1.

Asset Turnover ratio=Sales/Total assets

3.7=Sales/88,000

Sales=3.7*88,000=325,600

==> Profit margin=Net Income/Sales

8.8%=Net Income/325,600

Net income=8.8%*325,600=28,652.8

==> Equity=Assets-Laibilties=88,000-25,000=63,000

ROE=Net income/Total equity=28,652.8/63,000=45.48%

2. If sales decreases by 5%, then sales would become=325,600*(1-5%)=309,320

Profit margin becomes 9.5% of sales, Net income=9.5%*309,320=29,385.4

ROE=29,385.4/63,000=46.64%

ROE increases by 1.16% (46.64%-45.48%)

2.An initial public offering is when the shares of the company are offered to the outside public for the first time. This is not only for private investors. Also, this does not count under rights issue. Hence, an initial public offering of shares is-

An issue of shares that have never before been offered to public.

3.

Total number of common stocks within the portfolio = 15

All the stocks within the portfolio have equal investment of $5000

Therefore,weight of each stock within the portfolio = 1/15

Portfolio beta = 1.20

Beta of stock to be sold = 0.8

Beta of new stock to be purchased = 1.6

After replacement,

Portfolio new beta = Previous portfolio beta - (Weight * Beta of sold stock) + (Weight * Beta of purchased stock)

New portfolio beta = 1.20 - [(1/15) * 0.8] + [(1/15) * 1.6]

= 1.20 - 0.05333 + 0.10667

= 1.25334

≈ 1.25

Hence,the new portfolio beta is 1.25

4.

Venture Capitalists are often referred as Angel Investor.

For small starts, the capital is generally provided by High net worth individuals(HNI's). These HNI's are referred as Angel investors. They are looking for a rate of return higher than return from traditional investments. Obviously the investment is coupled with Higher risk.

5.

A.

In the given case, we must look in the Parol evidence rule and collateral contract. Parol rule preserves the genuinity or integrity of a written document. This helps secure the originality of written contract. This caused unfairness on opposite parties sometimes.

There are several exception to this case. In the given case, if there is collateral agreement, ie., the agreement consist of both oral and written, it may be considered. The exception states that extrinsic evidence is permitted to show if it can be proved by both parties that the contract consist of oral and written terms.

Marcel can use this exception to sue Yvonne for damages and claims

B.

You can give answer by providing definition of the term misrepresentation and its elements. Where, by using IRAC (Issue, Rule, Application and conclusion) strategy, appliying the "Rule" which applies test to the issue.

Misrepresentaiton refers to action of giving false or misleading account of nature of something. In the given case, the tyre hasn't been replaced and hence given false statement. The rule of general principle apply as per IRAC, it is clearly shown that the party cannot prove his negligence and hence can be sued for misrepresentation.