Pat and kris are roommates. they spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. pat takes 4 hours to brew a gallon of root beer and 2 hours to make a pizza. kris takes 6 hours to brew a gallon of root beer and 4 hours to make a pizza. pat's opportunity cost of making a pizza is of root beer, and kris's opportunity cost of making a pizza is of root beer. has an absolute advantage in making pizza, and has a comparative advantage in making pizza. if pat and kris trade foods with each other, will trade away pizza in exchange for root beer. the price of pizza can be expressed in terms of gallons of root beer. the highest price at which pizza can be traded that would make both roommates better off is of root beer, and the lowest price that makes both roommates better off is of root beer per pizza.

Insurance companies have internal controls in place to protect assets, monitor the accuracy of accounting records and encourage operational efficiencies and adherence to policies. these internal controls are generally of two types: administrative controls and accounting controls. administrative controls are the policies and procedures that guide the daily actions of employees. accounting controls are the policies and procedures that delineate authorizations of financial transactions that are done, safeguard assets, and provide reports on the company’s financial status in a reliable and timely manner. internal controls should include both preventative and detective controls. the purpose of preventative controls is to stop problems and errors before they occur. detective controls identify problems after they have occurred. preventative controls are usually more effective at reducing problems, but they also tend to be more expensive. internal controls must be flexible to adjust for changes in laws and regulations in addition to adding new products or modifying current ones. companies must also do regular analyses to ensure that the benefits of implementing the controls are worth their costs. when concerned about paying unwarranted insurance claims which type of control would be useful?

Jaynet spends $50,000 per year on painting supplies and storage space. she recently received two job offers from a famous marketing firm – one offer was for $95,000 per year, and the other was for $120,000. however, she turned both jobs down to continue a painting career. if jaynet sells 35 paintings per year at a price of $6,000 each: a. what are her accounting profits? b. what are her economic profits?

You are purchasing a bond that currently sold for $985.63. it has the time-to-maturity of 10 years and a coupon rate of 6%, paid semi-annually. the bond can be called for $1,020 in 3 years. what is the yield to maturity of this bond?