Question

Jessica invests money with a friend who is purchasing a small food truck, in return for a share of the business. What type of transaction is this?

a) Venture Capital Investment
b) Initial Public Offering (IPO)
c) Merger and Acquisition
d) Private Equity Investment

Answer 1

Jessica's investment in a small food truck for a share in the business is a Private Equity Investment, which is different from other financial transactions like an Initial Public Offering (IPO) or Venture Capital Investment.

Step-by-step explanation:

Jessica's investment with a friend to buy a small food truck in return for a share of the business is best described as a Private Equity Investment. This type of transaction involves the investment in a company that is not publicly traded on a stock exchange. In contrast, an Initial Public Offering (IPO) is when a firm sells its own stock to the public for the first time to raise capital and potentially repay early-stage investors like angel investors and venture capital firms. Venture Capital Investment is typically made by venture capital firms in the early stages of a company for a significant ownership stake and influential control. A Merger and Acquisition involves the consolidation of companies or assets through various types of financial transactions.