The following problem description applies also to the next two problems.

A piston-cylinder device contains 2 kg of a saturated liquid mixture at an initial state 1 with p₁= 100 kPa and x₁= 0.8. The water is heated at constant pressure until its final state 2 with volume V₂ = 1.947V₁.

Its initial volume, in m³/kg, is closer to:

2.990

3.836

2.711

4.625

2.345

1.736

2.156

1.294

Its final temperature, in ^oC, is closer to:

268

167

300

142

280

220

188

325

The amount of heat supplied to the steam during the expansion process, in kJ, is closer to:

1702

750

1992

2210

1623

1248

984

1110

1. A supplier of gasoline is considering whether to build a new station. The annual returns will depend on both the size of the station and marketing factors such as the oil industry and local demand of gasoline. The following data is available for decision making:

1. Develop an appropriate decision table for this case.
2. What is the maximax decision?
3. What is the maximin decision?
4. What is the equally likely decision?
5. What is the criterion of realism decision? Use α = 0.8.
6. Develop an opportunity loss table?
7. What is the minimax regret decision?

The summary of the payroll for the monthly pay period ending July 15 indicated the following:

a. Journalize the entry to record the payroll. If an amount box does not require an entry, leave it blank or enter 0.

b. Journalize the entry to record the employer's payroll tax expense for the month. The state unemployment tax rate is 3.1%, and the federal unemployment tax rate is 0.8%. Only $25,000 of salaries are subject to unemployment taxes. If an amount box does not require an entry, leave it blank or enter 0.

Maxwell Electronics, a consumer electronics company, plans to expand its operations in the Asia‐Pacific region. The company has debt of $4 million and assets worth $14 million. Cuprum Electricals Inc., the market leader, has similar revenue, net income, and business risk.

The information of the two companies is as follows:

Debt of Cuprum Electricals Inc. $7 million Equity of Cuprum Electricals Inc. $35 million Levered beta of Cuprum Electricals Inc. 0.8 Marginal tax rate 40% Risk‐free rate 5% Market risk premium 10% Based on the information provided, calculate the cost of equity of Maxwell Electronics.

Group of answer choices

10.76%.

13.86%.

13.37%.

Part I (investigating patterns)

         Assume that you are trying to achieve a certain goal and the probability of your success P(S) is only 20% and that your capabilities are not increasing over time, that is your probability of success is constant.

         1.       Show that the probability of unsuccessful attempt P(U) is 0.8.

          Given that you did not succeed the first time, find the probability that you succeed the second time.

          Given that you did not succeed in the first two attempts, find the probability that you succeed the third time.

          Given that you did not succeed in the first (n – 1) attempts, find the probability that you succeed in the nth attempt.

          What is the relation between the events S and U that lead to the results above?

Pick any two variables that you feel may be related and estimate what you think the strength of the correlation coefficient would be for those two variables. In your response, estimate the value of r. For example, specify a strong (.7 to .9), medium (.4 to .6), or low (0 to .3) value for r. The value of the coefficient can be positive or negative. For example, consider an increase in police patrols in a neighborhood and the number of burglaries that occur in that neighborhood. I would say that would be a strong inverse relationship with an R-value of -0.8; as one (patrols) increases, the other (burglary rate) goes down. Describe the factors that you think would contribute to why the variables would have the relationship that you estimate it to be.

Assuming we are using the CAPM to assess risk. There exists a security A with expected return of 13.1%, a stock beta of 1.5. Another security B has expected return of 9.25%, a stock beta of 0.8. The risk-free rate of return is 4.85%.

1. What is the difference between systematic risk and unsystematic risk? What does beta measure, systematic risk or unsystematic risk?                                                                  

2. Using the data above do determine the expected market return?                                     

c.   Suppose that among the firm A and B, one belongs to the industry of pharmaceutical (drug) research and development, while the other belongs to utilities industry equipment (such as electricity supply). Which firm is more likely to be in each industry, why did you make this choice?     

In a​ study, researchers wanted to measure the effect of alcohol on the hippocampal​ region, the portion of the brain responsible for​ long-term memory​ storage, in adolescents. The researchers randomly selected

23

adolescents with alcohol use disorders to determine whether the hippocampal volumes in the alcoholic adolescents were less than the normal volume of

9.02

cm cubedcm3.

An analysis of the sample data revealed that the hippocampal volume is approximately normal with no outliers and

x overbarxequals=8.12

cm cubedcm3

and

sequals=0.8

cm cubedcm3.

Conduct the appropriate test at the

alphaαequals=0.01

level of significance.

State the null and alternative hypotheses.

a). State the null and alternative hypotheses.

b). Identify the t-statistic.

c). Identify the P-value.

d). Make a conclusion

Suppose that the term structure of interest rates is flat in the US and UK. The USD interest rate is 2.5% per annum and the GBP rate is 2.9% p.a. Under the terms of a swap agreement, a financial institution pays 3% p.a. in GBP and receives 2.6% p.a. in USD. The principals in the two currencies are GBP20 million and USD32 million. Payments are exchanged every year, with one exchange having just taken place. The swap will last 3 more years NOTE: 1 USD = 0.8 GBP

i) Write out the formula for the valuation of a currency swap in terms of bond prices. From this formula, explain what prices and rates you need to calculate the value of a swap.