Question 1

a) For the data in Homework 2, Question 1

a) calculate the ANOVA table. Use the ANOVA Table to conduct an F-Test to see if the model is significant (use α = 0.05)

b) Give a 95% confidence interval for the mean sale price for 2000 sq. ft. houses.

c) Give a 95% prediction interval for the sale price of an individual 2000 sq. ft. house.

d) For the data in Homework 2, Question 2 calculate the ANOVA table for the data. Use the ANOVA Table to conduct an F-Test to see if the model is significant (use α = 0.05) (data provided below)

Thank you so much! Just want to check my answers.

1. Radiant wants to hire Cargo planes for transporting their goods. They contacted VIP Transportation Company to hire Cargo planes. VIP informed that they can provide two types of Cargo Planes. In addition, they provided the following cost related information about the two types Cargo planes- WT88 and BH54:

**** SHOW STEPS DONE THROUGH EXCEL PLEASE*****

                     Radiant has $200,000 to spend in personnel cost, $160,00 in fuel cost, and $80,000 in    maintenance cost. Moreover, they have to hire at least one of each type of planes. If WT88 can carry 45 tons of goods and BH54 can carry 65 tons of goods then find out the following:

1. What is the maximum amount Radiant can carry given their budget constraint?
2. To carry the maximum amount how many of WT88 and BH54 radiant should hire.

****SHOW STEPS THROUGH EXCEL PLEASE FOR A and B***

            Suppose a hypothetical oil market consists of two oil producers Jack & Jill. Suppose the marginal cost of pumping oil is equal to zero, while the demand for oil is described by the following schedule.

Quantity                               Price                         Total Revenue (and total profit)

0 gallons                                $120                                                               $   0

10                                            110                                                                  1100

20                                            100                                                                 2000

30                                            90                                                                    2700

40                                            80                                                                    3200

50                                            70                                                                    3500

60                                            60                                                                    3600

70                                            50                                                                    3500

80                                            40                                                                    3200

90                                            30                                                                    2700

100                                         20                                                                    2000

110                                         10                                                                    1100

120                                         0                                                                            0

a.         What would be the equilibrium outcome (price and quantity) if the markets were either competitive or monopolistic?

b.         If both Jack & Jill form a collusion, what quantity and price would they try to set?

c.         If both the duopolists don’t act together but instead make production decisions independently, what quantity would they produce and price they would set?

d.         Explain and give reasons for your answers.

(1) Given the following information what is the percentage change in the price of the bonds if interest rates suddenly rise by 4%?

(A) Wing Air -7.01%, Airfoil -29.07%

(B) Wing Air -7.0%, Airfoil -29.22%

(C) Wing Air 7.71%, Airfoil 48.03%

(D) Wing Air -12.27%, Airfoil -50.87%

Cavu Air Inc., issued 15 Year bonds 2 years ago at a coupon rate of 5.50% percent. The bonds make semi annual payments. If these bonds currently sell for 104 percent of par value, what is the YTM?

(A) 5.29%

(B) 5.71%

(C) 5.08%

(D) 5.50%

Contrail Air Inc. Just paid a dividend of $2.00 per share on its stock. The dividends are expected to grow at a constant rate of 4% percent per year, indefinitely. If investors require a return of 12% percent, what is the current price?

(A) 24.04

(B) (26.00)

(C) 26.00

(D) 24.00

Q3. (This question is based in R)
Now use the simulation ("X = rnorm(1000, mean = 10, sd = 2)", "Y = rnorm(1000, mean = 5, sd = 3)") to estimate the distribution of X+Y and create confidence intervals.

A) Form a set of Xs and Ys by repeating the individual experiment for B = 2000 times, where each experiment has n = 1000 samples. You may want to write a for loop and create two matrices "sample_X" and "sample_Y" to save those values. 

B) Calculate the mean of X+Y for each experiment and save it to a vector which has a length of B, and plot a histogram of these means. 

C) Now as we have a simulated sampling distribution of X+Y, calculate the 95% confidence interval for mean of X+Y (this can be done empirically). 

D) In the above example, we have fixed the sample size n and number of experiments B. Next, we want to change B and n, and see how the confidence interval will change. Please write a function to create confidence intervals for any B and n. 

E) Suppose the sample size n varies (100, 200, 300, .... , 1000) (fix B=2000) and the number of experiments B varies (1000, 2000, ... , 10000) (fix n=500). Plot your confidence intervals to compare the effect of changing the sample size n and changing the number of simulation replications B. What do you conclude? (Hint: Check function errbar() in Hmisc package for plot - library(Hmisc))

fix n, B varies

fix B, n varies

The town of Cypress Creek is preparing to go to war against the American government. To do this, it is building a giant satellite laser! To build the laser, the government of the town will resort to taxation to fund its expenditure. The initial economy of Cypress Creek can be expressed by the following agents:

Consumers, C = 25 + 0.95(Y-T)

Output, Y = 5000

Government expenditures, G = 2000

Taxation, T = 2000

Investors, I = 750-125r

Markets are fully competitive and the equilibrium condition for markets are:

Goods and service market: Y =C + I + G

Financial market: I = S

When it builds the Satellite, government and taxation change to  

Government expenditures, G = 4000

Taxation, T = 4000

Hank Scorpio, the towns' founder, announces that "even by increasing government spending and taxation, we are not worst off, as production has not changed!"

1. [2 points] check to make sure output does not change.
2. [2 points] find the consumption level in both scenario's (low and high government spending).
3. [3 points] who is paying for the burden of taxation? (how is this new spending/taxation being distributed between investors and consumers)
4. [2 points] as the government increases its spending (G from 2000 to 4000) why won't output change?

Hank Scorpio makes another announcement "People of North Haverbrook! We must all work together in this to crush the American Government - I implore you to save you wages! Don't spend!"

13. [2 points] by how much would consumers need to reduce their Marginal propensity to consume (MPC) such that the market clearing interest rate does not change?  

On May 1, 2018, a company placed (sold) bonds for $ 90 million to 98 (at a 2% discount). The coupon rate is 12%. The issue date was February 1, 2018 and they mature on January 31, 2038. Interest is paid semiannually on July 31 and January 31. What is the amount of the total liabilities originated by this issuance that the company owes on May 1, 2018 after having placed the bonds?

a) 88.2 million

b) 92.7 million

c) 90.9 million

d) 94.5 million

Using the data below, calculate price index numbers for each of the three years. 2017 is the base year.   Then calculate the percent change in the price index from 2017 to 2018, and from 2018 to 2019. Show all your calculations!

Quantity bought 2017 Price 2018 Price 2019 Price

Economics book 4 $150 $175 $200

Accounting book 2 $200 $250 $300

Math book 1 $175 $225 $250

Please show calculations