HBX final
scatterplot showing a downward 'slope' (really dots descending); some more clumped on each end, few in middle. What's the likely correlation? -.8, -.2, .2, or .8?
-.8
Using a 10% significance level, what decimal should we be seeking numbers to be below?
0.1
To maximize revenue the company should set its prices where elasticity of demand is equal to....
1
If you are performing a hypothesis test based on a 90% confidence level, what are your chances of making a type I error? 10% 90% 5% It is not possible to tell without more information
10%
Suppose we want to assign dummy variables to the seasons (Winter, Spring, Summer, Fall). How many dummy variables do we need?
3
For a sample with x =15, s=2, and n=25, which of the following formula would calculate the upper bound of the 95% confidence interval for the true population mean?
=15+CONFIDENCE.T(0.05,2,25) NOT =15+CONFIDENCE.T(0.025,2,25)
Using the Indirect Method to create the Statement of Cash Flows, which of the following options are correct in describing what must be done to convert net income to operating cash flow? (Please select all that apply.)
A gain, an increase in operating current assets, and a decrease in operating current liabilities would all need to be subracted from net income in order to convert net income into operating cash flow when using the indirect method to create the Statement of Cash Flows.
what happens to the average selling price of a house when house size increases by 500 square feet.
Average selling price would increase by approximately $127,500 the trick is that it's not asking what the total selling price is, but what the average selling price is... average selling price WHEN such and such is increased.
average vs averageIF (Don't forget descriptive statistics) ~mean
AverageIF is a conditional, limiting scope to something. Like if we're looking for the average IF so and so is doing something...
How is Net Working Capital derived?
By adding CURRENT assets and subtracting CURRENT liabilities
Which does not measure a company's ability to pay off debt: Debt to Equity Ratio, Quick Ratio, Current Ratio
Debt to Equity Ratio
after conjoint analysis, trying to choose the different feature combinations, how do we decide which segments to strip away to leave us with the logical choice?
Discount the segments we have on lock either way. Then compare the features between combinations with the competition. What will make the competitors win? Undermine them.
Gain/Loss on disposal of assets, shows as debit or credit in what order?
Gain = credit loss = debit
WTP + WTP (if compliments) = ?
Greater than the sum
The p-value for the two-sided hypothesis test is 0.04. How would you interpret the p-value?
If no relationship, then the chance of seeing sample so extreme is 4%.
The manager runs a two-sided hypothesis test to determine if the number of pints produced has changed. The p-value of the test is 0.238. What does this say about ice cream production?
If there were no actual change in the average number of pints of ice cream produced daily, the chance of seeing average ice cream production as low as 13,518 pints would be 23.8%. NOT The manager should expect to produce more than 13,518 pints of ice cream on 23.8% of the days that the factory is running.
What adjustments would need to be made in the Operating Section of the statement of cash flows prepared under the indirect method to account for the changes in the Accounts Receivable and Inventory account balances for Google?
Increases and decreases in inventory and accounts receivable are reversed in the operating section of the statement of cash flows when prepared under the indirect method.
If increased prices make a company lose customers but gain revenue, then they were pricing at a point on the demand curve that was elastic or inelastic?
Inelastic.
When projecting financial statements, which of the following accounts is difficult to forecast using the percent of sales method? Accounts Receivable, Accounts Payable, Interest Expense, or Cost of Sales
Interest expense does not track so well with sales, whereas everything else does.
How is present value calculated?
It is calculated by multiplying the annual payment by the present value of an annuity factor.
If the developer wanted to create a regression model to predict housing starts from all the other financial variables, which of the following would be INDEPENDENT variables? (Select all that apply.)
It's all the variables that make up the price during the year...
For each of the following variables, determine if dummy variables should be created for a regression analysis.
Level of Education (highest degree earned) Gender NOT: Age (in years) Income (in dollars)
statistically significant but not explain a large percentage of the variation between the two variables
Low R-squared, Low p-value
To determine free cash flows, do you subtract depreciation?
NO YOU ADD IT BACK
Assuming that all else remains constant, what happens to a confidence interval around the mean if we raise the sample size from 25 to 100? Does the width and confidence level narrow or widen?
Narrows!
What ratio gives us the profit margin? And what does this measure?
Net income/sales the ability of a company to make a profit relative to revenue generated during a period
If the price has been set JUST low enough for the buyer to purchase, then how much deadweight loss is there?
None. Deadweight loss will be avoided since each piece of furniture is sold at its marginal cost. Once the customer has paid the lump sum fee, he will buy every piece of furniture for which his WTP is more than or equal to its cost. Since the lump sum fee is set barely low enough for the customer to pay it, most of the surplus is going to the artisan through the fee.
The p-value tells us how extreme the chances are of pulling the given sample for the null hypothesis or the alternative hypothesis?
Null
If the prices are listed in cells A2:A26, which of the following Excel functions would calculate the 95th percentile?
PERCENTILE.INC(A2:A26,0.95) NOT "0.05"!!!
When analyzing a residual plot, which of the following indicates that a linear model is a good fit?
Random spread of residuals around the x-axis
A popular hair salon wants to gather data about how returning customers rate the quality of the service they received during their most recent appointment. The owner decides to use a survey to gather this data. What is the BEST option for selecting respondents to the survey?
Randomly select a sample of returning customers from appointment records and mail them a survey. NOT: Phone interview,s in person surveys during appointments... or paper surveys near the entrance. duh tothe last two
Which variable is the independent variable? Corn Acreage Planted (in million acres) Stock of Corn at Start of Year (in million bushels)
Stock of Corn at Start of Year = Y... (also B)
How to calculate Change in Net Working Capital
Subtract Net Working Capital from year from the prior.
How to calculate NPV
Take into account the rate, then crunch all the cash flows, then subtract the initial expenditure...
For comparing two regression analyses, what value do we consult?
The adjusted R-squared
y=a+bx, which of the following describes y? slope? intercept? value we're trying to predict? expected value of dependent variable? what about independent variable?
The expected value of the dependent variable The value we are trying to predict NOT THE INTERCEPT!!!!! Not the slope. Not independent variable..
The variables for location and wine consumption are collinear. VS: The variable for location is a better predictor than wine consumption.
The first is true of this manager's shitty regression analysis experiments because that's what happens when the coefficient for one variable is no longer significant and the other variable's R-squared value goes up, yet the adjusted R-squared has decreased.
If a business gets back the full amount plus interest on a loan, then that money should be accounted for under which activities: operating, investing, or financial?
The full amount goes into investing, whereas the interest is in "operating"
Do expense accounts increase or decrease with a debit?
They increase with a debit!
How do US GAAP and IFRS accounting standards differ on the liquidity of liabilities?
US GAAP lists assets and liabilities in order of liquidity - the most liquid being first. IFRS is generally the opposite.
A p-value to test the significance of a linear relationship between two variables was calculated to be 0.0210. What can we conclude? We can be 90% confident that there is a significant linear relationship between the two variables. We can be 95% confident that there is a significant linear relationship between the two variables. We can be 98% confident that there is a significant linear relationship between the two variables.?
We can be 90% confident that there is a significant linear relationship between the two variables. We can be 95% confident that there is a significant linear relationship between the two variables.
to calculate the lower end of a slope, we take the higher end and subtract the slope from its upper bound. Then what do we do with the result?
We subtract it from the slope for the lower bound.
Are checks cash in accounting terms?
YES
What makes a negative Cash Conversion Cycle?
a business with a fast turn over that mostly deals in cash.
at which phase will a business have negative/low cash flow from operating activities, NEGATIVE cash flow from investing activities, and large fluctuations in cash flow from financing activities?
at start-up
income statements vs. balance sheets...
balance sheet is snapshot in time income statement is of an entire period
NORM.INV is good for what?
calculating the inverse of a normal distribution
products that have a cross-price elasticity of demand in the negative are
compliments (NOT JELLY AND JAM)
the difference between WTP and price is
consumer surplus
the coefficient of variation is calculated by
dividing standard deviation by the mean
law of diminishing returns
holds that all other things being equal, there's a point when increasing one variable begins to decrease profitability or efficiency.
at which phase will a business have negative cash flow from operating activities, positive cash flow from investing activities, and negative or positive cash flow from financing activities?
in decline
at which phase will a business have postive cash flow from operating activities, slightly NEGATIVE cash flow from investing activities, and negative cash flow from financing activities?
mature
Nominal vs real accounts, what's the distinguishing feature?
nominal accounts are total over time. unearned revenue counts as real because it's a liability account used to show current obligation
coefficient of something in a regression analysis is the
number that the changing variable gets multiplied against
When a company raises its expenditures for advertising, how does it decide whether to keep paying that amount?
only if the increase in revenues was greater than the increase in expenditures.
Cash flows from operating, investing, and financing activities... what's the difference between these types of activities?
operating is the stuff of daily business, selling and buying; this is similar to net income. investing is the stuff of longterm assets such as plant, factory, or vehicles... also includes the loans made to other entities... financing deals with the investors and creditors.
Match these to operating or investing sections: Interest paid on loan Cash collections from customers Sale of used plant equipment for cash Cash dividend received
operating: Interest paid on loan Cash collections from customers Cash dividend received investing: Sale of used plant equipment for cash
the difference between price and cost is the
profit
at which phase will a business have postive cash flow from operating activities, NEGATIVE cash flow from investing activities, and postive, negative, or neutral cash flow from financing activities?
profitable/growing
A complimentary item becoming cheaper would shift the demand curve to the...
right! thus raising price and quanitity
what is marginal revenue
the difference made by going with the cheaper price that results in higher profit.
Price elasticity of demand is the what divided by what?
the percentage change in quantity demanded divided by percentage change in price (10/5 = 2)
A market's equilibrium outcome maximizes:
the sum of producer surplus and consumer surplus. Total surplus is maximized at the market outcome. (NOT consumer surplus or producer surplus, because these are incompatible to be maximized)
the residual plot that has a sort of upside down bell curve (
this looks like a non-linear relationship.
two null hypotheses, what's the difference: μ=$2,700 μ≤$2,700
two sided vs. one sided
yes a monopolist subtracts the cost of production when considering which demographic of customer it's aiming for
yes
