The CEO of a computer hardware company notices that its sales are concentrated at the beginning of each quarter and at the end of each quarter, with few sales in the middle. Sales at the beginning of the quarter and at the end of the quarter have much lower prices, about 10% lower than earlier sales. Why?

In the midst of labor negotiations, the CEO of a company argues that the company’s blue-collar workers, who are paid an average of $30,000 a year, are well paid because the mean annual income of all blue-collar workers in the country is less than $30,000. That figure is disputed by the union, which does not believe that the national mean blue-collar income is less than $30,000. An arbitrator draws a random sample of 150 blue-collar workers from across the country and asks each to report his or her annual income. She calculates the sample mean income x = $29,120 and the sample standard deviation s = $8,000. If the population mean annual income of blue-collar workers is less than $30,000 she will order the CEO to make bargaining concessions. a. Test whether the population mean annual income of blue-collar workers is less than $30,000 with a 95% confidence level. The z-critical value for this test is 645 1. z  z0.05  . Show all your steps clearly. b. Explain what is meant by the term “statistically significant”. Is the result you obtained in part a statistically significant?

The CEO of the company claims that the mean work day of the company’s mechanical engineers is less than 8.5 hours. A random sample of 25 of the company’s mechanical engineers has a mean work of 8.2 hours. Assume the population standard deviation is 0.5 hour and the population is normally distributed. At ​​α​​​​ = 0.01, test the CEO’s claim.

• State Ho and Ha and identify the claim.
• State the tail of the hypothesis test.
• State the level of significance.
• State the critical value and explain why you chose a z or a t-test.
• Complete the hypothesis test.
• State your conclusion.
• Discuss the possibility of a Type I or Type II error.

The CEO of Travel the World, Inc. would like to grow the company to $560,500 in sales next year. The finance officer has compiled the data below for the current year. Assets and costs will grow proportionate to sales; debt and equity will not. The dividend payout RATIO will be the same as current year. What is External Financing Needed?

Current Year Data


Sales 480,000
Costs 235,000
Tax rate 21%
Assets 1,400,000
Debt 550,000
Equity 850,000
Dividends 58,880

A company has stores in different countries. The CEO is not sure about the profitability of three stores. The following table includes the revenues and costs of these three stores in the year ended (in euros) :

Should any of the stores be closed as soon as possible? Choose the appropriate decision for each store on the assumption that closing one store will not affect any other stores and total head office costs would not decrease if any of the stores were closed.

1) Paris

close or continue

2) Vienna

close or continue

3) Dublin

close or continue

You are the CEO of a company that has to choose between making a $100 million investment in either Russia or Poland. Both investments promise the same long-run return, so your choice of which investment to make is driven by considerations of risk.

1. Assess the various risks of doing business in each of these nations. Compare Poland and Russia in terms of how easily contracts are enforced, how property rights can be registered, and how investors can be protected. Identify in which area you see the greatest difference.
2. Which investment would you favor and why?

You are the CEO of a midsize, software company in Saudi Arabia and want to take your company global and offer your software worldwide. You will need to open offices in nations around the world. Would you 1) open offices in nations with high political and legal risks or 2) just focus on nations with low political and legal risks? What are the pros and cons for each strategy?

Mr. Brown the CEO of a corporate company wants to know if a new method of rewarding employees influences morale. He gives 12 employees an anonymous survey measuring morale, implements the new method, and then measures morale again after four weeks.

a. State the null and alternative hypotheses

b. State the rejection region

c. Conduct a sign test on the above data

d. What can you conclude?

David is the CEO of FactsNow, Inc. (not a real company), a consumer research and crisis management organization located in Greenville, SC. FactsNow has contracts with several Fortune 500 organizations and has a reputation for uncovering future trends and handling any number of major crises with great success. Recently, David was approached by his friend Jason, who is the vice president of manufacturing for child clothing manufacturer Baby Gaits (also not a real company). Jason told David he needed to speak to him immediately regarding a matter of a "serious nature," and the two agreed to meet for dinner the following evening. Knowing that Jason had recently received a huge bonus and stock options for meeting production cost ceilings, David felt sure that Jason was going to finally give in and buy that lake house that he had always wanted.

During their dinner, Jason revealed that the FDA is about to release a report revealing that Baby Gaits knowingly participates in the practice of manufacturing clothes with legal products that contain levels of cancer causing agents described as "toxic and extremely dangerous." The FDA report is expected to confirm that the practice is not illegal, but that it results in a product that could be extremely dangerous to children. Jason wants to hire FactsNow to assess what steps should be taken to reduce the impact this will have on Baby Gaits' stock price and market share. David needs more information and asks Jason when he first became aware the products used in manufacturing are dangerous. When Jason says he's known for more than three years, David explodes and asks why Jason didn't immediately discontinue the use of these products. Jason explained that he was directed to continue using the products by Baby Gaits' chief operations officer, Linda Watts, even after he had recommended using alternative solutions. Further, Jason stated that he was told by Linda to, "keep this information to himself." David warned Jason that the report will bring with it severe fallout for Baby Gaits stock as well as all of its senior management personnel, and told him he would begin drafting a proposed public relations response. Out of curiosity, David asked Jason if he still continued to allow his children to wear Baby Gaits products, to which Jason replied incredulously, "What do you think?"

David went home and discussed this shocking information with his wife, Annabelle. David told Annabelle he was heading back to his office to begin developing a crisis management approach when Annabelle reminded him that a significant portion of their personal investment portfolio was invested in Baby Gaits' stock. David cringed when reminded, called his broker immediately and ordered him to dump the stock first thing in the morning. David felt bad about this decision since he owned more than 15 percent of Baby Gaits' stock, but knew he had to put his family first.

Three days later, the FDA released the report, which did contain the information Jason and David expected it to contain. Chaos ensued at Baby Gaits and FactsNow as both companies worked to deal with the fallout. During this time, David was pleased with his decision to sell his Baby Gaits holdings as the stock price plummeted to one-tenth of its previous value. Within one week of the FDA's report, lawsuits began trickling in and the Securities and Exchange Commission called and wanted to speak to David about a "serious matter." David cringed thinking back to the last time he had heard that term and wondered what could be next as he picked up the phone to call you, his lawyer.

A. The SEC speaks with you and indicates they believe David may have conducted a transaction in violation of applicable insider trading regulations. Describe insider trading and make a determination as to whether or not David's actions constituted insider trading.

B. David was recently told by Jason that shareholders are suing Linda for violating the actual authority rule. Jason comes to you and asks you what this is. Based on the information provided, did Linda violate this rule? Why or why not?

C. Angry that the SEC is now banging down his door, David is beginning to resent Jason for failing to honor his responsibility to ensure manufacturing is done properly. David comes to you and asks if he can sue Jason for violating the business judgment rule. What is this rule? Did Jason violate this rule? Why or why not?