From which of the following does a venture capital company usually achieve its greatest return?

Question

Quizplus · Accepted Answer

Venture capital companies achieve their greatest return through capital gains upon the sale of the company they have invested in. This is because venture capital companies typically invest in startups or young companies with high potential for growth. Once the company has grown and reached a certain level of success, it may be acquired by a larger company or have an initial public offering (IPO). The venture capital company can then sell their stake in the company for a profit, which generates capital gains. Dividends are typically not distributed by young companies with high growth potential, and MBI and borrowing at a lower interest rate than lending are not common strategies for venture capital firms to generate returns. While derivatives can be used to hedge investment risk, they are not typically the largest source of return for venture capital companies.

From Which of the Following Does a Venture Capital Company