- CFA Exams
- CFA Level I Exam
- Study Session 15. Alternative Investments
- Reading 41. Private Equity Valuation
- Subject 2. Valuation characteristics and issues in venture capital vs. buyout
CFA Practice Question
Venture capital investments tend to:
A. Have steady cash flows.
B. Be much less active in capital markets.
C. Have potential for restructuring and cost reduction.
Explanation: Large buyout firms are generally significant players in capital markets.
User Contributed Comments 4
| User | Comment |
|---|---|
| jpducros | Why is C wrong ? |
| TLamb | I may be wrong but I believe C is more characteristic of PE than VC |
| dotepx | It seems its a typo and they mean to ask about 'LBO' not venture firms. |
| bjw699 | TLamb is right about C. What makes this question work is that A is clearly wrong, and VCs do tend to raise most of their capital from private sources. |