Case Study: Madeline

Madeline is a 28 year old who is married and is 3 months pregnant. Madeline has presented to her doctor because she is aware that Phenylketonuria (PKU) runs in her family and her husband commented recently that one of his cousins was also undergoing tests for PKU.

Madeline thinks she may pass this disorder to her baby so she wants some information about it and would like to know what she can do to ensure her baby will be well.

1. What is Phenylketonuria (PKU)? Is it inherited and how?

2. How does it interact with diet?

3. What are specific foods that need to be controlled in the case of PKU?

4. What are the risks to Madeline and her baby?

Ximena, who runs a successful real estate agency, ran across a very interesting pamphlet on customer relations. The pamphlet was fifty pages long and cost $70.00. Ximena thought the price was outrageous. Accordingly, she bought one copy and photocopied the pages that she thought were pertinent and gave them to her employees. She copied forty of the pages out of the pamphlet for each of twenty employees. A disgruntled employee informed the pamphlet's publisher what Ximena had done, and she was charged with copyright infringement. Ximena defended on the basis of the fair use doctrine. Discuss the four factors a court would consider in determining whether a violation occurred and whether you think Ximena would prevail.

Ximena, who runs a successful real estate agency, ran across a very interesting pamphlet on customer relations. The pamphlet was fifty pages long and cost $70.00. Ximena thought the price was outrageous. Accordingly, she bought one copy and photocopied the pages that she thought were pertinent and gave them to her employees. She copied forty of the pages out of the pamphlet for each of twenty employees. A disgruntled employee informed the pamphlet's publisher what Ximena had done, and she was charged with copyright infringement. Ximena defended on the basis of the fair use doctrine. Discuss the four factors a court would consider in determining whether a violation occurred and whether you think Ximena would prevail.

) Ben and Allison each decide to wager 1 unit against the other person on flips
of an unfair coin, with probability 0.6 of landing head, until one of them runs out of money.
When the flip lands on head, Ben wins 1 unit from Allison; and when the coin lands on tail,
Allison wins 1 from Ben. At the start of the contest, Ben has 30 units and Allison has 45
units. Find
(a) the average number of flips needed until Ben is eventually broke,
(b) the average number of flips needed until Allison is eventually broke, and
(c) the average number of flips needed until either Ben or Allison is eventually broke.

1. In one state, 10 insurance companies have at least a five percent share of the market. One firm controls a 25% share, two each have a 20% share, and the remaining seven firms each have a 5% share.

1. Calculate the HHI for insurance in this state.
2. What does this say about the level of competition? Provide a 2-3 sentence explanation.
3. Suppose the largest firm decides to split into two firms (each has a 12.5% share). Calculate the new HHI after the split. Using economic theory, identify and explain how the split may affect the cost and quality of insurance.

Suppose Lost Pigeon Aviation is considering a project that will require $250,000 in assets.

If the project is financed using 100% equity capital, then Lost Pigeon’s return on equity (ROE) on the project will be (16.80%, 14.27%, 19.32%, or 17.64%)
In addition, Lost Pigeon’s earnings per share (EPS) will be ( $1.76 , $1.26, $1.68, $1.85 , or $1.51)

Alternatively, Lost Pigeon Aviation’s CFO is also considering financing the project with 50% debt and 50% equity capital. The interest rate on the company’s debt will be 12%. Because the company will finance only 50% of the project with equity, it will have only 12,500 shares outstanding. . Lost Pigeon Aviation’s ROE and the company’s EPS will be________________if management decides to finance the project with 50% debt and 50% equity.
A. 21.42 and $2.14, respectively
B. 30.24 and $2.90, respectively   
C. 27.72 and $2.65, respectively   
D. 25.20 and $2.52, respectively


When a firm uses debt financing, the business risk exposure for the firm’s common shareholders will_____
A. Increase
B. Decrease

Dmitry suspects that his friend is using a weighted die for board games. To test his theory, he wants to see whether the proportion of odd numbers is different from 50%. He rolled the die 40 times and got an odd number 14 times.

Dmitry conducts a one-proportion hypothesis test at the 5% significance level, to test whether the true proportion of odds is different from 50%

(a) H0:p=0.5H0:p=0.5; Ha:p≠0.5Ha:p≠0.5, which is a two-tailed test.

(b) Use Excel to test whether the true proportion of odds is different from 50% Identify the test statistic, z, and p-value from the Excel output, rounding to three decimal places.

Three identical units of merchandise were purchased during May, as follows:

Assume that two units are sold on May 23 for $313. Determine the gross profit for May and ending inventory on May 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

Match Column A with Column B