Saint Mary’s University jointly runs a dual degree program with the Beijing Normal University at Zhuhai. In order to do so, Saint Mary’s provides faculty to instruct in China. For the spring session scheduled to run from April 22^nd to May 31^st, 2019 Saint Mary’s had an individual prepared to instruct this course. This person entered into a contract with SMU which stated in part that the individual would instruct in China during the entirety of the spring session, but said nothing about cancellation by either party. At some point on or about late February, this individual advised Saint Mary’s that they would not be able to come to Zhuhai. Assume for the purposes of this assignment that the individual had been diagnosed with cancer, and was unable to travel.

In or about early March Professor Scott had been offered and had accepted a position as the new instructor by Saint Mary’s. A contract was entered into that included, among other things, clear instructions that he would need to secure the appropriate Visa that would allow him to travel to Zhuhai. As time was tight (in legal terms we say that time was of the essence) Scott was encouraged to go ahead and book flights and make the necessary arrangements in order to be in China to start classes on April 22.

In Canada, the Chinese embassy is responsible for issuing appropriate Visas for travel to China. In order to facilitate the processing of applications, the embassy utilizes an independent company known as the Chinese Visa Processing Centre Limited…this company is a separate entity from the government and operates at arm’s length from the embassy. Applications are filled out online, and when complete, the applicant must print the application form and attend in person at the offices of the Chinese Visa Processing Centre where they pay a fee and also provide biometric scans that enable the embassy to conduct their work. The Chinese Visa Processing Centre essentially pre screens visa applications to ensure conformity with the established decision parameters. If there are readily apparent issues, for example an expired passport or things of an administrative nature, then the Chinese Visa Processing Centre will hold an application pending the correction of the issue by the applicant. The Processing Centre also states that applicants who cannot pick up their passport in person must provide a prepaid pre-addressed return envelope so that the passport containing the Visa can be returned to the applicant.

Scott prepared the online application form as advised. Given the type of Visa required, Scott needed a letter, known as the Foreign Expert Invitation Letter issued by the provincial government in Guangdong, China. Although this letter was not mentioned in the contract, Saint Mary’s represented verbally that they would secure the letter for Scott. Saint Mary’s did, in fact secure the letter, which was advanced to Scott via email on March 19. Having completed the application, and with the letter in hand, Scott flew to Ottawa to deliver the visa application.

Before that however, Scott had booked flights from Halifax to Zhuhai that would have him arrive in China on April 19 in time to begin classes on the 22^nd. Scott was instructed to secure cancellation insurance on all flights. Scott did, in fact, pay for and receive a policy of insurance that clearly stated that it would cover the cost of flights cancelled due to medical emergencies or death, including medical emergencies or death to immediate family members of the insured party.

While sitting in the departure lounge awaiting his return flight to Halifax, having attended at the Visa Processing Centre as required Scott received a telephone call from the Chinese Visa Processing Centre and was told that the embassy has already had a look at the Foreign Expert Invitation Letter. Scott was advised that the letter would not suffice because it lacked certain information, and also because it needed to be issued by the appropriate government authorities in the Guangdong Province. The letter had actually been issued by the University, in accordance with past practice This issue had not been raised for previous applications.

As a result of this problem, it became impossible to travel as planned and Scott advised his travel agent that the flights would need to be cancelled or changed. Further, Scott and officials at Saint Mary’s decided that he should not rebook any travel until it was absolutely certain that the new letter could be obtained.

On April 19, Scott received a different Foreign Expert Invitation Letter and forwarded it to the Chinese Visa Processing Centre. They acknowledged receipt on April 22 and indicated that he should receive confirmation that the Visa had been processed by April 26.

With this new knowledge, Saint Mary’s and Beijing Normal University at Zhuhai amended the start date of the course to May 6.

On April 26, Scott received word that his Visa had been processed and his passport had been placed in the provided pre-paid, pre-addressed envelope and put in the mail. The expected delivery date was April 29. Unfortunately, on April 29 it was discovered that the passport had been delivered to any entirely different address, not in Halifax Nova Scotia, but in Mississauga Ontario, 2000 kilometres away. The address label on the envelope that had been purchased from Canada Post had been tampered with before it was sold. When it was placed in the postal system by the Chinese Visa Processing Centre, it had two different addresses, and Canada Post picked one but they picked the wrong one. When contacted by Scott, Canada Post officials advised that once the envelope had been placed in the mailbox of the receiver, it became the receiver’s property, and Canada Post could not recover it because this would constitute theft. They took no responsibility for the envelope, saying it was the buyer’s problem.

Fortunately the passport was located. The individual that had the passport said that he would return it if Scott came to get it at his home. When Scott travelled to the home, the gentleman said he would only return it if Scott paid a significant reward. At first Scott declined, but the gentleman indicated that he would call the police and state that Scott was trespassing on his property. Scott felt he had no choice, and so he complied and made the payment.

When Scott returned to his hotel with the passport, the rain started to fall heavily. The stone walkway at the front of the hotel was quite slippery, and unfortunately Scott fell and injured his shoulder. Hotel staff would take no responsibility for the injury, stating Scott should have been more careful as it was raining. A sign on the wall of the hotel indicated that the paving stones could become slippery when wet, and patrons of the hotel were cautioned that the hotel accepted no responsibility for injuries. Unfortunately, the hotel concierge had left a luggage cart in front of the sign such that it was not visible.

1. IDENTIFY ALL THE POTENTIAL LEGAL ISSUES WITH REFERENCE TO THE MATERIALS COVERED IN THE COURSE. YOU MAY PREPARE YOUR ANSWER IN POINT FORM. NOTE ALSO THAT YOU ARE ASKED ONLY TO IDENTIFY THE POTENTIAL LEGAL ISSUES, SO A COMPLETE ANALYSIS IS NOT REQUIRED. (50 points)

2. ASSUME YOU ARE A LAWYER RETAINED BY SAINT MARY’S. ADVISE SAINT MARY’S OF ALL OF THEIR RIGHTS AND OBLIGATIONS IF SCOTT HAD NOT BEEN ABLE TO SECURE THE VISA. (10 points)

3. IDENTIFY, WITH REFERENCE TO RISK MANAGEMENT STRATEGIES, AREAS WHERE RISK WAS ENCOUNTERED AND HOW THE PARTIES DEALT WITH THE RISK. SPECIFY THE PARTICULAR RISK MANAGEMENT STRATEGY. (35 points)

4. WOULD IT MAKE ANY DIFFERENCE TO YOUR ANALYSIS IF SCOTT WAS PAID OR IF HE WAS A VOLUNTEER? WHY OR WHY NOT? (5 points)

*** PLEASE SHOW HOW TO SOLVE IN EXCEL***

Case Problem 2:        Finding the Best Car Value

(Copy the worksheet named “FamilySedans” in QMB3200-Homework#10Data.xlsx into your file for this problem)

When trying to decide what car to buy, real value is not necessarily determined by how much you spend on the initial purchase. Instead, cars that are reliable and don’t cost much to own often represent the best values. But, no matter how reliable or inexpensive a car may cost to own, it must also perform well. To measure value, Consumer Reports developed a statistic referred to as a value score. The value score is based upon five-year owner costs, overall road-test scores, and predicted reliability ratings. Five-year owner costs are based on the expenses incurred in the first five years of ownership, including depreciation, fuel, maintenance and repairs, and so on. Using a national average of 12,000 miles per year, an average cost per mile driven is used as the measure of five-year owner costs. Road-test scores are the results of more than 50 tests and evaluations and are based upon a 100-point scale, with higher scores indicating better performance, comfort, convenience, and fuel economy. The highest road-test score obtained in the tests conducted by Consumer Reports was a 99 for a Lexus LS 460L. Predicted-reliability ratings (1 = Poor, 2 = Fair, 3 = Good, 4 = Very Good, and 5 = Excellent) are based on data from Consumer Reports’ Annual Auto Survey.

A car with a value score of 1.0 is considered to be “average-value.” A car with a value score of 2.0 is considered to be twice as good a value as a car with a value score of 1.0; a car with a value score of 0.5 is considered half as good as average; and so on. The data for 20 family sedans, including the price ($) of each car tested are contained in the worksheet “FamilySedans.”

Managerial Report

1. Develop numerical summaries of the data.
2. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the price of the car.
3. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the five-year owner costs (cost/mile).
4. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the road-test score.
5. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the predicted-reliability

What conclusions can you derive from your analysis?

Decide on the two grocery stores to use in this activity

Decide on the 15 products you want to compare.

The brand name, product, and size have to be exactly the same at each store. Therefore, do not compare generic brands as they have different names at different stores.

You may have to wait until your visit to the first store to determine the “size” as you may not be aware of the different size packages for different products.

Use a variety of products to get a good representation of all items at the stores.

At each store, record the price of each product on your list. (A question always comes up whether to use a sales prices or a club card price. You should use the price of the item that you’d pay on the particular day you visit the store.)

If you didn’t record the prices in an electronic spreadsheet (such as an Excel spreadsheet) at each store, do so after you collect all your data.

Questions to answer after collecting your data

The question of interest is, “Are the items at one of the two grocery stores in your study more expensive, on average, than the other store?”

Answer these questions to answer the question of interest. (R tutorial 2 may be helpful in answering some of these questions.)

1.   (1 point) Give the two stores you are comparing and a personal motivation on why you chose those two stores.

2.   (2 points) Give a brief summary of how you chose the 15 items you used in the study. Do you feel these items are representative of all items at the store? (In other words, do you feel that you’ll be able to answer the question of interest based the items in your sample?) Why or why not?

3.   (3 points) What method of inference you used and why? (Include a check of the conditions to use that particular method. If you use a graph to assess any condition, include the graph) (Hint: think about the samples you took – are the samples independent or dependent?)

4.   (3 points) State the null and alternative hypotheses in statistical notation. Define any parameters used.

5.   (2 points) Obtain and include an appropriate graphical display that will allow you to make an initial guess as to whether you feel the null hypothesis will be rejected or not. (Hint: think about what method you will be using to perform the hypothesis test.) Comment on whether or not you feel the null hypothesis will be rejected and why or why not.

6.   (1 point) Perform the analysis in R. Report the test-statistic (with degrees of freedom) and p-value.

7.   (3 points) State a conclusion in the context of the problem that answers the question of interest supported with the p-value obtained in #6.

8.   (3 points) Use R to construct a 95% confidence interval for the average difference in prices between the two stores. Include and interpret the confidence interval in the context of the problem. (3 pts)

9.   (2 points) Which store would you shop at? Why?

10. (2 points) Provide a copy of your data.

DATA:

Vons:

Almond Milk                                       3.49

Strawberry pop tarts                           2.59

1 lb Bananas                                        .69

Head lettuce                                         1.69

Pace Salsa                                             3.39

Ball park beef franks                          4.49

Ball park buns                                      2.49

Kraft American Cheese                     5.99

Crest toothpaste                                  4.00

Strawberries                                          3.50

Special K                                               4.99

Hidden Valley Ranch                         3.99

Core Water                                           1.99

Jif Peanut Butter                                  3.09

Egglands best                                       3.99

Smiths:                 

Almond Milk                                        3.19

Strawberry pop tarts                            2.29

1 lb Bananas                                        .59

Pace Salsa                                             3.29

Head lettuce                                         .99

Ball Park Beef Franks                        4.99

Ball Park Buns                                     2.99

Kraft American Cheese                      3.19

Crest toothpaste                                  2.99

Strawberries                                          2.50

Special K                                               2.49

Core Water                                           1.50

Jif Peanut Butter                                  2.79

Hidden Valley Ranch                         3.29

Egglands Best                                      2.89

Apex Art has been requested to prepare a bid on 500 pieces of framed artwork for a new hotel. Winning the bid would be a big boost for sales representative Jason Grant, who works entirely on commission. Sonja Gomes, the cost accountant for Apex, prepared the bid and calculated full product Costs of $121,000. Based on the company policy of pricing at 125% of full cost, Gomes gives Grant a figure of $151,200 to submit for the job.

Grant is very concerned. He tells Gomes that at that price, Apex has no chance of winning the job. He confides that he spent $500 of company funds to take the hotel’s purchasing agent to a basketball playoff game where the purchasing agent disclosed that a bid of $145,000 would win the job. He hadn’t planned to tell Gomes because he was confident that the bid she developed would be below that amount. Gomes reasons that the $500 he spent will be wasted if Apex doesn’t capitalize on this valuable information. In any case, the company will still make money if it wins the bid at $145,000 because it is higher than the full cost of $121,000.

Gomes suggests that if Grant is willing to use cheaper materials for the frame, he can achieve a bid of $145,000. The artwork has already been selected and cannot be changed, so the entire amount of the reduction in cost will need to come from framing materials.

A note regarding the bidding process:

The hotel would announce that it is seeking bids from suppliers interested in providing the artwork. The hotel would specify their requirements and a deadline for submitting bids. All interested companies, such as Apex Art, would submit bids in sealed envelopes. After the deadline has passed, the hotel company would unseal the bids and, assuming that at least one supplier submitted a bid within their maximum price (this is the info that Grant obtained from the purchasing agent which is not normally known to the bidders) would award the job. Generally, but not necessarily, the job is awarded to the company with the lowest bid.

Approaches to Ethical Decision Making

There is a large body of work stretching back thousands of years that discusses ethics. The list below is not intended to be either comprehensive or exhaustive. It is intended merely to provide a basic roadmap of the approaches that are commonly applied to business situations.

Long Term Self-interest (Egoism) - You should never take any action that is not in your or your organization’s long-term self-interest.

Personal Virtue - You should never do anything that is not honest, open, and truthful and that you would not be glad to see in the newspaper or TV.

Religious Injunction - You should never take an action that is unkind or that harms a sense of community.

Government Requirements - The law represents the minimal moral standards of society, so you should never take any action that violates the law.

Utilitarian Benefits - You should never take an action that does not result in greater good for society.   (cost vs. benefit analysis)

Individual Rights – You should never take an action that infringes on others’ agreed upon rights.

Justice - You should never take an action that would result in an unfair sharing of benefits or obligations.

Stakeholders are persons or groups with a legitimate interest in a company. Choose one or more as the most significant (but not all of them).

Questions:

1. State and describe the issues, if any, which may potentially violate ethical principles. Whose interests could be jeopardized due to the potential unethical behavior that you identified? Provide reasons why these stakeholders’ interests can be jeopardized.

2. What is Gomes’ rationale after Grant confides in her? Discuss the alternative courses of action that Gomes can take and the possible outcomes.

3. What should Gomes do, and why? Elaborate.

4. What can you conclude if Grant were to take Gomes’ suggestions, and what could be the consequences? What could be the possible consequences for taking the suggestion that you recommend?

Please explain the steps to calculate the answer. thx!

1. Your investment has a 10% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return and a 40% chance of losing 6%. What is your expected return on this investment?

2. Consider a T-bill with a rate of return of 5 percent and the following risky securities:
Security A: E(r) = 0.15; Variance = 0.04
Security B: E(r) = 0.10; Variance = 0.0225
Security C: E(r) = 0.12; Variance = 0.01
Security D: E(r) = 0.13; Variance = 0.0625
From which set of portfolios, formed with the T-bill and any one of the 4 risky securities, would a risk-averse investor always choose his portfolio?

3. You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 5% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14% and Y has an expected rate of return of 12%. To form a complete portfolio with an expected rate of return of 11%, you should invest __________ of your complete portfolio in treasury bills.

4. Which of the following correlations coefficients will produce the least diversification benefit?

5.

The standard deviation of a portfolio consisting of 30% of Stock X and 70% of Stock Y is:

6. Stocks A and B have the following returns in each of the states given below:

The probability of the good state is 0.4, the probability of the bad state is 0.3 and the probability of the ugly state is 0.3. What is the covariance between the returns of A and B?

7. Assume that you manage a risky portfolio with an expected rate of return of 15% and a standard deviation of 30%. The T-bill rate is 10%. Suppose that you have a client that prefers to invest in your risky portfolio a proportion (y) of his total investment budget so that his overall portfolio will have an expected rate of return of 15%. What is the investment proportion y?

A 5 kg ball is traveling to the right at a speed of 12 m/s.  A 2 kg ball is traveling to the left at 30 m/s.  They collide in an inelastic collision.  

What is their final speed?

A 2000 kg truck drives the right at a speed of 40 m/s. How many 0.25 kg bullets fired at 350 m/s need to be fired at the front of the truck to stop it if every bullet collides inelastically with the truck?

A 5 kg ball travels to the right at a speed of 2 m/s. It then strikes a stationary 20 kg ball. If the 5 kg ball bounces back and returns to the left at a speed of 0.4 m/s, how much energy was lost in this collision?

A 5 kg ball travels to the right at a speed of 2 m/s. It then strikes a stationary 20 kg ball. If the 5 kg ball bounces back and returns to the left at a speed of 0.4 m/s, how fast will the 20 kg ball be moving after this collision?

Ignore air resistance for the following problem.

A .75 kg ball is dropped from a height of 10 m. It strikes the ground and bounces back upward to a height of 8.25 m.

While we cannot know what type of collision this is, as we do not know how much the earth's motion changed, we do know what type of collision this is NOT. What type of collision do we know this is NOT?

Ignore air resistance for the following problem.

A .75 kg ball is dropped from a height of 10 m. It strikes the ground and bounces back upward to a height of 8.25 m.

What is the magnitude of the change in momentum the ball experiences in this collision with the ground?

An online stock trading firm has a fixed cost of $1700 and a variable cost of $6.5x, where x is the number of clients that suscribe to the firm's trading service. If the firm has 170 clients, what is the lowest price it can charge each client without pushing total revenue below cost?

Question 2

Say that a buyer of bonds values good bonds at $400 and values bad bonds at $250. Sellers of both good and bad bonds value them at $300. If the fraction of good sellers is 30% and the rest are bad sellers, then the maximum price an uninformed buyer will pay is ____ and this ___ high enough to sustain trade in both types of bonds.

Question 3

A loan buyer in a secondary market believes that x% of the loans are high quality, and the rest are low quality. The buyer values high quality loans at $100,000 and low quality at $75,000. Banks selling loans value high quality loans at $83,750 and value low quality at $55,550. If the buyer cannot observe the bond's type, then the maximum price the buyer will pay is equal to the seller's value of high quality loans when x is

Question 4

A financial intermediary is hired to make a transaction "go forward". The intermediary can do a good job that costs the intermediary $400, or do a bad job that costs zero. If the intermediary does a good job the transaction will go forward. If the intermediary does a bad job the transaction will go forward with probability 0.85, and will fail with probability 0.15. The customer can't observe the intermediary's job choice and simply pays the intermediary $X if the transaction goes forward and pays $0 if it fails. What is the minimum X the customer must pay in order to persuade the intermediary to do a good job?

Question 5

When a bank makes its loans, if it screens its borrowers it will collect repayment revenue of $40,000 per loan, but if it doesn't screen its borrowers then it will collect $40,000 per loan with probability 0.8 and collect $0 with probability 0.2. The cost of screening is $2,000 per loan. In this case, the expected payoff for the bank from screening is ____ and the expected payoff from not screening is ____ .

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

*Based on machine-hours.

During June, the plant produced 5,000 pools and incurred the following costs:

1. Purchased 24,500 pounds of materials at a cost of $2.95 per pound.

2. Used 19,300 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 4,600 direct labor-hours at a cost of $7.70 per hour.

4. Incurred variable manufacturing overhead cost totaling $5,070 for the month. A total of 1,300 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required:

1. Compute the following variances for June:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Deakin Ltd has just recently published following financial information:

Expected earnings per share $20

Deakin’s market beta 0.8

Earnings per share to be retained by the firm 30%

Growth rate in earnings per share 7% p.a.

Required:

1. Calculate Deakin's P/E ratio if the expected return on the ASX300 is 12% p.a. and the return on 10 year Commonwealth Government Bonds is 4% p.a. What does this ratio tell you?

2. Calculate Deakin's share price using P/E ratio calculated in Part 1.

The COVID-19 crisis has led to unprecedented fiscal measures. Use the IS-LM curves as well as the AD-AS curves to show the impacts of Congress and President Trump’s stimulus relief actions. Be sure to label all axes and curves. In one or more paragraphs explain what should happen when we assume the MPC is 0.8 and both spending and tax measures are taken to heal the economy. What part does a democrat majority congress and a republican president play in these decisions. Also, discuss the impact on all variables and economic agents. Be sure to indicate the direction of movement for all variables.