The Key Difference Between Valuing VC Investment and Other Kinds

question 82

Multiple Choice

The key difference between valuing VC investment and other kinds of investments is that:

• A) the expected returns do not need to be as high because the risk of most VC investments is not as high as most other types of investments.
• B) the expected return must be quite high because the risk of most VC investments is much higher than most other types of investments.
• C) the expected returns must be about the same because the risk of most VC investments is about the same as most other types of investments.
• D) none of the above

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Definitions:

Whole-Life

Refers to a type of life insurance policy that offers coverage for the life of the insured, typically including an investment component that builds cash value.

Universal Life

A type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element, which is invested to provide a cash value buildup.

Asset Allocation Strategy

The process of dividing investments among different kinds of asset classes to optimize risk and reward according to an individual's or institution's objectives and risk tolerance.

Equities

Shares or stocks representing an ownership interest in corporations, providing a claim to part of the firm's assets and profits.