1. The primary objective of venture capital is to make big profits by investing in risky...

1. The primary objective of venture capital is to make big profits by investing in risky start-ups.

Group of answer choices

True

False

2. Investment bank usually sets the IPO price at the fair value.

Group of answer choices

True

False

Expert Solution

Venture capital is financing that companies
provide to start up companies that are projected to do well in
the future.
The investments are believed to be risky, but there is a prospect
of above average returns.

1. The primary objective of venture capital is to make big profits by investing in risky start-ups.
TRUE.

An initial public offering (IPO) for a company is the price at which the
stock is issued to investors. In other words, when a company first goes public
the investment bank issues shares for that company at a certain price
known as the IPO.
The IPO is not always priced at the fair value. The price is determined based on the
following factors.
1) demand - When there is a high demand for an IPO the stock is priced above the fair value.
2) industry comparables - The price of the IPO also depends on how other companies in the
same industry are trading at that time.
3) Growth prospects - The price of the IPO is also based on the valuation of the company
based on future growth prospects.

2. Investment bank usually sets the IPO price at the fair value.
FALSE.

jeff jeffy answered 10 months ago

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