During the pandemic, stockpiling behavior have been criticized in the newspapers and described as irrational. From a game theory perspective, stockpiling of toilet paper can be modeled as a strategic game. Let’s assume that we have two players who can choose between option 1: running to buy toilet paper (stockpiling behavior); and option 2: waiting to buy toilet paper. They believe that there is a risk that supermarket will run out of stock. The following matrix gives the payoffs of each choice, where in each cell, the first number is the payoff of player A and the second number is the payoff of player B. Player B Wait to buy Run to buy Player A Wait to buy 3, 3 1,4 Run to buy 4,1 2,2 a. Explain the strategic interactions behind the stockpiling behavior (answer in 70-130 words). b. Find the equilibrium by elimination of dominated strategies (answer in 70-130 words). c. Does individual rationality lead to a socially desirable outcome? Why? (answer in 70-130 words)  

If you were to draw one individual from this sample of 10 individuals, what would do characteristics do you believe would be the most likely to be drawn (1 = Bully Victim and Bully Offender; 2 = Bully Victim but not Bully Offender; 3 = Bully Offender but not Bully Victim; or 4 = Non Bully Victim and Non Bully Offender)?  Why?

Please read the following article:

"Is the stock market good stewardship?"

As previously discussed in week 3, a direct relationship exists between higher risk and higher returns. In order for an individual or organization to recognize higher returns on their investments, it usually requires the assumption of a higher level of risk. Please answer the following questions:

Is it appropriate for Christians to assume a high level of risk in their investment portfolios? When might it be appropriate?

Is it appropriate for nonprofit organizations who rely upon donations to invest in risky assets such as the stock market?

Assuming there should be limits, what types of investments would or would not be appropriate?

What implications do your positions have for the potential investment income or operations of the nonprofit organization or the individual’s financial position?

1) No Christians are frbidden from gambling. Speculative investments is non-biblical.

2) It might be approporate if the proceeds are directed towards the church only.

3) No. It is not appropriate to use people's donations for speculative purposes.

4) Investing high rated bonds is appropriate.

Fork Motor Company is an automobile manufacturer operating in the US.

It has divided its market into three regions and has built three regional distribution centers (RDC) to serve these markets. The RDCs are located in California, Florida and Texas.

The annual demand at each regional distribution center is estimated as follows and the company wants to meet all the demand.

- RDC – California: 1.5M automobiles (i.e., 1.5 million)

- RDC – Florida: 0.5M automobiles

- RDC – Texas: 1M automobiles

Fork Motor has two plants in Michigan and Nevada and wants to distribute the automobiles to the RDCs at the lowest cost. So they need to decide how many cars to ship from each of the plants to each of the RDCs to achieve minimum cost. You are asked to model and solve this allocation problem.

Below, you are given the shipping distance between Fork Motor’s facilities in miles.

The head of supply chain informs you that you need to consider the capacity limits of the plants. The Michigan plant is much larger than the one in Nevada. He adds that the capacity limits are as follows:

- Plant – Michigan: 2.5M

- Plant – Nevada: 0.7M

The company estimates that transportation of each car will cost 8.53 dollars per mile.

What is the minimum cost of shipping cars to RDCs in million dollars?

A company has the investment opportunities. The following table of results gives us data related to each of them. Using the expected value techniques, the standard deviation and the coefficient of variation determine which of them the company should select

            Inversion # 1                                                             Inversion # 2

Fast Printing Company presents us the information of 12 months related to the purchase costs and the number of orders placed.

1. Project the purchasing costs for the first 6 months of next year using the function or cost equation developed by you. Use the space provided in the table above. Complete the Table.

2. Determine the highest points and the lowest points, what is the COST DRIVER ??. To determine this, use the first 12 months.

3. Develop a cost equation to determine the fixed component and the variable cost component. Present the same.

4. What would be the total cost of purchases for the first half of next year?

Mabrook confectionaries LLC. is a US based chocolate manufacturing company with manufacturing unit in
Oman. The company produces different varieties of chocolates of different flavors. The company is known
for the taste and quality of its products. The company wanted to expand its operations to UAE and other GCC
countries. It developed a greed for money and wanted to earn more. On the packaging the company is printing
wrong information about ingredients used and expiry date as well. The company is also exaggerating the
quality of its products in the advertisements on print, electronic and social media. Seeing the advertisements
of the company, people in Oman and other countries started buying the company’s products. This caused ill
health to many of the company’s consumers. The company started to blame the suppliers of the raw materials
for the poor quality of its products.
Question 4:
i. What are the ethical principles Mabrook confectionaries LLC. is not following in the case study?
Discuss any five ethical principles violated by the company with supporting reasons.
(5 Marks – Answer in 125 - 150 words)
ii. Do you think Mabrook confectionaries LLC. can achieve success with its communications? What
will be the result of such communications? (2 Marks– Answer in 50 – 75 words)
iii. Discuss any three suggestions that you would give to Mabrook confectionaries LLC. for achieving
success in the long run. (3 Marks – Answer in 75 - 100 words)

Rock company (a US firm) exports to Switzerland and expects to receive 500,000 Swiss francs in one year. The one-year U.S. interest rate is 5% when investing funds and 7% when borrowing funds. The one-year Swiss interest rate is 9% when investing funds, and 11% when borrowing funds. The spot rate of the Swiss franc is $.80. The firm expects that the spot rate of the Swiss franc will be $.75 in one year. There is a put option available on Swiss francs with an exercise price of $.79 and a premium of $.02.

a)Determine the amount of dollars that Rock Co. will receive at the end of one year if it implements a money market hedge.

b)Determine the amount of dollars that Rock Co. expects to receive at the end of one year (net of option premium) if it implements a put option hedge.

1. On liquidity: How can a profitable company (defined as positive net income on a US GAAP income statement) fail due to lack of cash? How is that even possible?
2. On earnings quality: How is it possible that profit and operating cash flow could diverge? Doesn't cash flow increase when profit increases, and vice-versa? What are some scenarios that could cause divergence?
3. On improper income recognition: What does it mean "whether income has been improperly recognized, only to be reversed in the future."? How could a company try to get away with improperly recognizing income?

Initial response

For your initial response, become Jim Kramer and in this role, respond to any ONE of the three questions posed as if you were answering as Jim might answer during his visit to Clarkson. (If you are not familiar with Jim, take some time to study his persona but most importantly, respond at a level that could be understood by a novice business student.)

FIELD: Exchange Rates and International Finance
The sales manager of a US company trades iPhones in three different markets, Europe (Eurozone), UK and the USA, has just received a total amount of $1million from the selling of 1,000 iPhones (each iPhone costs $1,000). He has a week available until the payment of firm’s suppliers and employees’ salaries. The current exchange rates between the currencies of the three markets (USD $, euro € and GBP £), are: ?¹_€⁄$=0.9110, ?²_€/£=1.1712 and ?³_{$ ⁄£}=1.2910.

a) If no transaction costs exist, could the manager take advantage of an arbitrage opportunity? Explain. [Mark 1.5]
b) When will there not be any room for profits? That is, there is no arbitrage opportunity. [Mark 0.5]
c) Suppose now that there is a cost each time currency is being traded, i.e., either bought or sold. Moreover, this transaction cost is equal to 1% of the value of currency that is traded. What will the manager’s decision be in this case? [Mark 1.0]

Note: Round your answers to the third decimal point.