9.1. Obtain the total periodic payments of a loan of 16,000€ and 3 years term, with the following conditions:

a. Adjustable interest rate.
Annual adjustment period: 1 year.
Type of loan: Semi-annually constant principal repayments over 3 years.
Nominal interest rate for the 1st period: 3%
Interest rates for the remaining periods: the index rate plus 0.5 percentage points.

The index rate take the following values for the other periods:

ir = 0.05 ; ir = 0.045

Find the periodic payments to be made.

b. Monthly constant payments over each adjustment period.
Annual adjustment period: 1 year.

Nominal interest rate for the 1st period : 5%.
Remaining periods: index rate plus 0.3 percentage points.
The index rates take the following values for each of the periods:

ir = 0.06 ; ir = 0.04

Find the periodic payments to be made.

c. Adjustable interest rate.
Annual adjustment period: 1 year.
Type of loan: quarterly constant principal repayments over 3 years.
Nominal interest rate for the 1st period: 7%
Interest rates for the remaining periods: the index rate plus 0.2 percentage points.

The index rates take the following values for the other periods:

ir = 0.035 ; ir = 0.05

Find the periodic payments to be made.

SciTools Incorporated, a company that specializes in scientific instruments, has been invited to make a bid on a government contract. The contract calls for a specific number of these instruments to be delivered during the coming year. The bids must be sealed (so that no company knows what the others are bidding), and the low bid wins the contract. SciTools estimates that it will cost $5000 to prepare a bid and $95,000 to supply the instruments if it wins the contract. On the basis of past contracts of this type, SciTools believes that the possible low bids from the competition, if there is any competition, and the associated probabilities are those shown in the table below. In addition, SciTools believes there is a 30% chance that there will be no competing bids.

Based on the data in the table above, SciTools will limit its choices for bids to $115,000, $120,000, and $125,000.

a) Draw a decision tree for this scenario

b) Solve this decision tree using EMV

c) Draw the risk profiles for all decision strategies

d) Draw the cumulative risk profile for this scenario. Is there dominance?

e) Construct a tornado diagram for this scenario, if we assume the following ranges for the

variables:

a. Probability of no competing bids: 0 to 0.6

b. Cost to supply the instruments: $85,500 to $105,400

c. Bid cost: $4,500 to $5,500

The dean of Mihaylo Business School is forecasting total student enrollment for next year based on the following historical data:

Year Total Enrollment

2015 1600

2016 2000

2017 2200

2018 2600

2019 3000

What is 2020's forecast using a 2-period moving average? Select one:

a. 2,800

b. None of the choices

c. 3,000

d. 1,960

e. 2,450

What is the MAPE value based on 2 year moving average?
Select one:

a. None of the choice
b. 0.191
c. 0.178
d. 0.144
e. 0.237

What is the forecasted value of 2020 by using a 3 year weighted moving average by using weights of 0.6, 0.3 and 0.1.
Select one:
a. 2480
b. 2800
c. 2680
d. None of the choices
e. 2400
a. None of the choice
b. 0.191
c. 0.178
d. 0.144
e. 0.237

What is the MSE value based on exponential smoothing forecast with smoothing constant of 0.4?
Select one:
a. 1,557,436
b. None of the choices
c. 576
d. 1,297,863
e. 357,985

Compare 2 year moving average and exponential smoothing with alpha=0.4, which forecasting approach is better? Using MAE as your forecast accuracy measure.
Select one:
a. Exponential smoothing with alpha=0.4
b. 2 year moving average

The dean of Mihaylo Business School is forecasting total student enrollment for next year based on the following historical data: Year Total Enrollment 2015 1600 2016 2000 2017 2200 2018 2600 2019 3000 What is 2020's forecast using a 2-period moving average? Select one: a. 2,800 b. None of the choices c. 3,000 d. 1,960 e. 2,450 What is the MAPE value based on 2 year moving average? Select one: a. None of the choice b. 0.191 c. 0.178 d. 0.144 e. 0.237 What is the forecasted value of 2020 by using a 3 year weighted moving average by using weights of 0.6, 0.3 and 0.1. Select one: a. 2480 b. 2800 c. 2680 d. None of the choices e. 2400 a. None of the choice b. 0.191 c. 0.178 d. 0.144 e. 0.237 What is the MSE value based on exponential smoothing forecast with smoothing constant of 0.4? Select one: a. 1,557,436 b. None of the choices c. 576 d. 1,297,863 e. 357,985 Compare 2 year moving average and exponential smoothing with alpha=0.4, which forecasting approach is better? Using MAE as your forecast accuracy measure. Select one: a. Exponential smoothing with alpha=0.4 b. 2 year moving average

1. Calculate the standard deviation of a portfolio consisting of 40 percent stock P and 60 percent stock Q.

Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.)

2.

What is the beta of the following portfolio?

Round to the second decimal place.

3.

Which of the following is NOT an example of factors that affect systematic risk?

4.

You are analyzing a common stock with a beta of 1.5. The risk-free rate of interest is 5 percent and the expected return on the market is 15 percent. If the stock's return based on its market price is 21.5%,

1.  Find the margin of error for the mean weight of medium Antonio’s cheese pizza if a sample of size n = 16 produces a sample standard deviation of 4.220 g, assuming 95% confidence. Round to two decimals.

2. The mean and standard deviation for voltages of power packs labeled as 12 volts for a sample of 25 are as follows:

Please develop a 95.00% confidence interval for the sample above. (Round to 3 decimal places.)
Lower limit = ?

Upper limit = ?

3. The actual voltages of power packs labeled as 12 volts for a sample are as follows: 11.90, 11.79, 11.38, 11.79, 12.21, 11.95, 11.38, 11.01.
Please develop a 90.00% confidence interval for the sample above.

Lower limit = ?

Upper limit = ?

4. Assuming the random variable X is normally distributed, compute the lower and upper limits of the 90% confidence interval for the population mean if a random sample of size n=7 produces a sample mean of 12 and sample standard deviation of 6.00. Round to two decimals.

Lower Limit = ?,

Upper Limit = ?

5. A random sample of 22 scalpers’ ticket prices for a rock concert has sample mean $44.00 and sample standard deviation of $6.02. What is the upper and lower limit of the 95% confidence interval of mean scalpers’ ticket prices? Round to two decimals.

Lower Limit = ?

Upper Limit = ?

3. [13 marks] A company is interested in forecasting demand for a product. They have reason to believe that the demand is not affected by any seasonal changes and that it does not increase or decrease systematically over time. They have data for the last 9 periods (below).

In each part of this question, show your work: show the equation you use, how you plug in, and your final answer. Please do not round any answers. Hint: see lecture 22 example 3.

a) [3 marks] Use a 4-period moving average to forecast demand for period 10.

b) [3 marks] Use a 3-period weighted moving average to forecast demand for period 10 using weights of 0.6, 0.3, and 0.1, respectively. Show your work.

c) [3 marks] Suppose the forecast for period 9 was 235 units. Use exponential smoothing with a smoothing constant of 0.6 to forecast demand for period 10.

d) [4 marks] Suppose the actual demand in period 10 was 211 units. Which of your forecasting methods from parts a through c performed best, and why? Please provide a table similar to the one shown on slide 48 of lecture 22, and make your conclusion based on your table.

A 60-year-old man suffered from 6 months of severe headaches and excessive perspiration, he also became aware that he had developed tunnel vision. He had a 12-yr history of hypertension and vague aches and pains in his shoulder and hand joints that were diagnosed as osteoarthrosis. On examination by his GP, he was found to have course facial features, a prominent jaw. He had bitemporal hemianopia, BP 145/105 mmHG and a slight glycosuria. He was sent for a lateral skull x-ray that showed an enlarged pituitary fossa. Blood tests showed: Fasting glucose 9.2 (Reference range 3.5-6.5 mmol/l) Luteinizing hormone 3.7 (Reference range 0.7-6.0 U/l) Follicle stimulating hormone 4.8 (Reference range <6 U/l) Prolactin 295 (Reference range <425 mU/l) Testosterone 18.1 (Reference range10-35 nmol/l) Growth hormone 8.0 (Reference range <10 mU/l) Cortisol (random) 458 (Reference range 250-700 nmol/l) TSH 3.2 (Reference range 0.3-6.0 mU/l) Free T4 15.6 (Reference range 9.4-25.0 pmol/l) What further biochemical tests would you perform?

Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.4 million. The equipment will be depreciated straight line over 6 years to a value of zero, but in fact it can be sold after 6 years for $606,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year’s forecast sales. The firm estimates production costs equal to $1.70 per trap and believes that the traps can be sold for $7 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm’s tax bracket is 35%, and the required rate of return on the project is 12%. Use the MACRS depreciation schedule.

a. What is project NPV? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions rounded to 4 decimal places.)

b. By how much would NPV increase if the firm depreciated its investment using the 5-year MACRS schedule? (Do not round intermediate calculations. Enter your answer in whole dollars not in millions.)