Assume a Firm Is Run as a Zero-Profit Enterprise

question 6

Multiple Choice

Assume a firm is run as a zero-profit enterprise.Which of the following would be true?

• A) There is a higher probability that wage reductions would outweigh layoffs.
• B) Those in charge would not act any different than regular owners, there would still be layoffs.
• C) Those not in charge would remain risk neutral.
• D) Wage reductions would be lower than they would be if the firm was run for profit.

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Definitions:

Venture Capital

Funding provided by investors to startups and small businesses that have a high potential for long-term growth.

Funding Stages

The various phases of financial support provided to startups and businesses, which typically progress from seed funding to later-stage investments.

Dutch Auction IPO

A method of initial public offering in which the price of the shares is determined after taking in all bids and finding the highest price at which the total offering can be sold.

Private Placements

The sale of securities to a relatively small number of select investors as a way of raising capital.