Sophia Principles of Finance Unit 4 Challenge 2

1 — Types of Financing Which of the following types of financing is typical for a business in its growth stage? Equity from an IPO 2 — Venture Capital Which of the following is a disadvantage of venture capital? Companies that receive venture capital are more closely monitored by investors than they might otherwise be. 3 — Leasing Determine whether the following statement is true of a capital lease, an operating lease, neither or both. "A commercial financing agreement in which the finance company legally owns an asset, but the company leases it for a small part of the asset's life." Operating lease 4 — The Role of Investment Banks in Financing What type of risk does a securities underwriter assume from the issuer? The risk that the security will underperform on the open market 5 — Comparing Public and Private Financing Select one reason why a company would want to go private. To have fewer administrative expenses associated with securities regulation