A Venture Capitalist Usually Will Invest in a Small Business

question 85

Multiple Choice

A venture capitalist usually will invest in a small business by one of several methods. Which of the following is not one of those methods.

• A) Taking a direct ownership position in the form of common stock
• B) Purchasing the business
• C) Accepting the firm's bond plus an "equity kicker"
• D) Taking the right to purchase a certain portion of the firm

Recognize the benefits of specialization and trading based on comparative advantage.

Identify how resource endowments influence a nation's trade patterns.

Analyze the role of production possibilities curves in comparing national production capabilities.

Examine how differences in production costs between nations facilitate international trade.

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Definitions:

Oversubscription Option

A clause in an offering agreement that allows the issuer to sell more shares than originally planned if the demand exceeds expectations.

Refunds a Debt Issue

The process where an issuer returns investors' capital for a debt instrument before its maturity, often relating to a callable bond or similar financial product.

Call Provision

A clause in a bond's contract that allows the issuer to redeem the bond before its maturity date, typically at a predetermined price.

Bondholders

Individuals or entities that own bonds issued by corporations or governments, entitling them to receive the bond's face value at maturity and periodic interest payments.