An investor owns 5,000 shares of stock AB, which is currently trading at $100 per share. The investor is fearful of a sharp decrease of the stock price. He decides to buy 50 December 95 put option at a price of $3, paying $15,000.  Note: Each put option contract provides for the right to sell 100 shares of stock. December 95 put option means that the strike price of the put is 95 and it matures in December.

If IBM stock price decreases from $100 to $80, the profit associated with the passive strategy is_____ and the profit associated with the protective put strategy is____.

An investor owns 5,000 shares of stock AB, which is currently trading at $100 per share. The investor is fearful of a sharp decrease of the stock price. He decides to buy 50 December 92 put option at a price of $3, paying $15,000. Note: Each put option contract provides for the right to sell 100 shares of stock. December 92 put option means that the strike price of the put is 92 and it matures in December.

If IBM stock price rises from $100 to $110, the profit associated with the passive strategy is_____ and the profit associated with the protective put strategy is____.

The following data show the brand, price, and the overall score for six stereo headphones that were tested by consumer reports. The overall score is based on sound quality and effectiveness of ambient noise reduction. Scores range from 0 to 100.

Price Score

Bose 180 76

Skullcandy 150 71

Koss 85 61

Phillips/O'Neill 70 56

Denon 70 40

JVC 35 26

a). Test for a significant relationship using the F test. What is your conclusion? Use α= 0.05

b). Develop a point estimate of the score for a headphone with a price of 100.

c). Develop a 95% confidence interval for the mean score for all headphones with a price of 100.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Question 5 [45]

Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The

company sells the lamps both for cash and on credit. Company management is

contemplating relaxing its existing credit standards in order to boost sales and profits.

The company provided you with the following information relating to this lamp:

 The current selling price is R150.00 per unit.

 Total sales for 2018 were 80 000 units.

The variable cost per unit is R80.00.

 The total fixed cost is R1 200 000.

 Current credit terms are 30 days from date of purchase.

 Current bad debts are 1% of sales.

 Owing to tough business conditions the company is considering relaxing its current credit

standards and in doing so, anticipates the following to happen as a result:

o An expected increase of 8% in current total sales

o An increase in the average collection period to 40 days

o An expected increase of 2% in bad debts

 The company’s opportunity cost of tying up funds in trade receivables is 15%.

 A trading year consists of 365 days.

Required

Show all calculations rounded off to the closest rand or nearest whole number.

Use the information provided by Gentronics in order to determine the impact of the proposed

relaxation in credit standards on profits.

Complete the following chart to determine which supplier will you choose according to given scoring system and what are your selections's point of strengths and weaknesses?

Given the following background information:

Each sub-item has the following meaning:

• Technical proposal: evaluation of three items 1. Adherence to system design included in the proposal (50%) 2. Historical supplier capability to adhere to design included in the proposal (35%) 3. Effectiveness of communication of technical details (15%)

• Matching with project planning: for each supplier, the difference between the project due date and the proposed due date is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)]

• Reorder lead time: each supplier offers a lead time value, from which the average lead time is calculated; so, for each supplier, the difference between the average lead time and the proposed lead time is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)]

• Supplier past performance: ongoing suppliers are evaluated against four performance dimensions (order freezing time, payment terms, delivery lead time, open work in progress activities, defects part per million); for each, a threshold value is set (e.g. for defects part per million, it is 1%): each supplier receives a score between 0% and 100% according to how much the target value has been achieved (it is default 0% if the supplier has no performance data available). Each performance has the same weight (20%)

• Quotation for the project: each supplier offers a price for this project, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];

• Quotation for future projects: each supplier offers a price for at three future project, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];

• Quotation for repairing and maintenance: each supplier offers a price for maintenance and repair, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];

• Supplier dependence: each supplier receives a score which equal the value of supplier dependence.

John purchased 100 shares of Black Forest Inc. stock at a price of $153.00 three months ago. He sold all stocks today for $157.64. During this period the stock paid dividends of $4.62 per share. What is John’s annualized holding period return (annual percentage rate)

You buy 100 shares of Apple common stock at a price of $55.75. One quarter later, you collect a dividend of $1.51 per share and sell your stock for $66.38 per share. What is the rate of return on your investment? (You may ignore commissions and taxes.) Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol. If the return is negative, then include a minus sign.