Which of the following is not true about private equity funds?* Private equity funds are pools of capital invested in companies which represent an opportunity for high rate of return Exit strategies for private equity funds include Initial Public Offerings (IPOs) and leveraged buyout (LBO) Venture capital is an example of private equity funds Private equity funds are usually invested for unlimited time periods

Which of the following is not true about private equity funds?* Private equity funds are pools of capital invested in companies which represent an opportunity for high rate of return Exit strategies for private equity funds include Initial Public Offerings (IPOs) and leveraged buyout (LBO) Venture capital is an example of private equity funds Private equity funds are usually invested for unlimited time periods

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter12: Professional Venture Capital

Section: Chapter Questions

Problem 15DQ

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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.
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The required rate of return of an investor is the rate of return that an investor demands to purchase a firm's stocks or bonds and thus provide funds for capital investment. Therefore, required returns from the investors' point of view correspond to the required returns or the weighted average cost of capital (WACC) from the firm's point of view. Indicate in the following table whether each of the statements about WACC and the required rates of return of investors is true or false. Statement True False The amount that an investor is willing to pay for a firm's stock is inversely related to the firm's cost of common equity before flotation costs. The firm's cost of debt is what an investor is willing to pay for the firm's stock before considering flotation costs. The amount that an investor is willing to pay for a firm's bonds is inversely related to the firm's cost of debt without considering the cost of issuing the bonds. The cost of retained earnings is the same as the cost of…
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