Suppose an individual invests $10,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses (or 12b-1 fees) are 0.80 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 8 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual fund over the two-year investment period

(Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))

Make sure the answer you provide is right please

We assume that our wages will increase as we gain experience and become more valuable to our employers. Wages also increase because of inflation. By examining a sample of employees at a given point in time, we can look at part of the picture. How does length of service (LOS) relate to wages? The data here (data336.dat) is the LOS in months and wages for 60 women who work in Indiana banks. Wages are yearly total income divided by the number of weeks worked. We have multiplied wages by a constant for reasons of confidentiality.

(a) Plot wages versus LOS. Consider the relationship and whether or not linear regression might be appropriate. (Do this on paper. Your instructor may ask you to turn in this graph.)

(b) Find the least-squares line. Summarize the significance test for the slope. What do you conclude?

(c) State carefully what the slope tells you about the relationship between wages and length of service.

This answer has not been graded yet.

(d) Give a 95% confidence interval for the slope.
(  ,  )

worker  wages   los     size
1       44.898  39      Large
2       85.8585 122     Small
3       37.6708 100     Small
4       44.1095 168     Small
5       47.756  25      Large
6       40.8481 22      Small
7       50.5179 27      Large
8       63.4659 70      Large
9       37.2126 86      Large
10      66.0707 95      Small
11      53.5897 56      Large
12      42.5586 18      Small
13      50.3493 129     Small
14      60.3041 75      Large
15      46.2348 93      Large
16      56.1494 23      Large
17      45.4136 15      Large
18      40.9541 44      Small
19      55.3183 26      Large
20      50.7934 58      Large
21      41.2603 79      Large
22      37.3516 19      Small
23      42.1137 30      Large
24      60.4141 88      Small
25      51.9331 119     Large
26      49.6191 20      Small
27      53.1292 116     Small
28      60.8961 62      Large
29      51.3743 31      Large
30      52.4964 42      Large
31      47.748  102     Small
32      47.1194 90      Large
33      60.6775 99      Large
34      70.5214 21      Small
35      39.4673 164     Large
36      50.4703 83      Large
37      66.2801 100     Large
38      62.3078 185     Small
39      43.79   18      Large
40      54.1258 56      Small
41      39.0053 174     Small
42      52.4289 59      Small
43      57.6612 89      Large
44      51.6591 17      Small
45      50.383  73      Large
46      38.2104 40      Small
47      52.421  78      Large
48      45.5227 55      Large
49      62.5477 53      Small
50      43.9493 58      Large
51      76.2546 87      Large
52      56.4322 110     Large
53      37.8525 64      Large
54      37.132  47      Small
55      50.4954 84      Small
56      49.1702 54      Large
57      41.8979 16      Small
58      45.3906 40      Large
59      57.8986 41      Small
60      40.3537 34      Large

A pharmaceutical company developed a new revolutionary diet pill, “fat buster,” which is believed to greatly help people with losing weights. They conducted an experimental study to assess its relative effectiveness, comparing it with a currently popular diet pill in the market. A random sample of 28 participants were split into two groups: People in Group A used this company’s “fat buster” and those in Group B used a competing diet pill, “fat killer.” After taking the pills for 6 months while otherwise being treated the same way, participants had their weights measured. On average, participants in Group A lost 11.39 pounds while those in Group B lost 6.71 pounds. The results of t-test (non-directional), however, were not significant (a = .01, t_crit = 2.779): t (26) = 2.509. Anxious and desperate, the company now wants to consult you as the new expert on statistics. What recommendations would you make to help them obtain significant results? Provide at least two recommendations. Any additional (and valid) suggestions or recommendations you provide will be given 2 extra points for each.

You lend $400,000 to your friend for seven years. According to the agreement, your friend has to repay $89,000 annually for the first four years with a fixed interest rate of 15% compounded annually. Your friend tries to bargain for a 13% charged for the remaining periods. What should be the annual repayment for the last three years?

In order to study the quality of parts, a batch of 100 parts was checked at the enterprise. The results are presented in the following table:

Determine the mean, variance, mode, median, 1st and 3rd quartiles, coefficient of variation, plot a histogram, find asymmetry and kurtosis. Calculated indicators indicate in the figure.

Designing a Managerial Incentives Contract

Specific Electric Co. asks you to implement a pay-for-performance incentive contract for its new CEO and four EVPs on the Executive Committee. The five managers can either work really hard with 70 hour weeks at a personal opportunity cost of $200,000 in reduced personal entrepreneurship and increased stress-related health care costs or they can reduce effort, thereby avoiding the personal costs. The CEO and EVPs face three possible random outcomes: the probability of the company experiencing good luck is 30 percent, medium luck is 40 percent, and bad luck is 30 percent. Although the senior management team can distinguish the three “states” of luck as the quarter unfolds, the Compensation Committee of the Board of Directors (and the shareholders) cannot do so. Once the board designs an incentive contract, soon thereafter the good, medium, or bad luck occurs, and thereafter the senior managers decide to expend high or reduced work effort. One of the observable shareholder values listed below then results.

Assume the company has 10 million shares outstanding offered at a $65 initial share price, implying a $650,000,000 initial shareholder value. Since the EVPs and CEOs effort and the company’s luck are unobservable to the owners and company directors, it is not possible when the company’s share price falls to $50 and the company’s value to $500,000,000 to distinguish whether the company experienced reduced effort and medium luck or high effort and bad luck. Similarly, it is not possible to distinguish reduced effort and good luck from high effort and medium luck.

Answer the following questions from the perspective of a member of the Compensation Committee of the board of directors who is aligned with shareholders’ interests and is deciding on a performance-based pay plan (an “incentive contract”) for the CEO and EVPs.

Referenced Questions:

• 2. If you decide to pay 1 percent of the increase in shareholder value as a cash bonus, what performance level (what share price or shareholder value) in the table should trigger the bonus? Suppose you decide to elicit high effort by paying a bonus should the company’s value rise to $800,000,000. What two criticisms can you see of this incentive contract plan?
• 3. Suppose you decide to elicit high effort by paying a bonus only for an increase in the company’s value to $1,000,000,000. When, and if, good luck occurs, what two criticisms can you see of this incentive contract plan?
• 4. Suppose you decide to elicit high effort by paying the bonus when the company’s value falls to $500,000,000. When, and if, bad luck occurs, what two criticisms can you see of this incentive contract plan?

_______________________________________________________

#8) Design an incentive plan that seeks to elicit high effort by granting restricted stock. Show that one-half million shares granted at $70 improves shareholder value relative to all prior alternatives.

#9) Sketch the game tree for designing this optimal managerial incentive contract among the alternatives in Question 2, 3 and 4. Who makes the first choice? Who the second? What role does randomness play? Which bonus pay contract represents a best reply response in each endgame? Which bonus pay contract should the Compensation Committee of the Board select to maximize expected value? How does that compare with your selection based on the contingent claims analysis in Questions 7 and 8?

Rainbow Company, a medium-sized company specialized in the manufacture and
distribution of equipment for babies and small children, is evaluating a new capital
expenditure project. In a joint venture with another separate company it has invented a
remote controlled pushchair, one of the first of its kind on the market. It has been unable
to obtain a patent for the invention, but is sure that it will monopolize the market for the
first three years. After this, it expects to be faced with stiff completion.
The details are set out below:
1. The project has an immediate cost of K2, 100,000
2. Sales are expected to be K1, 550, 000 per annum for the first three years, falling
to K650, 000 per annum for the last two years.
3. Cost of sales is 40% of sales
4. Distribution costs represents 10% of sales.
5. The company’s cost of capital is 5%
Required:
a) Calculate the NPV of the project at the company’s required rate of return. State
whether the project is financially viable? [5 Marks]
b) Calculate the projects Internal Rate of Return (IRR) to the nearest percent.

The president of Hill​ Enterprises, Terri​ Hill, projects the​ firm's aggregate demand requirements over the next 8 months as​ follows:

Her operations manager is considering a new​ plan, which begins in January with

200 units of inventory on hand. Stockout cost of lost sales is

​$125 per unit. Inventory holding cost is

​$20 per unit per month. Ignore any​ idle-time costs. The plan is called plan A.

Plan​ A: Vary the workforce level to execute a strategy that produces the quantity demanded in the prior month. The December demand and rate of production are both

1,600 units per month. The cost of hiring additional workers is $50 per unit. The cost of laying off workers is

​$80 per unit. Evaluate this plan.

​(Enter all responses as whole numbers​.)

​Note: Both hiring and layoff costs are incurred in the month of the change. For​ example, going from

1,600 in January to

1,400 in February incurs a cost of layoff for

200 units in February.

Summerville Inc. is considering an investment in one of two common stocks. Given the information in the popup​ window: ​, which investment is​ better, based on the risk​ (as measured by the standard​ deviation) and return of​ each? a. The expected rate of return for Stock A is nothing ​%. ​ (Round to two decimal​ places)

COMMON STOCK A COMMON STOCK B PROBABILITY RETURN PROBABILITY RETURN 0.20 12% 0.20 -6% 0.60 15% 0.30 7% 0.20 18% 0.30 15% 0.20 20%