Why are only wealthy individuals or organizations allowed to invest in high-risk private ventures? What are...

Why are only wealthy individuals or organizations allowed to invest in high-risk private ventures?

What are the advantages and disadvantages of raising money from private investors?

Expert Solution

Wealthy individuals or organisations are allowed to invest into high risk private ventures because these high risk private ventures will be exposed to higher fluctuations and it can even lead to wiping out of their overall capital so, only the high risk and high capital individuals can be bear with that much of risk of erosion of their capital.

These private ventures are exposed to various kinds of market risk in the initial stages of their life and they are highly exposed to getting liquidated so only high risk and high capital individuals can invest into such business who have a high risk appetite and high return appetite as well.

2. Advantages of raising money through private investors-

A. Large sum of money can be raised through the private investors

B. They are willing to take high risk

C. They are also willing to provide specialised services and expertised services

Disadvantage of private investors are-

A. There is is lack of control on the part of the original owners as they exchange their equity for capital

B. Interference into the overall management of the company.

jeff jeffy answered 1 year ago

Overnight Capital Ventures (OCV) is looking to invest $5.5 million dollars for high-tech equipment. OCV is...

Overnight Capital Ventures (OCV) is looking to invest $5.5 million dollars for high-tech equipment. OCV is planning to house the equipment in an unused warehouse that they currently own. OCV is currently renting that warehouse and receives $385,000 per year, annually that they would lose by letting their tenants leave to use the warehouse for their equipment. It would take two years, and capital expenditures of $550,000 per year to install and test the high-tech equipment and make it ready...

Venture Capital is an alternative for financing new and often high-risk ventures. Briefly discuss minimum of...

Venture Capital is an alternative for financing new and often high-risk ventures. Briefly discuss minimum of 3 key considerations of choosing a venture capitalist. (Word limit 70 - 100 words)

Wealthy individual seek for private banking service for several reasons including portfolio diversification, risk at home...

Wealthy individual seek for private banking service for several reasons including portfolio diversification, risk at home country, tax evasion, escape from domestic legal enforcement, and confidentiality. Explain the core client base of offshore private banking as following: Wealthy individual or families who seek for security Confidentiality Tax-friendly environment offshore Have standard portfolio diversification objectives Lifestyle requirement

Why are only odd harmonics allowed in a closed pipe?

. Explain why public organizations are said to be more difficult to evaluate than private organizations

How would the global risk calculus of individuals, organizations, and governments shift if a weapon of...

How would the global risk calculus of individuals, organizations, and governments shift if a weapon of mass destruction were detonated in a heavily populated city? The likelihood of such an event is high according to experts around the globe. Would such an event promote closer cooperation between countries in fighting the spread of WMDs or would it drive countries further apart and back within their sovereign borders?

Discuss why budgets are particularly important for public sector organizations as opposed to private sector organizations

This question only experts will answer, as its High marks, no handwriting or photo allowed: Data...

This question only experts will answer, as its High marks, no handwriting or photo allowed: Data March budget March actual data Unit Solds 6,000 5,600 Variable cost 592/ unit 1,836,800 Monthly fixed cost 432,000 400,000 Selling price per unit 880 896 Account variation Report Units sold Budget Variance flexible budget Flexible budget Variance sales quantity Actual Units sold 6,000 400 5,600 0 5,600 Revenue 5,280,000 352,000 4,928,000 89,600 5,017,600 Variable cost 3,552,000 236,800 3,315,200 1,478,400 1,836,800 Contribution Margin 1,728,000 115,200...

Mr. Jones has $10,000 to invest in three types of stocks: low-risk, medium-risk and high-risk. He...

Mr. Jones has $10,000 to invest in three types of stocks: low-risk, medium-risk and high-risk. He invests according to the following rules: the amount invested in low-risk stocks will be at most $2000 more than the amount invested in medium-risk stocks. At least $4000 will be invested in a combination of low- and medium-risk stocks. No more than $8,000 will be invested in a combination of medium- and high-risk stocks. The expected annual returns are 6% for low-risk stocks, 7%...

why the carry trade is a high-risk investment?

Question