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CFA Level 1 Question of the Week - Portfolio Management

Which of the following is least likely a similarity between buyout funds and venture capital funds?
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CFA Level 1 Question of the Week - Portfolio Management 6 votes

A. They both seek to only acquire a minority stake in the firms they invest in.
66% 4 votes
B. They both make investments with finite investment horizon (usually 3 to 5 years).
0% 0 votes
C. They both often take control of the board of the companies in which they invest.
33% 2 votes

Comments

  • Matt_AnalystPrepMatt_AnalystPrep MontrealPosts: 112 Associate
    The correct answer is A.

    Similar to buyout funds, venture capital funds typically have finite investment horizons (usually 3 to 5 years). Also, they both take control of the board of the companies in which they invest.
    However, buyout funds almost always buy 100% of a company, whereas venture capital firms only acquire a minority stake - less than 50%. Therefore, option A is the least likely answer.
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