Which statement about equity investors is true?

• A. They are paid from gross receipts
• B. They get paid back only from the sale, license, or exploitation of the film
• C. They receive net profits first
• D. They have no revenue rights

Answer: (B)

Equity investors are the risk capital in a film financing structure, and their return comes from the film’s profits generated through exploitation—sales, licenses, distribution, streaming, and other ways the film is monetized. They don’t have a guaranteed payment and their money is paid back only to the extent the film actually earns profits, after costs and any senior claims are addressed. This makes the statement that they are paid back only from the sale, license, or exploitation of the film accurate. The other options don’t fit because equity payments aren’t a share of gross receipts, they aren’t typically first in the distribution waterfall, and equity with a stake does imply revenue rights in profits from exploitation.