T/F

If you formed a portfolio that consisted of all stocks with betas less than 1.0, the portfolio would have a beta coefficient that is equal to the weighted average beta of the stocks in the portfolio.

The beta of an "average stock," or "the market," does not change over time.

The slope of the SML is determined by the value of beta.

The CAPM is built on historic conditions, although in most cases we use expected future data in applying it.

"Risk aversion" implies that investors require higher expected returns on riskier than on less risky securities.

If you plotted the returns of a company against those of the market and found that the slope of your line was negative, the CAPM would indicate that the required rate of return on the stock should be less than the risk-free rate for a well-diversified investor, assuming that the observed relationship is expected to continue in the future.

A firm can have a positive beta, even if the correlation between its returns and those of another firm is negative.

One stock has a beta of 1.2 and another has a beta of -0.6. The returns on the stock with the negative beta must have been negatively correlated with returns on most other stocks

A stock with a beta equal to -1.0 has zero systematic (or market) risk.

Accountant and the Business Owner 2

A young accountant straight out of school applies for a job advertised in the Sydney Morning Herald. He is interviewed by the owner of a small business who has built it up from scratch.

"I need someone with an accounting degree," says the man, "but mainly I'm looking for someone to do my worrying for me."

"How do you mean?" says the accountant.

"I have lots of things to worry about, but I want someone else to worry about money matters."

"OK," says the accountant. "How much are you offering?"

"You can start on seventy-five thousand," says the owner.

"Seventy-five thousand dollars. How can a business like this afford to pay so much?"

"That," says the man, "is your first worry."

After you have a good laugh (or perhaps a few chuckles), share with the group some information about yourself and your reactions to this story. Does this story portray the reality of the accountant's work? Does this joke portray a stereotype? If you agree with the substance of this story in terms of the accountant's role, is this attractive to you as a career? Please post a response, and respond to two other peoples' postings.

Linear Programming:
A real estate developer is planning a new mini apartment complex.

Three types of units can be built: one-bedroom apartments, two-bedroom apartments, and three-bedroom apartments.

Each one-bedroom apartment requires 700 square feet; each two-bedroom apartment requires 850 square feet; and each three-bedroom apartment requires 1,250 square feet.
The developer wants to keep a mix of apartment types in the complex. He believes that the number of one-bedroom apartments should be at least 15% of the total number of apartments. However three-bedroom apartments should not be more than 30% of the total number of apartments.

Local zoning laws do not allow the developer to build more than 42 units in this particular building location, and restrict the building to a maximum of 36,000 square feet.

Market studies show that one-bedrooms rent for $825 per month, two-bedrooms for $1,225 per month, and three-bedrooms for $1,775 per month.


a)Determine the constraint for square feet.

b)Determine the constraint for the number of total units.

c) Determine the constraint for one-bedroom apartments.​​​​​​​

d) Determine the objective function.

Let us say that the SBRU information system includes four subsystems: Resort relations, Student booking, Accounting and finance, and Social networking. The first three are purely Web applications, so access to those will be through an Internet connection to a Web server at the SBRU home office. The Social networking subsystem has built-in chat capabilities. It relies on Internet access for the students, as students compare notes before they book their travel reservations and as they chat while traveling. To function properly, the system obviously requires a wireless network at each resort during the trip. SBRU isn’t responsible for installing or maintaining the resort wireless network; they only plan to provide some design specifications and guidelines to each resort. The resort will be responsible for connecting to the Internet and for providing a secure wireless environment for the students.

1. Design the environment for the SBRU information system by drawing a network diagram. Include what might be necessary to support online chatting capabilities.

2. Considering that everything is designed to operate through the Internet with browsers or smart phones, how simple does this architecture appear to be? Can you see why Web and smart phone applications are so appealing?

3. What aspect of design becomes extremely important to protect the integrity of the system?

Using SHA 256 in Cryptool find the hash values (hash digests) for the following messages: (Show your work by capturing screen images)

1. Character 0 (note the word Character is not included)
2. Character 1 (note the word Character is not included)
3. Fort Valley State University is where talented students come simply for the opportunity to be brilliant. Located in the heart of Georgia, FVSU combines the personal attention and family feel of a small, private college with the resources and research found at large public universities. Located on the second largest acreage of any Georgia university, it is the only university in the world which at once is a University System of Georgia institution, a historically black university, and an 1890 land-grant institution, with a directive to use knowledge to improve the lives of students and non-students alike. Leveraging the reputation for excellence FVSU has built since 1895, the university is preparing students to embrace their genius as future global leaders and enabling discovery which will make real that only now imagined.
   That’s why our motto and tagline is “empower the possible.
4. Change the message in 3 by 1 bit and find the hash of it. You need to explain how you change the message by a single bit

Roadkill on China’s New Route to Progress A pile of rusty pipes and other construction materials are all that remain of Lanzhou New Area’s tram project in Gansu province. The tracks have been paved over, their mismatched lines scarring a six-lane road that ends at the edge of the planned city in central China. “The project is dead,” says a guard, who gives only his surname, Le. President Xi Jinping’s clampdown on debt had claimed another victim. In much of China the economy has powered through Beijing-mandated restrictions on borrowing by local governments and state-owned companies. Analysts surveyed by Bloomberg reckon growth accelerated to 6.8 percent last year, even though fixed investment was probably the weakest since 1999. But for China’s hinterlands—the less developed areas far from the more prosperous industrial centers along the coast—the story is different. Lanzhou New Area, a zone the size of New York City in the provincial capital of Lanzhou, was once a poster child for the spending boom that China’s central and local governments orchestrated to counteract the global financial crisis. After Beijing approved the development in 2012, armies of earth movers rolled in, flattening hills, filling valleys, and digging lakes in service of luring 1 million residents to the zone by 2030. The site achieved internet notoriety in 2016 for its theme-park reproductions of the Parthenon and the Great Sphinx. Now, Xi wants to neutralize the risk that soaring debt will cause a financial crisis and derail growth. The issue was front and center at October’s Communist Party Congress and December’s Central Economic Work Conference, where elite cadres set goals for 2018. Policymakers have introduced measures to restrict loans to real estate developers, local governments, and industries plagued by overcapacity. In Gansu, fixed investment shrank 39 percent in the first 11 months of last year, the most in any province, according to official statistics. “Deleveraging is always painful, but it will be more painful for inland provinces where growth is not as robust,” says Qian Wan, a Bloomberg economist in Beijing who analyzes China’s regional economies. While Lanzhou has a population of 3.7 million, data from the municipal statistics bureau show that fewer than 150,000 live in the New Area, an hour’s drive north of the city center. Work on projects such as the tram and a network of underground tunnels for water pipes and power lines came to a halt when the Bank of Gansu Co. refused last year to renew a 2 billion-yuan ($311 million) line of credit to the corporation overseeing development of the satellite city. More than 200 other projects across Gansu province are at a standstill. Local Communist Party officials denied Bloomberg’s requests for interviews with officials in the area. In a statement to Bloomberg, Bank of Gansu said it’s raised standards for creditors to mitigate risk and reduce financial leverage. Don’t write Lanzhou—or its New Area—off yet. The city, which sits on the banks of the Yellow River near China’s geographical center, was once a major stop on the Silk Road. As such, it stands to benefit from Xi’s One Belt, One Road initiative—a $1 trillion effort to revive and expand those ancient trade routes. It’s worth noting that while Bank of Gansu restricted credit to the local government investment arm, it continued to fund projects related to technological innovation, science, and cultural tourism. If the government can manage the shift in investment in Lanzhou without unleashing the excesses of the past decade, the city may eventually fill its empty tower blocks and once again become a bridgehead for China’s western development.

Briefly discuss the following two questions:

a. What are the key factors affecting the completion of the project?
b. What are your suggestions to the management team as to how to execute the project effectively and efficiently?

Questions using the financial statements below:

What is the Net Income Margin? State your answer as a % and round to the nearest whole number

What is the current ratio? Remember that a ratio is stated in reference to 1 (not as a percentage), and you should carry ratio out to two decimal places

What is the exact amount that account receivables increased during the year?

What is the total Cost of Sales for the year?

What month does the fiscal year begin in?

What is the quick ratio? Remember that a ratio is stated in reference to 1 (not as a percentage), and you should carry ratio out to two decimal places.

What two revenue line items make up more than 80% of the company’s revenue for the year? Hint: Write answers exactly like they are on the financial statements, capitalization and spaces included. Place a comma and space ", " in between your two answers.

How much did Park Systems invest in radio facilities?

What is EBITDA (Net Income before Interest Expense, Taxes, Depreciation and Amortization are deducted)?

How much did the company pay down its Note Payable?

Balance Sheet

Years Ended December 31 (in thousands)

Assets

Current Assets

Income Statement Years Ended December 31

(in thousands)

Statement of Cash Flows Year Ended December 31 (in thousands)

Operating Activities

Investing Activities

B. Compare and contrast these two case studies:

The first one we discussed in class, General Motors (GM), which decided to offshore production from the USA to Mexico. When GM began this in the late 70s, it was a relatively new idea for a major American producer, and was highly controversial, but the trend has grown over the decades, and nowadays other major car companies, including European and Asian giants like BMW and Honda, have followed the same strategy to close plants in their homelands and reopen in Mexico where labor is much cheaper. In 1978, there were 80,000 GM employees in the Flint, Michigan area, and today there are around 7,000. As those plants closed, the consequences have been very destructive for the surrounding towns, where unemployment skyrocketed (and with it crime, gangs and drugs), and areas have become like ghost towns where people have been evicted from their homes, and apartment buildings and businesses have been abandoned. As GM first began this offshoring in the late 70s they were enjoying a 49% share of the American car market, but changes in the market were showing that they would soon be losing this high position. By the mid 80’s they were down to 40% and this downward trend has continued (not only for them but for other American car manufacturers as well). Today, they stand at 15%.

The second one involves Malden Mills, a textile company (fabrics and clothing) in Lawrence, Massachusetts, near the city of Boston in the USA. In the 80s, other textile companies in the region had closed their Boston area factories to relocate to where labor was cheaper, often to Asia and Mexico, but Malden Mills decided to stay. During the 80s they survived near-bankruptcy and decided to gamble and re-focus their production on high-end, high-priced specialty fabrics, especially Polartec, a lightweight, fleecy material that turned out to be very popular with brands like L. L. Bean and Ralph Lauren. The gamble paid off and the Polartec profits rose from $5 million in 1982 to $200 million in 1995. The company was quite strong and successful when a crisis hit in December of 1995—an accidental industrial fire completely destroyed the factory. Everyone in the industry expected Malden Mills to do the only ‘smart’ thing at this point and take the $100 million insurance money and reopen in a developing country where labor would be cheaper. But they shocked everyone by announcing that they would rebuild in Lawrence, and also they would pay full salaries to their 3,000 employees for 3 months and continued health insurance for 6 months. Rebuilding in Lawrence ended up costing the company around $450 million and keeping the laid-off workers on salary and health benefits cost $20 million more, but the company gained a national reputation as a business ‘with a heart’ and enjoyed a very positive boost to their brand. They reopened in 1996, and most of the original employees were hired back, as their jobs were held for them. As the years went by, however, the company fell upon hard times. Perhaps due to the amount of money they spent on rebuilding, or perhaps it was mostly due to changes in the marketplace, but Malden Mills had to declare bankruptcy in 2007. The family that had run the plant for generations was forced out as another company took over, changed the name to Polartec, reduced the staff to 800, and moved most of the operations to other countries.

As you compare and contrast these two case studies, make sure you apply contrasting theories as well, such as Shareholder vs Stakeholder, or perhaps Social Darwinism vs. Ethic of Care. Since this is an essay, make sure you have a central point that you are developing along the way, which will be important to your conclusion.

B. Compare and contrast these two case studies: (350 words)

The first one we discussed in class, General Motors (GM), which decided to offshore production from the USA to Mexico. When GM began this in the late 70s, it was a relatively new idea for a major American producer, and was highly controversial, but the trend has grown over the decades, and nowadays other major car companies, including European and Asian giants like BMW and Honda, have followed the same strategy to close plants in their homelands and reopen in Mexico where labor is much cheaper. In 1978, there were 80,000 GM employees in the Flint, Michigan area, and today there are around 7,000. As those plants closed, the consequences have been very destructive for the surrounding towns, where unemployment skyrocketed (and with it crime, gangs and drugs), and areas have become like ghost towns where people have been evicted from their homes, and apartment buildings and businesses have been abandoned. As GM first began this offshoring in the late 70s they were enjoying a 49% share of the American car market, but changes in the market were showing that they would soon be losing this high position. By the mid 80’s they were down to 40% and this downward trend has continued (not only for them but for other American car manufacturers as well). Today, they stand at 15%.

The second one involves Malden Mills, a textile company (fabrics and clothing) in Lawrence, Massachusetts, near the city of Boston in the USA. In the 80s, other textile companies in the region had closed their Boston area factories to relocate to where labor was cheaper, often to Asia and Mexico, but Malden Mills decided to stay. During the 80s they survived near-bankruptcy and decided to gamble and re-focus their production on high-end, high-priced specialty fabrics, especially Polartec, a lightweight, fleecy material that turned out to be very popular with brands like L. L. Bean and Ralph Lauren. The gamble paid off and the Polartec profits rose from $5 million in 1982 to $200 million in 1995. The company was quite strong and successful when a crisis hit in December of 1995—an accidental industrial fire completely destroyed the factory. Everyone in the industry expected Malden Mills to do the only ‘smart’ thing at this point and take the $100 million insurance money and reopen in a developing country where labor would be cheaper. But they shocked everyone by announcing that they would rebuild in Lawrence, and also they would pay full salaries to their 3,000 employees for 3 months and continued health insurance for 6 months. Rebuilding in Lawrence ended up costing the company around $450 million and keeping the laid-off workers on salary and health benefits cost $20 million more, but the company gained a national reputation as a business ‘with a heart’ and enjoyed a very positive boost to their brand. They reopened in 1996, and most of the original employees were hired back, as their jobs were held for them. As the years went by, however, the company fell upon hard times. Perhaps due to the amount of money they spent on rebuilding, or perhaps it was mostly due to changes in the marketplace, but Malden Mills had to declare bankruptcy in 2007. The family that had run the plant for generations was forced out as another company took over, changed the name to Polartec, reduced the staff to 800, and moved most of the operations to other countries.

As you compare and contrast these two case studies, make sure you apply contrasting theories as well, such as Shareholder vs Stakeholder, or perhaps Social Darwinism vs. Ethic of Care. Since this is an essay, make sure you have a central point that you are developing along the way, which will be important to your conclusion.

Please prepare a PowerPoint presentation of the following case.

During the late 1980s, the decline in Akron’s tire industry, inflation, and changes in governmental priorities almost resulted in the permanent closing of the Akron Children’s Zoo. Lagging attendance and a low level of memberships did not help matters. Faced with uncertain prospects of continuing, the city of Akron opted out of the zoo business. In response, the Akron Zoological Park was organized as a corporation to contract with the city to operate the zoo.

The Akron Zoological Park is an independent organization that manages the Akron Children’s Zoo for the city. To be successful, the Zoo must maintain its image as a high-quality place for its visitors to spend their time. Its animal exhibits are clean and neat. The animals, birds, and reptiles are carefully looked after. As resources become available for construction and continuing operations, the Zoo keeps adding new exhibits and activities. Efforts seem to be working, because attendance increased from 53,353 in 1989 to an all-time record of 133,762 in 1994.

Due to its northern climate, the Zoo conducts its open season from mid-April until mid-October. It reopens for one week at Halloween and for the month of December. Zoo attendance depends largely on the weather. For example, attendance was down during the month of December 1995, which established many local records for the coldest temperatures and the most snow. Variations in weather also affect crop yields and prices for fresh animal foods, thereby influencing the costs of animal maintenance.

In normal circumstances, the zoo may be able to achieve its target goal and attract an annual attendance equal to 40% of its community. Akron has not grown appreciably during the past decade. But the Zoo became known as an innovative community resource, and as indicated in the table, annual paid attendance has doubled. Approximately 35% of all visitors are adults. Children account for one-half of the paid attendance. Group admissions remain a constant 15% of zoo attendance.

The Zoo does not have an advertising budget. To gain exposure in its market, the Zoo depends on public service announcements, its public television series, and local press coverage of its activities and social happenings. Many of these activities are but a few years old. They are a strong reason that annual zoo attendance has increased. Although the Zoo is a nonprofit organization, it must ensure that its sources of income equal or exceed its operating and physical plant costs. Its continued existence remains totally dependent on its ability to generate revenues and to reduce its expenses.

Source: Professor F. Bruce Simmons III, University of Akron.

Questions

1. The president of the Akron Zoo asked you to calculate the expected gate admittance figures and revenues for both 1999 and 2000. Would simple linear regression analysis be the appropriate forecasting technique?
2. What factors other than admission price influence annual attendance and should be considered in the forecast?