A company sells 1,200 units during the first quarter of the year at a selling price of $25 per unit.  In addition, the company has a beginning inventory of 600 units that were purchased at $10 per unit, and the following purchases and sales.

Date Units sold Units purchased Cost per unit

January 10         300    $11

January 25 450

February 7    400 $12

February 14 200

March 5 300 $14

March 27 550

If the company uses a periodic inventory system and the weighted average cost method of inventory valuation, then what is the company's ending inventory?

Part A) Which is NOT an IPO puzzle?

1. Huge price spikes in the first couple trading days
2. Underperformance in the long run
3. Extreme IPO market cycles
4. Hiring underwriters to do the job

Part B) Which is NOT an SEO puzzle?

1. Negative market reaction on average upon SEO announcements
2. Long-run underperformance
3. Very costly to hire underwriters
4. Extreme SEO market cycles

From the following information calculate the price of the stock. The stock will pay its first annual dividend of $1.00 four years from now. The dividends for years 5 and 6 will be $1.20 and $1.30, respectively. After year 6, dividends will grow by 2.00% p.a. forever. The required rate of return is 12.00% p.a.

a. $3.50 b. $11.52 c. $9.74 d. $16.49 e. $8.69

Using, for example, the command “=IF(RAND()<0,4;1;0)” in Excel, simulate 40 different realizations with n = 60 and the true supporting rate to be 40%. In order to “freeze” the output generated by Excel, select the cells with all 0s and 1s values that have been randomly generated using the above mentioned command, copy them and paste them (using the paste special option) as values back on top of the cells. Then in each of the 40 different simulated “datasets” calculate Y, i.e. total number of 1s (voters). Finally create a histogram of your 40 values of Y .Calculate the mean,median,standart deviation and the mode....construct as well the frequency and discuss your findings.

Read the online news article on SA’s “rand and interest rate” below and answer questions 2(a), (2b) and 3.

Where are the rand and interest rates headed? Apr 12 2018 07:39 Mariam Isa

The ousting of former President Jacob Zuma at the start of this year and the swift action taken by his successor, Cyril Ramaphosa, to root out corruption and address government mismanagement sparked a surge in business confidence, which has significantly improved South Africa’s growth outlook.
But the dramatic turnaround in sentiment has yet to translate into the reforms needed to generate enough private investment to make significant inroads into unemployment, restore social cohesion and put the economy on a sustainable path of much faster growth.
The decision by Moody’s Investors Service to keep the country’s sovereign credit rating at investment grade and change the outlook on its assessment to stable from negative has removed the threat of a foreign sell-off in government bonds, boosting the rand and prompting a welcome interest rate cut by the Reserve Bank.
But minister of Finance Nhlanhla Nene has cautioned against the groundswell of euphoria.
“I would want to call this a honeymoon phase, and it is for that reason we cannot be complacent about it […] We do need to take our agenda forward,” he said in an interview on the radio station 702 on 26 March.
Standard & Poor’s made that point in a report released the following day, even though it doubled its growth forecast for the country this year to 2% – well above the Reserve Bank’s latest forecast – and boosted its estimate for next year to 2.1% from 1.7%.
The rating agency questioned how quickly reform efforts would ease the structural constraints to economic growth – notably labour and product-market inefficiencies, poor education outcomes and a skills shortage.
Nonetheless, the rating agency said it no longer saw SA as among the “fragile five” emerging markets, which would be most vulnerable to higher interest rates in developed economies.

Reserve Bank Governor, Lesetja Kganyago was also circumspect when he announced the monetary policy committee’s (MPC’s) decision on 28 March to trim its key repo rate to 6.5%, warning that while the growth outlook was more positive, it was “still challenging”, as it was driven mainly by increased confidence.
He also noted that the rand, which had appreciated by 4.8% to the dollar in the past two months, was “somewhat overvalued” and further strengthening potential was probably limited.
He told reporters after the announcement that there had been “heated debate” over the decision to cut the repo rate, with four members of the MPC arguing for the step and three in favour of holding it steady.
That means further interest rate cuts are unlikely this year, and there could even be hikes in 2019, which will dampen business and consumer optimism.
“The private sector underinvested for the last three years,” said Stanlib Chief Economist Kevin Lings.
“Because the currency is strong, this is a good time to upgrade machines – there is restocking of inventory levels across most sectors.
“What we are not hearing is significant expansion plans. The government balance sheet prevents it from stimulating the economy – it has to come from the private sector.”
Mariam Isa is a freelance journalist who came to SA in 2000 as chief financial correspondent for Reuters news agency after working in the Middle East, the UK and Sweden, covering topics ranging from war to oil, as well as politics and economics. She joined Business Day as economics editor in 2007 and left in 2014 to write on a wider range of subjects for several publications in SA and in the UK.
This article is part of the cover story that originally appeared in the 12 April edition of finweek.

Question 2              [30 Marks]

a) The article outlines the motivations and actions predicted for the South African Reserve Bank (SARB) when they make a decision of increasing or decreasing “interest rates”. Discuss the monetary transmission mechanism when the Reserve Bank DECREASES the Repurchase (repo) rate.           [15 Marks]




b) In the article, The SARB Governor highlighted two major macroeconomic variables affecting the economy, which are, exchange rate and interest rate. Critically review how the recent macroeconomic policy change (interest rate and exchange rate) has affected a particular enterprise or business unit of your choice? Your answer must start by explaining the nature of business or sector of the company/organisation, followed by a critical review of the impact of exchange rate and interest rate changes on the business/organisation.            [15 Marks]


Question 3              [20 Marks]

The author, in her/his conclusion, highlighted the challenges facing the economy in a statement: “What we are not hearing is significant expansion plans. The government balance sheet prevents it from stimulating the economy – it has to come from the private sector.”

As an economist, you have been tasked to explain to a business forum how investment can be used to expand the economy. In your presentation, critically review four factors directly linked to investment and how this causes a shift in aggregate demand (AD) curve.     [20 Marks]

(1 mark for each identified factor 4 marks for explaining each factor).

Using, for example, the command “=IF(RAND()<0,4;1;0)” in Excel, simulate 40 different realizations with n = 60 and the true supporting rate to be 40%. In order to “freeze” the output generated by Excel, select the cells with all 0s and 1s values that have been randomly generated using the above mentioned command, copy them and paste them (using the paste special option) as values back on top of the cells. Then in each of the 40 different simulated “datasets” calculate Y, i.e. total number of 1s (voters). Finally create a histogram of your 40 values of Y .Calculate the mean,median,standart deviation and the mode....construct as well the frequency and discuss your findings.

1) Overall across all incomes Rand study found

Over the past year, the South African Rand has depreciated against the U.S. dollar by 5%. Furthermore, the inflation in the U.S. was at 4% over the year while the inflation in South Africa stood at 7% over the year.

A.
The U.S. exporters to South Africa have lost their competitive advantage relative to the local firms by about 3%.

B.
The U.S. exporters to South Africa have gained a competitive advantage relative to the local firms by about 2%.

C.
The U.S. exporters to South Africa have gained a competitive advantage relative to the local firms by about 3%.

D.
The U.S. exporters to South Africa have lost their competitive advantage relative to the local firms by about 2%.

Adequate Preparation for Retirement. In 2018, RAND Corporation researchers found that 71% of all individuals ages 66 to 69 are adequately prepared financially for retirement. Many financial planners have expressed concern that a smaller percentage of those in this age group who did not complete high school are adequately prepared financially for retirement.

a. Develop appropriate hypotheses such that rejection of H0 will support the con-clusion that the proportion of those who are adequately prepared financially for retirement is smaller for people in the 66–69 age group who did not complete high school than it is for the population of the 66–69 year old.
b. In a random sample of 300 people from the 66–69 age group who did not complete high school, 165 were not prepared financially for retirement. What is the p-value for your hypothesis test?
c. At a 5 .01, what is your conclusion?

Following the above balance sheet, suppose the assets of the First National Bank increases by 4%, so it becomes $520 from $500. Then which of the following must be true?

Select one:

Deposits of the Bank increases by $25.

Capital increases by 100%

Reserves doubles

Debt decreases

Which of the following is known as classical dichotomy?

Select one:

a. Monetary policy affects nominal variables but not real variables

b. Monetary policy affects real variables but not nominal variables

c. both a and b

d. neither a nor b

Which of the following is true about the neutrality of money proposed by classical economist?

Select one:

An increase in money supply affects the price level.

An increase in money supply affects Nominal wage

An increase in money supply does not affect real GDP.

All of the above

Suppose a country produces only one good: car. Let in year 2011, it produces 1000 units of car and the price of each car is $20. If the money supply in the economy is $2000.00, then which of the following is true about its nominal GDP and velocity of money?

Select one:

GDP is $2000 and velocity of money is 100

GDP is $20,000 and velocity of money is 10

GDP is $20, 0000 and velocity of money is 100

GDP is $20, 0000 and velocity of money is 1