Archives: Solution Manual

Chapter 11 – Managing Bond Portfolios CHAPTER 11 11-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, […]

Chapter 10 – Bond Prices and Yields CHAPTER 10 10-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, […]

Chapter 09 – Behavioral Finance and Technical Analysis CHAPTER 09 9-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, […]

Chapter 08 – The Efficient Market Hypothesis CHAPTER 08 8-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, […]

Chapter 07 – Capital Asset Pricing and Arbitrage Pricing Theory CHAPTER 07 7-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not […]

Chapter 06 – Efficient Diversification The bond portfolio is less risky as represented by its lower standard deviation. Yet, as the portfolio table shows, mixing .87% of bonds with 13% stocks would have produced a portfolio less risky than bonds. […]

Chapter 06 – Efficient Diversification CHAPTER 06 6-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, […]

Chapter 05 – Risk and Return: Past and Prologue CHAPTER 05 RISK AND RETURN: PAST AND PROLOGUE 1. The 1% VaR will be less than –30%. As percentile or probability of a return declines so does 2. The geometric return […]

Chapter 04 – Mutual Funds and Other Investment Companies CHAPTER 04 4-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be […]

Chapter 03 – Securities Markets 3-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or […]

Chapter 02 – Asset Classes and Financial Instruments CHAPTER 02 ASSET CLASSES AND FINANCIAL INSTRUMENTS 1. Common stock is an ownership share in a publicly held corporation. Common shareholders have voting rights and may receive dividends. Preferred stock represents 2. […]

CHAPTER 01 INVESTMENTS: BACKGROUND AND ISSUES 1Equity is a lower-priority claim and represents an ownership share in a corporation, 2The primary asset has a claim on the real assets of a firm, whereas a derivative asset provides a payoff that […]

17 Packages and Positions Problem 17.1 (Ine¢ ciency without package bidding) Suppose that there are two objects, aand b, for sale and two bidders with the following values a b ab x1y z 2 x22 2 2 where yand zare […]

16 Nonidential Objects Problem 16.1 (Low revenue) Consider the problem of allocating a set of two objects in K=fa; bgto three buyers with values as follows: a b ab x10 0 10 + “ x210 10 10 x210 10 10 […]

15 Sequential Sales Problem 15.1 (Power distribution) Consider a situation in which two identical ob- jects are to be sold to three interested bidders in two auctions conducted sequentially. Each bidder has use for at most one item— there is […]

13 Equilibrium and E¢ ciency with Private Values Problem 13.1 (Uniform price auction) Consider a three-unit uniform-price auction with two bidders. Each bidder’s value vector Xi=Xi 1; Xi 2; Xi 3is independently and identically distributed on the set X=fx2[0;1]3:x1x2x3gaccording to […]

11 Bidding Rings Problem 11.1 (Maximal loss from collusion) Consider a second-price auction with N2bidders. Each bidder’s private value Xiis independently and uniformly dis- tributed according on [0;1] : a. First, suppose bidders bid individually— that is, there is no […]

10 Mechanism Design with Interdependent Values All of the problems below concern the following environment. Suppose that there are two potential buyers for one indivisible object. Each buyer’s private value Xifor the object is drawn at random from the set […]

9 E¢ ciency and the English Auction Problem 9.1 (Two-bidder auctions) Suppose that there are two bidders with valua- tions v1(x1; x2) = 2 3×1+1 3×2 v2(x1; x2) = 1 3×1+2 3×2 and all signals lie in [0;1]. a. Using […]

Solution. The distribution in the question could be illustrated in the table below V X1X2Probability 1 1 1 2/9 1 0 0 1/18 1 1 0 1/9 1 0 1 1/9 First of all, given bidder 2’s strategy, bidder 1 […]

6 Auctions with Interdependent Values Problem 6.1 (A¢ liation) Suppose there are two bidders who receive private signals X1and X2which are jointly distributed over the set S=n(x1; x2)2[0;1]2:px1x2(x1)2o with a uniform density. The bidders attach a common value V=1 2(X1+X2)to […]

5 Mechanism Design Problem 5.1 (Surplus extraction) Show that if buyers’values are independently dis- tributed, then the seller cannot design an incentive compatible and individually ratio- nal mechanism that extracts the whole surplus from buyers. (In doing this problem, use […]

4 Qualifications and Extensions Problem 4.1 (Risk-averse bidders) There are two bidders with private values which are distributed independently according to the uniform distribution F(x) = xover [0;1] :Both bidders are risk-averse and have utility functions u(z) = pz: Find […]

3 The Revenue Equivalence Principle Problem 3.1 (War of attrition) Consider a two-bidder war of attrition in which the bidder with the highest bid wins the object but both bidders pay the losing bid. Bidders’values independently and identically distributed according […]

2 Private Value Auctions: A First Look Problem 2.1 (Power distribution) Suppose there are two bidders with private values that are distributed independently according to the distribution F(x) = xaover [0;1] where a > 0:Find symmetric equilibrium bidding strategies in […]

DISCUSSION QUESTIONS 1. Why has it been difficult for executives to understand the relationship between service improvements and profitability in their companies? One of the main reason it has been difficult for executives to understand the relationship between service improvements […]

CHAPTER 16: THE FINANCIAL AND ECONOMIC IMPACT OF SERVICE CHAPTER TOPICS Service and Profitability: The Direct Relationship Offensive Marketing Effects of Service: Attracting More and Better Customers Defensive Marketing Effects of Service: Customer Retention Customer Perceptions of Service Quality and […]

DISCUSSION QUESTIONS 1. Which approach to pricing (cost-based, competition-based, or demand-based) is the most fair to customers? Why? Cost-based pricing is likely to be the fairest approach to customers. Costs are based on the direct and labor costs to provide […]

CHAPTER 15: PRICING OF SERVICES CHAPTER TOPICS Three Key Ways that Service Prices Are Different for Consumers Approaches to Pricing Services Pricing Strategies that Link to the Four Value Definitions Technology Spotlight: Dynamic Pricing on the Internet Allows Price Adjustments […]

DISCUSSION QUESTIONS 1. Think of a service company that provides integrated service marketing communications. Go to the services company’s website and find the section where it posts its advertising and communication. Is the Company’s campaign as comprehensive and as integrated […]

CHAPTER 14: INTEGRATED SERVICE MARKETING COMMUNICATIONS CHAPTER TOPICS The Need for Coordination in Marketing Communication Key Service Communication Challenges Five Categories of Strategies to Match Service Promises with Delivery Technology Spotlight: Internet Expert Mary Meeker Predicts What Companies Most Need […]

DISCUSSION QUESTIONS 1. Why do service organizations lack the capability to inventory their services? Compare a car repair and maintenance service with an automobile manufacturer/dealer in terms of inventory capability. In general, service organizations lack the capability to inventory their […]

CHAPTER 13: MANAGING DEMAND AND CAPACITY CHAPTER TOPICS The Underlying Issue: Lack of Inventory Capability Capacity Constraints Demand Patterns Strategies for Matching Capacity and Demand Yield Management: Balancing Capacity Utilization, Pricing, Market Segmentation, and Financial Return Waiting Line Strategies: When […]

DISCUSSION QUESTIONS 1. Using your own personal examples, discuss the general importance of customers in the successful creation and delivery of service experiences. This question focuses on understanding the importance of both the customer him/herself as well as other customers […]

CHAPTER 12: CUSTOMERS’ ROLES IN SERVICE DELIVERY CHAPTER TOPICS The Importance of Customers in Service Cocreation Customers’ Roles Self-Service Technologies—The Ultimate in Customer Participation Strategies for Enhancing Customer Participation Technology Spotlight: Technology Facilitates Customer Participation in Health Care Global Feature: […]

DISCUSSION QUESTIONS 1. Define service culture. Why is service culture so important? Can a manufacturing firm have a service culture? Why or why not? As defined by Christian Grönroos and cited in the text, a service culture is “a culture […]

CHAPTER 11: EMPLOYEES’ ROLES IN SERVICE DELIVERY CHAPTER TOPICS Service Culture The Critical Importance of Service Employees Boundary-Spanning Roles Strategies for Delivering Service Quality Through People Customer-Oriented Service Delivery Technology Spotlight: How Technology Is Helping Employees Serve Customers More Effectively […]

DISCUSSION QUESTIONS 1. What is physical evidence, and why have we devoted an entire chapter to it in a marketing text? Physical evidence is the environment in which the service is delivered and where the firm and the customer interact […]

CHAPTER 10: PHYSICAL EVIDENCE AND THE SERVICESCAPE CHAPTER TOPICS Physical Evidence Types of Servicescapes Strategic Roles of the Servicescape Framework for Understanding Servicescape Effects on Behavior Guidelines for Physical Evidence Strategy Technology Spotlight: Virtual Servicescapes: Experiencing Services through the Internet […]

DISCUSSION QUESTIONS 1. How does the service measurement that we describe in this chapter differ from the service measurement in chapter 5? Which of the two types do you think is most important? Why? The measurement in this chapter is […]

CHAPTER 9: CUSTOMER-DEFINED SERVICE STANDARDS CHAPTER TOPICS Factors Necessary for Appropriate Service Standards Types of Customer-Defined Service Standards Development of Customer-Defined Service Standards  Technology Spotlight: The Power of Good Responsiveness Standards Global Feature: Adjusting Service Standards around the Globe […]

DISCUSSION QUESTIONS 1. Why is it challenging to innovate, design, and develop services? A primary objective of this chapter is to have students understand the complexities and challenges of innovating, designing and developing services. The inherent challenges in so doing […]

CHAPTER 8: SERVICE INNOVATION AND DESIGN CHAPTER TOPICS Challenges of Service Innovation and Design Important Considerations for Service Innovation Types of Service Innovations Stages in Service Innovation and Development Service Blueprinting: A Technique for Service Innovation and Design Technology Spotlight: […]

DISCUSSION QUESTIONS 1. Why is it important for a service firm to have a strong recovery strategy? Think of a time when you received less-than-desirable service from a particular service organization. Was any effort made to recover? What should/could have […]

CHAPTER 7: SERVICE RECOVERY CHAPTER TOPICS The Impact of Service Failure and Recovery How Customers Respond to Service Failures Service Recovery Strategies: Fixing the Customer Service Recovery Strategies: Fixing the Problem Service Guarantees Switching versus Staying Following Service Recovery Technology […]

DISCUSSION QUESTIONS 1. Discuss how relationship marketing or retention marketing is different from the traditional emphasis in marketing. The traditional focus in marketing has been on getting new customers and building the customer base through adding more first-time customers. While […]

CHAPTER 6: BUILDING CUSTOMER RELATIONSHIPS CHAPTER TOPICS Relationship Marketing Relationship Value of Customers Customer Profitability Segments Relationship Development Strategies Relationship Challenges Technology Spotlight: Customer Information Systems Help Enhance the Customer Relationship Global Feature: Developing Loyal Customers at Airbnb Strategy Insight: […]

DISCUSSION QUESTIONS 1. Give five reasons research objectives must be established before marketing research is conducted. Research objectives must be established in order to: avoid spending inefficiently make certain that the implicit questions that led to the research are answered […]

CHAPTER 5: LISTENING TO CUSTOMERS THROUGH RESEARCH CHAPTER TOPICS Using Customer Research to Understand Customer Expectations Elements in an Effective Service Marketing Research Program Analyzing and Interpreting Customer Research Findings Using Marketing Research Information Upward Communication Technology Spotlight: Conducting Customer […]

DISCUSSION QUESTIONS 1. What is customer satisfaction, and why is it so important? Discuss how customer satisfaction can be influenced by each of the following: product attributes and features; customer emotions; attributions for success or failure; perceptions of fairness; and […]