Venture Capitalists Tend to Insist on Which Form of Incorporation

question 2

Multiple Choice

Venture capitalists tend to insist on which form of incorporation for a venture because it offers multiple classes of stock?

• A) LLC
• B) S Corporation
• C) C Corporation
• D) None of the above

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Definitions:

Indifference Curve

A curve connecting all portfolios with the same utility according to their means and standard deviations.

Expected Rate of Return

The anticipated return on an investment, comprising both the risk-free rate of return and additional returns expected for taking on extra risk.

Beta

A measure of a stock's volatility in relation to the overall market, indicating the stock's risk compared to the market average.

Risk-Free Rate

Refers to the return on investment with no risk of financial loss, often estimated by the yield of government bonds.