1. Following is the shareholders’ equity section of Morgan Supplies on a day its common stock is trading at $77 per share.

Required:

a. Use the financial statement template below to show the financial statement effects of

the following dividend events. (Assume that the events are independent.)

(1) Cash dividend declaration and payment of $1 per share

(2) Property dividend declaration and payment of shares representing a short-term

investment in Screen Products, Ltd., with a fair value of $15,000

(3) 10 percent stock dividend

(4) 100 percent stock dividend

(5) 3-for-1 stock split

(6) 1-for-2 reverse stock split

Journal entry (optional):

b. Which events changed the book value of common equity?

c. Under what conditions will these events lead to future increases and decreases in ROE?

Please give more details with the answer!

Portfolio Theory

1. What type of risk does a portfolio have with a beta of 1.5?

a. Systematic risk only. b. Unsystematic risk only. c. Systematic and unsystematic risk. d. Cannot determine from the question.

2. Which tools can help to determine an optimal investment portfolio?

1. Mean-variance optimization model. 2. Risk tolerance questionnaire. 3. Tactical asset allocation.

a. 1 only. b. 2 only. c. 1 and 2. d. All of the above.

3. The highest annual range of returns for the S&P 500 has occurred for which of the following?

a. 1-year rolling returns. b. 5-year rolling returns. c. 10-year rolling returns. d. 20-year rolling returns.

4. The _____ is a graphical representation of expected return and risk, as measured by beta.

a. ALA. b. CML. c. SML. d. Efficient frontier

5. Jocko was just told that the expected return for Echo stock was 20%, based on the CAPM. Assuming that the market return and the risk-free rate are 12% and 4%, respectively, what is the beta for Echo?

a. 1.0. b. 1.5. c. 2.0. d. 2.5.

(LO 10) Poe Company is considering the purchase of new equipment costing $81,000. The projected annual cash inflows are $31,200, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine.

Multiple Choice

• $6,707.

• $(6,707).

• $(17,901).

• $34,710.

• $17,901.

(LO 10) Poe Company is considering the purchase of new equipment costing $81,000. The projected annual cash inflows are $31,200, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine.

Multiple Choice

• $6,707.

• $(6,707).

• $(17,901).

• $34,710.

• $17,901.

We collect data on a sample of 5 people regarding pretest aggression. The aggression measure is on a scale of 1 = low aggression to 10 = high aggression. After initial data collection, we do an intervention aimed at improving self-control and reducing aggression. After the intervention, we measure the same 5 people with the same aggression measure to get a posttest measure of aggression.

We need to determine if pretest aggression significantly differs from posttest aggression and decide to do a dependent-samples t-test. Compute the observed dependent-samples ttest value. Report the ttest to three decimal places. HINT: To avoid confusion regarding sign (+/-) of the observed value, subtract the posttest from the pretest to obtain D(pretest-posttest). For full credit, be sure to show all of your work.

1.A company buys a machine for $75,000 that has an expected life of 8 years and no salvage value. The company uses straight-line depreciation. The company anticipates a yearly net income of $3,600 after taxes of 24%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return?

2.If Management was not concerned with the time value of money, from which two capital budgeting methods should they choose?

3.

Vextra Corporation is considering the purchase of new equipment costing $35,000. The projected annual cash inflow is $11,000, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Vextra requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows:

What is the net present value of the machine?

4.Which one of the following methods considers the time value of money in evaluating alternative capital expenditures?

*** Please solve in R ***

You’re a newly hired analyst in Patriot Insurance Co. Your boss just asked to assess the relationship (if there is any) of the number of claims filed and length of time a policyholder hold his or her policy. You’ve randomly selected data on 20 policy holders: number of claims and length of time (in years) the policy holders held their policies. See “Prob 11-1 claims data.csv” for the data.

You decide that a Poisson distribution is a reasonable first choice as a data generating process that could have produced the counts of claims. Perform a Poisson regression to analyze the data; report your findings.

Berne Company (lessor) enters into a lease with Fox Company to lease equipment to Fox beginning January 1, 2016. The lease terms, provisions, and related events are as follows:

Ross Co., Westerfield, Inc., and Jordan Company announced a new agreement to market their respective products in China on July 18, February 12, and October 7, respectively. Given the information below, calculate the cumulative abnormal return (CAR) for these stocks as a group. Assume all companies have an expected return equal to the market return. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place.) Ross Co. Westerfield, Inc. Jordan Company Date Market Return Company Return Date Market Return Company Return Date Market Return Company Return July 12 −.6 −.3 Feb 8 −.6 −.3 Oct 1 1.4 .6 July 13 1.2 .3 Feb 9 −.7 −.3 Oct 2 1.3 .6 July 16 .4 .3 Feb 10 .4 .6 Oct 3 .7 1.3 July 17 −.6 −.2 Feb 11 .6 2.1 Oct 6 −.1 −.7 July 18 −.8 1.3 Feb 12 −.1 .1 Oct 7 −2.2 −.7 July 19 −1.9 −.1 Feb 15 1.2 1.9 Oct 8 1.2 .6 July 20 −.9 −1.2 Feb 16 .7 .5 Oct 9 −.5 −.6 July 23 .6 .4 Feb 17 −.1 .0 Oct 10 .1 −.1 July 24 1.2 .0 Feb 18 1.6 .4 Oct 13 −.1 −.6

ŷ = 20 + 0.8x is given for the data below.

Calculate SSE, the sum of square errors.

Calculate the sample estimate of the variance for the regression model.

What value would be given in Minitab? Why?

Calculate the value of R². What does R²represent?