Wharton Business Analytics Coursera Quiz

Module 1: Introduction to Models Quiz
Quiz, 10 questions
Question 1
1
point
1. Question 1
Which of the following features is typically NOT associated with a quantitative model for a business
process?
Mathematical equations
A formal description of a business process
A 100% accurate representation of the business process
Assumptions
Question 2
1
point
2. Question 2
For which activity(ies) might you use a quantitative model?
 (i) Forecasting
 (ii) Targeting
 (iii) Optimization
(i)
(i), (ii), and (iii)
(ii) and (iii)
Schlumberger-Private
(i) and (ii)
Question 3
1
point
3. Question 3
Which of the following activities is typically NOT a part of the modeling process?
Model formulation
Sensitivity analysis
Validation
Creating a model, so that the output always agrees with our prior expectations
Question 4
1
point
4. Question 4
If a model gives a different output even when the inputs are the same, then what sort of
model must it be?
Deterministic
Probabilistic
Dynamic
Discrete
Question 5
1
point
5. Question 5
From a modeling perspective, what is the key difference between a digital and an analog
thermometer?
The digital thermometer provides a discrete reading of the temperate, whereas the analog provides
a continuous one
The digital thermometer provides a continuous reading of temperature, whereas the analog provides
a discrete one
The digital thermometer always provides a more accurate reading of the temperature
There is no difference, because they will always provide identical readings of temperature
Question 6
1
point
6. Question 6
In the model y=3 e^(0.02 t) , where t is measured in months and y measures the number of
customers in thousands, what is the best interpretation of the coefficient 0.02?
The monthly customer growth rate is approximately 2%
Two-thousand extra customers are added every month
The annual customer growth rate is approximately 2%
For every 1% increase in months there will be a 2% increase in customers
Question 7
1
point
7. Question 7
What is the defining characteristic of the linear model y =3+4 x, where x is the number of units
produced and y is the time in hours it takes to produce them?
When x goes from 4 to 5, the change in y is larger than when x goes from 40 to 41
The model has a set-up time of 3 hours
If x increases by 1% then y will increase by 4%.
The rate of change in y is constant at 4 hours per unit
Question 8
1
point
8. Question 8
For which of the following business processes is a log function particularly useful in modeling the
output?
A process that exhibits diminishing returns to scale
A process that exhibits seasonality
A process that is increasing at a constant rate
A process that exhibits a constant growth rate
Question 9
1
point
9. Question 9
If you wanted to model a business process that looked like the graph below, then which modeling
function would you suggest?
Any of these
Log
Linear
Exponential
Question 10
1
point
10. Question 10
When would you choose to use a dynamic model for a business process?
When there is more than one input to the model
When there is specific interest in the state to state transitions of the process
When all of the inputs are random variables
When there is considerable uncertainty as to what the inputs should be
I, Arijit Paul, understand that submitting work that isn’t my own may result in permanent failure of
this course or deactivation of my Coursera account.
Module 2: Linear Models and Optimization Quiz
Quiz, 10 questions
Question 1
point
1. Question 1
Which of the following features is a defining aspect of a deterministic model?
There is no randomness in the model
It only uses linear functions
It always uses discrete input values
It cannot be used as a basis for a subsequent optimization

Question 2
point
2. Question 2
Total costs at a company have been modeled as TC = 100 + 12 q, where TC stands for total cost in
thousands of USD and q stands for quantity produced, again measured in thousands. What type of
function is this?
Linear
Power
Exponential
Log
Question 3
point
3. Question 3
In the model described in Q2, what is the best interpretation of the coefficient 100?
The variable costs are 100 USD
Fixed costs are 100 USD
The elasticity of cost respect to quantity is 100
Fixed costs are 100,000 USD

Question 4
point
4. Question 4
Which of the following modeling functions describes the graph below?
Cost = 2.5q
Cost = 25 + 25q
Cost = 25 + 2.5q
Cost = 25 + 2.5 log(q)

Question 5
point
5. Question 5
A website is increasing its user base by 10% each month. If it has 10,000 users now (t = 0), then
how many users does it expect six months from now (t = 6)? Use a discrete model for the growth
process.
16,105
17,716
18,221
16,000
Question 6
point
6. Question 6
The number of new domestic wind turbine generators installed each year in a particular country has
been forecast to increase at a constant multiplicative rate of 15% per annum for the foreseeable
future. This year (t = 0) 100 new generators were installed. What is the total number of new
generators including this year's, that would have been installed within the next ten years (that is up
to and including year t = 9)? Use a discrete model for the growth process.
2030
235
1679
900
Question 7
point
7. Question 7
What is the difference between compound interest and simple interest?
The terms are in fact synonyms
Compound interest is applied more often than simple interest
Compound interest means that any prior interest itself earns interest, whereas simple interest is only
applied to the principal investment
Compound interest rates can only be used if the interest accrues exactly once a year whereas
simple interest can be applied multiple times during a year
Question 8
point
8. Question 8
Using a discount rate of 5%, what is the present value of an investment that provides a lump sum
payment of $10,000 in 4 years?
8000
8227
10,000
12,155
Question 9
point
9. Question 9
The number of users of a cloud based storage service is projected to grow according to the growth
model: U_t=1,000,000 e^(0.05 t). What is the best interpretation of the value 1,000,000 in this
equation?
It represents the monthly growth rate
It represents the annual growth rate
It represents the number of users that they will have in a year’s time
It represents the current number of users. That is, at time t = 0

Question 10
point
10. Question 10
Consider the demand equation q=20,000 p^(-1.4). If the cost of production is constant at $0.50 per
unit then what is the optimal price to maximize profit?
$1.75
$0.29
$1.40
$0.50
Module 3: Probabilistic Models Quiz

Quiz, 10 questions
Question 1
point
1. Question 1
Which of the following characteristics implies that a quantitative model is probabilistic in nature?
The fact that it uses random variables
The fact that it measures time in discrete steps
The fact that it is based on theory rather than data
The fact that it uses an exponential function

Question 2
point
2. Question 2
What essential information can a probabilistic model provide, that a deterministic model can’t?
It can provide a more accurate measure of the output
It can be used with both discrete and continuous variables
It can deal with larger amounts of data
It can include a range of uncertainty for the model output

Question 3
point
3. Question 3
Monte Carlo simulation models incorporate uncertainty in what manner?
They generate a range of inputs for the model using random variables drawn from probability
distributions
They allow the analyst to generate any random outcome that they want to see
They incorporate uncertainty by forcing all random variables in the model to come from a Normal
distribution
Monte Carlo simulations do not in fact incorporate uncertainty

Question 4
point
4. Question 4
If you wanted to model an outcome variable that is defined as whether or not someone will buy a
new car within the next 12 months, then what type of random variable would you use to capture this
outcome?
Either continuous or discrete, it doesn’t matter
This future outcome is not in fact random and should be modeled in a deterministic fashion
A discrete random variable
A continuous random variable

Question 5
point
5. Question 5
A Bernoulli random variable, representing whether or not the stock market goes up or down
tomorrow (assume that the market cannot be unchanged), has an “up” probability of 0.6 and a
“down” probability of 0.4. What is the standard deviation of this random variable?
0.24
0.49
0.4
0.6
Question 6
point
6. Question 6
Using the same probability as described in Question 5, and assuming that moves in the market are
independent from day to day, then what is the probability that the market goes up on exactly 2 of the
next 4 days?
0.0576
0.5000
0.7776
0.3456
Question 7
point
7. Question 7
For which of the following random variables would the use of a Normal distribution as a model be a
clear error?
The daily percentage change on a stock
The number of minutes that a battery lasts in a cell phone
The number of houses that an individual owns
Student test scores on an exam

Question 8
point
8. Question 8
A snow tire manufacturer believes that a typical set of snow tires lasts on average for 30,000 miles.
They also believe that 95% of drivers get between 20,000 and 40,000 miles of use from the tires.
What value of σ, the standard deviation, would be needed to make the information above
approximately consistent with a Normal distribution model for tire wear? You should use the
Empirical Rule to answer this question.
10,000
5,000
20,000
3,333
Question 9
point
9. Question 9
Assuming that a Normal distribution model is reasonable for the tire wear, what is the approximate
probability that a randomly drawn driver gets more than 25,000 miles of use from their tires? Use the
value for the mean and standard deviation from Q8.
0.5
0.95
0.16
0.84
Question 10
point
10. Question 10
If you had two variables, the weight of a car measured in pounds and the fuel economy measured in
miles per gallon, then which of the following quantitative modeling methodologies would be preferred
for modeling fuel economy as a function of weight?
A regression model
A Markov chain
A Monte Carlo Simulation
A probability tree
Module 4: Regression Models Quiz
Quiz, 10 questions
Question 1
point
1. Question 1
What is the difference between a simple regression model and a multiple regression model?
A simple regression model can handle only limited amounts of data whereas a multiple regression
model can handle large data sets
A simple regression model has a single predictor whereas a multiple regression model has
potentially many
There isn’t one. The two terms are equivalent
A simple regression is appropriate for a dichotomous outcome variable, whereas a multiple

regression model should be used with a continuous outcome
Question 2
point
2. Question 2
A simple regression models which function of the outcome variable (Y)?
It models the variance of the outcome as a function of X
It models the median of the outcome
It models the mean of the outcome as a function of X
It models the standard deviation of the outcome as a function of X

Question 3
point
3. Question 3
If the simple regression for the expected price (in US$) of a diamond given its weight (in carats) is
modeled as E(Price │ Weight) = -260 + 3721 ⨯Weight , then what is the expected price of a diamond
that weighs 0.2 of a carat?
-259.80
744.20
1004.20
484.20
Question 4
point
4. Question 4
If two variables have a correlation of -1, then what do you know about them?
They have no linear association
They may or may not have a strong linear association
They have a perfect positive linear association
They have a perfect negative linear association

Question 5
point
5. Question 5
You can NOT use a regression for which of the following activities?
Identifying unusual data points
You can in fact use a regression model for all of these
Measuring the proportion of variability in the outcome variable explained by the predictor variables
Forecasting new observations

Question 6
point
6. Question 6
A simple regression equation decomposes the observed data into two parts: the fitted values and the
residuals. What is the interpretation of a residual?
The vertical distance from a point to the fitted regression line
The horizontal distance from a point to the fitted regression line
The squared vertical distance from a point to the fitted regression line
The intercept of the regression line

Question 7
point
7. Question 7
Given the fitted the regression equation of E(Price │ Weight) =-260 + 3721 ⨯ Weight and an RMSE
from the regression of 32, then which of the following is the approximate 95% prediction interval for
the price of a diamond that weighs 0.2 carats? Assume that the residuals are Normally distributed
and that the prediction is within the range of the data that was used to fit the model.
(420.2, 548.2)
(680.2, 808.2)
(452.2, 516.2)
(3397,3525)
Question 8
point
8. Question 8
In the regression demand equation E(log⁡〖(Sales) | Price))=11.015 -2.442 log⁡(Price)〗, at a price of
$1, what is the expected value of sales? The log here, is the natural log.
1
5,287
60,779
11
Question 9
point
9. Question 9
What characteristic of the outcome variable (Y) suggests that a logistic regression is a suitable
methodology?
When the outcome is always positive
When the outcome is a dichotomous variable
When the outcome is a continuous variable
When the outcome variable has a large variance

Question 10
point
10. Question 10
If, in a multiple regression of the price of a diamond against the two predictor variables, weight and
color, the R2 of the regression was 0.985, then which of the following is the best interpretation of this
value?
The correlation between price and weight is 0.985
The correlation between weight and color is 0.985
98.5% of the variation in price is explained by weight and color
None of these are true
Module 1 Quiz: History, Formulas, Functions and Errors

Quiz, 10 questions
Question 1
point
1. Question 1
The story of Bricklin and Frankston and the emergence of personal computers provides evidence
suggesting that ______________
The personal computer existed before Apple
Hardware sells software
Software sells hardware
Spreadsheets were not originally used for accounting applications
All of these are true
point
2. Question 2
If the range A1:A4 consists of the values 1,2,3,4 and the range B1:B4 consists of the values 9,8,7,6,
what is the value of the sumproduct(B1:B4, A1:A4)?
70
point
3. Question 3
Review the step function in the spreadsheet below. Given the conditional pricing formula shown in
C3, what’s the value of the order total in C5?
7650
point
4. Question 4
Evaluate the formula 3^(1+2)*4-5/7 using the order of calculation followed by Excel or
Sheets. Round to 2 decimals, and use a decimal point (".") in your answer.
107.29
point
5. Question 5
Below is a spreadsheet showing product sales for the past 6 months. Assume we want to write a
formula in cell C10 that we can copy later across 6 columns representing the past 6 months of sales.
The formula needs to apply the unit cost of goods sold found in cell C2. Enter the formula for cell
C10 using spreadsheet syntax and the appropriate absolute and relative addresses to calculate total
cost of goods sold for that period.
=$C$2*C8
Question 6
point
6. Question 6
Which of the following formulas from the spreadsheet shown below will result in a circular reference
error? Select all that apply.
Formula in cell H10=sum(H5:H10)
Formula in cell C10=sum(C7:C10)*$C$2
Formula in cell C10=sumproduct(C5:H7, C2)
Formula in cell C14=C10*C4-C10*C2
All of these will result in a circular reference error
Question 7
point
7. Question 7
In the cashflow spreadsheet below, which of the following cell addresses contains a potentially
important output function for the cashflow model? Select all that apply.
B7
B8
B6
B13
B12
Question 8
point
8. Question 8
In this analysis of historical sales, which cell formula tells you the level of variation in the spread of
sales numbers from low performing months to high performing months?
C9
C8
C11
C10
None of these show the spread of sales numbers
point
9. Question 9
Consider the following spreadsheet showing sales of Product A, current inventory of Product A and
purchases of Product A from a supplier when inventories run low.
Using appropriate syntax for entering a formula in a spreadsheet cell, write a statement in cell D5
that would trigger a 100 unit order from a supplier when the inventory for the period falls below 75
units. .
Question 10
point
10. Question 10
The term array is closest in meaning in Excel to:
Standard Deviation
Spreadsheet
Cell
Range
Sumproduct
Module 2 Quiz: Classic Models
Quiz, 10 questions
point
1. Question 1
How would you improve the transparency of the spreadsheet model below by separating data from
formulas? For example, how would you rewrite the formula shown in C10 in a form that would be
both more transparent and also could be easily copied through the multi year period in columns C
through F?
=B10*(1+$B$5)
Question 2
point
2. Question 2
The spreadsheet below models the costs and potential revenues of manufacturing speakers,
assuming that the full order is sold. In the spreadsheet, four different sets of cells have been
designated as A, B, C, and D.
Assume there is an expedited manufacturing option that results in a 50% reduction in time for
customers to receive their goods. However, that expedited service increases the cost of the order by
25%.
Which designated set of cells is the logical place to insert that potential 25% cost increase as a
variable?
B
None of these
A
D
Question 3
point
3. Question 3
Refer again to the spreadsheet in Q2. Again, assume there is an expedited manufacturing option
that results in a 50% reduction in time for customers to receive their goods, but that expedited
service increases the cost of the order by 25%.
Which designated set of cells is the logical place to insert a yes/no variable to indicate that the order
is to be expedited?
None of these
D
Question 4
point
4. Question 4
Refer again to the spreadsheet in Q2. If we wanted to add a variable to this model to calculate
average unit cost as an important output to monitor, which designated set of cells is the logical place
to insert that output?
D
None of these
A
Question 5
point
5. Question 5
Refer again to the spreadsheet in Q2, and assume that the following range names have been
created: number_ordered (cell B5); discount51 (cell B11); discount101 (cell B12); and
cost_per_cabinet (cell B15).
What is a formula for cell B16 that would use these range names?
=if(number_ordered<51,0,if(number_ordered>100, cost_per_cabinet*discount101,
cost_per_cabinet*discount51))
=if(discount51=”true”, cost_per_cabinet*discount51, if discount101=”true”,

cost_per_cabinet*discount101, 0 ))
None of these
=if(number_ordered<51,0,if(number_ordered>100, cost_per_cabinet*discount101,
cost_per_cabinet*discount51)
=if(number_ordered<51,0,if(number_ordered>100, cost_per_cabinet*30%, cost_per_cabinet*20%)

Question 6
point
6. Question 6
What is a useful source of data for projections and forecasts, such as sales forecasts or costs of
goods sold?
Your own historical data
Data from market research firms
Your own competitive market research
Public corporations' operating data

Question 7
point
7. Question 7
Assume that you have a company that assembles final products from a large variety of components
that are supplied by factories located in various parts of the world. In the past you have experienced
disruptions in the flow of your supply of components as the result of bad weather, such as a strong
El Niño phenomenon, as well as other uncontrollable events. You have back-up suppliers, but each
have different capacities and delivery schedules. So you created a model that includes sets of
assumptions about changes in suppliers and delivery times in the event of unusual disruptive events.
The Excel tool specifically designed for your use in this case is:
Sensitivity analysis
Linear programming models
What-if analysis
Data analysis toolpak
Scenario manager
Question 8
point
8. Question 8
Joseph used the spreadsheet below to check the sensitivity of Innovative Speakers profit to
increases in prices of components by suppliers next year. First he raised the cost of cabinets by 20%
in cell B12, then noted the profit change in B6. Next he raised the cost of diaphragms in C12 by
20%, then noted the profit change. He repeated these steps for electronics and assembly. What
mistake is Joseph making?
No use of historical cost data
Didn’t test conditional logic in model
Didn’t reset assumptions to original values
Didn’t test changes in retail price

Question 9
point
9. Question 9
In the model below, Amy used sensitivity analysis in a cashflow projection to check how her
assumptions affect her need to finance operations through credit or loans during the coming year.
This question has two parts. First, think about which one outcome variable is most clearly related to
the need to plan for financing operations. Then identify which assumption she should make sure she
has estimated correctly, since the outcome variable is most sensitive to changes in that assumption.
The range B4:F6 show current best assumptions. Range B8:F18 show 10% changes in the three
assumptions. Provide as your answer the assumption variable you've identified.
Margin
Return rate
Unit price
Advertising budget
Question 10
point
10. Question 10
The primary limitation of deterministic models is that:
Their forecasts aren’t situated in historical data
They are often inaccurate representations of the variance in the real world
They can’t model exponential growth or decline
All of these
Module 3 Quiz: Probability, Correlation, and Regression

Quiz, 10 questions
Question 1
1
point
1. Question 1
Randbetween generates random numbers based on what kind of probability distribution:
Uniform
All of these
Discrete
Normal
Bernoulli
Question 2
point
2. Question 2
The Data Analysis Toolpak in Excel and Sheets generates random numbers based on what kind of
probability distribution:
Normal
All of these
Discrete
Bernoulli
Uniform
1
point
3. Question 3
Below is a probability tree outlining 3 steps to introducing a new product – a market research study,
a test market initiative and a national marketing campaign. Calculate the probability of success of all
three steps. Express probability as a decimal with two decimal places. Example 50% = .50
0.23
point
4. Question 4
Using the probability tree for Question 3, what is the combined probability of a new product
appearing to be successful in a market research study as well as in a test market, and yet still failing
in a national marketing campaign? Express probability as a decimal with two decimal places.
Example 50% = .50
0.01
Question 5
point
5. Question 5
The spreadsheet below shows average outside temperature and retail food sales by a street vendor.
What’s the relationship between temperature and sales?
The correlation is strong
Relationship cannot be determined with this data
The correlation is weak
The correlation is moderate

Question 6
point
6. Question 6
A new baby thermometer uses an innovative design in which a monitor patch measures a baby’s
temperature each second and transfers that reading with a timecode to a smartphone application.
This is an example of the use of
Continuous time
Discrete time
Cannot be determined from this information
Constant time
point
7. Question 7
Below is the spreadsheet model we looked at in this module for measuring exponential growth of an
epidemic. Predict the number of users of a new social network at a future date assuming similar
exponential growth. How many users of the new service would we expect to have in seven and a
half months?
16565
Question 8
point
8. Question 8
A bank savings account that pays an interest rate based on the balance at the end of each month is
an example of
Proportionate or geometric growth
None of these
Constant growth
Exponential growth or decay
Arithmetic growth
point
9. Question 9
Write the formula in cell C13 that shows an exponential forecast for next year based on the past 10
years data.
=GROWTH(C3:C12,B3:B12,B13)
point
10. Question 10
Below is a regression analysis report that compared the clarity rating of diamonds for sale on the
Singapore diamond exchange to the price each diamond brought. What percent of changes in price
is due to the changes in quality? Express your answer as a decimal with two decimal places, for
example 50% = .50
0.9
Module 4 Quiz: Simulations, Scenarios, and Optimization

Quiz, 10 questions
Question 1
1
point
1. Question 1
A sales division in a large IT consulting company prepares proposals and bids on engagements with
companies who are considering purchasing new information systems. There is some randomness at
work in this process, with varying numbers of competitors in each case and other factors affecting
the customers’ decisions. Generally they win 20% of the contracts that they bid on. If you were to
build a model of the division’s activity and wanted to include a random variable for winning contracts,
what type of distribution would you use?
Normal
All of these
Bernoulli
Discrete
Uniform
Question 2
point
2. Question 2
Please check all that apply.
Monte Carlo simulations are useful to include in models when:
Stakes are high
A small amount of extra precision is valuable
Manual what-if testing isn’t feasible
There are many variables with complex interactions
point
3. Question 3
There are four main steps in building a Monte Carlo simulation: select probability distribution(s); run
the simulation model through a large number of trials; analyze results of multiple trials to assess
risks and opportunities; and generate ______ variables.
random
Question 4
point
4. Question 4
In the simulation model shown below, what is the primary purpose of the standard deviation formula
in cell H11?
To help assess risk
To add a constraint needed for an optimization function
None of these are the primary purpose
To select a probability distribution for generating random variables
Question 5
point
5. Question 5
In a linear programming model, all of the following are examples of variables Solver changes to
generate an optimal solution, except:
Profit margin targets
How much to purchase of various components from suppliers
Composition of a product
Production levels of alternative products
Allocation of scarce resources

Question 6
point
6. Question 6
Which of the following can be set as the objective of a linear programming optimization model using
Excel’s Solver function (check all that apply)?
Min
Random variables
Average
Max
A specific target value

Question 7
point
7. Question 7
In the Innovative Speakers case, Solver was used to generate an optimal outcome by trying every
possible value in a range of cells in the model.
That range in the model was:
C4:E4
All of these
C13:E13
F8:H10
H4
point
8. Question 8
In the model shown below, decisions about investments in research and development across three
possible product development projects are constrained by the overall R&D budget.
In the Solver Parameters form shown, what is the expression required to implement the staffing
constraint?
$F$8<=$H$8
Question 9
point
9. Question 9
Please check all that apply:
Which of the following business scenarios are examples of problems that can be addressed by
linear program models?
Allocating a fixed R&D budget across multiple development projects
Determining mix of economy or coach, business class and first class seats on an airplane
Setting truck routes for small deliveries
Planning staffing levels for a call center given uncertain customer demand
point
10. Question 10
Assume that in the Innovative Speaker simulation, the standard deviation of 1000 trials was 8404
and the mean was 16,808, as shown below.
What are the chances that the actual cashflow could still be negative? Express your answer as a
decimal with 3 decimal places. For example, 50% should be written as .500
0.023
Week 1: Modeling in Low Uncertainty Quiz

Quiz, 10 questions
Question 1
point
1. Question 1
This question relates to the Hudson Readers Example discussed in Sessions 1 and 2, and
assumes that the value of the advertising budget is equal to $195 million. You may use the
file Hudson Readers.xlsx developed in Session 2 to answer this question.
Consider the following spending allocation of the advertising budget: A SI = 60, ASC = 20, AEI = 0, AEC =
115. What is the total net sales increase (in $ millions) corresponding to this budget allocation?
Choose the closest value among the ones presented below.
6.25
6.80
7.25
6.85
5.70
Question 2
point
2. Question 2
Consider the following two ways to allocate the advertising budget:
(S1) ASI = 60, ASC = 22, AEI = 3, AEC = 110
(S2) ASI = 55, ASC = 10, AEI = 15, AEC = 115
Which of the following statements is correct:
S1 is feasible, and S2 is infeasible
Both S1 and S2 are feasible
S1 is infeasible, and S2 is feasible
Both S1 and S2 are infeasible

Question 3
point
3. Question 3
Consider a version of the Hudson Readers Problem where the only constraints are the advertising
budget constraint and the non-negativity constraints on the decision variables (in other words, ignore
the constraints for net sales increase in India and China and on the net sales increase of the
enhanced version). What is the optimal value of the total net sales increase (in $ millions) for such a
problem? Choose the closest value among the ones presented below.
7.80
3.90
5.85
9.75
9.25
Question 4
point
4. Question 4
Ignore the setting of Q3 and consider the original problem formulation. One of the senior managers
at the Hudson Readers believes that the constraint on the net sales increase for the enhanced
version severely limits company’s ability to generate the total net sales increase. Suppose that this
constraint is ignored, while all other constraints in the original problem formulation remain
unchanged. Which of the following statements describes the optimal advertising spending plan in the
absence of this constraint?
The total optimal amount of advertising spending in India is 0
The total optimal amount of advertising spending in China is 0
The total optimal amount of advertising spending on the standard product is 0
The total optimal amount of advertising spending on the enhanced product is 0

Question 5
point
5. Question 5
Ignore the settings of Q3 and Q4 and consider the original problem formulation. Suppose that the
company decides to change the requirement on the minimum net sales increase in China from the
current value of $4 million to $3 million. The other constraints remain unchanged. What is the new
value of the optimal total net sales increase, in $ millions? Choose the closest value among the ones
below.
7.38
3.00
9.56
7.52
9.15
3.14
Question 6
point
6. Question 6
assumes that the value of the advertising budget is equal to $195 million. This question tests
your understanding of the algebraic model formulation and does not require Excel.
The Hudson Readers is considering imposing the following additional requirement: the total amount
of advertising spending in India must be at least 55 percent of the total amount of advertising
spending in China. In terms of the problem’s decision variables, which algebraic expression
represents this requirement?
ASI + AEI ≥ 0.55*(ASC + AEC)
ASC + AEC ≥ 0.55*(ASI + AEI)
AEI + AEC ≥ 0.55*(ASI + ASC)
ASI + ASC ≥ 0.55*(AEI + AEC)

Question 7
point
7. Question 7
This question relates to the Epsilon Delta Capital example introduced in Session 3, and
assumes that the value of the investment budget is equal to $125 million. You may use the
file Epsilon Delta Capital.xlsx developed in Session 3 to answer this question.
Suppose that the Epsilon Delta Capital invests equal amount, $31.25 million, into each of the four
groups of financial products. What is weighted quality score of such investment? Choose the closest
among the values below.
2.00
3.00
2.25
2.75
1.75
2.50
Question 8
point
8. Question 8
Is the equal-amount investment of Q7 feasible for the Epsilon Delta Capital problem?
Impossible to say
No
Yes
Question 9
point
9. Question 9
For the equal-amount investment of Q7, what is the expected annual return, in $ millions? Choose
the closest among the values below.
5.31
6.23
6.76
4.25
4.03
5.23
Question 10
point
10. Question 10
TheEpsilon Delta Capital considers dropping the minimum investment requirement of $20 million on
all product groups. If this requirement is removed from the Epsilon Delta Capital model, and the rest
of the model remains unchanged, what is the new optimal expected return, in $ millions? Choose the
closest among the values below.
6.66
6.36
6.26
6.56
6.46
6.16
Week 2: Modeling in High Uncertainty Quiz

Quiz, 10 questions
Question 1
1
point
1. Question 1
This question relates to content of Session 1 and is based on the following example. Consider
a model for describing a random return on Stock C next week, RC. According to this model, RC
can be described using the following 5 scenarios. You can find these data in the posted file
Stock C.xlsx.
Scenario RC Value Probability of Scenario
1 -0.01 0.1
2 -0.03 0.2
3 0.01 0.4
4 0.02 0.2
5 0.04 0.1
What is the expected value of the return on Stock C next week, i.e., what is the value of E[RC]?
Choose the closest from the answers below.
0.015
0.000
0.010
0.020
.005
-0.005
Question 2
point
2. Question 2
Stock C.xlsx.
1 -0.01 0.1
2 -0.03 0.2
3 0.01 0.4
4 0.02 0.2
5 0.04 0.1
What is the standard deviation of the return on Stock C next week, i.e., what is the value of
SD[RC]? Choose the closest from the answers below.
0.031
0.011
0.021
0.051
0.041
Question 3
point
3. Question 3
Stock C.xlsx.
1 -0.01 0.1
2 -0.03 0.2
3 0.01 0.4
4 0.02 0.2
5 0.04 0.1
What is the probability that the return on Stock C next week is negative? Choose the closest from
the answers below.
0.3
0.4
0.5
0.1
0.2
Question 4
point
4. Question 4
This question relates to content of Sessions 1 and 2 and is based on the following example.
Consider a model for describing random returns on Stocks D and E next week, RD and RE.
According to this model, RD and RE can be described using the following 3 scenarios. You can
find these data in the posted file Stocks DE.xlsx.
Scenario RD Value RE Value Probability of Scenario
1 -0.04 0.01 0.3
2 0.03 0.02 0.5
3 0.01 -0.005 0.2
Let E[RD] and E[RE] be the expected return values for Stocks D and E next week, respectively,
and let SD[RD] and SD[RE] be the standard deviations of the returns for Stocks D and E next
week, respectively. Which of the following statements is correct?
E[RD] ≤ E[RE] and SD[RD] > SD[RE]
E[RD] > E[RE] and SD[RD] > SD[RE]
E[RD] ≤ E[RE] and SD[RD] ≤ SD[RE]
E[RD] > E[RE] and SD[RD] ≤ SD[RE]
Question 5
point
5. Question 5
1 -0.04 0.01 0.3
2 0.03 0.02 0.5
3 0.01 -0.005 0.2
What is the value of the correlation coefficient between RD and RE? Choose the closest answer
from the ones presented below.
0.165
0.379
-0.165
-0.379
-1
Question 6
point
6. Question 6
1 -0.04 0.01 0.3
2 0.03 0.02 0.5
3 0.01 -0.005 0.2
Suppose that a financial company invests $100,000 in the Stock D and $200,000 in the Stock E
now. What is the highest possible value of profit, in $, associated with this investment that the
company can earn next week? Choose the closest answer from the ones presented below.
5000
7000
-2000
2000
Question 7
point
7. Question 7
1 -0.04 0.01 0.3
2 0.03 0.02 0.5
3 0.01 -0.005 0.2
Under the investment plan of Q6, what is the expected value of profit, in $, that the company will
earn next week? Choose the closest answer from the ones presented below.
2900
3400
1700
0
2200
Question 8
point
8. Question 8
This question relates to the two-stock example considered in Session 3. In answering these
questions, you can use the Excel file TwoStocks_Solved.xlsx.
Suppose that an investor is considering a portfolio with XA =75,000, XB = 25,000. In other words,
the investor decides to put $75,000 in the Stock A and $25,000 in the Stock B “today”. What is
the expected profit, in $, such a portfolio will earn tomorrow? Choose the closest answer from
the ones presented below.
284
96
159
222
347
Question 9
point
9. Question 9
What is the value of the standard deviation of profits, in $, for the portfolio considered in Q8?
Choose the closest answer from the ones presented below.
1344
1446
1808
2030
2809
Question 10
point
10. Question 10
Suppose that an investor would like to split $100,000 between Stocks A and Stock B “today” so
as to maximize the expected profit “tomorrow” irrespective of the standard deviation of the
resulting profit. In other words, suppose that the investor “drops” the constraint on the maximum
allowable value of the standard deviation of profits, while keeping the rest of the constraints in
the portfolio problem. Which of the following choices describes the optimal portfolio in this
case?
XA =100,000, XB = 0
XA =75,000, XB = 25,000
XA = 0, XB = 100,000
XA =25,000, XB = 75,000
XA = 50,000, XB = 50,000
I, Mehendi Das, understand that submitting work that isn’t my own may result in permanent failure of
Week 3: Choosing Fitting Distributions Quiz

Quiz, 10 questions
Question 1
point
1. Question 1
A sports team named Philadelphia Streets has a probability of (2/3) for winning each game against
their division rivals Hockeytown. They play 12 games against each other during the season. Assume
that the outcome of any particular game is independent from an outcome of any other game. Let X
be the random variable that stands for the number of wins that Philadelphia Streets will have in
those 12 games. What is the expected value of X?
10
12
Question 2
point
2. Question 2
Re-examine the medical drug success example in the videos. Recall that the number of the
successes is distributed binomially (i.e., according to a binomial distribution).
Based on the definition of the mode, what is the mode of the distribution of successes? (Recall that
the mode is the most likely value that a random variable can take).
10
12
8
Question 3
point
3. Question 3
The number of shares of a stock traded during a day for a firm is approximated by a random
variable that is normally distributed with mean 3192 and standard deviation 1181.
What is the probability that the number of shares traded is less than or equal to 4200?
0.50
0.20
0.0002
0.80
0.9998
0.002
Question 4
point
4. Question 4
The number of shares of a stock traded during a day for a firm is approximated by a random
variable that is normally distributed with mean 3192 and standard deviation 1181.
Calculate the pdf value at x=3200.
0.0003
0.202
0.502
0.801
0.003
0.9997
Question 5
point
5. Question 5
The forecast monthly revenues for a firm are modeled using a random variable that is
distributed according to a normal distribution with mean $850,000 and standard deviation
$165,000.
What is median value of this distribution, in $?
520,000
200,000
850,000
1,180,000
685,000
1,015,000
Question 6
point
6. Question 6
$165,000.
What is the probability that the revenues will be less than $700,000? Choose the closest numerical
answer.
0.90
0.27
0.50
0.82
0.18
0.73
0.10
Question 7
point
7. Question 7
$165,000.
What is the probability that revenues will exceed 1 million dollars? Choose the closest answer.
0.50
0.73
0.27
0.10
0.18
0.90
0.82
Question 8
point
8. Question 8
A financial advisor at a financial consulting firm spends time with his investing clients
throughout the year. Based on the historical data, he finds that the consulting time T spent
with a client can be modeled as a continuous, uniformly distributed random variable, with the
minimum value of 50 minutes and the maximum value of 183 minutes.
What is the pdf value of this distribution at T=67 minutes?
0.67
0.33
0.47
0.0075
0.9825
0.53
Question 9
point
9. Question 9
A financial advisor at a financial consulting firm spends time with his investing clients
throughout the year. Based on the historical data, he finds that the consulting time T spent
with a client can be modeled as a continuous, uniformly distributed random variable, with the
minimum value of 50 minutes and the maximum value of 183 minutes.
What is the probability that his consulting time with an investor client will not exceed 2 hours (i.e.,
120 minutes)? Choose the closest answer.
0.33
0.0075
0.67
0.53
0.47
0.9825
Question 10
point
10. Question 10
Suppose you are working on a project based on some complex data from your firm. You have
broken down the 1344 data points that you have into 35 buckets or bins. You are now testing
the goodness of fit, using a chi-square test for a distribution that is characterized by 3
parameters.
What is the number of degrees of freedom associated with your chi-square test?
31
1344
32
35
1340
Week 4: Using Simulations Quiz
Quiz, 10 questions
Question 1
point
1. Question 1
All questions in this quiz relate to the Stargrove example covered during this week. You can
use the file Stargrove.xlsx to answer these questions. In this question, we assume that the
Stargrove decides to build R=96 regular and L=12 luxury apartments.
Suppose that the demand for regular apartments turns out to be D R = 94. How much profit, in $
millions, will the company earn from the sales of regular apartments, including the sales at the
$500,000 profit margin as well as the sales at the $100,000 profit margin? Note that you should not
count the profit from the sales of luxury apartments. Choose the closest from the answers below.
47
48
51.6
48.2
47.2
Question 2
point
2. Question 2
What is maximum amount of profit, in $ millions, that the company can earn from the sales of regular
apartments, including the sales at the $500,000 profit margin as well as the sales at the $100,000
profit margin? Note that you should not count the profit from the sales of luxury apartments. Choose
the closest from the answers below.
47
48
51.6
47.2
48.2
Question 3
point
3. Question 3
Suppose that the actual demand for regular apartments at the $500,000 profit margin, D R, is such
that the Stargrove realized a profit of $500,000 from selling regular apartments to the real estate
investment company at the salvage profit margin of $100,000 per apartment. How much profit, in $
millions, did the Stargrove earn from the sales of the remaining regular apartments at the $500,000
profit margin for the same realization of demand DR? Choose the closest from the answers below.
45.5
45
45.2
46
46.2
46.5
Question 4
point
4. Question 4
For what value of the demand for regular apartments, DR, the profit from selling regular apartments
at the high profit margin of $500,000 is equal to the profit of selling regular apartments to real estate
investment company at the salvage profit margin of $100,000?
26
36
46
16
Question 5
point
5. Question 5
Suppose that we have set up a simulation with n=4 simulation runs that generated the following
random instances for the demand for regular apartments, DR: 88, 91, 97, and 103. Calculate the four
corresponding values of the profit from the sales of regular apartments (i.e., the sum of profits at
both the high profit margin of $500,000 and the low profit margin of $100,000) and use Excel to
generate the descriptive statistics for this sample of four profit values. What is the sample mean, in
millions of $, of these four profit values? Choose the closest from the answers below.
46.7
45.7
43.7
42.7
44.7
Question 6
point
6. Question 6
Suppose that the same simulation as in Q5 generated the following random instances for the
demand for luxury apartments, DL: 5, 7, 12, and 13. Calculate the four corresponding values of the
profit from the sales of luxury apartments (i.e., the sum of profits at both the high profit margin of
$900,000 and the low profit margin of $150,000) and use Excel to generate the descriptive statistics
for this sample of four profit values. What is the sample standard deviation, in millions of $, of these
four profit values? Choose the closest from the answers below.
2.7
5.7
4.7
3.7
1.7
Question 7
point
7. Question 7
Using four random instances of the demand for regular apartments from Q5 and four random
instances of the demand for luxury apartments from Q6, calculate the four corresponding total profit
values obtained from sales of both regular and luxury apartments. Based on this four values,
estimate the likelihood of the total profit to be above $52 million. Choose the closest from the
answers below.
0.75
0.1
0.25
0.5
0.9
Question 8
point
8. Question 8
Use Excel to generate descriptive statistics for the four profit values in Q7 and calculate the 95%
confidence interval for the true expected value of the total profit. If this interval has the form [$X, $Y],
what is the value of X, expressed in millions? Choose the closest from the answers below.
48.5
55.3
2.1
6.8
62
Question 9
point
9. Question 9
use the file Stargrove.xlsx to answer these questions. This question is focused on an
alternative decision to build R=88 regular and L=16 luxury apartments.
Consider the decision to build R=88 regular and L=16 luxury apartments. Using the four random
instances of the demand for regular apartments from Q5 and four random instances of the demand
for luxury apartments from Q6, calculate the four corresponding total profit values obtained from
sales of both regular and luxury apartments under this decision. Based on this four values, estimate
the likelihood of the total profit to be above $52 million. Choose the closest from the answers below.
0.75
0.1
.5
0.25
0.9
Question 10
point
10. Question 10
use the file Stargrove.xlsx to answer these questions. This question is focused on an
alternative decision to build R=88 regular and L=16 luxury apartments.
Use Excel to generate descriptive statistics for the four profit values in Q9 and calculate the 95%
confidence interval for the true expected value of the total profit. If this interval has the form [$N, $M],
what is the value of M-N, i.e., what is width of the 95% confidence interval for the expected value of
the total profit? Express the value in millions and choose the closest from the answers below.
1.4
9.2
2.9
4.6
Evaluation Criteria: Module 1 Quiz

Quiz, 10 questions
Question 1
point
1. Question 1
If you had to select one criteria for choosing amongst projects, which would you select?
Return on Investment
Either Payback or Internal Rate of Return
Payback
Internal Rate of Return
Net Present Value

Question 2
point
2. Question 2
You may use a spreadsheet like Excel to help you find the solution to this question.
How much money would you have to put in the bank today, assuming that the bank account paid
interest at the rate of 5% per year, in order to be able to withdraw $10,000 at the end of Year 1,
$20,000 at the end of Year 2 and $30,000 at the end of Year 3, and have nothing left in the account
after the last withdrawal (round to the nearest dollar)?
$70,125
$60,000
$53,580
$45,560

Question 3
point
3. Question 3
Suppose the bank paid you interest at the rate of 15% per year. What amount of money would you
have to put in the bank today, in order to be able to withdraw $10,000 at the end of Year 1, $20,000
at the end of Year 2 and $30,000 at the end of Year 3, and have nothing left in the account after the
last withdrawal (round to the nearest dollar)?
$60,000
$43,544
$32,154
$71,125
Question 4
point
4. Question 4
Suppose that you wanted to be able to withdraw $10,000 at the end of Year 3 from a bank account
that will pay you 5% interest in the first year, 7% interest in the second year, and 10% interest in the
third year. What amount of money would you have to put in the bank today to be able to make that
withdrawal at the end of Year 3 and have nothing left in the account after that withdrawal (round to
the nearest dollar)?
$7,513
$6,920
$8,092
$4,420
Question 5
point
5. Question 5
Suppose your firm is considering investing in a project that requires an initial investment of $200,000
at Year 0, and returns cash flows at the end of Years 1 to 3 of $50,000, $100,000 and $150,000
respectively. Further, assume your company’s cost of capital is 15%. What is the net present value of
the project (round to the nearest dollar)?
$12,970
$100,000
$17,720
-$25,123
Question 6
point
6. Question 6
respectively. Further, assume your company’s cost of capital is 15%. What is the internal rate of
return of the project (round your IRR to the nearest tenth of a percent, e.g., 10.1%)?
22.6%
19.4%
15.0%
24.1%

Question 7
point
7. Question 7
respectively. Further, assume your company’s cost of capital is 15%. In what year does payback
occur for the project?
Year 3
Year 1
Payback is never reached
Year 2
Year 0
Question 8
point
8. Question 8
at Year 0, and returns cash flows at the end of Years 1 to 5 of $20,000, $40,000, $60,000, $80,000
and $350,000 respectively. Further, assume your company’s cost of capital is 8%. What is the net
present value of the project (round to the nearest dollar)?
-$102,551
$0
-$25,552
$90,000
Question 9
point
9. Question 9
at Year 0, and returns cash flows at the end of Years 1 to 5 of $20,000, $40,000, $60,000, $80,000
and $350,000, respectively. Further, assume your company’s cost of capital is 8%. What is the
internal rate of return of the project (round your IRR to the nearest tenth of a percent, e.g., 10.1%)?
7.9%
9.4%
0.0%
2.3%
Question 10
point
10. Question 10
This question relates to a comparison of the projects described in questions 5 and 8.
Refer to the projects in questions 5 and 8. Which of the following best describes the actions you
would take based on your analysis?
Reject the project in question 5 and accept the project in question 8
Accept both projects
Reject both projects
Accept the project in question 5 and reject the project in question 8
How to Evaluate Projects: Module 2 Quiz
Quiz, 11 questions
Question 1
point
1. Question 1
Questions 1-5 in this Quiz refer to the following scenario: Your company uses recycled
newspaper to make paper towels and is considering buying a machine that utilizes a proprietary de-
inking technology that will reduce the cost of de-inking the recycled newspaper. The company can
buy the machine for $300,000 and it is expected to have a five year life. In order to use the de-inking
machine, the company has to train multiple employees how to use the machine appropriately. The
cost of training is $10,000. Assume for simplicity that both of these components of the initial
investment occur at Year 0 and that the company is otherwise very profitable and faces a 40% tax
rate.
What is the after-tax cash flow associated with the initial investment in the project in Year 0?
$310,000
$306,000
$186,000
$180,000
None of these are correct
$300,000
Question 2
point
2. Question 2
Refer to the scenario in Question 1.
Assume that the company’s cost of producing paper towels falls by $100,000 per year for five years.
Further assume that the company uses straight-line depreciation for tax purposes based on a five
year life and an estimated salvage value of $25,000 for the machine. What is the change in the
company’s taxes paid for Years 1 to 5, due to operating the machine?
$10,000
$40,000
$18,000
$27,000
Question 3
point
3. Question 3
Given the information in questions 1 and 2, what is the change in the company’s after-tax cash flows
associated with operating the machine in Years 1 to 5?
$27,000
$100,000
$82,000
$45,000
Question 4
point
4. Question 4
Given the information in questions 1 and 2, assume that, at the end of Year 5, the company will sell
the machine. Further assume the company anticipates being able to sell the machine for $40,000,
despite the fact that the depreciation was based on an assumed salvage value of $25,000. What is
the change in the company’s after-tax cash flows associated with selling the machine at the end of
Year 5?
$19,000
$15,000
$40,000
$34,000
Question 5
point
5. Question 5
Assuming the company’s cost of capital is 12%, what is the NPV of purchasing the de-inking
machine that is discussed in questions 1 to 4 (round to the nearest dollar)? For simplicity in
calculating the NPV, assume that the cash flows occur at the end of each year.
$8,884
-$7,552
$19,526
$138,000
Question 6
point
6. Question 6
Questions 6-11 in this Quiz refer to the following scenario: Your company uses recycled
newspaper to make paper towels and is considering buying a machine that utilizes a proprietary de-
inking technology that will reduce the cost of de-inking the recycled newspaper. The company can
buy the machine for $300,000 and it is expected to have a five year life. In order to use the de-inking
machine, it has to train multiple employees in how to use the machine appropriately. The cost of
training is $10,000. In addition, the machine uses a special soap and the company buys enough
inventory of the soap at Year 0 to last the first year at a cost of $50,000. Assume for simplicity that all
three of these components of the initial investment occur at Year 0 and that the company is
otherwise very profitable and faces a 40% tax rate.
What is the after-tax cash flow associated with the initial investment in the project in Year 0?
$300,000
$336,000
$356,000
$360,000
$310,000
Question 7
point
7. Question 7
Assume that the company’s cost of producing paper towels falls by $250,000 per year, excluding the
cost of the soap in each of the next five years. Further assume that the company uses straight-line
depreciation for tax purposes based on a five year life and an estimated salvage value of $0 for the
machine. Note that at the end of Years 1 to 4, the company must buy another year’s worth of soap to
be used in the following year. What is change in the company’s taxes paid for Years 1 to 5, due to
operating the machine?
$56,000
$80,000
$76,000
$84,000
Question 8
point
8. Question 8
associated with operating the machine in Years 1 to 4?
$144,000
$104,000
None of these correct
$200,000
$194,000
Question 9
point
9. Question 9
associated with operating the machine in Year 5? Note that in Year 5, the company does not need to
replenish its supply of soap since they will stop operating the machine at the end of Year 5. Ignore
any salvage value associated with selling the machine when answering this question.
$200,000
$104,000
$164,000
$194,000
Question 10
point
10. Question 10
Given the information in questions 6 and 7, assume, at the end of Year 5, the company will sell the
machine. Assume the company anticipates being able to sell the machine for $40,000, despite the
fact that the depreciation was based on an assumed salvage value of $0. What is the change in the
company’s after-tax cash flows associated with selling the machine at the end of Year 5?
$12,000
$24,000
$56,000
$40,000
Question 11
point
11. Question 11
Assuming the company’s cost of capital is 10%, what is the NPV of purchasing the de-inking
machine that is discussed in questions 6 to 10 (round to the nearest dollar)? For simplicity in
calculating the NPV, assume that the cash flows occur at the end of each year.
$111,356
$235,821
$87,613
$438,000
Financial Statements and Forecasting: Module 3 Quiz
Quiz, 10 questions
Question 1
1
point
1. Question 1
Which of the following are on a Balance Sheet? (there can be more than one)
Cash
Depreciation Expense
Sales Revenue
Accounts Payable
Retained Earnings
Question 2
1
point
2. Question 2
Which of the following are on an Income Statement? (there can be more than one)
Interest Expense
Cost of Goods Sold
Selling, General, and Administrative Expense
Retained Earnings
Cash
Question 3
1
point
3. Question 3
Given the following information (not all of which is relevant), what is Net Income?
 Sales Revenue = $2000

 Dividends Paid = $100
 Cash = $300
 SG&A Expense = $200
 Cost of Goods Sold = $800
$1200
$300
$900
$600
$1100
$1000
Question 4
1
point
4. Question 4
Which of the following will have a bigger impact on income THIS YEAR?
 Spend $100 on research and development

 Spend $100 on purchases of equipment
 Spend $100 on purchases of inventory that is still not sold at the end of the year
 Spend $100 to pay off short term debt
Spend $100 on purchases of equipment
Spend $100 on research and development
Spend $100 to pay off short term debt
Spend $100 on purchases of inventory that is still not sold at the end of the year
Question 5
1
point
5. Question 5
Suppose you buy a machine for $200,000 that is expected to last for 10 years, with no salvage value
at that time. If the firm uses straight line depreciation, how much depreciation do they charge per
year?
$20,000
$200,000
$40,000
$10
Question 6
1
point
6. Question 6
Which of the following statements are true about depreciation for tax purposes? (there can be more
than one)
It lowers your tax bill
It depreciates assets faster than Straight Line Depreciation
It’s part of the Financing Section of the Cash Flow Statement
It generally is based on Accelerated Depreciation
Question 7
1
point
7. Question 7
Suppose Sales = $1000 and Receivables went up by $100. How much cash was collected from
customers?
$1100
$1000
$900
$100
Question 8
1
point
8. Question 8
Suppose Inventory went down by $200 and purchases were $600. What was the cost of the units
sold?
$800
$200
$400
$600
Question 9
1
point
9. Question 9
Suppose Net Income =$100, Depreciations = $20, and Working Capital increased by $30. What was
Cash From Operations?
$90
$50
$80
$100
$120
$140
Question 10
1
point
10. Question 10
Suppose Net Income = $200 , Depreciations = $10, and Working Capital went up by $70. What was
Cash from Operations?
$140
$260
$200
$280
$80
Calculating Value: Module 4 Quiz
Quiz, 10 questions
Question 1
point
1. Question 1
Setting up a spreadsheet so that all the assumptions are contained in a well-defined section is
valuable because (more than one answer could be correct)
It makes the calculations more precise
It minimizes the number of cells you ever change, thereby reducing the likelihood of inadvertent
errors
It allows for easier re-calculation of results under alternative scenarios
It makes it easier to blame someone else if things go wrong

Question 2
1
point
2. Question 2
Why does the process of generating forecasts of Future Financial Statements for a new product
venture generally start with forecasting the Sales line? (more than one answer could be correct)
Because Sales measures the profitability of the product venture
Because many of the other business activities are determined based on forecasted volumes of sales
Because Sales Revenues are the biggest numbers on the Income Statement
Because Sales is the easiest line item to forecast in a new product venture
Question 3
point
3. Question 3
The discount rate we use in calculating the net present value of the expected future cash flows
associated with the new product venture should: (more than one answer could be correct)
Be higher if the initial start-up costs of the venture are higher
Reflect the opportunity cost of using capital in our next best use
Be higher if we expect inflation to be higher
Be lower for riskier ventures

Question 4
1
point
4. Question 4
This question refers to the spreadsheet that we used in our lectures to analyze a New Product
Venture. This spreadsheet is titled MODULE 4 – NEW PRODUCT VENTURE – BASE CASE.xls
If you’ve been exploring the spreadsheet, make sure everything is re-set to the initial set of
assumptions in the spreadsheet. You can verify that everything is correctly reset by making sure the
NPV = $26,624 and the IRR = 11.5%. With these settings in place for our New Product Venture’s
forecasted financial statements, why is Cash Flow smaller than Net Income in Year 3?
Because they’ve invested some of the cash in Working Capital
Because they have to pay taxes
Cash Flow is always smaller than Net Income
Because Depreciation is not a Cash Flow

Question 5
point
5. Question 5
In our New Product Venture’s forecasted financial statements, why is Cash Flow larger than Net
Income in Year 6?
Because they’ve collected some of the cash that had been invested in Working Capital
Because they have to pay taxes
Cash Flow is always larger than Net Income
Because Depreciation is not a Cash Flow

Question 6
point
6. Question 6
Suppose the tax rate that the New Product Venture will face changed to 0%. How should we expect
the numbers in the spreadsheet to change? (there could be more than one). Note: You don’t have to
do any re-calculations with the spreadsheet to answer this, but you can recalculate if you like.
Present Value of cash flows will be higher
Sales Revenue will be higher
Cost of Goods sold will be smaller
Tax Expense will be zero

Question 7
point
7. Question 7
Make sure everything in the spreadsheet is re-set to the initial set of assumptions in the
spreadsheet. You can verify that everything is correctly reset by making sure the NPV = $26,624
and the IRR = 11.5%. If we changed the tax rate to 0%, what is the NPV of the cash flows now?
$124,676
$26,624
$54,676
$0
Question 8
point
8. Question 8
With a tax rate = 0% (as above), what Sales Volume per year causes the New Venture to Break
Even? That is, it has an NPV of zero at that volume. Feel free to try to use Goalseek to solve this.
Breakeven Volume = 1432 Units

Question 9
point
9. Question 9
Re-set everything in the spreadsheet. In particular, make sure that the tax rate is 40% and the initial
sales volume is 2000. Check that everything is correctly reset by making sure the NPV = $26,624
and the IRR = 11.5%. Now let’s change Research & Development Costs in year 1 and 2 to be
$60,000. What is the Internal Rate of Return (IRR) of the new product venture now?
3.7%
0.0%
3.0%
11.5%
6.0%

Question 10
point
10. Question 10
Re-set everything in the spreadsheet. In particular, make sure that the tax rate is 40%, the initial
sales volume is 2000, and the R&D costs are $20,000 in years 1 and 2. Check that everything is
correctly reset by making sure the NPV = $26,624 and the IRR = 11.5%. Suppose we offer to let
customers pay later in the hope that it stimulates more sales. Specifically, suppose customers only
pay 80% of the purchase price in the year of the sale (and 20 percent the next year), but that this
increases Sales volume per year to 2300 units. What is new Net Present Value of the proposed new
product venture?
$26,624
$48,246
$53,127
$22,380
Project Scope Quiz
Quiz, 5 questions
Question 1
point
1. Question 1
How many Steps are included in this project (both graded and ungraded)?
13
15
5
Question 2
point
2. Question 2
To complete this project, you will have to... (check all that apply)
Download historical market data
Complete a course in financial management
Use Excel to perform calculations
Perform asset allocation
Create a presentation outlining allocation strategy

Question 3
point
3. Question 3
Which "frontier" will be used in creating your portfolio?
Old frontier
Final frontier
Efficient frontier
Western frontier
New frontier
Question 4
point
4. Question 4
Which of the following will you compare while preparing your capstone?
individual returns vs. commodities
historical performance vs. stock options.
summary statistics vs. stock options
summary statistics vs. individual returns
individual returns vs. historical performance

Question 5
point
5. Question 5
Part of this project requires you to imagine yourself as a
financial analyst at a social impact fund
wealth advisor at a multinational bank
portfolio manager at an equity quant fund
stock trader on the stock exchange
stock broker in the London office
Daily Returns Quiz
Quiz, 10 questions
Question 1
point
1. Question 1
What was the Close price and Adjusted Close price, respectively, for MSFT on January 13, 2012?
28.25; 24.91
27.93; 27.79
28; 24.69
24.91; 28.25
point
2. Question 2
Calculate the daily return for MSFT on January 13, 2012 using the “Close price” and enter it here.
Write your answer as a percentage, with no percentage sign ("%"), and rounded to the nearest
hundredth decimal place (e.g., you would enter "1.2344%" as "1.23", not "0.012344").
0.88
point
3. Question 3
Calculate the percentage daily return for MSFT on June 27, 2016 using the “Adjusted Close price”
and enter it here.
2.88
point
4. Question 4
Calculate the difference between MSFT's "Close price" and "Adjusted Close price" on October 17,
2014 and enter it here.
2.272
point
5. Question 5
Calculate the daily return on August 31, 2011 for DJI using the “Close price” and enter it here.
0.46
point
6. Question 6
Calculate the daily return for DJI on November 1, 2012 using the “Adjusted Close price” and enter it
here.
1.028
point
7. Question 7
What was the numerical difference between DJI's "Close price" and "Adjusted Close price" on
August 28, 2012, January 23, 2014, and December 1, 2015?
0.000
Question 8
point
8. Question 8
Which price reflects the true return of holding a security?
Adjusted Close price
Close price
Question 9
point
9. Question 9
What could explain the differences between Adjusted Close price and Close price (check all the
apply)?
Dividend payments
Events where the corporation pays out stock to stockholders
The Dow Jones Industrial Average setting a record for gains
Stock split
Instability in the global markets

Question 10
point
10. Question 10
In order to make accurate calculations of a stock's return, which price should you use?
Adjusted Close price
Close price
Summary Statistics Quiz
Quiz, 10 questions
point
1. Question 1
Using the results you get from the Daily Returns quiz for MSFT, calculate the following summary
statistic "mean" of the MSFT return series (using the adjusted close return series).
0.06
point
2. Question 2
statistic "standard deviation" of the MSFT return series (using the adjusted close return series).
1.48
point
3. Question 3
statistic "min" of the MSFT return series (using the adjusted close return series).
-11.40
point
4. Question 4
statistic "max" of the MSFT return series (using the adjusted close return series).
10.45
point
5. Question 5
statistic "Sharpe Ratio" of the MSFT return series (using the adjusted close return series).
Write your answer as a number rounded to the nearest thousandth percentage point (e.g., you would
write "0.073214" as "0.073").
0.050
point
6. Question 6
Using the results you get from the Daily Returns quiz for DJI, calculate the following summary
statistic "mean" of the DJI return series (using the adjusted close return series).
0.03
point
7. Question 7
statistic "standard deviation" of the DJI return series (using the adjusted close return series).
0.91
point
8. Question 8
statistic "min" of the DJI return series (using the adjusted close return series).
-5.55
point
9. Question 9
statistic "max" of the DJI return series (using the adjusted close return series).
4.24
point
10. Question 10
Using the results you get from the Daily Returns quiz for DJIA, calculate the following summary
statistic "Sharpe Ratio" of the return series (using the adjusted close return series).
Write your answer as a number rounded to the nearest thousandth percentage point (e.g., you would
write "0.073214" as "0.073").
0.048

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Module 1: Introduction to Models Quiz

A formal description of a business process

A 100% accurate representation of the business process

(i), (ii), and (iii)

(ii) and (iii)

The monthly customer growth rate is approximately 2%

Two-thousand extra customers are added every month

The annual customer growth rate is approximately 2%

For every 1% increase in months there will be a 2% increase in customers

The model has a set-up time of 3 hours

If x increases by 1% then y will increase by 4%.

The rate of change in y is constant at 4 hours per unit

A process that exhibits diminishing returns to scale

A process that exhibits seasonality

A process that is increasing at a constant rate

A process that exhibits a constant growth rate

When there is more than one input to the model

When all of the inputs are random variables

There is no randomness in the model

It only uses linear functions

It always uses discrete input values

It cannot be used as a basis for a subsequent optimization

The variable costs are 100 USD

Fixed costs are 100 USD

The elasticity of cost respect to quantity is 100

Fixed costs are 100,000 USD

Cost = 25 + 2.5 log(q)

The terms are in fact synonyms

Compound interest is applied more often than simple interest

It represents the monthly growth rate

It represents the annual growth rate

It represents the current number of users. That is, at time t = 0

Module 3: Probabilistic Models Quiz

The fact that it uses random variables

The fact that it is based on theory rather than data

The fact that it uses an exponential function

It can provide a more accurate measure of the output

It can be used with both discrete and continuous variables

It can deal with larger amounts of data

It can include a range of uncertainty for the model output

Monte Carlo simulations do not in fact incorporate uncertainty

Either continuous or discrete, it doesn’t matter

A discrete random variable

A continuous random variable

The number of minutes that a battery lasts in a cell phone

The number of houses that an individual owns

Student test scores on an exam

A Monte Carlo Simulation

There isn’t one. The two terms are equivalent

A simple regression is appropriate for a dichotomous outcome variable, whereas a multiple

It models the median of the outcome

It models the mean of the outcome as a function of X

It models the standard deviation of the outcome as a function of X

They may or may not have a strong linear association

They have a perfect positive linear association

They have a perfect negative linear association

Identifying unusual data points

You can in fact use a regression model for all of these

Forecasting new observations

The horizontal distance from a point to the fitted regression line

The intercept of the regression line

When the outcome is always positive

Formula in cell C14=C10C4-C10C2

=if(number_ordered<51,0,if(number_ordered>100, cost_per_cabinet30%, cost_per_cabinet20%)