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1.Suppose the relationship between income and the years an employee has been with an employer is y = 99.464569 +3.713375*x + 0.010438*x^2, where y is income (measured in thousands of dollars), x is years, and x^2 is years squared. For someone with 12 years of employment, what is the slope? (Record your answer to the nearest third decimal place.)
2. Which of these is a clear example of stratified sampling? Pulling over 3 busses at random during the day on a popular bus route and asking the passengers onboard to complete a questionnaire Going to 12 randomly selected grocery stores and testing all employees within the store for covid Sampling 10 students from each of 30 undergraduate courses to assess their experiences with online learning Moving around a shopping mall and interviewing 35 passing people who agree to complete a survey Asking a random sample of 45 professors with tenure at a university their opinions on the importance of diversity.
3.An individual has $25,000 invested in a stock with a beta of 0.4 and another $80,000 invested in a stock with a beta of 2.2. If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal places.
4.finance: Define the five basic principles finance and justify
your analysis by illustrating examples: Choose one or more events described by media (CNN
Business, Financial Times, Dow Jones financial news etc.) about companies and financial
market. Analyse that event (s) applying the five basis principles of finance. Note: Each principle
is to be illustrated by at least one event. The events should be in 2020.
5. Assuming you are the Forex dealer and the following rates per $ (US Dollar) is quoted against SF. (Swiss Franc) Day Quote 1.6982/98 26.12.2019 27.12.2019 1.5990/7060 28.12.2019 1.7027/42 i. On which day is it cheaper to buy US $ with respect to SF? ii. How many US $ do you need to buy 1000 SF on Day 1? iii. Find out forex-spread on 27th December? iv. If you want to exchange $ 2500 for SF 4256.75 on which day it is cheapest?
Expert Solution
1.Slope = dy/ dx
y = 99.464569 + 3.713375(x) + 0.010438(x2)
dy/dx = 0 + 3.713375 + ( 0.010438)2x
=3.713375 + 0.020876 x
Given x is years i.e., 12 years of employment
Slope = 3.713375 + 0.020876(12)
=3.713375 + 0.250512
=3.963887
Therefore , Slope = 3.964
In order to solve this problem, derivatives concept is needed.
dy/dx(any number) = 0
dy/dx( x) =1
dy/dx(x2) = 2x
2.Answer:- Sampling 10 students from each of 30 undergraduate courses to assess their experiences wit online learning
Explanation:- Stratified sampling is a type of sampling method in which the total population is divided into smaller groups or strata to complete the sampling process. So, this is a clear example of stratified sampling.
3.Weight of Stock with Beta of 0.4 = Investment in Stock with Beta of 0.4 / (Investment in Stock with Beta of 0.4 + Investment in Stock with Beta of 2.2)
Weight of Stock with Beta of 0.4 = $25,000 / ($25,000 + $80,000)
Weight of Stock with Beta of 0.4 = 23.81%
Weight of Stock with Beta of 2.2 = Investment in Stock with Beta of 0.4 / (Investment in Stock with Beta of 0.4 + Investment in Stock with Beta of 2.2)
Weight of Stock with Beta of 2.2 = $80,000 / ($25,000 + $80,000)
Weight of Stock with Beta of 2.2 = 76.19%
Portfolio Beta = Weight of Stock with Beta of 0.4 * Beta of Stock + Weight of Stock with Beta of 2.2 * Beta of Stock
Portfolio Beta = 23.81% * 0.4 + 76.19% * 2.2
Portfolio Beta = 1.77.
4.A. Cash flow is what matters the most- it can be said that the cash flows of a company are always important as it will be reflecting the liquidity of the company and it will also reflect the company is highly solvent in the short-term and it is is having a futuristic cash flows also.
Ex- the shares of Tesla shot off due to increase in the cash flow of Tesla due to sale of the new vehicle even if it was not making profits and it was having higher cash flows.
B. Money has time value- time value of one of the most important principle of finance in which the value of money today is higher than the same amount of money tomorrow.
Ex- people were trying to sell their investment in the market correction as they believed that they will be losing upon the time value and the capital appreciation.
C. Risk will be requiring a reward- Higher the risk the higher will be reward, and lower the risk to the lower will be reward
Ex- those who invested into the market, at the time of the crisis were awarded the most and they were almost provided with almost 60% return in 3 months.
D. Market prices are generally right, as they will be reflecting the large consensus of the market and they will be derived by heavy transactions.
Ex- when the market started to go up, various experts countered that economy was weak, but it kept on going up and made new highs.
E. Conflict of interest- there will be a conflict of interest between the managers and its shareholders as the managers will be taking excessive risk in order to maximize the profits and that will be impacting the value of the shareholders.
Ex- The shares of Tesla fell down when they heard that management has sold its 5% stake.
5.From dealer perspective, On 27.12.2019 at 1.5990/7060 rate is cheaper to buy $ with respect to SF. As on this day bid price is lowest as compared to other days.
2) On day 1 bid/ask rate is 1.6982/98 which implies 1 SF = 1.6982 $
1000 SF = 1000 * 1.6982 $
= 1698.2 $
Hence 1698.2 $ is needed to buy 1000 SF.
3) Forex spread is the difference between ask price and bid price.
Forex spread as on 27 dec = 1.7060 $ - 1.5990 $ = 0.107 $.
4) 1 $ = 4256.75 SF / 2500 $ = 1.7027 $, which is equal to bid price at 28.12.2019. Therefore it is cheapest to buy on this day.
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