An Advantage of Using Friends and Relatives as Investors Is

question 9

Multiple Choice

An advantage of using friends and relatives as investors is that:

• A)they tend to be more patient.
• B)they take a lower return.
• C)they don't want controlling interest in the company.
• D)they don't tend to have unrealistic expectations.

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Definitions:

EPS

Earnings per share, a company's profit divided by its number of outstanding shares.

Intrinsic Value

The actual value of a company or an asset based on underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

P/E Multiple

Price-to-Earnings ratio, a valuation metric calculated by dividing the current market price of a stock by its earnings per share, indicating how much investors are willing to pay per dollar of earnings.

EPS

Earnings Per Share; a company's profit divided by its number of common outstanding shares, indicating the company’s profitability.