7. Which of the following statements is true?

a.Carried interest is shared equally by principals and general partners

b.Because new VC firms would like to build good reputation, they are not burdened with covenants in the partnership agreement with LPs.

c.Management fees are always set at a fixed rate for the entire life of the fund.

d.Everything else equal, a 25:75 carry arrangement produces higher payout to GPs if the basis of the carry is committed capital instead of investment capital.

e.Low management fees for GPs can create negative incentives to invest committed capital quickly.

8. Which of the following statements is false?

a. Ratchet provisions provide anti-dilution protection for earlier round investors in case of down rounds.

b.Weighted average anti-dilution provisions is less forgiving to founders than full ratchet.

c.In full ratchet, the conversion price is adjusted and additional shares are issued to the VC even if one new share of financing was issued at a lower price.

d.The ratchet provision provides price protection for VC from later financing rounds.

9. Which of the following statements is false?

a. The mandatory redemption right allows VC to "put" preferred stock back to company.

b. The VC prefers convertible preferred stock to common stock

c.Delayed vesting of founder shares is meant to prevent sale of stock before a certain date

d. The mandatory redemption right cannot prevent "life-style company"