Consider the following stock price and shares outstanding information.

Consider the following stock price and shares outstanding information.

1. Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as the base period. Do not round intermediate calculations. Round your answers to two decimal places.

             PWI_{Year 1}:

             PWI_{Year 2}:

             VWI_{Year 1}:

             VWI_{Year 2}:

2. Compute the percentage change in the value of each index during the year. Do not round intermediate calculations. Round your answers to two decimal places.

   Percentage change in PWI:   %

   Percentage change in VWI:   %

3. Compute the percentage change for an unweighted index assuming $1,000 is invested in each stock. Do not round intermediate calculations. Round your answer to two decimal places.

     %

What is consumer surplus?

a.It is the sum of the value consumers place on the product above the price they paid for it

b.It is the amount of income a consumer has remaining after purchasing a product

c.It is the profit margin on the product

Producer surplus is:

a.Revenue minus fixed costs

b.The area above the supply curve below the equilibrium price line

c.The area above the supply curve and beneath the demand curve to the left of the equilibrium point

The demand function for a pair of a popular new brand of athletic shoe has been estimated to be as follows:

Q_d = 500 – 2.5*Po + 1.5*Pc + .5*I + .02*A

Where Po is the own price of the pair of shoes, Pc is the price of a pair of close competitor’s shoes, I is the average income in the area measured in thousands of dollars, and A is spending on advertising measured in millions of dollars. At the current time, the new shoes are priced at $125 a pair, a pair of the competitor’s shoe is selling for $100, I = 37.5 and A = 5 .

Based on the cross price elasticity of the new shoe and its closest competitor, the 2 types of shoes are best described as:

a.unrelated

b.Substitutes

c.Complements

(Option leverage; straddle payoffs; replication; % margin) In the one-period binomial model, the current stock price of CAT (Caterpillar) is $90. Robert expects that in one year the stock price of CAT will be either $108 (up move) or $75 (down move). The exercise price of one-year European call (or put) option of CAT=$100 and risk-free rate r=2% per annum. Robert would like to construct a portfolio with the stock and cash to replicate the payoff of 1,000 units of “straddle” of CAT, where one unit of straddle is the combination of long one call option and long one put option with the same strike price.

(a) What are the gross payoffs ($) of 1,000 units of CAT straddle in the up and down move, respectively?

(b) How many shares of CAT does Robert need to buy/short now?

(c) How much money does Robert need borrow/save now?

(d) Calculate the percentage margin.

[Note: percentage margin=(equity)/(short position) or percentage margin=(equity)/(value of stock)]

(e) Calculate the current price of CAT straddle (per unit) in the one-period binomial setting.

Two firms, 1 and 2, are engaged in Bertrand price competition. There are10possible buyers, each of whom is willing to pay up to $4, and no more, for an item the firms sell .Firms 1 and 2 have identical unit costs of $2. However, each firm has a capacity of 8units, so that it cannot satisfy the whole market by itself (it can only satisfy 8 possible buyers, at most).The firms simultaneously announce prices, p1 and p2 respectively and the prices are publicly known. If p1=p2<=4; the first five buyers buy from firm 1 and the remaining 5from firm 2. Then firm 1's profit becomes (p1-2)*5 and similarly for firm 2.If p1< p2<=4; the first eight buyers buy from firm 1 and the remaining 2 from firm 2.If p2< p1<=4; then only the first two buyers buy from firm 1 and the remaining 8 from firm 2. If a firm charges a price above $4, it does not get any buyers. The prices p1;,p2 are restricted to be $0,$1, $2, $3, $4..

Find all the Nash equilibria in pure strategies for this game.

Weihu Corporation is considering building a new factory to manufacture bicycles. Weihu has already spent 300,000 in the R&D expense. The new factory will cost $1,500,000. The expected number of bikes produced and sold is 4000 for the first year, 5000 for the second year and 5500 for the third year. The sales price is $250 per bike in the first year in nominal terms. This price is expected to grow at 3% per year in real terms. The variable costs per bike are $120 in the first year in nominal terms. These costs are expected to increase at 2.5% per year in real terms. The factory requires temporary additional personnel, which will result in additional labor costs of $50,000 per year (in nominal terms), which remains constant in real terms. All costs and sales are incurred at the end of each year. Additional net working capital requirements at the beginning of each year are 15% of expected sales for that same year. The market value of the factory after three years is $1,300,000 in real terms. The asset class is closed upon selling the factory. The CCA rate is 4%, the tax rate is 35%, the expected inflation rate is 2.5% and the required rate of return is 10% in real terms. Calculate the project’s NPV.

A company just started to pay dividends. Its dividend payout ratio is 30%. An analyst expected the company growing fast at the following first two years at a dividend growth rate of 10% per year. After that the company will slow down to an annual growth rate of 5% forever. The company’s required rate of return is 8% per annual. If the company’s last annual earning is $10 per share, what’s the stock price the analyst should expect now?

A new issued ten-year maturity bond with coupon rate of 10% is selling at par ($1,000). If interest rate rise will rise from 10% to 15% after one year of purchasing the bond, what’s the bond’s rate of return at the end of the first year of purchasing?

A company just started to pay dividends. Its dividend payout ratio is 40%. An analyst expected the company growing fast at the following first two years at a dividend growth rate of 10% per year. After that the company will slow down to an annual growth rate of 5% forever. The company’s required rate of return is 14% per annual. If the company’s last annual earning is $10 per share, what’s the stock price the analyst should expect now?

It has been extensively demonstrated that adequate night sleep is crucial for cognitive performance.  To investigate whether first year USC students are getting adequate sleep the night before a final exam, 81 randomly selected first year USC students were asked to record their number of hours of sleep the night before their final exams. The mean number of hours of sleep among the 81 students was 6.2 with an SD of 1.5 hours.                                                                                       (18 points)

1. Identify the population, sample, and parameter of interest in this study.  (3 points)
2. Construct a 95% CI for the mean number of hours first year USC students sleep the night before an exam.  Explain the meaning of this CI (you are expected to explain what this confidence interval says about the parameter of interest)    (5 points)
3. Now construct a 99% CI for the mean number of hours first year USC students sleep the night before an exam.  Explain the meaning of this CI and contrast with the 95% CI in part b.                          (5 points)
4. Suppose the 81 students represent a subset of a larger pool of 100 students randomly selected for the study.  The 81 students provided the investigators with their number of hours of sleep, while the remaining 19 students did not respond when contacted by the investigators.  If the 19 ‘non-responders’ were more likely to sleep more hours before an exam than a typical first year USC student, how would this affect the estimate and CI for the mean number of hours first year USC students sleep the night before an exam?                                                                                                                (5 points)

PART 1

Two methods are compared to inoculate or infect a corn fungus strain known as huitlacoche. In a first stage of the study, the experimenter wants to determine which of the methods generates the highest percentage of infection. The method A consists in cutting the tip of the ear to apply the strain, and in the method B the strain is injected transversely. Of 41 ears inoculated with the method A, 20 were infected, that is, they generated huitlacoche; Meanwhile, 38 ears of corn inoculated with the method B they became infected 27.

Part 2

With respect to the problem described in part 1, the best method of inoculation was applied to two varieties of maize in two locations. Once the ear is infected, it is important to measure the final percentage of the surface of the ear that was covered by the fungus, as well as the weight in grams of the huitlacoche. The results for variety 2 of maize, obtained in 15 ears of Texcoco and in 15 ears of Celaya are the same as in the table in part 1.

a) Can we say that the percentage of coverage of the fungus is higher in Celaya than in Texcoco? Test the appropriate hypothesis for the means

b) Use a scatter diagram (graph type X-Y) to verify if there is a linear relationship between the percentage of coverage of the ear with grams of huitlacoche.

c) Ignore the coverage and test the equality of the average production of huitlacoche in the two locations.

d) It is evident that the greater the coverage, the greater the production of huitlacoche, would there be a way of knowing with these data whether a similar production of huitlacoche in both locations corresponds to the same coverage? Argue your answer.

Note: The exercises must be solved in two ways. The first is without using the excel data analysis and the second using the excel data analysis. Remember that you have to show step by step explaining clearly.

Progression

Chart View

Lab Results

 L.B.                                                                      J.B.

Progesterone low                                             Testosterone Normal

Estradiol normal                                                LH normal

FSH normal                                                         TSH norm

TSH normal                                                         Seminal parameters normal

Pelvic ultrasound normal



J.B.'s semen analysis reveals no apparent problem. L.B. appears to be ovulating normally. BBT charting captures a change in temperature, and ovulation testing reveals an LH surge. The provider suspects L.B. may have a luteal phase defect because her progesterone levels are low after ovulation. The provider decides to order an hysterosalpingogram (HSG) for LB.

1. How will you describe a HSG to the couple?
2. You tell L.B. that it is important for her to call the office when her menstrual cycle starts

so the HSG can be scheduled between days 7 and 10 of her cycle. It is important they                             abstain from sex between the first day of her cycle until after the test. L.B. asks why. What do you tell her?

The HSG was normal, with no blockage to the fallopian tubes. The provider speaks with the couple about starting L.B. on clomiphene (Clomid) and progesterone vaginal suppositories, starting 2 days after ovulation.

3. What is the expected outcome associated with each of these medications?
4. You determine that L. B. understands your teaching about clomiphene therapy.

  (Select all that apply;)

1. “I do not need to use the LH testing kits anymore.”
2. “There is a higher risk of my having twins, or more.”
3. “I will take this medicine orally for 5 days each month.”
4. “I may experience some flushing and breast tenderness.”
5. “My husband will need to learn to give me daily injections.”

Mrs. Smith is a 50 year old Caucasian woman who has 4 children ages 17, 15, 13, and 10. She was 33 with the birth of her first child. Her BMI is 25. She has no personal or family history of breast cancer. She lives with her husband in a suburban community. She is an elementary school teacher who is working part-time as a substitute so she can be home with her children. She has been healthy with no previous medical history. One year ago she noted a small palpable lump in her right breast about the size of an almond. Because she has been healthy she assumed it was nothing and ignored it. Over the last month she has noted that this lump has been increasing in size. Her health insurance would be expiring in the next month so she reluctantly decided to have a mammogram. She called for an appointment and they were unable to see her for another 2 months.

After waiting 2 months, her mammogram confirmed a 5 cm mass. She then had an ultrasound guided biopsy. This biopsy confirmed the presence of cancer cells. An additional biopsy confirmed the presence of cancer cells in 3 of her lymph nodes most proximal to the tumor.

1. What are the primary concerns for the patient right now?
2. What is the rationale for these concerns?
3. What are some of the expected medical surgical interventions?
4. What is the worst possible complication to anticipate?
5. What further assessment will be needed if complications develop?
6. What pharmaceutical drugs are approved treatments for breast cancer patients?
7. Discuss the advantages and disadvantages of the selected drugs, and include safety issues.