Question

37. Which of the following is not a private equity investing strategy?

A. venture capital

B. mezzanine financing

C. distressed debt investing in start-up firms

D. leveraged buyouts

38. Venture capitalists are always looking for viable business to invest in. In reviewing all the issues affecting profitability and realization of return, which of the following issues would be the most important?

A. Professional background of the management team

B. Key staff are “locked in” with non-computer algorithms

C. Rate of “cash burn”

D. Exit plan

39. Which of the following statements regarding club deals is least accurate? Club deals:

A. offer increased returns for investors

B. provide a competitive opportunity for weak private equity firms

C. provide an investment opportunity when private equity capital is scarce

D. offer diversification benefits to participating private equity firms

Answer 1

37) The correct answer is option C i.e. distressed debt investing in start-up firms

PE investment strategy includes-

1. Venture Capital

2. Growth Capital

3. Mezzanine Financing

4. Funds of Funds

5. Leveraged Buyouts.

Hence option C is correct

38) The correct answer is option D i.e. Exit plan

Exit plan is one of the most important issues.

39) The correct answer is option B. provide a competitive opportunity for weak private equity firms

club deals-

offer increased returns for investors,  provide an investment opportunity when private equity capital is scarce and  offer diversification benefits to participating private equity firms

Other options are incorrect