Instructions: Choose one of the two options described below. Analyze the data using what you have learned in class.

Instructions: Your answer will include the following:

• A statement of the research question
• A description of the source of the data
• A description of the variables used in the analysis
• A contingency table (two-way table)
• Calculations of relevant percentages
• An answer to the question based on your analysis of the data

Option 1: Cheating

Research questions (do both):

• Are college students willing to report cheating?
• Is the willingness to report cheating related to   gender?

Investigate these questions for the students described in    body_image.xls.

This data comes from a survey of university students at Carnegie Mellon University in Pittsburgh, PA.

Here are the survey questions and associated variables:

Are you a male or a female? Gender (male, female) What is your height in inches? Height (in inches) What is your GPA? GPA

What was your high school GPA?    HS GPA

Where do you tend to sit in class?   Seat (F=front, M=middle, B=back)   How do you feel about your weight? WtFeel (OverWt, AboutRt, UnderWt) Would you report cheating if you witnessed it?    (yes, no)

Option 2: Gender and Body Image

Research question: Do female college students tend to feel differently about their weight compared to male college students?

Investigate this question for the students described in   body_image.xls.

This data comes from a survey of university students at Carnegie Mellon University in Pittsburgh, PA.

Here are the survey questions and associated variables:

Are you a male or a female? Gender (male, female) What is your height in inches? Height (in inches) What is your GPA? GPA

What was your high school GPA?    HS GPA

Where do you tend to sit in class?   Seat (F=front, M=middle, B=back)   How do you feel about your weight? WtFeel (OverWt, AboutRt, UnderWt) Would you report cheating if you witnessed it?    (yes, no)

1. A monopolist maximizes profits at the output at which

A) total revenue is at its greatest, assuming that the firm has both fixed and variable costs.

B) price equals marginal cost.

C) price exceeds marginal cost by the greatest amount.

D) none of the above

2. Which of the following is true of marginal revenue earned by a monopolist that charges a single price to all its consumers?

A) ​Marginal revenue earned by a monopolist is equal to the average cost incurred by it.

B) ​Marginal revenue earned by a monopolist is more than the price of its product.

C) ​Marginal revenue earned by a monopolist is less than the price of its product.

D) Marginal revenue earned by a monopolist is equal to the average revenue earned by it.

E) ​Marginal revenue earned by a monopolist is equal to price of its product.

3. For a monopolist, if price is above average total cost, the monopolist is

A) earning an economic profit.

B) taking an economic loss.

c) minimizing total fixed costs.

d) minimizing total variable costs.

A firm purchased noninfluential and noncontrolling stock investments for $65,000. The firm does not intend to sell the investments in the near future. During the year, the firm received dividends totaling $4,000 from these stock investments. At year-end, the stock portfolio had a quoted market value of $68,000. The increase in net income for the year from these stock investments is:

a. $1,000.

b. $3,000.

c. $4,000.

d. $7,000.

Artway Company purchased 30 percent of the voting stock of Barton Company for $60,000 on January 1. During the year, Barton Company earned $50,000 net income and paid $15,000 in dividends. At the end of the year, Artway Company’s account, Stock Investment-Influential (Barton) should have a balance of:

a. $110,000.

b. $70,500.

c. $95,000.

d. $60,000.

The proper category to classify an investment in equity securities depends on:

a. Management’s intentions with regard to when to sell the investment.

b. The relative easy to sell the invenstment.

c. The ability of the purchasing company to influence the investee company.

d. All of the above.

Where would the account unrealized gain/loss on investment appear for trading security investment?

a. Income Statement.

b. Equity section of the Balance Sheet.

c. Statement of Cash Flows.

d. It does not appear on any statement.

Controlling securities typically require the investor to acquire what percent of the investee company common stock?

a. Under 20 percent.

b. Between 20 and 50 percent.

c. Over 50 percent.

d. 100 percent.

Create a class named Student. Student has fields for an ID number, number of credit hours earned, and number of points earned. (For example, many schools compute grade point averages based on a scale of 4, so a three-credit-hour class in which a student earns an A is worth 12 points.) Include methods to assign values to all fields. Student also has a field for grade point average. Include a method to compute the grade point average field by dividing points by credit hours earned. Write methods to display the values in each Student field. Save this class as Student.java

Write a class named ShowStudent that instantiates a Student object from the class you created and assigns values to its fields. Compute the Student grade point average, and then display all the values associated with the Student. Save the application as ShowStudent.java

Create a constructor for the Student class you created. The constructor should initialize each Student's ID number to 9999, his or her points earned to 12, and credit hours to 3 (resulting in a grade point average of 4.0). Write a program that demonstrates that the constructor works by instantiating an object and displaying the initial values. Save the application as ShowStudent2.java

Confidence intervals, effect sizes, and Valentine’s Day spending: According to the Nielsen Company, Americans spend $345 million on chocolate during the week of Valentine’s Day. Let’s assume that we know the average married person spends $45, with a population standard deviation of $16. In February 2009, the U.S. economy was in the throes of a recession. Comparing data for Valentine’s Day spending in 2009 with what is generally expected might give us some indication of the attitudes during the recession. a. Compute the 95% confidence interval for a sample of 18 married people who spent an average of $38. b. How does the 95% confidence interval change if the sample mean is based on 180 people? c. If you were testing a hypothesis that things had changed under the financial circumstances of 2009 as compared to previous years, what conclusion would you draw in part (a) versus part (b)? d. Compute the effect size based on these data and describe the size of the effect.

Using the CNA Insurance company Knowledge Management scenario (below), carry out the following knowledge management assignment Questions after reading the scenario/essay:

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For Gordon Larson, telling stories is all in a day's work at his job as chief knowledge officer at CNA, and that's just fine with executives at the Chicago-based insurance giant. Larson owes his job to a shift in corporate direction. Three years ago, under the direction of a new chairman, CNA set off on a new mission. The ultimate goal, says Karen Foley, CNA's executive vice president of corporate development, was "to get out of the distribution business and become a great underwriting company." And in order to do that, the company had to become more informed about the industries and customers it served. But CNA's traditional structure of 35 separate strategic business units made sharing internal information among employees nearly impossible. A single customer seeking answers to different insurance needs might be passed along to a variety of departments.

CNA knew it had to create one uniform face to customers, and that meant it had to reeducate its employees. Branch offices would have to be consolidated to facilitate closer working relationships among staff teams. Most important of all, CNA had to equip its employees—many of whom had focused solely on niche markets—with the much broader knowledge of all the company's products. To do that, CNA set about building a Web-based knowledge network that captures the expertise of its employees. And it's that expertise that Larson uses as the fodder for his "knowledge" stories. In 1999, a team of CNA executives evaluated the feasibility of becoming a "great underwriting company," and what they found wasn't pretty. In North America, 175 branch offices supported CNA's 35 business units. In order to create a single face for customers, the executives decided to reorganize the company's business into three major areas: property casualty, life and group benefits, and reinsurance. By December 2001, the trio of new business units was established. CNA is still consolidating its field operations into 75 offices organized around five geographic regions, and that process is expected to be complete by early next year.

Along with the physical reorganization, the very nature of what employees did had to change as well. "Just by reorganizing, we wouldn't get people to change how they think and work with other people," Larson says. "Moving from a decentralized culture to a collaborative one is a major change-management challenge." As the new "single face" of the company, each employee had to cede narrow product and market expertise to gain general knowledge of the company's entire product portfolio. In the past, a CNA small business customer that wanted additional coverage in the international arena would have to contact another underwriter and complete separate applications. With the new CNA, such customers would get all their needs met through one representative. "We needed to give the frontline underwriter the ability to appear like an expert for a variety of products," Larson says.

But how to make instant experts out of the staff? CNA's offerings include hundreds of products in more than 900 industry segments for both businesses and individuals, and in-depth knowledge was dispersed among 15,000 employees. The company had to figure out how to make the collective expertise of so many employees readily available to anyone, when and where it was needed. And it would have to do so in a way that didn't crimp individual work styles or create undue burdens on employees looking for information. Larson knew the company would have to "make it easy for any individual to have access to people within CNA who had answers and information." Even if that staff was geographically dispersed. Then Larson hit upon the idea of an expert locator system, software that allows employees to post questions and give answers via the Internet or an intranet.

Working with consultants from Cap Gemini Ernst & Young, a team of CNA managers spent the end of 2000 evaluating numerous expert location software products. In late 2000, the team chose AskMe Enterprise software from AskMe Corp. of Seattle. Factors in AskMe's favor included software that was scalable and capable of being integrated with Microsoft Outlook (already used by the company's employees), which meant a quick implementation. In February 2001, Bob James, CNA executive vice president of the technology and operations group, spearheaded a team of consultants from AskMe's professional services group to customize the software and create a small pilot project of 500 employees. The system, which CNA calls the knowledge network, has since been rolled out companywide and is being actively used by 4,000 employees.
Now if a CNA employee needs someone with underwriting experience in the inland marine industry, for example, he can type in a query and other employees are notified via e-mail that a question in their area of expertise has been posted. When employees answer questions, the software automatically adds to the archive, which eliminates the headache of answering the same question over and over again. Employees who have identified themselves as subject experts are known as knowledge sources. "Our knowledge network is a high-tech, geographically neutral watercooler that enables access to thousands of people," says James.

Larson, a 20-year veteran of the insurance industry and CNA employee since 1995, didn't officially join CNA's knowledge management effort until four months after the pilot launch of the expert locator system. Back then, Larson was working with Foley in the corporate development department on efforts to bring together CNA's various products and expertise in professional liability and standard property casualty. "It was hard to bring our internal expertise to our customers because each business unit had separate channels and distribution," Larson says. Given his prior experience in cross-marketing and in getting employees in different units to collaborate, he was very interested in taking a key role in CNA's new strategic direction. In June 2001, Foley formalized a leadership role around knowledge management, and Larson assumed the helm of a four-person team dedicated to promoting KM.

As Larson sees it, implementing KM represented a significant cultural change at CNA, where employees traditionally didn't collaborate with one another. For Foley, creating a KM department under the corporate development umbrella was a nod from management to the importance of knowledge sharing. "Our KM sits in corporate development for a specific reason," she says. "We chose not to put KM under technology because we don't want it viewed as a piece of technology. We chose not to put it in HR because it's not a training program. For us, KM involves brand development, research and employee communication."

Daniel Wright, AskMe's vice president of professional services, who consulted with James on implementing the knowledge network, says that CNA's establishment of a high-profile chief knowledge officer (CKO) role in conjunction with rolling out a KM system is part of an increasing trend. "Having a CKO not only shows commitment from the executive team, but it helps create accountability," he says. "Leaders within an organization have to drive adoption of knowledge-based networks in order for them to be effective."

That's not to say that Larson has had it easy simply because he now wears an official CKO mantle. He is quick to admit that creating an environment receptive to knowledge sharing came at a particularly problematic time. When CNA announced its reorganization plans, the inevitable rumors of layoffs and restructuring that resulted sent nervous vibes throughout the company. "Getting traction for the knowledge network in the second half of last year was difficult," Larson concedes. "We were reorganizing the company into three major business units, there was a great amount of organizational turmoil, and employees were not sure of their roles or where they would fit in the new structure." However, now that the reorganization is complete, organizational roles have been clarified. "There's now a clear understanding of the importance of collaboration and knowledge sharing because the knowledge network is aligned with our corporate strategy," Larson says. For their part, employees are now clearer about their roles, responsibilities and accountabilities, and Larson has seen a groundswell of interest in the knowledge network as a result.

Much of that interest in the knowledge network is attributable to Larson's message and the way he has chosen to deliver it. He has hammered home to employees and CNA's leadership alike the connection between presenting one face to the customer and shared knowledge. Larson has done that by telling stories about how sharing knowledge has helped employees on the job. He highlights individual success stories and publicizes them on CNA's intranet via a newsletter called Inside Scoop that's pushed to employees' desktops. As of April, Larson was in the process of recruiting so-called knowledge champions in about 20 functional areas throughout the company who will be responsible for collecting stories and passing them his way. "Storytelling is a helpful way for people to understand the role of the network," he says. "I highlight some of the ways using the network has helped us land new business or avoid unnecessary costs."

The case of Donald Schwanke is a perfect example. A claims consultant in commercial insurance from Syracuse, N.Y., Schwanke received a claim from Canada in February 2001 that involved a lawsuit relating to alleged abuses that took place between 1953 and 1962. Included with the claim was a policy written through Continental Insurance, which had merged with CNA. Canada would not allow any statute of limitation defense—making this, potentially, CNA's responsibility. However, some of Schwanke's colleagues, former employees of Continental, recalled that all the Canadian policies had been sold following the merger. Schwanke needed to find out if the policy in question was among those sold and if so, which company had purchased it. Schwanke turned to the CNA knowledge network, where he posted his question. His answer came the next day from an executive in a different business line who pointed Schwanke to a Canadian insurance company that had indeed purchased the policy. Schwanke was then able to notify the party who'd sent the claim of the correct insurer. According to Larson, the end result was Schwanke saving hours researching the issue—and CNA was spared settling a potentially very expensive claim.

Larson spent last winter and early spring reorganizing the categories on the knowledge network to better reflect CNA's new strategy and the roles of employees. For example, within the underwriting group, Larson is organizing content into casualty, property and specialty categories to capitalize on internal expertise. In the process, Larson is also recruiting new knowledge sources to populate the categories with information. To get out the word about the new knowledge network, Larson and his KM team took their message on the road this summer by visiting CNA's field offices and offering a hands-on introduction. In addition to gathering feedback from employees about the knowledge network and its relevancy to their job, Larson gathered more stories to share. To demonstrate the value of the knowledge network in the future, Larson wants to incorporate a more formal metrics process through regular employee surveys.

Despite high-level executive support for the knowledge network in particular and knowledge management in general, Foley remains circumspect about KM's ability to completely transform CNA. "We're excited about the [KM] initiative, but we've come to understand that people and paper are still important," she says. James is a bit more enthusiastic. "The idea of using technology to connect people in a knowledge network is a very interesting one for corporations with a lot of intellectual talent geographically dispersed," he says. "Where it's difficult to get to know your colleagues, these networks can really help collaboration efforts." For Larson, the end result is the power of collective knowledge. "With the network," he says, "we have the tremendous capability to deliver the expertise of thousands of people to our customers."

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Using the Essay above to help answer with the Questions:

Conclusions – summarize your findings in the form of an overall description of the current KM situation. (Answer must be at least 2 paragraphs)

Evaluation of this answer will be based on completeness in addressing all key KM dimensions (e.g. BTOPP Framework or KM Maturity Model), ability to analyze and to justify discussion and recommendations made (e.g. level of persuasiveness of your arguments, justifications, and prioritization).

You are the CEO of a major US apparel company that contracts work to garment manufacturers abroad. Employees of one contractor report 20-hour workdays, pay below the minimum wage, overcrowded living conditions, physically abusive supervisors, and confiscation of their passports so they cannot quit. Local officials say labor laws are adhered to and enforced, though abuses appear widespread. You send inspectors to the offending factory abroad, but they uncover no labor violations. A labor-advocacy group claims that supervisors coached workers to lie to your inspectors about conditions and threatened workers with time in makeshift jails without food if they talked. Questions to be answered: 1-5. Should you implement a monitoring system to learn the truth about what is happening? 1-6. Do you help the factory improve conditions, withdraw your business from the country, or simply do nothing? 1-7. How might your actions affect relations with the factory owner and your ability to do business in the country?

You are working for a US-based company and have been tasked with integrating an acquisition in Japan (based in Osaka). Prior to this acquisition your company had only a representative office based in Tokyo. What are the four key elements of Human Relations Management and for each element list at least one criterion relevant to your firm’s future success in this marketplace. Where would you establish the administrative offices for the acquired company (explain the rationale for your decision).

1. You are a finance manager for the company JKL Limited based in the US. Your CFO comes to you and tells you that you intend to make a debt funding for a new 5-year project in Austria. Since he is not very familiar with such a funding, he tells you that he has heard of different aspects or variables of such a funding. Please name those and explain briefly.
2. Company JKL Limited has 10 million stocks outstanding. The shares are trading at 60$ per share. It also has 400 bonds outstanding – each valued at 500.000$. The marginal tax-rate is at 30%. For the expected return of the shareholders is about 14% and the interest rate for the bonds is at 8%. What is JKL’s after-tax WACC?

3. Recently you have been invited to the Directors meeting to decide on the future capital structure for the firm. One of your colleagues came with the following argument: “As the firm borrows more and debt becomes risky, both stockholders and bondholders demand higher rates of return. Thus, by reducing the debt ratio we can reduce both the cost of debt and the cost of equity, making everybody better off.”

   Using the argument of M&M Proposition I“The market value of a company is independent of its

   capital structure”, suggest why this argument is not relevant, for simplicity ignore the tax implications.

4. An investor considers whether to invest in debt or equity of STU Corporation. Since he already has to pay a high personal tax rate, he does not want to pay more taxes than necessary. Therefore, he weighs the pros and cons of investing in bonds or equities in the local financial markets. The personal tax rate on interest income is 45%, the corporate tax rate is 27.5% and the tax rate on dividends is 20%. Which strategy do you recommend the investor?  

5. STU Corporation wants to assess the value of interest savings due to the tax deductibility of interest on debt. The corporate tax rate is given above. The total debt stands at $ 7.5mn and the return on debt is 6.5%. Assuming that the current level of debt is permanent, calculate the annual interest payment due and the present value of the perpetual tax shield. Explain in what situations a tax shield might be less relevant and/or even misleading.

6. Most financial managers measure debt ratios from their companies’ book balance sheets. Many financial economists emphasize ratios from market-value balance sheets. Which is the right measure in principle? Does the trade-off theory propose to explain book or market leverage? How about the pecking-order theory?

7. The VWX Inc. has 100,000 bonds outstanding (1000$ each) that are selling at 100%. The bonds are yielding 7.5 percent. The company also has 1 million shares of preferred stock outstanding currently yielding 18.75 percent. It has also 5 million shares of common stock outstanding. The preferred stock sells for $56 per share and the common stock sells for $38 a share. The expected return on the common stock is 13.8%. The corporate tax rate is 34 percent. What is VWX Inc.’s weighted average cost of capital

8. The WACC formula implies that debt is “cheaper” than equity, that a firm with more debt could use lower discount rate. Does this make sense?  

9. The Rockettech Corp. is currently at its target debt ratio of 40%. It is contemplating a $1 million expansion of its existing business. This expansion is expected to produce a cash inflow of $130,000 a year in perpetuity.

   The company is uncertain whether to undertake this expansion and how to finance it. The two options are a $1 million issue of common stock or a $1 million issue of 20-year debt. The flotation costs of a stock issue would be around 5% of the amount raised, and the flotation costs of a debt issue would be around 1.5%.

   Rockettech’s financial manager, estimates that the required return on the company’s equity is 14%, but argues that the flotation costs increase the cost of new equity to 19%. On this basis, the project does not appear viable. On the other hand, she points out that the company can raise new debt on a 7% yield, which would make the cost of new debt 8.5%. She therefore recommends that Rockettech should go ahead with the project and finance it with an issue of long-term debt.

   Is the financial manager right? How would you evaluate the project, considering that the project has the same business risk as the firms other assets?

You are a finance manager for the company JKL Limited based in the US. Your CFO comes to you and tells you that you intend to make a debt funding for a new 5-year project in Austria. Since he is not very familiar with such a funding, he tells you that he has heard of different aspects or variables of such a funding. Please name those and explain briefly.