An investment in which the investor limits its involvement to providing equity capital in an enterprise managed by another in hope of a profitable return is called a(n):

Question

Quizplus · Accepted Answer

A passive investment is characterized by limited investor involvement in the management of the enterprise. The investor provides equity capital and expects a profitable return but does not play an active role in running the business. This is different from an active investment where the investor has a say in management decisions and operations. A leveraged investment involves the use of borrowed funds to finance the investment, while an inactive investment is not a common investment term.

An Investment in Which the Investor Limits Its Involvement to Providing