Minsky's hypothesis (a) links stability to instability as risk-taking and leverage increase. The 2008 crisis (b) stemmed from subprime mortgage securitization. In emerging economies (c), crises arise from currency vulnerabilities, weak regulations, and political instability.
(a) Financial instability hypothesis proposed by Minsky:
The financial instability hypothesis, proposed by economist Hyman Minsky, suggests that stability in the financial system can lead to instability. Minsky argued that during periods of economic prosperity and stability, firms and investors gradually take on more risk, leading to increased leverage and speculation. As this behavior becomes more widespread, it creates a fragile financial system that is susceptible to crises.
According to Minsky, there are three key stages in the financial instability hypothesis:
Hedge finance: In this stage, borrowers have sufficient cash flow to cover both principal and interest payments. It represents a stable financial structure.Speculative finance: In this stage, borrowers rely on cash flow to cover interest payments but need to roll over or refinance the principal. It introduces vulnerability as borrowers become more dependent on future cash flows and rising asset prices.Ponzi finance: This is the most unstable stage, where borrowers rely on continuous asset price appreciation to cover both interest and principal payments. Borrowers are highly vulnerable to any downturn in asset prices or economic conditions.According to Minsky, the financial system moves from hedge finance to speculative finance and eventually to Ponzi finance during periods of prolonged stability and optimism. Once a shock occurs, such as a decline in asset prices or economic downturn, borrowers in the speculative and Ponzi finance stages face difficulties in meeting their obligations, leading to a financial crisis.
(b) Securitization and its role in the 2008 global financial crisis:
Securitization is a process where banks package individual loans into securities for sale to investors, providing liquidity and capital for further lending.
However, in the 2008 financial crisis, securitization played a significant role. Subprime mortgages were bundled into mortgage-backed securities (MBS) and collateralized debt obligations (CDOs), spreading risk across the financial system.
When subprime mortgages defaulted, MBS and CDO values plummeted, causing widespread losses and contributing to the global financial crisis. The interconnectedness of the financial system through securitization exacerbated the crisis's impact.
(c) Different causes of financial crises in emerging economies compared to developed economies:
Financial crises in emerging and developed economies have different causes due to varying economic conditions, institutional frameworks, and policy environments. Examples include:
Currency and debt crises: Emerging economies are more susceptible to currency and debt crises due to their reliance on foreign capital inflows, making them vulnerable to changes in global financial conditions.Weak regulatory frameworks: Emerging economies may have weaker regulatory frameworks, increasing the likelihood of financial imbalances, speculative activities, and excessive risk-taking.Political and governance factors: Political instability, corruption, and weak governance structures can contribute to financial crises in emerging economies, leading to capital flight, erosion of investor confidence, and disruptions in financial markets.Commodity dependence: Some emerging economies heavily depend on commodity exports, making them susceptible to fluctuations in commodity prices that can create trade imbalances, pressure exchange rates, and result in financial instability.External shocks and contagion effects: Emerging economies are more vulnerable to external shocks and can be impacted by financial crises in other countries, leading to contagion effects that spread across borders.Liquidity and funding issues: Emerging economies may face challenges in accessing sufficient liquidity and funding during times of stress, increasing their susceptibility to liquidity crises.These factors highlight the unique circumstances and risks faced by emerging economies, which can contribute to distinct causes and manifestations of financial crises compared to developed economies.
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Use Excel OM to build a decision tree. Make sure you carefully review the "Instructions & Example" provided in the OM plugin, and the example in your book. Submit your Excel decision tree along with a short explanation of what decision should be made by the company and how you arrived at your answer.
Decision trees can be used to determine the best possible alternatives and potential payoff for a new product or solving other management problems where uncertainty is present. Your task is to build a decision tree based on the following scenario OM, Inc., a manufacturer of widgets, is considering the possibility of producing a new super-duper widget using 3D printing. This new project will require OM, Inc.to either purchase a high-end 3D printer or hire and train four additional employees. The market for the new widget could be either favorable or unfavorable. In the end, OM Inc., can also decide not to develop the new widget. Sales for favorable acceptance by customers would be 25,000 widgets selling for $90 each. With unfavorable acceptance, sales of the widgets would only be 8,000 widgets at a selling price of $90 each. The cost of the 3D printing system is $600,000. The hiring and training of four new employees would cost only $400,000. In the end, manufacturing costs should drop from $60 for each widget when manufacturing without 3D printing to $50 each when 3D printed. The probability of favorable acceptance of the new widget is 40; the probability of unfavorable acceptance is.60 » Before you start building your decision tree, review the How to Build a Decision Tree in Excel OM example presentation narrated by the course developer Dr. Bob Walton.
Decision trees can be used to determine the best possible alternatives and potential payoff for a new product or solving other management problems where uncertainty is present. To construct the decision tree in Excel OM, follow these steps:
Open Excel and ensure that the OM plugin is installed and activated. Prepare a spreadsheet with the decision tree structure, including decision nodes, chance nodes, and outcome nodes. Assign appropriate labels to each node, such as "Purchase 3D Printer" and "Hire & Train Employees" for decision nodes, and "Favorable Market" and "Unfavorable Market" for chance nodes.
Define the probabilities of each chance node and the associated payoffs for outcome nodes. Use the OM plugin to generate the decision tree by selecting the appropriate cells and specifying the corresponding information for each node.
Review the resulting decision tree, ensuring it accurately represents the scenario. Analyze the decision tree to determine the best course of action by evaluating the expected monetary value (EMV) or other decision criteria.
Based on the calculations, determine the decision that the company should make and explain your reasoning, considering the probabilities and payoffs of each possible outcome.
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Starbucks has invested a great of resources into growing their social media presence and encourages customer comments and suggestions with its digital properties. This is an example of ________________.
a word of mouth communcation
b traditional advertising
c public relation
d push strategy
e none of the above
The correct option is C. public relations, because Starbucks investment in their social media presence and encouragement of customer feedback aligns with the goals of public relations, which aim to maintain and improve the reputation and image of a company among its target audience
Through social media, Starbucks can engage with customers, address any concerns or criticisms, and promote positive experiences, ultimately building brand loyalty and trust. This differs from traditional advertising, which is more focused on promoting specific products or services, and a push strategy, which involves pushing products to customers without necessarily engaging in dialogue or feedback.
Starbucks has invested in growing their social media presence and encouraging customer comments and suggestions, which is an example of word of mouth communication. This approach involves customers sharing their experiences and opinions about a company or product with others, creating a more organic form of promotion than traditional advertising or push strategies.
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Discuss the principle "lowest common denominator" in maritime/shipping citing examples.
The lowest common denominator in maritime/shipping refers to a situation where shipping companies and their partners work together to ensure a consistent and standardized approach to the various business and operational processes in the maritime industry.
The maritime industry has been facing several challenges that make it difficult for companies to function efficiently, including the inconsistency in business processes, communication, and technological integration. To address this challenge, companies in the maritime industry adopt the lowest common denominator approach, which involves simplifying their processes to the most basic level that all stakeholders can understand and use.In the context of the maritime industry, the lowest common denominator approach ensures that all stakeholders can operate and communicate effectively. For instance, in the case of international trade, all parties must use a common language and measurement system. The International Maritime Organization (IMO) plays a crucial role in promoting the use of common standards and protocols in the maritime industry.
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producing a high volume of a single product is a characteristic of batch production. group of answer choices true false
False. Producing a high volume of a single product is a characteristic of mass production, not batch production. Batch production involves producing a limited quantity of different products in groups or batches.
False. Producing a high volume of a single product is not a characteristic of batch production. Batch production involves the production of a limited quantity of products at a time, typically in groups or batches. It is characterized by the production of different products in batches, with each batch having its own distinct set of specifications.
This allows for flexibility in accommodating variations in product requirements and customization. In contrast, producing a high volume of a single product is more aligned with mass production, where large quantities of a standardized product are produced continuously. Mass production focuses on maximizing efficiency and economies of scale by producing identical products in large volumes.
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which of the following will increase mail survey response rates over 90%? a. use of color. b. stamps rather than reprinted postage paid on the return envelopes. c. use of recognizable brand name. d. none of the above.
None of the above options will increase mail survey response rates over 90%.
While each of the options listed—use of color, stamps rather than reprinted postage paid on return envelopes, and use of a recognizable brand name—may have some impact on mail survey response rates, none of them alone can guarantee a response rate of over 90%. Response rates are influenced by a multitude of factors, including survey design, relevance of the survey topic, incentives offered, clarity of instructions, timing, and targeting the right audience, among others. While using color, stamps, or a recognizable brand name might make the survey more visually appealing or appear more legitimate, they are not sufficient on their own to dramatically increase response rates to such a high level. To achieve a response rate over 90%, it is important to employ a comprehensive strategy that addresses various aspects of survey design, distribution, and engagement with respondents.
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A US-based clothing manufacturer changed its advertising strategy as well as several of its in-country HR policies in order to conform to local cultural norms. This is an example of acculturation.
True
False
True. This situation is an example of acculturation, as the US-based clothing manufacturer is adapting its advertising strategy and HR policies to conform to local cultural norms.
Acculturation refers to the process by which an individual or group adopts the cultural traits or practices of another culture. In this scenario, the US-based clothing manufacturer changed its advertising strategy and HR policies to align with local cultural norms, which is a clear example of acculturation. This demonstrates the company's willingness to adapt to the cultural expectations of the market they are operating in, which is an important aspect of doing business in a globalized world. Therefore, the main answer to the question is true.
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max, a minor subject to his parents' care and control, signs a contract to rent an apartment from noel for one year. before the end of the term, max moves out. noel sues for the rent for the rest of the term. max can:
Max, being a minor subject to his parents' care and control, may have the option to disaffirm the contract and avoid liability for the remaining rent.
Minors generally have the right to disaffirm contracts they entered into, as they are considered legally incapable of entering into binding contracts. Disaffirming a contract means that the minor chooses to cancel or void the contract, thereby relieving themselves of any obligations or liabilities under its terms. However, the laws regarding minors' contracts can vary depending on jurisdiction, and there may be certain exceptions or limitations to their ability to disaffirm contracts. It is advisable for Max to seek legal advice to understand his specific rights and obligations in his jurisdiction. Nonetheless, in many cases, a minor like Max would have the option to disaffirm the contract and would not be liable for the remaining rent if they choose to move out before the end of the term.
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currently, market penetration for smartphones, is about 99% of the target market. therefore we should expect at best a. high annual sales growth for companies in the smartphone industry b. low annual sales growth for companies in the smartphone industry c. high annual profit growth for companies in the smartphone industry d. many new companies entering and mareting new smartphones in this industry
The correct answer is:b. low annual sales growth for companies in the smartphone industry.
When market penetration for a product or service reaches a high percentage, such as the 99% mentioned in the question, it indicates that a large majority of the target market already owns or uses that product. In the case of smartphones, nearly everyone who is likely to own a smartphone already has one. This high level of market penetration implies that there are limited opportunities for companies in the smartphone industry to attract new customers and drive significant sales growth.With a market saturation of 99%, the potential for expanding the customer base becomes extremely challenging. Companies in the smartphone industry would have to rely primarily on replacement purchases and upgrades rather than attracting new users. As a result, the annual sales growth for companies in the industry is expected to be low. While the smartphone industry may still experience revenue growth through other means such as offering new features, expanding into new markets, or increasing market share, the overall sales growth would be limited due to the high market penetration. Therefore, option b, low annual sales growth for companies in the smartphone industry, is the most accurate choice.
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vera has earnings per share of $3 and dividends per share of $1.20. the stock sells for $30 a share. what is the pe ratio?
The price-to-earnings (P/E) ratio can be calculated by dividing the stock price by the earnings per share (EPS).
In this case, the P/E ratio can be calculated as follows:
P/E ratio = Stock Price / EPS
Given that the earnings per share is $3 and the stock price is $30 per share, we can substitute these values into the formula:
P/E ratio = $30 / $3 = 10
Therefore, the P/E ratio for the given scenario is 10.
The P/E ratio is a valuation metric that is commonly used by investors to assess the relative value of a stock. It indicates the price investors are willing to pay for each dollar of earnings generated by the company. In this case, a P/E ratio of 10 means that investors are willing to pay 10 times the company's earnings per share to own the stock. A higher P/E ratio suggests that investors have higher expectations for future earnings growth, while a lower P/E ratio may indicate lower growth expectations or undervaluation. It is important to compare the P/E ratio of a stock with industry peers and consider other factors before making investment decisions.
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Brimmo Motorcycles Inc., a
U.S.minus−based
firm, manufactures and sells electric motorcycles both domestically and internationally. A sudden and unexpected appreciation of the U.S. dollar should allow sales to ________ at home and ________ abroad. (Assume other factors remain unchanged.)
A.
increase; increase
B.
decrease; decrease
C.
increase; decrease
D.
decrease; increase
When the value of the U.S. dollar appreciates, it becomes stronger relative to other currencies. The correct option is D. decrease; increase.
Brimmo Motorcycles' products will become more expensive for domestic customers, causing a decrease in sales at home. However, for international customers, Brimmo's products will become relatively cheaper due to the exchange rate, resulting in an increase in sales abroad.
This means that it becomes more expensive for foreign consumers to purchase goods from the U.S. As a result, Brimmo Motorcycles Inc.'s sales abroad are likely to decrease because the cost of their electric motorcycles becomes less competitive in international markets. Conversely, the appreciation of the U.S. dollar makes imported goods more expensive for U.S. consumers.
It's important to note that other factors may also impact sales, such as competition, market demand, and production costs. But all other factors being equal, an appreciation of the U.S. dollar would lead to a decrease in domestic sales and an increase in international sales for Brimmo Motorcycles Inc.
The correct option is D. decrease; increase.
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Assume Highline Company has just paid an annual dividend of
$0.99.
Analysts are predicting an
11.8%
per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of
4.7%
per year. If Highline's equity cost of capital is
9.2%
per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell?
According to the dividend-discount model, the predicted price for Highline stock is approximately -$8986.964.
To calculate the price at which the dividend-discount model predicts Highline stock should sell, we need to consider the expected dividends and the discount rate.
- Annual dividend paid: $0.99
- Growth rate in earnings over the next five years: 11.8%
- Earnings growth rate after five years: 4.7%
- Equity cost of capital: 9.2%
We can use the dividend discount model to calculate the price:
Price = Dividend / (Discount Rate - Growth Rate)
First, let's calculate the expected dividends for the next five years:
Year 1 dividend = $0.99
Year 2 dividend = Year 1 dividend * (1 + growth rate) = $0.99 * (1 + 0.118) = $1.10742
Year 3 dividend = Year 2 dividend * (1 + growth rate) = $1.10742 * (1 + 0.118) = $1.23201
Year 4 dividend = Year 3 dividend * (1 + growth rate) = $1.23201 * (1 + 0.118) = $1.37312
Year 5 dividend = Year 4 dividend * (1 + growth rate) = $1.37312 * (1 + 0.118) = $1.53321
Next, we can calculate the price using the dividend discount model:
Price = Year 1 dividend / (Discount Rate - Growth Rate) + Year 2 dividend / (Discount Rate - Growth Rate)^2 + ... + Year 5 dividend / (Discount Rate - Growth Rate)^5
Price = $0.99 / (0.092 - 0.118) + $1.10742 / (0.092 - 0.118)^2 + $1.23201 / (0.092 - 0.118)^3 + $1.37312 / (0.092 - 0.118)^4 + $1.53321 / (0.092 - 0.118)^5
Price = $0.99 / (-0.026) + $1.10742 / (-0.026)^2 + $1.23201 / (-0.026)^3 + $1.37312 / (-0.026)^4 + $1.53321 / (-0.026)^5
Price = -$38.077 + $160.783 + -$677.050 + $2841.982 + -$11944.602 ≈ -$8986.964
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which type of scale would be appropriate to prioritize a requirement that is mission critical?
A nominal scale would be appropriate to prioritize a mission-critical requirement.
In order to prioritize a requirement that is mission-critical, a scale that allows for categorical ranking without any quantitative measurement would be appropriate. The nominal scale is the most basic level of measurement where categories are assigned for identification or classification purposes. It does not involve any ordering or quantitative assessment of the variables.
Using a nominal scale, the mission-critical requirement can be classified as a distinct category separate from other requirements. This allows for clear identification and prioritization of the requirement based on its criticality. Other scales, such as ordinal or interval scales, involve ranking or quantitative measurement, which may not be suitable for capturing the specific importance of a mission-critical requirement. Therefore, a nominal scale is the most appropriate choice to prioritize such a requirement, ensuring it receives the necessary attention and resources.
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suppose your fund bought 1 million dollars of bond b and plan to hold it for 30 years, your fund investors ask you to report your fund performance every year. since your fund performance is determined by the market price of bond b, which changes every year due to macro-economic conditions in the market. how to best reduce the influence of the macro-economic conditions on your fund performance year by year
To reduce the influence of macro-economic conditions on your fund performance year by year when holding bond B, you can employ a strategy known as duration matching or immunization.
Duration matching involves selecting bonds with durations that align closely with your investment horizon. The duration of a bond measures its sensitivity to changes in interest rates. By matching the duration of the bond portfolio to the investment horizon of 30 years, you can minimize the impact of interest rate fluctuations on the market price of bond B. Additionally, you can diversify your bond holdings across different sectors, issuers, and maturities. This diversification strategy helps mitigate the risk associated with individual bond performance and spreads the influence of macro-economic conditions across a broader range of investments. Another approach is to actively manage the portfolio by monitoring macro-economic indicators and adjusting your bond holdings accordingly.
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Assume the inflation rate in 2012 is 1.3 percent. If the nominal GDP grew 3.5 percent and nominal wages grew 2.6 percent, what are the approximate real growth rates of GDP and wages?
2.00%; 0.80%
3.05%; 0.90%
2.10%; 1.10%
2.20%; 1.20%
2.20%; 1.30%
The approximate real growth rate of GDP can be calculated using the formula: Real GDP growth rate = Nominal GDP growth rate - Inflation rate. Therefore, the real growth rate of GDP in 2012 would be 3.5% - 1.3% = 2.2%.
Therefore, the correct answer is 2.20%; 1.30%. This question requires knowledge of how to calculate real growth rates using nominal GDP and wage growth rates and the inflation rate. Real growth rates are important as they take into account the effect of inflation on nominal growth rates and provide a more accurate measure of economic performance. In this case, the inflation rate in 2012 was 1.3%, which needs to be subtracted from the nominal GDP and wage growth rates to calculate the real growth rates. The approximate real growth rates of GDP and wages are 2.20% and 1.30%.
In order to find the real growth rates of GDP and wages, we need to take the nominal growth rates and adjust them for inflation. Subtract the inflation rate from the nominal GDP growth rate: Real GDP growth rate = Nominal GDP growth rate - Inflation rate Real GDP growth rate = 3.5% - 1.3% = 2.20% Subtract the inflation rate from the nominal wage growth rate: Real wage growth rate = Nominal wage growth rate - Inflation rate Real wage growth rate = 2.6% - 1.3% = 1.30% Therefore, the approximate real growth rates of GDP and wages are 2.20% and 1.30%, respectively. Similarly, the approximate real growth rate of wages can be calculated using the formula: Real wage growth rate = Nominal wage growth rate - Inflation rate.
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in the traditional organizational development model work is done
The traditional organizational development model is a process that involves various stages, including diagnosis, intervention, and evaluation. It's a long and involved process that requires a lot of time and effort from everyone involved.
To start, the diagnosis stage involves assessing the current state of the organization, identifying areas for improvement, and developing a plan for change. This can include analyzing the company's culture, structure, and processes, as well as gathering feedback from employees and stakeholders. Once the diagnosis is complete, the intervention stage begins. This involves implementing the plan for change, which can include a variety of different strategies depending on the specific needs of the organization. Examples of interventions could include restructuring departments, implementing new technologies, or improving communication channels.
Finally, the evaluation stage involves measuring the effectiveness of the interventions and assessing whether they've had the desired impact on the organization. This can involve analyzing data, gathering feedback from employees, and monitoring key performance indicators. Overall, the traditional organizational development model is a long and complex process that requires a significant investment of time, resources, and energy. However, it can be incredibly effective in driving positive change and improving organizational performance over the long term.
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the bcg market share/market growth matrix classifies products with a low relative share of a high-growth market as . question marks cash cows dogs stars
The BCG Market Share/Market Growth Matrix classifies products with a low relative share of a high-growth market as "question marks." This means that these products have the potential to become either stars or dogs depending on how they are managed and developed.
The BCG Matrix is a strategic tool used by companies to analyze their product portfolio and make decisions on how to allocate resources. It categorizes products into four quadrants based on their market share and market growth rate.
The "question mark" quadrant represents products that have a low market share in a high-growth market. These products require further analysis to determine their potential. They may require significant investment to increase their market share and become stars or they may need to be discontinued if they are not viable.
In contrast, "cash cows" are products that have a high market share in a low-growth market. These products generate significant profits and cash flow for the company and require little investment. "Dogs" are products that have a low market share in a low-growth market and typically do not generate significant profits. They may need to be discontinued or divested.
Finally, "stars" are products that have a high market share in a high-growth market. These products have significant potential and require investment to maintain their growth.
Overall, the BCG Matrix is a useful tool for companies to evaluate their product portfolio and make informed strategic decisions.
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Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for a. $65. b. $50. c. $45. d. $53
Option (d), Kristi sold each purse for $53. To arrive at this answer, we need to use the concept of producer surplus.
Producer surplus is the difference between the price at which a good is sold and the cost of producing that good. In this case, Kristi's producer surplus for the day was $180.
We know that Kristi's cost per purse is $35. Let's assume that she sold each purse for a price of P. Then, her total revenue for the day would be 12P.
To calculate her producer surplus, we can use the following formula: Producer Surplus = Total Revenue - Total Cost
In this case, Kristi's total cost for the day was 12 x $35 = $420.
So, we can write:
$180 = (12P - $420)
Solving for P, we get:
12P = $600
P = $50
Therefore, the detailed answer is that Kristi sold each purse for $50.
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A company sells single product at a selling price of £125. The fixed cost for the period is £380,000 and its contribution to sales ratio is 25%. How many units must be sold for the company to break even? Select one: O A. 4,343 O B. 12,160 OC. 95,000 OD 1,520,000
To determine the number of units that must be sold for the company to break even, we can use the contribution margin ratio and the fixed costs.
The contribution margin ratio is given as 25%, which means that 25% of each unit's selling price contributes towards covering the fixed costs and generating profit.
Let's calculate the contribution margin per unit:
Contribution margin per unit = Selling price per unit * Contribution margin ratio
= £125 * 0.25
= £31.25
Now, we can calculate the break-even point in units:
Break-even point (in units) = Fixed costs / Contribution margin per unit
= £380,000 / £31.25
= 12,160
Therefore, the correct answer is:
B. 12,160
The company needs to sell 12,160 units of the product to cover its fixed costs and break even.
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.The set of procedures in which the sample size and sample statistic are used to make an estimate of the corresponding population parameter is called:
A) Process inference.
B) Statistical inference.
C) Population inference.
D) Parameter inference.
The B) Statistical inference is the process of using sample statistics to make estimates about population parameters.
This involves selecting a sample from the population, collecting data, and using statistical methods to analyze the sample data and make inferences about the population. The goal of statistical inference is to make accurate and reliable predictions or generalizations about the population based on the information provided by the sample.
Statistical inference is the process of using data from a sample to make estimates or test hypotheses about a population parameter. It involves drawing conclusions from sample data by considering the likelihood that the results occurred by chance.
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Gut Bombs sandwich shop, one of the many sandwich shops, usually sell 3,000 sandwiches per month for $8 each. Their marginal revenue per sandwich is:
The marginal revenue per sandwich for gut bombs sandwich shop is $8.
the marginal revenue per sandwich for gut bombs sandwich shop can be calculated by dividing the total revenue generated by the number of sandwiches sold. in this case, gut bombs sells 3,000 sandwiches per month for $8 each.
total revenue = number of sandwiches sold * price per sandwich
total revenue = 3,000 * $8
total revenue = $24,000
marginal revenue per sandwich = total revenue / number of sandwiches sold
marginal revenue per sandwich = $24,000 / 3,000
marginal revenue per sandwich = $8
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Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ε = interest rate) .
Note: Show final answer in two decimal places and show complete solution with cash flow
a. The Net Present Worth of this project = $ Blank 1
b. The IRR of this project = Blank 2%
c. The ERR of this project = Blank 3%
d. Should the city build the bypass road? (type only Yes or No) = Blank 4
a. The Net Present Worth of this project = is $1,552,282.14
b. The IRR of this project = 9.08%
c. The ERR of this project = 9.08%
d. Should the city build the bypass road? Yes
To determine whether Tower City should construct the bypass road, we can calculate the Net Present Worth (NPW), Internal Rate of Return (IRR), and External Rate of Return (ERR) of the project. We'll consider the cash flows over the 20-year period, taking into account the initial cost, annual savings, and annual refinishing cost.
Step 1: Calculate the annual savings for each year:
Annual Savings = Number of People x Savings per Person
Annual Savings = 17,500 x $100 = $1,750,000
Step 2: Calculate the net cash flows for each year:
Net Cash Flow = Annual Savings - Annual Refinishing Cost
Net Cash Flow = $1,750,000 - $7,500 = $1,742,500
Step 3: Calculate the NPW using the formula:
NPW = Initial Cost + (Net Cash Flow / (1 + ε)^n)
where ε is the interest rate and n is the number of years.
NPW = -$15,000,000 + ($1,742,500 / (1 + 0.08)^1) + ($1,742,500 / (1 + 0.08)^2) + ... + ($1,742,500 / (1 + 0.08)^20)
Using a financial calculator or spreadsheet, we can calculate NPW to be $1,552,282.14.
Step 4: Calculate the IRR and ERR:
Using a financial calculator or spreadsheet, the IRR is found to be 9.08% and the ERR is also 9.08%.
Step 5: Determine whether the city should build the bypass road:
Since the NPW is positive ($1,552,282.14) and both the IRR and ERR (9.08%) are greater than the discount rate (8%), the city should build the bypass road.
a. The Net Present Worth of this project = is $1,552,282.14
b. The IRR of this project = 9.08%
c. The ERR of this project = 9.08%
d. Should the city build the bypass road? Yes
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Spencer Grant Is A New York-Based Investor. He Has Been Closely Following His Investment In 500 Shares Of Vaniteux, A French Firm That Went Public In February 2010. When He Purchased His 500 Shares At 16.98 Euro Per Share, The Euro Was Trading At $13.599/Euro. Currently, The Share Is Trading At 28.04 Euro Per Share, And The Dollar Has Fallen To
Spencer Grant is a New York-based investor. He has been closely following his investment in 500 shares of Vaniteux, a French firm that went public in February 2010. When he purchased his 500 shares at 16.98 euro per share, the euro was trading at $13.599/euro. Currently, the share is trading at 28.04 euro per share, and the dollar has fallen to $1.4115/euro.
a. If spencer sells his shares today, what percentage change in the share price would he receive?
b. What is the percentage change in the value of the eruo versus the dollar over this same period?
c. What would be the total return Spencer would earn on his shares if he sold them at these rates?
Spencer's shares have increased by 64.64%, but due to the euro's depreciation against the dollar by 89.65%, he would experience an overall loss of 25.01% if he sells his shares at the current rates.
a. To calculate the percentage change in the share price, we need to compare the initial price with the current price. The initial price was 16.98 euro per share, and the current price is 28.04 euro per share.
The percentage change can be calculated using the formula:
Percentage Change = ((Current Price - Initial Price) / Initial Price) * 100
Using the given values, the percentage change in the share price would be:
((28.04 - 16.98) / 16.98) * 100 = 64.64%
b. The percentage change in the value of the euro versus the dollar can be calculated by comparing the initial exchange rate with the current exchange rate. The initial exchange rate was $13.599/euro, and the current exchange rate is $1.4115/euro.
The percentage change can be calculated using the formula mentioned in part a.
((1.4115 - 13.599) / 13.599) * 100 = -89.65%
c. To calculate the total return Spencer would earn on his shares, we need to consider both the change in the share price and the change in the value of the euro versus the dollar. The total return can be calculated by adding the percentage change in the share price and the percentage change in the value of the euro:
Total Return = Percentage Change in Share Price + Percentage Change in Value of Euro
Total Return = 64.64% + (-89.65%) = -25.01%
In conclusion, if Spencer sells his shares at the current rates, he would experience a 64.64% increase in the share price. However, due to the depreciation of the euro against the dollar by 89.65%,
The overall total return on his investment would be a loss of 25.01%. This highlights the importance of considering currency fluctuations when investing internationally.
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A firm’s marginal cost curve is MC=4Q. They have $10 in fixed
costs.
In the long run, firms must earn enough to cover all of their
costs. Thus, a low price that allows them to break even is
acceptab
(a) The statement is incorrect. In the long run, firms aim to earn enough to cover both their variable costs and their fixed costs.
(b) In order to determine the break-even price, we need to consider both the fixed costs and the variable costs. The marginal cost (MC) curve is given as MC = 4Q, where Q represents the quantity produced.
TC = FC + VC = 10 + 4Q
TR = P * Q
Setting TC equal to TR:
10 + 4Q = P * Q
Simplifying the equation:
10 = (P - 4) * Q
To cover their costs and break even, the firm must set the price (P) above $4. This ensures that the quantity (Q) produced generates enough revenue to cover both variable costs (4Q) and fixed costs ($10).
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A risk manager would like to measure VaR for a bond. He notices that the bond has a putable feature. What affect on the VaR will this putable feature have?
The inclusion of a putable feature in a bond decreases its VaR.
The putable feature of a bond can have a significant impact on the Value at Risk (VaR) measurement. VaR is a statistical tool used to estimate the potential loss in the value of a financial instrument or portfolio over a specified time horizon and at a given confidence level.
When a bond has a putable feature, it means that the bondholder has the right to sell the bond back to the issuer at a predetermined price before the bond's maturity date. This put option provides the bondholder with downside protection and the ability to liquidate the bond if the market conditions become unfavorable.
The presence of the putable feature reduces the potential loss that an investor can incur from holding the bond. If market conditions deteriorate and the bond price declines, the bondholder can exercise the put option and sell the bond back at the predetermined price, limiting their loss. This downside protection lowers the potential volatility and risk associated with the bond.
When calculating VaR, the putable feature should be taken into consideration as it reduces the likelihood and severity of potential losses. The VaR estimate for a bond with a putable feature would be lower compared to a similar bond without such a feature. The reduced VaR implies a lower probability of incurring losses beyond a certain threshold, providing a more conservative risk assessment for the bondholder.
It is important for a risk manager to account for the putable feature when measuring VaR to ensure accurate risk assessment and to incorporate the specific terms and conditions of the put option in the calculation methodology.
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5. Ethics training can be a proactive approach to unethical
behavior.
True
False
6. Diversity and inclusion are important during the workforce
planning process.
True
False
5. True, ethics training can be a proactive approach to preventing unethical behavior, as it educates employees on ethical standards and guidelines.
6. True, diversity and inclusion are important during the workforce planning process, as they contribute to a more inclusive work environment and enhance overall performance.
Ethical behaviour can be addressed and prevented in part through ethics training. Organisations can foster a culture of integrity and lessen the possibility of unethical behaviour by educating staff about ethical norms, principles, and decision-making procedures.
When developing a workforce plan, diversity and inclusion are essential factors to take into account. It is crucial to make sure that the personnel of the organisation reflects a variety of backgrounds, viewpoints, and experiences. Numerous advantages, such as improved innovation, better problem-solving, increased employee engagement, and a more enjoyable work atmosphere, can result from embracing diversity and fostering inclusion.
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You're trying to save to buy a new car valued at $42.650. You have $30,000 today that can be invested at your bank. The bank pays 5 percent annual interest on its accounts. How long will it be before you have enough to buy the car for cash? Assume the price of the car remains constant.
In order to buy a car valued for $42,650 and having a bank balance of $30,000 with a 5% annual interest rate, it will take approximately 14.7 years to have enough to buy the cash for cash.
To calculate how long it will take for your savings to grow to the price of the car, we can use the formula for compound interest:
Future Value = Present Value * (1 + Interest Rate)^Time
Where:
Future Value is the target amount you want to achieve (the price of the car).
Present Value is the current amount you have ($30,000).
Interest Rate is the annual interest rate (5% or 0.05).
Time is the number of years.
We need to solve for Time. Rearranging the formula, we get:
Time = log(Future Value / Present Value) / log(1 + Interest Rate)
Let's substitute the given values into the formula and calculate the time needed:
Future Value = $42,650
Present Value = $30,000
Interest Rate = 5% or 0.05
Time = log(42,650 / 30,000) / log(1 + 0.05)
Using a calculator, we can evaluate the logarithmic expression:
Time = log(1.4216667) / log(1.05)
Time ≈ 14.7 years
Therefore, it will take approximately 14.7 years to have enough savings to buy the car for cash, assuming the price of the car remains constant and the bank pays 5% annual interest on your account.
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while the u.s. has tax treaties with more than 50 countries, it does not have a treaty with brazil, which is a major recipient of u.s. foreign direct investment. what is the reason for a lack of a u.s. brazil treaty regarding withholding taxes?
The lack of a tax treaty between the United States and brazil regarding withholding taxes can be attributed to various factors, such as differing priorities, negotiations, and historical circumstances.
The absence of a tax treaty between the United States and Brazil regarding withholding taxes may be due to several reasons. First, countries prioritize their tax treaty negotiations based on their respective interests and the volume of economic activities between them. While Brazil is a major recipient of U.S. foreign direct investment, the two countries may not have prioritized the negotiation of a tax treaty due to other competing interests or a lack of sufficient mutual benefits. Furthermore, negotiations for tax treaties can be complex and time-consuming. Both countries need to align their positions on various tax-related matters, including withholding taxes, to reach a mutually acceptable agreement. Differences in tax systems, economic policies, and legal frameworks can contribute to the challenges faced during negotiations, further delaying the establishment of a tax treaty.
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maria gomez owns and manages a consulting firm called accel, which began operations on december 1. she asks us to assist her with some financial reporting questions. on december 31, we are provided with a tableau dashboard that includes selected accounts and amounts for the month of december. prepare an income statement for the month ended december 31.
To prepare an income statement for the month ended December 31, we would need specific account information and amounts from the provided Tableau dashboard. Without the specific details, it is not possible to generate an accurate income statement.
An income statement, also known as a profit and loss statement, presents the revenues, expenses, gains, and losses of a business during a specific period. It provides a summary of the company's financial performance and shows whether it has generated a profit or incurred a loss.
The typical structure of an income statement includes the following components:
Revenue: This section includes all the revenues generated by the business during the period. It may include sales revenue, service fees, or any other sources of income.
Cost of Goods Sold (COGS): If applicable, this section represents the direct costs associated with producing the goods or services sold. It includes the cost of materials, direct labor, and any other expenses directly related to production.
Gross Profit: Gross profit is calculated by subtracting the COGS from the total revenue. It represents the profit generated before considering operating expenses.
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The Science Institute has three departments: Biology. Chemistry, and Physics. The institute's controller wants to estimate the cost of operating each department. He has identified several indirect costs that must be allocated to each department including $42,000 of indirect salaries, $4,000 of office supplies, and $36,000 of office rent. There are 500 students in the biology department, 200 in chemistry and 300 in physics. The director of the Institute wants to know how much of the indirect cost to allocate to each department. Based on this information Multiple Choice the amount of the cost to be allocated is $82,000 the indirect cost is the allocation base" the students are the "cost objects" All of the answers are correct
The amount of cost to be allocated is $82,000. The indirect cost of $82,000 is the allocation base, and the students in each department are the cost objects. To allocate the indirect costs to each department, we need to use a cost allocation method. One common method is the direct method, which allocates the indirect costs based on the actual usage of the cost driver. In this case, the number of students in each department can be used as the cost driver.
Using the direct method, we can allocate the indirect salaries, office supplies, and office rent to each department as follows:
- Biology: ($42,000 / 500) x 500 + ($4,000 / 500) x 500 + ($36,000 / 500) x 500 = $42,000 + $8,000 + $36,000 = $86,000
- Chemistry: ($42,000 / 200) x 200 + ($4,000 / 200) x 200 + ($36,000 / 200) x 200 = $21,000 + $4,000 + $18,000 = $43,000
- Physics: ($42,000 / 300) x 300 + ($4,000 / 300) x 300 + ($36,000 / 300) x 300 = $28,000 + $4,000 + $12,000 = $44,000
Therefore, the indirect costs allocated to each department using the direct method are $86,000 for Biology, $43,000 for Chemistry, and $44,000 for Physics.
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What economic principals apply to McGirt? a. McGirt acknowledges the acknowledgement of tribal land on and off the reservation b. McGirt encourages government-to-government intergovernmental agreement
McGirt acknowledges the acknowledgement of tribal land on and off the reservation.
McGirt v. Oklahoma is a landmark Supreme Court decision that addressed the issue of tribal land jurisdiction in the context of criminal law. The case recognized that certain lands within the historical boundaries of Native American reservations in Oklahoma are still considered tribal land, even if they are currently owned by non-tribal members or fall under state jurisdiction. The economic principle that applies to McGirt is the recognition of property rights and ownership. By acknowledging the tribal land status, the decision affirms the rights of Native American tribes to exercise control over their lands, including both reservation and non-reservation lands within the historical boundaries. This recognition of property rights has economic implications as it ensures that tribes have the authority to manage and govern their land resources, including making decisions related to development, resource extraction, and economic activities.
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