Purchase-Related Transactions Using Perpetual Inventory System

The following selected transactions were completed by Capers Company during October of the current year:

Required:

Journalize the entries to record the transactions of Capers Company for October.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Consider the Happy Cruise Lines Sailor file shown below. It lists all of the sailors on the company’s cruise ships by their unique sailor identification number, their name, the unique identification number of the ship they currently work on, their home country, and their job title.

                 Sailor file

QUESTION: Construct a B+-tree index of the type shown in this chapter for the Sailor file, assuming that now there are many more records than are shown above. The file and the index have the following characteristics:

• The file is stored on nine cylinders of the disk. The highest key values on the nine cylinders, in order, are:

                        Cylinder 1: 02653

                        Cylinder 2: 07784

                        Cylinder 3: 13957

                        Cylinder 4: 18002

                        Cylinder 5: 22529

                        Cylinder 6: 27486

                        Cylinder 7: 35800

                        Cylinder 8: 41633

                        Cylinder 9: 48374

• Each index record can hold four key value/pointer pairs.

• There are three index records at the lowest level of the tree index.

The riskless rate for this period is 3.5%, and the covariance between returns on IBM stock and the S&P500 over this period is 0.02276.

1E. What is the variance of the S&P500 over this period? 2 points

1F. What is IBM’s CAPM beta according to this data? 5 points

1G. What is IBM’s CAPM cost of equity according to this data? 5 points

1H. If IBM’s debt to equity ratio is 0.57, what is their unlevered cost of equity according to this model? 5 points

The National Health and Nutrition Examination Survey (NHANES) assesses the health and nutritional status of adults and children in the United States using data from interviews and direct physical examinations. From 1999 to 2002, 712 men between the ages of 20 and 29 were examined. The mean body weight in this sample was 183.0 pounds. The margin of error associated with this estimate for 95% confidence was plus or minus 3 pounds. What is the probability (expressed as a percent) that the true population mean weight of men between the ages of 20 and 29 is between 180 and 186 pounds?

April 2, 2013

A crisis needs a firewall not a ringfence

By Alistair Darling

Fortunately I’ve only ever had to take one telephone call that made my blood run cold. On the morning of October 7, 2008, Sir Tom McKillop, the then chairman of Royal Bank of Scotland, called me to say that his bank was fast running out of money. He asked me what I was going to do about it.

This was three weeks after the collapse of Lehman Brothers. The markets were in a panic. RBS shares were in free fall that morning. We were on the brink of an international banking collapse.

I had no doubt what had to be done. If RBS closed its doors people would panic. The cash machines would close down. There would be no way for customers to get their money out. That panic would have spread to other British banks and then to the US and beyond.

The UK government had seen what happened 12 months earlier with the run on Northern Rock. Yet it was a comparatively small bank where, in reality, depositors’ money was guaranteed by the government.

So that October morning I had no choice but to bail out RBS, to do whatever it took to stop a catastrophic banking collapse across the globe. It was not an easy decision. RBS, one of the largest banks in the world, had a balance sheet about the same size as Britain’s gross domestic product. Added to that, we knew we would have to bail out HBOS. It was in the same precarious position.

We did what was needed. But it was at a substantial cost. I hope that none of my successors are ever faced with the same scale of horrors.

It is against this background that I looked at Monday’s announcement by Chancellor George Osborne on ringfencing, made as part of a speech on banking reform. Would a ringfence, or even the “electrified” version he now proposes, have made any difference? I don’t think it would. A partial bailout would not have worked in those febrile times.

The theory is that if a bank is divided so that its retail and investment activities are separated then it would be possible to save one part but let the other go to the wall. The argument runs that I could have saved RBS’s high street activities and abandoned the investment arm to its fate.

I am not so sure that would have worked. In the face of blind panic and a total collapse in confidence, the government needed to erect a firewall to show that it was not prepared to let the banking system collapse.

After all, Lehman Brothers was just such an investment bank. The Americans let it go. Its collapse was not the cause of the ensuing crisis but it was certainly a major catalyst.

Ringfencing will not avert the possibility of bank bailouts in a time of acute crisis. No government can say that it will never again have to bail out a bank or intervene in the face of such crisis. It should be different in more tranquil times, when there is no reason that a failed bank cannot be treated like any other failed company and face the consequences.

Ringfencing is a perfectly sensible measure. It would help in identifying good and bad assets. It took months to discover the sheer horror of the scale of RBS’s problems, particularly outside of the UK. But ringfencing – even with electrification, whereby regulators will have the power to break up a bank – has its limits.

The proposals by the Independent Commission on Banking – headed by Sir John Vickers – were entirely sensible. The banks should adopt them and they are entitled to ask that there are very clear rules in place if in future the regulators are to take enforcement action.

But there are two other elements of the Vickers proposals, and surely the most important is the capital that banks are required to hold and the lending ratio they are allowed to support. Vickers recommended capital of 4 per cent, a lending ratio of 25 to 1. The chancellor, in an apparent sweetener to the banks, has said the ratio should be 3 per cent, allowing a 33 to 1 ratio.

A requirement to hold more capital and to be more prudent about the amount of money that can be lent will, I suspect, be a far greater buffer against calamities than a ringfence.

Nor have we heard how, in future, bond holders will be made to take some losses in the event of such failure. We have to end a situation where in the good times they profit, but in the bad it is the taxpayer who loses out.

A lot of work has been done on “bail in” for bond holders. That needs to be developed into a set of firm proposals. Sadly, when normal companies go bust there is some pain, but not in banks.

Finally, we can never sort out our banking problems in the UK until the eurozone does the same. The putative banking union will not work in its present form. The recommendations of Erkki Liikanen, governor of Finland’s central bank, which were meant to mirror those of the Vickers commission, appear doomed. The French and German governments – and more particularly their banks – have made it clear they will not accept ringfencing.

This presents further risk to add to that of failing to recognise that some of Europe’s banks still badly need more capital and further write-offs.

Ringfencing is a useful tool to help manage banks but it is certainly not a complete answer. Too many risks still remain.

*The writer is a former UK chancellor of the exchequer

Class work Questions

“Ringfencing is a useful tool to help manage banks but it is certainly not the complete answer” (Alastair Darling, Financial Times, 4 Feb 2013).

1) Briefly describe what Alistair Darling means by “ringfencing”, and how it might help prevent a banking collapse such as RBS:

2) Briefly describe the further measures apart from Ringfencing, that Vickers proposes? Look for information about those policies. (internet search)

3) How the implementation of those proposals affected many European banks? (some internet search)

4) Did the UK government do well to save the UK banks while the US government did not save Lehman Brothers? What kind of problems this decision may create in the future for the banking system?

explain the concept of a food web and what happens if one species disappears; explain what factors contribute to changes in the size of populations; explain what biodiversity is and why it changes (either at the geologic time scale or human-caused changes); explain what potential changes will occur to the climate engine with increased greenhouse gases in the atmosphere;

What you have to do:

Your task for this activity will be to compare and contrast the locomotor strategies of the following three hominin species: Ardipithecus ramidus, Australopithecus afarensis and Homo erectus. You will accomplish this by answering the following questions.

Use the following resource for Ardipithecus. https://milnepublishing.geneseo.edu/the-history-of-our-tribe-hominini/chapter/ardipithecus-ramidus-ardipithecus-kadabba/ (Click)

Use the following resource for Australopithecus https://milnepublishing.geneseo.edu/the-history-of-our-tribe-hominini/chapter/australopithecus-afarensis/ (Click)

Use the following resource for Homo erectus https://www.nationalgeographic.com/science/2004/11/humans-were-born-to-run-fossil-study-suggests/ (Click)

Before you begin make sure view all relevant reading material so that you can give me informed opinions.

1. Which hominin had the best arboreal capabilities? Make sure you explain your answer by talking about only one feature that backs up your claim. Choose only one feature from the lower extremities (Legs and feet).

2. Which hominin was the first to have feet that are effective for habitual bipedalism? Briefly explain what makes their feet more effective for bipedalism when compared to previous hominins.

3. Which hominin had the best anatomy for running on two legs? Briefly explain how you would know and tell me about two specific skeletal features that suggest that your chosen species was running on two legs.

4. Lastly, I would like you to give a short summary of the notable evolutionary changes in locomotor strategy (the way that you move around) that you notice occur over time as seen from the perspective of Ardipithecus ramidus, Australopithecus afarensis and Homo erectus.

The following is an extract from the statement of financial position of
Verona Co at 30 September 2004:
R
Ordinary shares of 25 cents each 250,000
Reserves 350,000
7% preference shares of R1 each 250,000
15% long-dated bonds 150,000
–––––––
Total long-term funds 1,000,000
–––––––
The ordinary shares are currently quoted at R1.25 each, the bonds
trading at R85 per R100 nominal and the preference shares at 65 cents
each. The ordinary dividend of 10 cents has just been paid, and the
expected growth rate in the dividend is 10%. Corporation tax is at the
rate of 30%.

Required:
Calculate the weighted average cost of capital for Verona Co.

The paper “Cigarette Tar Yields in Relation to Mortality from Lung Cancer in the Cancer Prevention Study II Prospective Cohort “ (British Medical Journal [2004]: 72-79) included the accompanying data on the tar level of cigarettes smoked for a sample of male smokers who subsequently died of lung cancer.

Assume it is reasonable to regard the sample as representative of male smokers who die of lung cancer. Is there convincing evidence that the proportion of male smoker long cancer death is not the same for the four given tar level categories?

Researchers for the University of Maryland Department of Civil and Environmental Engineering used stochastic dynamic programming to determine optimal load estimates for electric power (Journal of Energy Engineering, Apr. 2004). One objective was to determine the probability that a supplier of electric power would reach or exceed a specific net profit goal for varied load estimates. All load estimates in the study yielded a probability of .90. Consider two different suppliers of electric power (Supplier A and Supplier B) acting independently.

a. What is the probability that both suppliers reach their net profit goal?

b. What is the probability that either Supplier A or Supplier B reaches its net profit goal?