CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Venture capital funds differ from investments in publicly held firms in that they are ______.

I. illiquid in the short-term
II. for newer firms with very little operating history
III. difficult to value
IV. for small firms in which the venture capital firm and the subject company have personal involvement
Correct Answer: I, II, III and IV

Venture capital funds differ from investments in publicly held firms in that they are generally:
1. for newer companies with little operating history.
2. for smaller companies in which the venture capital firm and the entrepreneurial company have a high degree of personal involvement.
3. illiquid in the short-term, until the company goes public or is acquired by another company, which usually takes three to seven years.
4. difficult to value because there is no public market for these securities.
5. going to require future rounds of financing.

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