Read this article and answer questions at the bottom.

The Rise of the Jumbo Student Loan

Most students with loan balances exceeding $50,000 in 2010 had failed to pay down any debtfour years late

During the housing boom of the 2000s, jumbo mortgages with very large balances became a flashpoint for a brewing crisis. Now, researchers are zeroing in on a related crack but in the student debt market: very large student loans with balances exceeding $50,000. A study released Friday by the Brookings Institution finds that most borrowers who left school owing at least $50,000 in student loans in 2010 had failed to pay down any of their debt four years later. Instead, their balances had on average risen by 5% as interest accrued on their debt. As of 2014 there were about 5 million borrowers with such large loan balances, out of 40 million Americans total with student debt. Large-balance borrowers represented 17% of student borrowers leaving college or grad school in 2014, up from 2% of all borrowers in 1990 after adjusting for inflation. Large-balance borrowers now owe 58% of the nation’s $1.4 trillion in outstanding student debt. “This is comparable to mortgage lending, where a subset of high-income borrowers hold the majority of outstanding balances,” write Adam Looney of Brookings and Constantine Yannelis of New York University. “A relatively small share of borrowers accounts for the majority of outstanding student-loan dollars, so the outcomes of this small group of individuals has outsized implications for the loan system and for taxpayers,” the authors say. The problem is particularly acute among borrowers from graduate schools, who don’t face the kinds of federal loan limits faced by undergraduate students. Half of today’s big balance borrowers attended graduate school. The other half went to college only or are parents who helped pay for their children’s education. Grad school borrowers tend to be among the best at paying off student debt because they typically earn more than those with lesser degrees. But the rising balances unearthed in the latest study suggest that pattern might be changing. Overall across the U.S., one-third of borrowers who left grad school in 2009 hadn’t paid down any of their debt after five years, compared to just over half of undergraduate students who hadn’t, federal data show. Mr. Yannelis and Mr. Looney, a former Treasury Department official under President Barack Obama, built the research out of exclusive access to federal student-loan and tax data. The findings on graduate schools are particularly noteworthy because the government offers little information on the loan performance of grad students, who account for about 14% of students at universities but nearly 40% of the $1.4 trillion in outstanding student debt. The data set accompanying the new study breaks down performance for students at 934 schools with 100 or more graduate borrowers whose loans first came due in 2009. At Nova Southeastern University , a large private nonprofit school in South Florida, just over half of the 10,319 graduate borrowers who departed in 2009 had reduced their balances by just a dollar or more five years later, the data show. Many sought or received advanced degrees in health fields. They collectively borrowed $412 million for grad school, or an average $40,000, excluding any debt from other schools, the study showed. George Hanbury, Nova Southeastern’s president, said many of the school’s former grad students went into health fields, where salaries often start low and then rise quickly later on. “They all have the capability to see higher incomes the longer they stay in their career, which means they have the greater capability to increase their rate of payback than they do in the earlier stage,” Mr. Hanbury said. He said the school’s former students earn more, on average, than workers with bachelor’s degrees. At Arizona State, a large public university in Tempe, 51% of the 4,000 grad students who left in 2009 had reduced their initial balances by 2014. Arizona State, through a spokesman, declined to comment. At Walden University, a large collection of graduate programs run by Wall Street giant Laureate Education Inc., 53% of 9,530 graduate borrowers paid down their balances by at least a dollar or more over five years. Many were enrolled in programs involving social services. Walden, in a statement emailed by a spokeswoman, said many former graduate students are in fields that often pay modestly at first but serve a social good. “This is consistent with our social mission where we are educating in professions like teaching, social work, and counseling, for example, and those professionals may not earn significant salaries right after graduation, but who are making a significant societal impact,” the statement said. Most borrowers from those schools aren’t in default. Instead, a big share of them are in debtrelief plans that lower monthly payments, known as income-driven repayment, or they’ve won permission from the government to postpone payments due to a range of circumstances, including unemployment or further study.

Questions

3.   [Financial Statements and Ratios] Bike-With-Us Corporation, a specialty bicycle parts replacement venture, was started last year by two former professional bicycle riders who had substantial competitive racing experience including competing in the Tour de France. The two entrepreneurs borrowed $50,000 from members of their families and each put up $30,000 in equity capital. Retail space was rented and $60,000 was spent for fixtures and store equipment. Following are the abbreviated income statement and balance sheet information for the Bike-With-Us Corporation after one complete year of operation.

BIKE-WITH-US CORPORATION

Sales                           $325,000

            Operating Costs          285,000

            Depreciation                   10,000

            Interest                              5,000

            Taxes                                6,000

      Cash                                $1,000

            Receivables                    30,000

            Inventories                      50,000

            Fixed Assets, Net            50,000

            Payables                          11,000

            Accruals                          10,000

            Long-Term Loan            50,000

            Common Equity             60,000

A.     Prepare an income statement and a balance sheet for the Bike-With-Us Corporation using only the information provided above.

B.     Calculate the current ratio, quick ratio, and NWC-to-total-assets ratio.

C.    Calculate the total-debt-to-total-assets ratio, debt-to-equity ratio, and interest coverage.

D.Calculate the net profit margin, sales-to-total-assets ratio, and the return on total assets.

A.     Calculate the equity multiplier. Combine this calculation with the calculations in Part D to show the ROE model with its three components.

Researchers claim that women speak significantly more words per day than men. One estimate is that a woman uses about 20,000 words per day while a man uses about 7,000 . To investigate such claims, one study used a special device to record the conversations of male and female university students over a four‑day period. From these recordings, the daily word count of the 2020 men in the study was determined. The table contains their daily word counts.

(a) Use the software of your choice to make a histogram of the data. What value should we remove from the data to make it reasonable to use the t procedures (assume these men are an SRS of all male students at this university)?

value to remove:

(b) With this value removed, carry out a test of significance to determine if the mean number of words per day of men at this university differs from 7000. (If you're using CrunchIt for your calculations, adjust the default precision under Preferences as necessary. See the instructional video on how to adjust precision settings.)

Choose the correct hypotheses to test.

H0:μ=7000 versus H0:μ>7000

H0:μ≠7000H0 versus H0:μ=7000H0

H0:μ<7000H0 versus H0:μ≠7000H0

H0:μ=7000H0 versus H0:μ≠7000H0

With the value removed, find ¯x . (Enter your answer rounded to two decimal places.)

x¯=

With the value removed, find s . (Enter your answer rounded to three decimal places.)

s=

With the value removed, find t . (Enter your answer rounded to three decimal places.)

t=

Using the software of your choice, find the P‑value. (Enter your answer rounded to four decimal places.)

P=

What conclusion can we make from this data? Choose the correct answer.

A.There is no evidence that the mean number of words per day of men at this university differs from 7000 The sample mean indicates they speak less than 7000 words per day.

B.There is overwhelming evidence that the mean number of words per day of men at this university differs from 7000The sample mean indicates they speak more than 7000 words per day.

C.There is overwhelming evidence that the mean number of words per day of men at this university differs from 7000The sample mean indicates they speak less than 7000 words per day.

D.There is no evidence that the mean number of words per day of men at this university differs from 7000The sample mean indicates they speak more than 7000 words per day.

For each question please state your null and alternative hypothesis, your p-value and conclusion of your hypothesis test. You may use your calculator to perform the hypothesis.

1. Research conducted a few years ago showed that 35% of UCLA students had travelled outside the US. UCLA has recently implemented a new study abroad program and results of a new survey show that out of the 100 randomly sampled students 40 have travelled abroad. Is there significant evidence to suggest that the proportion of students at UCLA who have travelled abroad has increased after the implementation of the study abroad program? Use a .01 significance level.

   2. Sleep experts believe that sleep apnea is more likely to occur in men than in the general population. In other words, they claim the percentage of men who suffer from sleep apnea is greater than 5.8%. To test this claim, one sleep expert examines a simple random sample of 90 men and determines 9 of these men suffer from sleep apnea. Does this evidence support the claim that the percentage of men who suffer from sleep apnea not longer equals 5.8%? Use a 0.05 level of significance.

Approximately 300 million golf balls were lost in the U.S. in 2009. Assume that the number of golf balls lost in an 18-hole round is distributed as a Poisson random variable with a mean of 3 balls. What is the probability that:

0 balls will be lost in an 18-hole round?

An individual can play an 18-hole round with a single sleeve of golf balls (3 balls)? (Hint: can you continue to play if you have lost all 3 balls?)

An individual who is going to play 3 rounds of golf on a trip can play all three rounds with the single sleeve of balls?

The transactions completed by AM Express Company during March, the first month of the fiscal year, were as follows:

Mar 1. Issued Check No. 205 for March rent, $2,450.

Mar 2. Purchased a vehicle on account from McIntyre Sales Co., $26,900.

Mar 3. Purchased office equipment on account from Office Mate Inc., $1,570.

Mar 5. Issued Invoice No. 91 to Ellis Co., $7,000.

Mar 6. Received check for $7,950 from Chavez Co. in payment of invoice.

Mar 7. Issued Invoice No. 92 to Trent Co., $9,840.

Mar 9. Issued Check No. 206 for fuel expense, $820.

Mar 10. Received check for $10,000 from Sajeev Co. in payment of invoice.

Mar 10. Issued Check No. 207 to Office City in payment of $450 invoice.

Mar 10. Issued Check No. 208 to Bastille Co. in payment of $1,890 invoice.

Mar 11. Issued Invoice No. 93 to Jarvis Co., $7,200.

Mar 11. Issued Check No. 209 to Porter Co. in payment of $415 invoice.

Mar 12. Received check for $7,000 from Ellis Co. in payment of March 5 invoice.

Mar 13. Issued Check No. 210 to McIntyre Sales Co. in payment of $26,900 invoice of March 2.

Mar 16. Cash fees earned for March 1–16, $26,800.

Mar 16. Issued Check No. 211 for purchase of a vehicle, $28,500.

Mar 17. Issued Check No. 212 for miscellaneous administrative expense, $4,680.

Mar 18. Purchased maintenance supplies on account from Bastille Co., $2,430.

Mar 18. Received check for rent revenue on office space, $900.

Mar 19. Purchased the following on account from Master Supply Co.: maintenance supplies, $2,640, and office supplies, $1,500.

Mar 20. Issued Check No. 213 in payment of advertising expense, $8,590.

Mar 20. Used maintenance supplies with a cost of $4,400 to repair vehicles.

Mar 21. Purchased office supplies on account from Office City, $990.

Mar 24. Issued Invoice No. 94 to Sajeev Co., $9,200.

Mar 25. Received check for $14,000 from Chavez Co. in payment of invoice.

Mar 25. Issued Invoice No. 95 to Trent Co., $6,300.

Mar 26. Issued Check No. 214 to Office Mate Inc. in payment of $1,570 invoice of March 3.

Mar 27. Issued Check No. 215 to J. Wu as a personal withdrawal, $4,000.

Mar 30. Issued Check No. 216 in payment of driver salaries, $33,300.

Mar 31. Issued Check No. 217 in payment of office salaries, $21,200.

Mar 31. Issued Check No. 218 for office supplies, $600.

Mar 31. Cash fees earned for March 17–31, $29,400.

Instructions:
1. Journalize the transactions for March, using the following journals similar to those illustrated in this chapter: single-column revenue journal, cash receipts journal, purchases journal (with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), cash payments journal, and two column general journal. Also do the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger.

Answer Check Figure: Total cash receipts, $96,050

2. Post the appropriate individual entries to the general ledger.

3. Total each of the columns of the special journals and post the appropriate totals to the general ledger; insert the account balances.

4. Prepare a trial balance.

At the height of the housing crisis in the US, in 2009-2010 the Government decided for a temporary extension of unemployment benefits to 99 weeks, from the standard six months.    (In parallel way, during this Corona time, millions of unemployed seek the same kind of benefits. )

a) What do you think of this decision? What are the positive and negative impacts of this decision to the society and the overall economy?

b) How would J.M. Keynes react to this extension?

c) How would a Classical Economist say about it?

d) Along with the Unemployment Benefits, during the Corona time, as well as previous recessions, the Government poured in billions dollars to stimulate the economy through various programs (to individual taxpayers as well as small, medium, and large businesses). Some worry about the future consequence, such as Inflation. According to you, how does the increase in government spending on those programs might or might not have effect on Inflation?

At the height of the housing crisis in the US, in 2009-2010 the Government decided for a temporary extension of unemployment benefits to 99 weeks, from the standard six months.    (In parallel way, during this Corona time, millions of unemployed seek the same kind of benefits. )

What do you think of this decision? What are the positive and negative impacts of this decision to the society and the overall economy? How would J.M. Keynes react to this extension? How would a Classical Economist say about it? Along with the Unemployment Benefits, during the Corona time, as well as previous recessions, the Government poured in billions dollars to stimulate the economy through various programs (to individual taxpayers as well as small, medium, and large businesses). Some worry about the future consequence, such as Inflation. According to you, how does the increase in government spending on those programs might or might not have effect on Inflation?

Big corporations feel very evil to us now, the natural targets of blame for low-paying jobs, environmental abuse and sickening ingredients. But this thinker argued that there was an unexpected, and more important, element responsible for these ills: our taste. He encouraged the education of consumers to limit the problems of capitalism.

Select one: a. Adam Smith b. Alfred Marshall c. David Ricardo d. Karl Marx e. Thomas Malthus

This economist is one of the most influential economists and political thinkers in the history of economic thought. He started his analysis of Capitalism by starting to analyze one single "commodity". From this individual analysis of single commodities, he proceeded to investigate more complex laws and relations in Capitalism.

Select one: a. Karl Marx b. Adam Smith c. David Ricardo d. Alfred Marshall

Calculate the times interest earned ratio from 2015 to 2018 and interpret them.