7 part a

Year                                      1                              2                              3                             4                              5

Free Cash Flow      $22 million          $26 million          $29 million          $30 million          $32 million

General Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 9% and General Industries has cash of $15 million, debt of $45 million, and 80 million shares outstanding, what is General Industries' expected current share price?

part b 10:

Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems. It has made the above estimates of free cash flows resulting from such a decision. There are concerns of the sensitivity of this project to changes in the cost of capital. For what cost of capital does this project break-even? (Hint...Remember what IRR does!)

part c 11:

the average annual return for the S&P 500 from 1886 to 2006 is 5%, with a standard deviation of 15%. Based on these numbers, what is a 95% confidence interval for 2007's returns?

1.Let us begin our analysis with pairs of years where either GDP or the P index remained the same.

a)From year 2-3, nominal GDP stayed the same while prices rose. Hence real GDP rose/fell?

b)In 3-4 prices stayed the same while nominal GDP fell, so real GDP rose fell?

c)In 4-5 nominal GDP stayed the same while prices fell. Hence real GDP rose/fell?

2. In 5-6 both measures rose but which rose more? If output rises faster than prices then real GDP rises which was/not the case.

3. In 6-7 both measures rose but prices barely rose, so real GDP rose/fell?

a)            CEMENCO Stock Return

Find the Average Return and Risk (as measured by Standard Deviation) of CEMENCO since 2000.

b) You have a portfolio consisting of 20 percent CEMENCO stock (β = 0.81), 40 percent of Monrovia Breweries (Club Beer) stock ((β = 1.67). How much market risk does the portfolio have? How does this compare with the general market?

c) Data from the last eight decades for S & P 500 index yield the following statistics: average excess return = 7.9%; Standard Deviation = 23.2%.

(i)To the extent that these averages approximated investor expectations for the period, what must have been the average coefficient of risk aversion? Formula: E (r_m) – r_f = Ā ẟ²_m

(II)If the coefficient of risk aversion were actually 3.5, what risk premium would have been consistent with the market’s historical standard deviation?

d) A portfolio’s return is 12%, its standard deviation is 20% and the risk-free rate is 4%. Which of the following would make the greatest increase in the portfolio’s Sharpe ratio?

An increase of 1% in expected return?

A decrease of 1% in the risk-free rate?

A decrease of 1% in its standard deviation?

What is (are) the ethical issue(s) in this situation?

What are Jane’s responsibilities as a management accountant?

Has Jane violated any part of the IMA Statement of Ethical Professional Practice? Support your answer.

Which of the following is NOT given as an example of an Institution's setting?

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The appropriate goal of the financial manager is to maximize the firm's profits.

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Finance is:

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Finance originally grew from:

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Which of the following is NOT mentioned as an area in which an asset manager may invest when we think of the Investments sub-field?

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Which of the following business entities is subject to double taxation?

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Investments is taught from:

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If you are interested in working as a financial planner, or want to hire someone to manage your personal assets, which professional designation does the text mention is important?

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The text mentions some historical investment banks. Which of the following is NOT one of them?

Problem 1:

A research laboratory was developing a new compound for the relief of severe cases of hay fever. In an experiment with 36 volunteers, the amounts of the two active ingredients (A & B) in the compound were varied at three levels each. Randomization was used in assigning four volunteers to each of the nine treatments. The data on hours of relief can be found in the following .csv file: Fever.csv

1.1) State the Null and Alternate Hypothesis for conducting one-way ANOVA for both the variables ‘A’ and ‘B’ individually.

1.6) Mention the business implications of performing ANOVA for this particular case study.

A pharmaceutical company has developed a drug to treat depression. To determine who best benefits from the drug, they tested it with multiple age groups. Ten participants with major symptoms of depression were recruited from each age group; all participants took the drug for 1 month. At the end of the month, depression was measured using a depression rating scale (1 = least depressed and 20 = most depressed). The group data follow. Is there a difference in depression symptoms? If so, which age group(s) seem(s) to benefit more from the drug? Children Young Adults Older Adults M1 = 18 M2 = 7.8 M3 = 6.8 ΣX2 = 4,524 n1 = 10 n2 = 10 n3 = 10 G = 326 T1 = 180 T2 = 78 T3 = 68 N = 30 SS1 = 24 SS2 = 93.6 SS3 = 95.6 k = 3 a. State your hypotheses and set criteria for rejection of the null (α=.05). b. Calculate the test statistic (show ALL work with appropriate notation - if long decimals are involved, maintain 3 decimals in your formulas). State whether or not you can reject the null. c. Organize your findings in an ANOVA table (round to 3 decimals) d. Calculate η2 . Round to 3 decimals if necessary. State whether the effect size is small, medium, or large. Ignore this one. e. If appropriate, conduct post-hoc tests using Tukey’s HSD. (q table: if two values are possible, choose the larger q value) f. Write a conclusion that summarizes what you’ve found. Be sure to mention the drug, age groups, depression symptoms, and the appropriate stats (round to 3 decimals). If you conducted post-hoc tests, summarize those results as well.

Nurses, Pharmacy Technicians, Lab Assistants and other health care workers are expected to make decisions on a daily basis and many spend their entire working day trying to solve problems in order to get their work done. Most health care professionals, if you asked them, would tell you that they have good reasons for the decisions they make, and that they have a process for problem solving. But, do they?

• Do they use defined and established elements of reasoning for decision-making and problem solving?
• Do they recognize the assumptions they make about clients and situations and the negative results those assumptions can have?
• Do they avoid mistakes in reasoning?

The purpose of this assignment is to help you see how you make decisions and problem solve. Read the 3 scenarios and answer the following questions for EACH scenario. Be sure to explain why you have answered in the way that you have.

1. What assumptions have been made in each scenario?

(definition of assumption – a thing that is accepted as true or certain to happen, without proof)

2. What are the consequences if those assumptions are incorrect?

(definition of consequence – a result or effect of an action or condition, usually thought of as a negative)

3. Put yourself into the situation and tell me how you would have handled it differently.

Scenario #3: 5 points

You are working the night shift in ER, and you've had more patients than usual. The local police phone to say that they handled a call from a local bar for the paramedics. Now the police are headed into the station for a break, and they mention that they have a man in their patrol car, "out-like-a-light," that they picked up in the bar and they "Just want to let you know." Another drunk you think as you hang up; probably fell off a bar stool. In fact, you're happy the police picked this one up, because the paramedics would have brought him to the ER.