Between about December 2007 and June 2009, the United States was considered to be in a recession. The U.S. Gross Domestic Product fell approximately 3% from the third quarter of 2008 to the third quarter of 2009. Also, during December 2007 and June 2009, the Standard and Poor’s 500 index dropped by 38% and the unemployment rate climbed from 5% to 9.5%.

The macroeconomic situation affected almost all companies since higher unemployment affected personal consumption, which dropped from 10,140.3 Billion Dollars in Aug 2008 to 9,807 Billion Dollars in June 2009, a drop of 3.8 percent.

Starbucks is one of the companies affected by the December 2007 recession. The following table shows several ratios for Starbucks corresponding to the years 2006, 2007, and 2008. Use a stock price of 10.9 dollars per share for the year 2009.

By using the financial statements provided, calculate the ratios presented in the table for the year 2009 and answer the following questions:

a-       Were sales per dollar of assets impacted by the recession?

b-      which ratio shows the impact of the recession on sales per dollar of assets?

c-       Did the company operating profit margin increased, decreased, or was the same, between the years 2007 and 2009?

d-      Did the mix of debt and equity changed for Starbucks between the years 2007 and 2009?

e-      In what ratio can you see the change in the mix of debt and equity reflected?

f-        Did the value added by management, reflected in market to book ratio, increased or decreased between the years 2007 and 2009?

g-       Did the quick ratio increase or decrease between the years 2007 and 2009?

h-      Explain why you expect the quick ratio to increase or decrease during a recession?

i-        Use the ratios for the years 2007 and 2009 to explain if, in your view, Starbucks is in a better or worse situation in the year 2009 due to the recession.

j-        What areas should Starbucks improve for the years 2010 onwards, if any?

Suppose the mean salary for assistant finance professors in the United States is believed to be $131,600. A sample of 25 professors revealed a mean salary of $142,400 . Assuming the standard deviation is $10,000, can it be concluded that the average salary has increased using a 0.02 level of significance?

a. Write down the type of test you will conduct.

b. Write down the null and alternative hypotheses.

c. Construct the test statistic.

d. Conduct the test.

e. What do you conclude?

10. The nominal salaries paid to the President of the United States, along with data for the Consumer Price Index (CPI) for various years, are given below. Calculate the real presidential salaries in dollars (not cents) based on year 2000 dollars? Enter you answers in the space provided in the table. Show your work in the space below the table.

                        Nominal                      Average Annual CPI              Real

Year                Presidential Salary      (1982-84 = 100)                      Presidential Salary

1920                $75,000                       20.0                                         _______________

1940                $75,000                       14.0                                         _______________

1960                $100,000                     29.6                                         _______________

1980                $200,000                     82.4                                         _______________

2000                $400,000                     172.2                                       $400,000

If you were the President of the United States and had to choose between spending on improvements in infrastructure (bridges, roads, trains, etc.), providing health care guarantees to families, or enhancing our military strength, which would you choose? Explain why in as much detail as possible.

For this assignment I want you to assume you are the President of the United States, and China (one of our largest export customers) decides to ban all imports from the U.S. What effect would that have on the U.S. economy? Consider AD, unemployment, inflation, and recession as you contemplate your answer. Once you have determined a potential danger to our economy, what fiscal policy tool would you use to mitigate the damage of China’s decision?

In many cities and towns across the United States, the numbering system of the roads is based on a grid, similar to the latitude and longitude lines on a globe. Suppose the green lines in the following graph represent two east-west and two north-south running roads in a Midwestern town.

Write equations for the two horizontal and two vertical lines that represent roads in the town.






2. The Willis Tower (formerly known as the Sears Tower) in Chicago, Illinois, is the tallest building in the United States. Measuring 1,450 feet, the tower contains 110 stories filled with a combination of office and retail space. The base of the tower is made up of nine 75’ × 75’ squares. Suppose the square graphed on the coordinate plane below represents the base of the Willis Tower.

Write equations for the two horizontal and two vertical lines that pass through the square.



3. Think of another real-world situation that might involve horizontal and vertical lines. Write a description of the situation and draw the graph of a coordinate plane with two horizontal and two vertical lines to represent your situation. Draw the lines so that two of them pass through positive values and the other two pass through negative values on the coordinate plane. Then write equations for all four of the lines on your graph.

For a certain drug, based on standards set by the United States Pharmacopeia (USP) - an official public standards-setting authority for all prescription and over-the-counter medicines and other health care products manufactured or sold in the United States, a standard deviation of capsule weights of less than 1.9 mg is acceptable. A sample of 34 capsules was taken and the weights are provided below:

(Note: The average and the standard deviation of the data are respectively 120.2 g and 2.06 g.)

At 1% significance level, test the claim that the standard deviation of capsule weights of the drug is greater than 1.9 g.

Procedure: Select an answer One variance χ² Hypothesis Test One proportion Z Hypothesis Test One mean Z Hypothesis Test One mean T Hypothesis Test

Assumptions: (select everything that applies)

• Population standard deviation is unknown
• Sample size is greater than 30
• Simple random sample
• Population standard deviation is known
• Normal population
• The number of positive and negative responses are both greater than 10

Step 1. Hypotheses Set-Up:

Step 2. The significance level α=α= %

Step 3. Compute the value of the test statistic: Select an answer z₀ χ²₀ t₀ f₀  = (Round the answer to 3 decimal places)

Step 4. Testing Procedure: (Round the answers to 3 decimal places)

Step 5. Decision:

Conclusion: Select an answer Reject the null hypothesis in favor of the alternative. Do not reject the null hypothesis in favor of the alternative.

Step 6. Interpretation:

At 1% significance level we Select an answer DO NOT DO  have sufficient evidence to reject the null hypothesis in favor of the alternative hypothesis.

Suppose that a foreign citizen and resident is considering immigration into the United States and owns both appreciated assets (value greater than basis) and depreciated assets (value less than basis) that she is thinking of selling. What practical tax planning steps should be suggested?

For a certain drug, based on standards set by the United States Pharmacopeia (USP) - an official public standards-setting authority for all prescription and over-the-counter medicines and other health care products manufactured or sold in the United States, a standard deviation of capsule weights of less than 0.8 mg is acceptable. A sample of 20 capsules was taken and the weights are provided below:

(Note: The average and the standard deviation of the data are respectively 119.8 g and 0.73 g.)

At 5% significance level, test the claim that the standard deviation of capsule weights of the drug is different from 0.8 g.

Procedure: Select an answer One mean Z Hypothesis Test One mean T Hypothesis Test One proportion Z Hypothesis Test One variance χ² Hypothesis Test

Assumptions: (select everything that applies)

• Normal population
• Sample size is greater than 30
• The number of positive and negative responses are both greater than 10
• Population standard deviation is unknown
• Population standard deviation is known
• Simple random sample

Step 1. Hypotheses Set-Up:

Step 2. The significance level α=α= %

Step 3. Compute the value of the test statistic: Select an answer z₀ f₀ χ²₀ t₀  = (Round the answer to 3 decimal places)

Step 4. Testing Procedure: (Round the answers to 3 decimal places)

Step 5. Decision:

Conclusion: Select an answer Do not reject the null hypothesis in favor of the alternative. Reject the null hypothesis in favor of the alternative.

Step 6. Interpretation:

At 5% significance level we Select an answer DO DO NOT  have sufficient evidence to reject the null hypothesis in favor of the alternative hypothesis.

In 1898 the United States and Spain fought a war over the U.S. intervention in the Cuban War of Independence. At that time the U.S. military was concerned about the nutrition of its recruits. Many did not have a sufficient number of teeth to chew the food provided to soldiers. As a result, it was likely that they would be undernourished and unable to fulfill their duties as soldiers. The require-ments at that time specified that a recruit must have "at least four sound double teeth, one above and one below on each side of the mouth, and so opposed" so that they could chew food. Of the 58953 recruits who were under the age of 20, 63 were rejected for this reason. For the 43786 recruits who were 40 or over, 3829 were rejected.

(a) Find the proportion of rejects for each age group ( ±± 0.0001).

pˆ<20p^<20 =

pˆ40+p^40+ =

(b) Find a 99% confidence interval ( ±± 0.001) for the difference in the proportions.

A 99% confidence interval is from to

(c) Use a significance test to compare the proportions ( ±± 0.001)

pˆp^ =

zz =

PP -value =

Conclusion

We have evidence to conclude there was an age group difference in the rejection rate

OR

We have no evidence to conclude that there was an age group difference in the rejection rate