The following table represents the numbers of employees, by age group, who were promoted or not promoted in a sample of restaurants in last year. Using a 0.01 significance level, can you conclude

that the people in some age groups are more likely to be promoted than those in other age groups?

Age
Under 30 30-39 40-49 50 and Over
Promoted 89.0 77.0 102.0 63.0
Not Promoted 99.0 110.0 65.0 70.0

A) Calculate the table of expected values? Circle the correct table.
99.19 100.7 81.89 65.22
99.81 95.3 87.11 67.78

86.19 91.7 90.89 65.22
95.81 87.3 85.11 67.78

92.19 91.7 81.89 65.22
95.81 95.3 85.11 67.78

92.19 84.7 77.89 65.22
90.81 95.3 95.11 67.78

92.19 86.7 81.89 65.22
95.81 91.3 85.11 66.78

B) Calculate the χ2 Test Statistic:

(a) 14.82 (b) 14.768 (c) 14.68 (d) 14.658 (e) 14.542

C) Identify critical value:

(a) 12.838 (b) 9.348 (c) 7.815 (d) 6.251 (e) 11.345

D) What determination about the Claim can you make?
(a) There appears to be enough evidence to claim the the two variables are independent.
(b) There does not appear to be enough evidence to claim the the two variables are independent.
(c) We need a larger sample before we can make a determination about independence.
(d) We first need more samples since the mean of sample statistics is uniformly distributed.
(e) We do not know how accurate the sample is, so we can make no determination about the claim.

51. The relationship between nominal returns, real returns, and inflation is referred to as the:
A. call premium.
B. Fisher effect.
C. conversion ratio.
D. spread.
E. current yield.
52. Which of the following bonds would have the greatest percentage decrease in value if all interest rates in the
economy rise by 1%?
A. 10-year, zero coupon bond;
B. 30-year, zero coupon bond;
C. 20-year, 10% coupon bond;
D. 10-year, 10% coupon bond;
E. 20-year, 5% coupon bond;


53. If a security is risker than average stock, what is the possible value of the stock’s beta?
A. -0.5
B. 0
C. 0.5
D. 1
E. 1.5
54 .What is the standard deviation of the stock?
Economy Prob. Return
Strong 0.3 80%
Normal 0.4 10%
Weak 0.3 -60%
A. 57%
B. 54%
C. 26%
D. 30%
E. None of above
55 .The slope of security market line is
A. Risk-free rate
B. Beta
C. Market risk premium
D. Market return
E. None of above
56 .Stocks A and B each have an expected return of 12%, a beta of 1.2, and a standard deviation of 25%. The returns
on the two stocks have a correlation of +0.6. Portfolio P has 50% in Stock A and 50% in Stock B. Which of the
following statements is correct?
A. Portfolio P has a beta that is greater than 1.2.
B. Portfolio P has a standard deviation that is greater than 25%.
C. Portfolio P has an expected return that is less than 12%.
D. Portfolio P has a standard deviation that is less than 25%.
E. Portfolio P has a beta that is less than 1.2.
57 .A bond’s annual interest divided by its face value is referred to as the:
A. market rate.
B. call rate.
C. coupon rate.
D. current yield.
E. yield-to-maturity.


58. The risk free rate is 3% and the market risk premium is 4%. Stock A has a beta of 1.5. What is the required rate
of return on stock A.
A. 9.0%
B. 7.8%
C. 4.8%
D. 7%
E. None of above is correct.
59 .An individual has $40,000 invested in a stock with a beta of 0.8 and another $40,000 invested in a stock with a
beta of 1.4, what is her portfolio’s beta?
A. 0.9
B. 1.10
C. 2.2
D. 1.12
60 .Last year, you earned a rate of return of 6.42 percent on your bond investments. During that time, the inflation
rate was 1.6 percent. What was your real rate of return?
A. 4.69 percent
B. 4.80 percent
C. 4.83 percent
D. 4.74 percent
E. 4.71 percent
61 .Capital Asset Pricing Model (CAPM) reflects the risk before diversification.
A. True
B. False
62 .The 8 percent, $1,000 face value bonds of Sweet Sue Foods are currently selling at $1,057. These bonds have 16
years left until maturity. What is the current yield?
A. 7.38 percent
B. 7.57 percent
C. 8.00 percent
D. 8.23 percent
E. 8.28 percent
63 .A $1,000 face value bond currently has a yield to maturity of 8.22 percent. The bond matures in five years and
pays interest semiannually. The coupon rate is7.5 percent. What is the current price of this bond? [Match time
period and interest rate]
A. $948.01
B. $989.60
C. $1,005.26
D. $970.96
E. $1,010.13
64 .Which of following is incorrect?


A. Systematic risk can be eliminated by proper diversification.
B. Market risk is the risk remains after diversification.
C. Market risk is also known as systematic risk.
D. All of above are correct.
65. Which one of the following bonds is most apt to have the smallest liquidity premium?
A. Treasury bill
B. Corporate bond issued by a new firm
C. Municipal bond issued by the State of New York
D. Municipal bond issued by a rural city in Alaska
E. Corporate bond issued by General Motors (GM)
66 .If g=6%, ??1 = 2, and ???? = 13%, what is the stock’s value?
A. 25.89
B. 28.57
C. 30.29
D. 50.22
E. None of the above
67 .If g=6%, ??1 = 2, and ???? = 13%, what is the stock’s value two years from now?
A. 25.89
B. 32.10
C. 30.29
D. 34.02
E. None of the above
68 .Investors require a 13% rate of return on the Levine Company’s stock. If the dividend increase at a constant rate
of 6%, what is the capital gain yield?
A. 6%
B. 13%
C. 7%
D. 19%
E. None of the above
69 .Negative growth rate stocks have negative values.
A. True
B. False
70 .If a zero growth rate shock with an annual dividend of $5 sells for $50, what is the stock’s expected return?
A. 5%
B. 10%
C. 15%
D. 20%
E. Can not be determined
71 .New Markets has $1,000 face value bonds outstanding that pay interest semiannually, mature in 14.5 years, and
have a 4.5 percent coupon. The current price is quoted at 97.6. What is the yield to maturity? [Match time period and interest rate]
A. 5.32 percent
B. 4.73 percent
C. 4.92 percent
D. 5.13 percent
E. 5.27 percent
72 .All else held constant, the present value of a bond increases when the:
A. coupon rate decreases.
B. yield to maturity decreases.
C. current yield increases.
D. time to maturity of a premium bond decreases.
E. time to maturity of a zero coupon bond increases.
73 .Schnusenberg Corporation just paid a dividend of D0 = $0.75 per share, and that dividend is expected to grow at
a constant rate of 6.50% per year in the future. The company’s beta is 1.25, the required return on the market is
8.50%, and the risk-free rate is 3.50%. What is the company stock price?
A. $ 9.33
B. $ 10.47
C. $ 24.58
D. $ 33.84
E. None of the above.
74 .Capital gains yield will always equal the growth rate.
A. True
B. False
75 .A six-year, semiannual coupon bond is selling for $991.38. The bond has a face value of $1,000 and a yield to
maturity of 9.19 percent. What is the coupon rate? [Match time period and interest rate]
A. 4.50 percent
B. 4.60 percent
C. 6.00 percent
D. 9.00 percent
E. 9.20 percent
76 .Which of following information is not required to calculate WACC?
A. Weight of debt
B. Weight of common equity
C. Tax rate
D. Cost of preferred stock
E. All of above are required
77 .If tax rate increases, WACC will decrease.
A. True
B. False
78 .If a firm can borrow at an interest rate of 8% and its tax rate is 40%, its after-tax cost of debt is
A. 3.2%
B. 4%
C. 4.8%
D. 6%
E. 8%
79 .If a firm pays out $5 preferred dividend per share, and the stock is priced at $40 per share. The component cost
of preferred stock is
A. 8%
B. 10%
C. 12.5%
D. 17.5%
E. 25%
80 .The cost of preferred stock to a firm must be adjusted to an after-tax figure.
A. True.
B. False.
81 .Assuming a stock’s dividend yield is 5% and capital gains yield is 8%, what is the stock’s total return?
A. 3%
B. 5%
C. 8%
D. 13%
82 .Which of the following is the criticism of dividend discount model?
A. It does not account for the firm’s dividend
B. It does not account for the firm’s growth
C. It does not account for investor’s required rate of return
D. It does not account the situation that dividend is zero
E. None of the above
83 .Under which of the following situations, the constant growth dividend discount model does not apply?
A. When dividend is positive
B. The growth rate (g) is constant
C. When the growth rate (g) is negative
D. When the growth rate (g) > investor required rate of return (rs)
E. None of the above
84 .Sugar Cookies will pay an annual dividend of $1.23 a share next year. The firm expects to increase this dividend
by 8 percent per year the following 5 years and then decrease the dividend growth to 2 percent annually
thereafter. Which one of the following is the correct computation of the dividend for Year 8?
A. ($1.23) x(1.08 x4) x(1.02 x3)
B. ($1.23) x(1.08 x4) x(1.02 x2)
C. ($1.23) x(1.08)5x(1.02)2
D. ($1.23) x(1.08)4x(1.02)3
E. ($1.23)x (1.08)5x(1.02)2

85. Newly issued securities are sold to investors in which one of the following markets?
A. Proxy
B. Stated value
C. Inside
D. Secondary
E. Primary
86 .Firms with riskier projects generally have a lower WACC.
A. True
B. False
87 .Which of the following statements is correct?
A. Since debt capital can cause a company to go bankrupt but equity capital cannot, debt is riskier than
equity.
B. The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company
does in fact pay taxes.
C. If a company assigns the same cost of capital to all of its projects regardless of each project’s risk,
then the company is likely to reject some safe projects that it actually should accept and to accept
some risky projects that it should reject.
D. Because no flotation costs are required to obtain capital as retained earnings, the cost of retained
earnings is generally lower than the after-tax cost of debt.
E. Higher flotation costs tend to reduce the cost of equity capital.
88 .The sum of weight of debt, weight of preferred stock, and weight of common equity should be
A. -1
B. 0
C. 0.5
D. 1
E. 1.5
89 .An agent who buys and sells securities from inventory is called a:
A. floor trader.
B. dealer.
C. commission broker.
D. broker.
E. floor broker.
90 .Solar Energy will pay an annual dividend of $2 per share next year. The company just announced that future
dividends will be increasing by 2 percent annually. How much are you willing to pay for one share of this stock
if you require a rate of return of 12 percent?
A. $20.4
B. $20
C. $14.29
D. $16.67
91 .The internal rate of return is the:
A. discount rate that causes a project’s aftertax income to equal zero.
B. discount rate that results in a zero net present value for the project.
C. discount rate that results in a net present value equal to the project's initial cost.
D. rate of return required by the project's investors.
E. project's current market rate of return.
92 .The possibility that more than one discount rate can cause the net present value of an investment to equal zero is
referred to as:
A. duplication.
B. the net present value profile.
C. multiple rates of return.
D. the AAR problem.
E. the dual dilemma.
93 .Now a firm has 40% debt, 10% preferred stock, and 50% common equity. The after-tax cost of debt is 5%, cost
of preferred stock is 8%, and the cost of common equity is 10%. What is WACC of the firm?
A. 5%
B. 7.4%
C. 7.8%
D. 8%
E. 10%
94 .Which of following is correct?
A. Increase of tax rate and increase of cost of preferred stock must result in decrease of WACC.
B. Increase of tax rate and decrease of cost of preferred stock must result in decrease of WACC.
C. Decrease of tax rate and increase of cost of preferred stock must result in decrease of WACC.
D. Decrease of tax rate and decrease of cost of preferred stock must result in decrease of WACC.
E. None of above.
95 .Which one of the following is an indicator that an investment is acceptable? Assume cash flows are
conventional.
A. Modified internal rate of return that is equal to zero
B. Profitability index of zero
C. Internal rate of return that exceeds the required return
D. Payback period that exceeds the required period
E. Negative average accounting return
96 .Which of the following is not an advantage of MIRR compared to IRR?
A. Assumes reinvestment of cash flows at WACC
B. Assumes reinvestment of cash flows at IRR
C. Avoids multiple IRR issue
D. None of the above
97 .What’s the crossover rate of the following two cash flow series?
Year 0 1 2 3
Project X -$1,150 $1000 $300 $400
Project Y -$1,150 $500 $300 $1000
A. 12%
B. 11%
C. 10.3%
D. 9.5%
E. None of the above
98 .Which of the following is the criterion to evaluate mutually exclusive projects using NPV decision rule?
A. If NPV>0, accept the project
B. If NPV<0, accept the project
A. Select the project with the highest positive NPV
B. Select the project with the highest negative NPV
C. None of the above
99 .Which of the following is the criterion to evaluate independent project using IRR decision rule?
A. If IRR>WACC, accept the project
B. If IRR<WACC, accept the project
C. Select the project with the highest IRR
D. Select the project with the highest WACC
E. None of the above
100 .You are using a net present value profile to compare Projects A and B, which are mutually exclusive. Which
one of the following statements correctly applies to the crossover point between these two?
A. The internal rate of return for Project A equals that of Project B, but generally does not equal zero.
B. The internal rate of return of each project is equal to zero.
C. The net present value of each project is equal to zero.
D. The net present value of Project A equals that of Project B, but generally does not equal zero.
E. The net present value of each project is equal to the respective project's initial cost.

14. The table below ~hows the probabilities of all realizations
for each of the three dice. Notice that the dice are all
"loaded" meaning that they are unbalanced in some way
leading to an unequal probability of any number coming
up.

1. If die 3 is rolled, what is the probability of rolling a
two?
b. If one of these three dice is selected at random and
roll ed, what is the probability of rolling a two?
c. If one of these three dice is selected at random and
rolled, what number is the least likely to appear?
d. If one of these three dice is selected at random and a
two is rolled, what is the probability that die 3 was
rolled?
e. If one of these three dice is selected at random and a
four is rolled, what die is the most likely to have been
chosen?
f. If die 1 and 2 are selected and rolled, and one adds
their realizations, what is the probability that this
sum is 7?
g. If die 1 and 2 are selected and rolled, and one adds
their realizations, what is the probability that this
sum is less than S?
h. If die 1 and 2 are selected and rolled, and one adds
their realizations, what is the sum is that is more
likely to appear?
i. If die 2 and 3 are selected and rolled, and one adds
their realizations, what is the probability that this
sum is less than 11?
j. If die 1 and 3 are selected and rolled, what is the
probability that the minimum of the two realizations
is 2?
k. If die 1 and 3 are selected and rolled, what is the
probability that the minimum of the two realizations
is 5?
I. If die 1 and 3 are selected and rolled, what is the
probability that the minimum of the two realizations
is less than 4?
m. If die 2 and 3 are selected and rolled, what is the
probability that the maximum of the two realizations
is greater than 6?

You have been asked to plan the following covert operation for the AIC:

What is the probability of the project taking more than 25 days to complete? (In percentage and keep two decimal)

Collecting Averages of Groups of Five Repeat steps one through five (of the section titled Collect the Data) with one exception. Instead of recording the change of 30 classmates, record the average change of 30 groups of five. 1. Randomly survey 30groups of fiveclassmates. 2. Record the values of the average of their change.
Chapter 7 | The Central Limit Theorem 419
__________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Table 7.3
3. Construct a histogram. Scale the axes using the same scaling you used for the section titled Collect the Data. Sketch the graph using a ruler and a pencil.
Figure 7.12
4. Calculate the following (n= 5; surveying five people at a time): a. x ¯ = _______ b. s= _______ 5. Draw a smooth curve through tops of the bars of the histogram. Use one to two complete sentences to describe the general shape of the curve. Discussion Questions 1. Why did the shape of the distribution of the data change, as n changed? Use one to two complete sentences to explain what happened. 2. In the section titled Collect the Data, what was the approximate distribution of the data? X ~ _____(_____,_____) 3. In the section titled Collecting Averages of Groups of Five, what was the approximate distribution of the averages? X ¯ ~ _____(_____,_____) 4. In one to two complete sentences, explain any differences in your answers to the previous two questions.

One hundred teachers attended a seminar on mathematical problem solving. The attitudes of representative sample of 12 of the teachers were measured before and after the seminar. A positive number for change in attitude indicates that a teacher's attitude toward math became more positive. The twelve change scores are as follows.

4; 7; −1; 1; 0; 5; −2; 2; −1; 6; 5; −3

1. What is the mean change score? (Round your answer to two decimal places.)

2. What is the standard deviation for this sample? (Round your answer to two decimal places.)

3. What is the median change score? (Round your answer to one decimal place.)

4. Find the change score that is 2.2 standard deviations below the mean. (Round your answer to one decimal place.)

_______________________________________________________________________________________________________________________________________

A sample of 100 clients of an exercise facility was selected. Let X = the number of days per week that a randomly selected client uses the exercise facility.

1. Find the number that is 1.5 standard deviations BELOW the mean. (Round your answer to three decimal places.)

FIFO Perpetual Inventory

The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

-- Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account.

-- Determine the gross profit from sales for the period.
$______

-- Determine the ending inventory cost as of June 30.
$____________

-- Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?

You have been asked by an investor to value a restaurant using discounted cash flow valuation. For the current year, the restaurant earned pretax operating income of $750,000. Income has grown 2% annually during the last five years, and is expected to continue growing at that rate for the next two years. Net operating working capital increased by $60,000 during the current year and current year capital spending on long-lived assets exceeded depreciation by $75,000. Both working capital and the excess of capital spending over depreciation are projected to grow at the same rate as operating income. Subsequent to the second year, you believe the pretax operating income growth rate will increase to 3% per year and remain at that level into the foreseeable future. The 10-year Treasury bond rate is 2.5%, the equity risk premium is 5.5%, and the marginal federal, state, and local tax rate is 35%. The restaurant’s beta and its target debt-to-equity ratio are 1.74 and 0.67, respectively. Its pretax cost of borrowing, based on its recent borrowing activities, is 9%. (Show Work)

What is the restaurant’s enterprise free cash flow in year 1?

A)$352,500 B)$420,750 C)$427,500 D)$359,550 E)$436,050

What is the restaurant’s enterprise free cash flow in year 2?

A)$370,337 B)$359,550 C)$436,050 D)$366,741 E)$388,745

What is the restaurant’s cost of equity?

A)14.5% B)12.07% C)7.72% D)7.72% E)9.13%

What are the restaurant’s target capital structure weights?

Dr. Lillian​ Fok, a New Orleans​ psychologist, specializes in treating patients who are agoraphobic​ (i.e., afraid to leave their​ homes). The following table indicates how many patients Dr. Fok has seen each year for the past 10 years. It also indicates what the robbery rate was in New Orleans during the same​ year.                                                                                                                                          

The simple linear regression equation that shows the best relationship between the number of patients and year is ​(round your responses to three decimal​ places):

ModifyingAbove y with carety ​=??????​+??????x where

ModifyingAbove y with carety ​= Dependent Variable and x​ = Independent Variable.

Using linear regression​, the number of patients Dr. Fok will see in year 11​=????? patients​ (round your response to two decimal​ places).

Using linear regression​, the number of patients Dr. Fok will see in year 12​=???? patients ​(round your response to two decimal​ places).

The coefficient of determination for the linear regression model is 0.8621 This shows that there is a (strong) OR (not so strong) relationship between the​ "Number of​ Patients" and​ "Year."