Private Individuals Who Put Their Own Money into Start-Ups,with the Goal

question 99

Multiple Choice

Private individuals who put their own money into start-ups,with the goal of eventually selling their interest for a profit,are called ________.

• A) angel investors
• B) microlenders
• C) venture capitalists
• D) advisory boards
• E) business incubators

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Definitions:

WACC

Weighted Average Cost of Capital; the average rate of return a company is expected to pay its security holders to finance its assets, integrating debt and equity.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

FCFE Valuation Model

Free Cash Flow to Equity (FCFE) Valuation Model estimates the value of a company by calculating the present value of its expected future cash flows available to shareholders, after deducting operational expenses, taxes, and reinvestment needs.

Required Rate of Return on Equity

The minimum rate of return that investors expect to receive on their equity investment in a company, taking into account the risk associated with the investment.