Problem 3: A linear regression by using famous data set found in Freedman et al. (1991) in Table 1: ‘Statistics’ refers to the percapita consumption of cigarettes in various countries in 1930 and the death rates (number of deaths per million people) from lung cancer for 1950.

1. Perform the simple linear regression with and without USA and make the overlay graph.
2. The question is: should we use USA data, should the regression line pass through the original? Give your answer.

Zach is a 5-year-old boy who recently split his chin open after tripping on the sidewalk, and he was rushed by his parents to the emergency room at a nearby hospital. Although an MRI revealed that Zach needed only stitches and some mild pain medication, his medical bill for the hospitalization and tests totaled $4,178. Zach is covered under his parents' insurance policy, which has a $200 hospital stay deductible and a coinsurance rate of 20%. His parents can therefore expect a reimbursement from the insurance company of $ _________ (Note: Round your answer to the nearest dollar.)

Complete each statement that follows with the appropriate insurance term.

Zach's fall was completely unexpected and therefore insurable. This is an example of: a. Physical hazard b. fortuitous loss c. speculative risk d. morale hazard e. moral hazard It is easier for the insurance company to predict the risk associated with an entire town than to predict the risks of a given individual. This reflects the: a. law of large numbers   b. principle of indemnity c. large-loss principle

Because Zach is young and has no history of medical conditions, he is a part of the: a. substandard b. preferred c. desirable class of insured.

Rainbow Cosmetics hires Tiffany as the Sales and Marketing Manager. She finds the culture of Rainbow Cosmetics is quite different from the companies that she worked before. In Rainbow Cosmetics, the staff of the department are divided into different teams, and members of each team have to work collaboratively to achieve the annual sales target. The winning team of the year would be rewarded with a team-based bonus. The personal achievement is also counted that the individual would be rewarded if they propose new ideas for new product development. The supervisors within the company are high tolerance in careless mistakes. The company will conduct a face-to-face interview with each of its employees for the plan of career development. Because of the arrangement, members within the teamwork aggressively just like they are running their own businesses. Tiffany used to work alone as a marketer, and she believes that teamwork is more time- consuming. She has a daughter who is two-years-old. She would like to spend more time with her.

(a) Identify and explain any FIVE cultural characteristics. Use them to describe the culture of the “Rainbow Cosmetics”.

(b) Describe the stages that Tiffany will process to adapt herself to the culture of “Rainbow Cosmetics”. Use examples to illustrate your answers.

A finance journal published a study of whether the decision to invest in the stock market is dependent on IQ. Information on a sample of 156905 adults living in Finland formed the database for the study. An IQ score​ (from a low score of 1 to a high score of​ 9) was determined for each Finnish citizen as well as whether or not the citizen invested in the stock market. The following table gives the number of Finnish citizens in each IQ​ score/investment category. Suppose one of the 156905 citizens is selected at random. Complete parts a through f.

a. What is the probability that the Finnish citizen invests in the stock​ market?

The probability is ________.. ​(Round to the nearest thousandth as​ needed.)

b. What is the probability that the Finnish citizen has an IQ score of 6 or​ higher?

The probability is ________. ​(Round to the nearest thousandth as​ needed.)

c. What is the probability that the Finnish citizen invests in the stock market and has an IQ score of 6 or​ higher?

The probability is ________.. ​(Round to the nearest thousandth as​ needed.)

d. What is the probability that the Finnish citizen invests in the stock market or has an IQ score of 6 or​ higher?

The probability is ________.. ​(Round to the nearest thousandth as​ needed.)

e. What is the probability that the Finnish citizen does not invest in the stock​ market?

The probability is ________.. ​(Round to the nearest thousandth as​ needed.)

f. Are the events​ {Invest in the stock​ market} and​ {IQ score of​ 1} mutually​ exclusive? Choose A,B,C or D

A. ​Yes, they are mutually exclusive because there are no Finnish citizens who invest in the stock market and have an IQ score of 1.

B. ​Yes, they are mutually exclusive because there are Finnish citizens who invest in the stock market and have an IQ score of 1.

C. ​No, they are not mutually exclusive because the probability that a Finnish citizen invests in the stock market and has an IQ score of 1 is very small.

D. ​No, they are not mutually exclusive because there are Finnish citizens who invest in the stock market and have an IQ score of 1.

CK investments (Pty) is a local hand sanitizing production company. The company was
incorporated in 2010.
The company was started by Charles Mujende who is the 100% shareholder. CK is run by the
owner’s brother in law, Lazareth Shilongo CA(NAM), the CEO of the company. Charles started
the company using his pension fund of N$ 200 000.00.
The start-up funds were used to build the production centre in Tsumeb where the sanitisers are
produced. The ingredients used to make the sanitiser include water from a nearby lake, alcohol
and fragrance. CK investments is known to make sanitizers that leave your skin clean, smelling
good and moisturized, they have patented their recipe and production processes. The sanitiser
is packaged in plastic bottles. It is company policy that all spoilage from production be dumped
in the lake to minimise waste management costs.

You are a charted accountant and you went to university with Lazareth, the two of you have
remained good friends since your time at university. Lazareth has asked you to assist the
company with accounting, finance and internal audit functions of the company as they do not
currently have a CFO or CAE. You accepted the job because he has promised you a handsome
service fee that you will be paid in cash at the end of every month, off the books.
The company employs 500 men to produce, package and sell the sanitisers. All the salesmen
are paid on a commission basis only. The company has a list of commercial suppliers whom
they have a three-year sales agreement with. The CEO is output driven and is known to fire
salespersons who do not sell more than N$10 000.00 worth of sanitiser per month. The CEO
and all executives receive annual bonuses based on the profit before tax of the company.
In 2020, the demand for hand sanitisers increased exponentially due to the Corona virus. The
government has put out a tender to local companies to produce hand sanitizers. The tendering
process is highly competitive.
Fortunately, the audit committee chair, who is also the sales executive at CK, Sidney Haufiku is
good friends with the government official who is overseeing the tender process. Sidney has
invited the government official and his family to a nearby lodge for the weekend. All expenses
for this trip were covered by CK investments and expensed in terms S11a of the income tax act.
On the Saturday afternoon Sidney had a drink with the government official to discuss the
tender. Sidney proposed that he could service the tender at a cost of N$3m, half the market
value of sanitizers to save the government money if he could be guaranteed that the tender
would be awarded to CK Investments. The government official agreed that given countries
financial position, they would agree to the N$3m.
On 30 March the board had their first and last board meeting for the year. The audit committee
has not had a meeting and no other committees have been established as yet. At that meeting
Sidney briefed the board on his deal with the government official. Wilhelm Gariseb, is the
production executive and a member of the board, his department has been experiencing a
shortage of pharmaceutical alcohol in 2020. He proposed that to be able to produce at such low
costs, they could use less alcohol and more water to make the sanitizers. The board consisting of Lazareth Shilongo (chair of the board), Sidney Haufiku (audit comm chair) and Wilhelm Gariseb (member of the board), resolved to apply for the tender at a low cost using less alcohol At the same meeting, the board learned that they were required to hire an external auditor.
Lazareth suggested that you be appointed as the auditor as you are already familiar with the
business. The board members agreed, and you were appointed as the auditor.
On 29 May 2020, a newspaper article published that a local company CK Investments had been
selling the government ineffective sanitizer that was not strong enough to cleanse or sanitize
skin. The government has distributed this sanitizer to schools and hospitals. As a result, the
virus was able to easily spread as people would go about day to day activities under the
assumption that they had effectively sanitized their hands.
After a legal inquiry the company was found guilty of several legal violations. As a result, the
company was liquidated, and all 500 employees were left unemployed.

Question 5 (2)
The executive and government official agreed that the company would benefit from the
contract as they would have more income and the government would save costs from the 3m
dollar deal. Which method of ethical evaluation did they use and why?
Question 6 (2)
What kind of economic system is CK investments operating in? Please provide a reason for your
conclusion.

question 7

Assume that CK is the only seller of sanitizer in the country. What kind of competitive
environment do they operate in? Please draw the demand curves for this type of competition.
Question 8 (5)
Would you agree or disagree that CK investments is operating sustainably? Please provide
reasons for your answer.
Question 9 (10)
Identify any ethical concerns you may in terms of the CPC, based on the company description
above.
Question 10 (12)
Please raise any corporate governance concerns you noted in the description above based on
your knowledge of King 3/4. Please state the principle first and then apply it to the scenario
above.

VOCABULARY REVIEW
Using the word pool on the right, find the correct word to match the definition. Write the word on the line after the
definition.
Group A Word Pool
1. A document sent by the insurance company to the provider and
the patient explaining the allowed charge amount, the amount
reimbursed for services, and the patient’s financial responsibilities
_______________________

2. An online marketplace where you can compare and buy
individual health insurance plans; state health insurance
exchanges were established as part of the Affordable Care Act
_______________________

3. Low-income Medicare patients who qualify for Medicaid for their
secondary insurance _______________________

4. A formal request for payment from an insurance company for
services provided _______________________

5. System used to determine how much providers should be paid
for services rendered; used by Medicare and many other health
insurance companies _______________________

6. An order from a primary care provider for the patient to see a
specialist or get certain medical services _______________________

7. A written agreement between two parties where one party (the
insurance company) agrees to pay another party (the patient) if
certain specified ci cumstances occur _______________________

8. A list of fixed fees for services ______________________

9. An organization that processes claims and provides
administrative services for another organization; often used by
self-funded plans _______________________

10. Poor, needy, impoverished _______________________

policy
claim
indigent
resource-based relative value
scale (RBRVS)
explanation of benefits (EOB)
fee schedule
qualified Medica e
beneficiaries (QMBs)
third-party administrator
(TPA)
health insurance exchange
referral

When discussing individual choice, it is discussed mainly about the choices of an individual person. However, in economics we often talk about the choice of a household consisting of two or more people. In ways are the choices of a household different from the choices of an individual? In what ways are they similar?

Give a brief summary of each and explain why they are the most important.

Benefit 2 Increasing the minimum wage could reduce poverty. A person working full time at the federal minimum wage of $7.25 per hour earns $15,080 in a year, which is 20% higher than the 2015 federal poverty level of $12,331 for a oneperson household under 65 years of age but 8% below the 2015 federal poverty level of $16,337 for a singleparent family with a child under 18 years of age. [7] [8] According to a 2014 Congressional Budget Office report, increasing the minimum wage to $9 would lift 300,000 people out of poverty, and an increase to $10.10 would lift 900,000 people out of

Cost 2 Raising the minimum wage could increase poverty. A study from the Federal Reserve Bank of Cleveland found that although low-income workers see wage increases when the minimum wage is raised, "their hours and employment decline, and the combined effect of these changes is a decline in earned income... minimum wages increase the proportion of families that are poor or near-poor." [47] As explained by George Reisman, PhD, Professor Emeritus of Economics at Pepperdine University, "The higher wages are, the higher costs of production are. The higher costs of production are, the poverty. [5] A 2013 study by University of Massachusetts at Amherst economist Arindrajit Dube, PhD, estimated that increasing the minimum wage to $10.10 is "projected to reduce the number of non-elderly living in poverty by around 4.6 million, or by 6.8 million when longer term effects are accounted for." [6] higher prices are. The higher prices are, the smaller the quantities of goods and services demanded and the number of workers employed in producing them." [48]Thomas Grennes, MA, Professor Emeritus at North Carolina State University, and Andris Strazds, MSc, Lecturer at the Stockholm School of Economics in Riga (Latvia), stated: "the net effect of higher minimum wages would be unfavorable for impoverished households, even if there are no job losses. To the extent that some poor households also lose jobs, their net losses would be greater.

Allison and Leslie, who are twins, just received $10,000 each for the 25^th birthday. The both aspire to become millionaires. Each plan to make a $5,000 annual contribution to her “early retirement fund” on her birthday, beginning a year from today. Allison opened an account with the Safety-First Bond Fund, a mutual fund that invests in investment-grade (AAA rated) bonds whose investors have earned 6% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average 10.8% per year in the fund’s relatively short history.

a. If the tow women’s funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire?

b. How large would Allison’s annual contributions have to be for her to become a millionaire at the same age as Leslie, assuming their expected returns are realized?

c. Is it rational or irrational for Allison to invest in the bond fund rather than in stocks?

Linda Grabeck did not have an athletic scholarship, there simply weren't enough scholarships to go around. Until the NCAA relaxed the rules and allowed you to come up with more scholarships, that was the way it had to be.

When you spoke to Linda about your concerns, she was very open about her part-time job. She indicated that, of course, college was very expensive. Tuition and fees were high and the cost of books and other materials grew more expensive each year. Certainly jobs were available such as working at one of the many burger joints in the area. But Linda told you that she could make as much in a single night of nude dancing as she could make in a whole week of flipping burgers, She asked how people knew that she was a Carver State athlete because she never wore any clothing at the club to connect her to the university or the track team.

You assured her that these things had a way of getting around, and that some of the school's baseball players had been in the club and noticed her. Linda said it seemed unfair that the ballplayers had worn their Carver State caps and sweatshirts to the establishment and she was the one getting called in on the carpet. You said that may be true, but that was a different issue that someone else would have to deal with.

So that was her side of the story. Linda Grabeck was an exotic dancer but she was not trying to use her position as a member of the track team in any way to her advantage. She saw it as a simple case of economics. She needed the money for school and this was the best way to make it. Besides, as she commented, “A lot of college students do this." She went on to say that her job was part of her private life and on her own time. She was not an 18 year-old freshman. She was a young adult who was capable of weighing the advantages and disadvantages of working in an all-nude club. Furthermore, Linda suggested that there might be a double standard at the school if it was acceptable for male athletes to visit a strip club but not acceptable for female athletes to work there.

However, there were other serious issues that you could not ignore. Not only did you have a responsibility to Linda, you had a responsibility to the university, other members of the track team, and yourself. Carver State had a particular image that it had earned over the years. This was an institution that cared about its students. Parents liked the idea of sending their sons and daughters to a school that was reasonably conservative and fairly safe. That image would be harmed if people knew that the school's athletes were working as strippers in the local bars, You wondered how you would respond to the parents of a young woman you were recruiting if they asked about a member of the track team who worked as a stripper

QUESTIONS

• What components of this case are technical and what components are

ethical?

• At what point in the chain of problems and symptoms can you effectively

intervene?

• What are the consequences of allowing Ms. Grabeck to be on the track

team while she works as a stripper (long- and short-term)?

• Who will benefit and who will suffer if Ms. Grabeck cannot be on the

team and continue her chosen employment (long- and short-term)?

• To whom do you owe an obligation in this situation?

• What are the expectations for college coaches?

• How have you acted in a situation similar to this one? What did you

learn from that experience?