Question 1
During February, PanAm Imports had the following cash payment transactions: Feb. 3 Paid $392 on account to Marquis Corporation net of an $8 discount for an earlier $400 purchase of inventory. 6 Purchased inventory for cash, $1,267. 11 Paid $375 for supplies. 15 Purchased inventory on credit from Monroe Corporation, $774. 16 Paid $4,062 on account to LaGrange Associates; there was no discount. 21 Purchased furniture for cash, $960. 26 Paid $3,910 on account to Graff Software for an earlier purchase of $4000 inventory. The discount was $90. 27 Made a semiannual interest payment of $800 on a long-term note payable. The entire payment was for interest. (a) Design a Cash Payment Journal with a summary of debits and credits, and record the transactions in the journal. PanAm Imports uses a periodic inventory system. Post references are not needed. (b) Explain any transactions that do not belong in the Cash Payment Journal and specify the journal it does belong. (c) Prepare a Doughnut chart showing the dollar amount and percentages of cash paid on account to the vendors with the vendors? names in the legend and provide a descriptive title. A data table is not required but suggested. *An example of Cash Payments Journal on PDF is attached. Requirements on Excel: ? Worksheet CPJ with Cash Payments Journal transactions February 3?27 (Item (a) above) ? I will check your formulas for the Cash Payments Journal, you do not have to do a separate worksheet for these. ? Explanations (Item (b) above) ? Doughnut chart (Item (c) above)
Question 2
The Florida Pool Home Data Excel file (linked in the Resources) contains data for 80 properties, as described in the Chapter 3, "Descriptive Statistics: Numerical Methods" reading from your MBA6018 ? Data Analysis for Business Decisions custom textbook. Using the Excel file and the Excel capabilities described in Appendix 2.2 from the same reading in the custom textbook: 1.Calculate the mean, median, range, and standard deviation of home price and size. 2.Assume that the price for home number 66 had been mistyped as 427.9 instead of 247.9. Would the value of each of these statistics increase, decrease, or remain the same? ?Mean. ?Median. ?Range. ?Standard deviation. 3.Calculate the mode for the number of bathrooms. 4.Produce two frequency distributions and histograms?one for homes with pools and one for homes without?showing the number of homes by niceness rating (Column E). What do these two distributions tell you about the relationship between niceness rating and the presence of a pool? 5.Produce a histogram that shows the number of houses by price range, in increments of $50,000 (for example, $0?$50,000, $50,001?$ 100,000, and so on). 6.Produce a scatter plot showing the relationship between price and home size. 7.Produce a scatter plot relating the number of bathrooms to price. Explain why this plot has a bar-like pattern.
Question 3
1. Use the following information. Spot rate of the euro = $1.33 1- year forward rate of the euro = $1.30 1- year interest rate in the European market = 6% 1- year interest rate in the US market = 3% If you use covered interest arbitrage, what will your percentage gross return be in a year? (You are a US investor) a) 3.61% b) 2.88% c) 4.05% d) 4.28% 2. The 1-year interest rate in Canada is 5% and the 1-year interest rate in the US is 2%. The spot rate of the Canadian dollar is $.75. Assume that the IRP holds. What is the forward rate? Is this a premium or discount? (You are a US investor) a) Discount, $.729 b) Discount, $.772 c) Premium, $.729 d) Premium, $.772 3. Assume that locational arbitrage ensures that spot exchange rates are properly aligned. Also assume that you believe in international Fisher effect. The spot rate of the British pound is $1.25. The spot rate of the Swiss franc is .4 pounds. You expect that the one-year inflation rate is 10 percent in the U.K., 9 percent in Switzerland, and 1 percent in the U.S. The one-year interest rate is 6% in the U.K., 2% in Switzerland, and 4% in the U.S. What is your expected spot rate of the Swiss franc in one year with respect to the U.S. dollar? a) $.51 b) $.48 c) $.46 d) $.43 4. Brian Tull sold a call option on Canadian dollars for $.05 per unit. The strike price was $.80, and the spot rate at the time the option was exercised was $.83. Assume Brian immediately purchased the Canadian dollars to be delivered when the option was exercised. Also assume that there are 20,000 units in a Canadian dollar option. What was Brian?s net profit or loss on the call option? a) $400 profit b) $400 loss c) $300 profit d) $300 loss 5. Assume that one year ago, the spot rate of the British pound was $1.36. One year ago, the one-year futures contract of the British pound exhibited a discount of 5%. At that time, you sold futures contracts on pounds, representing a total of 1,000,000 pounds. From one year ago to today, the pound?s value depreciated against the dollar by 10 percent. Determine the total dollar amount of your profit or loss from your futures contract. a) $68,000 profit b) $68,000 loss c) $56,000 profit d) $56,000 loss 6. Diamond Bank expects that the Singapore dollar will depreciate against the dollar from its spot rate of $.43 to $.40 in a year. The following interbank lending and borrowing rates exist: Lending Rate Borrowing Rate U.S. dollar 5.0% 5.5% Singapore dollar 10.0% 15.0% Diamond Bank considers borrowing 10 million Singapore dollars in the interbank market and investing the funds in dollars for one year. What is the profit (or loss) that could be earned from this strategy? a) $212,500 loss b) $212,500 profit c) $325,000 profit d) $325,000 loss 7. Assume the Canadian dollar is equal to $.88 and the Peruvian Sol is equal to $.35. The value of the Peruvian Sol in Canadian dollars is: A) about 0.4 Canadian dollars. B) about 0.3 Canadian dollars. C) about 3.3 Canadian dollars. D) about 2.5 Canadian dollars. 8. Assume that you observe the following exchange rate in the market. 1 euro = $1.45 1 peso = $.14 1 euro = 10.56 pesos What is your triangular arbitrage gain assuming that you have $100,000 to invest? a) $1,959 b) $2,318 c) $1,566 d) $2,408
Question 4
Requirements ? Answer in detail how answers were derived and with Excel to reflect accounting details. 1. Duncan Brooks needs to borrow $500.000 to open new stores. Brooks can borrow $500,000 by issuing 5%, 10 year bonds at a price of 96. How much will Brooks actually receive in cash under this arrangement? How much must Brooks pay back at maturity? How will Brooks account for the difference between the cash received on the issue date and the amount paid back? 2. Brooks prefers to borrow for longer periods when interest rates low and for shorter periods when interest rates are high. Why is this a good business strategy?,How will Brooks account for the difference between the cash received on the issue date and the amount paid back?,How will Brooks account for the difference between the cash received on the issue date and the amount paid back?,I really need the clarification in the next hour and a half,please!,Please send the clairification. I asked for the clarification at 3:45 over 4 hours ago.,You gave me the same answer as before. I asked to clarifiy How will Brooks account for the difference between the cash received on the issue date and the amount paid back?"
Question 5
Portfolio Beta Jerry's portfolio is invested in five stocks (that is, each stock in the portfolio has a weight of 0.20) and has a required return of 9.4%. The risk-free rate is 5% and the market risk premium is 4%. What is the portfolio's beta? Assume that Jerry's is on the SML. A. 0.800 B. 1.100 C. 1.250 D. 1.400 E. 1.550 The last stock added to this portfolio is Lauren Clothing Co., which has a betta of 0.90. What was the portfolio's beta before Lauren's stock was added? (hint: Remember that it was a four-stock portfolio before the last stock was added). A. 1.050 B. 1.150 C.1.225 D. 1.275 E. 1.250 7. a financiakll planenr is examinign the portfolios held by several clients. the protfolios described below. Which one is likely to have the smallest standard deviation: 1. a portfolio containing only microsoft stock 2. portfolio containing microsoft,apple computer, and google 3. portfolio consisting of about 3 randomly selecred stocks 4. a portfolio consisting of about 30 randomly selected stocks 5. portfolio consisting of about 30 technology stocks the tradeoff between risk and return is a cornerstone concept in finance. if a security offers a higher expected returnit must have higher risk. looking at the two stocks described. they have the same rik but one stock has a higher expected return. does this example contradict the tradeoff between risk and return? 1. yes 2. no suppose the market risk premium is currently 6%. if investors were to become more risk-avers, the market risk premium might increase to 8%. if investors become more risk-averse what effect would you expect this to have on the prices of most financial assets? 1. prices decrease 2. prices increas 3. prices would be unaffected
