Husayn-McMahon Essay Example for Free

Husayn-McMahon Essay McMahon-Hussein Correspondence refers to an exchange of letters between Sharif Husayn Ibn Ali of Mecca and Sir Henry McMahon of Britain detailing the future of the Arab world in the face of a possible annexation by the Ottoman Turks. The background to this communication can be traced to early 1914 when Sharif Husayn’s son, Amir, paid a visit to the then British Consular in Egypt, Lord Kitchener, seeking British assurance that they would offer their support incase Arabs opted to revolt against Turkey. While at first Kitchner was reluctant to make any commitment, his successor in the region, McMahon, upon sensing the dwindling British fortunes in the Middle East, made hefty promises to garner the Arabs support during the First World War. It is during this period that McMahon would initiate correspondence with Husayn. The Husayn family emerged to be an influential force in the Middle East as it lay claim to be the descendant of Muhammad and held the mantle leadership of a number of kingdoms in the region (Daly 215). The issue of McMahon-Hussein correspondence has emerged highly controversial and is held to be at the core of the crisis in the Middle East. It is regarded as an important correspondence by the Palestinians as it was seen as a commitment by the British of granting them independence. In these series of letters, Husayn had asked for Arabs independence, he outlined these areas to be the Arabian Peninsula, Palestine and Iraq amongst others. McMahon on the other hand made a commitment to ensure the independence of a number of territories which would not damage the existing cordial relations with France. Arabs in the Middle East have maintained that British had promised independence to the Palestinians; on the other hand, Britain claims that this was merely a declaration of intent that was not legally binding and cannot be used to lay claim of independence to the Palestinians (Mack 123).

Briefly comment on the communication research report Essay Example for Free

Briefly comment on the communication research report Essay With rapid advancement of new communication technologies, people currently can freely and actively express their own opinions in the new media. For example, the Internet has dramatically changed the ways in which some individuals receive news and information, this is very big different from the traditional forms of communication. However, there are some correlation links between traditional mass communication ways and modern new technology ways(Kotcher,1992;Rubin, 1994). Roberts M, Wanta, W and Dzwo, T (2002) examined one aspect of the Internet: electronic bulletin boards (EBBs). The objective of this study is to investigate if traditional news media sources have an agenda-setting impact on the discussions taking place on the EBBs. In other words, the purpose of the study is to examine the agenda-setting process and the role it may play on the Internet. The reports dominant methodology is quantitative. As we know, it is a critical issue that appropriate methodology should be taken depending on different research topic. Quantitative approach and qualitative approach have their respective advantages and disadvantages (Fowler, 1993). Quantitative research, through surveys, gathers data about peoples knowledge, opinions, attitudes and behavior. Quantitative research approach is used to generate new knowledge for evidence-based practice. Attention will be given to the advantages and disadvantages of Quantitative research designs for large group research, the principles of reliability and validity, the value of descriptive and inferential statistics and the importance of ethical research conduct. For the topic, it belongs to sociology category, so I think the researchers have used appropriate research approach (quantitative research approach) even though the approach has some disadvantages. This is because quantitative research approach for this topic has the following advantages: Large members of people can be studies; the method is relatively quick and relatively cheap; the results are reliable, and representative of a much wider population than that directly investigated, the personal influence of the research on the results is slight and the data can easily be expressed in statistical form. This enables comparisons to be made between different groups and populations. For this study, the researchers use Internet, its main advantages are low/moderate cost to design; low cost to send; quick to analyse data; easy for respondent to complete and can attach brochures, images, etc. However, Every survey methodology has its weaknesses, and online surveys are no exception. Not sure who is answering the survey. Like mail studies, it is difficult to insure the desired person actually answers the survey. Not representative of the population. The Internet population has a slight bias towards younger, more computer literate users, though this is changing all the time and becoming more representative of the population. Long surveys are more difficult. The personalities of todays online users makes it difficult to coerce respondents into completing long surveys. Not a mainstream research methodology, yet. With more experience and comparative analyses of online surveys versus mail and telephone results, online surveys should reach the same level of acceptance as other methodologies. For this research, the researchers use EBBs which has the above weaknesses too. For the researchs method, the researchers use five steps (Roberts, 2002, P456-458): The first step imperative examines whether traditional news media sources have an agenda-setting impact on the discussions taking place on the EBBs. They ask Do individuals take issue information gained from news media and pass information about this issue online to other electronic bulletin board users? The second step is selecting the sample. The third step deals with defining categories, time frames, coding units, and context units. The fourth step is content analysis and the final and fifth step of content analysis process is to analyze and interpret the data. The five steps are typical research method that is used by many researchers (McMillan, 2000) and they are very similar with the quantities analysis approach (the Scientific Method) which includes seven steps: Defining the problem; Developing a Model; Acquiring Input Data; Developing a Solution; Testing the Solution; Analyzing the Results and Implementing the Results (Render, 1982). The researchers use an ARIMA model cross-correlational test showed EBB discussions of three issuesimmigration, health care, and taxes-correlated with news media coverage, with time lags varying from 1 day to 7 days. In my opinion, the method is appropriate method for the topic. This investigation looks for a more powerful effect than previous agenda-setting researchers. Because of the Internets dynamic characteristic of transmitting information from senders to receivers, researchers currently assume that our traditional theories of mass communication can directly apply to online communication (Wimmer, 1994). The researches have an accurate research questions or hypothesis that are: how will the new online communication forms affect the agenda-setting process? Can we assume that the transfer of salience still follows the original hypothesis? How does the condensed and compressed environment of online communication affect what we know about time frame effects? All these questions are explored in their study. By quantitative research, the researchers concluded: The results demonstrate the usefulness of examining the rule the Internet plays in the agenda-setting process. Media coverage apparently can provide individuals with information to use in their Internet discussions. As the Internet continues to become an important source of information, it also will become an important area for mass communication researchers. (Roberts, 2002, P464). The report also recommended future research should link other mass communication theoretical approaches with Internet usage. Despite the research has some definite problems; online research has many more advantages than disadvantages. When surveying populations, which mimic the demographics of online users, online research can be a primary means of information collection. With other populations, online research can be effective as a supplement to more traditional survey approaches or as a quick impression of your customers (much like qualitative approaches are used). For outlook, as the Internet continues to grow in popularity, investigations of the content of information being sent online similarly will increase in importance. The study takes an important step in linking the Internet to a mainstream mass communication theory. References Kotcher, R. L. (1992). The technological revolution has transformed crisis communication. Public Relations Quarterly, 37(3), 19-21. Rubin, R. , P. Palmgreen, and H. Sypher (1994 eds. ), Communication Research Measures: A Sourcebook, New York: Guilford. Roberts, et al (2002), Agenda setting and issue salience online. Communication Research, Vol. 29 No. 4, August 452-465. Fowler, Floyd J. , Jr (1993). Survey Research Methods, 2nd ed. Newbury Park, CA: Sage Publications. McMillan, S. J. (2000). The microscope and the moving target: The challenge of applying content analysis to the World Wide Web. Journalism and Mass Communication Quarterly, 77, 80-98. Render, B and Stair, R. M (1982). Quantitative Analysis for Management ( The Second Edition). New York: Library of congress Cataloging in Publication Data. Wimmer, R. D. and J. R. Dominick (1994), Mass Media Research: An Introduction, 4th ed. Belmont, CA: Wadsworth.

How Stock Prices React to Information

How Stock Prices React to Information INTRODUCTION Case studies, introduced back in 1969, produced useful evidence on how stock prices react to information. Many studies focus on returns in the short window (several days) about clean of the event. The advantage of this approach is that, because expected daily returns are close to zero, the model for the expected return does not have a major impact on the findings of abnormal returns. The assumption in studies that focus on short return windows is that there were delays in price response event is short-lived. There is a developing literature that challenges this assumption, arguing instead that stock prices adjust slowly to information, so that one must examine returns over long horizons to show full-size market inefficiency. If someone said to accept its conclusions, many of the recent studies on long-term returns suggest market inefficiency, namely, long-term under reaction or overreaction to information. It is time, however, to ask whether this literature, viewed as a whole, suggests that the efficiency should be rejected. The answer should be a solid, no, for two reasons. First, the efficient market generates categories of events that individually suggest that prices are over-react to information. But in an efficient market, it is obvious: Under-reaction will be around as often as over-reaction. If the anomaly is divided between the accident under-reaction and overreaction, they are consistent with market efficiency. We will see that even clear about the division between overreaction and underreaction is a good description of the menu of existing anomalies. Second, and more importantly, if the long-term return anomalies are so large that it cannot be attributed to the case, then even split between over-and under-reaction is a Pyrrhic victory for market efficiency. We will find, however, that the long-term return anomalies are sensitive to the methodology. They tend to become marginal or disappear when exposed to different models for expected (normal) returns or when different statistical approaches are used to measure them. Thus, even viewed one by one, most long-term return anomalies can reasonably be attributed to chance. The problem in the development of the overall perspective of long-term return studies is that they rarely test specific alternative to market efficiency. Instead, the alternative hypothesis is unclear, the market inefficiency. This is unacceptable. Like all models, market efficiency (the hypothesis that prices fully reflect the available information) is a wrong description of the pricing. Following the standard scientific rule, however, market efficiency could be replaced by a better specific model of price formation, itself potentially rejectable by empirical tests. Each alternative model has a difficult task. Please specify the errors in information processing, which have the same investors under-react to certain types of events and over-reaction to others. The alternative must also clarify the observed results better than the simple story of market efficiency, ie the expected value of abnormal returns is zero, but chance generates deviations from zero (anomalies) in both directions. From the literature, the irregularity was not settled on a concrete alternative to market efficiency, to get the ball rolling I assume that reasonable alternatives must choose between over-reaction or response. Using this perspective, we review existing studies, without questioning their applications. Each mechanism of organized marketing assets or financial liabilities is determined on the financial market. It is a market in which financial assets and liabilities are traded (Richard and Bill, 2006). Financial assets in this area includes all forms of securities, ranging from ordinary derivatives. Performance, it is widely used can be seen as the ability to achieve the desired result of the action or not waste energy (Encarta Dictionary, 2009). In other words, it has to do with how resources are used efficiently, the extent to which something is good. Financial market efficiency can be said to include as financial assets and liabilities are exchanged efficiently and productively the funds invested in financial market instruments. However, the exchange of securities in respect of funds can not be made only at the price willingly accepted by both parties, while the price is determined mainly by the value and scope of information available on the market for investors. This document d iscusses the performance of financial markets, however, explore the theories and assumptions, and explaining in detail all the terminology (majorly prices and information) relating to the efficiency of the financial market. LITERATURE REVIEW There have been extensive results on the effectiveness of the financial market. This led to the development of various theories, such as determination of the value of securities, the impact of information on share prices, dividend policy, to name a few. DEFINITION OF FINANCIAL MARKET Financial markets, as per Olowe, 1997, are mechanisms in which the surplus and deficit units can be connected economy by buying and selling financial claims. Furthermore, he argues that the primary function of financial markets is to allow the funds effectively allocated from the surplus units in the economy, the deficit units for productive investments. Richard and Bill, 2006, view of the financial market, like any market mechanism for financial assets and securities. They further explain that there is often no physical market transactions are conducted via telephone or computer. Is any market in which financial assets and liabilities are traded and the mechanism through which corporate financial managers have access to various funding sources and instruments. Capital markets, however, operate in two ways: Primary market providing new capital for enterprises and other activities, usually in the form of issuing shares to new or existing shareholders or loans. It provides the focal points for lenders and borrowers to meet. First of all, new sources of funding is raised in this market. Secondary market trade existing securities, thereby allowing investors to supply the existing holdings at will. Active in the secondary market is a prerequisite for efficient primary market and, as no investor will want to stick with investments that cannot be implemented if desired. Institute of Chartered Accountants of London describes the financial market, with the means provided by the financial system for the creations, care and distribution of financial assets and liabilities. The market according to the institute, has two major segments, money and capital markets. Money market offers the opportunity to raise short-term investments and funds. Tenor, which from day to day varies from about a year or two years. Exchange financial instruments on the market include treasury bills, bills, treasury certificates, securities, etc., the capital market on the other hand are the mechanisms, institutions and structures in which the medium and long term funds are collected and made available for businesses, government and individuals . Capital markets is that the instruments which are already provided are outstanding. OVERREACTION AND UNDERREACTION One of the first papers on long-term return anomalies wrote by DeBondt and Thaler (1985). We find that when stocks are ranked on three to five years past returns, past winners are usually the future losers, and vice versa. Attributed to these long-term return reversals to investor overreaction. In forming expectations, investors give too much weight to past performance of companies and too little to performance instead of the mean return. DeBondt and Thaler seem to argue that the overreaction to past information about the general assessment of behavioral decision theory of Kahneman and Tversky (1982). So could be that the overreaction to the prediction of behavioural finance alternative to market efficiency. In most cases, however, the anomalies literature has not accepted the discipline of an alternative hypothesis. An exception is Lakonishok et al. (1994). They argue that the indicators of stock prices proxy for past performance. Companies in the high proportion of earnings in the financial market instruments. These are securities or financial instruments traded on financial markets and the already mentioned, the two major segments of financial markets money and capital markets, the instruments traded in the money market are as follows: Treasury securities those short-term obligations of the federal government to the holder a specified sum of money after a certain number of days in question. Treasury securities are of two types depending on the denomination and maturities. While Treasury yields are generally low fixed and matures about 91 days of issue of certificate treasury share similar features with it, but a longer duration and higher fixed rate. Certificate of deposit (CDS) these are the revenues of banks deposit liabilities of a specified interest rate for a specified period of time. CDS is an interbank asset and serve as a means of channeling cash surplus of commercial banks, commercial banks, who are the main issuers of these types of devices. When the bank promises to pay the principal and interest at maturity, usually 3-36 months, with the name of the negotiable certificate of deposits. However, if the CD features of the deposit receipt, and are generally held to maturity, while, they are called non-negotiable certificates of deposits. Non-negotiable certificates of deposits is also maturity of up to 3-36 months. Commercial paper this is an unsecured short-term bills issued by the company to interested investors for a cash discount for a specific term. Investors in commercial paper loans are usually worth individuals or institutional investors. This is usually for a duration ranging from 30-270 days. Commercial paper dealer, however, classified documents and the documents placed directly. Securities dealer commercial paper investors placed through the dealer, which can be placed directly under a bank notes, commercial papers directly to the investors of the company issuing the documents, which require the issuer to maintain dress trained personnel who have a good knowledge of financial markets and good relationships in the markets. In all cases, the commercial paper investment of the investors, who borrow in the credit market without security, or even negative pledge. Commercial paper traded only on the primary market. Bankers Acceptances also known as the draft bill adopted by the drawee bank determines that a certain amount to be paid after a certain period of time. Adopted by writing the word your means the whole face of the draft with authorized signature. If this is done, the invoice, you should be the beneficiary of a discount rate. This financing through international trade credits. It is also intended to finance trade in goods in bonded warehouses, and in particular the credit created by the bankers acceptance self-liquid short-term loans. The maturity range of 90-180 days, or sometimes 30 to 270 days. Bank deposits this place is the base of the investors / depositors of the bank agreed rate of interest. Bank deposits are divided into call deposits / savings account deposits and fixed deposits. Call made deposits with agreed maturity date, and should be terminated by both parties at any given notice to the other party to an agreement based on the period of notice, the deposit liabilities of deposit and the bank for a specified period a specified rate of interest, which can be fixed or variable. The maturity of deposits vary from a few days a number of years. The deposit must be certified or non-receipt or certificate of deposit. Derivatives they are using, or losing or speculation from hedge against movements in currencies and interest rates. These financial instruments whose value are derived from underlying securities, which allows an investor to gain exposure to the performance of the underlying securities without having to physically. If a profit, there may be a hidden risk in derivative markets. Financial experts term financial weapons of mass destruction, and describes as hell, which is easy, and almost impossible to quit. Examples of derivatives, forward contracts and contract options for the future. CAPITAL MARKET INSTRUMENTS Debt Securities long-term loans are raised by a company or the government, which interest is payable, and a fixed rate. The nominal value of debt instruments, the debt of the issuer of the instrument and the interest is paid at the nominal rate of interest on this amount. In most cases, debt can be exchanged. Preference Shares this is a major source of long-term financing for the company. The holders of traditional shareholders instead of dividends. Preference shares, if they are collectively entitled to the unpaid dividend for the previous periods, carried over from one period to another, until finally paid off, in which case the arrears must be paid before common stock dividends paid. As well as debt securities, preferred shares convertible. Ordinary Shares the holders of these shares owned by the company. These nominal values and the memorandum and articles of association of the companys authorized common shares of the company may issue. The ordinary shareholders of the companys remaining claims, ie, they paid dividends in other fixed obligations have been met. Convertible Securities shares of both of these hybrid securities, the functions of the fixed-income securities and equity. These securities (usually fixed-rate), which is convertible into ordinary shares in the companys choice of the right in the future. Having explained the concept of the financial market, and it is composed, it is necessary to examine whether effective or not. Before this can be done, efficiency, whereas a different connotation in different environments should be clarified in the light of the financial market. EFFICIENCY This word efficiency is all part of the vocabulary of everyone. For most, this means that it can achieve the desired result, without or with minimal wasted energy or effort. The Encarta dictionary, 2009, is the ability to do something well or achieve the desired results will not be wasted energy and effort, that is, to what extent something is done well, or not wasted energy and effort. Overall, this is a situation where growing prosperity of the amount of productive resources and the current state of technical knowledge economy, eliminating wasted effort, and allows for additional output from the available resources to achieve this desired result, avoiding wastage and prevent losses to avoid harm. (David N.H, 2005). However, in order that the various professions that means different things, the economists are talking about allocation of efficiency the extent to which resources are allocated to the most productive use of this society with the greatest need. The engineers talk about the technical efficiency the extent to which a mechanism performs the maximum capacity. Sociologists and political scientists talk about the social efficiency the extent to which complies with the accepted mechanism for social and political values. (Richard and Bill, 2006). 6.1 Financial Market Efficiency The investment guru or financial expert, a slightly better efficiency, this also applies to the pricing and information on the effectiveness, efficiency, instead of sources of financial market instruments. It is necessary to do a quick and convenient tool to convert currency and vice versa, that the price of the securities is determined and how to manage the risks associated with the securities. This, however, with the roles of the financial market is expected to perform in the economy, according to which the Olowe, 2007, divided into three (3); Allocational efficiency the role of financial markets to optimally allocate scarce savings in productive investments in such a way that benefits everyone. The operating efficiency the server as an intermediary, who provide the funds from savers to investors at the least cost, which offered them a fair return for their services. Pricing efficiency the role of the dominant values at which securities will be replaced if the market price of capital allocation signals. The prices of the forces of supply and demand. Fama, 1976 (the Olowe, 1997) considers the effectiveness of pricing efficiency in the processing of information. Based on what said before, we can conclude that the pricing information of the two major determinants of efficient financial markets. Thus, financial market efficiency can be defined as the market in which security prices quickly and fully reflects all available information. The market in which any device that outperforms the market to be unusable. Therefore, the efficient financial markets, the same yield for a given level of risk should be implemented for all investors. Price (E / P), cash flow to price (C / P), and the book-to-market equity (BE / ME) is generally poor past earnings growth, and firms with low E / P, C / P, and BE / ME are generally strong earnings growth in the past. Since the market is over-react to the recent growth, it is surprised when earnings growth mean returns. As a result, a high E / P, C / P, and BE / ME stocks (poor past performers) have high future returns, and low E / P, C / P, and BE / ME stocks (strong past performers) at low future returns. We also considered the poor long-term post-event returns in the stock market (IPO), and experienced their own offerings (SEO) is the overreaction camp. SEO is a strong stock returns in the three years prior to the issue. It seems safe to assume that these strong returns reflect strong earnings. It seems safe to assume that the IPO will have a strong past earnings to appear in public. If the market does not mean that the income growth increasingly means returns, stock prices at the time of the equity issue (IPO or SEO) is too high. If the market only gradually recognizes the mistake, the overreaction to past earnings adjusted for slow growth in the future. Finally, some argue that the long-term negative abnormal stock returns post-list of companies that the new list of the NYSE and Amex because of the overreaction. Companies list their stocks to take advantage of market overreaction to the recent strong performance. As it turns out, overreaction was the result of tests of long-term returns, market efficiency would be dead, replaced by the alternative behavioural DeBondt and Thaler. The fact that it was obvious during the reaction around frequently. My grandfather was in the bottom of the reaction to the events of the evidence that stock prices seem to respond to income of about one year after announced. Another impetus to the effect that the high returns of stocks over the past year, yields are typically high, as the next three to six months. Alternatively, if new tests also produce the long-term post-event abnormal returns, which suggest underreaction, indicating a positive post-event abnormal returns of divesting firms and the companies that will sell. Attributed to the result of market underreaction to the enhanced probability that after the spinoff, both the parent and the spinoff is likely to become merger targets, and the recipient of aid. Desai and Jain and Ikenberry et al. Determine that the companies shared experience in human resources, long-term positive abnormal returns before and after the split. Attributed to the post-split returns to the market underreaction to the information indicates a positive split. Lakonishok and Vermaelen find positive long-term post-event abnormal returns when companies apply for stock. Ikenberry et al. observed similar results in the open market share repurchases. The story in both cases is that while the market, responding to a positive sign for the future performance of the share repurchases. Finally, Michaely et al. finds that the basis of stock prices, appears to respond to negative information in dividend omissions, information and positive initiatives. A few of the long-term return anomalies it is not easy to classify. For example, Asquith and Agrawal et al. indicate negative long-term abnormal returns to acquiring firms following mergers. This is also attributable to underreaction of market to a bad investment decision, or overreaction to the typically strong pre-merger performance of acquiring firms, documented, and Mitchell Staford. Ikenberry and Lakonishok find a negative post-event abnormal returns of firms involved in proxy contests. A story, based on the stock exchange, responds to the poor performance of these businesses prior to the proxy of competition, but another is that the price is too responds to the proxy information that something is likely to change. Because of the ambiguities in classifying certain disorders, and given the fact that the above review is certainly not complete, I will not do a number against the overreaction underreaction studies. What is important is that the literature does not lean toward the clean up of behavioral alternative to market efficiency. This will not be lost in the behavioral finance researchers who acknowledge the issue: We hope that future research will help to understand why the market seems to overreact in certain circumstances and underreact in others. (Michaely et al.). The market efficiency hypothesis is a simple answer to this question is a chance. Specifically, the expected value of zero abnormal returns, but chance generates apparent anomalies that split randomly between underreaction and overreaction. The weight of evidence of long-term return anomalies are so overwhelming that market efficiency is not viable even in the absence of an alternative working model that explains both under-and overreaction? The answer to that question is no, for two reasons: First, it is doubtful that the literature is presented in a randomly selected sample of events. Splashy results get more attention, and it encourages you to find. That the dredging of the irregularities of a rewarding profession suggested by the fact that the anomalies literature shows so little sensitivity to the other hypothesis problem. The same authors, visual events are often satisfied with the overreaction or underreaction, and are prepared to conclude that both justify the rejection of market efficiency. Second, some disorders may be evident by means of a reasonable price. Fama and French find that the long-term return reversals and the DeBondt Thaler, and conversely, to return to the Lakonishok et al. captured by a multifactor asset pricing model. In a nutshell, covariation between the returns of long-term losers seems related to the risk premium, which explains why higher future average returns than long-term winners. Fama and French discuss the fights and the multifactorial model, but the results are sufficient to illustrate an important point: Conclusions on market efficiency can be sensitive to the assumed model of expected returns. Last, but most importantly, have more or less split between overreaction and underreaction is not much support for market efficiency in the long-term return anomalies are so great they can not be attributed to chance. But it will still be viewed individually, most of the anomalies are weak. They usually disappear when reasonable alternative approaches to measure them. 6.2 Pricing of Securities Pricing is a major determinant of financial market efficiency security is discussed in relation to pricing of risk and return. Risk, which is created by many factors, such as general economic conditions, economic factors specific to security, competition, technological development, investor preferences, and all other kinds of circumstances, as defined in Van Horne, 1986, the various possible return on investment. Olowe, in 1997, also sees risk to the likelihood of a deviation from the expected return from holding a security back to the actual holding of such securities. The introduction of the risk, the investor may be indifferent as to which to invest in safety, if there is available for investment, similar yields. A conceptual framework for examining the relationship between risk and return, as they affect the pricing of security, discussed the Capital Asset Pricing Model (CAPM) and the discretionary pricing model (APM). 6.3 Capital Asset Pricing Model (CAPM) This model was developed by Sharpe (1964), Linter (1965) and Mossin (1966). It shows the expected return on the relationship between security and the inevitable risks. Provides a framework for the evaluation of the securities and can be used to find the unit cost of equity capital. CAPM, however, was the following assumptions: A time CAPM model assumes that investors are risk averse. The rice adopters and investors in the securities in the uniform requirement. There is a risk-free security, so that investors may borrow or loan an unlimited amount of risk premium rates. The securities are sold, and perfectly divisible. Even more so, to the quantities. The information is freely available to all investors. Investment restrictions cannot be neglected and no investor is large enough to affect the market price of the stock. The above assumptions are briefly assumes that there is a perfect market, and that the financial market is efficient. Thus, as the assumptions, all asset prices fall, that the security market line, while the security market line equation: E(R1) = RF + [E(RM) RF]ÃŽ ²1 Where ÃŽ ²1 = COV(R1RM) ÏÆ'2m E(R1) = expected return on security RF = risk – free rate E(RM) = expected rate on market portfolio ÃŽ ²1 = beta of security i COV(R1RM)= covariance of return on security i with the returns on a market portfolio. ÏÆ'2m = variance of returns on the market portfolio Example; if the expected return on security is 24% and its beta is 1.8. show whether the security is under or overvalued if the risk – free rate is 13% and return on market portfolio is 18%. Solution; E(R1) = RF + [E(RM) RF]ÃŽ ²1 = 0.13 + [0.18 – 0.13]1.8 0.22 i.e. 22%. We conclude that it is undervalued as the expected return is 2% less than the predicted. i.e. 24% > 22%. 6.4 Characteristics of CAPM The fact that not all risk-return safety concern that risk averse investors, asset should be priced to the risk-adjusted return is exactly the security market line. So the only risk is that investors pay a premium to avoid the risk of market share so that the total risk of each security in a systematic and systemic risk. A general and systematic risk affects the entire market, and irregular and the characteristic factors unique to a particular person. Effective diversification, however, reduces the overall risk of the portfolio to the point where only the regular risk remains. Measured by the weighted average portfolio beta of the beta of individual securities in the portfolio. Proportion of portfolio funds allocated to represent the weights of individual securities in the portfolio, and it represents mathematically: n ÃŽ ²P = ∑ wi ÃŽ ²i i=1 where ÃŽ ²p = beta of portfolio p ÃŽ ²i = beta of security Wi = proportion of security in portfolio p Conclusion: CAPM has been derived under some simplifying assumptions, most of which do not correspond to reality. For this reason, it has been criticized on the grounds that it assumes the market portfolio of all assets stocks, bonds, property and human capital. The real-life situations, empirical tests of the CAPM tend to use proxies, such as stock market indices as the market portfolio. 6.5 The Arbitrage Pricing Model It has proposed by Rose (1976), because the dissatisfaction of the CAPM on the theoretical and empirical grounds. This is a multi-factor model (multiple-beta model), compared to the CAPM, a single factor model. The safety factor for the actual return for a state grant: n Ri = E(Ri) + ∑ bijFj + ej J=1 This can be restated as Ri = E(Ri) + bi1F1+bi2F2 + †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. + binFn + ei Ri = actual return on security E(Ri) = expected return on security i Fj = the (uncertain) value of factor j bij = sensitivity to factor j ei = the error term. It is also the security-specific return. Similar to the CAPM, we diversify the unsystematic risk, but in addition, we arrive at the market equilibrium, as individuals eliminate arbitrage profits across multiple factors. The model does not explicitly indicate what factors or economic factors or behavioral significance. However, the market return as in the case of CAPM can be one factor. The APM, therefore, suggests that the linear relationship between security returns and a few factors. The steady-state under this model, the expected return on security i E (Ri) issued by: E(Ri) = Rf +Ɔº1 bi1 + Ɔº2 bi2 + †¦Ã¢â‚¬ ¦..+ Ɔºn bn Where Rf = risk – free rate Ɔºn = risk premium for the types of risk associated with particular factors. Its equation can be rewritten as: Ɔºn = En – Rf where En is the expected return of a portfolio which has unit response to other factors. Example: The return of stock company is related to two factors as follows. E(Ri) = Rf +0.7Ɔº1 + 1.6 Ɔº2 + 1.3 Ɔº3 Where 0.7,1.6 and 1.3 are sensitivity coefficients associated with each factor. If the risk – free rate is 12%, Ɔº1 is 7%, Ɔº2 is 4% and Ɔº3 is 6%. Calculate the expected return on the company’s stock. Solution: E(Ri) = 0.12 + 0.7(0.07) + 1.6(0.04)+1.3(0.06) = 0.311 i.e. 31.1% In summary, it seems more than the CAPM, the APM allows the CAPM risk averse investors to focus more attention to the systematic risk of securities pricing and diversify the systematic risk. According to APM on the other hand, individuals across a number of factors arbitrage, arbitrage opportunities disappear when the market is in balance. However, there is consensus on these factors, the APM, and testable. Thus, CAPM can still be used in security prices. INFORMATION ON SECURITIES Information can be classified as historic, current, or expected. Only the current or previous information from some of its effect on prices. The more information is available, the better the situation means that an informed decision is more likely correct. Security prices are characterized by a random and unpredictable movements. The movement in security prices may be interpreted to mean that investors in the market, a quick note to all security-related information on prices and prices adjust quickly to such information. Thus, the effectiveness of the security prices depend on the speed of price adjustment to all available information. The more efficient than the speed of adjustment of prices. The market efficiency of the available information, however, the efficient market hypothesis reflects (EMW), the three basic forms: Weak form Semi a strong form; Strong form. 1) The weak form EMH states that current stock prices fully reflect all of the information included in the recent price movements, which makes it impossible for investors to predict future security prices and the analysis of historical prices, achieved better results than the stock market as well. Therefore, the market may be effective in this form, there is no significant correlation term average prices of securities. Even more so, if an investors trading strategy can not beat the market based on information available to him, we conclude that the market is weak form efficient. Olowe 1997, places that most

Public vs. Private Education Essay -- Compare Contrast School Educatin

Public vs. Private Education   Ã‚  Ã‚  Ã‚  Ã‚  I have examined and compared public versus private education. Also, this collection of information should help you understand differences between public and private schools. Aspects of equality and achievement in private and public education will be dissected and evaluated. Observations I have evaluated and examined both public and private education instittutional systems. Public Education Public schools are in crisis, and not because of any shortages of public funds (more money is spent on public education than ever before, but with declining results). Many people like to think the problem with our schools is precisely that they are public: "Government schools" are run like the rest of the government, poorly and inefficiently. Teachers are not primarily to blame, because they are also victims of bad conditions of schools and their profession. The solution is to get government out of the business of education and to run education in a more businesslike way. However, education is not a business like other businesses; it does not turn out a product whose value can be expressed adequately in terms of market price. Education does impart business or workplace skills, of course, but the value of reading and writing well cannot be captured fully by a future salary. The love of learning and growing as a student mentally is what shapes each individual's identity in public life. Before much progress can be made, Americans will have to be persuaded that public schools are a public failure -- that they are turning out not just poorly educated students but bad or indifferent citizens. However statistics show that Americans have confidence in public education. In 1997 Phi Delta Kappa/Gallup Poll of the Public's Attitudes Toward the Public Schools was the first in which an effort was made to determine whether the public wants to place its confidence in the public schools or to start looking for an alternative system. In that poll, the public clearly indicated its preference for the public schools.. The results clearly affirm the public's belief that our national commitment to educating all our children through the public schools should be maintained. 71% of Americans indicate that the focus in education should be on reforming the existing system. This compares to 27% opting for finding an alternative system such as p... ... school also generally increased with family income. Children from the lowest income families (less than $15,000) were more likely than those from families with incomes over $30,000 to attend a chosen public school. However, the net result of the various types of choice was that children from families with incomes over $50,000 were much less likely than children from families in lower income categories to attend an assigned public school over which they had not exercised any choice. Reference The Condition of Education 1997, 182, based on NCES, Schools and Staffing Survey, 1993?94, and the Teacher Follow-up Survey, 1994?95. 14/ NCES, Schools and Staffing in the United States, 1993?94, 107. 15/ V.E. Lee and J.B. Smith, "High School Size: Which Works Best, and for Whom?," paper presented at the annual meeting of the American Educational Research Association, New York, 1996. 16/ F. Mosteller, R. Light, and J. Sachs, "Sustained Inquiry in Education: Lessons from Skill Grouping and Class Size," Harvard Educational Review 66 (4) (1996): 797?842. 17/ The Condition of Education 1997, 136, based on NCES, Schools and Staffing Survey, 1987?88, 1990?91, and 1993?94.

The Banning Of e For Ecstasy By Nicholas Saunders :: essays research papers

The Banning of "E for Ecstasy" by Nicholas Saunders The book entitled E for Ecstasy, by Nicholas Saunders, is a book of history, information, and stories about the illegal drug ecstasy. The author presents a vast amount of information about many aspects of the drug such as the history of the invention of the drug, information about how the drug effects people in different ways, positive reasons to use the drug, side effects and negative reasons to use the drug, and an overview of how the drug has been accepted into various societal groups. A shipment of this book, which was published in England in 1994, was ceased by Australian customs agents in the spring of 1994 and has been banned in Australia ever since. The ban on this book is currently still in place and being upheld by the Australian government due to the way the book portrays the drug ecstasy in a primarily positive way. According to the author of the book, even anti-drug groups are opposed to the ban because they believe both sides of the story should be heard. As I read this book, at first I felt a temptation to try ecstasy due to the positive way in which the drug was described. After reading further into the text, however, much more detailed information about the drug is brought fourth. For example, the book associates use of ecstasy with the cultures of all kinds of illegal drugs. In my opinion, the ban should be lifted because the book does not just give the positive information about this drug. While the book does side towards the use of the drug, it does provide all kinds of interesting information and education including negative data about the drug. If information about drugs is kept in the dark, people will be tempted to seek information in potentially harmful ways. If information flows freely, however, people can usually be trusted to make smart choices. The latest twist to this otherwise traditional story is that the entire text of the book is now available on the Internet, as is the text of many other banned books.

Monasticism And The Code Of Chivalry :: essays research papers

Monasticism and the Code of Chivalry In the Middle Ages, there were many factors contributing to the building of monasticism. One of the most important components of the fourth century came when the Christians believed that Jesus would return very soon. So they did not care what the world did to itself. Instead they waited for Jesus to fix things, but it did not happen. This caused the world to become a violent place to live. Christians were persecuted for their beliefs by the Roman Government. The Christians had enough and were ready to leave. Some Christians went to a place where they could have communion in peace without the fear of the Roman government, this place was Egypt. They were called hermit monks. But others, Christians, had their ideas of the way that a Christian life should be lived. They wanted to live in a community, so they could worship together as a group instead of being alone. Benedict of Nursia established a rule that was used by most of the monks as a way of life. In this there were three specific vows, they are used to make it easier for monks to be closer to God. They are poverty, chastity, and obedience. Poverty meant that the need for money and material possessions were not needed as a means of worship. The monasteries gave the monks the things that they needed, and this was only the bare essentials. The monasteries made their own money by owning land and selling surplus products. Thus, they became very wealthy. Chastity meant that the men and women would not have sex or get married. This was said to have saved the monks from the "devilish acts" that happen when sexual desires were exploited for selfish reasons. Obedience was essential, each monk had to be absolutely obedient to their abbot. The purpose of this obedience was to develop personal humility, and to become more holy by becoming humiliated or less proud of one's self. Only making them worship and become closer to God. The monasteries were a place to get away from evil and anything to deter them from God. The Code of Chivalry means, if you own a horse than you can have wealth or power in the Middle Ages. As there are more people with horses, the tension gets tighter and tempers are flared, this is how elite soldiers and knights are

Prada Case Analysis Essay

â€Å"FINANCE† Course â€Å"PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN† case analysis Brief summary of the case with the emphasis on managerial problems that Prada faces. Prada currently requires a significant amount of capital both to re-finance debt that is maturing in the next six to twelve months and to finance its intended growth into the Asian (especially Chinese) markets. Since financial markets are aware of Prada’s pressing need to raise capital, it is important for the board of directors to develop a credible strategy for raising the necessary capital of at least â‚ ¬1 billion. Although the press has been suggesting that Prada will do an initial public offering, the company has tried this several times in the past with no success, mainly because of bad timing (9/11, the SARS outbreak, and the ongoing global financial crisis and European sovereign debt crisis). The board has approached Guido Santini of the investment bank Grupo Capo Milano to come up with a number of credible alternatives and a strategy for raising the needed capital. 1. What is the current and future outlook for the luxury goods segment over the next couple of years? How should Prada position itself to prosper in this market? Luxury goods segment proved to be resilient to the economic crises and had consistently grown from 1994 till 2010.The luxury industry grew approximately by 2% per year until 2007, and by 1% per year from 2007 to 2010.  Beginning from 2010, the global luxury goods market started a new growth phase driven by emerging markets. This was a significant change as growth was usually driven by the developed markets, especially the US. Prada needs to support a global portfolio of leading luxury brand. Following the series of acquisitions and consistent with its attempt to become one of the top global brands Prada consistently worked on expanding its global footprint by opening and running its own stores around the world. 2. What should be Prada’s priorities in determining the best way to raise capital now? What are Prada’s priorities in evaluating different ways of raising the funds it requires? How do these relate to Prada’s strategy? I choose IPO over Debt and Strategic partnership. Compare to issuing debt, an IPO will not add any more burden to the company’s balance sheet, which for Prada, was already showed a sign of insolvency and over leveraged. Another issue is that no firms in this industry have ever raised  money in US bond market. Although â€Å"dim sum bond† – a Chinese Yuan denominated bonds issued in Hong Kong could be the best alternative to this situation, however, the short life and the exchange risk it involved are its most disadvantages. How about sale some portion of the firm to the private equity firms to raise capital? For this deal, it seems that they will not only offer a sizeable premium to the family, but also to offer some important positions on the board too. But, compare to IPO, it will not increase Prada’s publicity through this method. And also, an IPO in Hong Kong will give the company more opportunity to expand their Asia market, especially in China and Japan. Choosing a Strategic Partnership would be just like giving that huge potential profit away. 3. What are the different sources of capital that Prada should consider? Should there be a preference for debt versus equity? Should there be a preference for raising capital in one country relative to another? Should there be a preference regarding the types of investors? How would these influence the attractiveness of the different available sources of capital for Prada? Equity IPO in HK 1.higher valuation than listed in Europe 2. aim to the Asia market 1.HK market has lower liquidity (page 7. Sect. 2) 3.potential tax problem HKDR 1. listed in Milan but also can be bought and sold by investors in HK. 2.help future negotiation in China 3. may have lower valuation than IPO in HK 4. higher cost than IPO Strategic partnership 1.current price for PE transaction is attractive 2.higher premium 1. higher cost than other alternatives 3. may cause partially loss of control of the corporation Debt Traditional corporate bond 1. easily priced 2 2. further potential financial problem 3. higher leverage ratio 4. How would you recommend the board of directors proceed? One of the best solutions for Prada to solve this problem is to raise capital in the stock market, which we could refer as IPO. Given the current market conditions, listing in Hong Kong might appears to be the best choice after all.