A futures contract is a contract that essentially gives the owner of the contract the ability to buy some specific amount of a good at a given price at a point in the future. In a 1984 paper entitled "Orange Juice and the Weather," economist Richard Roll showed that the price of frozen orange juice futures could be used to predict errors in weather forecasts for Florida made by the National Weather Service. That is, there were times in which the price of orange juice futures did a better job of predicting the temperatures in Florida than did the National Weather Service! Given this information, which of the following would the efficient markets hypothesis suggest was occurring? a. Investors in orange juice futures were using publicly available information that scientists at the National Weather Service were not using
b. Scientists at the National Weather Service had private information that they were not making available to the public when issuing weather forcasts
c. The futures market was on an extended lucky streak
d. Frozen orange juice futures must have been a riskier investment than the stock market since you had to bet against scientific experts to do well

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?