Question：Which type of financing arrangement would you associate with mezzanine finance?
A. Small business lending.
B. Issuing bonds.
C. Venture capital finance.
D. Leasing arrangements.
The correct answer is: Venture capital finance.
Mezzanine finance is a form of debt finance ranking below senior debt and other debt in rights to payment of interest and repayment of capital, but with some equity element in it (equity kicker). Interest on mezzanine finance is higher than on senior debt because of the higher risk. It might be used in a venture capital financing arrangement.
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