The Table below provides quotes from three Banks A,B, and C for the British Pound in U.S. dollars (A), the US dollar in Euros (B) and the British Pound in Euros (C).

Bid price Ask price

A - USD/POUND 1.4871 1.4900

B - EURO/USD 0.8794 0.8852

C - EUR/POUND 1.3050 1.3062

(a) Calculate the appropriate EUR/POUND bid and -ask cross exchange rates.

(b) Give your answers to (a), which currency is overvalued? Explain your answer.

(c) Assuming no other trading costs, explain if there are arbitrage opportunities for a US dealer with US$800,000. If there are no arbitrage opportunities explain why.

"Mini Case Study - Haley Roberts "

Haley Roberts is quite proud that she has grown her business in website design from a small startup to a mid-sized organization. However, she is now running into some “growing pains.” Now there are sales people and account managers that deal with the clients. Her Controller, Dan, oversees daily operations, human resources, and accounting. One day, Dan comes into Haley’s office to discuss the morning meeting. Sales have almost doubled from the prior year, but collections are down. SOMETHING has to be done! Dan and Haley refer to their notes of the ideas and concerns voiced at the meeting:

• Alex (sales) – “I’m no accountant, I just know sales. I have grown my sales by reaching out to clients who need our help but may not have the best credit. Just by giving them an extra month or so to pay makes a big difference! And who cares, as long as they pay? We still get the money!”
• Jessie (account manager) – “I just want to keep my clients happy. I do that by addressing their concerns, and I can tell you that their biggest concern is usually that they can get similar services cheaper somewhere else. If I start pressuring them to pay sooner, we may lose them!”
• Sam (accounting) – “All I know is that if we are going to get our vendors paid on time, we need to pull in our cash faster! I am tired of putting off payments and then sometimes paying interest or late fees just because I didn’t have enough cash to go around!”
• Dan (Controller) – “Maybe there are ways to get our cash faster without bugging our clients directly. There are companies that will buy our receivables from us, so we would not be dealing with the clients directly regarding collectibles. Of course, that would also cost us…”

Haley feels overwhelmed by all of her options. There is no easy answer. After reviewing the various perspectives above, what should Haley do? What would you do, or what advice would you give to Haley

Trophies R Us manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month; current monthly production is 7,500 medals. The company normally charges $225 per medal. Variable costs and fixed costs for the current activity level of 75% follow:

Trophies R Us has just received a special one-time order for 2,500 medals at $115 per medal. For this particular order, no variable marketing costs will be incurred. As a management accountant with Trophies R Us, you have been assigned the task of analyzing this order and recommending whether the company should accept or reject it..

1) Calculate both the old (i.e., prior to the special order) average cost per unit and the recalculated average cost per unit, including the effect of the special sales order. Are either of these two figures relevant for evaluating whether to accept or reject the special order? Explain.

2) Based on a short-term financial analysis, determine if Trophies R Us Co. should accept the special order and why.

3) What is the breakeven selling price per unit for the special sales order?

4) Discuss at least three other considerations that you should include in your analysis of the special order.

Homes for Sale

The dataset HomesForSale has data on houses available for sale in three Mid-Atlantic states (NY, NJ, and PA). Table 1 shows the mean and standard deviation from the three Mid-Atlantic states, in thousands of dollars. Use this table, the knowledge that within the US the average house sells for about 265 thousand dollars¹, and a 5% significance level to answer the following questions.

Table 1 Mean housing prices for New York, New Jersey, and Pennsylvania


Click here for the dataset associated with this question.


¹According to the US Census in April 2011.

(a) Test whether the average cost of a house in New York is significantly greater than the US average.

Give the test statistic and the p-value.

Round your answer for the test statistic to two decimal places and your answer for the p-value to three decimal places.

test statistic = Enter your answer in accordance to item (a) of the question statement

p-value = Enter your answer in accordance to item (a) of the question statement

Is the average cost of a house in New York significantly greater than the US average?

(b) Test whether the average cost of a house in New Jersey is significantly greater than the US average.

Give the test statistic and the p-value.

Round your answer for the test statistic to two decimal places and your answer for the p-value to three decimal places.

test statistic = Enter your answer in accordance to item (b) of the question statement

p-value = Enter your answer in accordance to item (b) of the question statement

Is the average cost of a house in New Jersey significantly greater than the US average?

Choose the answer from the menu in accordance to item (b) of the question statement                                                                      YesNo

(c) Test whether the average cost of a house in Pennsylvania is significantly greater than the US average.

Give the test statistic and the p-value.

Round your answer for the test statistic to two decimal places and your answer for the p-value to three decimal places.

test statistic = Enter your answer in accordance to item (c) of the question statement

p-value = Enter your answer in accordance to item (c) of the question statement

Is the average cost of a house in Pennsylvania significantly greater than the US average?

Choose the answer from the menu in accordance to item (c) of the question statement                                                                      YesNo

(d) Which state shows the most evidence that the state average is greater than the US average?

New York

New Jersey

Pennsylvania

A Spanish commercial bank is engaged in the following foreign
lending/borrowing and trading activities in U.S dollar:
a) The bank owns $5,000,000 value of corporate bonds in U.S
company
b) The bank has lent an U.S. company an amount of $16,000,000
c) The bank has borrowed $8,000,000 from a American bank
d) The bank has sold $300,000 to a Spanish customer to facilitate
acquisition of raw materials from U.S supplier.
e) The bank has purchased $4,000,000 from Spanish investor who
received dividends on stockholding in corporation in U.S.A.

Required:
a. Find the net foreign exchange exposure of the bank.
b. Does the bank have long or short position in U.S Dollar?

URGENT PLEASE

On September 28, 1994, Disney officials announced the end of the Disney’s America project in Prince William County, Virginia. Two representatives from Disney’s America flew to Richmond to brief Virginia’s Governor George Allen on the decision. The same day, Prince William County officials were notified as well. Peter S. Rummell, president of Disney Design and Development Company, issued a public statement, saying in part: We remain convinced that a park that celebrates America and an exploration of our heritage is a great idea, and we will continue to work to make it a reality. However, we recognize that there are those who have been concerned about the possible impact of our park on historic sites in this unique area, and we have always tried to be sensitive to the issue. While we do not agree with all their concerns, we are seeking a new location so that we can move the process forward. . . . Despite our confidence that we would eventually win the necessary approvals, it has become clear that we could not say when the park would be able to open—or even when we could break ground. The controversy over building in Prince William County has diverted attention and resources from the creative development of the park. Implicit in our vision for the park is the hope that it will be a source of pride and unity for all Americans. We certainly cannot let a particular site undermine that goal by becoming a source of divisiveness.1 Rummell stated that Disney would try to build an American history theme park elsewhere in Virginia, but that a site had not yet been selected. Many Virginia politicians were disappointed, but some tried to remain optimistic. Governor George Allen’s office issued a statement: “I’m committed to a Disney theme park in Virginia and the jobs that will be created thereby. I’m pleased that the Walt Disney Company shares that commitment.”2 Robert S. Skunda, Allen’s Secretary of Commerce and Trade, commented to reporters, “I think they see the likelihood of long-term damage to their image. No company likes to be publicly bashed when they feel as though they are doing something that is worthwhile. . . . The thing that a company values most is its reputation. It has to. Without a reputation a company cannot continue to exist. I think those things drove Disney away from the Haymarket site.”3 Prince William County executive James Mullen said the county would be forced to go through a time of self-examination following Disney’s exit. He stated, “Mainly I’m disappointed for the people in the community who supported the project and for our staff, who put so much time in on this. Disney certainly hasn’t helped our marketing effort. They’ve made it very difficult for us to overcome the perception that this is a place (where) you can’t do a big project without a hassle.”4 Other local politicians were not as generous in their remarks about Disney. State Senator Joseph Benedetti of Richmond stated, “Promises were made that they’d stay, come hell or high water. Whatever they do is going to have to be written in blood next time.”5 State Senator Charles Colgan of Prince William County stated, “I think they broke faith with us.”6 James McPherson, the Princeton history professor and one of Disney’s most vocal opponents, stated, “I’m very happy. It’s good news.”7 McPherson said that he would be happy to help Disney find another location in Virginia that would be less significant historically. He stated, “Some of us would be quite happy to advise them. This has never been an attempt to bash Disney.”8 Over the next few weeks, scores of municipalities wrote newspaper articles and petitioned Disney directly, stating that they would welcome a Disney park in their areas. Since the decision to halt plans for Disney’s America in Virginia, observers have tried to make sense in retrospect of the park’s failure. In 1998, Eisner issued a memoir, Work in Progress. In a chapter devoted to the Disney’s America project,9 Eisner freely and openly admits that Disney made many missteps, while still arguing for the vision he had for the theme park. Among the missteps Eisner identified were • Naming the project “Disney’s America,” which implied the company’s ownership of U.S. history. He said, “That was unfortunate because we were never interested in a park that merely reflected a Disneyesque view of American history.” • Failing to “recognized how deeply people often feel about maintaining their communities just as they are. . . . There may have been no collection of people [the Piedmont Environmental Council] in America better equipped to lobby a cause, whether with Congress or government agencies or through the media.” • Being “blindsided” by the issue of proximity to the Manassas Battlefield Park. Jody Powell’s advice had been that the distance of three miles would be great enough to avoid controversy. • Believing Disney “could announce the project on [its] own timetable. Our focus on secrecy in land acquisition had prevented us from even briefing, much less lobbying, the leading politicians in the state about our plans as they evolved. The consequence was that we lost the opportunity to develop crucial allies and nurture goodwill.” • Revealing to the public “a plan that looked relatively complete [which] opened ourselves up to every critic with different ideas about what a park based on American history should and should not include.” • Making emotional statements that critics latched on to, including being shocked about not being taken around on people’s shoulders and complaining that history in school was boring. Eisner reflects: “My comments made me sound not just smug and arrogant but like something of a Philistine. . . . Looking back, I realize how much my brief moment of intemperance undermined our cause.” To balance his story, Eisner also recollects his well-meaning intentions for the theme park, describing his motives as the patriotic and socially responsible vision of a son of immigrants. He wanted visiting Disney’s America to be as multimedia intensive and deeply moving an experience as the U.S. Holocaust Museum. In retrospect, Eisner explained “We saw ourselves as storytellers first and foremost,” who needed advice from historical experts to portray American history “knowledgeably and responsibly.” Working with the advisory group of “openminded” historians who critiqued comparable exhibits in Orlando was particularly eye-opening: “In our original plan, for example, we’d envisioned recreating a classic twentieth-century steel. mill and then putting a roller-coaster through it. To do that, we began to understand, could trivialize and even demean the attempt to portray the steel mill realistically.” Of his critics, Eisner complains, “By any reasonable measure, this attack on Disney’s America was dramatically overstated. . . . Much like negative advertising in a political campaign, [their] incendiary claims were effective in influencing public opinion and putting us further on the defensive. I was suddenly the captain of Exxon’s Valdez. . . . By the summer of 1994, opposing Disney’s America had become a fashionable cause célèbre in the media centers of New York City and Washington, D.C. . . . Fairness seemed to have given way to polemics.” In the end, Eisner explains that financial projections made in late August 1994 “showed that rather than the profit we’d previously projected for Disney’s America, we were now facing the prospect of substantial losses.” On the cost side, Eisner attributed the losses to the current and future expense of dealing with opponents’ legal challenges, to the carrying costs caused by a projected two-year delay before breaking ground, and to the modifications to the original plans that increased costs by almost 40 percent. On the revenue side, the Disney’s America team now projected a lower price point for tickets and a shorter season at eight months down from nine. According to Eisner, “Now that a dozen members of our team had spent a year living in the towns adjacent to our site, they had a different view. An eight-month season for the park seemed more realistic.” The revised figures, coupled with the psychic impact of Wells’ death, Eisner’s by-pass surgery, and Katzenburg’s departure led to the decision to abandon plans for Disney’s America. As Eisner concludes, I still believed that it was possible to get Disney’s America built, but the question now was at what cost. . . . [A]fter two weeks of soul-searching, we finally agreed that it wasn’t fair to subject the company to more trauma. The issue was no longer who was right or wrong. We had lost the perception game. Largely through our own missteps, the Walt Disney Company had been effectively portrayed as an enemy of American history and a plunderer of sacred ground. The revised economic projections took the last bit of wind out of our sails. The cost of moving forward on Disney’s America, we reluctantly concluded, finally outweighed the potential gain. Others interpreted the situation as one in which Eisner himself needed better handling. In The Keys to the Kingdom, former Washington Post reporter Kim Masters says Eisner’s dealings with the media had suffered since late 1992 when he lost his chief of corporate communications, Erwin Okun, to cancer. “Okun had a shrewd yet avuncular style that worked well with the press,” wrote Masters. Journalist Peter Boyer said of Okun “‘He somehow pushed that button in all of us that said Disney is an honest, good company that meant well. . . . He packaged [Eisner] well without seeming to do so.’” “Eisner said he relied on Okun ‘to counsel, review, berate, encourage, and protect me,’” Masters writes. Okun’s successor, John Dreyer, however, “came from the theme parks. He lacked Okun’s cordiality and treated the press with suspicion bordering on hostility. At the Washington Post, he quickly alienated the very reporters whose coverage of Disney’s America would prove most influential.”10 Pat Scanlon, formerly an Imagineer, speculated that Wells might have salvaged the Disney’s America project. “There wasn’t anybody at a high enough level to keep Michael in his box, [Scanlon] says. “Michael was making public remarks that weren’t helpful. Michael sounded a bit like an abrasive Hollywood producer coming to town. Frank would have shaped public relations because he would have made Michael more aware. Frank was the consummate diplomat.”11 Whatever the cause, Nick Kotz, a member of the Piedmont Environmental Council and author of the editorial in the Los Angeles Times, observed this about the effects of the Disney’s America theme park controversy: “Undoubtedly Disney had internal reasons for the decision to strike its tent on the Piedmont battlefield. But it had also faced the danger of a Pyrrhic victory. In all probability, it could have prevailed and built its theme park, but it would have suffered serious and perhaps permanent value to its reputation.”12 Despite claims by Eisner and Disney officials to the contrary, as of the writing of this case, no further plans have been announced for a Disney’s America theme park.

Discuss and Anlysis the Case Study.

One measure of student success for colleges and universities is the percent of admitted students who graduate. Studies indicate that a key issue in retaining students is their performance in so-called gateway courses. These are courses that serve as prerequisites for other key courses that are essential for student success. One measure of student performance in these courses is the DFW rate, the percent of students who receive grades of D, F, or W. A major project was undertaken to improve the DFW rate in a gateway course at a large midwestern university. The course curriculum was revised to make it more relevant to the majors of the students taking the course, a small group of excellent teachers taught the course, technology was introduced, and student support outside of the classroom was increased.

Do you think that the changes in this gateway course had an impact on the DFW rate? Write a report giving your answer to this question. Support your answer by an analysis of the data.

Zaxxone Oil Company, Inc., headquartered in Mobile, Alabama, is a multinational corporation with 2012 annual profits of $45 billion. Zaxxone has 12 board members who serve the company on a part-time basis, with each board member receiving an average of $300,000 per year in compensation.

Emily Chanel, a pre-law student at the University of Alabama in Mobile, is quite familiar with Zaxxone, and she has studied her business law textbook material on corporations and their directors, officers, and shareholders very carefully. She recalls that a board of directors and its members owe a strict fiduciary duty to the corporation; as part of this fiduciary duty, the board must exercise oversight in monitoring the actions of corporate employees, including the executives and officers of the corporation.

Chanel ponders, "How can board members of a major corporation be truly objective when they are being paid such lavish sums of money? Wouldn't Zaxxone board members have a 'don't rock the boat' mentality in terms of exercising their oversight function?”

"Why, for example, would a Zaxxone board member question the practices of the company's high-ranking executives and officers when such an inquiry might jeopardize his or her $300,000 per year annual compensation? Make no bones about it—if I were a board member at Zaxxone, I would probably be a 'yes-woman' and approve of everything the chief executive officer, the chief financial officer, and the chief operating officer wanted to do!“

How would you respond to Chanel's questions and overall concerns about board members' compensation and objectivity?

QUESTION 14

1. Which of the following statements is the most accurate description of limited liability?

   	A.	In a company limited by shares, shareholder who holds a share in the company is not liable beyond any amount outstanding on partly paid shares.
   	B.	In a company limited by shares, a company has limited liability for their debts.
   	C.	A company is a separate legal entity from its directors, so directors are always shielded from the company's losses.
   	D.	A and B above.
   	E.	None of the above.

1 points   

QUESTION 15

1. Which of the following is the best description of the significance of the decision in Salomon v Salomon & Co Ltd?

   	A.	The notion of limited liability should not apply to corporations owned and operated by a single person.
   	B.	The concept of separate legal personality cannot be used by a sole trader to avoid liability to creditors.
   	C.	A shareholder who is also involved in the management of the company is not entitled to the benefit of limited liability
   	D.	The doctrine of separate legal personality continues to operate, even where a company is effectively controlled by a single shareholder.
   	E.	None of the above

1 points   

QUESTION 16

1. Annual general meetings agenda is governed by s. 250R. This provision requires:

   		That an annual general meeting is to be held to consider the company s annual financial report.
   		That an annual general meeting is to be held to elect directors.
   		That an annual general meeting is to be held to appoint the auditor.
   		All of the above.
   		None of the above.

1 points   

QUESTION 17

1. In which of the following circumstances is a company most likely to choose to rely on the replaceable rules?

   	A.	Where it is going to list on ASX.
   	B.	Where the company was incorporated prior to 1 July 1998.
   	C.	Where a proprietary company is registered that may wish to convert to a public company in the future.
   	D.	Where the company proposes to issue partly paid shares.
   	E.	None of the above.

Chris is enrolled in a college algebra course and earned a score of 260 on a math placement test that was given on the first day of class. The instructor looked at two distributions of scores – one is the distribution for all first year college students who took the test, and the other is a distribution for students enrolled in this algebra class. Both are approximately normal and have the same mean, but the distribution for the algebra class has a smaller standard deviation. A z-score is calculated for Chris’ test score in both distributions (all first year college students and all algebra class students). Given that Chris’ score is well above the mean, which of the following would be true about these two z-scores?

a) The z-score based on the distribution for the algebra students would be higher.

b) The z-score based on the distribution for all first year college students would be higher.

c) The two z-scores would be the same.

d) There’s not enough information to answer this question.