Which of the Following Statements Is Incorrect Regarding Equity Funding

question 35

Multiple Choice

Which of the following statements is incorrect regarding equity funding?

• A) Equity investors expect to get their money back, along with a substantial capital gain, through the sale of their stock.
• B) Angel investors are a common source of equity funding.
• C) Equity funding is not a loan.
• D) Equity investors are very demanding.
• E) Equity investors fund the majority of the plans they consider.

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Definitions:

Full Capacity Sales

Full Capacity Sales represent the maximum sales level a company could achieve utilizing its available capacity without incurring additional capital expenses.

Net Income

Net income, also known as net profit, is the total earnings of a company after subtracting all expenses, taxes, and costs from total revenue; it indicates the financial health and profitability of a business.

Fixed Assets

Assets with a useful life extending beyond one year, used in the operations of a business, such as property, plant, and equipment.

Corporate Financial Planning

Involves the development of long-term operational plans for a company, ensuring adequate funding and maximizing shareholder value.