42–3. Insider Trading.

Scott Ginsburg was chief executive officer (CEO) of Evergreen Media

Corp., which owned and operated radio stations. In 1996, Evergreen became interested in

acquiring EZ Communications, Inc., which also owned radio stations. To initiate negotiations,

Ginsburg met with EZ’s CEO, Alan Box, on Friday, July 12. Two days later, Scott phoned his

brother Mark, who, on Monday, bought 3,800 shares of EZ stock. Mark discussed the deal with

their father Jordan, who bought 20,000 EZ shares on Thursday. On July 25, the day before the

EZ bid was due, Scott phoned his parents’ home, and Mark bought another 3,200 EZ shares.

The same routine was followed over the next few days, with Scott periodically phoning Mark or

Jordan, both of whom continued to buy EZ shares. Evergreen’s bid was refused, but on August

5, EZ announced its merger with another company. The price of EZ stock rose 30 percent,

increasing the value of Mark and Jordan’s shares by $664,024 and $412,875, respectively. The

Securities and Exchange Commission (SEC) filed a civil suit in a federal district court against

Scott. What was the most likely allegation? What is required to impose sanctions for this

offense? Should the court hold Scott liable? Why or why not? [

SEC v. Ginsburg,

362 F.3d 1292

(11th Cir. 2004)]

The Association of Sugar Cane Growers in the country plans to form a Company. The association is not sure yet on the kind of business they should venture in though they know that it should be in the sugar cane industry. The company should either be producing sugar known as option C, or producing biofuel referred to option D or just produce sugar cane and sell to sugar-producing organizations - option E. Information pertaining to investment requirements is given in the table below. The costs/revenue are in US $.

Using a discount rate 0f 12%

Using the Capital Asset Pricing Model *(CAPM) and the Betas from the table below, along with market parameters shown below, what is the required return for Ford Motor Co.? (round your answer to two decimal places)

Company Beta

US Steel 1.77

Ford Mo Co 1.31

General Electric 1.20

Boeing   0.94

Amazon   0.90

Starbucks 0.79

McDonalds 0.51  

Walmart 0.26

Market Details

Current T-Bill Price 985.12

Historic Average T-Bill Return 2.3%

Current Market Return 8.5%

Historic Average Market Return   8.9%

B) Review the table below. Beta is a measure of sensitivity, showing how the returns of an individual investment compare to the returns of the Market as a whole. Beta is measured by analyzing actual historic Market returns. Starbucks sells coffee. What might explain why a company like Starbucks has its Beta at that level ?  

what is the microeconomics concept or model that explains below behavior. explain.

1) company A, a competitor of B in the same market segment nevertheless supplies Company B with many of the components that B needs.

2) controversy in spain last year over the payment of a tax on the creation of mortgages. In response to popular pressure, the govt decreed that this tax be paid entirely by the bak from now on, and not by consumer. Banks did not push back against this policy change, despite many folks views that they have a strong case if they chose to fight the government decree in court

3) while country A has emerged as a world leader in the design and production of industrial robots, most of its production is sold internationally, with less than 1% purchased by manufacturing companies in the country A. In fact, robot statistics show a very low degree of automation of the manufacturing industry in country A: 0.0003 robots/worker, as opposed to 0.0085 worldwide, 0.02 in US or 0.03 in japan.

An automobile insurance company claimed that, because of the Covid-19 pandemic, resulting in less automobile driving, they have reduced the monthly premiums that they charged per automobile by more than $60 per month on average. To test this claim, a random sample of 25 automobile policies were allowed to be looked at. This random sample compared the monthly premiums in June, 2020, with the monthly payment before the pandemic (February, 2020) and it was calculated that the monthly premium in June dropped by an average of $63 and that the standard deviation in this this drop in premiums was calculated to be $10.00. At the .01 level of significance, is there sufficient evidence that the insurance company’s claim is true? In answering this question, complete the following in the spaces provided (including diagrams):

Hypotheses

Test statistic

Decision rule

p-value

Conclusion

An automobile insurance company claimed that, because of the Covid-19 pandemic, resulting in less automobile driving, they have reduced the monthly premiums that they charged per automobile by at least $50 per month on average. To test this claim, a random sample of 22 automobile policies were allowed to be looked at. This random sample compared the monthly premiums in June, 2020, with the monthly payment before the pandemic (February, 2020) and it was calculated that the monthly premium in June dropped by an average of $44 and that the standard deviation in this this drop in premiums was calculated to be $12.00. At the .05 level of significance, is there sufficient evidence that the insurance company’s claim is false? In answering this question, complete the following in the spaces provided (including diagrams):

Please provide hypothesis, test staistic, decision rule, p-value, and conclusion.

Marin Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $46,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Marin’s incremental borrowing rate is 9%. Marin is unaware of the rate being used by the lessor. At the end of the lease, Marin has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Marin uses the straight-line method of depreciation on similar owned equipment. Prepare the journal entries, that Marin should record on December 31, 2020.

Required information

[The following information applies to the questions displayed below.]
  
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. (Do not round intermediate calculations.)

The Washington Capitals recently won the National Hockey League’s Stanley Cup championship, and there was a parade on June 12 to celebrate. Let’s say 500,000 people attended the parade. We want to interview (sample) some of the Capitals fans at the parade to find things out about Capitals fans in general. Suppose we believe that the standard deviation of Capitals fans’ income is $20,000 (close to the overall standard deviation of American incomes). We sample 45 Capitals fans at the parade (some people declined to give a response, but 45 people did give answers) and find that these 45 fans have a mean income of $58,500.

a)Assuming this is a valid, random sample, specify a 95% confidence interval of what we think the mean of the population is given this sample. Please justify which statistic you use (t or z).

b)One Capitals fan, during the interviews, says he thinks that the mean income of Capitals fans is $61,000. Does our sample (again, let’s assume it’s a valid sample), support his belief?

c)If the fan from part b is correct, what is the probability of a sample of 45 Caps fans having a mean income less than or equal to $58,500?

d)How many fans do we need to interview to be 95% confident that we have a sample mean within $2,000 of the population mean.

e)Explain two ways that this sampling method is biased (remember that we are trying to estimate the mean income of all Capitals fans) – you don’t necessarily need to name the type of bias involved, but just explain two things wrong with it.