Investment Strategies Quiz

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Questions and Answers

In the context of investing, when do VCs typically invest compared to angel investors and private equity firms?

  • Before angel investors but after private equity firms
  • After both angel investors and private equity firms
  • Before private equity firms but after angel investors (correct)
  • Before angel investors and before private equity firms

Which of the following is NOT a downside of using Net Present Value?

  • Multiple IRRs
  • Sensitive to discount rate
  • Dynamic assumptions
  • Includes Real options (correct)

What is a key drawback of using the Net Present Value method?

  • Includes many real options
  • Produces multiple IRRs (correct)
  • Is not affected by the discount rate
  • Requires static assumptions

Why is the Net Present Value method considered sensitive to the discount rate?

<p>As it discounts future cash flows back to their present value (D)</p> Signup and view all the answers

Which factor makes Net Present Value different from other valuation methods that may result in multiple IRRs?

<p>Dynamic assumptions used in calculations (A)</p> Signup and view all the answers

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