Brexit has led to the relocation of many multinational companies from the United Kingdom to continental Europe. This has in turn reduced the demand for real estate and many other local goods and services in the country on a long-term basis.

In addition to its impact on demand, Brexit is likely to lower the productivity of tradables in the UK. The reason is that after Brexit, British producers are likely to face hurdles in their access to the EU as their biggest trading partner, and this limits their ability to exploit the division of labor and economies of scale. What is the likely long-run impact of this change on the real exchange of the British pound? Please make sure to explain the mechanism that supports the answer you provided.

An article predicts that "spit," spam that is delivered via internet phone lines and cell phones, will be a growing problem as more people turn to web-based phone services. In a poll of 5500 cell phone users, 25% indicated that they had received commercial messages and ads on their cell phones. Is there sufficient evidence that the proportion of cell phone users who have received commercial messages or ads in 2004 was greater than the proportion of 0.13 reported for the previous year? (Use α = 0.05. Round your test statistic to two decimal places and your P-value to four decimal places.)

Calculate percentages for the following table. A prior Gamma analysis has indicated that the relationship is significant (p-value <0.05). Use these percentages to assess the strength (using the maximum difference method) and direction of this relationship.

Write a bullet points describing the relationship between these two variables

Q 2 - “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” Ronald Reagan (1911-2004)

a. There are two types of inflation. How are these different types of inflation reflected in the aggregate demand and aggregate supply (AD-AS) model? Use diagrams to illustrate your answer.

b. Governments may adopt fiscal policy to control one of these types of inflation. What type of fiscal policy can be adopted? Explain how this fiscal policy works. How would the ‘ratchet effect’ affect the effectiveness of this fiscal policy?

c. On a separate diagram, clearly illustrate your answer in (b).

A home theater in a box is the easiest and cheapest way to provide surround sound for a home entertainment center. A sample of prices is shown here (Consumer Reports Buying Guide, 2004). The prices are for models with a DVD player and for models with a DVD player.

1. Compute the mean price for models with a DVD player and the mean price for models without a DVD player. What is the additional price paid to have a DVD player included in a home theater unit?
2. Compute the range, variance, and standard deviation for the two samples. What does this information tell you about the prices for models with and without a DVD player?

Complex finance problems using Excel.

1. Compost International issued $1000 bonds on May 12, 2000 in order to finance world-wide expansion. The bonds have a coupon rate of 8.4% with payments on a semi-annual basis (November 12, May 12) and mature on May 12, 2020. You purchased one of Compost’s $1000 bond on June 25, 2004 and plan to hold the bond to maturity. The bond has a list price of $1090 (not including accrued interest).

Compute the semi-annual coupon payment, the accrued interest, the invoice price of the bond, and the Yield to Maturity (YTM) of your bond.

Question 1
IAS 10: Events after the Reporting Period addresses two issues: adjusting events, namely, those events that provide evidence of conditions that existed at the end of the reporting period and non-adjusting events: which are those events that are indicative of conditions that arose after the reporting period that need to be reflected in the financial statements. Amounts recognized in the financial statements are adjusted to reflect adjusting events, but only disclosures are required for material non-adjusting events. Management’s judgment is required in determining whether events that took place after the end of the reporting period are adjusting or non-adjusting events. This will be highly dependent on the reporting date and the specific facts and circumstances of each company’s operations. Coronavirus has overwhelmed the world in various ways and at various times. China was the first to announce spread of the virus in November, 2019. UK announced its first case of coronavirus in February, 2020 and Ghana announced its first case in March, 2020. While company A resides in China, company B resides in the UK and C resides in Ghana. Company A’s financial reporting period ends on 31st October each year; company B’s financial reporting period ends on 31st December, each year and company C’s financial reporting period ends on the 31st of March each year. Management of these companies may need to continually review and update the assessments up to the date the financial statements are issued given the fluid nature of the crisis and the uncertainties involved.
You are required to discuss in respect of each of the companies, the potential management conclusions of the impact of the coronavirus on end of year reporting, mindful of IAS 10.
Total Marks: 20marks