An investor can invest in 2 assets: a government T-bill with a certain return of 0.03, and the index of all stocks in the S&P 500 (an asset called SPY). The SPY asset has the following properties: E(r) = 0.08; volatility = 0.2 What is the Sharpe ratio of the SPY asset? 1.33 Let’s say the investor sets up their portfolio such that 40% is invested in SPY, and 60% is invested in the risk-free government debt. What is the expected return of the portfolio? 5 % (answer in units of %) What is the volatility of a portfolio? 8 % (answer in units of %) What is the Sharpe ratio of the portfolio? 25 Let’s say the investor had a utility function described by U = E(r) - 1/2*A*V^2, where A is the investor’s risk-aversion coefficient, and V is the volatility of the investor’s portfolio returns. If A = 3, would the investor prefer a) the initial setup with 40% invested in SPY, or b) 60% invested in SPY, and 40% invested in the risk-free asset instead? (please write one of the following: a b ) b

2. the language of price controls consider the market for rental cars. suppose that, in a competitive market without government regulations, the equilibrium price of rental cars is $58 per day, and employees at car rental companies earn $19.50 per hour. complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. statement price control effect there are many teenagers who would like to work at car rental companies, but the minimum-wage law sets the hourly wage at $23.00. the government has instituted a legal minimum price of $87 per day for rental cars. the government prohibits car rental companies from renting out rental cars for more than $87 per day.

An important application of regression analysis in accounting is in the estimation of cost. by collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. consider the following sample of production volumes and total cost data for a manufacturing operation. production volume (units) total cost ($) 400 4000 450 5000 550 5400 600 5900 700 6400 750 7000 compute b 1 and b 0 (to 2 decimals if necessary). b 1 b 0 complete the estimated regression equation (to 2 decimals if necessary). = + x what is the variable cost per unit produced (to 1 decimal)? $ compute the coefficient of determination (to 4 decimals). note: report r 2 between 0 and 1. r 2 = what percentage of the variation in total cost can be explained by the production volume (to 2 decimals)? % the company's production schedule shows 500 units must be produced next month. what is the estimated total cost for this operation (to 2 decimals)? $

Specialization—the division of labor—enhances productivity and efficiency by a) allowing workers to take advantage of existing differences in their abilities and skills. b) avoiding the time loss involved in shifting from one production task to another. c) allowing workers to develop skills by working on one, or a limited number, of tasks. d)all of the means identified in the other answers.