CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

Which company-specific factors contribute to the increased risk of a private company?

I. Size.
II. Lifecycle stage.
III. Quality of management.
IV. Quality of financial information.
A. I, II and III
B. I, III and IV
C. I, II, III and IV
Explanation: All of these factors lead to higher risk and lower valuation.

User Contributed Comments 3

User Comment
Friso I disagree with IV. Investing in the company becomes more risky, but the company itself is not more risky due to weak financial reporting.
LyncKidd The requirements of financial reporting are less for a private company and thus you may not get all that you need for your investing decisions. I personally don't agree with the question in regards to life cycle stage as I find that more apples to apples between private and public. I suppose due to having better access to capital or something a public company would be advantaged.
Riane Lifestyle stage is not a company-specific factor. It is an industry factor.
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