(TCO B) The following is a portion of a qualified audit report issued for a private company. To the shareholders of Tamarak Corporation, We have audited the accompanying balance sheet of Tamarak Corporation as of October 31, 2009 and the related statements of income, retained earnings, and cash flows for the past year. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The company has included in property and debt in the accompanying balance sheet certain lease obligations that, in our opinion, should be expensed in order to conform with generally accepted accounting principles. If these lease obligations were capitalized, property would be decreased by $4,000,000, long-term debt by $2,000,000, and retained earnings by $180,000 as of October 31, 2009, and net income and earnings per share would be decreased by $180,000 and $0.62, respectively, for the past year. Required: Complete the above qualified audit report by preparing the opinion paragraph. Do not date or sign the report.

The purpose of the Central America Free Trade Agreement is to

Multiple Choice

• lower trade barriers between the United States and the Central American Common Market countries.

• eliminate trade barriers between the CARICOM and Central American Common Market countries.

• reduce of trade barriers between Caribbean Single Market and Economy nations and Central American Common Market countries.

• introduce a common currency for Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

• reduce tariffs and quotas between Costa Rica, Dominican Republic, and Nicaragua.

• Which country has been granted three bailout efforts by the EU in an attempt to prevent a sovereign debt crisis?

• Multiple Choice

• Greece

• France

• Great Britain

• Belgium

• Portugal

• Canada and the United States agree to remove all barriers to the trade of goods between them. However, the countries agree that each would be allowed to determine its own trade policies with regard to nonmembers. The economic integration between these countries is called a(n)

  Multiple Choice

• free trade area.

• customs union.

• common market.

• economic union.

• political union.

• What is one main impediment to regional economic integration?

  Multiple Choice

• identical political ideologies

• reduced immigration

• loss of national sovereignty

• lack of popular support

• difficult international policies

• Brett Thiesen wants to make a political case for regional economic integration to his electorate. Which valid statement can he make in this regard?

  Multiple Choice

• Linking neighboring economies increases the potential for violent conflict.

• Free trade stimulates economic growth, which creates dynamic gains from trade.

• Making neighboring economies increasingly dependent on each other fails to create incentives for political cooperation.

• Countries can enhance their political weight in the world by grouping their economies.

• Those seeking a united Europe have always had a desire to make another war in Europe imminent.

. Why does Porsche hedge its foreign exchange exposure? Does it make sense, from the perspective of shareholders, for Porsche to hedge? Does it make sense from management’s perspective? Are there potential differences in interest between management and shareholders regarding the hedging policy? 2. Suppose it is end of November 2007, and Porsche reviews its hedging strategy for the cash flows it expects to obtain from vehicle sales in North America during the calendar year 2009. Assume that Porsche entertains three scenarios: The expected volume of North American sales in 2009 is 32,750 vehicles. The low-sales scenario is 30% lower than the expected sales volume, and the high-sales scenario is 30% higher than the expected sales volume. Assume, in each scenario, that the average sales price per vehicle is $90,000 and that all sales are realized at the end of November 2009. All variable costs incurred by producing and shipping an additional vehicle to be sold in North America in 2009 are billed in € and amount to €60,000 per vehicle. Characterize how Porsche’s € cash flows, net of variable costs, obtained from its North American sales depend on the spot exchange rate that prevails at the end of November 2009, if: a. Porsche does not hedge its currency exposure at all; b. Porsche hedges by selling forward US$ equal to the amount of expected 2009 sales with a two-year forward contract; c. Porsche hedges by buying two-year European at-the-money put options on US$ (providing to Porsche the right to sell US$, receiving €, at the strike exchange rate) in sufficient quantity to have the right to sell an amount of US$ equal to expected 2009 sales. 3. Based on your analysis of question 2, what’s your view on the foreign exchange hedging strategy and the hedging instruments chosen by Porsche? If you were Porsche’s CEO, would you implement a different strategy? If yes, why? If no, why not? 4. How might Porsche’s ownership structure influence the hedging strategy pursued by management? 5. Do you think Porsche’s strategy of using options to acquire a stake in VW (instead of buying stocks directly) is a sensible one? Or do you agree with the critics who argued that Porsche was speculating with shareholders’ money and that it had become a “hedge fund” that neglected its core business?

Suppose that an Irish Sweepstakes winner deposits $10 million in cash into her transactions account at the Bank of America. Assume a reserve requirement of 25 percent and no excess reserves in the banking system prior to this deposit. Show the changes on the Bank of America balance sheet when the $10 million is initially deposited.

A bank loan officer claims that the mean monthly mortgage payment made by all home owners in a certain

city is $1365. A housing magazine wanted to test this claim. A random sample of 40 homeowners taken by this magazine produced the mean monthly mortgage of $1489 with a standard deviation of $278. Testing at the 2% significance level, would you conclude that the mean monthly mortgage payment made by all homeowners in this city is different from $1365?

      a. State H₀ and H_a symbolically.

      b. Compute the test statistic.

     c. Find the p-value.

     d.   State the initial conclusion.

     e. State the conclusion in terms of the original claim.

OptiJet Airlines provide daily service for commuters traveling from South to MidWest. One of the fare classes for this flight has been set at $250. The airline has set aside a capacity of 25 passengers in this fare class. Historical passenger demand for these seats in this fare class has been fit to a normal distribution with mean 27.18 and standard deviation 3.14. If demanded, the airline will typically accept more reservations than the seat capacity since only 90% of all customers who have a reservation show up for the flight. This policy is called overbooking. If the flight is overbooked, anyone who shows up but does not receive a seat on the plane receives $350 in compensation in addition to a full refund of the ticket price. The variable cost of transporting a passenger and his/her luggage on this flight is $100. The fixed cost of operating the flight is $2,500. To maximize expected profit from operating this flight, how many reservations for the flight should this airline accept? Develop a simulation model in the spreadsheet file. What would be the best strategy for the airline?

The following are historical assembly costs and corresponding number of components for the Precision Manufacturing Co.

1. Utilizing the High-Low method determine the cost function for the assembly department.
2. Estimate the cost to assemble 8700, 9500 and 12000 components.
3. Would it be appropriate to use the cost function to estimate the cost to assemble 100,000

Sage Co. sells $ 403,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2021. The bonds yield 10%. On October 1, 2018, Sage buys back $ 132,990 worth of bonds for $ 138,990 (includes accrued interest).

-Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end

-Prepare all of the relevant journal entries from the time of sale until the date indicated. Give entries through December 1, 2019. (Assume that no reversing entries were made.)

1.) Suppose that the US trades goods and services with South Korea. In particular, Jeep produces and sells a Wrangler in South Korea for 30,000 US dollars (USD), and Samsung produces and sells a Galaxy S9 in the US for 960,000 South Korean won (KRW).

(a) Suppose that the exchange rate as is 1,000 won per US dollar.

1.)Obtain the price of a Jeep Wrangler in South Korea in terms of the South Korean won.

2.)Obtain the price of a Samsung Galaxy S9 in the US in terms of the US dollar.

(b) Suppose now that the exchange rate rises to 1,200 won per US dollar.

1.)Obtain the price of a Jeep Wrangler in South Korea in terms of the South Korean won.

2.)Obtain the price of a Samsung Galaxy S9 in the US in terms of the US dollar.

3.)Examine how the increase in the exchange rate affects the price competitive- ness of Jeep in South Korea and of Samsung in the US.

2.)Suppose that you are an investor who is considering investing $10,000 a one-year U.S. government bond that has a 5% interest rate or a one-year Japanese government bond with a 1% interest rate. The exchange rate today is 110 yen per dollar, and you expect the exchange rate to be 105 yen per dollar one year from now.

(a) Which bond would you purchase? Explain detailedly why.

(b) Suppose now that the exchange rate today is 107 yen instead of 110 yen, and you still expect the exchange rate to be 105 yen one year from now. Would you change your decision about which bond to buy? Explain detailedly why.

1. survey of the MBA students at a university in the United States classified the country of origin of the students as seen in the table.

1. What percent of all MBA students were from North America?

2. What percent of the Two-year MBA students were from North America?

3. What percent of the evening MBA students were from North America?

4. What is the marginal distribution of origin?

1. Using the table below, calculate the variance of X, variance of Y, standard deviation of X, standard deviation of Y, the covariance between X and Y, the correlation coefficient between X and Y, and find the regression line assuming X is the independent variable (find the slope and the intercept). Show your work.