Illinois Bio Technologies (IBTECH) was founded in Rosemont, Illinois, in 1992 by Kelly O'Brien, David Roberts, and Barbara Smalley. O'Brien and Roberts, both MDs, were on the research faculty at the Chicago Medical School at the time; O'Brien specialized in biochemistry and molecular biology, and Roberts specialized in immunology and medical microbiology. Smalley, who has a PhD, served a department chair of the Microbiology Department at the same school.

The company started as a research and development firm, which performed its own basic research, obtained patents on promising technologies, and then either sold or licensed the technologies to other firms which marketed the products. In recent years, however, the firm has also contracted to perform research and testing for larger genetic engineering and biotechnology firm, and for the U.S. government. Since its inception, the company has enjoyed enormous success - even its founders were surprised at the scientific breakthrough made and the demand for its services. One event that contributed significantly to the firm's rapid growth had been the AIDS research. Both the U.S. government and private foundations have spent billions of dollars in AIDS research, and IBTECH had the right combination of skills to garner significant grant funds, as well as perform as a subcontractor to other firm receiving AIDS research grant.

The founders were relatively wealthy individuals when they started the company, and they had enough confidence in the business to commit most of their own funds to the new venture. Still, the capital requirement brought on by extremely rapid growth soon exhausted their personal funds, so they were forced to raise capital from outside sources. First, in 2001, the firm borrowed heavily, and then in 2003, when it used up its conventional debt capacity, it issued $15 million of preferred stock. Finally, in 2006, the firm had an initial public offering (lPO) which raised $50 million of common equity. Currently, the stock trades in the over-the-counter market, and it has been selling at about $25 per share.

IBTECH is widely recognized as the leader in an emerging growth industry, and it won an award in 2008 for being one of the 100 best-managed small companies in the United States. The company is organized into two divisions: (1) the Clinical Research Division and (2) the Genetic Engineering Division. Although the two divisions are housed in the same buildings, the equipment they use and their personnel are quite different. Indeed, there are few synergies between the two divisions. The most important synergies lay in the general overhead and marketing areas. Personnel, payroll, and similar functions are all done at the corporate level, while technical operations at the divisions are completely separate.

The Clinical Research Division conduct most of the firm' AIDS research. Since most of the grant and contracts associated with AIDS research are long-term in nature, and since billion of new dollars will likely be spent in this area, the business risk of this division is low. Conversely, the Genetic Engineering Division works mostly on in-house research and short-term contracts where the funding, duration, and payoff are very uncertain. A line of research may look good initially, but it is not unusual to hit some snag, which preclude further exploration. Because of the uncertainties inherent in genetic research, the Genetic Engineering Division is judged to have high business risk.

The founders are still active in the business, but they no longer work 70-hour week. Increasingly, they are enjoying the fruits of their past labor, and they have let professional managers take over day-to-day operations. They are all on the board of director, though, and David Roberts is chairman.

Although the firm's growth has been phenomenal, it has been more random than planned. The founders would simply decide on new avenue of research, and then count on the skills of the research teams-and good luck-to produce commercial successes. Formal decision structures were almost nonexistent, but the company's head start and its bright, energetic founder easily overcame any deficiencies in its managerial decision processes. Recently, however, competition has become stiffer, and such large biotechnology firms such as Genentech, Amgen, and even Bristol-Myers Squibb have begun to recognize the opportunities in IBTECH's research line. Because of this increasing competition, IBTECH's founders and board of directors have concluded that the firm must apply state-of-the-art technique in its managerial processes as well as in its technological processes. As a first step, the board directed the financial vice president, Gary Hayes, to develop an estimate for the firm's cost of capital and to use this number in capital budgeting decisions. Hayes, in turn, directed IBTECH's treasurer, Julie Owens, to have a cost of capital estimate on his desk in one week. Owens has an accounting background, and her primary task since taking over as treasurer has been to deal with the banks. Thus, she is somewhat apprehensive about this new assignment especially since one of the board members is her former Kean University finance professor.

bank. 21- Explain the binding situation and draw the Fed Rule and AD curve associated with binding situation. 22- Suppose that the economy is experiencing stagflation. What is the policy you recommend to the central bank. Elaborate your answer. 23- Explain briefly the main idea of the supply side economics. Draw the Laffer curve and explain the main idea of the Laffer curve. Considering the experience of Reagan administration, what is your evaluation of supply side economics? auld takeQuestion 31 4 pts Which economic perspective is MOST associated with tax cuts and the "Laffer Curve?" O Austrian Economics O Supply Side Economics O Monetarist Economics O Keynesian economics Question 32 4 pts Which kind of economic policy focuses on the role of central banks/ Federal Reserve actions in maintaining a healthy economy? O Social policy Egalitarian policy O Fiscal policy Monetary policyQUESTION 4 Identify the statement that illustrates a criticism of supply-side economics. Supply-side economics focus mainly on eliminating the trade-off between interest rates and investment spending Supply-side economics exaggerates the effects of tax cuts Supply-side economics exaggerates the effects of fluctuations in the price level Supply-side economics ignores the effects of a change in a component of demand QUESTION 5 Keynesian economists believe that People react to expectations quickly Unemployment is costlier than inflation The economy's self-correcting mechanism moves efficiently and quickly The Phillips curve is relatively steepQUESTION 90 WHICH OF THE FOLLOWING STATEMENTS DESCRIBES THE CIRCADIAN RHYTHM OF ACTH LEVELS? O DECREASED IN MORNING AND RISES SHARPLY UNTIL NOON WHEN IT BEGINS TO DECLINE RISES EARLY IN THE DAY, DECLINES THROUGHOUT THE DAY AND RISES AGAIN DURING THE NIGHT O DECREASED IN THE MORNING AND RISES THROUGHOUT THE DAY O ELEVATED IN MORNING AND STABILIZES UNTIL LATE IN AFTERNOON QUESTION 91 In Addisons disease you find that there is a decrease in hormonal secretion from the adrenal gland. This decrease in hormonal secretion causes which of the following responses? O Increased release of ACTH from the pituitary gland. O Decreased release of ACTH from the pituitary gland. There is no change. None of these answers are correct. QUESTION 92 Chick Save and Submit to save and submit. Click Save All Answers to save all answers. CF 2 3 5 9 O Q W E R T Y U O A S DF G H L K Z X C V B N M