Private Equity firms, Venture Capital Funds, and Hedge funds are all Buy-Side firms. However, there are fundamental differences between these groups. Select three correct answers. 00 A core part of a Hedge Fund's primary activities include taking an ownership stake in a company often restructure it to optimize value and sell their stake to earn returns Private Equity is deal-oriented and non-market facing Venture Capital is deal-oriented and non-market facing Hedge funds actively manage a portfolio of securities that are mainly issued by public companies

Private Equity firms, Venture Capital Funds, and Hedge funds are all Buy-Side firms. However, there are fundamental differences between these groups. Select three correct answers. 00 A core part of a Hedge Fund's primary activities include taking an ownership stake in a company often restructure it to optimize value and sell their stake to earn returns Private Equity is deal-oriented and non-market facing Venture Capital is deal-oriented and non-market facing Hedge funds actively manage a portfolio of securities that are mainly issued by public companies

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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You are looking for an investment vehicle that has two characteristics. First, you want an incentive structure for asset managers where they earn more money when you (the investor) earns more money. Second, you want a mostly diversified pool of investments. Which vehicle is your best option? O Hedge fund Closed-end mutual fund Open-end mutual fund
The risk of default on the part of the importer—risk of noncompletion—is present as soon as: A) Private equity funds differ from traditional venture capital funds. List and discuss three differences between them.
Private equity funds invest either in the equity of publicly traded or private firms, wanting to become private, or in early-stage firms. Select one: True False
You are a portfolio manager for a wealthy individual who is interested in investing in the stock market. The individual is risk-averse and wants to maximize returns while minimizing risk. Which of the following asset classes would be most appropriate for a well-diversified portfolio? Stocks only Bonds only A mix of stocks, bonds, and other asset classes Real estate only
A venture capitalist invests primarily his/her own money in a company, seeking a substantial return. true or false?
Are the following statements true or false? Please give a brief explanation. (a) Consider a firm A which has a lot of cash. A poison pill in the corporate charter of firm A is designed to protect shareholders of firm A because it makes inefficient acquisitions by the management of firm A more difficult. (b) A limited partner in a private equity fund typically has voting rights regarding investment decisions. (c) When a venture capital fund invests in a portfolio company, the venture capitalist typically requires a carry of 20% of the profit made by the portfolio company. (d) A distressed debt fund typically buys all equity stakes of firms with high leverage.
Give typing answer with explanation and conclusion Nelson is faced with a conundrum as a hedge fund manager. He could choose to invest a new client’s wealth in a fairly new and conservative opportunity, but this option has no track record that can be relied on. On the other hand, he could invest it in a copper mine that is seeking capital to expand its infrastructure as there may be a boom in this industry in the near future. From the scenario provided, which key concepts are present? (Exercise caution when answering this question as multiple responses may be correct.) 1. Return 2.Reward 3. Investment 4.Risk 5.Uncertainty
Which of the following defines a hedge fund the most? 1. A collective investment model based on issuing a fixed number of shares which are not redeemable from the fund. 2. A negotiable security that represents securities of a foreign company and allows that company's shares to trade in the U.S. financial markets. 3. A diversified portfolio that typically does not limit the number of shares it can offer, and they are bought and sold on demand. 4. A type of investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio construction and risk-management techniques to improve performance.
Ashley is a cautions investor who cares a lot about diversification. Which action she is likely to pursue? Invest entire portfolio into mutual fund Invest entire portfolio into options Invest entire portfolio into REIT Invest entire portfolio into hedge fund
The advantages offered by investment companies include 1. professional management 2. avoidance of income taxes by the investor 3. portfolio diversification * 2 and 3 all of these choices 1 and 3 1 and 2
What is the primary trading cost for a hedge fund that manages a large fund (e.g., $1 billion in total equity capital). O A. Commissions B. Bid-ask spreads. O. The slope of the market impact (or price impact) curve. O D. Large hedge funds benefit from economies of scale when it comes to trading costs, in which case none of the above are important.
Corporate Venture Capital Funds operate on a different and often longer investment time frame than venture capital funds that have multiple limited partners because corporate venture capital funds are willing to hold investments much longer as their investments return strategic value to the parent company (sole limited partner). True False Venture Capital with many limited partners must consider that the limited partners are expecting to receive cash compensation between 7-10 years after their initial investment. This means the General partner must make investments that are expected to go public or be acquired in this time frame. True False

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