4) Which of the following statements is FALSE? A. The general partners work for the venture capital firm and run the ven

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4 Which Of The Following Statements Is False A The General Partners Work For The Venture Capital Firm And Run The Ven 1 (390.27 KiB) Viewed 12 times

4) Which of the following statements is FALSE? A. The general partners work for the venture capital firm and run the venture capital firm; they are called venture capitalists. B. An important consideration for investors in private companies is their exit strategy- how they will eventually realize the return from their investment. C. When a company founder decides to sell equity to outside investors for the first time, it is common practice for private companies to issue common stock rather than preferred stock to raise capital. D. Institutional investors such as pension funds, insurance companies, endowments, and foundations manage large quantities of money. 5) Which of the following statements regarding best efforts IPOs is FALSE? A. For smaller IPOs, the underwriter commonly accepts the deal on this basis. B. The underwriter does not guarantee that the stock will be sold, but instead tries to sell all the stock on offer in the primary market within an agreed price range. C. Often these arrangements have an all-or-none clause: either all of the shares are sold in the IPO, or the deal is called off. D. If the entire issue does not sell out, the underwriter is on the hook for the unsold shares. 6) Which of the following statements regarding bonds is FALSE? A. By including more covenants, issuers increase their costs of borrowing. B. Once bonds are issued, equity holders have an incentive to increase dividends at the expense of debt holders. C. Covenants may restrict the level of further indebtedness and specify that the issuer must maintain a minimum amount of working capital. D. If the covenants are designed to reduce agency costs by restricting management's ability to take negative NPV actions that exploit debt holders, then the reduction in the firm's borrowing cost can more than outweigh the cost of the loss of flexibility associated with covenants.