Which of the Following Is NOT an Advantage of Private

question 55

Multiple Choice

Which of the following is NOT an advantage of private equity funds?

• A)Private companies are not subject to the same regulations as a publicly traded company.
• B)Managers of private firms are not under the same level of pressure to produce high returns compared to the managers of publicly traded firms.
• C)Private equity firms can do a better job in controlling the problems created by moral hazard.
• D)Private equity funds give managers of the companies higher stakes compared to managers in publicly traded companies.

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Definitions:

Machine-Hours

A measure of production time used, indicating the number of hours machines are operated in the manufacturing process.

Maintenance Costs

Expenses associated with the routine care and preservation of assets to keep them in operational condition.

Variable Operating Expense

Expenses that fluctuate in proportion to the amount of production or the volume of sales.

Sales Revenue

The income received from selling goods or services, which may include discounts and deductions for returned merchandise.