aggressive strategy is more risky, however: there is a

25%

charce that the firm will be sold for

$300Million

, and a

75%

chance the firm will be worthless.\ Which strategy is, on average, more profitable for the firm?\ A. Aggressive Strategy\ B. It cannot be determined\ C. Friendly Strategy\ D. The Strategies are Equally Profitable\ If the firm pursues the friendly strategy, what is the founder's expected payoff closest to?\ A.

$70

Million\ B.

$50

Milion\ c.

$100

Million\ D.

$60

Milion\ If the firm pursues the aggressive strategy, what is the founder's expected payoff closest to?\ A.

$50

Million\ B.

$60

Milion\ c.

$75

Million\ D. $65 Milion\ What changes if the firm had issued venture debt pledging repayment of

$40

Million?\ A. Nothing Changes, firm still executes Aggressive Strategy\ B. Firm switches from Friendly Strategy to Aggressive Strategy\ C. Firm switches from Aggressive Strategy to Friendly Strategy\ D. Nothing changes, firm still executes Friendly Strategy\ What is an advantage of the venture capitalist writing a contract with liquidation preferences and no participation rights?\ A. It is better at ripping off entrepreneurs\ B. Discourages misappropriation of resources\ C. This contract reduces excessive risk taking

aggressive strategy is more risky, however: there is a 25% charlce that the firm will be sold for $300 Million, and a 75% chance the firm will be worthless. Which strategy is, on average, more profitable for the firm? A. Aggressive Strategy B. It cannot be determined C. Friendly Strategy D. The Strategies are Equally Profitable If the firm pursues the friendly strategy, what is the founder's expected payoff closest to? A. $70 Million B. $50 Milion c. $100 Million D. \$60 Milion If the firm pursues the aggressive strategy, what is the founder's expected payoff closest to? A. $50 Million B. $60 Milion c. $75 Million D. \$65 Milion What changes if the firm had issued venture debt pledging repayment of $40 Million? A. Nothing Changes, firm still executes Aggressive Strategy B. Firm switches from Friendly Strategy to Aggressive Strategy C. Firm switches from Aggressive Strategy to Friendly Strategy D. Nothing changes, firm still executes Friendly Strategy What is an advantage of the venture capitalist writing a contract with liquidation preferences and no participation rights? A. It is befter at ripping off entrepreneurs B. Discourages misappropriation of resources C. This contract reduces excessive risk taking