The following table repeats the annual total returns on the MSCI Germany Index previously given and also gives the annual total returns on the JP Morgan Germany five- to seven-year government bond index (JPM 5–7 Year GBI, for short). During the period given in the table, the International Monetary Fund Germany Money Market Index (IMF Germany MMI, for short) had a mean annual total return of 4.33 percent. Use that information and the information in the table to answer the following questions.

a) Using the IMF Germany MMI as a proxy for the risk-free return, calculate the Sharpe ratio for:

(i) the 60/40 equity/bond portfolio described in Problem 12.

(ii) the MSCI Germany Index.

(iii) the JPM Germany 5–7 Year GBI.

b) Contrast the risk-adjusted performance of the 60/40 equity/bond portfolio, the MSCI Germany Index, and the JPM Germany 5–7 Year GBI, as measured by the Sharpe ratio.

Throughout 2019, H had 15,000,000 shares of common stock issued and outstanding and 100,000 shares of 5%, $100 par value cumulative preferred stock issued and outstanding. H's net income for 2019 was $7,700,000. During 2019 H neither declared nor paid any kind of dividend. H's income tax rate is 25%.

• During the entire year ending 12-31-19, H had 750,000 outstanding and exercisable employee stock options that were granted to employees during 2016. Each option has an exercise price of $40 per share of H common stock. During 2019, the average market price of H's common stock was $60 per share.
• As of 12-31-19, H had $3,000,000 of 6%, 15-year convertible bonds. H issued the bonds at par during 2005. The bonds can be converted into 40,000 shares of H's common stock.
• As of 12-31-19, H had $40,000,000 of 8%, 40-year convertible bonds. H issued the bonds at par during 1995. The bonds can be converted into 300,000 shares of H's common stock.

What will H report as basic EPS for the year ended 12-31-19?

What will H report as diluted EPS for the year ended 12-31-19?  

Use the procedure outlined in Section 11.6.2 on p.262 of textbook and the annual percentage default rate for all rated companies in Table 11.6 on p.259,

a. Estimate the probability of default (PD) and default correlation (ρ) for the period 1970-1993, and for the period 1994-2016 separately.

b. Plot the probability distribution of default rate (similar to Figure 11.6 on p.263) for the time period 1970-1993 and 1994-2016 together on the same graph.

Textbook Risk Management and Financial Institutions, 5th Edition

Create an application named Rusty2 that asks the user for the dealer cost of a car, and the cleaning cost, and then displays the retail cost. Your application should simply send the dealer cost and cleaning cost to the getRetailPrice method in the Dealership class to obtain the retail cost.

here below is the dealership class code amd meed to create rusty2 code

import java.util.Calendar;
public class Dealership {

// public static final class variables

public static final int YEAR_STARTED = 1995;
public static final String COMPANY_NAME = "The Rusty Lemon";
public static final String COMPANY_URL = "www.TheRustyLemon.com";
public static final String COMPANY_ADDRESS = "123 Rustbelt Road, Somewhere, SomeState, 12345";
public static final String COMPANY_SLOGAN = "Many parts of our cars run great!";
public static final double STANDARD_MARKUP = 0.50;
public static final String COMPANY_EMAIL = "[email protected]";

// public static methods

public static String getCompanyBanner() {

return COMPANY_NAME + "\n(Selling rusty lemons since "
+ YEAR_STARTED + ")\n" + COMPANY_ADDRESS + "\n"
+ COMPANY_URL + "\n" + COMPANY_SLOGAN + "\n";

}

public static double getRetailPrice(double dealerCost, double cleaningCost) {

double markup = dealerCost * STANDARD_MARKUP;
return dealerCost + cleaningCost + markup;

}
public static int getYearsInBusiness()
{
int currentYear = Calendar.getInstance().get(Calendar.YEAR);
int yearsInBusiness = currentYear - YEAR_STARTED;
return yearsInBusiness;

}
}

4. In late 1994 there was a political and financial crisis in Mexico. Foreign investors withdrew their funds from the country while Mexicans pulled their money out of domestic banks and switched to foreign assets. The Mexican central bank at that time maintained a fixed peso/dollar exchange rate (P/$).

a. Show on a graph the situation that the Mexican central bank faced in the foreign exchange market and explain what it was required to do.

b. Explain how the central bank’s actions affected the Mexican money supply.

c. In early 1995 the Mexican government had to abandon the fixed rate, and the peso depreciated. What would have prompted this move? d. Was the depreciation beneficial for the Mexican economy? (Hint: is there a single answer to this question?)

5. The demand and supply of foreign exchange in the Eurozone (the European countries that use the euro) are given by:

Q^D = 36 – 6 (e)

Q^S = 18 + 3 (e), where e = €/$, the price of a U.S. dollar in Euros

a. If the exchange rate is set in the foreign exchange markets, what will the exchange rate be?

b. The European Central Bank (ECB) plans to fix the exchange rate at 3 €/$. What must the ECB do to maintain the exchange rate at this level?

c. What will be the impact on the Eurozone’s money supply?

d. What could the ECB do to reverse the impact of the foreign exchange market operation?

The table contains real data for the first two decades of AIDS reporting.

1.) Graph “year” versus “# AIDS cases diagnosed” (plot the scatter plot). Do not include pre-1981 data. In excel using formula's

2.) Find the regression equation, Interpret slope, Find r. and Describe linear correlation.

3.) When x = 1985, ŷ = _____

When x = 1990, ŷ =_____

When x = 1970, ŷ =______ Why doesn’t this answer make sense?

4.)  What does the correlation imply about the relationship between time (years) and the number of diagnosed AIDS cases reported in the U.S.?

The Omega’s Positioning Strategy Priced in excess of $2,000, the luxury watch industry is dependent on promotions and product features to attract the consumer. Omega SA (Omega), the third largest luxury watch maker in the world, is the pioneer of celebrity endorsement in the luxury watch industry. The company, which introduced celebrity endorsement in 1995, has featured many charming young men and women confirming Omega as the watch of their choice. The chosen brand ambassadors have been leaders in the field of fashion, sports and the performing arts. Apart from celebrity endorsements, Omega associates itself with, and ensures its product placement with landmark events. The case also traces the evolution of Omega’s advertising strategy. With luxury watches growing in popularity as a status and lifestyle statement, Omega is looking beyond the mature markets of Europe and America, to the new developing markets in the Middle East, India and China. It has unveiled a strategy tailored to drive growth in these promising markets. Q. 5. Luxury watch brands like Rolex are already well established in the Middle Eastern, Indian and Chinese markets. What shall be the competitive strategy by Omega to make this brand a success in the new markets? Q. 6. Keeping in mind the cultural changes of Western and Eastern countries, what challenges for the Demographic, Social and Psychographic Factors Omega has to face in the target markets? Q. 7. With reference to advertising, do you suggest that Omega should continue the same advertising strategy in the new markets?

a)

b)

c)

How do you interpret the price indices in Exhibit 3? How do economists construct them? Use Excel regression to analyze the relationship between the adjusted price index (dependent variable and year (independent variable). Interpret your regression findings by discussing the coefficient of determination (R-squared), the regression coefficient, the regression equation, and the p value.   Can you use the regression equation to predict the price indices? Take into account statistical, macroeconomic, and other considerations.

EXHIBIT 3

Cost Data for Financial Reporting and Special Order Decisions Friendly Greeting Card Company produces a full range of greetings cards sold through pharmacies and department stores. Each card is designed by independent artists. A production master is then prepared for each design. The production master has an indefinite life. Product designs for popular cards are deemed to be valuable assets. If a card sells well, many batches of the design will be manufactured over a period of years. Hence, Friendly Greeting maintains an inventory of production masters so that card may be periodically reissued. Cards are produced in batches that may vary by increments of 1,000 units. An average batch consists of 10,000 cards. Producing a batch requires placing the production master on the printing press, setting the press for the appropriate paper size, and making other adjustments for colors and so forth. Following are facility-, product-, and unit-level cost information:

Product design and production master per new card…………… $ 2,000.00

Batch setup (typically per 10,000 cards)…………………………. 200.00

Materials per 1,000 cards………………………………………….. 100.00

Conversion per 1,000 cards……………………………………….. 80.00

Shipping Per batch…………………………………………………………... 25.00

Per card……………………………………………………………. 0.02

Selling and administrative

Companywide…………………………………………………….. 200,000.00

Per product design marketed…………………………………… 500.00

Information from previous year...

Products designs and masters prepared for new cards……….. 90

Product designs marketed………………………………………… 120

Batches manufactured…………………………………………….. 500

Cards manufactured and solid……………………………………. 5,000,000

QUESTIONS:

a. Describe how you would determine the cost of goods sold and the value of any ending inventory for financial reporting purposes. (No computations are required.)

b. You have just received an inquiry from Walgreens stores to develop and manufacture 20 special designs for sale exclusively in Walgreens stores. The cards would be sold for $1.50 each, and Walgreens would pay Friendly Greeting $0.35 per card. The initial order is for 20,000 cards of each design. If the cards sell well, Walgreens plans to place additional orders for these and other designs. Because of the preestablished sales relationship, no marketing costs would be associated with the cards sold to Walgreens. How would you evaluate the desirability of the the Walgreens proposal?

c. Explain any differences between the costs considered in your answer to requirements (a) and the costs considered in your answers to requirements (b).