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Explain the following, stating clearly their significance to the organisation, shareholders, and implications for investors.  

1. Gross Profit Margin

2. Net Profit Margin

Which is a better capital budgeting tool: NPV or Payback period? Why?

Can you earn excess returns trading on rumors about a merger? Why or why not?

Assume the CAPM holds. Suppose that the expected return on the market is 7% in 2017 and the standard deviation of market return is 2017 is 12%. Assume that the covariance of Walmart returns with market is 0.00144 and the covariance of Google return with the market is 0.01512. The standard deviations of Walmart and Google stock return are 6% and 20%, respectively. The risk-free rate is 1%.

a) Suppose that you can either invest in Walmart and the risk free treasury bills OR invest in Google and the risk free treasury bills, which company will you choose?

b) What proportion of Google's and Walmart's risk (variance) can be diversified away?

AP Classroom: Assume an economy produces two goods, capital goods, and consumer goods. If the production of capital goods increases in the current period, which of the following will occur for the current future production (PPQ) for consumer goods and capital goods?

If two assets have zero covariance, can they still be used to diversify each other even if the CAPM holds?

Question 1: Monopoly Choice (10 points) True or False? A monopolist always prices in the inelastic portion of the De- mand curve. Provide an explanation - all points are awarded on the basis of the quality of the explanation.

List the name of 7 functional groups that have one or more oxygen atoms but no nitrogens. Draw a simple example of each.

Fifty years ago, Jessy purchased a set of dinnerware for $47.8. The Silver Flatware cost index for the dinnerware was 125.2 when Jessy purchased the set. Today the index is 1987.8. Calculate the amount the insurance company must pay you if the set was destroyed by a fire in your house.

If the marginal product per dollar spent on capital is more than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use:

a) less capital and more labor

b) less labor and more capital

c) less labor and less capital

d) more labor and more capital

Assume a firm is currently employing 20 units of capital and 100 units of labour in its production process. Assume also that the marginal product of the 20th unit of capital is 40 units of output, the marginal product of the 100th unit of labour is 10 units of output and the per-unit prices of capital and labour are $20 and $10, respectively. In this case, to minimize its costs of production the firm should:

1. hire more capital and less labour.
2. hire more labour and less capital.
3. hire less capital and less labour.
4. hire more capital and more labour.

A firm has a production function Q=F(K, L) with the constant return to scale, where k is units of capital and L is united of labour. Input prices are r=$2 per unit of K and w=$1 per unit of L. When it produces 5 units of output, it uses 2 units of capital and 3 units of labour. When its long-run total cost is equal to $70, how much capital and labour it will employ to product how many units of output? What is the long-run average cost?

A firm has the following production function: Q = 7*K^1/2*L^1/2

a) Calculate the amount of output the firm should expect if it uses 25 units of capital and 50 units of labor.

b) Suppose the firm wants to produce the same amount of output from a), but only has 15 units of capital. How much labor will it need to hire?

c) Suppose that a unit of capital costs $50, and a unit of labor costs $20. What is the cost of producing that quantity in part a) and in part b)?

Consider the following difference equation
(E^2+E+1/4)y(k)=sin(kpie/2)
with y(0)=0, y(1)=1
and Find the complete solution to the difference equation

A firm produces according to the following production function: Q = K^.5L^.5 where Q = units of output, K = units of capital, and L = units of labor. Suppose that in the short run K = 100. Moreover, the wage of labor is W = 5 and the price of the product is P = 10. What are the optimal units of labor?

5. Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output is constant at $50 per unit. The production function is f(E,K) = E½K ½, so that the marginal product of labor is MPE = (½)(K/E) ½ . If the current capital stock is fixed at 1,600 units, how much labor should the firm employ in the short run? How much profit will the firm earn?

For annual output Q, where Q=500L^0.6K^0.8 where L is labor measured in hours and K is capital measured in machine hours.

The marginal products areMP_L=300L^-0.4K^0.8 andMP_K=400L^0.6K^-0.2.

Wage=$15 per hour and capital = $50 per hour.

a) How much capital and labor should the firm employ given the $500,000 budget? Calculate the output.

b) If wage rises to $22.50, find the new optimal capital-labor ratio. Should the company increase or decrease the labor input under the new situation?

A new machine comes with 180 free service hours over the first year. Additional time costs $150.5 per hour. What is the marginal cost per hour for 250 hours?

The Universal Set, U, consists of the natural numbers from to 30 inclusive?

If you have a triangle with sides of lengths 3, 4, and 5, how would you determine if it is a right triangle using the Pythagorean theorem?