Linda is a 60-year-old woman with moderate mental retardation who has recently been diagnosed with congestive heart failure. Her doctor has recommended that Linda lose weight, get regular exercise, and eat low sodium, low cholesterol diet. She lives in an adult living facility. Linda works at a local shelter. She is required to bring lunch to the shelter every day and she always brings a bologna and cheese sandwich, a bag of pretzels and a chocolate chip cookie. During her morning break, she always gets a Coke and a bag of potato chips from the vending machine for a snack. Linda has eaten this same diet every day for at least 25 years and is very resistant to the idea of changing what she eats for lunch every day. After work Linda has staff that supports her in cooking dinner and she has tried a variety of foods. On the weekends her favorite thing to do is to go to Burger King for a Whopper with cheese and a large French fries. Linda has support with going grocery shopping. She is willing to pick out a variety of foods, but she always insists on buying pretzels and potato chips. She becomes very angry when staff suggest that she leave the store without the two items. Linda had had no trouble taking medication as she has staff who remind her in the morning and at night that she needs to do this. She also has support with monitoring her weight every day. She must monitor her weight to assure that she is not retaining water. Linda does not get any regular exercise. She has trouble climbing the set of stairs to her second-floor apartment. A couple of weeks ago one of the staff that supports her tried taking her for an hour walk in a near-by park. She had to turn around after 15 minutes because she was exhausted, and declared that she would never go walking again. Linda is fascinated by machines. One of the staff on weekends noted that she watched several infomercials about treadmills, rowing machines, and other types of exercise equipment. What are the behaviors that need to be changed? What health promotion actions would help? What additional supports or information might motivate Linda? Do you believe Linda can follow her doctor's recommendations? Why or why not?

Bell Brands USA would like to predict the sales of their Babybel cheese product. They have gathered data on monthly sales of the cheese. They have also gathered information related to the average price of all cheeses in the market, the monthly advertising expenditures they expend promoting their product, and the disposable income per household in the areas surrounding the stores that sell their cheese. Below you will find output from the stepwise regression analysis. The p-value method was used with a cutoff of 0.05.

Regression coefficients

(A) Summarize the findings of the stepwise regression method using this cutoff value.

(B) When the cutoff value was increased to 0.10, the output below was the result. The table at top left represents the change when the disposable income variable is added to the model and the table at top right represents the average price variable being added. The regression model with both added variables is shown in the bottom table. Summarize the results for this model.

(C) Which model would you recommend using? Why?

7.3 Part D

Bank Balance Sheet

Item                             Amount            Duration       Interest Rate       

Cash-type Securities       $50m                1.2 year             2.25%

Commercial Loans          $100m             2.4 years           4.50%

Mortgages                     $350m             8.0 years           6.50%

Core Deposits                $270m             1.0 year             2.00%

Notes Payable                $180m             2.0 years           4.50%

3. Off-Balance sheet futures hedge (Use balance sheet information above, 8 points)

T-Bond futures contracts for the delivery of $100,000 face value are trading at 102-16, and have a duration of 9.50 years.

a. What is the total dollar price of each futures contract (P_F)?

b. For this bank to achieve complete immunization, solve for F (total dollar value of futures contracts to immunize). Note: We don’t know the number of contracts yet or a specific interest rate change, so that information should not be used to solve for the dollar value F. Use only the information provided above to solve for F.

c. Using F from part b above, solve for the number of T-Bond futures contracts needed by this bank to hedge the interest rate risk (round to the nearest whole number of contracts).

Answers A-C below

The contract size for Treasury future is usually $100,000. Each contract trades in handles of $1,000,

but these handles are split into thirty-seconds, or increments of $31.25 ($1,000/32)

a)$ Price of Futures Contract = $102.5

b)$ Value of futures Contract = $100000+$2000+($1000*16/32) = $102500

c) 1000 Future Contracts

Please assist with D below

D. Explain in a full essay what risk this bank faces, what position this bank would take on the T-Bond futures contracts to hedge against the interest rate risk it faces, why it would take that position, and graph that position in a fully-labeled futures payoff diagram.

Suppose the US economy is in recession. The unemployment rate is 7% and the Federal Reserve Bank is considering using monetary policy to expand output. Assume the bank knows, with certainty, that:

i.             absent changes in monetary policy, unemployment will still be 7% next year;

ii.           the natural rate of unemployment is 5%;

iii.          from Okun's law, 1% more output growth for a year leads to a 0.4% reduction in the unemployment rate.

Also assume the bank can effectively use monetary policy to increase output growth rates as desired, i.e., the interest rate is sufficiently far away from the zero lower bound. However, the bank is uncertain about the effect that changes in its policy rate, the Official Cash Rate (OCR), have on output growth. To inform its decisions, the monetary policy committee summons the research department to produce predictions of the one-year response of US output growth to a decrease of 1% in the OCR. The research department, using three different macroeconometric models, presents the results from three different models:

Model (a): output growth is predicted to increase by 1.0% (moderate monetary transmission channel)

Model (b): output growth is predicted to increase by 0.6% (weak monetary transmission channel)

Model (c): output growth is predicted to increase by 2.0% (strong monetary transmission channel)

The research department further informs that each model prediction is equally likely, and that effects for OCR changes different than -1% are proportional to these predictions, e.g.: a decrease of 2% in the OCR is predicted to increase output growth by 2% according to model (a), 1.2% according to model (b), and 4% according to model (c), and so on.

Using the scenario information above answer the following questions.

Note: for the numerical questions, please provide a numerical answer in percentage points, e.g., 1 for 1%, -2 for -2%, etc.

What is the output growth rate needed to lower the unemployment rate to the natural rate of unemployment?

A 52-year-old man went to his physician for a physi- cal examination. The patient had been a district manager for an automobile insurance company for the past 10 years and was 24 pounds overweight. He had missed his last two appointments with the phy- sician because of business. The urinalysis dipstick finding was not remarkable. His blood pressure was elevated. The blood chemistry results are listed

Questions 1. Given the abnormal tests, what additional information would you like to have?

2. If this patient had triglycerides of 100 mg/dL (1.1 mmol/L) and an HDL-C of 23 mg/dL (0.6 mmol/L), what would be his calculated LDL-C value?

3. If, however, his triglycerides were 476 mg/dL (5.4 mmol/L), with an HDL-C of 23 mg/dL (0.6 mmol/L), what would be his calculated LDL-C value?

Assume that you recently graduated and you just landed a job as a financial planner with the Cleveland Clinic. Your first assignment is to invest $100,000. Because the funds are to be invested at the end of one year, you have been instructed to plan for a one-year holding period. Further, your boss has restricted you to the following investment alternatives, shown with their probabilities and associated outcomes. State of Economy Probability T-Bills Alta Inds. Repo Men American Foam Market Port. Recession 0.1 8.00% -22.0% 28.0% 10.0% -13.0% Below Average 0.2 8.00% -2.0% 14.7% -10.0% 1.0% Average 0.4 8.00% 20.0% 0.0% 7.0% 15.0% Above Average 0.2 8.00% 35.0% -10.0% 45.0% 29.0% Boom 0.1 8.00% 50.0% -20.0% 30.0% 43.0% Barney Smith Investment Advisors recently issued estimates for the state of the economy and the rate of return on each state of the economy. Alta Industries, Inc. is an electronics firm; Repo Men Inc. collects past due debts; and American Foam manufactures mattresses and various other foam products. Barney Smith also maintains an "index fund" which owns a market-weighted fraction of all publicly traded stocks; you can invest in that fund and thus obtain average stock market results. Given the situation as described, answer the following questions. a. Calculate the expected rate of return on each alternative. b. Calculate the standard deviation of returns on each alternative. c. Calculate the coefficient of variation on each alternative. d. Calculate the beta on each alternative. e. Do the SD, CV, and beta produce the same risk ranking? Why or why not? f. Suppose you create a two-stock portfolio by investing $50,000 in Alta Industries and $50,000 in Repo Men. Calculate the expected return, standard deviation, coefficient of variation, and beta for this portfolio. How does the risk of this two-stock portfolio compare with the risk of the individual stocks if they were held in isolation?

Assume that you recently graduated and you just landed a job as a financial planner with the Cleveland Clinic. Your first assignment is to invest $100,000. Because the funds are to be invested at the end of one year, you have been instructed to plan for a one-year holding period. Further, your boss has restricted you to the following investment alternatives, shown with their probabilities and associated outcomes.   

Barney Smith Investment Advisors recently issued estimates for the state of the economy and the rate of return on each state of the economy. Alta Industries, Inc. is an electronics firm; Repo Men Inc. collects past due debts; and American Foam manufactures mattresses and various other foam products. Barney Smith also maintains an "index fund" which owns a market-weighted fraction of all publicly traded stocks; you can invest in that fund and thus obtain average stock market results. Given the situation as described, answer the following question using Excel (PLEASE SHOW WORK USING EXCEL FORMULAS : I NEED TO KNOW WHICH FORMULA AND WHICH DATA TO USE IN THE FORMULA) (CALCULATOR FORMAT NOT ACCEPTED).

f. Suppose you create a two-stock portfolio by investing $50,000 in Alta Industries and $50,000 in Repo Men. Calculate the expected return, standard deviation, coefficient of variation, and beta for this portfolio. How does the risk of this two-stock portfolio compare with the risk of the individual stocks if they were held in isolation?

Q1. A total of 1,176,453 deaths (all causes in the whole population) were reported in country X in 2003. The mid-year population in 2003 was estimated to be 198,812,000. HIV related deaths and mid-year population by age-group are given below.

(a) Calculate the crude death rate (from all causes) in country X in 2003. (2pts)

(b) Calculate the crude HIV-related death rate in country X in 2003 in the whole population. (2pts)

(c) Calculate the age specific HIV-related death among 5-14year-olds and among 35-44year-olds. (1 + 1pt)

HIV-related deaths and mid-year population by age group in Country Y in 2003 are given below

(d) Calculate the age-specific HIV-related death rates for country Y in 2003, and complete the above table.(4pts)

(e) Can you conclude that a person living in country X has a risk of dying from HIV that is 1.2 times as high as a person living in country Y? Give a reason for your answer (2pts)

Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5]

Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.