The age for COVID-19 patients in a country is normally distributed with mean 57.6 years and standard deviation 28 years. A COVID-19 patient was randomly selected from that country. Find the probability that this patient
(i) is below 50 years.
(ii) is between 30 and 75 years.
(iii) 5% of the patients are above k years old. Find k.
(b) The number of COVID-19 patients in 5 different countries are shown in the table below.
Country A B C D E Number of patients 1006 112 1104 926 1852 Test at 10% significance level, if the number of COVID-19 patients is evenly distributed among the five countries.

(c) In 2019, 20% of the students at University X are from China. In a random sample of 500 university students selected recently, it is found that that 130 of them are from China. Test if there is an increase in the percentage of China students in University X at 3% significance level.

Quest for Wisdom

Please write a one page double spaced response to Oscar Wilde’s insight that it is “through art and through art only, that we can shield ourselves from the sordid perils of actual existence.” Art according to Wilde protects us from the Real, from the actual, by transporting us into the virtual. Art provides us with a world of antiseptic safety. Art for Wilde is preferable to life because, “We weep but are not wounded. We grieve but our grief is not bitter.” Art for Wilde transforms the real into the virtual. Is it not the other way around, namely that art must force us to confront the real. Can Art can heal us when it forces us to confront our fictions?

1. An airport limousine can accommodate up to 4 passengers on any one trip. The company will accept a maximum of 6 reservations for a trip, and a passenger must have a reservation. From previous records, 20% of all those making reservations do not show up for the trip. Answer the following questions assuming independence wherever appropriate.

   A) Assume that six reservations are made. Let X = the number of customers who have made a reservation and show up for the trip. Find the probability distribution function of X in table form.
2. B)Assume that six reservations are made. What is the probability that at least one individual with a reservation shows cannot be accommodated on the trip?
3. C)Assume that six reservations are made. What is the expected number of available places when the limousine departs?
4. Suppose that the probability distribution of the number of reservations made is given by the accompanying table. Let Y denote the number of passengers on a randomly selected trip.
5. D) Obtain the probability distribution function of Y in table form.The possible values for Y are 0, 1, 2, 3, 4. You are still assuming that 20% of passengers who have made a reservation do not show up.
6. E) Find the expected value of Y.

You will suggest a business to your client describing the following:

1. Identify a business opportunity in relation to the existing Canadian business environment.
2. Identify a product, either a good or a service, that will take advantage of this opportunity.
3. Who is your competition for this product, either direct competition or substitute products?
4. Thinking about your business venture, identify at least three ethical issues that could potentially arise.
5. Should your venture have a formal statement of company practices and business ethics or simply rely on your own individual ethical standards? What are the pros and cons of each approach?
6. Who are the primary stakeholders in your new venture? Rank them in order of their relative importance.
7. Does it make sense for a new business to develop a formal social responsibility program? Why or why not?
8. For the specific business you are starting, does it make more sense to start from scratch, to buy an existing business, or to buy a franchise? Why?
9. How will you most likely finance your new venture?
10. What factors will most likely contribute to your success? What factors might cause your business to fail? Is there a way to minimize or eliminate these risk factors?
11. What form of ownership will your group use? What are the advantages and disadvantages of this approach?

Governor Gavin Newsom recently signed 25 bills aimed at setting a path to reform California’s criminal justice system. The bills include support for those reentering the community after serving their sentences, including creating a system to automatically expunge records of individuals previously convicted of low-level offenses, as well as reform unfair sentencing practices, and enhance support for victims of crime.

“I am signing more than two dozen bills that give hope to those that have earned a second chance in our communities, and also support victims of crime,” said Governor Newsom. “These bills show a new path to ensure our state moves closer toward a more equitable criminal justice system.”

Research these reforms and let me know what do you think of such reforms. The clear trend of these reforms is toward rehabilitation of offenders and away from incarceration of these individual. Is this a positive trend?

400 words or more

1. Donald Trump promised a more aggressive fiscal policy with a large increase in spending and significant tax cuts leading to a much larger government (budget) deficit. The US economy was at near the full employment (the unemployment rate in the US was low below 5%), what do you expect will be the response of the US Central Bank in terms of changes to the cash rate? Explain.

2. The Central Bank of New Zealand has a higher inflation target than the Reserve Bank of Australia. Does this tend to depreciate or appreciate the New Zealand dollar against the Australian dollar? Explain

3. What are the reasons for increasing convergence between emerging economies (defined as countries with lower GDP per capita but growing rapidly) and advanced economies (countries with high GDP per capita but lower growth)? Explain.

4. You have successfully secured the mortgage of worth in $1,000,000 from the Bank to purchase a house. After the contract has been written, inflation in the economy turned out to lower than what was expected. Who gained and lost from this development? Explain.

Answer

5. The government (and the central bank) has an easier job of dealing with the macroeconomic impacts of consumers and investors being pessimistic about the future of the economy than the period of stagflation. Do you agree? Explain

Answer

1. An investor purchases 400 shares at $21.40 a share, holds the stock for 30 weeks, and then sells the stock for $24.60 a share. Use the commission schedule below from Company A to find the annual rate of interest earned by the investment.

Company A

Principal

Under $3,000

$3,000-$10,000

Over $10,000

Commission

$25 + 1.8% of principal

$37 + 1.4% of principal

$107 + 0.7% of principal

2. Find the annual percentage yield (APY) for money invested at an annual rate of (a) 3.05% compounded quarterly. (b) 2.95% compounded continuously. As an investor what is the preferable interest plan?

Topics and Key Questions - Walmart company

I. Corporate Governance Analysis Is this a company where there is a separation between management and ownership? If so, how responsive is management to stockholders? How does this firm interact with financial markets?

How do markets get information on the firm?

How does this firm view its social obligations and manage its image in society?

II. Stockholder Analysis

Who is the average investor in this stock? (Individual or pension fund, taxable or taxexempt, small or large, domestic or foreign)

Who is the marginal investor in this stock? III. Risk and Return What is the risk profile of your company?

(How much overall risk is there in this firm? Where is this risk coming from (market, firm, industry or currency)?

How is the risk profile changing?)

What is the performance profile of an investment in this company?

What return would you have earned investing in this company's stock?

Would you have under or out performed the market?

How much of the performance can be attributed to management?

How risky is this company's equity? Why? What is its cost of equity?

How risky is this company's debt? What is its cost of debt?

What is this company's current cost of capital?

IV. Measuring Investment Returns

Is there a typical project for this firm? If yes, what would it look like in terms of life (long term or short term), investment needs and cash flow patterns?

How good are the projects that the company has on its books currently?

Are the projects in the future likely to look like the projects in the past? Why or why not?

V. Capital Structure Choices

What are the different kinds or types of financing that this company has used to raise funds?

Where do they fall in the continuum between debt and equity?

How large, in qualitative or quantitative terms, are the advantages to this company from using debt? How large, in qualitative or quantitative terms, are the disadvantages to this company from using debt?

From the qualitative trade off, does this firm look like it has too much or too little debt?

VI. Optimal Capital Structure

Based upon the cost of capital approach, what is the optimal debt ratio for your firm? Bringing in reasonable constraints into the decision process, what would your recommended debt ratio be for this firm?

Does your firm have too much or too little debt relative to the sector?

Does your firm have too much or too little debt relative to the market?

VII. Mechanics of Moving to the Optimal

If your firm's actual debt ratio is different from its “recommended" debt ratio, how should they get from the actual to the optimal? In particular, should they do it gradually over time or should they do it right now? Should they alter their existing mix (by buying back stock or retiring debt) or should they take new projects with debt or equity? What type of financing should this firm use? In particular, should it be short term or long term? What currency should it be in? What special features should the financing have?

VIII. Dividend Policy

How has this company returned cash to its owners? Has it paid dividends, bought back stock or spun off assets?

Given this firm's characteristics today, how would you recommend that they return cash to stockholders (assuming that they have excess cash)?

IX. A Framework for Analyzing Dividends

How much could this firm have returned to its stockholders over the last few years? How much did it actually return?

Given this dividend policy and the current cash balance of this firm, would you push the firm to change its dividend policy (return more or less cash to its owners)? How does this firm's dividend policy compare to those of its peer group and to the rest of the market?

X. Valuation

What type of cash flow (dividends, FCFE or FCFF) would you choose to discount for this firm? What growth pattern (Stable, 2-stage, 3-stage) would you pick for this firm? How long will high growth last? What is your estimate of value of equity in this firm? How does this compare to the market value? What is the "key variable" (risk, growth, leverage, profit margins...) driving this value? If you were hired to enhance value at this firm, what would be the path you would choose?

Topics and Key Questions - Walmart Company

I. Corporate Governance Analysis

Is this a company where there is a separation between management and ownership? If so, how responsive is management to stockholders?

How does this firm interact with financial markets? How do markets get information on the firm?

How does this firm view its social obligations and manage its image in society?

II. Stockholder Analysis

Who is the average investor in this stock? (Individual or pension fund, taxable or taxexempt, small or large, domestic or foreign)

Who is the marginal investor in this stock?

III. Risk and Return

What is the risk profile of your company? (How much overall risk is there in this firm? Where is this risk coming from (market, firm, industry or currency)?

How is the risk profile changing?)

What is the performance profile of an investment in this company?

What return would you have earned investing in this company's stock?

Would you have under or out performed the market?

How much of the performance can be attributed to management?

How risky is this company's equity? Why? What is its cost of equity?

How risky is this company's debt? What is its cost of debt?

What is this company's current cost of capital?

IV. Measuring Investment Returns

Is there a typical project for this firm? If yes, what would it look like in terms of life (long term or short term), investment needs and cash flow patterns?

How good are the projects that the company has on its books currently?

Are the projects in the future likely to look like the projects in the past? Why or why not?

V. Capital Structure Choices

What are the different kinds or types of financing that this company has used to raise funds?

Where do they fall in the continuum between debt and equity?

How large, in qualitative or quantitative terms, are the advantages to this company from using debt? How large, in qualitative or quantitative terms, are the disadvantages to this company from using debt?

From the qualitative trade off, does this firm look like it has too much or too little debt?

VI. Optimal Capital Structure

Based upon the cost of capital approach, what is the optimal debt ratio for your firm?

Bringing in reasonable constraints into the decision process, what would your recommended debt ratio be for this firm?

Does your firm have too much or too little debt relative to the sector?

Does your firm have too much or too little debt relative to the market?

VII. Mechanics of Moving to the Optimal

If your firm's actual debt ratio is different from its “recommended" debt ratio, how should they get from the actual to the optimal?

In particular, should they do it gradually over time or should they do it right now? Should they alter their existing mix (by buying back stock or retiring debt) or should they take new projects with debt or equity?

What type of financing should this firm use? In particular, should it be short term or long term? What currency should it be in? What special features should the financing have?

VIII. Dividend Policy

How has this company returned cash to its owners? Has it paid dividends, bought back stock or spun off assets? Given this firm's characteristics today, how would you recommend that they return cash to stockholders (assuming that they have excess cash)?

IX. A Framework for Analyzing Dividends

How much could this firm have returned to its stockholders over the last few years? How much did it actually return?

Given this dividend policy and the current cash balance of this firm, would you push the firm to change its dividend policy (return more or less cash to its owners)?

How does this firm's dividend policy compare to those of its peer group and to the rest of the market?

X. Valuation

What type of cash flow (dividends, FCFE or FCFF) would you choose to discount for this firm?

What growth pattern (Stable, 2-stage, 3-stage) would you pick for this firm? How long will high growth last? What is your estimate of value of equity in this firm?

How does this compare to the market value?

What is the "key variable" (risk, growth, leverage, profit margins...) driving this value? If you were hired to enhance value at this firm, what would be the path you would choose?

The University of Kentucky Builds with Bonds

Every year, hundreds of colleges around the country build new buildings. Where do most schools get the money for these expensive projects? From long-term bonds.   

The University of Kentucky (UK) has issued “revenue” bonds to build buildings on the 23,000 student Lexington campus, and on 14 community colleges throughout the state. These bonds pledge the school’s revenues as collateral to guarantee payment of the bonds. At one time the outstanding debt on the Lexington campus buildings was $137 million. The total debt on the community college buildings equaled $121 million. The bonds generally have maturities ranging from 10 to 20 years.

Additional “guarantees” for bond purchasers are the ratings given the bonds by professional rating agencies.   Their bonds are rated “AA-“ by Standard & Poor’s Corporation, which is well above investment grade. Thee is always a very good market for the bonds.

People in Kentucky identify very closely with the university. Even though the bonds are rated “AA-” they trade at AAA (the top bond rating) because they are so easy to sell.  

One advantage for investors: the bonds’ interest revenue id exempt from federal income tax and from state tax for in-state investors. So, an issue offering 6% is the equivalent of 10% to those individuals in the top tax bracket. Many investors feel very confident in buying the bonds, because it is inconceivable to them that there would ever e a default.  

1) The University of Kentucky’s bonds are rated “AA-“ by Standard & Poor’s and A1 by Moody’s Investor Service. Why is it important to the University of Kentucky that its bonds have a high bond rating?

2) Why does the state use bonds to finance the buildings rather than taking the funds out of general revenues?

3) Explain the meaning to the tax-exempt status of the University of Kentucky bonds. What does it mean to say that “a recent issue offering 6% is the equivalent of 10% to those individuals in the top tax bracket?”