Which Observation Is True of Vulture Funds

question 93

Multiple Choice

Which observation is true of vulture funds?

• A)Their decisions based on developing and maintaining long-term relationships.
• B)Their sole agenda is to helping the distressed firm to survive.
• C)Their investments are always passive.
• D)They are relationship based, not transaction driven.
• E)In a restructuring, they are looking for a return on capital invested.

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Definitions:

Floatation Costs

Costs a company faces when issuing new securities, such as underwriter fees, legal charges, and registration expenses.

Firm Commitment

A firm commitment refers to an underwriter's agreement to assume all inventory risk and purchase all securities directly from the issuer for sale to the public.

Underwriter

A professional who assesses and accepts the risk of an insurance policy or security, determining pricing and coverage.

Direct Costs

Expenses that can be directly tied to the production of specific goods or services, such as raw materials and labor.