CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

Which best describes venture capital?

A. Venture capital is typically a secondary form of financing, after bank financing.
B. Venture capital is in the form of equity.
C. Venture capital is short-term financing, usually at higher-than-market rates.
D. Venture capital is financing for privately held companies, typically in the form of equity and/or long-term debt.
Correct Answer: D

Venture capital becomes available when financing from banks and public debt or equity markets is either unavailable or inappropriate.

User Contributed Comments 3

User Comment
ankurwa10 this is actually a good question. Helps clarify the point that VC investment isn't always in equity. traditionally, if i need to fund my start up, i go to banks or angel investors (debt or equity). VCs can simply be seen as a proxy (replacement for them, hence debt and equity)
Inaganti6 it's also a good question because it proves that choosing the more broad and unconditionally right answer can be rewarding. D> B
ascruggs92 B is wrong because it is absolute, not because it is "less right" than D. Venture Capital CAN BE in the form of equity or IS OFTEN in the form of equity would be correct.
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