Why Do Investors Require Entrepreneurs to Put in a Lot

question 5

Multiple Choice

Why do investors require entrepreneurs to put in a lot of their own capital?

• A) Entrepreneurs know more about the venture opportunity than the investor.
• B) Their capital serves as an incentive to be careful with the investor's capital.
• C) It is useful for reducing venture finance problems.
• D) All of the above.
• E) None of the above.

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Definitions:

Profit & Loss Statement

A financial report that shows a company's revenues, expenses, and profits or losses over a specific period of time.

Account Types

This refers to the various categories used in accounting to classify financial transactions, such as assets, liabilities, equity, revenue, and expenses.

Revenues

Represent the total amount of income generated by the sale of goods or services related to a company's primary operations.

Asset Accounts

Accounts that represent the resources owned by a business, which are expected to provide future benefits.