30 , then X is approximately normal and X Z , regardless of the distribution of the population random variable X. n Sampling Distribution of the Proportion For a binomial random variable X with parameters n (sample size) and (probability of X success or population proportion), the sample proportion is given by p . n The sample proportion p is a continuous random variable with mean p and standard deviation p 1 n . Result 3: If n is large enough, n
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13. Variance and Standard Deviation (expected). Using the data from problem 13, calculate the variance and standard deviation of the three investments, stock, corporate bond, and government bond. If the estimates for both the probabilities of the economy and the returns in each state of the economy are correct, which investment would you choose considering both risk and return? Why? | |Forecasted Returns for Each Economy
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Merck & Company: Evaluating a Drug Licensing Opportunity Case Summary Merck & Company (Merck) a large pharmaceutical company was approached by LAB Pharmaceuticals in 2000 for the purchase option to license and provide funding for a newly developed drug compound called Davanrik. If Merck, the licensee purchased the compound it would be responsible for the design, administration, and funding of the clinical testing of the compound, as well as take care of its manufacturing and marketing
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359450*log(L) + 0.027607*log(K) The output elasticity of capital is 0.027607 and the output elasticity of labor is 0.359450. 2. Degree of freedom =n-k = 15-3 DF = 12 Probability = 0.05 By using the student distribution, the critical t value of 12 degree of freedom with the probability of 0.05 is 2.179 | t-stat | critical t | significant level | Labor | 1.463601 | 2.179 | not significant | Capital | 4.562114 | 2.179 | statically significant |
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Chestnut Ridge Country Club Filename: chestnut1=2011.sav The Chestnut Ridge Country Club has long maintained a distinguished reputation as one of the outstanding country clubs in Elma, Tennessee, area. The club’s golf facilities are said by some to be the finest in the state, and its dining and banquet facilities are highly regarded as well . This reputation is due in part to the commitment by the Board of Directors of Chestnut Ridge to offer the finest facilities of any club in the area
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- 588 | 12,472 | | | Expected leftover inv. = 16124 - 12472 | 3,653 | | | Expected proft = 12472*18 - 3653*7 | 198,924 | | | F(.72) = .7642 | 76.42% | in stock probability | | F(z) = 90% | z= 1.29 | | | Q = 13060+1.29*4257 | 18,551 | order quantity of 90% in-stock probability | | 3. Their production commitments are only “one-shot” commitments, so there is a risk association with overstocked and under stocked. Especially with their nature of business
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Five-Step Approach to Unstructured Problems 1. Succinct Statement of the Financial Reporting Issue(s) Provide a brief statement of the accounting issue that includes the characteristics of the transaction that introduce uncertainty about how to record it. How should an expenditure, in this instance to purchase a lottery ticket, which has a high risk of providing no future cash flows be reported? 2. Brief Summary of the Economic Purpose of the Transaction State the reason corporate management
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approval process, and the subsequent marketing, distribution, and sales of new drugs. This task is better suited for a larger company, such as Merck, which has more resources and money. 2. Build a decision-tree that shows the cash flows and probabilities at all stages of the FDA approval process. Since the EMV of the decision tree is positive, Merck should license Davanrik. From consolidated income statement, we could calculate the retained earnings as a percentage of income before taxes
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with success rate of 99% The distribution is a binomial distribution since we have 500 independent and identical trials with a certain probability of success and we see a defected or non- defected option therefore in the excel file we should use the command BINOMDIST. Number of trials is 500 and for cumulative we should consider 1 as we want to have the probability of less than or equal to K defects. As we can see in below tables the smallest defected number that reaches the rate of 99% is 18 watches
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of past forecast errors is used as a probability distribution for future forecast errors. iv. The cost of understocking an item is calculated by subtracting the cost price from the selling price. v. The cost of overstocking an item is computed by subtracting the liquidation price from the cost price of the item. vi. The critical ratio CU / (CU + CO) is calculated, which gives the optimal order size as the quantile of the item’s probability distribution of demand. vii. The
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