Turkey legs.

ATTN: Ross

icf87@hotmail.com — Sun, 27 Dec 2009 08:35:06 GMT

I totally called it.

Director Guy Ritchie used the soundtrack from The Dark Knight by Zimmer as temporary music during editing. Zimmer was pleased when Ritchie asked him to do the score but told him to do something completely different. Zimmer described his score to Ritchie as the sound of the Pogues joining a Romanian orchestra.

Top five Final Fantasy games, spinoffs included.

icf87@hotmail.com — Thu, 24 Dec 2009 03:22:31 GMT

Gogogogogogo

Mine in first comment

Steam makes impulse buying too easy,

icf87@hotmail.com — Wed, 23 Dec 2009 07:28:50 GMT

and I'm going to fritter away my money on cheap games. In the past 24 hours, I've got STALKER, Civ 3 and Braid for a total of less than $8.

icf87@hotmail.com — Thu, 03 Dec 2009 18:05:14 GMT

Topic 8

1. Alberta Appliances is considering a new investment project: producing the Portable Perfect Chicken Chum,
a small rotisserie grill that plugs into a car’s cigarette lighter. The Chums are expected to be sold for $135 each.
The variable cost (materials, production wages, power to run the machines, etc.) of producing each unit is expected to be $94. Cash outlays for building rent, management salaries, and other fixed annual operating costs are expected to be $2,600,000 each year. Alberta also would have to buy manufacturing machinery at a cost of $13,250,000. This equipment is expected to have a 10-year life (equal to the life of the project), and then to have no salvage value. What is the grill project’s annual accounting (sometimes called operating) break-even point? If Alberta’s weighted average cost of capital is 12.5% per year, what is the project’s annual financial break-even point?

2. In its most recent operating year, British Columbia Lumber Products sold 450,000 folding tables. Its total fixed operating costs (in an accounting sense) were $3,500,000, and variable cost per unit produced was $27.75. The tables were sold to houseware stores for $46 each. British Columbia paid $765,000 in interest during the year. Compute the company’s degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL, also called degree of combined leverage DCL), and interpret these values.

3. The managers of Canada Consolidated Copper are analyzing the company’s capital structure. They feel that the costs of various components of the financing mix (debt, preferred stock, and common stock) would be as follows, under the indicated capital structure possibilities:
Proportion Cost of Proportion Cost of
Proportion Pre-Tax from Preferred Preferred from Common Common
from Lenders Cost of Debt Stockholders Stock Stockholders Stock
(D/V or wd) (kd) (P/V or wp) (kp) (E/V or wc) (ke)
0 N/A .10 6.0% .90 14.5%
.20 8% .10 7.5% .70 16.5%
.40 10% .10 9.5% .50 18.0%
.60 14% .10 15.0% .30 28.0%
.80 26% .10 30.0% .10 52.0%

Compute the weighted-average cost of capital (WACC) under each of the representative capital structures shown
(do not forget to adjust the cost of debt to reflect the expected income tax savings under Canada’s 34% marginal income tax rate). Which financing mix results in the lowest WACC and is, therefore, our estimate of the optimal capital structure? Why does that outcome seem to occur?

Topic 10

1. You are analyzing a bond that will mature in four years. Actually, ABC Company issued several hundred million dollars worth of these bonds, but we conduct our analysis in terms of the individual units, described as follows. These bonds had 25-year original maturities, but they were issued twenty-one years ago; thus they will mature
four years from today. Each individual bond has a $1,000 par value ($1,000 was the amount originally lent to the company and the amount the company will pay back at maturity; par value for bonds issued by U.S. corporations is typically $1,000) and a 7% annual coupon interest rate, with interest paid annually. Today, rational buyers of bonds with similar risk, 4-year remaining lives, and annual interest payments require a 10% effective annual rate of return (also called the bond’s yield to maturity). What should a rational investor pay for one of these ABC bonds?

2. BCD Company issued several hundred million dollars worth of bonds twenty-one years ago. These bonds had 25-year original maturities; therefore they will mature in four years. Each individual bond has a $1,000 par value and a 7% annual coupon interest rate, with interest paid semiannually (unlike what question 1 above might seem
to suggest, bonds issued by U.S.-based corporations typically provide interest payments semiannually, not annually). Today, rational buyers of bonds with similar risk, 4-year remaining lives, and semiannual interest payments require
a 10% annual percentage rate (APR) of return. What should a rational investor pay for one of these BCD bonds?
If BCD were to issue 4-year bonds today, what annual coupon interest rate would we expect them to pay?

3. CDE Company issued several hundred million dollars worth of bonds twenty-one years ago. These bonds had
25-year original maturities; therefore they will mature in four years. Each individual bond has a $1,000 par value and a 7% annual coupon interest rate, with interest paid semiannually. Today, rational buyers of bonds with similar risk, 4-year remaining lives, and semiannual interest payments require a 10% effective annual rate (EAR) of return (also called the bond’s yield to maturity). What should a rational investor pay for one of these CDE bonds? If CDE were to issue 4-year bonds today, what coupon interest rate would we expect them to pay?

12. Eleven years ago, LMN Company issued several hundred million dollars worth of bonds with 30-year maturities. Each individual bond will mature at a price of $1,000, but no periodic interest payments are to be made (thus we
are looking at zero-coupon bonds). What yield to maturity does an investor receive if she buys one of these bonds today for $111.29?

13. Two years ago, MNO Company issued several hundred million dollars worth of bonds with 30-year original maturities and an 8.25% annual coupon interest rate, with interest payments to be made semiannually. Today Ms. Investor, a wealthy individual, buys some of these $1,000 par value bonds at the market price of $1,224.33 each. What is her yield to maturity on this investment?

14. Now Ms. Investor (see the previous question) realizes that the MNO bonds she bought contain a call provision. Specifically, the company can call the bonds (buy them back from Ms. Investor and other bond holders, even if they do not wish to sell) as soon as ten years have passed from the date of issue, which was two years ago. If the bonds are called, MNO will pay a price of $1,082.50 (the par value plus an extra year’s worth of interest) for each. If Ms. Investor buys each bond today for $1,224.33, and then MNO calls the entire bond issue at the earliest possible date – which Ms. Investor fears they may do, since the 6.5% APR required by the market today is lower than the 8.25% annual coupon rate on the callable bonds she holds – what will be her yield to first call?

15. Now let’s move forward in time nine years with Ms. Investor (see the previous two questions). It turns out that the MNO bonds she bought were not called 8 years after she bought them; in fact, market interest rates began rising such that MNO ultimately had no incentive to call the bonds. However, Ms. Investor also did not hold the bonds until they matured. Instead, nine years after she bought her bonds for $1,224.33 each, she sold them to Mr. Financial for $952.84 each. Looking back, what has been her holding period yield for the 9 years she held her MNO bonds?

24. VWX Securities has announced that the following interest rates are being paid on U.S. government bonds purchased today:
One-year maturity: pays 6.15% annual interest for one year
Two-year maturity: pays 6.45% annual interest each year for two years
Three-year maturity: pays 6.85% annual interest each year for three years

Compute and identify the applicable implied forward rates, based on our additive approximation approach.

Topic 11

1. After comparing the annual returns earned on the stock market and those earned by common stockholders
of various corporations over a series of prior years, Wall Street analysts have determined that the beta for Baja California Sunblock’s common stock is .875. They expect the holders of “risk-free” short term U.S. government bonds to earn a 3.75% average annual rate of return, and expect the holders of Baja California common stock to earn a 10.5% average annual return, in future years. Based on the security market line (SML) equation, what average annual rate of return would we expect investors to earn on the overall stock market in future years?

2. After analyzing the annual returns earned on the overall stock market and those earned by various companies’ common stockholders over many previous years, professional investment analysts have measured the beta for Campeche Camouflage Corporation’s common stock to be 1.43. They expect the average annual rate of return on the stock market overall to be 8.75% in future years, and expect the average annual return earned by holders of “risk-free” short term U.S. government bonds to be 3.25%. Using the security market line (SML) equation, estimate the expected average annual rate of return we would expect holders of Campeche common stock to earn. What if Campeche moved to a more stable mix of business activities, causing its beta to fall to 1.05?

3. After making a historical comparison of annual returns earned by Chiapas Chair Covers, Inc. common stockholders and those earned by stock market investors on average, professional analysts have computed a beta
of 1.12 for Chiapas common shares. If the average annual rate of return for holders of Chiapas common stock is expected to be 9.875% in future years, while the annual rate of return on the stock market overall is expected to average 9.25%, what average annual “risk-free” rate of return would we expect the holders of short term U.S. government bonds to earn in future years, according to the security market line equation?

4. Economists expect that, in the future, the average annual “risk-free” interest rate earned by holders of short term U.S. government bonds will be 3.95%, while stock market investors will earn an additional 5.9%, on average, as a “market risk premium.” If observers who base their analysis on the security market line (SML) equation expect the common stockholders of Chihuahua Cheese Company to earn an 8.25% average annual rate of return on their equity investment in future years, what do these observers estimate Chihuahua’s beta to be?

5. The average annual “risk-free” interest rate that holders of short term U.S. government “T-Bills” will earn is expected to be 3.45% in the future, while the average annual rate of return on the stock market is expected to be
9%. A historical comparison of past returns earned on some individual companies’ common stocks with those of
the overall stock market show the beta for Coahuila Coatracks to be 1.10, the beta for Colima Coolers to be 1.20,
and the beta for Durango Durables to be 1.30. After analyzing the economy and each of the three companies,
you believe that the average annual returns for the three will actually be: 9.85% for Coahuila, 10.11% for Colima, and 10.25% for Durango. Is each of your estimates consistent with the security market line (SML) equation?

Topic 12

4. Nile Numismatic Industries is owned by individuals and institutions (banks, pension funds, mutual funds) that jointly hold 10,000,000 shares of common stock. The firm’s net income last year was $57,000,000. Total cash dividends paid to the common stockholders was $25,650,000. Compute the year’s earnings per share (EPS), dividends per share (DPS), and dividend payout ratio. What would these figures have been if Nile’s board of directors had decided, at some point during the year, to declare a 4-for-1 stock split? What if the board had instead decided, at some point during the year, to declare a 1-for-5 reverse stock split?

5. The net income earned by Rhine Refrigeration Company during the past year (which just ended today) was $125,000,000. The company expects to earn approximately this same annual net income level in each of the next several years. The board of directors has retained $50,000,000 of the past year’s $125,000,000 net income to buy new production equipment. But instead of paying cash dividends with the remaining $75,000,000, as it might in a typical year, the board has decided to repurchase 600,000 of the 15,000,000 outstanding shares of the company’s common stock, which currently sells in the market for $125 per share. If this repurchase were not expected to have any impact on subsequent years’ net income (or cash flows available to the common stockholders) or the relationship between a year’s net income and the stock’s market value, how would this action be expected to benefit the remaining common stockholders?

6. The chief financial officer of St. Lawrence Sandblasting expects the company’s net income in the coming year to be $29,000,000. A recently approved plan calls for capital spending over the coming year to be $36,000,000. The optimal capital structure for St. Lawrence is believed to be 38% debt/62% equity. If the company follows a residual dividend policy, how much in cash dividends should its managers plan to pay to the common stockholders in the coming year? What if net income were instead expected to be $40,000,000, $25,000,000, or $22,320,000?
Would this type of dividend payment plan constitute a constant dividend payout ratio?

7. The directors of Volga Vineyards believe in paying cash dividends to their common stockholders in accordance with the residual dividend theory. The company has a plan to spend $945,000 on new wine pressing and bottling equipment over the coming year. If the year’s net income is expected to be $730,000 and the company’s optimal capital structure is believed to be 60% debt/40% equity, what is the total amount of cash dividends that Volga should plan to pay? What if the planned level of capital spending were instead $0? What if it were $1,350,000? At what level of capital spending would following a residual dividend policy no longer be a workable possibility?

Topic 13

2. Venus Corporation raised money several years ago by issuing preferred stock, with a $100/share par value. Holders of these preferred shares receive an 8.24% stated annual dividend, paid in equal quarterly installments. Based on the risks of providing money to Venus, rational buyers of these preferred shares require a 9.9512% effective annual rate (EAR) of return. What price should a rational investor pay for each share of Venus preferred stock? What if the required EAR were instead 11.6792%, 7.3967%, or 8.4981%?

Questions 8 through 13 are based on the following information. Sally Ride, senior investment manager for the Neptune Mutual Fund, is trying to decide whether to purchase shares of Pluto Company’s common stock for the Neptune portfolio. She assigns six analysts to estimate a fair price to pay for the stock. Pluto paid its common stockholders a quarterly per-share dividend of $1.14 over the past year (so D0 = $1.14 x 4 = $4.56). All of the analysts at Neptune agree that an appropriate effective annual rate of return for holding Pluto common stock is 12.25%. However, each of the six analysts has a different view regarding future dividend payments.

8. Analyst Neil Armstrong does not think Pluto’s per-share dividend will change by even one small step; in other words, he feels it will always remain at the recent $4.56 level. What is the highest price that Armstrong would recommend paying for each share of Pluto Company common stock? What if the required effective annual rate
of return were instead 10.25%?

9. Analyst Leia Vader-Solo feels that some unseen force will cause Pluto’s annual per-share dividend to rise
by a constant yearly rate of 2.5% forever into the future. What is the highest price that Vader-Solo would recommend paying for each share of Pluto Company common stock? What if the required effective annual rate
of return were instead 10.25%? What if she instead predicted a constant annual dividend growth rate of 14%?

10. Analyst Will Robinson fears there is a danger that Pluto’s annual per-share dividend will decline by a constant yearly rate of 1.5% forever into the future. What is the highest price Robinson would recommend paying for each share of Pluto Company common stock? What if he instead predicted a constant annual dividend growth rate of
-6.5%? What if the required effective annual rate of return were instead 10.25%?

11. Analyst Judy Jetson foresees a slightly rosier future for Pluto than Armstrong or Robinson, predicting that the annual per-share dividend will remain at $4.56 for three years, and then increase by 2.5% per year forever into the future. What is the highest price that Jetson would recommend paying for each share of Pluto Company common stock? What if the required effective annual rate of return were instead 10.25%?

12. Although Sigourney Ripley is reluctant to alienate her fellow analysts, she expresses the even more optimistic view that the per-share dividend Pluto pays to its common stockholders will grow by 15% per year for three years, and then by 2.5% per year forever into the future. What is the highest price Ripley would recommend that the Neptune Mutual Fund pay for each share of Pluto Company common stock? What if the required effective annual rate of return were instead a lower 10.25%?

13. Finally, analyst James T. Kirk is even more optimistic than Ripley, expecting Pluto Company to boldly raise
its dividend where no similar firm has gone before. Specifically, he predicts that the annual per-share dividend will grow by 45% in year 1, 35% in year 2, 25% in year 3, and 15% in year 4, and then by 2.5% per year forever into
the future. What is the highest price that Kirk would recommend paying for each share of Pluto Company common stock? What if Kirk instead expected 8% growth in year 5, before leveling off to a constant 2.5% in year 6? What
if the required effective annual rate (EAR) of return were instead 10.25%?

15. Investment analyst Perry White thinks Krypton Corporation’s common stockholders will receive dividends
of $3.50/share each year for fifty years, and then $4.00/share each year thereafter. Analysts Lois Lane and Jimmy Olson agree that dividends will be $3.50/share each year for fifty years, but Lane feels they will then increase to $40.00/share each year thereafter, while Olson insists they will then rise to $400.00/share each year thereafter. If
the three analysts agree that Krypton common stockholders require an 11.35% effective annual rate (EAR) of return, what are their respective estimates of the stock’s value? Why are these estimates not farther apart than they are? What if expected per-share dividends were instead $40.00 for fifty years and then $3.50 thereafter?

icf87@hotmail.com — Thu, 03 Dec 2009 05:12:19 GMT

The Will Smith and Robin Williams characters switch places.

You only get to watch one of the new movies.

Which do you watch?

Beta.

icf87@hotmail.com — Mon, 16 Nov 2009 20:22:48 GMT

“Is Beta Dead?”
• Since all investors have the same expectations about the market as a whole (the market is efficient), the amount of return a portfolio manager gets from a stock is neatly tied to beta (riskiness compared to the market at large).
• Capital asset pricing model – return on any asset can be predicted by adding together the return on a risk-free asset and a risk premium (expected return on the market as a whole minus return on t-bills, multiplied by beta)
• Richard Roll – you cannot test the validity of CAPM, because the market cannot be defined – S&P 500 is not a perfect proxy for the market, because the alphas of the stocks that comprise them are not 0
• William Sharpe – “We cannot, without a shadow of doubt, establish the validity of the CAPM”
• Beta was criticized before Richard Roll
o James Farrell – “I’ve been familiar with the problem since 1972. … Now Roll comes along and eyes light up.”
o Gilbert Beebower – “The best of betas are awful, if for no other reason than that they’re based on a model that’s been seriously clouded.”
• If the S&P 500 is not a proxy for the efficient market, then index funds are not risk-free
• Performance measurement looks at market return vs. market proxy weighted by beta
• Barr Rosenberg of Chicago’s American National Bank – Roll’s work’s implications are “minimal”
• William Fouse of Wells Fargo – Roll is indulging in “intellectual gamesmanship”
• Robert Kafee, Merill Lynch – “pushing MPT into the background,” “provide alpha because clients want it”
• Jack Treynor, FAJ: “What Lola wants, Lola gets”
• CAPM systems have been unsuccessful to date
• Fouse – “what are the alternatives?”
o Roll – not trying to kill Beta, just correct it
• Pi – measures error created by comparing stock to imperfect benchmark
• Stephen Ross – Arbitrage Pricing Theory – measures risk based on interest rates, exchange rates, etc.
• Sharpe – working on variant of CAPM that would look at more than beta
• Some papers show that P/E affects returns more than beta
• Even those looking for new methods like beta, because it has made people look at risk
• There’s always been suspicion of beta

“In Defense of Beta”
• Beta – “regression coefficient designed to measure the extent to which a given asset’s return moves together with the broad market’s”
• “A stock with a beta of 2.0 should earn a risk “premium” that over long periods of time is twice the premium on a stock with a beta of 1.0”
• Fama, French (1992) – “beta does a poor job of explaining “cross-sectional” variation in the average returns of stocks over the period 1963-90”
• If betas are poorly correlated, professional investors must reevaluate their investment strategies
• If Fama, French are right, then it would make more sense to invest in low-beta stocks – would create pressure on price, lower returns, and relation between beta and expected return would be strengthened
• Fama, French – book-to-market ratio and firm size do nearly as good a job as beta
• Points to note
o CAPM is a statement of expected returns, not actual returns – should be similar in the long term, but in the short term, can vary wildly
o Fama-French paper – there is a correlation, but the t-stat is too low to reject the null – this means that there is just as likely a chance that the risk premium will be higher than average as 0
• Shanken uses annual data rather than monthly data to estimate beta – reduces precision, but helps avoid other measurement problems and seasonal patterns – statistically significant correlation between beta and average returns

Trefzger notes, topic 5
• The capital asset pricing model, or CAPM, is an useful tool to estimate the cost of common equity. Using the CAPM, we can determine a reasonable approximation of what sort of return an investor expects to receive on an investment, and using this information, we can determine whether a potential project can provide a fair return to the owners (in conjunction with the lenders) and therefore be worth pursuing.
• The CAPM says that the owner’s expected return is a function of the returns of risk-free investments, such as t-bills, the risk premium of the market as a whole, and beta.
• Beta is a measure of a stock’s riskiness compared to the riskiness of the market as a whole. If beta is 1, then the stock is equally risky as the entirety of the market; if it is less than 1, a stock is less risky; if it is greater than 1, a stock is riskier.

ATTN: Cole, Haney

icf87@hotmail.com — Tue, 10 Nov 2009 00:44:28 GMT

Arceus is available now through Saturday. We should all go over to Toys 'R' Us and get us some Arceuses.

Oh, hey.

icf87@hotmail.com — Sat, 31 Oct 2009 14:57:51 GMT

recent study by the Centers for Disease Control and Prevention (CDC) found that of the 36 children who died from H1N1 from April to August, six had no chronic health conditions. But all of them had a co-occurring bacterial infection.

The most common co-occurring infection that causes flu-related deaths is staphylococcus aureus. A third of the population carries it, most in their nose or on their skin.

The flu causes upper respiratory damage, which allows the staph to make its way into the lungs.

Methinks I'm gonna keep working on getting that vaccine.

Most iconic comic book moment ever?

icf87@hotmail.com — Wed, 28 Oct 2009 05:08:26 GMT

Death of Superman?

Death of Gwen Stacy?

Or something else?

You tell me.

Short essay on Malthus.

icf87@hotmail.com — Mon, 26 Oct 2009 19:52:42 GMT

Thomas Robert Malthus was an influential economist who contributed to the subject in the late 1700s and early 1800s. During this time, many of Malthus’s contemporaries were pondering the concept of perfectibility. Philosophers such as William Godwin and the Marquis de Condorcet believed that humanity would eventually reach a “perfect” state, in which all could live comfortably and fairly well-off for the rest of time. Malthus, however, believed that humanity would continually cycle between happiness and misery.
According to Malthus, there were two important principles that could not be contradicted: men need and will always need food to survive, and the passion between sexes will never decline. These principals, according to Malthus, lead to an inevitable conclusion. Population grows at a geometric growth rate – a family has two children, who start two families with a total of four children, who start four families with a total of eight children, and so on. If left unchecked, population could double in 25 years, as seen in the United States. Food, on the other hand, grows at an arithmetic growth rate. Over time, food growth would fall behind population growth, and since people would not have enough access to food, some would end up starving.
When the population exceeds the amount of food that can be produced, population growth starts declining. Population is kept in check by “preventive checks,” or actions that lead to people having fewer children, as well as “positive checks,” or actions that hold back a population increase that has already begun, such as starvation or war. These checks could take the form of misery, which includes natural occurrences such as famine and disease, and vice, including human acts such as war and abortion. Due to these checks, population growth in the long run will oscillate – it will increase until it outpaces food growth, fall as people starve or choose to have fewer children, and then increase again when more children are born and survive to adulthood.
Malthus also looked at many social issues. He opposed England’s social welfare system, the Poor Laws, because they distorted incentives for the poor in a negative fashion. Under the Poor Laws, people were less likely to go out and search for productive work, and were more likely to stay dependent on the government for their well-being. Any help given to the poor, he thought, meant taking away from somebody else. In addition, the Poor Laws made it easier for the poor to have children, which would just lead further to the misery and vice that kept population in check. Malthus believed that it would be more sensible to give the poor incentives to work, so they would contribute to the growth of society. It seems that this way food production would stay higher, population growth would stay lower, and the misery and vice that kept population in check would not have to be so strong.
Based on Malthus’s arguments against the Poor Laws, it seems that he would have been in favor of the Corn Laws. The Corn Laws restricted imports of grain from foreign countries. It is possible that Malthus would have seen the importation of grain as a distortion similar to the redistribution of income triggered by the Poor Laws. England would have had incentive to be unproductive, and the grain imported from other countries would end up reducing the food supply available to those foreign lands. If England was not able to import grain, the country would have incentive to produce as much grain as possible itself, thus making the country as a whole better off. There are sound economic arguments that could be made against this policy, but it seems like a reasonable train of thought for Malthus to take based on his thoughts on population growth and the Poor Laws, and similar arguments are still made today when discussing agricultural subsidies.

Eco 339 notes that I can't save on this computer for some reason.

icf87@hotmail.com — Thu, 22 Oct 2009 16:49:16 GMT

I really need a flash drive.

• 9/22/09
• Managing “buy”
• About supplier behavior
o Employed towards principal firm’s objectives
o Maximizing profit as a separate organization
o Non-aligned actions, effort and discretion
• Challenges for the firm
o Principal-agent relationships
 Asymmetric information, costs of ex post enforcement
o Incomplete contracts, explicit contracts
 Contingencies, measurement , costs of ex ante contract
• Why are contracts incomplete?
o Costly and asymmetric information
o Imperfect performance measurement
o Bounded rationality – imperfect info, costs to gather info – ex., grocery store purchases
• Introduction to agency theory
o Principal – does hiring
o Agent – hired
o Efficient actions – actions taken by the agent that are good for the whole and the principal
o Incentive compatibility – contract/arrangement that leads to efficient actions being taken
o Shirking – agent is not carrying out objectives of principal – inefficient actions
o Moral hazard – contract gives agent incentive to shirk – loopholes – due to incomplete contracts
• 9/24/09
• Pay for performance patterns
o Traditional
 Employees: time-based pay (wage, salary)
 Suppliers: flat fees, cost-based, pay for performance
 Government contracts: cost-based
o Recent trends
 Employees: pay for performance spreading (beyond CEO and sales)
 Suppliers: flat fees, cost based, pay for performance
 Government contracts: flat fees, cost-based, pay for performance
• Formal model
• Self-selection (sorting)
o Incentives and behavior of current suppliers
 Anticipated response to performance-based pay – effort up
o Incentives and pool of applicants
 Who is attracted? – more willing to put forth effort – down in learning curve
 Who is repelled? – higher costs of effort
o Heterogenous suppliers
 Opportunity costs (other offers, comparative advantage)
 Productivity on task (matching), costs of effort
 Risk tolerance (sorting across clients and contracts)
• Noise – affects pay – introduce risk in pay for performance – sorting by risk aversion
• Incentive pay puts income at risk
o Noise from principal behavior
 Principal firm may control key elements
 Airline food service on per meal served basis
 Management consulting agent on cost-saving basis
o Noise from external sources
 Other key elements beyond control of agent
 Organic farm supplying Whole Foods – weather
 Manufacturing agent on per unit produced basis
 CEOs pay based on stock performance
o Risk aversion, risk premium
 Increased variability, requires increased reward
 Increased cost – balanced by better results

Ian presents, by request of a Mr. Jarrett Sigler,

icf87@hotmail.com — Sat, 10 Oct 2009 17:38:43 GMT

the ten most difficult/annoying/worst random encounters/non-boss fights in video games ever.

-Brachiosaur (FFVI)
-Hammer Bros. (various Mario games, SMB1 in particular)
-Behemoths (various FF games, FFIV in particular)
-Malboros (various FF games)
-Like-Likes (Zelda series)
-Cockatrices (various game series, Ogre Battle 64 in particular)
-any flying enemies ever (Medusa Heads from Castlevania, birds from Ninja Gaiden, etc.)
-Zubat (Pokemon series)
-Scarabs (Diablo II)
-tie: Troggs and Murlocs (World of Warcraft)

Please feel free to add to this list, or make a list of your own. I'm sure I missed some big ones.

ATTN: Haney

icf87@hotmail.com — Sun, 27 Sep 2009 03:31:02 GMT

http://www.youtube.com/watch?v=yRuJfhEeCe8 <-- Metropolis Zone theme.
http://www.youtube.com/watch?v=xrBAYD4kmPo <-- The Offspring - Gotta Get Away.

???

Ummmm

icf87@hotmail.com — Sat, 26 Sep 2009 13:50:51 GMT

(n^5)(n^3) does NOT equal (n^2), nor does (n^5)^3 equal 1/(n^15).

I swear, the free online practice tests are probably intentionally typoed to make you buy the books.

Ummm

icf87@hotmail.com — Fri, 25 Sep 2009 14:45:00 GMT

I am openly taking contributions

icf87@hotmail.com — Wed, 23 Sep 2009 03:17:43 GMT

so that Cole and I can go as Statler and Waldorf for Halloween this year.

The masks have been found.

And they're $48 each. D=

http://www.empirecostumes.com/p-65042-the-muppets-statler-overhead-latex-mask.aspx
http://www.empirecostumes.com/p-65043-the-muppets-waldorf-overhead-latex-mask.aspx

Listen to this.

icf87@hotmail.com — Mon, 31 Aug 2009 19:39:57 GMT

http://www.youtube.com/watch?v=WXFSSByxkOU&fmt=18

All of the curse words and "nigga"s from Dr. Dre's seminal album, The Chronic, on one track, all in a row.

It's five minutes long.

Enjoy.

Silversun Pickups.

icf87@hotmail.com — Thu, 27 Aug 2009 19:42:27 GMT

Silversun Pickups are coming to the Expo Gardens in Peoria on Wednesday, October 28. I will be going to this show, without question, because SSPU are just awesome. If you want to come along (and you should!), talk to me.

Songs to check out (I'll post links later):
-Well Thought-Out Twinkles
-Panic Switch (this apparently was a fairly big hit single, though I was not aware of this)
-Lazy Eye
-Little Lover's So Polite
-Growing Old is Getting Old

Tactics Ogre: KoL

icf87@hotmail.com — Sat, 22 Aug 2009 16:31:36 GMT

I don't know if I'm ever going to finish this game, because I died on the final form of the final boss, after completing four missions beforehand that took at least four hours total. I can't save in between the missions, so that's four hours of wasted time. =/ At least they were fun missions. But I don't think I could even attempt that again for quite some time.

However, one thing pleased me: There was an ending developed exclusively for losing to the final boss, in which the island the game takes place on is overrun by the boss's evil forces. Chrono Trigger did this once upon a time, and I haven't seen any other game that has... until now. More games need to do this.

Mousepad

icf87@hotmail.com — Tue, 18 Aug 2009 05:46:03 GMT

My mouse would work much better with a mousepad. Anybody have one lying around, by chance? I'm surprised I can't find one around here anywhere...

ATTN: Cole

icf87@hotmail.com — Mon, 17 Aug 2009 05:30:27 GMT

Here, look at this. Lots of information in here on the Chaos Frame that blew my mind.

http://www.neoseeker.com/resourcelink.html?rlid=95921&rid=89083

Ponyo on the Cliff by the Sea

icf87@hotmail.com — Thu, 13 Aug 2009 22:20:02 GMT

Miyazaki's new movie is coming out tomorrow. They're showing it at the Parkway. I'm interested in going, either on a weeknight some time next week or on Saturday afternoon. Anybody else interested?

ATTN: Ross

icf87@hotmail.com — Sat, 01 Aug 2009 04:24:46 GMT

Apparently, the guy from Man V. Food has been to Pappy's Smokehouse too. And Iron Barley.

Adam journeyed to St. Louis, Missouri, to attempt the $35 "Big Ben" meal at Pappy's Smokehouse which includes a full slab of ribs, 2 sandwiches, a quarter-chicken, and 4 side dishes.[52] Local press reports state this taping took place on December 18, 2008.[52] He also stopped at Iron Barley to try a Monte Cristo hotdog.[53] The episode's main challenge was the Malt Milkshake Challenge at Crown Candy Kitchen. To win, Adam had to drink five 24-ounce malt milkshakes in 30 minutes, a challenge offered by the restaurant since 1913.[45][53] The milkshakes were divided into 15 8-ounce glasses for Adam. Adam started strong but he ended up running to the bathroom to vomit it out after drinking 12 out of the 15 glasses.[54] As a result of this episode, Pappy's Smokehouse reported a spike in traffic on their website and increased business from the national exposure, even on Ash Wednesday.[55][56] Winner: Food

Sweet, I wanna find this episode now.

Top 5 stand-up comedians. Go.

icf87@hotmail.com — Sat, 18 Jul 2009 19:37:50 GMT

1. George Carlin
2. Richard Pryor
3. Bill Hicks
4. Dave Chappelle
5. Chris Rock

Pokemon Heart Gold/Soul Silver stuff

icf87@hotmail.com — Tue, 14 Jul 2009 06:07:05 GMT

The Final Scans from CoroCoro this month have arrived and show the various things added on Friday are true barring the Latios/Latias/Mewtwo stuff. It confirms that the legendary Beasts (Entei, Raikou & Suicune) are to be at Level 40 when they roam.
It also contains more details on Pokéthlon, showing another two Pokéthlon events, both of which the Pokémon Sunday Program didn't include. It appears that you'll have your three Pokémon across from another three Pokémon. This is essentially a Snowball Fight called Shooting Snow. Another Pokéthlon mode is called Ring Out Fight where your 3 Pokémon have to knock the other three Pokémon out.
CoroCoro also reconfirms the appearance of the PokéGear within the game, appearing in the Menu as usual. It contains the same features as before specifically the Phone, Map, Radio & now the Itemfinder. It also shows the capturing of Pokémon on PokéWalk.
CoroCoro has also confirmed that the special Notched-Ear Pichu that you obtain using the Pikachu Coloured Pichu given away at the 12th movie is unable to be traded and it cannot evolve. It also seems that you can also register two key items in this game and they are accessible via the Touch Screen. I've added a variety of pictures to the picture page and will continue adding as more comes. Expect higher quality pictures as soon as possible

BICYCLE + VS. SEEKER

FINALLY