All questions should be done well on all parts.. markets

Question:

Pinder LLC is planning on a leveraged buyout of Value Co. Pinder LLC believes that it could improve its investment returns by reducing capital expenditures to 2% of sales for the first four years then raising it to 7% of sales in the fifth year and onwards. Pinder believes that this reduction in capital expenditures will only have a small impact on the performance of Value Co, and that the long-term consequences will only be felt much later, when Pinder LLC has long exited from the investment. What is the percentage point improvement for Pinder LLC's IRR under this strategy? Assume that all other conditions of the buyout are identical to the assumptions in the lecture. (For this question, the answer does not need to be handwritten. You only need to copy paste the relevant sensitivity table containing the entry and exit multiples at 8.0x EBITDA after making the necessary changes to the template to show your work. Make sure the assumptions in the lecture are correctly inputted in the template -the IRR prior to making changes should be 19.7%

Pinder Ltd buys 396,563 barrels of crude oil each year to produce 303,978 barrels of refined oil products. Pinder Ltd has a price policy where Pinder Ltd's refined oil products are priced at 200% of the crude oil price. Pinder Ltd has no problems selling all of its products as long as it keeps to that price policy. For example, if the price of crude oil is $18 per barrel, the price of Pinder Ltd's refined oil products will be $36 per barrel. Last year, the price of crude oil was $40 per barrel, and all other costs for Pinder Ltd excluding the cost of purchasing crude oil, such as wages and maintenance costs, added up to a total of $1,000,000. The price for this year's crude oil has yet to be determined, but Pinder Ltd expects crude oil prices to remain at $40 per barrel with 40% probability, fall to $30 per barrel with 30% probability, and rise to $50 per barrel with 30% probability. Additionally, the other costs (which was $1,000,000 last year) is expected to rise by 10% this year, regardless of crude oil prices. Pinder can go long on call or put options with the crude oil as the underlying asset and an exercise price of $40 that expire this year, when the profits for the firm are generated. The price of the call/put options are $0.09 per option, where one option gives the holder the right to buy/sell one barrel of crude oil. Pinder Ltd wants to take the smallest option position possible so that its net income for this year does not fall below $6,000,000. Assume that there are no taxes. Based only on the information above, which of the following option positions should Pinder Ltd take? (round to the nearest two decimal places)

Group of answer choices

Long 81,510.01 call options

Long 71,509.43 put options

Long 71,509.43 call options

None of the other answers.

Long 81,510.01 put options

Questions 1

A firm that sets an annual target of a specific dollar volume of profit is using a target profit pricing approach. As the owner of al picture framing store, suppose you decide to use target profit pricing to establish a price for a typical framed picture. First, you need to make some assumptions. such as:

Variable cost is a constant $22 per unit.

Fixed cost is a constant $26,000.

Demand is insensitive to price up to $60 per unit. A target profit of $7,000, at an annual volume of 1,000 units Calculate the price of the firm?

Question 2

Research question

Flexible labor markets In the 1990s, the UK government saw flexible labor markets as key to its supply side reforms, Labor markets are flexible when it is relatively easy for firms to hire and fire labor, and for workers to move between jobs. Inflexible labor markets create market failure, partly because they tend to lead to unemployment. There are many different aspects to creating flexible labor markets. One is education and training, discussed above. An educated workforce is more attractive to firms and helps workers to change jobs when the need arises. Another aspect is government rules and regulations about employment. Health and safety laws, maximum working hours, minimum wages, minimum holiday entitlements, redundancy regulations and maternity and paternity leave are all examples of government imposed rules which increase the cost of employment to firms and reduce the ability of firms to manage their workforces to suit their production needs.

Refer to this article here (www.kbb.com) and answer the following questions siting out relevant examples and reference.

It is argued that, in EU countries, firms have to comply with too many rules and regulations, why?

Question 3

Frito-Lay route salespeople sell and display products in 350,000 supermarkets, convenience stores, and other establishments. Salespeople should call on these ac counts at least once a week, or 52 times a year. The average sales call lasts an aver age of 83 minutes (1.38 hour). An average salesperson works 2,000 hours a year (50 weeks X 40 hours a week), but 12 hours a week are devoted to non-selling activities such as travel and administration, leaving 1,400 hours a year. Using these guidelines find out the number of salesperson Frito needs.

[8:53 PM, 11/11/2021] Flo: Choose a publicly traded security for which you can find a series of historical values and make a conjecture about related data (at least two data series) that might be used as predictors for this series of values Find online data sources to get current data for both the predictors and the values of the security (up to 12/31/19 or more recent, if possible) Download this data and copy it into Excel Create graphs of the data Use Excel to conduct a regression of the values of the security against the predictors and verify the validity of underlying assumptions Check for homoscedasticity and serial correlation If necessary, rerun the regression using robust standard errors Look for evidence of multicollinearity and eliminate redundant predictors if necessary Sub... [10:09 PM, 11/11/2021] Flo: CA

Rio Tinto: A Shameful History of Human and Labour Rights Abuses and Environmental Degradation Around the Globe

Founded in 1873, the Rio Tinto Company began its operations by mining copper in Rio Tinto, Spain. Over the next few decades, the company expanded its mining business to many countries across the world. By 1954, the company had divested/sold-off most of its Spanish businesses. In 1962, the British operations of The Rio Tinto Company and The Consolidated Zink Corporation (a British mining company) merged to form The Rio Tinto Zinc Corporation. For Rio Tinto, controversies were nothing new as the company had been embroiled in many problems for years. However, the company did not seem to be bothered by controversies. A Rio Tinto project manager dismissed public protests stating, "Greenies (environmentalists) are protesting. But that always happens, greenies are protesting all over the world".

In the early-2000's the company came under attack at its annual general meeting for alleged environmental destruction and human rights abuses related to its mining operations in Indonesia. Among other allegations, Rio Tinto, the parent company of the Indonesian mining outfit PT Citra Palu Mineral, was said to be secretly exploring the protected forest park 'Poboya-Paneki Great Forest Park' for gold reserves. The forest park was a protected conservation reserve within a distance of seven kilometers from the provincial capital of Palu in Central Sulawesi. It was a crucial water catchment area and a source of drinking water supply for Palu, managed by the local communities. Rio Tinto had reportedly continued mining in this area despite opposition from the local community. Rio Tinto categorically denied all the charges leveled against it. However, Muhardjo, a geologist working with PT CPM had confirmed that the company had gone ahead with the mining exploration activity despite knowing that it was a protected area. However, Rio Tinto maintained that it did not see any problem with mining in the forest area as it was adhering to the applicable government regulations.

The mining industry, an integral part of any economy, can cause environmental damage and are also responsible for disturbing the living habits and lifestyles of the indigenous people. More harmful than these are the contaminations caused by tailings (solid waste left after the processing of ore) and waste water (water used for treating the mining waste) disposal. Mining organizations have to set up a massive infrastructure in and around the mines (roads, buildings etc.) besides bringing in their staff, which stay there for extended periods of time. This leads to a disturbance in the way of life of the people originally living in these areas. Often cultural clashes arise as the local people are displaced from their land, which deprives them of their self reliance and destroys their sense of belonging.

This following are just a few of the allegations levied upon Rio Tinto around the world:

Rio Tinto "viewed the people of Bougainville as inferior due to their colour and culture and, therefore, intentionally violated their rights." As part of its discriminatory treatment of the local people, the company allegedly paid "slave wages" to black workers.

Serious human rights violations have reportedly occurred near the Grasberg Mine and Rio Tinto and Freeport-McMoRan have been accused of complicity due to their reliance on the military and police for security at the mine. According to Indonesia's National Commission on Human Rights, "in the mid-1990s the Indonesian security forces indulged in indiscriminate killings, torture and disappearances of local people in their safeguarding of the mine operations and their campaigns against West Papuan secessionists."

According to the Indonesian Commission on Human Rights, protestors of the mine were arrested and detained on numerous occasions during the 1990s and some Kelian staff reportedly raped local community members. Local people also reported that mine security guards shot at and attacked them and local police ran a terror campaign intended to squelch protests.

In its 13 years of production the mine reportedly dumped 100 million metric tons of waste rock into the environment, much of which was contaminated. Rio Tinto acknowledged that there was "acid mine drainage" from the mine site; further, the company's own environmental report said that in 1996 almost 1,100 kilograms of cyanide were discharged from the mine into the Kelian River.

Rio Tinto was fully aware of the damage all the negative publicity was causing to its image as a socially responsible company. In addition to the rehabilitation measures, the company had in fact taken many other remedial steps to salvage its reputation. Rio Tinto claimed that it had stopped using 'old' mining practices and adopted a new approach, which was guided by the document entitled 'The Way We Work'. Thereafter, the company even claimed to be the 'industry leader' in adopting a community friendly approach. However, environmentalists criticized the document itself for lack of verifiable and enforceable standards and the company's reliance on fine sounding, but not binding, aspirations.

Question 1:

Rio Tinto's reputation has taken a hit. You are working with the Marketing Manager to construct a marketing strategy for each component of the 3 components to try and improve Rio Tinto's corporate perception. Note: Keep in mind the concept of Marketing with Ethics.

Question 2:

As COO, you are assembling a management team to find some solutions to resolve this problem. Assembling the right team will be a big challenge. The people you assemble may not know each other or may not get along. According to B. W. Tuckman, there are five phases that groups go through in their development. Select four phases and discuss how you will use each of these phases to ensure your team meets your objectives.

Discuss these marketsPerfect competition, Monopolistic competition and Oligopoly

what factors determine GDP

What are the Top reasons businesses fail?

'The most we can say about the Demand Curve is that it slopes down unless it slopes up.' Discuss. 332 Examination questions and answer notes 333 2. Explain the determination of the optimal price and output combination in a situation of monopolistic competition. Use the resulting equilibrium to illustrate the statement that 'production inefficiency is a necessary price to pay for product variety'. Comment on this statement. 3. Assess the contribution of business games to the study of decisionmaking processes, illustrating your answer by reference to one business game with which you are familiar. 4. 'Given that the future is unknown, the best we can do is to estimate the likelihood of future events and then use expected profit as the decision criterion.' Discuss. 5. The senior partner in a local accountancy firm is concerned about the error rate amongst assessments issued by her office. A careful check over the past few years enables her to estimate that the error rate has the following probability distribution: Error rate Probability 0.05 0.25 0.10 0.35 0.15 0.25 0.20 0.15 Each error costs 40 because of the labour time involved in reassessment. Her firm is just entering the assessment 'season', and is expected to perform 500 assessments over the next few months. One way to reduce the error rate is to send all staff to a one-day training course at the local university- 'Precision in Assessment' . The university claims this would ensure an error rate of 0.05, but she considers that an error rate of 0.10 would be equally likely. The course fee is 700 for all her staff, whilst lost profit from one day's work missed would be 500. Advise her on whether to send staff on the course or not. A careful check of that day's output shows that in ten assessments, two contained errors. Use this information to update the error rate probability distribution and hence determine whether your advice needs amendment. 6. 'The fitting of mathematical trend curves is by far the easiest and cheapest method of forecasting long-run changes in product demand, and is likely to be just as reliable as any alternative method. ' Discuss. 7. An engineering firm has applied for patents on two new products and has just learned that only one application has been successful. Compare and contrast the optimal pricing and promotional strategies for each of these new products. 8. Critically examine the view that advertising can be . seen as the 334 Managerial Economics provision of information valuable to the consumer, for which the consumer will be prepared to pay extra.

InvestmentCorporation of Dubai (ICD) is the premier sovereign wealth fund serving the Emirate of Dubai. ICD is led by a prominent group of leaders including H.E. the Crown Prince of Dubai and several Ministers.

You are a portfolio manager who invests in fixed income securities for ICD. For the financial year 2021-2022, you are to complete important tasks set forth by the Board. They are enumerated as follows:

Task 1: In a recent meeting of the Board, it was discussed that the economic conditions would be dire for the financial year 2021-2022 given COVID 19 pandemic. The senior economist at the ICT predicts that the interest rates will remain low and could decrease further as the government of the UAE and the Central Bank of the UAE increase the money supply to deal with post-covid19 economic conditions. You are advised to study all possible types of Yield Curves and predict future economic conditions for the UAE based on them. Elaborate your thinking on this issue - logically argue your position (critical thinking) and make a recommendation.

Task 2: The Board is considering investing in a special issue of zero-coupon bonds with 20-year maturity. These Zero Coupons are issued through UK Treasury in British Pounds. The par value of these bonds are 1000. Current yield in British capital markets is 6.80% per annum. The Board wants you to find the fair price of these Zero-coupon bonds so that ICD can allocate funds for that long-term investment.

Task 3: An analyst who has been scoping for arbitrage opportunities in dollar-denominated Eurobonds have uncovered the following scenarios:

The yield on a regular bond is 7% and the yield on a callable bond is6% The yield on a regular bond is 7% and the yield on a puttable bond is 8% You as the portfolio managers to identify the arbitrage opportunity and advise the Board on which investment to make. You have to provide your logic in your decision making process (critical thinking). Will you recommend a regular bond, callable bond or the puttable bond? Why?

Task 4: ICD has invested in convertible bonds in its portfolio. ICD invested in these convertible bonds exactly one year back and now has to make an evaluation of the investment. The bond par value is AED 1000 and yields a 7% annual interest rate. The convertible bond can be converted into 10 shares of the company stock listed in the Dubai Financial Market(DFM). Current the stock price is AED 127.50. As the portfolio manager for fixed income securities, how would you advise the Board? Logically present your case (critical thinking)

Task 5:

ICD is considering investing in a 3-year fixed-rate investment-grade corporate bond with a coupon rate of 6% but coupon paid semi-annually. The current market rate (current yield) is 7%. The Board wants you to calculate the fair value of this bond which pays interest semiannually (in this case, the bond will make 6 semi-annual payments). The par value is AED1000. Show your calculations. Given the post-covid19 economy, will you recommend investing in this bond? Your answer should take into consideration governments post-covid19 policies with regard to money supply and interest rates.

Pinder LLC is planning on a leveraged buyout of Value Co. Pinder LLC believes that it could improve its investment returns by reducing capital expenditures to 2% of sales for the first four years then raising it to 7% of sales in the fifth year and onwards. Pinder believes that this reduction in capital expenditures will only have a small impact on the performance of Value Co, and that the long-term consequences will only be felt much later, when Pinder LLC has long exited from the investment. What is the percentage point improvement for Pinder LLC's IRR under this strategy? Assume that all other conditions of the buyout are identical to the assumptions in the lecture. (For this question, the answer does not need to be handwritten. You only need to copy paste the relevant sensitivity table containing the entry and exit multiples at 8.0x EBITDA after making the necessary changes to the template to show your work. Make sure the assumptions in the lecture are correctly inputted in the template -the IRR prior to making changes should be 19.7%