The survey data shown as Figure 10 in Chapter 27 indicate that most economists invest using low-cost index funds. Index funds invest in the whole stock market (or at least a large chunk of it). The “low-cost” part matters because even fees that seem small can have a big cumulative effect on your returns over time. Actively managed funds have higher fees. Index funds are not managed so they will have lower fees.

Mutual funds typically come with two types of fees:

• Font-end Load – sales fees investor pays at time of purchase
• Annual fees -- management fees, 12b-1 (distribution) fees, and other expenses

The table below presents information for four hypothetical mutual funds.

Return, load, and fees are expressed as a percentage of total assets.

• Return represents the average annual return on the portfolio.
• Load represents the front-end fee that must be paid when making the initial investment.
• Fees represent the management and distribution fees that are charged on an annual basis. It’s helpful to think about annual fees as reducing the annual return by the percentage rate of the fee.

Suppose you have $10,000 to invest today (time = 0). Create a spreadsheet to model the growth in your investment over 30 years for each of the funds.

Post the following in the discussion:

1. What are the total fees paid for each fund over the full 30 years?
2. Explain how you would make the choice between Fund B and Fund C. That is, how should you think about the trade-off between higher annual fees and lower fees with a load?
3. How do you think this information may change your investing behavior in the future?

After you post your answers, you will need to comment on at least one other post. See if you can help your classmates who are having trouble with the calculations.

Please see the rubric for details on how you will be assessed for this activity. Remember that doing the minimum will give you a passing grade. Earning a higher grade requires more than the minimum.

11-27 (Objectives 11-3 , 11-4) The following are misstatements that can occur in the sales and collection cycle:

A customer number on a sales invoice was transposed and, as a result, charged to the wrong customer. By the time the error was found, the original customer was no longer in business.

A former computer operator, who is now a programmer, entered information for a fictitious sales return and ran it through the computer system at night. When the money came in, he took it and deposited it in his own account.

A nonexistent part number was included in the description of goods on a shipping document. Therefore, no charge was made for those goods.

A customer order was filled and shipped to a former customer, which had already filed for bankruptcy.

The sales manager approved the price of goods ordered by a customer, but he wrote down the wrong price.

A computer operator picked up a computer-based data file for sales of the wrong week and processed them through the system a second time.

For a sale, a data entry operator erroneously failed to enter the information for the salesman’s department. As a result, the salesman received no commission for that sale.

Several remittance advices were batched together for inputting. The cash receipts clerk stopped for coffee, set them on a box, and failed to deliver them to the data input personnel.

Required

Identify the transaction-related management assertion(s) to which the misstatement pertains.

Identify one automated control that would have likely prevented each misstatement

27. When examining a master budget, where does a company find the planned expenditures for facilities and equipment?

A) operating expense budget

B) capital budget

C) operating budget

D) purchases budget

28. In a master budget, the schedule of cash disbursements for operating expenses is used to prepare the ________.

A) capital budget

B) purchases and cost of goods sold budget

C) sales budget

D) cash budget

31. When preparing a budgeted balance sheet, the balance for the inventory account is found on the ________.

A) sales budget

B) cash budget

C) operating expense budget

D) purchases and cost of goods sold budget

32. An example of a favorable variance is ________.

A) actual revenues are less than expected revenues

C) actual material prices are greater than expected material prices

D) expected labor costs are less than actual labor costs

Consider a sample with data values of 27, 25, 20, 15, 30, 34, 28, and 25. Compute the 20th, 25th, 58th, and 68th percentiles. If needed, round your answers to two decimal digits.

Percentile   Value
20%   *

25%   *

58%   *

68% *

27. In a perfectly competitive market,
A) firms can freely enter and exit.
B) firms sell a differentiated product.
C) transaction costs are high.
D) All of the above.

28. The "Got Milk?" advertising campaign is a good example of
A) advertising in a competitive market.
B) how advertising in a competitive market does not pay off for a single firm.
C) interest groups financed by the industry advertise for the whole industry.
D) All of the above.

29. A bike builder owns a bike shop earns $18,000 in revenue weekly. She pays $8,000 as
explicit costs and owns the shop so no rent is paid. The bike builder could work for other bike
shop and earn $10,000 per week. Her business profit is ________ and her economic profit is
________.
A) $10,000, $10,000
B) $28,000, $10,000
C) $10,000, $0
D) $8,000, $0

30. If the company E-bikes R US is producing at a level where losses are minimized, the
company
A) has no incentive to stay in the industry.
B) is better of exiting the industry.
C) is maximizing profits.
D) will shut down.

31. Suppose the company E-bikes R US produces bike seats and has an estimated fixed cost
of $7,000 and not sunk. The estimated variable cost for each bike seat is $20. The market
price for a bike seat is $25 each and the owner can sell 1000 bike seats at most each year. In
the long run, the owner
A) should shut down.
B) should keep operating.
C) should sell less.
D) None of the above.

Consider a sample with data values of 27, 25, 20, 15, 30, 34, 28, and 25. Compute the 18th, 23rd, 59th, and 69th percentiles. If needed, round your answers to two decimal digits.

30)A pianist plans to play 6 pieces at a recital from her repertoire of 27 pieces, and is carefully considering which song to play first, second, etc. to create a good flow. How many different recital programs are possible?
31)Suppose a designer has a palette of 9 colors to work with, and wants to design a flag with 2 vertical stripes, all of different colors.

How many possible flags can be created?

32)From a group of 8 people, you randomly select 5 of them.

What is the probability that they are the 5 oldest people in the group?

Give your answer as a fraction

33)You pick 6 digits (0-9) at random without replacement, and write them in the order picked.

What is the probability that you have written the first 6 digits of your phone number? Assume there are no repeats of digits in your phone number.

Give your answer as a fraction.

36)A girl has 7 skirts, 10 blouses, and 4 pairs of shoes. How many different skirt-blouse-shoe outfits can she wear? (Assume that each item matches all the others, so she is willing to wear any combination.)
Your answer is

37)Standard automobile license plates in a country display 2 numbers, followed by 2 letters, followed by 3 numbers. How many different standard plates are possible in this system? (Assume repetitions of letters and numbers are allowed.)
Your answer is

38)A true-false test contains 21 questions. In how many different ways can this test be completed. (Assume we don't care about our scores.)
Your answer is

39)How many three-letter "words" can be made from 9 letters "FGHIJKLMN" if repetition of letters
(a) is allowed?
Your answer is :   
(b) is not allowed?
Your answer is

40)In how many ways can first, second, and third prizes be awarded in a contest with 245 contestants?
Your answer is


41)Find the number of distinguishable permutations of the given letters "AAABBBCC".
Your answer is

27) Bonds issued by Fairfax Mechanical were priced at 993.39 dollars six months ago and are priced at 978.2 dollars today. The bonds have a face value of 1,000 dollars, pay semi-annual coupons, and just made a coupon payment. The bonds had a percentage return over the past six months (from 6 months ago to today) of 6.5 percent. What is the coupon rate of the bonds? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

31

Bonds issued by Oxygen Optimization were priced at 891.76 dollars 6 months ago. The bonds pay semi-annual coupons, have a coupon rate of 9.56 percent, just made a coupon payment, and have a face value of 1,000 dollars. If the bonds had a percentage return over the past 6 months (from 6 months ago to today) of -3.41 percent, then what is the current yield of the bonds today? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Question 32

Bonds issued by Fairfax Paint have a par value of 1000 dollars, were priced at 856.92 dollars six months ago, and are priced at 783.58 today. The bonds pay semi-annual coupons and just made a coupon payment. If the bonds had a percentage return over the past 6 months (from 6 months ago to today) of -2.35 percent, then what was the current yield of the bonds 6 months ago? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

(27 pts total) What follows is hypothetical Excel output for doing regression of y on x. The regression equation is: ^y = 54:6429 + 0:9451x Source DF SS MS F P Regression 1 130.0396 130.0396 20.7812 0.0019 Residual Error Total 9 180.1000 (a) (3 pts) Complete the ANOVA table above by lling in the \Residual Error" row above. (b) (6 pts) What are the values of the regression standard error s and the coecient of determination r2? (c) (6 pts) Write down a null hypothesis H0 and an alternative hypothesis Ha that the P-value 0:0019 in this chart is referring to. Should you reject the null hypothesis at the 1% level of signcance? To what type of error are you now subject to? (d) (4 pts) Suppose SSxx = 145:6. Calculate the t statistic for the test in part (c) and conrm the P-value using the t-table. There are a couple dierent ways this could be done. Choose one, but show your work and/or explain. (e) (8 pts) Suppose x = 20:8 and SSxx = 145:6. Give a 90% prediction interval for the value of y when x = 24. Describe the meaning of this interval in relation to the population

3-27. The Georgeville city government provides a wide variety of services to the community. Among
them is the protection provided by the police force. In order to provide that force, it spends $3 million
on salaries, $200,000 on vehicle costs, and $300,000 on supplies.
The police force expects to have 7,000 measurable actions, consisting of 1,000 arrests, 4,000 traffic
citations, and 2,000 responses to emergency calls. It has noted that the average cost for each one of these
actions is $429 if you simply divide the $3 million department cost by the 7,000 specific individual
actions. Some have argued that it is not cost-effective to give out traffic tickets since the $429 cost per
ticket exceeds the fine collected. The Georgeville Police Department is considering adopting a
performance budget. The performance areas would be arrests, citations, and emergency responses.
The Police Department believes that activities related to making arrests consume 30 percent of salaries
and 40 percent of supplies. Traffic citations consume 30 percent of salaries and 10 percent of supplies.
Emergency response takes up 15 percent of salaries and 25 percent of supplies. Additionally, it performs
many other activities that collectively take up 25 percent of salaries and 25 percent of supplies. The
Police Department also estimates that its vehicles are used 25 percent for arrests, 30 percent for
citations, andand 5 percent for emergency responses. How much money is budgeted for each arrest,
citation, and emergency response? Regardless of your answer, assume that the cost per traffic citation
exceeds the average fine collected. Should the police cease issuing citations? Why?