Which of the following statements about Private Equity and Venture Capital are true? (i) Private Equity Firms tend to purchase that currently trade on a stock exchange and have recently experienced low stock prices or suffered poor performance. (ii) Venture Capital Firms tend to invest in new start-up enterprises that are not currently traded on a stock exchange. (iii) The availability of funding from Private Equity and Venture Capital has increased in recent decades.

Which of the following statements about Private Equity and Venture Capital are true? (i) Private Equity Firms tend to purchase that currently trade on a stock exchange and have recently experienced low stock prices or suffered poor performance. (ii) Venture Capital Firms tend to invest in new start-up enterprises that are not currently traded on a stock exchange. (iii) The availability of funding from Private Equity and Venture Capital has increased in recent decades.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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With a decline in the number of publicly traded companies and the growth of other investment vehicles such as private equities, hedge funds, junk bonds, etc., some people claim that the investment world is becoming more and more unfair towards smaller investors since most of the alternative investment vehicles are only available to institutions or high-net-worth individuals. Do you agree or disagree with this claim?
Which of the following statements is incorrect about the methods of raising capital? I. In comparison to debt issuance expenses, the total direct costs of initial equity issues are more likely to be considerably smaller. II. Empirical evidence suggests that initial new equity issues are generally underpriced by investor excitement concerning a new issue. III. One of the common ways for start-up companies to access capital is through convertible securities issued by private equity or venture capital funds. IV. Empirical evidence suggests that upon the announcement of a seasoned equity issue, current stock prices generally drop. a. None of the other choice combinations are correct. b. IV only c. I only d. I and III only e. II and IV only Please fully explain
Which one of the following is true regarding venture capitalists? I. They are large shareholders of the issuing firms and exit their investment in initial public offerings. II. They are large investors who want to buy the shares in initial public offerings. III. They tend to invest in young risky ventures. IV. They like underpricing in initial public offerings. A. I and II B. I and IV C. I, III, and IV D. I, II, III, and IV Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Which of the following statements is NOT true about Initial Public Offerings? A. An IPO occurs when a private company sells stock to the public for the first timeB. IPOs are less risky than a typical stock market investment since they are typically smaller companiesC. When an IPO occurs, a company raises money from public investors that they use to grow their businessD. IPOs are risky investments since the company going public often has a limited track record of performance
Which of the following is/are NOT true about private equity? (select all that apply) a.Three levers to increase equity value are multiple expansion, EBITDA growth, and cash generation. b. Private equity investors can easily sell or exchange their investments for cash anytime. c. Private equity firms only invest in small companies. d. Everything else stays the same. If a company's gross debt amount increases, its equity value decreases.
Private equity investing differs from public investing in which of the following ways? a. Private equity investors make illiquid investments that cannot be sold because of either a lack of an organized market or investment restrictions.b. Private equity investors are active investors.c. Private equity investments are made for a finite period of time.d. Private equity investments are risky and illiquid and thus require high returns.e. All of the above.
Yesterday, Western Gas & Electric Co. released its 2018 annual report on the company's website. While reading the report for her boss, Claire came across several terms about which she was unsure. She leaned around the wall of her cubicle and asked her colleague, Alexis, for help. CLAIRE: Alexis, do you have a second to help me with my reading of Western G&E's annual report? I've come across several unfamiliar terms, and I want to make sure that I'm interpreting the data and management's comments correctly. For example, one of the footnotes to the financial statements uses "the book value of Western G&E's shares," and then in another place, it uses "Market Value Added." I've never encountered those terms before. Do you know what they're talking about? ALEXIS: Yes, I do. Let's see if we can make these terms make sense by talking through their meaning and their significance to investors. The term book value has several uses. It can refer to a single asset or the company as a whole. When…
Which of the following statements is true? Group of answer choices a. Dividend payments are attractive to executives who hold many executive stock options that were awarded to them by their firms b.Executives and other insiders benefit most by being able to tender their shares in an open market repurchase since they usually are privy to information that is not available to the general public c.Empirical research suggests that small, retail investors prefer stock repurchases to dividend payments d. a firm does not pay dividends, some institutional investors are prohibited from investing it the firmʹs equity
True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. If a firm needs additional capital from equity sources once its retained earnings breakpoint is reached, it will have to raise the capital by Issuing new common stock. ◇ False: Firms raise capital from retained earnings only when they cannot issue new common stock due to market conditions outside of their control. O True: Firms will raise all the equity they can from retained earnings before issuing new common stock, because capital from retained earnings is cheaper than capital raised from issuing new common stock. Alpha Moose Transporters is considering investing in a one-year project that requires an initial Investment of $450,000. To do so, it will have to Issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $550,000. The rate of return that Alpha Moose expects to earn on its…
Which of the following is an appropriate goal for the firm? Select one: a. All of these b. In secondary markets, outstanding shares of stock are bought and sold among investors. c. An active secondary market causes firms to sell their new debt or equity issues at a higher cost of funds. d. A secondary market allows investors to share their risk and return e. For an investor, the function of secondary markets is to provide profitability for the shares of securities they own.
Hi! I'm having difficulty comparing the choices between raising a large amount of cash in the capitaal market verses the bond market. I have to make a decision as to what is best and why, all while considering ethical implications of financial reporting and how it relates to acquiring additional investors and accessing markets for additional capital. Consider the impact on the following on your choice: The company’s existing capital structure The company’s current market capitalization The company’s weighted average cost of capital The company’s degree of operating, financial and combined leverage
Which of the following statements is FALSE? O A. Public companies typically have access to much larger amounts of capital through the public markets. B. The two advantages of going public are greater liquidity and better access to capital. OC. The process of selling stock to the public for the first time is called a seasoned equity offering (SEO).

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