Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 60 shares with a basis of $6,600, and Clyde owns the remaining 40 shares with a basis of $15,000. At year-end, Getaway is considering different alternatives for redeeming some shares of stock. Evaluate whether each of the following stock redemption transactions will qualify for sale and exchange treatment.

a. Getaway redeems 10 of Bonnie’s shares for $5,000. Getaway has $26,000 of E&P at year-end and Bonnie is unrelated to Clyde.

b. Getaway redeems 29 of Bonnie’s shares for $10,000. Getaway has $26,000 of E&P at year-end and Bonnie is unrelated to Clyde.

c. Getaway redeems 8 of Clyde’s shares for $5,500. Getaway has $26,000 of E&P at year-end and Clyde is unrelated to Bonnie.

Suppose that, prior to the passage of the Truth in Lending Simplification Act and Regulation Z, the demand for consumer loans was given by Qdpre-TILSA = 14 -90P (in billions of dollars) and the supply of consumer loans by credit unions and other lending institutions was QSpre-TILSA = 6 + 70P (in billions of dollars). The TILSA now requires lenders to provide consumers with complete information about the rights and responsibilities of entering into a lending relationship with the institution, and as a result, the demand for loans increased to Qdpost-TILSA = 26 -90P (in billions of dollars). However, the TILSA also imposed “compliance costs” on lending institutions, and this reduced the supply of consumer loans to QSpost-TILSA = 2 + 70P (in billions of dollars). Based on this information, compare the equilibrium price and quantity of consumer loans before and after the Truth in Lending Simplification Act.(Note: Q is measured in billions of dollars and P is the interest rate). Instruction: Enter your responses for the equilibrium price in percentage terms, and round all responses to one decimal place. Equilibrium price (interest rate) before TILSA: percent Equilibrium quantity (in billions of dollars) before TILSA: $ billion Equilibrium price (interest rate) after TILSA: percent Equilibrium quantity (in billions of dollars) after TILSA: $ billion

Suppose that, prior to the passage of the Truth in Lending Simplification Act and Regulation Z, the demand for consumer loans was given by Qdpre-TILSA = 14 -90P (in billions of dollars) and the supply of consumer loans by credit unions and other lending institutions was QSpre-TILSA = 6 + 70P (in billions of dollars). The TILSA now requires lenders to provide consumers with complete information about the rights and responsibilities of entering into a lending relationship with the institution, and as a result, the demand for loans increased to Qdpost-TILSA = 26 -90P (in billions of dollars). However, the TILSA also imposed “compliance costs” on lending institutions, and this reduced the supply of consumer loans to QSpost-TILSA = 2 + 70P (in billions of dollars).

Based on this information, compare the equilibrium price and quantity of consumer loans before and after the Truth in Lending Simplification Act.(Note: Q is measured in billions of dollars and P is the interest rate).

Instruction: Enter your responses for the equilibrium price in percentage terms, and round all responses to one decimal place.

Equilibrium price (interest rate) before TILSA:  percent

Equilibrium quantity (in billions of dollars) before TILSA: $  billion

Equilibrium price (interest rate) after TILSA:  percent

Equilibrium quantity (in billions of dollars) after TILSA: $  billion

Suppose that, prior to the passage of the Truth in Lending Simplification Act and Regulation Z, the demand for consumer loans was given by Q^d_pre-TILSA = 12 -100P (in billions of dollars) and the supply of consumer loans by credit unions and other lending institutions was Q^S_pre-TILSA = 5 + 150P (in billions of dollars). The TILSA now requires lenders to provide consumers with complete information about the rights and responsibilities of entering into a lending relationship with the institution, and as a result, the demand for loans increased to Q^d_post-TILSA = 18 -100P (in billions of dollars). However, the TILSA also imposed “compliance costs” on lending institutions, and this reduced the supply of consumer loans to Q^S_post-TILSA = 3 + 150P (in billions of dollars).

Based on this information, compare the equilibrium price and quantity of consumer loans before and after the Truth in Lending Simplification Act.(Note: Q is measured in billions of dollars and P is the interest rate).

Instruction: Enter your responses for the equilibrium price in percentage terms, and round all responses to one decimal place.

Equilibrium price (interest rate) before TILSA: ____ percent

Equilibrium quantity (in billions of dollars) before TILSA: $ ___ billion

Equilibrium price (interest rate) after TILSA: _____percent

Equilibrium quantity (in billions of dollars) after TILSA: $ _____billion

Do students reduce study time in classes where they achieve a higher midterm score? In a Journal of Economic Education article (Winter 2005), Gregory Krohn and Catherine O’Connor studied student effort and performance in a class over a semester. In an intermediate macroeconomics course, they found that “students respond to higher midterm scores by reducing the number of hours they subsequently allocate to studying for the course.” Suppose that a random sample of n = 8 students who performed well on the midterm exam was taken and weekly study times before and after the exam were compared. The resulting data are given in Table 10.6. Assume that the population of all possible paired differences is normally distributed.

Table 10.6

Paired T-Test and CI: Study Before, Study After

95% CI for mean difference: (5.20929, 10.79071)

T-Test of mean difference = 0 (vs not = 0): T-Value = 6.78, P-Value = .0003

(a) Set up the null and alternative hypotheses to test whether there is a difference in the true mean study time before and after the midterm exam.

H₀: µ_d =  versus H_a: µ_d ≠

(b) Above we present the MINITAB output for the paired differences test. Use the output and critical values to test the hypotheses at the .10, .05, and .01 level of significance. Has the true mean study time changed? (Round your answer to 2 decimal places.)

t =   We have (Click to select)strongvery strongextremely strongno evidence.

(c) Use the p-value to test the hypotheses at the .10, .05, and .01 level of significance. How much evidence is there against the null hypothesis?

There is (Click to select)extermly strong evidenceno evidencestrong evidencevery strong evidence against the null hypothesis.

1-Look up the requested values using book tables. You may check with a calculator, but enter the table value.

   Let T denote a t-distribution variable with 14 degrees of freedom. Find:

P(T>1.761)=?

Note: Enter X.XX AT LEAST ONE DIGIT BEFORE THE DECIMAL, TWO AFTER and round up. Thus, 27 is entered as 27.00, 3.5 is entered as 3.50, 0.3750 is entered as 0.38

2-Look up the requested values using book tables. You may check with a calculator, but enter the table value.

     Find the normal distribution P VALUE used for a Greater Than one-sided alternative hypothesis test with a test statistic z=2.32.

Note: Enter X.XX AT LEAST ONE DIGIT BEFORE THE DECIMAL, TWO AFTER and round up. Thus, 27 is entered as 27.00, 3.5 is entered as 3.50, 0.3750 is entered as 0.3

3-Look up the requested values using book tables. You may check with a calculator, but enter the table value.

     Find the standard normal distribution Critical VALUE used for a Less Than one-sided alternative hypothesis test with a 1% significance level.

Note: Enter X.XX AT LEAST ONE DIGIT BEFORE THE DECIMAL, TWO AFTER and round up. Thus, 27 is entered as 27.00, 3.5 is entered as 3.50, 0.3750 is entered as 0.3

4-Look up the requested values using book tables. You may check with a calculator, but enter the table value.

   Let T denote a t-distribution variable with 25 degrees of freedom. Find:

P(T<-0.684)=?

Note: Enter X.XX AT LEAST ONE DIGIT BEFORE THE DECIMAL, TWO AFTER and round up. Thus, 27 is entered as 27.00, 3.5 is entered as 3.50, 0.3750 is entered as 0.38

5-Use a CALCULATOR to compute the below probability.

     Suppose a basketball player hits and average of 60% of his free throws. In a game with 15 independent free throws, what is the probability he makes exactly 12 baskets?

Note: Enter X.XX AT LEAST ONE DIGIT BEFORE THE DECIMAL, TWO AFTER and round up. Thus, 27 is entered as 27.00, 3.5 is entered as 3.50, 0.3750 is entered as 0.3

Do students reduce study time in classes where they achieve a higher midterm score? In a Journal of Economic Education article (Winter 2005), Gregory Krohn and Catherine O’Connor studied student effort and performance in a class over a semester. In an intermediate macroeconomics course, they found that “students respond to higher midterm scores by reducing the number of hours they subsequently allocate to studying for the course.” Suppose that a random sample of n = 8 students who performed well on the midterm exam was taken and weekly study times before and after the exam were compared. The resulting data are given in Table 10.6. Assume that the population of all possible paired differences is normally distributed.

Table 10.6

Paired T-Test and CI: Study Before, Study After

95% CI for mean difference: (3.65391, 8.84609)

T-Test of mean difference = 0 (vs not = 0): T-Value = 5.69, P-Value = .0007

(a) Set up the null and alternative hypotheses to test whether there is a difference in the true mean study time before and after the midterm exam.

H₀: µ_d =  versus H_a: µ_d ≠

(b) Above we present the MINITAB output for the paired differences test. Use the output and critical values to test the hypotheses at the .10, .05, and .01 level of significance. Has the true mean study time changed? (Round your answer to 2 decimal places.)

t =   We have (Click to select)noextremely strongvery strongstrong evidence.

(c) Use the p-value to test the hypotheses at the .10, .05, and .01 level of significance. How much evidence is there against the null hypothesis?

There is (Click to select)no evidencevery strong evidenceextermly strong evidencestrong evidence against the null hypothesis.

Do students reduce study time in classes where they achieve a higher midterm score? In a Journal of Economic Education article (Winter 2005), Gregory Krohn and Catherine O’Connor studied student effort and performance in a class over a semester. In an intermediate macroeconomics course, they found that “students respond to higher midterm scores by reducing the number of hours they subsequently allocate to studying for the course.” Suppose that a random sample of n = 8 students who performed well on the midterm exam was taken and weekly study times before and after the exam were compared. The resulting data are given in Table 10.6. Assume that the population of all possible paired differences is normally distributed.

Table 10.6

Paired T-Test and CI: Study Before, Study After

95% CI for mean difference: (1.97112, 6.77888)

T-Test of mean difference = 0 (vs not = 0): T-Value = 4.30, P-Value = .0036

(a) Set up the null and alternative hypotheses to test whether there is a difference in the true mean study time before and after the midterm exam.

H₀: µ_d =  versus H_a: µ_d ?

(b) Above we present the MINITAB output for the paired differences test. Use the output and critical values to test the hypotheses at the .10, .05, and .01 level of significance. Has the true mean study time changed? (Round your answer to 2 decimal places.)

t =   We have (Click to select)novery strongextremely strongstrong evidence.

(c) Use the p-value to test the hypotheses at the .10, .05, and .01 level of significance. How much evidence is there against the null hypothesis?

There is (Click to select)very strong evidenceextermly strong evidencestrong evidenceno evidence against the null hypothesis.

Do students reduce study time in classes where they achieve a higher midterm score? In a Journal of Economic Education article (Winter 2005), Gregory Krohn and Catherine O’Connor studied student effort and performance in a class over a semester. In an intermediate macroeconomics course, they found that “students respond to higher midterm scores by reducing the number of hours they subsequently allocate to studying for the course.” Suppose that a random sample of n = 8 students who performed well on the midterm exam was taken and weekly study times before and after the exam were compared. The resulting data are given in Table 10.6. Assume that the population of all possible paired differences is normally distributed.

Table 10.6

Paired T-Test and CI: Study Before, Study After

95% CI for mean difference: (3.73660, 12.51340)

T-Test of mean difference = 0 (vs not = 0): T-Value = 4.38, P-Value = .0032

(a) Set up the null and alternative hypotheses to test whether there is a difference in the true mean study time before and after the midterm exam.

H₀: µ_d =  versus H_a: µ_d ?

(b) Above we present the MINITAB output for the paired differences test. Use the output and critical values to test the hypotheses at the .10, .05, and .01 level of significance. Has the true mean study time changed?(Round your answer to 2 decimal places.)

t =   We have (Click to select)strongvery strongextremely strongno evidence.

(c) Use the p-value to test the hypotheses at the .10, .05, and .01 level of significance. How much evidence is there against the null hypothesis?

There is (Click to select)no evidencevery strong evidencestrong evidenceextermly strong evidence against the null hypothesis.

Discuss the approach described in HKFRS 13 ‘Fair Value Measurement’ to measure the non- financial asset.