Quantitative Reasoning II Project: Calculations And Visuals

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Create at least three visuals.

  • One visual must be a scatter plot with trend line, equation, R2 value, and prediction value.
  • Two of the remaining required visuals can be of the following format: histogram, box and whisker plot, or pie chart.
  • Please note that the data set that you chose in Week 2 includes data that will not be needed to create your visuals. Quantitative reasoning requires critical thinking to decide what data is necessary.

Create a Microsoft® Word document that includes your three visuals and the following items:

  • Title of your project and the scenario you are addressing
  • Brief description of each visual (15 to 50 words)
  • Consider including the following for each visual when applicable:
    • A chart title that is appropriate for the data
    • A descriptive x-axis label
    • A descriptive y-axis label
  • For your xy scatter plot, make at least one prediction using the trend line equation for a date in the future. How confident are you in this prediction? State your prediction and provide justification (50 to 150 words).
  • If you created a box and whisker plot, describe the central tendency of the values. What does this tell you about the data and about your project?
  • Calculate the mean of the sample data.

    Sheet1

    Security and Criminal Justice Scenario
    Topic 2 Predicting Total U.S. correctional population
    Scenario 2 Review the data on persons supervised by U.S. adult correctional systems by correctional status. Predict the number of the United States population that will be supervised by U.S. adult correctional system in 2018.
    Year Total U.S. correctional population Probation Parole
    2000 6,467,800 3,839,400 725,500
    2001 6,584,900 3,934,500 731,100
    2002 6,730,900 3,995,000 753,100
    2003 6,886,800 4,073,800 773,500
    2004 6,997,000 4,140,400 775,900
    2005 7,055,600 4,162,300 784,400
    2006 7,199,700 4,236,800 798,200
    2007 7,339,600 4,293,000 826,100
    2008 7,313,600 4,270,100 828,200
    2009 7,235,200 4,196,200 824,100
    2010 7,086,500 4,053,600 840,700
    2011 6,989,200 3,969,400 854,600
    2012 6,945,100 3,940,800 857,800
    2013 6,903,200 3,910,600 855,200
    2014 6,851,000 3,864,100 856,900

Business Assignment

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Consider the following scenarios, each of which necessitate some kind of written correspondence. Based on our discussions of mediums(genres of writing) and their relative appropriateness and chapter one’s suggestions, A. state which medium you’d use and B. explain why you chose that medium(i.e. what is it about the context/setting informing your decision).

 

For example, if a close colleague suffered a death in their family I would likely utilize a sympathy card. My reasoning for this choice is that I want to express compassion and a card is not only nonintrusive (allowing the recipient to read it at their leisure) but it also shows initiative on my part for writing and sending a card to express my sympathies. Be specific about the medium.

 

Assume all mediums of communication are available and Feel free to use multiple mediums (15 points)

 

1. Due to an increase in rent, you’ve decided you need to increase prices for your services. You want to send a message to your customers conveying your gratitude for their patronage but also informing them of the price increase.

 

A.

 

B.

 

2. The president and the vice-president of the company are giving a presentation in just half-an-hour. While on the subway, the vice-president says they cannot attend due to an emergency. You must tell the president they will be presenting alone.

A.

 

B.

 

 

3. You’re the CEO of a clothing company and you want to begin brainstorming the summer collection at a company-wide meeting. Because the project is in its early stages, you want to include the opinions of essentially every department within the company (finance, marketing, research & development, etc). How will you reach out to these departments to inform them of a meeting?

 

A.

 

B.

 

 

4. Consider our earlier discussions of what comprises persuasive rhetoric. We discussed the relationship between goal, audience, rhetoric and voice.

 

Please select one of the following videos and analyze the use of persuasion within the video you select. Please discuss the following ideas regarding persuasion within the video you selected (15 points):

 

A. Key questions regarding persuasion: What is the goal of the speaker? i.e. what is the speaker hoping to gain? Who do you believe is the intended audience for the video? Based on the audience you believe the video is aimed at, how does the speaker attempt to appeal to this audience? In other words, how is the argumentation they deploy related to their audience?

 

B. Please define what your definition of persuasive rhetoric is. You may use the traditional ethos, pathos, logos terms, if you want, but you don’t need to. If you find it easier to define your perception of effective rhetoric through other terms, you’re free to do so. 4-6 sentences should suffice.

 

C. Based on your definition of effective persuasion, assess the speaker you selected. Did they meet your definition of good rhetoric? Why or why not? Do you feel you’re part of the intended audience? There should be consistency between your definition and your assessment of the rhetoric within the video. Please use specific examples of the speech in your assessment. Remember, be honest in your assessment. My hope here is that you become aware of what is persuasive to you and that you’re able to evaluate others’ rhetoric with this definition in mind. Some of these video are long, so you don’t need to watch the entire thing but select a period within the video of approximately 10-15 minutes. 8-10 sentences will suffice.

 

Please select one of the following speakers to assess and analyze:

 

· Sana Amanat (editor of Marvel comics)

· Douglas Rushkoff (media theorist/Economist)

· Andrew Yang (Tech Entrepreneur/ Advocate for Universal Basic Income)

 

 

A.

 

 

 

 

 

B.

 

 

 

 

C.

 

 

 

 

Refer to our discussions and reading on routine correspondence. The following statements deliver various modes of communication. However, the manner in which the ideas are conveyed isn’t ideal. Rewrite each statement so as to convey the message more effectively/clearly/less harshly. (20 points)

 

5. Ten percent of the marketing department failed to attend Friday’s meeting.

 

 

6. We’ve decided to go with another candidate because you do not meet our needs.

 

 

 

 

7. We will not be able to offer you a job. We encourage you to apply for positions with us, in the future.

 

 

8. Because you have are attempting to return this item beyond the fifteen-day return period, we can’t offer you a refund and can only offer a 25% discount on your next purchase.

 

 

9. The following is the opening to a university letter informing an applicant that they will not be admitted. Please critique this document. A. What do you feel—based on our discussions of bad news messages—the writer could have done for this letter to be more effective? In other words, what doesn’t work about this letter B. Rewrite this opening—adding, subtracting or rewording anything you deem appropriate. (10 points)

 

Dear Ms. Jenson,

 

Unfortunately we cannot offer you admission at this time. We thank you for applying

 

 

Sam Brown,

Director of Admissions

 

A.

 

 

 

B.

 

 

 

 

 

 

10. Typically in business communication you’ll be writing using a direct approach pattern. However, there are a few situations when you’ll want to use an indirect approach. Please name one of these situations.(5 points)

 

 

 

 

11. The previous assignment asked you to explore the cultural facets of another country with regards to written business etiquette. This time, I’d like you to meta-cognitively explore the etiquette, rules and ideas that comprise your own style of business writing. (15 points)

 

 

A. Please examine two pieces of writing. First, examine an email you have sent to a boss, professor or somebody else In a professional setting. Then, please look at a message (email, Facebook message, text, etc) that was sent in a more personal context. Compare the high-context VS. low-context nature of these messages. Is one more high context than the other? Do the circumstances that the messages were written under have any bearing on how you wrote the message?

(about one paragraph)

B. What do you feel influences these preferences? How much influence—if any at all—does your home culture have on your writing/reading within these contexts? When considering this question, you may consider your home culture but you don’t necessarily need to do so. Perhaps there are other influences that influence the way you write.

(about one paragraph)

 

 

For example, perhaps your culture is high context and this manifests blatantly in your preferences. Conversely, perhaps your home culture is Swedish (a country that’s immensely low context) but you still have a personal preference for higher context writing.

 

 

 

12. Consider our discussion on the elements of an argument. (20 points)

 

Please identify the following components, exigency(aka motive) , audience , rhetors , and constraints within the following article, by Nithin Coca.

 

A few notes:

 

Remember that despite the negative connotation, constraints can be good or bad for an argument. For instance, if you’re thirsty it will be easier for someone to make the argument that you should buy a bottle of water. In this case, your thirst is a constraint that will help me make my point. However, if I’m trying to ask for a raise but the company is in poor financial condition, the company’s sub-par finances will be a constraint that harms my ability to make my argument (I deserve a raise).

 

Contextual info (If it’s useful)Nithin Coca, a journalist who covers human rights, technology, and business.

International Business Paper On Chick-Fil-A Inc.

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Introduction

(Company Name) Overview

Company Description

Company Strengths

Company Weaknesses

Company Needs

Global Industry

Expansion Opportunities

Expansion Risks: Threat of New Entrants and Threat of Substitute Products

Expansion Risks: Bargaining Power of Suppliers.

Expansion Risks: Bargaining Power of Buyers.

Expansion Risks: Rivalry Among Existing Competitors.

Expansion Risks: Legal Environment.

Expansion Risks: Regulatory Environment and Intellectual Property.

Country Selection Rationale

Macro-Level Comparison of Countries

United Kingdom and China

Country Comparison

Opportunity Comparison for United Kingdom and China

Market Size

United Kingdom.

China .

Growth

United Kingdom.

China.

Business Climate

Industry Opportunities

Risk Comparisons Between United Kingdom and China

Threat of New Entrants.

Competitive Risk in United Kingdom and China

Global Competitors and their Threat

Risk Mitigation Strategy

Entry Strategy

Conclusion

Why Study Financial Markets and Institutions?

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Chapter One

Introduction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6th Edition

1

Why Study Financial Markets and Institutions?

Markets and institutions are primary channels to allocate capital in our society

Proper capital allocation leads to growth in:

Societal wealth

Income

Economic opportunity

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2

 

Why Study Financial Markets and Institutions Continued…?

In this text we will examine:

the structure of domestic and international markets

the flow of funds through domestic and international markets

an overview of the strategies used to manage risks faced by investors and savers

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3

 

Financial Markets

Financial markets are one type of structure through which funds flow

Financial markets can be distinguished along two dimensions:

primary versus secondary markets

money versus capital markets

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4

 

Primary versus Secondary Markets

Primary markets

Markets in which users of funds (e.g., corporations) raise funds by issuing new financial instruments (e.g., stocks and bonds)

Secondary markets

Markets where existing financial instruments are traded among investors (e.g., exchange traded: NYSE and over-the-counter: NASDAQ)

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5

You might also wish to mention electronic communication networks or ECNs. ECNs allow direct electronic trading among buyers and sellers without a third party. Two former ECNs, BATS (formed in 2005) and DirectEdge (formed in 1998), merged in fall 2013, and applied to become an exchange. The combined entity makes them the number two stock market ahead of NASDAQ and behind NYSE. Together the two have about 270 employees. The NYSE and NASDAQ have far more! Sign of the times.

 

BATS Global Markets is a stock exchange based in Lenexa, Kansas, a suburb of Kansas City. BATS was founded in June 2005 as an Electronic Communication Network (ECN) and its name stands for Better Alternative Trading System.[2] (Trades stocks on BZX and options on BYX exchange.) (source BATS website)

Primary versus Secondary Markets Continued

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6

 

Primary versus Secondary Markets Concluded

How were primary markets affected by the financial crisis?

 

Do secondary markets add value to society or are they simply a legalized form of gambling?

How does the existence of secondary markets affect primary markets?

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7

Primary market issuance declined sharply during the crisis, although with low interest rates bond issuance boomed after market uncertainty declined in 2010. Stock issuance remained weaker longer, recovering in 2012.

Secondary markets add liquidity for risky investments and encourage investment in primary markets. Secondary markets also aid in price discovery, providing up to date signals of the ongoing value of firms. These signals also provide benchmarks for corporate performance. It is not true that secondary markets are simply a legalized form of gambling.

Money versus Capital Markets

Money markets

Markets that trade debt securities with maturities of one year or less (e.g., CDs and U.S. Treasury bills)

little or no risk of capital loss, but low return

Capital markets

Markets that trade debt (bonds) and equity (stock) instruments with maturities of more than one year

substantial risk of capital loss, but higher promised return

Figure 1.3

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8

 

Money Market Instruments Outstanding, ($Tn)

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9

Notice with the 2016 data that T-bills are now about 1/5 of total money market instruments. Banker’s Acceptances continue to be used less due to their cost and the growth of other trading arrangements. The commercial paper (cp) market collapsed during the financial crisis and has grown more slowly since. Stress that cp is an alternative to a bank loan and may provide a cheaper source of financing for large well known companies.

 

Many students will not be familiar with commercial paper, repurchase agreements (repos or RPs) and banker’s acceptances so it is worthwhile to discuss these briefly. In a repo one sells a security and agrees to repurchase it at maturity at a higher price that is set in the contract. A repo is best thought of as a short term collateralized loan as compared to a fed funds loan which is uncollateralized.

Banker’s Acceptances have traditionally been used to finance international trade where a bank is asked to guarantee payment on a commercial contract in case the buyer of the goods does not or cannot pay.

Capital Market Instruments Outstanding, ($Tn)

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10

Text: As of mid-March 2009, the Dow Jones Industrial Average (DJIA) had fallen 53.8 percent in value in less than 1 ½ years, larger than the decline during the market crash of 1929 when it fell 49 percent. However, stock prices recovered, along with the economy, in the last half of 2009, rising 71.1 percent between March 2009 and April 2010.

Foreign Exchange (FX) Markets

FX markets

trading one currency for another (e.g., dollar for yen)

Spot FX

the immediate exchange of currencies at current exchange rates

Forward FX

the exchange of currencies in the future on a specific date and at a pre-specified exchange rate

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11

Spot FX: Note that ‘immediate’ usually means delivery within one or two business days.

Derivative Security Markets

Derivative security

A financial security whose payoff is linked to (i.e., “derived” from) another, previously issued security such as a security traded in capital or foreign exchange markets

Generally an agreement to exchange a standard quantity of assets at a set price on a specific date in the future

The main purpose of the derivatives markets is to transfer risk between market participants

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12

 

Derivative Security Markets Continued

Selected examples of derivative securities

Exchange listed derivatives

Many options, futures contracts

Over the counter derivatives

Forward contracts

Forward rate agreements

Swaps

Securitized loans

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13

Exchange listed are more regulated, more transparent, and generally involve no default risk for the counterparty.

 

OTC derivatives are nonstandard, largely unregulated and may involve substantial counterparty credit risk.

 

Forward rate agreements are prearranged loan contracts with the loan terms set now, drawdowns in the future.

Derivatives and the Crisis

Mortgage derivatives allowed a larger amount of mortgage credit to be created in the mid-2000s.

Growing importance of ‘shadow banking system’

Mortgage derivatives spread the risk of mortgages to a broader base of investors.

Change in banking from ‘originate and hold’ loans to ‘originate and sell’ loans.

Decline in underwriting standards on loans

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14

(Optional slide: Hide if you do not wish to cover this topic)

This helped fuel a ‘credit boom’ that led to unsustainable increases in home prices. The shadow banking system refers to non-bank FIs who indirectly provide financing for loans buy originating loans or more likely by purchasing securities backed by loans. Shadow banking allows more rapid growth in credit by increasing the supply of funds available.

When home prices began falling in late 2006, more institutions were affected.

Resulted in a change in culture at some banks as well from a lending culture to a trading culture that was less risk averse.

 

 

 

 

 

 

The instructor may wish to ask students whether it makes sense to blame the instrument or the users. Warren Buffett has called derivatives, ‘weapons of mass destruction.’ However, used properly they allow market participants to transfer risk to other parties that they themselves do not wish to bear, and allow others lower cost methods to gain exposure to markets. It does seem reasonable to require greater transparency in OTC derivatives to ensure that players can cover the promises they make. Derivatives that involve payments of principal, such as credit default swaps, should be required to be traded on an exchange so that there are guarantees of performance and reasonable limits to speculation.

Derivatives and the Crisis Continued

Subprime mortgage losses were large, reaching over $700 billion.

The “Great Recession” was the worst since the “Great Depression” of the 1930s.

Trillions $ global wealth lost, peak to trough stock prices fell over 50% in the U.S.

Lingering high unemployment and below trend growth in the U.S.

Sovereign debt levels in developed economies reached post-war all-time highs

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(Optional slide: Hide if you do not wish to cover this topic)

Led to overall large declines in home prices nationwide. Houses are illiquid assets and falling home values are a drag on economic growth. Millions of homeowners are ‘underwater,’ owing more on their homes than their current market value.

Much of the wealth loss may be temporary over the long term, but growth declined at a rapid rate during the crisis. As of 2014 only now beginnin to see a return to more normal growth rates of the U.S. economy.

 

 

 

 

 

The instructor may wish to ask students whether it makes sense to blame the instrument or the users. Warren Buffett has called derivatives, ‘weapons of mass destruction.’ However, used properly they allow market participants to transfer risk to other parties that they themselves do not wish to bear, and allow others lower cost methods to gain exposure to markets. It does seem reasonable to require greater transparency in OTC derivatives to ensure that players can cover the promises they make. Derivatives that involve payments of principal, such as credit default swaps, should be required to be traded on an exchange so that there are guarantees of performance and reasonable limits to speculation.

Financial Market Regulation

The Securities Act of 1933

Full and fair disclosure and securities registration

The Securities Exchange Act of 1934

Securities and Exchange Commission (SEC) is the main regulator of securities markets

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16

 

Financial Institutions (FIs)

Financial Institutions

Institutions through which suppliers channel money to users of funds

Financial Institutions are distinguished by:

Whether they accept insured deposits

Depository versus non-depository financial institutions

Whether they receive contractual payments from customers

 

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Institutions that accept insured deposits must be regulated by the government to offset the government’s liability. Insured deposits are a low cost source of financing, but the regulatory burden increases these institution’s costs significantly.

FIs that receive contractual payments, such as life insurers, pension funds and property and casualty insurers have steady premium income to invest. This allows them to take on more risk in their investment portfolio.

Percentage Shares of Assets of Financial Institutions in the United States, 1948–2016

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Point out the large decline in the share of commercial banks from 2010 (32.8%) to 2016 (26.1%).

18

Users of Funds

Suppliers of Funds

 

 

Financial Claims

(equity and debt instruments)

Cash

Flow of Funds in a World without FIs

Non-Intermediated (Direct) Flows of Funds

Direct Financing

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Users of Funds

FIs

(brokers)

 

 

FIs

(asset

transformers)

 

Suppliers of Funds

 

 

 

 

 

 

 

 

 

 

Financial Claims

(equity and debt securities)

Financial Claims

(deposits and insurance policies)

Cash

Cash

Flow of Funds in a World with FIs

Intermediated Flows of Funds

Intermediated Financing

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20

 

Depository versus Non-Depository FIs

Depository institutions:

commercial banks, savings associations, savings banks, credit unions

Non-depository institutions

Contractual:

insurance companies, pension funds,

Non-contractual:

securities firms and investment banks, mutual funds.

 

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21

Note: savings associations, savings banks and credit unions are often called ‘thrifts.’

FIs Benefit Suppliers of Funds

Reduce monitoring costs

Increase liquidity and lower price risk

Reduce transaction costs

Provide maturity intermediation

Provide denomination intermediation

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FIs Benefit the Overall Economy

Conduit through which Federal Reserve conducts monetary policy

Provides efficient credit allocation

Provide for intergenerational wealth transfers

Provide payment services

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23

 

Risks Faced by Financial Institutions

Credit

Foreign exchange

Country or sovereign

Interest rate

Market

Off-balance-sheet

Liquidity

Technology

Operational

Insolvency

Volcker Rule: Insured institutions may not engage in proprietary trading

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Regulation of Financial Institutions

FIs are heavily regulated to protect society at large from market failures

Regulations impose a burden on FIs; before the financial crisis, U.S. regulatory changes were deregulatory in nature

Regulators attempt to maximize social welfare while minimizing the burden imposed by regulation

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Enterprise Risk Management

Enterprise risk management

Recognizes the importance of managing the combined impact of the full spectrum of risks as an interrelated risk portfolio

Popularity rose as a result of the failure of advanced risk measurement and management systems to detect exposures that led to the financial crisis

Stresses importance of building a strong risk culture

 

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Globalization of Financial Markets and Institutions

The pool of savings from foreign investors is increasing and investors look to diversify globally now more than ever before

Information on foreign markets and investments is becoming readily accessible and deregulation across the globe is allowing even greater access to foreign markets

International mutual funds allow diversified foreign investment with low transactions costs

Global capital flows are larger than ever

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Appendix: FIs and the Crisis

Timeline of events

Home prices decline in late 2006 and early 2007

Delinquencies on subprime mortgages increase

Huge losses on mortgage-backed securities (MBS) announced by institutions

Bear Stearns fails and is bought by J.P. Morgan Chase for $2 a share (deal had government backing)

 

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In 2007 Citigroup, Merrill Lynch and Morgan Stanley wrote off $40 billion in bad mortgages.

The MBS insurer, MBIA, reported a $2.3 billion loss in the fourth quarter of 2007, Countrywide had to draw down its entire $11.5 billion credit line, leading to a buyout by Bank of America.

 

Indy Mac Bank, the largest mortgage lender in the U.S. at the time tried to find additional capital throughout 2007, but could not, and was seized by the FDIC in July 2008 after facing deposit withdrawals of $1.3 billion. The cost to the FDIC was betweent $8.5 and $9.4 billion.

Appendix: FIs and the Crisis Continued

Timeline of events

September 2008, the government seizes government-sponsored mortgage agencies Fannie Mae and Freddie Mac

The two had $9 billion in losses in the second half 2007

Now run by Federal Housing Finance Agency (FHFA)

September 2008, Lehman Brothers files for bankruptcy; Dow drops 500 points

 

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Lehman had been around for over 150 years, Barclays eventually acquires many of Lehman’s assets.

Appendix: FIs and the Crisis Concluded

Figure 1-9 The Dow Jones Industrial Average, October 2007–January 2010

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Dow drops during the crisis.

Overnight LIBOR, 2001 – 2010

Figure 1-10 Overnight London Interbank Offered Rate (LIBOR), 2001–2010

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International lending market seizes up. LIBOR (London Interbank Offer Rate) climbs rapidly.

(Institutions intentionally misreport LIBOR to hide default risk from the markets.)

Appendix: Government Rescue Plan

Table 1-12 Federal Government Rescue Efforts through December 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Appendix: Government Rescue Plan Continued

Table 1-12 Federal Government Rescue Efforts through December 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Federal Funds Rate and Discount Window Rate

Figure 1-11 Federal Funds Rate and Discount Window Rate—January 1971 through January 2010

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Major Items in the Stimulus Program

Table 1-13 Major Items in the $787 Billion Stimulus Program as Passed by the U.S. Congress, February 13, 2009

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