Question

QUESTION 6

A term sheet will address what happens to the shares of founders should founders decide to leave the company.

True

False

QUESTION 7

A Drag-Along clause in a term sheet will address the rights of shareholders who control a majority of shares relative to shareholders who control a minority of shares.

True

False

QUESTION 8

When a subsequent round of financing takes place at a lower price per share than previous round of financing; existing shareholders would suffer from the dilution of their ownership stake. If the existing shareholders required a clause in the terms of their financing that would obligate the company to offer them additional shares when subsequent shares are issued at a lower price than the paid is an example of an anti-dilution clause.

True

False

QUESTION 9

Use the “YIELD” function in Excel to find the yield to maturity of a bond with the following characteristics. The yield to maturity on this bond is less than 3.6%.

Settlement 5/17/2018

Maturity 5/17/2028

Rate 5%

Price 110

Redemption 100

Frequency 2

Basis 0

True

False

QUESTION 10

An example of a restrictive covenant in a term sheet would be one that prevents founder from leaving the business to start another business for a set period of time and/or while the founder owns a certain percentage of the company.

True

False

Answer 1

Answer 6

False

Explanation- term sheet can be defined as a non binding agreement with set back and forth basic terms and conditions for the investment that is being made.

Answer 7

True

Answer 8

True

Explanation- this type of incident would be a direct example of anti dilution clause as it would protect the share holders.

Answer 9

False

In this is specific case yield to maturity is 3.7 percent which is higher than 3.6.

P.S.- please use separate Threads to ask more than 4 questions.