Which of the Following Statements Regarding Exit Strategies Is FALSE

question 33

Multiple Choice

Which of the following statements regarding exit strategies is FALSE?

• A)An alternative way to provide liquidity to its investors is for the company to become a publicly traded company.
• B)An important consideration for investors in private companies is their exit strategy or how they will eventually realize the return from their investment.
• C)Often large corporations purchase successful start-up companies.In such a case,the acquiring company purchases the outstanding stock of the private company,allowing all investors to cash out.
• D)Roughly 25% of venture capital exits from 2002-2012 occurred through mergers or acquisitions.

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Definitions:

Dividends

Disbursements issued by a company to its shareholders, apportioning some of the firm's profits among them.

Cost of Debt

The effective rate that a company pays on its borrowed funds from financial institutions or other sources.

Coupon Rate

A bond's interest rate per year, represented as a percentage of its face value.

Maturity

The date on which the principal amount of a financial instrument, such as a bond or loan, becomes due and payable.