A blue-sky company is one that:

A) only invests in environmentally friendly private equity projects
B) only invests in any promising private equity project
C) promises a lot but does not do much
D) promises a lot and achieves to fulfill its promises

Question

A blue-sky company is one that:

A) only invests in environmentally friendly private equity projects
B) only invests in any promising private equity project
C) promises a lot but does not do much
D) promises a lot and achieves to fulfill its promises

Quizplus · Accepted Answer

A critical point to understand about private equity funds is that,while they are able to diversify risk across investments,they are still exposed to significant risk associated with private equity per se.Many of the investments are in blue-sky companies that promise much,but also carry a significant probability of delivering little.Further,because of the lockup periods,the lack of liquidity introduces an additional consideration.

A Blue-Sky Company Is One That