FIN 501 Lecture Notes - Lecture 5: The Big Payoff, Market Capitalization, Nordstrom

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Our goal in this chapter is to provide a big picture overview of: who owns stocks, how a stock exchange works, and, how to read and understand the stock market information reported in the financial press. Private equity is used in the rapidly growing area of equity financing for nonpublic companies. Firms other than start-ups might also need financing. Private equity also includes: middle-market firms large leveraged buyouts. Private equity funds and hedge funds are two types of investment companies. Private equity funds generally have: a high-water-mark provision, a clawback provision. Venture capital refers to financing new, often high-risk, start-ups. Venture capital firms pool funds from various sources, like. Venture capitalists know that many new companies will fail. The companies that succeed can provide enormous profits. To limit their risk: venture capitalists generally provide financing in stages, venture capitalists actively help run the company.

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