Which One of the Following Statements Concerning Venture Capital Financing

question 72

Multiple Choice

Which one of the following statements concerning venture capital financing is correct?

• A)Venture capitalists desire shares of common stock but avoid preferred stock.
• B)Venture capital is relatively easy to obtain.
• C)Venture capitalists rarely assume active roles in the management of the financed firm.
• D)Venture capitalists often require at least a forty percent equity position as a condition of financing.
• E)Venture capital is relatively inexpensive in today's competitive markets.

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Definitions:

Marginal Cost

The variation in the overall cost of production that occurs with an increase of one unit in the quantity produced.

Pollution Abatement

Measures taken to reduce, control, or eliminate pollution from various sources to improve environmental health.

Diminishing Returns

Diminishing returns is an economic principle stating that as one factor of production increases while others are held constant, the additional output (returns) from the increased factor will eventually decrease.

Free Ride

Benefiting from a service or good without having to bear the cost or effort of obtaining it, usually in the context of public goods.