1. As the CEO of Gelta Airlines, your compensation is tied to the performance of firm. You know that fuel price has a significant impact on the performance of the firm. To avoid operating losses from high fuel prices, you are considering 100 call contracts (1 contract = 100 call options) with exercise price of $30/barrel. Its price is either $25 or $50 at the end of the year. The risk-free rate is 10% and the current market price of the stock is $28.
   1. What is the replicating portfolio strategy? Specify the investments.
   2. What is the no arbitrage condition?
   3. What is the value of these call contracts?
   4. If the exercise price is $20, then what are the answers for parts a, b, and c?
   5. Considering a frictionless market, how do shareholders react on the disclosure of such contracts?

The CEO of a mail order business is reviewing the order filling operations at their two warehouses. The goal is to have 100% of orders shipped within 24 hours. In previous years, neither warehouse has achieved the goal, but the East Coast Warehouse has consistently out-performed the West Coast Warehouse.
To compare the current performance of the warehouses, they decide to conduct a hypothesis test at the 5% significance level. They randomly select 300 orders from the West Coast Warehouse (population 1) and 250 orders from the East Coast Warehouse (population 2). They found that 267 of the West Coast Orders were shipped within 24 hours, and the East Coast Warehouse shipped 212 orders within 24 hours. What is the p-value for testing the hypothesis that the West Coast Warehouse is now outperforming the East Coast Warehouse ?

(Use 4 decimals)

A CEO of a horizontally integrated healthcare organization suggested that the persons receiving services at their health care facilities are 'actual patients' for less than 10% of the time they are at the facility and for the rest of the time they are general consumers. Because patient satisfaction is one of their strategic goals, the CEO explained that addressing this goal begins before individuals even get to the parking lot. For example: Are phone calls answered in a timely fashion? what is the tone of the respondent on the call? how timely are appointments? is there ease of parking? what are the attitudes of the valets, receptionists' body language; do care providers make eye contact? does the care team appear clean/tidy/properly dressed? do the medical assistants and other staff appear competent? is the actual clinical visit (the 10%) rushed? how are difficult financial issues handled? etc.

How can one health care organization address all of these, as well as the other issues, without compromising the quality of care? Pick a specific type of health care organization to use as an example. (For example, a clinic that offers lots of different specialty services, hospitals, Nursing homes, or other long-term care facilities). Also, think of all the changes that had to be made because of COVID-19 could have impacted patient satisfaction with their quality of care and the services received.

As CEO of Ocean World​, Rita Greenwood knows it is important to control costs and to respond quickly to changes in the highly competitive​ boat-building industry. When DMG Consulting proposes that Ocean World invest in an ERP​ system, she forms a team to evaluate the​ proposal: the plant​ engineer, the plant​ foreman, the systems​ specialist, the human resources​ director, the marketing director, and the management accountant. A month​ later, management accountant Marcus Chumura reports that the team and DMG estimate that if Ocean World implements the ERP​ system, it will incur the following​ costs:

Costs of the Project

a. $360,000 in software costs

b. $72,000 to customize the ERP software and load OceanWorld​'s data into the new ERP system

c.$115,000 for employee training

Benefits of the Project

Requirement 1. If the ERP installation​ succeeds, what is the dollar amount of the​ benefits?

Requirement 2. Should OceanWorld install the ERP​ system? Why or why​ not? Show your calculations.

Complete the table below to calculate the expected net benefits​ (costs) of the project. ​(Use parentheses or a minus sign for net​ costs.)

Since the expected value of the benefits ▼(are less than ,are greater than )the total​ costs, Ocean World▼(should not,should)undertake the project.

Requirement 3. Why did Stuckey create a team to evaluate DMG​'s ​proposal? Consider each piece of​ cost-benefit information that management accountant Chumura

reported. Which person on the team is most likely to have contributed each​ item?

​(​Hint: Which team member is likely to have the most information about each cost or​ benefit?)

Stuckey formed a team to evaluate the feasabilty of installing an ERP system for the following reasons. ​(If a box is not used in the​ table, leave the box​ empty; do not select a​ label.)

Forming a team would lower the cost of evaluating the system.

She did not want to take sole responsibility for the decision

the project was too big for one person

the representatives of different functional business areas have different knowledge and information to contribute

the representatives of different functional business areas have the same knowledge and will offer similar perspectives.

Consider each piece of​ cost-benefit information that management accountant Chumura reported. Which person on the team is most likely to have contributed each​ item?

​(​Hint: Which team member is likely to have the most information about each cost or​ benefit?) ​(If a box is not used in the​ table, leave the box​ empty; do not select a​ label.)

You are the CEO of a firm with five distinct SBU/LOBs. It is your responsibility to decide how to manage them. Develop a model using the following intelligence, and then briefly comment on what you would do with each SBU/LOB.

The GNP is growing at 8%.

SBU/LOB A. This is your newest product line and it was just introduced. You anticipate significant competition from the bigger existing competitors but there is still plenty of room to grow in the industry, even faster than the GNP . Its contribution to the corporate portfolio is 5%.

SBU/LOB B. This product is in the decline stage of its life cycle and your competition have already exited because of lack of growth in the industry. Contribution is 5%.

SBU/LOB C. This is an established product with 25% market share. Your competitors have 50%, 20% and 5% respectively. There is almost no industry growth and contribution is 65%.

SBU/LOB D. You are the market leader in an industry. growing at 5%. Its contribution is 15%.

SBU/LOB E. You were the first to introduce this product so now you are the biggest guy on the block. Because of the potentially unlimited value of this great product this industry is growing at 20% and its contribution is 10%.

Determine the relative market share (RMS) of each LOB/SBU.

Kryptonite is a telecommunications provider located in Iowa with hundreds of thousands of employees. Their CEO, Clark Kline is considering the replacement of their expensive defined benefit (DB) pension plan which requires large contributions every year with a 401(k) where the employees will bear the investment risk. The majority of the workforce is young and the top executives are ll in their 50's and 60's. 2. An intern that works for you recommends utilizing a DB.K plan. What is your opinion of using such a plan in this case? 3.Who would benefit the most from the change away form the DB plan to a 401(k)? 4. What is the maximum contribution to a 401(k) of a worker age 56, who earns $200,000 per year as a factory worker with Kryptonite? 5. Louis Kent has been with Kryptonite for 10 years but is nervous now that Clark has taken over operations. She wants to know her options regarding taking money out of the 401(k) at a later date. You correctly tell her that she can access her 401(k) funds without penalty under what eight circumstances? 6. Clark gas heard that ADP testing is an issue for 401(k) plans. What are three ways to minimize that issue?

The CEO of FUN Corp. believes the cost of capital used in the previous question is inaccurate. You have been assigned to estimate cost of capital for FUN Corp.

• The company has a capital structure which consists of 80% long-term debt and 20% common stock.
• The company’s credit rating is Ba1/BB+ (equivalent to spread of 2%). Beta of debt is 0.
• The company’s common stock currently sells for $35 per share with 2.5 million shares outstanding.
• The company’s marginal tax rate is 30%. Market risk premium is 5%. Risk-free rate is 5%.
• FUN Corp.’s most comparable competitor is Toy Inc. who has no debt. Toy Inc’s equity beta is 1.4.

Answer the following questions (please show reasonings or calculations):

1. What is Toy Inc’s cost of capital?
2. What is FUN Corp’s cost of capital?

The CEO of Manitoba Health does not want the variance of waiting times at the emergency in Manitoba's hospital longer than 0.25 0.25 square hours. A random sample of 25 25 patients taken from Health Science Center gave the variance of the waiting time equal to 0.49 0.49 square hours. Assume that the waiting times for all patients are normally distributed. (a) Test whether the standard deviation of the waiting times for all patients at HSC is greater than 0.5 0.5 hours. Use α=0.05 α=0.05 . (b) Calculate a 95% 95% confidence interval for the population standard deviation.

Imagine you are the CEO of Google and you are interested in developing a new product. You have 5 ideas to choose from: •3-sided flip phone •Living robots •760mph trains •Cancer-detecting “smart” needles •Car batteries that charge in 10 minutes 1.What are the top 15 criterias you would use to screen/evaluate the above ideas? List those criterias in order of importance (1- most important, 15- least important). 2.Based on your established criteria, which of the 5 ideas would work best? Explain your choice and the selection criteria(s) that helped you determine it.