Question

Syndicating investments is a strategy used by

Select one:

a. companies to raise seed capital.

b. underwriters to increase investor interest in IPOs.

c. venture capitalists to reduce their risk.

d. shareholders to diversify their risk.

Answer 1

The correct answer is option c. venture capitalists to reduce their risk.

Syndicating investments is a strategy commonly used by venture capitalists to reduce risk.

In syndicating investments the venture capitalist reduce the risk by including other investors.

Option a is incorrect because companies raise seed capital through personal and family investments

Option b is incorrect because underwriters do not use syndicating invesetments to increase investor interest in IPOs

Option d is incorrect because diversification strategy is used by shareholders to diversify their risk