An investor with an initial equity of $15,000 sees a good investment opportunity to purchase stocks of Walmart (WMT) buying with 50% on margin from his broker. If the stock is currently trading at $100:

1. How many stocks he will be able to purchase?
2. If the broker Maintenance Margin Required is 30%, at which stock price of WMT the investors would receive a margin call? Show formula and calculation.
3. What would be the return on this investment 1 year later, if the WMT price increases to $112? And, if stock price is $92? Consider an annual borrowing interest rate of 4%. Show all calculations.
4. What is the leverage factor (effect) of buying on margin for this investment for when WMT increases $112? Show all calculations.

INTEREST RATE SENSITIVITY

An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 10% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter all amounts as positive numbers.

The dollar-value LIFO method was adopted by Riverbed Corp. on January 1, 2017. Its inventory on that date was $220,000. On December 31, 2017, the inventory at prices existing on that date amounted to $201,600. The price level at January 1, 2017, was 100, and the price level at December 31, 2017, was 112.

Compute the amount of the inventory at December 31, 2017, under the dollar-value LIFO method.

Inventory 12/31/17 under dollar-value LIFO method

On December 31, 2018, the inventory at prices existing on that date was $237,245, and the price level was 115.

Compute the inventory on that date under the dollar-value LIFO method.

Inventory 12/31/18 under dollar-value LIFO method

1. Suppose the inverse demand function for a monopolistically competitive firm’s product is given by

? = 100 − 2?
and the cost function is given by ?? = 52 + 4?

1. Determine the profit-maximizing price and quantity

2. Determine the maximum profits.

3. Can we say that this firm is operating in the long-run or short-run equilibrium at the equilibrium price and quantity?

2. Suppose the inverse demand for a monopolist’s product is given by ? = 110 −

The monopolist can produce output in two plants. The marginal cost of producing in plant 1 is ??! = 3?!, and the marginal cost of producing in plant 2 is ??" = 2?".

1. How much output should be produced in each plant to maximize profits?

2. What price should be charged for the product?

EXCEL ASSIGNMENT

You are thinking of advertising Microsoft products on a popular TV music program. You will pay 1 price for the first group of ads, but as you buy more ads, the price per ad decreases as shown in the following table...

For example, if you buy 8 ads, you pay $12,000 for the first 5 ads and $11,000 for each of the next 3 ads. If you buy 14 ads, you pay $12,000 for the first 5 ads, $11,000 for each of the next 5 ads, and $10,000 for each of the last 4 ads.

Build your spreadsheet in a way that when the user enters the number of ads, the total cost will be calculated. (You can build your sheet in any way you want and might need to use multiple formula in multiple steps to calculate the total cost)

HINT: For each range calculate the cost until breakpoint. For example for the range of 6-10 calculate what you have to pay for the first 5 ads. For 11-20 what do you have to pay for the 10 previous ads. You need to build it in a form of table that for each range it uses the cost you got from the previous range plus the cost of the remaining. Once you have that, then you will need to combine a couple of VLOOKUPs to get the final answer.

Consider two firms that provide a differentiated product, which they produce at the same constant marginal cost, MC = 3 (no fixed cost). The demand function for Firm 1 is q1 = 10 – p1 + 0.5p2 and for Firm 2 is q2 = 20 – p2 + 0.5p1, where p1 is Firm 1’s price and p2 is Firm 2’s price.

a) Write the profit functions for these firms.( 8 marks)

b) What are the equilibrium prices and quantities? ( 15 marks)

c) Assume now Firm 1 has the advantage to set its price first followed by Firm 2, after Firm 2 observed the price set by Firm 1. What is the equilibrium price for each firm? ( 15 marks)

This is a two-part discussion topic. In the first part, you will demonstrate your understanding of one key aspect of perfect competition. In the second, you will apply your understanding of perfect competition to the world around you.

1. In a perfectly competitive industry, buyers and sellers are "price-takers". What exactly does it mean to say that sellers are price takers? [Hint: Why does a seller not sell at a price lower than the market-established equilibrium price? Why does a seller not charge a price higher than what has been established in the market?]

2. Identify an industry / market that, in your understanding, can be described as being close to "perfectly competitive". Explain your choice.

In 2007, the British bank ________ experienced the first bank run to occur in the United

Kingdom in over 100 years.

A) the First National Bank of Keystone

B) Indymac

C) Northern Rock

D) Barclays Bank, PLC

The largest bank failure rate occurred during the:

A) early 1930s.

B) late 1970s.

C) early 1890s.

D) mid-2000s.

Immediately after being sworn in as president in 1933, ________ declared ________.

A) Herbert Hoover; the end of the Great Depression.

B) Franklin D. Roosevelt; a bank holiday.

C) Alexander Hamilton; the establishment of the First Bank of the United States.

D) Harry S. Truman; higher taxes on bank profits.

The name of the government agency that insures commercial bank deposits is the:

A) Federal Savings and Loan Insurance Corporation.

B) Federal Deposit Insurance Corporation.

C) Federal Reserve System.

D) Office of the Comptroller.

12 pts) Below is a set of exam 1 scores from our Statistics class. 7 of the scores come from females, and 7 come from males. Test the hypothesis that males and females scored differently on our first exam, using an alpha level of .05.

1. (2 pts) What is the appropriate test? Two Sample test
2. (1 pt) State the null hypothesis: Males and females did not the differently on first exam
3. (1 pt) State the alternative hypothesis: Males and females did score differently on first exam
4. (2 pts) Find the critical value: 2.178
5. (3 pts) Calculate the obtained statistic: 0.785
6. (2 pts) Make a decision:
7. (1 pt) What does your decision mean?

A mixture of hydrocarbons is separated with two distillation columns in series. This mixture, containing 20 mass% ethane, 40 mass% propane and 40 mass% butane, is fed to the first column a rate of 100 moles per hour. The overhead product from the first column contains 95 mole% ethane, 4 mole% propane and 1 mole% butane. The bottoms product from the first column is sent to the second column for further separation. The composition of the overhead product from the second column is 99 mole% propane and 1 mole% butane. The composition of the bottoms product from the second column is 8.4 mole% propane and 91.6 mole% butane. Determine: 1. (5 points) Draw a process flow diagram and clearly label your streams. 2. (5 points) Calculate the flow rate of ethane in the overhead product of the first column. 3. (10 points) Calculate the flow rate of the overhead product leaving the second column. 4. (10 points) Determine the composition of the feed to the second column.