Tutor profile: Matteo O.
20 divided by a positive integer x leads to a remainder of x-2. x could be one of the following: a) 7 b) 8 c) 19 d) 10 e) 11 which one and why?
the fact that the remainder is x-2 tells us that k is a factor not of 20, but of 2 more than 20, that is 22. the only choice that is a factor of 22 is 11 (option e) another way is to trial & error, yet the key-point is that the student has to learn how to go as fast as possible when sitting the GMAT (reasoning as above)
Subject: Corporate Finance
Imagine you are a successful entrepreneur with a fully owned company (all-equity financed). An angel investor comes in and wants to buy your company. You have 2 options: 1) selling 50% of your company for €10m 2) accepting a €10m equity injection in your company in exchange for 50% of it. Do you have a preference or is it indifferent?
You should always maximise your value, therefore you should peek the highest implicit value of your company. Enterprise value in 1) €20m - you sell 50% for €10m indeed Enterprise value in 2) is €10m - the post-money valuation of the company is 10+10=20 (in words, only after the equity injection the company is valued €20m and the angel investor will have 50% of this post-money EV) then with option 1) you are better off
Imagine you know that inflation will be higher than expected in the following years. How would you behave to benefit from this information?
Firstly, inflation penalises lenders and benefits borrowers. Therefore, this is the ideal moment to buy a house with a fixed-rate mortgage. You, as a borrower, will have a lower real cost of debt in the presence of higher than expected inflation. Secondly, it will depreciate bonds. Then, you should short-sell bonds such as US T-Bills. This depreciation comes from the foundational characteristics of the bond market - bonds pay a rate which is strongly linked to inflation rates. Thirdly, your currency will lose value relative to other currencies. Therefore, an easy profit could be made by buying/selling currency pairs. (let's say you are American, then you should short-sell USD/EUR or buy EUR/USD)
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