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.

Suppose you borrowed $400,000 for a home mortgage on January 1, 2010 with an annual interest rate of 3.5% per year compounded monthly.

(a) If you didn't make any payments and were only charged the interest (and no late fees), how much would you owe on the mortgage on January 1, 2030?

(b) Suppose the balance on the mortgage is amortized over 20 years with equal monthly payments at the end of each month. (This means the unpaid balance on January 1, 2030 should be $0). What are the monthly payments?

(c) How much interest was paid during the 20 years of the mortgage?

(d) What is the unpaid balance on the mortgage on January 1, 2015?

The Affordable Care Act was signed into law by President Barack Obama in March 2010. Many of the provisions of the law directly affect health care providers. Review the following topic materials:

Key Features of the Affordable Care Act

Health Care Transformation: the Affordable Care Act and More

What are the most important elements of the Affordable Care Act in relation to community and public health? What is the role of the nurse in implementing this law?

Brick & Stone Notes to the Income Statement

1. The Cost of Sales includes goods valuing $250,000 that were purchased for Mr. Stone’s personal use.

2. Salaries and Wages include $25,000 per month, and $20,000 per month, paid to Mr. Stone and Mr. Brick respectively.

3. $65,000 of the rent relates to the private dwelling of Mr. Brick’s wife.

4. The rates of depreciation on the fixed assets of the business are below those given in the Wear and Tear Schedule of the Income Tax Act. The Wear and Tear allowance total 35 % of qualifying assets valuing $300,000.

5. The partners agreed to dispose of an old pick-up truck with a net book value of $35,000 for $25,000. The pick-up had a tax written down value of $30,000

6. The telephone expense includes 20% for private calls made from Mr. Stone’s cellular phone.

7. The electricity relates to the private dwelling of Mr. Brick.

8. Entertainment expenses relate solely for the promotion of the business to new and prospective customers.

9. Donations of $60,000 were made to a local political party to fund its campaign. The remainder was donated to an approved local children’s home.

10. The partners could not determine if all of the customers would be able to settle their bills on time so a general provision of $80,000 was made to cushion the effect of the any debt going bad.

11. Fines and Penalties include traffic offences of $5,000 and penalties $10,000 for non filing of VAT returns for the period January – March 2014.

Note that the business was owned sole by Mr. Brick and registered in Trinidad and Tobago as a Sole Trading business in 2009. However, through continuous growth, Mr. Brick decided to enter into a partnership agreement with Mr. Stone, thus the status of the business was changed in 2014. The partnership agreement stated that the partners are to share profit and loss in the ratio 45:55

Requirement:

Given the information provided, compute the adjustable profit of the partnership and the share of profit for the year ending 31 December 2016.

According to a survey of 5041 Star Trek fans conducted in 2010, 2873 are females. Use this data to test the claim that the majority of Star Trek fans are female. Use 0.10 as the significance level.

p-value=0.570, evidence not support claim

p-value=1.000, evidence not support claim

p-value=0.570, evidence support claim

p-value=1.578, evidence not support claim

p-value=0.000, evidence support claim