Which of the following is true? An undervalued fixed rate currency encourages inflation in that country An overvalued currency is a sign of a trade surplus for that country An undervalued currency is a sign of an excess supply of that currency An overvalued currency increases a country’s exports

A US corporation has a CNY1,000,000 account payable due in 6 months. To hedge its currency risk your company enters into an NDF contract. The current spot rate is CNY7.15/$, the NDF contract rate is CNY7.00/$, and the spot rate 6 months from today is CNY7.25/$

Your company pays $1,929.11

Your company pays $4,926.11

Your company receives $1,929.11

Your company receives $4,926.11

Which of the following transactions is/are in the US BOP account?

I.)    A Chinese company buys US Treasury securities from a broker/dealer in Sydney, Australia.

II.)  An Italian family flies United Airlines to New York.

III.)  A US investment bank buys a German stock from a US insurance company.

IV.) A Spanish mutual fund sells a Chinese company’s stock to a NY investment bank.

V.)  A US company sells a factory in Malaysia to a Chinese bank.

II and V

I and II

II, IV, and V

III and V

Undergraduate Degree and MBA Major (3 parts, 14 marks)

BA (=1), BEng (=2), BBA (=3), and several others (=4). There are three possible majors for the MBA students: Accounting (=1), Finance (=2), and Marketing (=3). Can the Statistics professor conclude that the undergraduate degree affects the choice of major?

1. [2 Marks] Create a cross-classified (or contingency) table with undergraduate degree as the row and MBA major as the column. The data in this table should be deemed as observed counts.
2. [3 Marks] Create another table with the corresponding expected counts and having row totals, column totals, and grand total. Round each cell value to two decimal places.
3. [9 Marks] Perform a chi-square test to assess the association (or independence) between undergraduate degree and choice of MBA major at 5% level of significance. Verify the assumptions required for the chi-square test of independence. Make sure you follow all the steps for hypothesis testing indicated in the Instructions section and show your computations.

Purpose: To ensure that you can get StatCrunch up and running, download and open a data file, create graphical and numeric output, and transfer the output into Word.

1. Open the data file Soda.csv in Excel. The file contains survey responses from 339 adults. Variables are ‘Soda’ = the % of daily fluid intake due to soda, ‘Diet’ = whether or not the individual is on a diet, ‘Gender’ = the gender of the individual, and ‘Age’ = the age in years of the individual.

1. Which of the variables are categorical?

2. Which of the variables are numeric?

3. What are the scales of measurement of the variables?

2. Open the data file StocksTbills1960-2000.csv in StatCrunch. The file contains percent returns for stocks ‘stock’ and US Treasury bills ‘tbill’ for each year from 1960 to 2000.

1. Use StatCrunch to produce a dotplot of ‘tbill’ and paste it

                                                                  here

2. Use StatCrunch to calculate the sample mean of ‘tbill’ and paste the output

                                                                  here.

3. Submit the assignment by uploading this document.

Marcel and Clio are considering making a sizable charitable gift to a local university using assets held in their joint mutual fund accounts. The primary purpose of their gifting strategy is to reduce the taxable estate while providing a benefit for the university. Which of the following strategies will maximize the effectiveness of this estate planning strategy?

a.Give the mutual funds first to their oldest child, who can then sell them with a stepped-up basis and use the proceeds as a donation to the university.

b.Donate the mutual funds directly to the university and allow the university to sell the mutual funds.

c.Sell the mutual funds first and then donate the cash proceeds to the university.

d.Transfer the mutual funds to a non-charitable irrevocable trust and then donate the trust income to the university.

Company B sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 6%. For years, Company B believed that the 6% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Company B decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:

Company B gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Company B $30,000 to buy from manufacturers):

1. Compute the total revenue that Company B would receive from University and from Memorial.

2. Compute the activity rate for each activity cost pool. (customer deliveries, manual order processing, electronic order processing, line item picking)

3. Compute the total activity costs that would be assigned to University and to Memorial.

4. Compute Company B's customer margin for University and for Memorial. (Hint: Do not overlook the $30,000 cost of goods sold that Company B incurred serving each hospital.)

Maurice has recently graduated from University and started working for a small public accounting firm who specialise in providing taxation services to a range of clients. He has just returned from a review interview with one of the partners and is upset because the partner was not happy with the quality of the work papers he has prepared to support the income tax return for a client.

Explain to Maurice the reasons why quality work papers are important, what should be included in a set of work papers that support the income tax return for a client, and what they may be used for in the future. 10 marks

Ann and Suzan are classmates who graduated with business degrees from Athabasca University. Ann inherited $50,000 from her father. She considers forming a 10-year business partnership with Suzan. To join the partnership, Ann needs to invest $50,000. She believes her portion of the partnership will generate the following profits at a discount rate of 4%.

a) Calculate the Net Present Value (NPV).

b) Instead of forming a partnership with Suzan, Ann has the option to buy a government bond. Ann expects to receive $150 per year for each of the next ten years, and then receive a principle repayment of $50,000. What is the value of a coupon bond that pays $150 per year for each of the next ten years? Assume the rate is 5%.

c) Suppose Ann has the option to buy a new motor home for $25,000 and sell it for $15,000 after six years. Alternatively, she can lease the motor home for $250 per month for six years and return it at the end of the six years. For simplification, assume that lease payments are made yearly instead of monthly and pay at the beginning of each year. If the interest rate, r, is 3.5%, is it better to lease or buy the motor home?

Great Games Company operates miniature golf courses throughout southern Arizona. On July 1, 2016, Great Games’ balance sheet showed (all dollar figures in thousands):

Cash $40 -- Accounts Payable $50 -- Credit Card Receivables 25 -- Accruals Payable 0 -- Golf Supplies 35 -- Long-term Notes Payable 0 -- Office Equipment (net) 45 -- Common Stock 65 -- Retained Earnings 30

Draft the journal Entry and Balance Sheet

During July the following events occurred to Great Games:
a) Collected $20 cash on credit card receivables due from customers.
b) Paid $27 on accounts payable that had come due.
c) Deposited in the bank $30 of rental fees earned from customers.
d) Customer rental fees of $64 were accepted on credit cards; credit card receipts were
submitted to Trusty Bank. Cash collection from bank is expected in August.
e) Bought $2 of golf supplies (balls) on an account to be paid in August.
f) Paid employee wages of $15.
g) Received a $3 electricity bill in July; this bill will be paid in August.
h) Paid rent for July, $9.
i) Bought office equipment costing $20. Paid $5 now and signed a note payable for
the remainder, due on December 30, 2018.
j) The note payable incurred $1 of interest during July; interest is to be paid in December.
k) Signed a contract for $7 for billboard advertising to be shown during August.
Payment will not be made until after the advertisements have been displayed.
l) Trusty Bank notified Great Games that it had collected $33 of credit card receipts.
m) Declared a cash dividend of $5 to shareholders who founded the company. Payment
will be made in December, 2016.
n) Counted $24 of golf supplies remaining at the end of July.
o) Great Games received $30 for additional stock issued to friends of the founders.
p) Estimated income taxes of $21 for July 2016. These will be paid next March 2017.

Great Games Company operates miniature golf courses throughout southern Arizona. On July 1, 2016, Great Games’ balance sheet showed (all dollar figures in thousands):

Cash $40 -- Accounts Payable $50 -- Credit Card Receivables 25 -- Accruals Payable 0 -- Golf Supplies 35 -- Long-term Notes Payable 0 -- Office Equipment (net) 45 -- Common Stock 65 -- Retained Earnings 30

Draft the Journal Entry

During July the following events occurred to Great Games:
a) Collected $20 cash on credit card receivables due from customers.
b) Paid $27 on accounts payable that had come due.
c) Deposited in the bank $30 of rental fees earned from customers.
d) Customer rental fees of $64 were accepted on credit cards; credit card receipts were
submitted to Trusty Bank. Cash collection from bank is expected in August.
e) Bought $2 of golf supplies (balls) on an account to be paid in August.
f) Paid employee wages of $15.
g) Received a $3 electricity bill in July; this bill will be paid in August.
h) Paid rent for July, $9.
i) Bought office equipment costing $20. Paid $5 now and signed a note payable for
the remainder, due on December 30, 2018.
j) The note payable incurred $1 of interest during July; interest is to be paid in December.
k) Signed a contract for $7 for billboard advertising to be shown during August.
Payment will not be made until after the advertisements have been displayed.
l) Trusty Bank notified Great Games that it had collected $33 of credit card receipts.
m) Declared a cash dividend of $5 to shareholders who founded the company. Payment
will be made in December, 2016.
n) Counted $24 of golf supplies remaining at the end of July.
o) Great Games received $30 for additional stock issued to friends of the founders.
p) Estimated income taxes of $21 for July 2016. These will be paid next March 2017.