You have a data set of 4096 daily observations and would like to estimate the Hurst exponent for that data like we discussed in the lectures. In the first iteration, you want to operate with two data samples consisting of 2048 non-overlapping observations and in the last iteration you want to have 1024 data samples consisting of 4 non-overlapping observations. How many data clusters do you have in total? You perform the following log-log regression: In(R/S)k = In(C) + HIn(k) + u. The estimated Hurst exponent is 0.72. If you implement the following hypothesis test,
Ho: H = 0.50 versus H1: H > 0.50,
what is your dependency structure under the null hypothesis? What is the corresponding reference distribution under the null hypothesis? Assuming that you apply a standard significance level of 5%, what is the critical value? Assume now that you run the test and your
estimated test statistic has a value of ^ = 1.81. What do you conclude concerning the
dependency structure of your data?
Pure Pharmaceuticals, a company engaging in research on drugs, is having operations in the USA, the United Kingdom, Asia-Pacific region, include Vietnam. The firm is considering adopting cloud computing services which enable the organization to obtain its computing resources and applications from any location via an Internet connection. To be more specific, staff members are then able to receive emails stored in the cloud and share research projects with staff members working in another office easily. In such adoption, Pure Pharmaceuticals has to search for a cloud service provider, a thirdparty vendor providing application delivery, hosting, monitoring, and other services through cloud computing. You are the firm’s consultant and you are requested to provide advice to the board of directors before such adoption.
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Required:
a. Perform a risk assessment on the adoption of cloud computing to the firm’s operations,
including both the opportunities and the risks involved.
b. Discuss if there would be any possible change to the existing IT organizational structure
after the adoption of cloud computing.
c. How does adoption of cloud computing affect the control environment of the
organization? What are the roles of the board of directors in the adoption of cloud
computing?
d. Discuss the general IT controls that may be expected in cloud computing environment.
