A Venture Capital Firm Protects Its Equity Investment from Moral

question 47

Multiple Choice

A venture capital firm protects its equity investment from moral hazard through which of the following means?

• A) It places people on the board of directors to better monitor the borrowing firm's activities.
• B) It writes contracts that prohibit the sale of an equity investment to anyone but the venture capital firm.
• C) It prohibits the borrowing firm from replacing its management.
• D) It does both A and B of the above.
• E) It does both A and C of the above.

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Definitions:

Diagnostic Interview Schedule

A structured assessment tool used by clinicians to diagnose psychiatric conditions based on standardized criteria.

Wechsler Adult Intelligence Scale

The most widely used IQ tests, designed to measure diverse aspects of intelligence. Developed by David Wechsler (1896–1981). See also WAIS-IV.

Intelligence Test

A standardized test designed to measure human intelligence and cognitive abilities.

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