Question 1

Alex is a young investor with high risk tolerance level and hopes to earn money as fast as he can. Analyse each of the following plans and evaluate which is the most suitable plan for Alex.

(1) Dollar-cost averaging
(2) Constant-dollar plan
(3) Constant-ratio plan
(4) Variable-ratio plan

Question 2

An investor estimates that next year’s net income for Hilary Pullman Hotel would be RM 8 million. The company has 0.5 million shares outstanding and decided to pay RM 0.5 million to the preferred stockholders from its net income. Listed companies similar to Hilary Pullman Hotel have been recently reported to have an average price/earnings ratio of 4 times. Given the information, calculate the expected price of the stock and evaluate the problems in using Price/earnings ratio method of valuing the shares of a company.

Question 3

Two securities – PohKeong Gold and Mama Care are currently being considered by Jason. He is considering either to invest 100% in PohKeong Gold or building a portfolio that consist of both security – 60% in PohKeong Gold and 40% in Mama Care. The probability distribution of expected returns of these assets are shown in the following table.

State of Economy Probability Return on PohKeong Gold Return on Mama Care
Bear 0.30 3% 2%
Bull 0.70 18% 10%

(i) Calculate the expected return for each of the two alternatives.
(ii) Calculate the standard deviation of returns of the two alternatives.
(iii) Evaluate the investors decisions, based on the above calculations

Question 4

Given the following situations, evaluate in each scenario whether the hypothesis of an efficient capital market of semi-strong form is violated.

(i) Through the introduction of an advanced webinar into the analysis of the past share price movements, a brokerage firm is able to predict price movements are able to earn consistent 1% profit more than normal market returns after adjusted for risk.

(ii) On average, investors in the stock market this year are expected to earn a positive return on their investment. Some investors will earn considerably more than others.

(iii) You have discovered that the square root of any given stock price multiplied by the day of the month provides an indication of the direction in price movement of that particular stock with a probability of 20%.

1. An entrepreneur is:

a. an employee in a factory.

b. the manager of a factory.

c. the person who conceives and starts a business.

d. the person who contracts to work for a specific price.

e. the person who does not assume any risk in business

2. The study of microeconomics and macroeconomics differ in that:

a. macroeconomics is concerned with the domestic economy and macroeconomics is concerned only with the international economy.

b. microeconomics examines the individual markets of the economy while macroeconomics studies the whole economy.

c. microeconomics studies the actions of households and macroeconomics studies the actions of business firms.

d. microeconomics studies the economy in terms of private individuals and firms while macroeconomics includes the effect of government.

e. microeconomics examines the whole economy while macroeconomics studies the individual units of the economy.

3. Which of the following is a statement of positive economics?

a. Government control of rent is a fair way to help poor people afford housing.

b. Government control of rent keeps landlords from charging too much rent.

c. Government control of rent decreases the number of new apartments constructed.

d. Government control of rent is an injustice.

4. The amount of a good that must be given up to produce another good is the concept of:

a. scarcity.

b. specialization.

c. trade.

d. efficiency.

e. opportunity cost.

5. For the economy shown in Exhibit 2-6 to operate at point C, it must:

a. be willing to lower the price of grain.

b. use its given resources more efficiently than it would at point A.

c. experience resource unemployment.

d. experience an increase in its resources and/or an improvement in its technology

6. If the market price is below the equilibrium price, then:

a. a surplus of product will result.

b. the quantity supplied will exceed the quantity demanded.

c. the market supply curve will shift to the right.

d. the quantity demanded will exceed the quantity supplied.

e. the market demand curve will shift to the left.

7. Assume that the equilibrium price for a good is $5. If the market price is $10, a:

a. shortage causes the price to decline toward $5.

b. surplus causes the price to rise above $10.

c. shortage causes the price to rise above $10.

d. surplus causes the price to decline toward $5.

8. If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:

a. raise prices 1 percent.

b. lower prices 1 percent.

c. raise prices until the elasticity becomes very high.

d. keep the price where it is.

e. lower prices until the elasticity becomes very high.

9. If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then demand is:

a. elastic.

b. inelastic.

c. of unitary elasticity.

d. 0.

e. inferior

10. In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

a. $300,000.

b. $400,000.

c. $500,000.

d. $600,000

11. What is scarcity and why does it exist? How is scarcity related to the study of economics?

12. Why are all costs really "opportunity costs"?

13. Distinguish the laws of demand and supply. How are the laws of demand and supply illustrated graphically?

14. What does the "price elasticity of demand" measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?

15. What happens to total revenue given a price increase and demand is inelastic? Why?

16. What are the characteristics of the product that has an inelastic demand?

Demand and Supply Project

Overview: In economics, students need to be able to graph and explain the concepts related to supply and demand.

Purpose: The purpose for this project is for students to demonstrate the ability to analyze objective data and use supply and demand models and concepts that project possible economic outcomes.

Requirements: Number and answer each of the questions below.

1. Graph the following price and quantity information for athletic shoes. Label all parts of the graph including price, quantity, supply, demand and the equilibrium point as E1. (2 points)

2. Is the demand curve a direct or inverse relationship? Explain how price relates to quantity demanded. (1 point)
3. Is the supply curve a direct or inverse relationship? Explain how price relates to quantity supplied. (1 point)
4. What is the equilibrium price and equilibrium quantity? Provide the exact numbers from the chart above. (1 point)
5. If the price of athletic shoes changes from $45 to $40 is this a movement along, or a shift of the demand and/or supply curves. Explain the changes in quantity demanded and quantity supplied. (2 points)
6. If incomes increase, what direction will the supply curve or demand curve shift? How do the equilibrium price and equilibrium quantity change? Show this on a separate graph with the original curves from question 1, label the new equilibrium point E2, and explain in writing which curve shifts and how equilibrium price and equilibrium quantity change (up or down). (3 points)
7. If labor costs decrease, what direction will the supply curve or demand curve shift? How do the equilibrium price and equilibrium quantity change? Show this on a separate graph with the original curves from question 1, label the new equilibrium point E3, and explain in writing which curve shifts and how equilibrium price and equilibrium quantity change (up or down). (3 points)
8. If a substitute good (tennis shoes) becomes available at a lower price, what direction will the supply curve or the demand curve shift. How do the equilibrium price and equilibrium quantity change? Show this on a separate graph with the original curves from question 1, label the new equilibrium point E4, and explain in writing which curve shifts and how equilibrium price and equilibrium quantity change (up or down). (3 points)
9. Answer all parts below using the following scenario: incomes decrease and labor costs decrease at the same time. (9 points in total)
   1. What direction will the supply and demand curves shift?
   2. Show on a separate graph, with the original curves from question 1, the potential situation that can occur if the demand curve shifts to a greater degree than the supply curve in relation to quantity. Label the new equilibrium point E5 and explain in writing what changes occur with the equilibrium price and the equilibrium quantity (up, down, or stays the same).
   3. Show on a separate graph, with the original curves from question 1, the potential situations that can occur if the demand curve shifts to a lesser degree than the supply curve in relation to quantity. Label the new equilibrium point E6 and explain in writing what changes occur with the equilibrium price and the equilibrium quantity (up, down, or stays the same).
   4. Show on a separate graph, with the original curves from question 1, the potential situations that can occur if the demand curve shifts to the same degree as the supply curve in relation to quantity. Label the new equilibrium point E7 and explain in writing what changes occur with the equilibrium price and the equilibrium quantity (up, down, or stays the same).

One share of Global Core Development Systems, Inc (an imaginary company with the abbreviation: Go-CDS) stock was priced at $14.31 on January 1, 2015. Your tasking in this problem is to determine how long does it take for a stockholder to double their money who has invested in Go-CDS? In other words, how long until the price per share has doubled.

Here are some facts about Go-CDS:

• Very stable company with a proven track record of manufacturing.
• The normal growth of Go-CDS's stock has averaged a monthly growth rate of 0.5000% in the share price. (This means that the price per share goes up by 0.5000% each month over the last month's price.)
• Beginning in March 2015, each time Go-CDS releases a quarterly report (on the 15th of the months of March, June, September and December each year), the stock share price increased immediately by 4.3000% due to the continuing, favorable outlook for Go-CDS's products in the marketplace. This trend continues throughout the time period.
• Due to a merger with another manufacturing company in the 19th month after 1/1/2015, the monthly growth rate increased to 1.4000% until the end of THAT calendar year (the last month of that year is the 24th month). Since then, the monthly growth rate increased to 2.3000% per month.
• Unfortunately, due to a bad set of business decisions in 2017, the Board fired the CEO which instantly cut the share price on January 5, 2017 to $3.58 (the 25th month). A new CEO was immediately hired on January 10, 2017.
• The company growth rate reset to 0.9500% per month after the new CEO was hired due to bad press.

Problem: Write a MATLAB program to solve the following questions:

Question 1:

In what month does the stock exceed 2 times the price of $14.31?

Question 2:

Prepare a plot of the stock's per-month price movement over the course starting from the first month of year 2017 until the price has exceeded 2 times the price of $14.31. (You plot should start from month 25, and should cover the month that is the answer to Question #1.) You will need to adjust the plot routine to ONLY show these months.

To limit the plot to these months, add the following command after your xlabel and ylabel commands:

How do I code this is MATLAB?

1- Why would a large country be better off favoring import-substitution industries instead of export industries?

A- Increased production in import-substitution industries takes factors of production away from export industries, which effectively allows only the strongest industries to survive.

B- Increased production in import-substitution industries increases the country's exports, which allows an improvement in the country's terms of trade.

C- Increased production in import-substitution industries results in an increase in supply of the imported product, which results in a higher price for the imported product, and increased imports result in increased exports.

D- Increased production in import-substitution industries results in a decrease in the demand for the imported product, which results in a decrease in the price the country pays for the imported product, but increased production in export industries results in an increase in the supply of the exported product, which decreases the price that the country can charge for the exported product.

2- If a large country's growth increases the country's willingness to trade, the price of the imported goods can change. In that case, the country experiences:

A- a decline in its terms of trade.

B- multiple positive consequences.

C- an improvement in its terms of trade.

D- an increase in the price of the goods that it exports.

3- Why would a large country be better off favoring import-substitution industries instead of export industries?

A- Increased production in import-substitution industries takes factors of production away from export industries, which effectively allows only the strongest industries to survive.

B- Increased production in import-substitution industries increases the country's exports, which allows an improvement in the country's terms of trade.

C- Increased production in import-substitution industries results in an increase in supply of the imported product, which results in a higher price for the imported product, and increased imports result in increased exports.

D- Increased production in import-substitution industries results in a decrease in the demand for the imported product, which results in a decrease in the price the country pays for the imported product, but increased production in export industries results in an increase in the supply of the exported product, which decreases the price that the country can charge for the exported product.

4- A large country that expands its ability to produce an import-competing good benefits in two ways. First, the country benefits from improved production, and second:

A- by decreasing its demand for the imported product, it reduces the price of that product.

B- it benefits by increasing the variety of products that it imports.

C- it can demand a higher price for its exports.

D- it increases the amounts of its exports and gains greater influence over prices.

Omega Distributing Company

Omega Distributing Company specializes in supplying fragrances to retail outlets such as Goody’s and JCPenney. One of its products is Smelgud. Smelgud has generated significant revenue in the past, however top management is concerned as to whether its pricing and advertising policies are optimal for the demand. Partnering with some of its retail outlets Omega has undertaken to conduct a statistical study of consumer demand for Smelgud.

Omega’s analyst believe that the principal determinant of consumer demand for Smelgud are(1) the price of Smelgud, (2) the price of Antistink (a competing fragrance) and (3) advertising expenditures. The following data were collected from a group of representative outlets .

In the table the price of Antistink is the retail price charged customers while the price of Smelgud is the wholesale price charged by Omega to its customers. Since the retailers use markup pricing omega s price represents what retail customers pay for Smelgud.

It is hypothesized that a linear demand function like the following would describe the relation between quantity sold and price of Smelgud and the other independent variables.

Q = Bo + B1(Ps) + B2(Pa)+ B3(A)  

You have been hired by Omega after recent graduation from Missouri Valley College at a salary in the 95th percentile of new graduate hires. Because of your understanding of Economics and how to apply Statistics, one of your first assignments is to analyze this data and determine a demand function of the form shown. You have determined that once you have good estimates of the coefficients on the independent variables you could calculate various elasticity measures which could show insights into pricing, competition and advertising.    

You will need to report your findings to your immediate supervisor, Duncan Haynes. Mr. Haynes background is in Art History and Chemistry, he was promoted out of the the product inception area. Hence, your report will need to explain what you have done and what your findings mean in detail. You will make recommendations and defend them.    

Science Model

One share of Global Core Development Systems, Inc (an imaginary company with the abbreviation: Go-CDS) stock was priced at $14.59 on January 1, 2015. Your tasking in this problem is to determine how long does it take for a stockholder to double their money who has invested in Go-CDS? In other words, how long until the price per share has doubled.

Here are some facts about Go-CDS:

• Very stable company with a proven track record of manufacturing.
• The normal growth of Go-CDS's stock has averaged a monthly growth rate of 1.0000% in the share price. (This means that the price per share goes up by 1.0000% each month over the last month's price.)
• Beginning in March 2015, each time Go-CDS releases a quarterly report (on the 15th of the months of March, June, September and December each year), the stock share price increased immediately by 2.5000% due to the continuing, favorable outlook for Go-CDS's products in the marketplace. This trend continues throughout the time period.
• Due to a merger with another manufacturing company in the 15th month after 1/1/2015, the monthly growth rate increased to 1.1000% until the end of THAT calendar year (the last month of that year is the 24th month). Since then, the monthly growth rate increased to 1.5000% per month.
• Unfortunately, due to a bad set of business decisions in 2017, the Board fired the CEO which instantly cut the share price on July 5, 2017 to $7.30 (the 31st month). A new CEO was immediately hired on July 10, 2017.
• The company growth rate reset to 1.0500% per month after the new CEO was hired due to bad press.

Write a MATLAB program to solve the following questions: Use matlab to make plot

1. In what month does the stock exceed 2 times the price of $14.59?

2. Prepare a plot of the stock's per-month price movement over the course starting from the first month of year 2017 until the price has exceeded 2 times the price of $14.59. (You plot should start from month 25, and should cover the month that is the answer to Question #1.) You will need to adjust the plot routine to ONLY show these months.

To limit the plot to these months, add the following command after your xlabel and ylabel commands:

1. The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $295 each. The company has a 30% income tax rate.

a. Prepare a contribution margin income statement for the company.

b. Compute its contribution margin per unit and its contribution margin ratio.

2. Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $350 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $315,000, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $245 per 100 yards of XT rope.

a. Estimate Product XT’s break-even point in terms of sales units and sales dollars. (1 unit = 100 yards) (Do not round intermediate calculations.) 2.

b. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point.

Abbott Lamp Corporation manufactures Mountain Dew Lamps.   Abbott Lamp Corporation has the following historical cost behavior data:

Other 2018 estimated information is as follows:

Rent on production facility                 $100

Factory supervisor salary                    $100

Depreciation on factory equipment    $200

Rent on corporate headquarters          $300

Corporate HQ salaries                         $1,000

Total                                                    $1,700

Abbott Lamp also estimates the following with regard to direct materials and direct labor:

Direct Materials:

1 mountain can/mountain dew lamp @ $2/mountain dew can;

.25 pieces of paper/mountain dew lamp @$4/piece of paper;

Direct Labor

.2 dlh/mountain dew lamp @ $10/dlh

1. Estimate the VARIABLE predetermined overhead rate using the high-low method. Using the high-low method, what does the y-intercept ‘mean’ in this case? Please answer number 2 question below and confirm calculation for Question 1 is correct.

   Variable predetermined overhead rate:    ($1950-$700)/(350dlh-100dlh)
   				$1250/250=$5.00dlh
   				$1950-($5.00dlh)*(350dlh)
   				$1950-$1750= $200
   Now, this predicts that for every dlh we incur, utilities will increase by $5.00.

2. Using your answer from 1 above (using BOTH the VPDOH and the y-intercept), compute the breakeven point in terms of total # of mountain dew lamps that need to be sold to break even. Assume that the price per Mountain Dew Lamp is $20/mountain dew lamp and that capacity is NOT an issue.

Thermal properties

A bar has an initial length of 100 mm at room temperature of 27oC. The tensile test indicates that the bar yields when it reaches is the stress level of 145 MPa and the strain value of 2.071 x 10-3. The bar is later placed in an oven and heated from room temperature to 100 oC. The linear coefficient of thermal expansion of the material is 23 x 10-6 oC-1 at 27oC, and 34 x 10-6 oC-1 at 527oC. Determine:

a. What is the linear coefficient of thermal expansion at 100 oC?

b. What is the length of the bar in millimeter at 100 oC?

c. Does the heating from room temperature to 100 oC the cause the bar to yield