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Mutual Fund, Hedge Fund, Venture Capital, Angel Investors Video Lecture | Commerce & Accountancy Optional Notes for UPSC

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FAQs on Mutual Fund, Hedge Fund, Venture Capital, Angel Investors Video Lecture - Commerce & Accountancy Optional Notes for UPSC

1. What is the difference between a mutual fund and a hedge fund?
Ans. A mutual fund pools money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities, while a hedge fund is a private investment fund that typically caters to high-net-worth individuals and institutions and employs more complex strategies, such as leverage and derivatives.
2. How do venture capital and angel investors differ in their investment approaches?
Ans. Venture capital firms typically invest larger amounts of money in more established startups, while angel investors are individuals who provide capital to early-stage startups in exchange for equity. Venture capitalists often take a more hands-on approach in managing their investments compared to angel investors.
3. What is the primary goal of a mutual fund?
Ans. The primary goal of a mutual fund is to provide investors with a professionally managed, diversified portfolio of securities to help them achieve their financial goals while spreading risk across different assets.
4. How do hedge funds differ from mutual funds in terms of regulation?
Ans. Hedge funds are typically less regulated than mutual funds, as they are only available to accredited investors and are subject to fewer restrictions on investment strategies. Mutual funds, on the other hand, are regulated by the Securities and Exchange Commission (SEC) and must adhere to specific guidelines to protect investors.
5. What is the role of venture capital in fostering innovation and entrepreneurship?
Ans. Venture capital plays a crucial role in fostering innovation and entrepreneurship by providing funding and support to early-stage companies with high growth potential. Venture capitalists help entrepreneurs turn their ideas into successful businesses by providing not only financial resources but also mentorship, networking opportunities, and strategic guidance.

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