In 2010, an online security firm estimated that 64% of computer users don't change their passwords very often. Because this estimate may be outdated, suppose that you want to carry out a new survey to estimate the proportion of students at your school who do not change their password. You would like to determine the sample size required to estimate this proportion with a margin of error of 0.05.

(a) Using 0.64 as a preliminary estimate, what is the required sample size if you want to estimate this proportion with a margin of error of 0.05? (Round your answer up to the nearest integer.)

(b) How does the sample size in part (a) compare to the sample size that would result from using the conservative value of 0.5? (Round your answer up to the nearest integer.)

The sample size in part (a) smaller than the sample size of: computed using the conservative estimate

(c) What sample size would you recommend? Justify your answer. (Round your sample size up to the nearest integer.)

The sample size of: should be used for this study because it will guarantee a margin of error of no greater than 0.05. The other sample size computed will only guarantee a margin of error no greater than 0.05 if p >: or if p < : .

1. In 2010, Betty White (at age 88!) hosted an episode of Saturday Night Live, becoming the oldest host the show has ever had. Most people know that she was the oldest. However, what about the second oldest? Do people have an idea how old the second oldest guest host was? A random sample of people was taken; these people were asked two questions: what is your age (x) and what do you believe is the age of the second oldest SNL host?

Note: the second oldest SNL guest host was Miskel Spillman at age 80 (in 1977) who won a contest and is the only non-celebrity to host the show.

1. Draw a scatterplot for this set of data

2. Find the linear correlation coefficient. Based on that value, is there evidence of a linear relationship between the variables? Explain.

3. Find the line of best fit.

4. Predict the value of y given the value of x = 40

5. Find the residual for x = 40.

1. An important development during the Great Recession of 2007–2010 was that

   	A.	more than 70 percent of all unemployed workers exited unemployment within 5 weeks; however, most of this movement was due to the unemployed becoming discouraged and exiting the labor force rather than finding a job.
   	B.	the amount of frictional and seasonal unemployment increased dramatically while the amount of structural unemployment decreased substantially.
   	C.	the unemployment rate increased dramatically, but the average unemployment spell remained constant at about 8 weeks of unemployment.
   	D.	most unemployment spells lasted 13 to 26 weeks.
   	E.	more than 35 percent of all unemployed workers remained unemployed for more than 26 months.

2 points   

QUESTION 2

1. For two substitutes in production, if the substitution effect dominates

   	A.	then the inputs are complements.
   	B.	then the inputs are substitutes.
   	C.	then the inputs could be either complements or substitutes.
   	D.	then the inputs can not be used at the same time.

2 points   

QUESTION 3

1. The price elasticity of demand for the final product affects the elasticity of demand for labor by affecting the magnitude of:

   	A.	the substitution effect that occurs in the labor market
   	B.	the scale effect that occurs in the labor market.
   	C.	both the substitution and scale effects.
   	D.	neither the substitution nor the scale effects.

2 points   

QUESTION 4

1. Which of the following is best considered an implicit contract?

   	A.	A union contract that specifies hourly wages and fringe benefits.
   	B.	A historical agreement between a firm and its employees that the firm pays workers based on a combination of age, experience, and education.
   	C.	A union contract that specifies how overtime wages will be calculated.
   	D.	An informal agreement between a firm and its employees to reduce hours of work for everyone a little bit during an economic contraction in order to prevent firing anyone.
   	E.	A firm offering health insurance to all of its workers in order to abide by the Affordable Care Act.

2 points   

QUESTION 5

1. A standard efficiency wage model pays workers higher wages in order to increase worker efficiency. As a result, firm profits increase and there is a pool of involuntarily unemployed workers. In this model, if the firm's cost of monitoring effort falls,

   	A.	the firm will increase its number of factory managers.
   	B.	the number of shirking workers will fall.
   	C.	the efficiency wage will fall.
   	D.	firm profits will fall.
   	E.	the pool of involuntarily unemployed workers will increase.

Case Study 1
Quick Biotech
It is late in September 2010, and Michelle Chang, a doctoral student at the National
University of Singapore (NUS), is to meet her colleagues Henry Tan and Mike
Hammer from the Institute of Molecular Biology again in a few days to discuss the
course of action to be pursued for the establishment of Quick Biotech. Henry Tan
and Mike Hammer both hold doctorates in biology and work at NUS as senior
assistants. A few months before, they patented a process for the production of multi
protein complexes, which they had already put to successful use, and about which
they had received favourable feedback. Now, the three colleagues want to set-up a
company called Quick Biotech in order to apply the new technology to a wider field.
Background
The human body is exposed to numerous external influences and internal genetic
defects, which cause the proteins in our cells to malfunction. Proteins constitute the
basis of all biological processes. If proteins no longer fulfill their function adequately
owing to defects, this often results in life-threatening illnesses, such as cancer. This
is why almost all drugs have effect on proteins. Consequently, most research and
development work for drugs and therapies need protein, which is why both academic
research institutions and the pharmaceutical companies use proteins as a basis to
their research activities.
Recently, progress in fundamental research revealed the total of the proteins in a
cell, which in the case of human being amounts to more than 40,000 proteins. It
became obvious that the proteins in a cell do not work individually; rather, they
combine to act as protein complexes that are made up of numerous protein
components. In addition, virtually all biological processes in cells are executed by
such protein complexes. This has crucial consequences for research; in order to
understand how proteins work, protein machines must be explored as a whole, and
not only their individual protein components.
Nonetheless, academic institutes and the pharmaceutical industry have almost
exclusively focused on individual, isolated proteins. The primary reason for this was
that human protein machines are very difficult to produce in a pure form. Although
the development of modern, recombinant methods now enables the production of
individual protein components, there is still a demand for a technology that is able to
provide sufficient volumes of entire protein machine, which form the basis of
biological functions. This is also Michelle’s, Henry’s and Mike’s experience in their
research at NUS. They realize that no suitable technology for the production of
protein machines exists. This is why they developed their own technology: the
MultiBac technology.
The technology
The MultiBac technology uses a modified, yet greatly improved version of the so
called “baculovirus gene transfer vector” to produce any combination of proteins in
great volumes and of high quality. The genes of a great number of proteins, such as
human ones, can be placed on this gene transfer vector. This process can be carried
out in an ordinary molecular biology laboratory. The MultiBca gene transfer vector
multiplies in cell cultures and constitutes no danger to human beings. Therefore, no
special health and safety regulations are required to work with this system.
The gene transfer vector of the MultiBac system was developed to provide it with a
unique feature namely, that is particularly careful in the production of the desired
protein machines. For customers, this is a guarantee of the unsurpassed quality of
the protein complex produced with the MultiBac technology. In comparison with
conventional processes, the simplified MultiBac technology additionally saves a
substantial amount of time for the production of the desired protein product: it only
takes weeks rather than months. Also, the technology offers the possibility to build
numerous different protein complexes from the same protein components on a
modular basis and, thus, of supplying individual solution to customers’ problems.
Laboratories of renowned research institutes already use MultiBac, which NUS has
made available as trial specimens. This shows that the technology works, is mature
and has a selling potential. The process was patented last year by NUS, and since
then it was developed in the context of employment at the university. However, the
rights can be assigned to a start up, for instance, in the form of an exclusive license.
The next steps to launch the venture
In autumn 2010, Michelle is in the final stages of her doctoral thesis, which she
wants to complete by the year. After that, she needs to work full time for the new
company. In contrast, Henry and Mike want to retain their jobs at NUS and spend
less time on the company. As such, they would not be involved in the company’s
operative daily business but will assume an advisory function. They will receive
shares in the start-up but will not be on the company payroll.
One of the key roles of Henry and Mike will be to guarantee long term access to the
latest findings in scientific research. This model, whereby some of the founders
remain at the university, has already proved successful in a number of other
biotechnology start ups. Research in the field of biotechnology is very costly; both in
terms of time and money, so only by retaining close links with a research institution
will the company ensure that it will always work with the latest technologies and,
thus, remain competitive.
One of the greatest challenges currently perceived by the team is to secure funding
for the new company. Although the founders are able to invest S$200, 000 of their
personal savings into the enterprise and, thus, realize a small scale start up, present
plans are based on the assumption that at least S$500 000 of external capital will be
needed for the first two years.
These funds will primarily serve to finance Michelle’s position and a small team of lab
assistants in charge of producing the protein complex for the clients. The product will
be sold via a network of sales agents, and other functions, such as accounting and
finance, will be outsourced to a professional accountant.
Answer all questions.
1. Should Michelle consider debt or equity to finance QuickBiotech? Explain your
answer.

2. Would you consider any alternative sources or finance? Which one? Why?

3. Analyse other issues to be addressed before QuickBiotech is launched.

Please write all your answers in essay format. Do not answer in point-form unless
the questions mention “List” or “State”. It is not necessary to precede each answer
with an introduction and end with a summary. Proceed directly with the answer

The following table contains monthly returns for Cola Co. and Gas Co. for

2010

​(the returns are shown in decimal​ form, i.e., 0.035 is​ 3.5%). Using this table and the fact that Cola Co. and Gas Co. have a correlation of

−0.0969​,

calculate the volatility​ (standard deviation) of a portfolio that is

65%

invested in Cola Co. stock and

35%

invested in Gas Co. stock.

Month   Cola Co   Gas Co
Jan   -0.0210   0.0280
Feb   0.0000   -0.0050
Mar   -0.0200   -0.0180
Apr   0.0090   0.0280
May   -0.0310   0.0840
Jun   -0.0840   -0.0460
Jul   -0.1190   0.0820
Aug   -0.0160   0.0460
Sep   0.0550   0.0300
Oct   -0.0110   0.0140
Nov   -0.0380   0.0290
Dec   -0.0220   0.0740

​(Click the icon to view the monthly​ returns.)

Calculate the volatility​ by:

a.

Using the​ formula:

Var left parenthesis Upper R Subscript p right parenthesis equals w Subscript 1 Superscript 2 Baseline SD left parenthesis Upper R 1 right parenthesis squared plus w Subscript 2 Superscript 2 Baseline SD left parenthesis Upper R 2 right parenthesis plus 2 w 1 w 2 Corr left parenthesis Upper R 1 comma Upper R 2 right parenthesis SD left parenthesis Upper R 1 right parenthesis SD left parenthesis Upper R 2 right parenthesisVarRp=w21SDR12+w22SDR2+2w1w2CorrR1,R2SDR1SDR2.

b.

Calculating the monthly returns of the portfolio and computing its volatility directly.

c.

How do your results​ compare?

a.

Use the formula

Var left parenthesis Upper R Subscript p right parenthesis equals w Subscript 1 Superscript 2 Baseline SD left parenthesis Upper R 1 right parenthesis squared plus w Subscript 2 Superscript 2 Baseline SD left parenthesis Upper R 2 right parenthesis plus 2 w 1 w 2 Corr left parenthesis Upper R 1 comma Upper R 2 right parenthesis SD left parenthesis Upper R 1 right parenthesis SD left parenthesis Upper R 2 right parenthesisVarRp=w21SDR12+w22SDR2+2w1w2CorrR1,R2SDR1SDR2.

The volatility​ (standard deviation) of the portfolio is

nothing​%.

​(Round to two decimal​ places.)

Tasks 1

Asha and Rasha started a partnership business in 2010 sharing profit and losses in the ratio of 60% and 40% respectively. The following is the trial balance of the partnership firm, which has been extracted as of 31 December 2019:

The following information is relevant:

(i) Closing inventory as of 31/12/2019 is valued at $8,000

(ii) Provision for bad debts is to be created 8% of Trade Receivables

(iii) Insurance amount included prepayment for 2020 $500 5

(iv) Salary outstanding (accrual) as on 31/12/2019 is $2,000

(v) Interest on loan given by Rasha (partner) is not provided in the partnership agreement.

(vi) The following is provided in the partnership agreement:

- Interest on drawings at 10% per annum

- Interest on Capital at 8% per annum

- Salary to Asha $5000 and to Rasha $8,000 per annum.

You are required to prepare:

a) Income Statement for the year-end 31/12/2019

b) Profit and Loss Appropriation Account (Statement of the division of Income) for the year-end 31/12/2019.

c) Partners' Capital Account in columnar form d) Partners’ Current Accounts in columnar form, and

e) A Statement of Financial Position (Balance Sheet) as at 31/12/2019

Note: you are required to Perform all relevant accounting entries relating to Interest on Capital Account, Interest on Drawings, Salary to partners with regards to the preparation of the partnership business.

In the Davis & Muehlegger (2010) analysis of pricing above marginal cost under regulation, they observe that ... decreased consumption along the intensive margin is not costly from the regulated firm’s perspective because the rate base does not depend on the level of natural gas consumption per customer. In short, under traditional rate-of-return regulation a reg-ulated firm attempts to maximize the rate base, and this creates incentive for firms to lobby regulators for low fixed fees.” (p. 803) In 2-3 sentences, explain what they mean, based on their analysis. Why does traditional ROR regulation provide this incentive?

QUESTION TWO

On 1 October 2010, Pythias secured a majority equity shareholding in Sara on the following terms: an immediate payment of K4 per share on 1 October 2010 and a further amount deferred until 1 October 2011 of K5.4 million. The immediate payment has been recorded in Pythias’s financial statements, but the deferred payment has not been recorded. Pythias’s cost of capital is 8% per annum. On 1 February 2011, Pythias also acquired 25% of the equity shares of Austin paying K10 million in cash.

The summarised statements of financial position of the three companies at 30 September 2011 are:

Pythias Sara    Austin

Assets    K000 K000 K000

Non-current assets

Property, plant and equipment 40,000 31,000 30,000

Intangible assets    7,500

Investments – Sara (8 million shares at K4 each) 32,000

– Austin    10,000    nil nil

–––––– –––––– ––––––

89,500 31,000 30,000

Current assets

Inventory 11,200    8,400    10,000

Trade receivables    7,400    5,300 5,000

Bank    3,400    nil    2,000

–––––– ––––––    ––––––

Total assets    111,500    44,700    47,000

   –––––– –––––– ––––––

Equity and liabilities

Equity Equity shares of K1 each    50,000    10,000 10,000

Retained earnings – at 1 October 2010 25,700    12,000 31,800

– for year ended 30 September 2011 9,200    6,000    1,200

––––––    –––––– ––––––

   84,900 28,000 43,000

Non-current liabilities

Deferred tax    15,000    8,000 1,000

Current liabilities

Bank nil 2,500 nil

Trade payables 11,600    6,200    3,000

–––––– –––––– ––––––

Total equity and liabilities    111,500 44,700 47,000

   ––––––    ––––––    ––––––

The following information is relevant:

(i) Pythias’s policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose the directors of Pythias considered a share price for Sara of K3.50 per share to be appropriate.

(ii) At the date of acquisition, the fair values of Sara’s property, plant and equipment was equal to its carrying amount with the exception of Sara’s plant which had a fair value of K4 million above its carrying amount. At that date the plant had a remaining life of four years. Sara uses straight-line depreciation for plant assuming a nil residual value. Also at the date of acquisition, Pythias valued Sara’s customer relationships as a customer base intangible asset at fair value of K3 million. Sara has not accounted for this asset. Trading relationships with Sara’s customers last on average for six years.

(iii) At 30 September 2011, Sara’s inventory included goods bought from Pythias (at cost to Sara) of K2.6 million. Pythias had marked up these goods by 30% on cost. Pythias’s agreed current account balance owed by Sara at 30 September 2011 was K1.3 million.

(iv)Impairment tests were carried out on 30 September 2011 which concluded that consolidated goodwill was not impaired, but, due to disappointing earnings, the value of the investment in Austin was impaired by K2.5 million.

(v) Assume all profits accrue evenly through the year.

Required:

Prepare the consolidated statement of financial position for Pythias as at 30 September 2011.

January 2010, Giant Green Company pays $3,400,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $782,000, with a useful life of 25 years and a $79,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $440,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,420,600. Giant Green also incurs the following additional costs:

What is the amount that should be recorded for Land?

Determine the number of lanes required according to Highway Capacity Manual 2010 methodology to achieve a target Level of Service (LOS) of C for a section of a freeway. The section characteristics are the following: rolling terrain, 15% trucks, 2% RVs, PHF = 0.90, AADT = 30,000 veh/day, 50% traffic in the design direction, 12 ft wide lanes, 5 ft right shoulder clearance, 4 ramps in 6 miles. Use 30^th highest hourly volume for design hour volume assuming that the value will be exceeded in 15% of similar locations.