Question

1: 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 over 7%.

Settlement	5/17/2018
Maturity	5/17/2028
Rate	5%
Price	90
Redemption	100
Frequency	2
Basis	0

True

False

QUESTION 2

Dilution of ownership is a benefit to an early stage venture capitalist because it indicates that other investors want a share of the same venture.

True

False

QUESTION 3 It is standard practice for a term sheet to require more than half the board seats to go to the seed investors.

True

False

QUESTION 4

Entrepreneurs will never agree to offer information regarding the operations of the business to investors for fear of damaging their ability to raise further rounds of finance.

True

False

QUESTION 5

Term sheets protect the interests of investors by limiting certain actions of the founders.

True

False

Answer 1

1) Calculation of YIELD

Excel Formula in cell B9 to calculate YIELD  =YIELD(B1,B2,B3,B4,B5,B6,B7)

2) False

Dilution of ownership is a disadvantage, as the percentage of shareholding of the angel investor (early stage VC) decreases as more and more investors put in their money. The economic value of the angel investor's money reduces reduces as dilution increases.

3) True

Seed investors want to have as much control economic benefit as possible.

4) False

Entrepreneurs have to provide information about business operations, otherwise investors would not have confidence in the business and they might not invest.

5) True