following results are at a 2-sided confidence level of 90%. Lower confidence limit $1,200,000 uncollectible Upper confidence limit $1,900,000 uncollectible Max. tol. misstatement: $500,000 The client already has a previously recognized a $1.500.000 allowance for uncollectibles recorded. Which of the following would be a materially correct DR or CR adjustment amount? a. DR Allowance $500,000 CR Allowance $500,000 No adjustment needed. CR Allowance $1,550,000 b. F +
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- The accounting department reports the accounts receivable balance as $175,000.You are willing to accept that balance if it is within $15,000 of the actual balance.Using a variables sampling plan, you compute a 95% confidence interval of $173,000to $187,000. You would therefore(1) find it impossible to determine the acceptability of the balance.(2) accept the balance but with a lower level of confidence.(3) take a larger sample before rejecting the sample and requiring adjustments.(4) accept the $175,000 balance because the confidence interval is within themateriality limits.A financial analyzer believes that the proportion of investors who are risk-averse (that is, try to avoid risk in their investment decisions) is at least 0.7. A sur-vey of 32 investors found that 20 of them were risk-averse. Formulate a one-sample hypothesis solution for a proportion to asses this belief. (Answer on Excel)Evaluate the following statement made by an auditor: “I took arandom sample and derived a 90 percent confidence interval of $800,000 to $900,000.That means that the true population value will be between $800,000 and $900,000, 90percent of the time.”
- Suppose that Mr Plutus has been asked to choose between various pairs of strategies and he responds as follows: Choose between: Response B and D В A and D C and D D B and E indifferent A and C A D and E Е. Assuming that Mr Plutus' preferences satisfy the four von Neumann-Morgenstern axioms, how does Mr Plutus rank the five instruments A,B,C,D and E? Select one: E = B > D > C > A а. || O b. E = B > A > D > C Ос. B = E > D > C > A O d. E = B > D > A > C %3DDo pregnant women give birth the week of their due date? A study claims that 18% of the population of all pregnant women actually gave birth the week of their due date. You are a researcher who wants to test this claim, so you will select a random sample of 80 women who have recently given birth. Follow the steps below to construct a 99% confidence interval for the population proportion of all pregnant women who gave birth the week of their due date. Then state whether the confidence interval you construct contradicts the study's claim. (If necessary, consult a list of formulas.) (a) Click on "Take Sample" to see the results from the random sample. Number Proportion Take Sample Gave birth the week of due date 28 0.35 Did not give birth the week of due date 52 0.65 Enter the values of the sample size, the point estimate of the population proportion, and the critical value you need for your 99% confidence interval. (Choose the correct critical value from the table of critical values…calculate the following Sharpe Ratio (SP) Treynor Measure Jensen Measure M2 measure T2 measure Information Ratio (appraisal ratio) Fund Average return Standard Deviation Beta coefficient Unsystematic Risk A 0.240 0.220 0.800 0.017 B 0.200 0.170 0.900 0.450 C 0.290 0.380 1.200 0.074 D 0.260 0.290 1.100 0.026 E 0.180 0.400 0.900 0.121 F 0.320 0.460 1.100 0.153 G 0.250 0.190 0.700 0.120 Market 0.220 0.180 1.000 0.000 Risk free return 0.050 0.000
- In a survey, the planning value for the population proportion is p* = 0.25. How large a sample should be taken to provide a 95% confidence interval with a margin of error of 0.03? Round your answer up to the next whole number.a risk manager gathers the following sample data to analyze annual returns for an asset: 12%, 25% and -1%. he wants to compute the best unbiased estimator of the true population mean and standard deviation. the manager's estimate of the standard deviation for this asset should be closest to a. 0.0111 b. 0.0113 c. 0.1054 d. 0.1204.a. Using the data in the table below alculate the following performance measures.i. Sharpe ratioii. Treynor measureiii. Jensen’s alphaiv. M-squared measurev. T-squared measure, andvi. Appraisal ratio (information ratio) Fund Average return Standard Deviation Beta coefficient Unsystematic Risk A 0.240 0.220 0.800 0.017 B 0.200 0.170 0.900 0.450 C 0.290 0.380 1.200 0.074 D 0.260 0.290 1.100 0.026 E 0.180 0.400 0.900 0.121 F 0.320 0.460 1.100 0.153 G 0.250 0.190 0.700 0.120 Market 0.220 0.180 1.000 0.000 Risk free return 0.050 0.000 b. Out of the performance measures you calculated in part a., which one would you use undereach of the following circumstances:i. You want to select one of the funds as your risky portfolio.ii. You want to select one of the funds to be mixed with the rest of your portfolio,currently composed solely of holdings in the market-index fund.iii. You want to select one of the funds to form an actively managed stock portfolio
- Suppose your client asks for your advice about which portfolio she should invest in. After some research, you find the following risky portfolios that are suitable for your client. Based on her previous financial contracts, you estimate that her risk aversion coefficient is 8.5. The return on a 9-month T-bill is 6%. Which asset would you recommend for your client? Low Risk Expected Return 0.07 Std Deviation 0.05 The 9-month T-bill. The low-risk portfolio. The high-risk portfolio. O The medium-risk portfolio. Medium Risk 0.09 0.1 High Risk 0.13 0.2Stock A has an expected return of 9%, while the market portfolio has an expected return of 6.36%. Stock A has variance 2.56 %, and the risk-free rate is 1%. You are a financial advisor and try to assess quantitatively the risk aversion of one of your clients, giving her a questionnaire about risk-return preferences. From her answers, you conclude that her risk-aversion coefficient is 4. a. Derive the condition under which you could claim that the CAPM holds. b. Derive the condition under which your client would be indifferent between investing her wealth either in the riskless asset or in the market. c) Your client also asks you to show her an alternative portfolio created by mixing the riskless asset with stock A. In this case, which weights would you suggest?Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What's the standard deviation of the estimated returns? (Hint: Use the formula for the standard deviation of a population, not a sample.) Do not round your intermediate calculations. Economic Conditions Strong Normal Weak O a. 17.49% O b. 12.36% O c. 22.49% O d. 10.10% O e. 18.36% Prob. 30% 40% 30% Return 27.0% 13.0% -17.0%