PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 7PS
a)
Summary Introduction
To discuss: True or false of following situations based on venture capital.
b)
Summary Introduction
To discuss: True or false of following situations based on venture capital.
c)
Summary Introduction
To discuss: True or false of following situations based on venture capital.
d)
Summary Introduction
To discuss: True or false of following situations based on venture capital.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following statements is NOT true?
Venture capitalists’ sole function is to provide financing for new firms.
Modern venture capital firms tend to specialize in a specific line of business, such as hospitality, food manufacturing, or medical devices.
Venture capitalists bear a substantial amount of risk when they fund a new business.
A significant number of venture capital firms focus on high-technology investments.
Venture capital (VC) firms are pools of private capital that typically invest in small, fast-growing companies that can't raise funds through other
means. In exchange for this financing, VCs receive a share of a company's equity, and the founders of the firm typically stay on and continue to
manage the company.
A VC firm wants management to focus on improving
while the managers may also act to increase
VC investments have two typical components: (1) managers maintain some ownership in the company and often earn additional equity if the company
performs well; (2) VCs demand seats on the company's board.
Management ownership serves to
the alignment of the incentives of managers with the incentives of owners.
An investor provides an entrepreneurial firm with the capital that it needs to grow. over and above providing the capital, in what other ways can the investor add value to the firm? What are the possible downsides of having a venture capitalist as an investor in the business?
Chapter 15 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 15 - Vocabulary Each of the following terms is...Ch. 15 - Prob. 2PSCh. 15 - Vocabulary Here is a further vocabulary quiz....Ch. 15 - Stock issues True or false? a. Venture capitalists...Ch. 15 - Prob. 5PSCh. 15 - Prob. 6PSCh. 15 - Prob. 7PSCh. 15 - Venture capital Complete the passage using the...Ch. 15 - Venture capital a. A signal is credible only if it...Ch. 15 - IPOs Refer to Section 15.1 and the Marvin...
Ch. 15 - Prob. 11PSCh. 15 - Prob. 12PSCh. 15 - Issue costs In April 2019. Van Dyck Exponents...Ch. 15 - Underpricing In same U.K. IPOs, any investor may...Ch. 15 - Prob. 15PSCh. 15 - Prob. 16PSCh. 15 - Underpricing Construct a simple example to show...Ch. 15 - Prob. 18PSCh. 15 - Prob. 19PSCh. 15 - Costs of a general cash offer Why are the costs of...Ch. 15 - Prob. 21PSCh. 15 - Prob. 22PSCh. 15 - Rights issues In 2012, the Pandora Box Company...Ch. 15 - Prob. 24PSCh. 15 - Rights issues vs. cash offers Suppose that instead...Ch. 15 - Private placements You need to choose between...Ch. 15 - Prob. 27PSCh. 15 - Prob. 28PSCh. 15 - Dilution Here is recent financial data on Pisa...
Knowledge Booster
Similar questions
- Venture capital firms: O A. Generally, provide capital to back an new company, with little or no record of success, and it managers B. Take an equity stake in the company O C. Are not passive investors D. Do not make outright loans O E. All of the abovearrow_forwardA venture capitalist invests primarily his/her own money in a company, seeking a substantial return. true or false?arrow_forwardAn entrepreneur opens an Internet start-up and secures substantial venture capital. Which of these best defines venture capital? interest paid on money borrowed from the government funds used to promote buisness growth wages for workers who provide techinical assistance fees charged for the creation of a business planarrow_forward
- Provide detailed explanation to the following questions 1. Explain the concept of venture capital funding with relevant examples 2. Using relevant illustrations, compare and contrast the workforce implications of the Baby Boomers generation with those of the Generation X. 3. Compare and contrast strategic alliances with joint ventures. Support your answer with relevant examples. 4. How is a business plan different from an executive summary?arrow_forwardVenture capital (VC) firms are pools of private capital that typically invest in small, fast-growing companies, which usually can’t raise funds through other means. In exchange for this financing, the VCs receive a share of the company’s equity, and the founders of the firm typically stay on and continue to manage the company. Describe the nature of the incentive conflict between VCs and the managers, identifying the principal and the agent. VC investments have two typical components: (1) managers maintain some ownership in the company and often earn additional equity if the company performs well; (2) VCs demand seats on the company’s board. Discuss how these two components help address the incentive conflict.arrow_forwardWhen venture capitalists take an active role in the management of a company they finance, they are trying to alleviate the moral hazard problem. Group of answer choices True Falsearrow_forward
- Venture-capital funding may sometimes be used to fund high-growth small companies. Venture capitalists usually invests in companies in return for which one of the following? Select one: a. Buy-back options b. Preference shares c. Tax breaks d. Interest on capital loanedarrow_forward(a) Venture capital funds want to invest in innovative startups. Why should VC manager care about agency theory? What is agency theory about? (b) Venture capital funds invest in startups. Why are convertible preferred securities so prevalent in such investments?arrow_forwardwhy are technology-based companies that lots of opportunities to get funding from venture capital firm? please no reject this question thank uarrow_forward
- We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example, the manager might: Make shareholders as wealthy as possible by investing in real assets. Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Choose high- or low-risk assets to match shareholders' risk preferences. Help balance shareholders' checkbooks. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?arrow_forwardWe can imagine the financial manager doing several things on behalf of the firm's stockholders. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Multiple Choice Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Help balance shareholders' checkbooks. Choose high- or low-risk assets to match shareholders' risk preferences. Make shareholders as wealthy as possible by investing in real assets.arrow_forwardLily and Bob own a company and have been developing a product that they want to take to market. To do this they need substantial investment that they are unable to raise from their own savings. They are thinking of approaching a venture capita firm and ask you for advice as they know you studied finance. Explain the process of obtaining venture capital. What woulo that mean for their company?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage