Which of the Following Statements Regarding Exit Strategies Is False

question 25

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 2001-2005 occurred through mergers or acquisitions.

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Definitions:

Marginal Revenue Curve

A graphical representation that shows how marginal revenue varies with changes in the quantity of output sold.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.

Monopoly Pricing

The pricing strategies employed by a monopoly, characterized by the ability to set prices higher due to lack of competition.

Colluding

Coordinating actions or decisions secretly, especially between competitors in order to cheat or deceive others.