CASE STUDY 27.10 CHILL OUT-MOVE TO HONOLULU

question 31

Multiple Choice

CASE STUDY 27.10
CHILL OUT-MOVE TO HONOLULU
For Questions , use the following narrative
Narrative: Case study 27.10 summary
This study was based on a poll that measured citizens' hostility levels and compared them with their cities' death rates.The research findings were reporting as the following: 1) people with higher hostility levels have higher rates of heart disease deaths and overall deaths; 2) cities with higher hostility scores consistently had higher death rates; 3) cities with lower hostility scores had lower death rates.The results were summarized by saying "Hostile cities may want to chill out." The study was based on 10 cities, one from each of the states with the five highest and five lowest heart disease death rates.Philadelphia had the highest levels of both (hostility and death rate) , and Honolulu had the lowest levels of both (hostility and death rate) .It was reported that statistically, the probability of the observed correlation between hostility and death rate occurring by chance is less than 1 in 10,000.

-{Case study 27.10 narrative} It was reported that statistically, the probability that the observed correlation between hostility and death rate occurred by chance is less than 1 in 10,000.What is your reaction to this statement?

• A)This sounds about right, given that 10 entire cities were studied.
• B)This can't be right; only the top and bottom five states were used; these are outliers by definition, and can strongly affect the correlation and hypothesis tests about it.
• C)There is not enough information to effectively evaluate this statement.
• D)It has to be correct; it was reported in a news article.

Understand the impact of financial decisions on a firm's financial leverage and risk.

Grasp the concept of depreciation and its role in financial statements.

Apply DuPont analysis to dissect a firm's return on equity.

Evaluate the liquidity position of a firm through common-size financial statements and ratios.

---

Definitions:

Liquidating Dividend

A type of dividend payment made by a corporation using its capital base rather than earnings, typically during partial or full liquidation.

Dividend Policy

A strategy a company uses to decide how much it will pay out to shareholders in dividends.

Alternate Dividend Policy

A strategy employed by a company to distribute earnings to shareholders through dividends that may vary in amount and frequency depending on the company's earnings, investment opportunities, and capital needs.

Stock Repurchase

A financial transaction in which a company buys back its own shares from the marketplace, reducing the amount of outstanding stock.