Questions: Answer these questions effectively explaining each part.

11 Trade credit and debt factoring are both used to provide businesses with short term finance. Describe the main features of each. [5] 12 Describe the costs and benefits associated with seeking a stock exchange quotation. [5] 13 A company requires finance in order to expand. Explain how the company's tax position may affect the decision to use debt rather than equity. [5] 14 Describe the role of the International Accounting Standards Board (IASB) in the regulation of financial reporting. [5]The share price, in pence, of a certain company is monitored over an 8-year period. The results are shown in the table below: Time (years) 0 2 3 4 5 6 7 8 Price 100 131 183 247 330 454 601 819 1,095 [(x; -5)2 =60 _(vi -V)2 =925,262 [(x; -X)(); - 5)=7,087 An actuary fits the following simple linear regression model to the data: yi = a+ Bx; te; 1=0,1. ....8 where {e; ) are independent normal random variables with mean zero and variance o. (i) Determine the fitted regression line in which the price is modelled as the response and the time as an explanatory variable. [2] (ii) Obtain a 99% confidence interval for: (a) , the true underlying slope parameter (b) o', the true underlying error variance. [5] (iii) (a) State the "total sum of squares" and calculate its partition into the "regression sum of squares" and the "residual sum of squares". (b) Use the values in part (iii)(a) to calculate the "proportion of variability explained by the model" and comment on the result. [5] (iv) The actuary decides to check the fit of the model by calculating the residuals. (a) Complete the table of residuals (rounding to the nearest integer): Time (years) 0 2 3 4 5 6 7 8 Residual 132 -21 -75 -104 -75 25 (b) Use a dotplot of the residuals to comment on the assumption of normality. (c) Plot the residuals against time and hence comment on the appropriateness of the linear model. [7] [Total 19]