Question

1.A classmate offers you the chance to invest into a businesses opportunity wherein you would pay $60 for a crypt-currency and are responsible for re-selling those currencies to other students. Any revenue you make is yours to keep.

- There is a 33% chance you cannot sell the currency and you lose $60.
- There is a 66% chance you sell the currency for $90.

Is this a good investment?

Y.Yes

N.No

2.Stock represents what?

A.A tradable investment

B.Wall Street

C.An option

D.An ownership interest

3,A company goes into bankruptcy. What do you know about the company?

A.The company no longer exists.

B.The company is liquidating.

C.The company is dissolving.

D.None of the above.

4.Why do lawyers use pre-written forms for their investments?

A.To save time

B.To make the investment easier for everyone to understand

C.To reduce risk

D.All of the above

5.Erik asks his assistant to buy him groceries. Because of COVID-19, the grocery store is not accepting returns. Erik’s assistant buys the wrong brand of gluten-free, ethically sourced, shade grown cucumber water. Erik demands a refund and claims his assistant made the mistake and therefore the transaction was invalid. Why will Erik not get a refund?

A.The transaction was not in writing

B.Cucumber water is illegal

C.Principals are bound to their agent’s actions

D.Safety is the ultimate priority

6.What is the watermark for good VC performance?

A.10% return

B.$100m return

C.3x return on fund

D.100x return on fund

7.Public companies publish financial information. Why?

A.Reporting helps reduce information asymmetry and agency costs

B.Reporting allows companies to comply with securities regulations.

C.Reporting allows investors to evaluate the risk of investing in the company.

D.All of the above.

8.A retiree gives money to an institutional investor and asks the investor to only invest in high risk investments. The investor does not have access to the top performing VC funds, however the investor is required by to comply with the requests of the retiree. The investor has no option but to invest in the low performing funds. The retiree’s capital is lost on a bad investment in "Sniff: The Tinder for Dogs."

What is this an example of what?

A.Tragedy of the commons

B.Capitalism

C.Unintended consequences

D.Socialism

Answer 1

Question 1:

No, this is not a good investment

As there is 33% probability of complete loss. & 66% probability of $90

90*66% = $ 59.4

as we have invested $ 60, there is loss of 60 cents which can't be a good investment

Question 2:

Option D.Ownership Interest

A Stock Represents an ownership Interest. it will be tradable only listed on stock markets.

Question 3:

Option B.The company is liquidating

If a Company goes into bankruptcy, it has to be liquidated as per law.

Question 4:

Option D. All of the options

Lawyers use pre - written forms for reducing risks,make the investment easier for everyone to understand & to save time.

Question 5:

Option C.Principals are bound to their agent’s actions

Any acts done by the agents are legally bound by the principals.

Question 6:

Option D.100x return on fund

The watermark for good VC performance is 100x return on fund

Question 7:

Option D.All of the above

Public Companies publish information because:

• Reporting helps reduce information asymmetry and agency costs
• Reporting allows companies to comply with securities regulations
• Reporting allows investors to evaluate the risk of investing in the company

Question 8:

Option C.Unintended consequences

The Retiree has clearly instructed the institutional investor. but, investor invested in small cap investments. The action of the Investor is an unintended Consequence.