Caitlin founded an HR software company called Plum. She wants to add a diversity survey to her product but struggles with the types of insights that the HR departments need versus what employees feel comfortable sharing. What should Caitlin do before creating a new feature on her platform?

Question 13 options:

You own a US company with borrowings from Switzerland. Over the next few months, your loan repayment of CHF 50 million is due. Given the foreign exchange market movements, you would like to minimise the impact on your cash outflow. Based on the following data, devise a suitable strategy. Evaluate your chosen strategy against suitable alternatives for a range of expected future spot rates.

Spot rate = 0.9888 CHF/USD

3 month forward rate = 3 month future rate = 0.9796 CHF/USD

Each option contract has a size of 125,000 Swiss Francs.

Suppose that you (i.e., company XYZ) are a US-based importer of goods from Canada. You expect the value of the Canada to increase against the US dollar over the next 6 months. You will be making payment on a shipment of imported goods (CAD100,000) in 6 months and want to hedge your currency exposure. The US risk-free rate is 5% and the Canada risk-free rate is 4% per year. The current spot rate is $1.25/CAD, and the 6-month forward rate is $1.3/CAD. You can also buy a 6-month option on Canadian dollars at the strike price of $1.4 /CAD for a premium of $0.10/CAD.

1) If XYZ enters a forward contract today, the guaranteed dollar cost for this CAD obligation today (not in six months) should be $______

2) In six months, if the spot exchange rate turns to be $1.4/CAD. XYZ will be _______ using forward hedge compared with unhedged position. a) better off b) worse off c) indifferent

3) If XYZ wants to hedge the transaction exposure using money market hedge, XYZ should ______________. a) borrow PV of CAD and buy USD today, and deposit USD in the bank and sit on it. b) buy PV of CAD today using USD, and deposit CAD in the bank and sit on it.

4) If XYZ uses MMH, the guaranteed dollar cost today should be $_____

5) At what 6-month forward rate: $ /CAD will XYZ be indifferent between the forward hedge and MMH? Please leave 4 decimal points for your answer.

6) If XYZ wants to hedge the transaction exposure using option hedge, XYZ should ______. a) buy a put option b) sell a put option c) buy a call option d) sell a call option

7) If XYZ hedges the exposure using an option hedge, total option premium: $____ will be paid today. The option premium will grow to $_____ in six months at the US interest rate. In six months, if the spot price is $1.3 per CAD, the option is (in or out) of the money. So, XYZ will buy 100,000 CAD at the price of $ per CAD, which equals to a total cost of $____ After the option premium, the total (net) dollar costs in six month is $____

8) At what future spot exchange rate do you think XYZ will be indifferent between the option and forward hedge?

9) The range that you will prefer option hedge to forward hedge is ________.

A new medical test has been designed to detect the presence of the mysterious Brainlesserian disease. Among those who have the disease, the probability that the disease will be detected by the new test is 0.78. However, the probability that the test will erroneously indicate the presence of the disease in those who do not actually have it is 0.02. It is estimated that 19 % of the population who take this test have the disease.
If the test administered to an individual is positive, what is the probability that the person actually has the disease?

Financial Accounting: Question about Business Ethics

Maurice Stokes was one of the best classmates of Roy Russell while he studied his MBA in the USA. Maurice grew up in Addis Ababa, the capital of Ethiopia. Ethiopia’s GDP per capita ranked 187 out of 191 countries due to adverse geopolitics and civil wars in the past. Maurice is talented and hard working. He went through his bachelor degree in Ethiopia and luckily won a scholarship to study an MBA in the USA. Right after he got his MBA degree, Maurice joined AB&T, the world’s biggest mobile phone service provider, as a management trainee. After 5 years’ working in the USA, Maurice was assigned to work as the Vice President in Addis Ababa, where AB&T’s African headquarter is located, to oversee all African operations.

After his MBA graduation, Roy Russell joined his father’s family business– a medium size mobile phone service provider in Hong Kong. Three years later, AB&T acquired Roy’s family business and retained all existing staff. Roy then became an employee of AB&T and he was happy to work for a multinational company with good reputation. After 3 years’ working as financial controller in AB&T’s Singapore office, Roy was offered an opportunity for promotion to work as chief financial officer (CFO) in its African headquarter in Addis Ababa. Eager to get more international exposure, Roy said yes to this offer. This is how Roy came to a reunion with Maurice.

AB&T provides its senior employees in Addis Ababa with a monthly housing allowance of up to $2,500. Compared with the US standard, most of the housing in Addis Ababa is of low quality, and in many regions the law and order are bad. By giving a generous allowance, AB&T aims to ensure that its senior employees live in areas that are safe, convenient and comfortable to ensure that senior executives can have good rest, that they live in a district that is appropriate to the company’s reputation. For housing allowance claim, senior executives need to hand in their monthly receipts for reimbursement. Every month Maurice submits a bill of $2,500 from his landlord to the finance office for re-imbursement. Roy suggested paying a visit Maurice’s house for a few times. However, every time Maurice rejected this suggestion, claiming that he had never entertained any coworkers at home so that his family members would not be distributed. Roy considered this understandable and so did not insist.

After working for six months in Addis Ababa, Roy had a business dinner with a supplier. The supplier mentioned that Maurice was a neighbor in a district called Winter Town. Winter Town is a district quite far from AT&T’s African office and is well-known for its high crime rate in Addis Ababa. Roy was surprised to hear that, as Maurice told him that he lived in Spring Town, a district that many foreign ambassadors lived and a lot more expensive than Winter Town. Through some connection, Roy verified that what the supplier said was true.

Roy decided to confront Maurice about the housing allowance issue. Maurice at first denied but later admitted that his apartment was in Winter Town and the rent was less than $2,500. He defended his action by saying that “Every AB&T senior executive gets $2,500 a month. If I live in an economically way, why should I be penalized? I just receive the same as others”. As a reply, Roy stressed that “It is AB&T objective to let senior employees to live in a safe place and have good rest for the challenging duties during office hours. Besides, the districts that the company’s senior executives live in represent the image of the company. Moreover, the company’s housing allowance policy is reimbursement on an actual basis, i.e. the amount of monthly claim should be the same as the rental value of the apartment and not to allow staff to make a profit. As the regional CFO, I have to maintain my professional standing”. When Roy challenged Maurice for using falsified rental receipts for disbursement claims, Maurice admitted but replied that this is a common and well-accepted practice in Ethiopia.

Later in the discussion, Maurice tried to convince Roy regarding his housing allowance claim practice. Maurice explained his situation that “You may not understand my situation. I have to save every dollar to pay school fees for my ten nephews and nieces. I got my family members’ great support to finish my education. I owe it to my brothers and sisters to give their children the same chance to study as I did. My parents can never understand why I live in a big apartment instead of helping their grandchildren. I am just doing what I should do. The company has no extra expense to reimburse me $2,500 housing allowance per the monthly receipt I submit. As my old classmate and my best friend, please pretend you know nothing and pay me $2,500 housing allowance as before. As a person grown up in Ethiopia, I know all business practice here and have good connection in this country. I know many senior executives in the government tax department and that will be helpful to your work here. I will fully support you to do an excellent job to save some tax for the benefit of our company. You will be compliment by your boss for paying a lower tax than other companies here”.

Roy does not want to lose his friendship with Maurice and he believes it will make his working life easier if he can make use of Maurice’s connection in Africa. Roy is not sure what should be his next step.

Required

1. Identify the ethical issue, if any, involved in this case?                                
2. Who are the stakeholders in this situation? How are they affected? (Hins: state all stakeholder)   
3. What are Roy’s alternatives? (Hins: state at least 3)
4. What course of action will you suggest Roy Russell to take and justify your suggestion? (Hins: reply the alternative in Q3)

I would like to ask this question about ethics in business. Thank you.

Maurice Stokes was one of the best classmates of Roy Russell while he studied his MBA in the USA. Maurice grew up in Addis Ababa, the capital of Ethiopia. Ethiopia’s GDP per capita ranked 187 out of 191 countries due to adverse geopolitics and civil wars in the past. Maurice is talented and hard working. He went through his bachelor degree in Ethiopia and luckily won a scholarship to study an MBA in the USA. Right after he got his MBA degree, Maurice joined AB&T, the world’s biggest mobile phone service provider, as a management trainee. After 5 years’ working in the USA, Maurice was assigned to work as the Vice President in Addis Ababa, where AB&T’s African headquarter is located, to oversee all African operations.

After his MBA graduation, Roy Russell joined his father’s family business– a medium size mobile phone service provider in Hong Kong. Three years later, AB&T acquired Roy’s family business and retained all existing staff. Roy then became an employee of AB&T and he was happy to work for a multinational company with good reputation. After 3 years’ working as financial controller in AB&T’s Singapore office, Roy was offered an opportunity for promotion to work as chief financial officer (CFO) in its African headquarter in Addis Ababa. Eager to get more international exposure, Roy said yes to this offer. This is how Roy came to a reunion with Maurice.

AB&T provides its senior employees in Addis Ababa with a monthly housing allowance of up to $2,500. Compared with the US standard, most of the housing in Addis Ababa is of low quality, and in many regions the law and order are bad. By giving a generous allowance, AB&T aims to ensure that its senior employees live in areas that are safe, convenient and comfortable to ensure that senior executives can have good rest, that they live in a district that is appropriate to the company’s reputation. For housing allowance claim, senior executives need to hand in their monthly receipts for reimbursement. Every month Maurice submits a bill of $2,500 from his landlord to the finance office for re-imbursement. Roy suggested paying a visit Maurice’s house for a few times. However, every time Maurice rejected this suggestion, claiming that he had never entertained any coworkers at home so that his family members would not be distributed. Roy considered this understandable and so did not insist.

After working for six months in Addis Ababa, Roy had a business dinner with a supplier. The supplier mentioned that Maurice was a neighbor in a district called Winter Town. Winter Town is a district quite far from AT&T’s African office and is well-known for its high crime rate in Addis Ababa. Roy was surprised to hear that, as Maurice told him that he lived in Spring Town, a district that many foreign ambassadors lived and a lot more expensive than Winter Town. Through some connection, Roy verified that what the supplier said was true.

Roy decided to confront Maurice about the housing allowance issue. Maurice at first denied but later admitted that his apartment was in Winter Town and the rent was less than $2,500. He defended his action by saying that “Every AB&T senior executive gets $2,500 a month. If I live in an economically way, why should I be penalized? I just receive the same as others”. As a reply, Roy stressed that “It is AB&T objective to let senior employees to live in a safe place and have good rest for the challenging duties during office hours. Besides, the districts that the company’s senior executives live in represent the image of the company. Moreover, the company’s housing allowance policy is reimbursement on an actual basis, i.e. the amount of monthly claim should be the same as the rental value of the apartment and not to allow staff to make a profit. As the regional CFO, I have to maintain my professional standing”. When Roy challenged Maurice for using falsified rental receipts for disbursement claims, Maurice admitted but replied that this is a common and well-accepted practice in Ethiopia.

Later in the discussion, Maurice tried to convince Roy regarding his housing allowance claim practice. Maurice explained his situation that “You may not understand my situation. I have to save every dollar to pay school fees for my ten nephews and nieces. I got my family members’ great support to finish my education. I owe it to my brothers and sisters to give their children the same chance to study as I did. My parents can never understand why I live in a big apartment instead of helping their grandchildren. I am just doing what I should do. The company has no extra expense to reimburse me $2,500 housing allowance per the monthly receipt I submit. As my old classmate and my best friend, please pretend you know nothing and pay me $2,500 housing allowance as before. As a person grown up in Ethiopia, I know all business practice here and have good connection in this country. I know many senior executives in the government tax department and that will be helpful to your work here. I will fully support you to do an excellent job to save some tax for the benefit of our company. You will be compliment by your boss for paying a lower tax than other companies here”.

Roy does not want to lose his friendship with Maurice and he believes it will make his working life easier if he can make use of Maurice’s connection in Africa. Roy is not sure what should be his next step.

Required

1. Identify the ethical issue, if any, involved in this case?                                     

2. Who are the stakeholders in this situation? How are they affected?

3. What are Roy’s alternatives?   

4. What course of action will you suggest Roy Russell to take and justify your suggestion?

Maurice Stokes was one of the best classmates of Roy Russell while he studied his MBA in the USA. Maurice grew up in Addis Ababa, the capital of Ethiopia. Ethiopia’s GDP per capita ranked 187 out of 191 countries due to adverse geopolitics and civil wars in the past. Maurice is talented and hard working. He went through his bachelor degree in Ethiopia and luckily won a scholarship to study an MBA in the USA. Right after he got his MBA degree, Maurice joined AB&T, the world’s biggest mobile phone service provider, as a management trainee. After 5 years’ working in the USA, Maurice was assigned to work as the Vice President in Addis Ababa, where AB&T’s African headquarter is located, to oversee all African operations.

After his MBA graduation, Roy Russell joined his father’s family business– a medium size mobile phone service provider in Hong Kong. Three years later, AB&T acquired Roy’s family business and retained all existing staff. Roy then became an employee of AB&T and he was happy to work for a multinational company with good reputation. After 3 years’ working as financial controller in AB&T’s Singapore office, Roy was offered an opportunity for promotion to work as chief financial officer (CFO) in its African headquarter in Addis Ababa. Eager to get more international exposure, Roy said yes to this offer. This is how Roy came to a reunion with Maurice.

AB&T provides its senior employees in Addis Ababa with a monthly housing allowance of up to $2,500. Compared with the US standard, most of the housing in Addis Ababa is of low quality, and in many regions the law and order are bad. By giving a generous allowance, AB&T aims to ensure that its senior employees live in areas that are safe, convenient and comfortable to ensure that senior executives can have good rest, that they live in a district that is appropriate to the company’s reputation. For housing allowance claim, senior executives need to hand in their monthly receipts for reimbursement. Every month Maurice submits a bill of $2,500 from his landlord to the finance office for re-imbursement. Roy suggested paying a visit Maurice’s house for a few times. However, every time Maurice rejected this suggestion, claiming that he had never entertained any coworkers at home so that his family members would not be distributed. Roy considered this understandable and so did not insist.

After working for six months in Addis Ababa, Roy had a business dinner with a supplier. The supplier mentioned that Maurice was a neighbor in a district called Winter Town. Winter Town is a district quite far from AT&T’s African office and is well-known for its high crime rate in Addis Ababa. Roy was surprised to hear that, as Maurice told him that he lived in Spring Town, a district that many foreign ambassadors lived and a lot more expensive than Winter Town. Through some connection, Roy verified that what the supplier said was true.

Roy decided to confront Maurice about the housing allowance issue. Maurice at first denied but later admitted that his apartment was in Winter Town and the rent was less than $2,500. He defended his action by saying that “Every AB&T senior executive gets $2,500 a month. If I live in an economically way, why should I be penalized? I just receive the same as others”. As a reply, Roy stressed that “It is AB&T objective to let senior employees to live in a safe place and have good rest for the challenging duties during office hours. Besides, the districts that the company’s senior executives live in represent the image of the company. Moreover, the company’s housing allowance policy is reimbursement on an actual basis, i.e. the amount of monthly claim should be the same as the rental value of the apartment and not to allow staff to make a profit. As the regional CFO, I have to maintain my professional standing”. When Roy challenged Maurice for using falsified rental receipts for disbursement claims, Maurice admitted but replied that this is a common and well-accepted practice in Ethiopia.

Later in the discussion, Maurice tried to convince Roy regarding his housing allowance claim practice. Maurice explained his situation that “You may not understand my situation. I have to save every dollar to pay school fees for my ten nephews and nieces. I got my family members’ great support to finish my education. I owe it to my brothers and sisters to give their children the same chance to study as I did. My parents can never understand why I live in a big apartment instead of helping their grandchildren. I am just doing what I should do. The company has no extra expense to reimburse me $2,500 housing allowance per the monthly receipt I submit. As my old classmate and my best friend, please pretend you know nothing and pay me $2,500 housing allowance as before. As a person grown up in Ethiopia, I know all business practice here and have good connection in this country. I know many senior executives in the government tax department and that will be helpful to your work here. I will fully support you to do an excellent job to save some tax for the benefit of our company. You will be compliment by your boss for paying a lower tax than other companies here”.

Roy does not want to lose his friendship with Maurice and he believes it will make his working life easier if he can make use of Maurice’s connection in Africa. Roy is not sure what should be his next step.

Required

1. Identify the ethical issue, if any, involved in this case?   

2. Who are the stakeholders in this situation? How are they affected?  

3. What are Roy’s alternatives?

4. What course of action will you suggest Roy Russell to take and justify your suggestion?

You have recently been hired by Swan Motors, Inc. (SMI), in its relatively new treasury management department. SMI was founded 8 years ago by Joe Swan. Joe found a method to manufacture a cheaper battery with much greater energy density than was previously possible, giving a car powered by the battery a range of 700 miles before requiring a charge. The cars manufactured by SMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Joe and his family, and it had sales of $97 million last year. SMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. Most sales are online. The customer selects any customization and makes a deposit of 20 percent of the purchase price. After the order is taken, the car is made to order, typically within 45 days. SMI’s growth to date has come from its profits. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Joe has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Joe would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Joe wants you to use the pure play approach to estimate the cost of capital for SMI, and he has chosen Tesla Motors as a representative company. The following questions will lead you through the steps to calculate this estimate.

3. you can use other websites such as marketwatch.com, Bloomberg.com, etc. to find the main competitors of Tesla. Find the beta for each of these competitors, and then calculate the industry average beta. Using the industry average beta, what is the cost of equity? Does it matter if you use the beta for Tesla or the beta for the industry in this case?

Mimi operates Mimi’s Cupcakes, a single store in College Station. She claims that her cupcakes are from an old family-recipe and that is why her shop is so successful. Cakes ‘R Us is a national chain with 1,000 stores in all 50 states. Cakes “R Us claims that Mimi has stolen its proprietary recipe (she did not). Cakes ‘R Us threatens to file a civil lawsuit against Mimi for $1 Million in damages unless she agrees to a contract to share 50% of her profits with the Cakes “R Us. Because she cannot afford an attorney or the cost of litigation, she reluctantly agrees. Later, when Mimi does not share her profits with Cakes ‘R Us, the company sues her for breach of contract. Mimi seeks to defend herself by claiming both undue influence and duress. Under these limited acts, will a court recognize either defense, and explain why or why not.

Airbnb, a popular home-sharing website founded in San Francisco in 2008, offers millions of homes for
short-term rental in more than 190 countries. This company has revolutionized the sharing economy in
the same way that ride-sharing services such as Uber and Lyft have, and according to the company, the
site’s drive to connect hosts and potential renters has been able to contribute to the quality of life of
both homeowners and travelers. According to Airbnb’s press releases and information campaigns, their
services can reduce housing costs for travelers on a budget and can provide unique experiences for
adventurous travelers who wish to have the flexibility to experience a city like a local. The organization
also claims that most of its users are homeowners looking to supplement their incomes by renting out
rooms in their homes or by occasionally renting out their whole homes. According to a statement, most
of the listings on the site are rented out fewer than 50 nights per year.

Despite the carefully crafted messages Airbnb has presented to the public, in 2016 the company came
under intense scrutiny when independent analyses by researchers and journalists revealed something
startling: While some Airbnb hosts did in fact use the services only occasionally, a significant number of
hosts were using the services as though they were hotels. These hosts purchased a large number of
properties and continuously rented them, a practice that affected the availability of affordable housing in
cities and, because these hosts were not officially registered as hoteliers, made it possible for Airbnb
hosts to avoid paying the taxes and abiding by the laws that hotels are subject to.

Title II of the Civil Rights Act of 1964 mandates that hotels and other public accommodations must not
discriminate based on race, national origin, sex, or religion, and Title VIII of the Civil Rights Act of 1968
(also known as the Fair Housing Act [FHA]) prohibits discrimination specifically in housing. However,
Airbnb’s unique structure allows it to circumvent those laws. The company also claims that while it
encourages hosts to comply with local and federal laws, it is absolved from responsibility if any of its
hosts break these laws. In 2017, researcher Ben Edelman conducted a field experiment and found that
Airbnb users looking to rent homes were 16% less likely to have their requests to book accepted if they
had traditionally African American sounding names like Tamika, Darnell, and Rasheed.

These findings, coupled with a viral social media campaign, #AirbnbWhileBlack, in which users claimed
they were denied housing requests based on their race, prompted the state of California’s Department
of Fair Employment and Housing (DFEH) to file a complaint against the company. In an effort to resolve the complaint, Airbnb reported banning any hosts who were found to have engaged in discriminatory
practices, and they hired former U.S. Attorney General Eric Holder and former ACLU official Laura
Murphy to investigate any claims of discrimination within the company.31 In 2016, Airbnb released a
statement outlining changes to company practices and policies to combat discrimination, and while they
initially resisted demands by the DFEH to conduct an audit of their practices, the company eventually
agreed to an audit of roughly 6,000 of the hosts in California who have the highest volume of properties
listed on the site.

Sources: AirBnB Press Room, accessed December 24, 2018, https://press.atairbnb.com/about-us/;
“Airbnb's data shows that Airbnb helps the middle class. But does it?”, The Guardian, accessed December
23, 2018, https://www.theguardian.com/technology/2016/jul/27/airbnb-panel-democratic-nationalconvention-
survey ; and Quittner, Jeremy, “Airbnb and Discrimination: Why It’s All So Confusing”,
Fortune, June 23, 2016, http://fortune.com/2016/06/23/airbnb-discrimination-laws/ (Links to an external site.).

Discussion Questions
1. What are some efforts companies in the sharing economy can take before problems of
discrimination threaten to disrupt operations?
2. Should Airbnb be held responsible for discriminatory actions of its hosts?