Several studies into returns from venture capital funds have generally supported the notion of high returns.What arithmetic return on financing rounds to IPO did Cochrane (2005)report?

A) $ 30.5 \% $
B) $ 698 \% $
C) $ 350 \% $
D) $ 498 \% $

Question

Several studies into returns from venture capital funds have generally supported the notion of high returns.What arithmetic return on financing rounds to IPO did Cochrane (2005)report?

A) $ 30.5 \% $
B) $ 698 \% $
C) $ 350 \% $
D) $ 498 \% $

Quizplus · Accepted Answer

Several studies into returns from venture capital funds have generally supported the notion of high returns.For example,Chen,Baierl and Kaplan (2002)report an average (arithmetic)return of 45% p.a.Gompers and Lerner (1997)report an equivalent figure of 30.5% p.a.using a different sample.Cochrane (2005)reports an average (arithmetic)return on financing rounds to IPO of 698%! Note that this figure is over the life of the investment rather than an annualised figure.

Several Studies into Returns from Venture Capital Funds Have Generally 30.5% 30.5 \% 30.5%

Several Studies into Returns from Venture Capital Funds Have Generally $30.5 \%$