Question

Pedro is considering whether to invest in a startup. Before investing, Pedro sends a technical and industry expert to meet with the entrepreneur and take a close look at the technology. He also talks with potential customers to gauge the potential market size. Pedro has engaged in:
a. A private placementb. A fundamental transactionc. Due diligenced. None of these are correct

Answer 1

Answer:

The correct option is C,due diligence

Explanation:

Due diligence involves a thorough examination and appraisal of a prospective business venture undertaken by a would-investor in order to determine the value of the target business and most importantly to substantiate the information provided by the current business owner such the prospective investor  can decide whether or not the business is worth investing in.

Pedro has just carried a due diligence by committing an industry expert to examine closely the prospective business.