idea, there are a million of them and execution is
everything.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
25. S1: External Audit is the process of carrying out an investigative analysis of the financial,
legal, and operating activities of an entity in connection with a proposed transaction that
would result in a significant change in the ownership or the capital structure of the entity.
S2: Compliance is a reasonable step taken by a person in order to satisfy a legal requirement,
especially in buying or selling something.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
26. S1: The purpose of due diligence it to assess the reasonableness of historical and projected
earnings and cash flows.
S2: The purpose of due diligence is to understand the company and its market.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
27. S1: Weighted Average Cost of Capital (WACC) is a method of valuing a company, typically a
going concern by estimating the cash flows and adjusting it for the time value of money.
S2: Discounted Free Cash Flow Method is the calculation of a firm’s cost of capital.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
28. S1: The aim of a hedge fund is to provide the highest investment returns possible as quickly
as possible.
S2: Hedge Fund have less control over the assets and lack in voting power.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
29. S1: Private Equity refers to equity investments, in relatively mature companies that are
looking for capital to expand or restructure operations, enter new markets, or finance a
major acquisition without a change of control of the business.
S2: Recapitalization is utilized by businesses to subsidize the expansion of their operations,
entrance into new markets, and acquisitions to boost the company’s revenues and
profitability.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
30. S1: Comparable Transactions Multiple Method look at similar or comparable transactions
where the acquisition target has a similar business model and similar client base to the
company being evaluated.
S2: Market Price Method evaluates the value on the basis of prices quoted on the stock
exchange.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
31. S1: Post-IPO Transaction Stage involves achieving goals that should enhance the
initial valuation of the firm. The critical part of this step is maximizing investor confidence
and credibility to ensure the issue will be successful.
S2: IPO Transaction Stage involves the execution of the promises and business strategies the
company committed to in the preceding steps.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
32. S1: Financial Investor Treats the investment in an economic matter, invests in almost any
niche, as long as the opportunity is good and not easily swayed by emotions.
S2: Angel Investors are semi- professional investors, often invest with their gut, and tend to
invest in their professional niche.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
33. S1: Corporate restructuring is the corporate management term for the act of reorganizing
the legal, ownership, operational, or other structures of a company for the purpose of
making it more profitable, or better organized for its present needs.
S2: Swap ratio is an exchange rate of the shares of the companies that would undergo a
merger and it is calculated by the valuation of various assets and liabilities of the merging
companies.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
34. S1: An acquisition is the voluntary fusion of two companies on broadly equal terms into one
new legal entity. The five major types of mergers are conglomerate, congeneric, market
extension, horizontal, and vertical.
S2: Mergers are typically made in order to take control of, and build on, the target company's
strengths and capture synergies.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
35. S1: In capitalization, assets are valued by looking at how similar assets are priced by the
market and performing a comparative analysis.
S2: Intrinsic value of an asset is determined by the cash flows that the asset is expected to
generate over its life, keeping in mind the certainty of such cash flows.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
36. S1: Investment banks introduce potential acquisitions target to Private Equity firms.
S2: Investment banks help to negotiate acquisition price.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
37. S1: Friends and Family Investors are usually not professional, ruled by emotion and trust,
comes with both benefits and disadvantages.
S2: Strategic/ Industrial Investors players in a certain niche and often does defensive
investments.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
38. S1: Asset Based Method is based on the principle of substitution: no rational investor will pay
more for the business assets than the cost of procuring assets of similar economic utility.
S2: In considering an income-based approach, the valuation professional must consider
whether the shareholder whose interest is being valued would have any authority to access
the value of assets directly.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
39. S1: The need for due diligence in IPO’s is to increase the number of shareholders.
S2: In due diligence, investors require assurance of a system of strategic planning and
budgeting, financial reporting, and management information.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.
40. S1: Funds of Funds (FOF) also known as a multi-manager investment—is a pooled investment
fund that invests in other types of funds.
S2: A Fund of Funds (FOF) is an investment vehicle where a fund invests in a portfolio
composed of shares of other funds rather than investing directly in stocks, bonds, or other
securities.
A. Only first statement is correct. C. Both statements are correct.
B. Only second statement is correct. D. Both statements are incorrect.