Over The Course Of A Decade, A Police Department Issue ✓ Solved

Over The Course Of Adecade A Certain Police Department Issued 1609

Over the course of a decade, a certain police department issued 160.9 thousand speeding tickets. The ages of the males and females who received tickets are shown below. Use this information to answer parts a through c.

Construct a relative frequency distribution of the males who received tickets. (Round answers to three decimal places.)

Construct a relative frequency distribution of the females who received tickets. (Round answers to three decimal places.)

Construct a side-by-side relative frequency bar graph. Choose the correct graph below, where in each age grouping, the left bar represents males and the right bar represents females. (A, B, or C)

The data below represent the per capita (average) disposable income (income after taxes) for 25 randomly selected cities in a recent year. Complete parts (a) through (j).

a) Construct a frequency distribution with the first class having a lower class limit of 30,000 and a class width of 6,000. Class Frequency __ - __ __ - __ __ - __ __ - __ __ - __

b) Construct a relative frequency distribution with the first class having a lower class limit of 30,000 and a class width of 6,000. Class Relative Frequency __ - __ __ - __ __ - __ __ - __ __ - __

c) Construct a frequency histogram of the data. Choose the correct graph below.

Which one of these is a correct definition?

- Current assets are assets with short lives, such as inventory.

- Long-term debt is defined as a residual claim on a firm's assets.

- Current liabilities are debts that must be repaid in 18 months or less.

- Tangible assets are fixed assets such as patents.

- Net working capital equals current assets plus current liabilities.

All else held constant, interest rate risk will increase when the time to maturity:

- Increases or the coupon rate decreases.

- Increases or the coupon rate increases.

- Decreases or the coupon rate increases.

- Decreases and the coupon rate equals zero.

- Discount rate decreases.

The market price of a bond increases when the:

- Face value decreases.

- Coupon rate decreases.

- Par value decreases.

- Coupon is paid annually rather than semiannually.

- Discount rate decreases.

Book value:

- Generally tends to exceed market value when fixed assets are included.

- Is adjusted to market value whenever the market value exceeds the stated book value.

- Is more of a financial than an accounting valuation.

- Is equivalent to market value for firms with fixed assets.

- Is based on historical cost.

The cash flow resulting from a firm's ongoing, normal business activities is referred to as the:

- Cash flow to investors.

- Additions to net working capital.

- Net capital spending.

- Cash flow to retained earnings.

- Operating cash flow.

An efficient capital market is one in which:

- Taxes are irrelevant.

- Security prices reflect all available information.

- Brokerage commissions are zero.

- Securities always offer a positive NPV.

- All investments earn the market rate of return.

All else equal, the contribution margin must increase as:

- Sales price per unit declines.

- The fixed cost per unit declines.

- The sales price minus the fixed cost per unit increases.

- The variable cost per unit declines.

- Both the sales price and variable cost per unit increase.

Which one of the following statements about preferred stock is true?

- Dividends on preferred stock payable during the next twelve months are considered to be a corporate liability.

- There is no significant difference in the voting rights granted to preferred and common shareholders.

- Preferred stock usually has a stated liquidating value of $100 per share.

- Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.

- If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.

Which one of these statements is correct concerning the cash cycle?

- Adopting a more liberal accounts receivable policy will tend to decrease the cash cycle.

- Increasing the accounts payable period increases the cash cycle.

- A positive cash cycle is preferable to a negative cash cycle.

- The longer the cash cycle, the more likely a firm will need external financing.

- The cash cycle can exceed the operating cycle if the payables period is equal to zero.

Which one of the following statements is false?

- Aging schedules are used to monitor accounts receivable.

- If sales are seasonal, the percentages shown on an aging schedule will vary during the year.

- Collection efforts may involve legal action.

- An aging schedule includes only overdue accounts.

- Investments in accounts receivable equal average daily sales times average collection period.

A firm has a debt-equity ratio of 0.64, a pretax cost of debt of 8.5 percent, and a required return on assets of 12.6 percent. What is the cost of equity if you ignore taxes?

- 11.12%

- 16.38%

- 15.22%

- 8.55%

- 8.06%

Sample Paper For Above instruction

Introduction

This paper analyzes the statistical data regarding the issuance of speeding tickets over a decade by a specific police department and explores various financial concepts through provided multiple-choice questions. The goal is to interpret the given data accurately and relate it to fundamental financial and managerial principles.

Part A: Relative Frequency Distribution of Male Speeding Tickets

The initial task involves constructing a relative frequency distribution for males who received speeding tickets. To do this, the total number of tickets issued to males within each age group must be divided by the total tickets issued to males overall. As the total tickets issued are 160,900 over ten years, the relative frequency for each age group is calculated as:

Relative Frequency = (Number of tickets in age group) / (Total tickets to males)

This calculation, rounded to three decimal places, provides insight into the proportion of tickets issued to males in each age category, enabling identification of age groups with higher or lower incidences of speeding violations among males.

Part B: Relative Frequency Distribution of Female Speeding Tickets

Similarly, the relative frequency distribution for females who received tickets is constructed by dividing the count of tickets in each age group by the total tickets issued to females. This standardizes the data, allowing for comparison between gender-specific ticket distributions. These proportions reveal which age groups among females are more likely to receive speeding violations and support targeted traffic enforcement strategies.

Part C: Side-by-Side Relative Frequency Bar Graph

The third task entails creating a comparative bar chart, where each age group has two bars—one representing males and the other representing females. The height of each bar corresponds to the relative frequency calculated in parts A and B. The chart visually highlights differences or similarities in speeding violation rates by age and gender, facilitating easy interpretation and policy formulation.

Additional Data Analysis: Income Distribution

The subsequent data set involves the analysis of per capita disposable income across 25 cities, requiring the construction of frequency and relative frequency distributions and histograms. Using a class interval starting from a lower limit of 30,000 with a width of 6,000, the frequency count of cities within each income bracket is tallied, then converted into relative frequencies by dividing each class frequency by 25, the total number of observations.

Part A: Frequency Distribution

Identification and tallying of city incomes within each class interval provide the frequency distribution. The class intervals are specified as 30,000-36,000, 36,000-42,000, etc. The total count per class indicates the distribution's shape and spread, which is critical in understanding income disparities among cities.

Part B: Relative Frequency Distribution

Calculating the relative frequency for each class involves dividing each class's frequency by the total number of cities, i.e., 25. This transforms raw counts into proportions, allowing for better comparison and proportion analysis of income distribution percentages.

Part C: Histogram Construction

Creating a histogram based on the frequency data involves plotting the class intervals on the x-axis and their respective frequencies on the y-axis. The proper graph visually summarizes the income data, revealing the distribution's modality, skewness, and concentration areas.

Financial Concepts

The remaining multiple-choice questions address various financial definitions and principles, covering areas such as asset classification, debt types, valuation, cash flow management, market efficiency, contribution margins, stock preference, cash cycle management, and bond pricing. These concepts are foundational for financial decision-making and strategic planning.

Sample Question Analyses

Interest Rate Risk and Maturity

The interest rate risk of a bond increases with longer maturity and lower coupon rates because the bond's price becomes more sensitive to interest rate fluctuations. Thus, increasing maturity or decreasing coupon rate heightens risk.

Bond Market Price Dynamics

A bond's price increases when the discount rate decreases because the present value of future cash flows is higher. Conversely, changes in face value or coupon payments also influence bond prices.

Book Value Utilization

Book value, based on historical cost accounting, generally exceeds or is similar to market value, but it does not necessarily reflect current worth, especially with fixed assets.

Cash Flow from Operations

The operating cash flow reflects the cash generated by normal business operations, excluding financing and investing activities, essential for assessing operational efficiency.

Market Efficiency

In an efficient market, securities prices fully reflect all available publicly known information, making it impossible to consistently earn abnormal returns.

Contribution Margin and Pricing

An increase in contribution margin occurs if the selling price increases or variable costs decrease, enhancing profitability per unit sold.

Preferred Stock Characteristics

Preferred stock dividends are not tax-deductible and typically have fixed dividends, often with a stated liquidation value of $100.

Cash Cycle Management

A shorter cash cycle reduces financing needs; adopting liberal receivable policies may increase the cycle, and a longer cycle usually indicates higher external funding requirements.

False Statements Identification

Statements regarding aging schedules and accounts receivable monitoring are factually accurate, but the statement that investments in accounts receivable equal the average daily sales multiplied by the average collection period is false since the latter is usually in days, not directly multiplying the two values without adjusting units.

Cost of Equity Calculation

Using the given debt-equity ratio, pretax cost of debt, and return on assets, the cost of equity can be computed employing the weighted average cost of capital (WACC) formula, ignoring taxes, to further analyze the company's capital structure and risk profile.

Conclusion

This comprehensive analysis covers statistical distributions, financial definitions, and valuation principles integral to understanding traffic violation data and fundamental financial concepts. Proper interpretation of such data supports effective policy-making, revenue management, and strategic financial planning.

References

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• Investopedia. (2023). Financial Concepts and Definitions. Retrieved from https://www.investopedia.com
• Financial Accounting Standards Board (FASB). (2022). Accounting Standards Updates.
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