Global Financing and Exchange Rate Mechanisms Essay

Global Financing and Exchange Rate Mechanisms - Essay Example The Purchasing Power Parity principle (PPP) was enunciated by a Swedish economist, Gustav Cassel in 1918. According to this theory, the price levels (and the changes in these price levels) in different countries determine the exchange rate of these countries currencies. The basic tenet of this principle is that the exchange rates between various currencies reflect the purchasing power of these currencies. This tenet is based on the Law of One Price. ... It also makes a few additional assumptions. No transaction costs in the foreign currency markets: It assumes that there are no costs involved in buying or selling a currency. Basket of commodities: It also assumes that the same basket of commodities is consumed in the different countries, with the components being used in the same proportion. This factor, along with the Law of One Price, makes the overall price levels in different countries equal. Though the explanation provided by the absolute PPP is very simple and easy to understand, it is difficult to test the theory empirically. This is due to the fact that the indexes used in different countries to measure the price level may not be comparable due to: -- the indexes being composed of different basket of commodities, due to different needsand tastes of the consumer. -- the components of the indexes being weighted differently due to their comparativerelevance, -- different base years being used for the indexes. Due to these reasons, these price indexes cannot be used to evaluate the validity of the theory. The relative form of PPP: The absolute form of PPP describes the link between the spot exchange rate and price levels at a particular point of time. On the other hand, the relative form of PPP talks about the link between the changes in spot rates and in price levels over a period of time reflect the changes in the price levels over the same period in the concerned economies. Relative PPP relaxes a number of assumptions made by the Law of One Price and the absolute PPP. These are: Absence of transaction costs Absence of transportation costs Absence of tariffs. The relaxation of these assumptions

United States Reform Movements Essay Example for Free

United States Reform Movements Essay In the years following the Second Great Awakening of the United States, numerous reform factions began to spring up around the country, fueled by recent evangelical ideals. Seeking to improve and expand democratic ideals, many of these factions undertook drastic measures to achieve what they believed to be a proper aspiration. Nevertheless, it would be farfetched to claim that such reform movements within the US resulted in any positive outcomes, and it would be much more logical to claim that many of the so-called reformers were in fact trying to further their own ambitions. By keeping penitentiary, church, and alcohol reforms as a pretense for egotistical purposes, they were able to attract an elite following of people that that acted with virtues that were anything but democratic. On of the first reform movements to become advocated was the penitentiary system. It had become a brutal institution, becoming known for excessively cruel punishments for criminal offenses. Extreme cases included imprisonment for insignificant amounts of debt, and asylums were common practices for what was believed to be insanity, following medieval practices. The Society for the Reformation of Juvenile Delinquents, in 1829, reported that they were proud to have rescued the youthful from temptation and turning them into valuable members of society. Yet by allowing the Society, and other institutions like it, to determine which of the youths were undisciplined and under the influence of temptation, the United States government was effectively allowing these organizations to diminish democracy. When these institutions were allowed to decide who was or was not orderly, power shifted away from the people and into their hands. A similar transfer of control occurred during the Second Great Awakening, when a fresh wave of spiritual fervor empowered numerous factions of the church. By gaining control over a culture dedicated to a religion, the church managed to dictate an entire society towards its own values. Charles G. Finney, in 1843 remarked that all sorts of abandoned characters are awakened and converted by the church, failing to mention whether or not any of the profligates actually wished to be converted. By forcing infidels to follow their ethics, supporters of the church had secured themselves within a throne of power, with the ability to enforce what they believed was  moral, desecrating the principles of free speech and democracy. Samuel Morse commented that emigrants were selected not for their affinity to liberty, but for their mental servitude when coming into the country. The church had begun to demolish Naturalization Laws, one of the first benefits of the democracy of the United States, un der the flag of the nativists (those who wished to favor the natural inhabitants of the United States). By controlling who may or may not immigrate to the US, nativists had begun to gain a dangerous amount of power, not through democracy, but abnormally favoring selection. The same approach towards atypical persons was present within the movement against alcohol as there was within the nativists, for both wished to rid the United States of what they believed to be crimes against their people. The Temperance Movement was as a milder offspring of the teetotalism movement, which promoted a complete abstinence from alcoholic beverages. Common belief with teetotal persons included an abhorrent view of alcohol, promoting notions that even a single drink of alcohol can and will lead to brawls, poverty, crime, and ultimately death or suicide. Even the less extreme Temperance movement had attempted to stop the peoples consumption of the wretched Demon Drink. Soon, laws were being created to enforce such views, with the Maine Law of 1851 standing out amongst them, prohibiting the manufacture and sale of liquor. Even though such a law was fueled by optimistic virtues, it was anything but democratic, enforcing one groups ideals onto an entire population without th eir consent. Attempting to force reform onto a people without their consent and condemning past principles for the sole reason of rash modification can not result in hopes for a new social order, as some movements may wish. During an address to Wesleyan College, Orestes Brownson proposed that Quack Reformers were disowning the past and promoting an entirely new social order. Of course, no good could possibly come from this, since it had taken numerous years to set up the securities that were in place, defending the democratic practices of the people of the United States. Reform should be focused around preserving values that are known to be sound and stable, not the upheaval of a society to the mere cause of altering a single trivial value. Drastic  Reform can only lead to ultimate destruction of democracy and leads to a rule by a chosen elite if not carefully monitored.

Case Study of China Aviation Oil Corporation Ltd

Case Study of China Aviation Oil Corporation Ltd Risk Management and Corporate Governance A Case Study of China Aviation Oil Corporation Ltd. Background introduction to CAO China Aviation Oil (Singapore) Corporation Ltd (CAO) is the Singapore subsidiary of China Aviation Oil. CAO was established in 1993 and its main business were jet fuel (kerosene) purchase for Chinese airports and international trading of fuels. CAO developed really fast and achieved 92% market share of the procurement of imported jet fuel for Chinas civil aviation industry by 2001. However, it was then involved in a big scandal which lead to its failure. In November 2004, CAO declared a total loss of $550 million and filed for bankruptcy. timeline of critical events Q1 2003 CAO enters into speculative option trades on oil prices with a bullish view Q4 2003 CAO changed its strategy and started trading speculative option trades taking a bearish view. Oct 2004 à ¢Ã¢â€š ¬Ã‚  international oil prices rose steeply, leaving CAO facing significant margin calls on its open (short) derivative positions. Nov 2004 in a press release CAO stated it was unable to meet some of the margin calls arising from speculative derivative trades. The total derivative losses amounted to $550m. Mar 2006 à ¢Ã¢â€š ¬Ã‚  CEO Mr. Chen Jiulin was arrested with the charge of insider trading, fined and sentenced to 51 months imprisonment. Literature Review option-based strategies There are two types of options: call and put option. One can either long or short the two options to gain profit (speculating) or mitigate risk(hedging) from price changes. In this case, CAO started its option trading in 2002 initially to hedge its jet fuel risk thorough. derivatives of futures and swaps. However, in the mid 2003, CAO started trading in speculative derivative options. hedging A hedge is needed to mitigate the risk from potential unfavorable swings in commodities. However, considering the cost and benefit effect, a hedge is not always necessary. One needs to understand the risks to be hedged, evaluate the severity and timing of downside risks properly, consider the financial instruments available and costs of certain instruments to determine the most cost-effective way to hedge. risk management and corporate governance Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risks can come from various sources including uncertainty in financial markets, threats from project failures, legal liabilities, credit risk, accidents, natural causes and disasters, or uncertain events, etc. The Board should establish appropriate guidelines for trading and ensured that they were consistent with the companys fundamental risk management policies, management capabilities and expertise, and overall risk appetite and tolerance. Senior managers (including executive members of the board) should formulate the major policies and guidelines of an institution. There should be a separation of duties between those who generate financial risks and those who manage and control these risks. Analysis CAOs trading strategies escalating bets As mentioned above, the companys trading strategy changing from hedging risks in 2002 to speculation with bullish strategy (bought calls and sold puts)in Q1 2003, which proved to be an accurate prediction. However, CAO then took a bearish view of the trend in oil prices in the fourth quarter of 2003, and began to sell calls and buy puts, with the result that it was in a short position at the end of the quarter. As the assumption was that oil prices would fall, it was further assumed that the counterparties would not extend the options, and these would therefore lapse to the benefit of the company. However, the price went further upward this time. The rise in oil prices resulted in the counterparties exercising the extendible features on options, and with the calls that were sold, the company faced the real risk of having to sell the contracted number of barrels at the strike price and realizing substantial loss. incorrect option valuation methodology The Special Auditor from PwC assigned by SGX discovered that the company used the wrong MTM valuation method by ignoring the time value, which lead to the misestimation of oil price and the wrong speculation strategy. While CAO had the chance to remedy the mistake by comparing the pricing with counterparties but the company met the margin calls without protest until it lost the financial capacity to do so at the end of September 2004. motivations behind Financial: the company developed fast and became monopoly in the market since 2000. In order to bolster its profile as well as boost investors confidence and generate more profit, the company was willing to take high risk. Political: according to exhibit 8, the year 2003 saw the burst of Gulf War. The company may want to take advantage of the war so that higher risk is acceptable as fuel is a critical resource during wars. Corporational: the lack of risk management knowledge of the CEO, insufficient management environment within the company and the inefficient external audit, as will be discussed in detail in the next section, further accelerated the fall of the big company. CAOs risk management and corporate governance In its 2003 annual report, CAO indicated that it had a formal system of rigorous internal controls over three layers. Meanwhile, other sources of control includes China Securities Regulatory Commission and External Audits. It seems that the company should have a stringent risk appetite. However, according to PwCs report, despite a continuing significant loss in 2004, in order to avoid recording and reporting losses, the company adopted a much larger risk exposure by selling longà ¢Ã¢â€š ¬Ã‚ term options with extremely high risk profiles to raise the premiums to cover the cost of closing out the lossà ¢Ã¢â€š ¬Ã‚ making option contracts (Exhibit 1). So in effect, CAO coveredà ¢Ã¢â€š ¬Ã‚ up the losses that were realized when closing out the lossà ¢Ã¢â€š ¬Ã‚ making nearà ¢Ã¢â€š ¬Ã‚ dated options. Exhibit 1 It was unclear why the companys directors did not question or object to this contravention of regulations. The Audit Committee did not carry out its function of identifying and monitoring the financial risks involved in options trading, and investigating whether the risk management framework and safeguards were sufficient for dealing with the business. Follow-up Development Restructuring outcome: In response to the investigation results by PwC, CAO indicated in a press statement that it intended to form a committee to study the results and to recommend the company on specific remedial or disciplinary improvements. It also expressed the willingness to be more honest on past events and to move forward with the debt and equity restructuring exercise in a positive manner. The company then called for a creditor meeting to approve its latest debt restructuring plan on June 8. As far as I am concerned, with the resources of the parent company, both from the aspects of finance and entrepreneurship, the support from Chinese government, and the establishment of a strict risk management framework, CAO can still gain back confidence from stakeholders, which may need time and effort. Conclusion Improper application of accounting principles, lack of oversight, inadequate knowledge of market and ineffective risk management systems for the speculative options deal were the major contributing factors towards CAOs failure. We should learn a lesson from the case as factors are similar and equally applicable to different business contexts so it is important to avoid certain mistakes. References Li, S., Nadeem, M. (2010). Risk Management and Internal Control: A case study of China Aviation Oil Corporation Ltd. Farhan. (2016, April 10). China Aviation Oil (Singapore) Corporation Limiteds Jet Fuel Scandal (2005) Casestudy. Retrieved January 15, 2017, from https://financetrainingcourse.com/education/2014/04/china-aviation-oil-singapore-corporation-limiteds-jet-fuel-scandal-2005-casestudy/ Yeo, A. (2014). China Aviation(Singapore) Limited- Sliding down a Slippery Slope: The $550m Derivative Trading Loss on November 2004.

History of Tuberculosis Essay example -- Medical Biology Disease TB

History of Tuberculosis Abstract This paper discusses the historical aspect of the fatal and contagious disease now known as tuberculosis. It discusses the history of Tuberculosis beginning with Ancient Egyptian mummies to the most current discovery of TB. Greek philosopher such as Hippocrates and Plato observed the first cases of tuberculosis. They are two out of the many people that gradually discovered the TB out of the many. It talks about the different remedies that different philosophers and physicians came about that have been revised. Tuberculosis, also known as â€Å"the white plague,† (The history of tuberculosis 2) is a silent and unknown prehistoric air borne disease that quickly spreads and kills nearly two million people worldwide (Tuberculosis-Revolution). Today, tuberculosis is the most deadly disease known to man, more deadly than HIV/AIDS. Despite advances in treatment, TB is a global pandemic, fueled by the spread of HIV/AIDS, poverty, a lack of health services and the emergence of drug-resistant strains of the bacterium (Tuberulosis-revolution Health). However, TB has an unknown past, and in order to understand tuberculosis, one must know its history. Evidence of Mycobacterial infection has been found in the mummified remains of Ancient Egyptians 1000 B.C. The â€Å"Father of Medicine,† Hippocrates (460-377 B.C), made the first breakthrough in TB research. He named the disease â€Å"phthisis,† which means the â€Å"shrinking of the body,† because the majority of the cases he found occurred in the spinal area. However, the majority of the population of that time commonly called the illness, â€Å"Pott’s disease.† Which is tuberculosis of the spine. The Greeks thought that phthisis was a heredity issue, while others though... ...http://www.revolutionhealth.com/conditions/lung/tuberculosis/tubercul osis?section=section_00>. "Defintion: Sputum from Online Medical Dictionary." 1997-2007. Center of Cancer Education. 29 Jul 2007 . "Healthline-Dictionary Search." Healthline-Scofula. 2005-2007. Center of Cancer Education. 23 Jul 2007 . The History of tuberculosis. 2005-2007. Center of Cancer Education. 23 Jul 2007 . â€Å"Tuberculosis." EncyclopÊdia Britannica. 2007. EncyclopÊdia Britannica Online. 29† July†  2007http://www.britannica.com/eb/article-253299. Brief History of tuberculosis." Brief History of TB. 23 Jul 2007 .

Alice Munro :: Biography Biographies Essays

Alice Munro Alice Munro’s fiction receives its strength from her vivid sense of regional focus, the majority of her stories take place in Huron County, Ontario, and through the sense of her narrators she illuminates and gives personal significance to each story. Many of Munro’s themes are centered around adolescent girls dealing with the ideas of loving, growing up, and losing innocence in a small town. Munro steps away from the adolescent girl and in her most recent work focuses on problems of the middle aged, such as women alone and those of the elderly. Munro is most famous for her works that deal with the adolescent girl and it has been said that Lives of Girls and Women is nearer her autobiography than it is a work of fiction. Munro has been known to say it is "autobiographical in form, but not in fact." As mentioned above many of Munro’s themes are centered around young girls, but the overlying theme is power. Munro defines the power of her artistic vision as the direc t result of her lack of power as a woman. Munro state’s "A subject race has a kind of clarity of vision and I feel that women have always had a clarity of vision which men were denied. And, in a way, this is a gift, it goes along with lack of power." At the end of Lives of Girls and Women, Del, the narrator, is trying to write fiction but finally rejects her unwritten novel as an "unreliable structure." The Lives of Girls and Women is a novel that focuses on the young Del Jordan, who is struggling with the problems of becoming a young woman. Munro takes the reader through Del’s carefree childhood to an uneasy adolescence in search of love and sexual experience. Munro’s ability to use Del as the narrator and to capture the perfection of local speech makes the reader feel that it is not Del’s life that is being told, but every young adolescent girl’s. In Lives of Girls and Women, Munro uses metaphors to organize the sequences of the fiction into a larger picture.. Metaphors of fire and electric power are used to associate fleshly humiliation of death and in Lives of Girls and Women are associated with sexual experience as in the climatic chapter "Baptizing." The most pronounced metaphor Munro uses is that of drowning. Munro uses a splitting metaphor to describe two kinds of power, sexual power and the power of death.

Melville’s Tools of Bob le flambeur Essay -- Herman Melville French Fi

Melville’s Tools of Bob le flambeur Removing the sound from Melville’s Bob le flambeur might lead one to believe that he or she is watching a Hollywood film noir, circa 1950. Melville, though not professionally trained as a director, manages to create an oddly stirring and quirky French film shrouded in the sheer curtain of Hollywood film noir. Though he retains much of the Hollywood style, he also employs tools of his own—camera movement and voice-over—to embrace the film in Melville-vigilante-style. Melville uses the trademarked tools of the noir film. For example, high key lighting and, therefore, deep shadows play a key determinant in one of the first scenes of Bob le flambeur. After establishing the setting through the reflection on a darkened window pane, the camera pans left to reveal five or six men standing around a table, lit only by the hanging lamp at least one foot below each of their chins. This leaves the men’s faces encompassed by darkness, forcing the audience to watch their hands and the gambling that is taking place. While all these factors—high key lighting, flooding shadows, tall, looming men, gambling, and near silence—all lend to the typical noir style, Melville uses odd camera movements to remain distinct. Within the same scene, there is a shot of Bob rolling dice; the camera swoops upward, as though coming from underneath the table, and ends up in a high angle shot, shooting downward at the dice. Now, combine that sweeping movem ent with the next cut, and Melville’s distinction appears. After the dice have been rolled, there is a three-quarter shot of Bob, who claps his hands once and walks off screen left. Suddenly, the camera lurches forward, as if to catch a glimpse of something that li... ...lationship can be seen in Hawks’ 1944 film To Have and Have Not; Humphrey Bogart plays stern and experienced Harry Morgan, a man involved with Lauren Bacall’s character, Slim, a husky-voiced, wise young woman who butts heads with men. While the characters are written in the same essence, the acting in these cases also seems similar; Roger Duchesne and Humphrey Bogart both are older, stoic and serious where Isabel Corey and Lauren Bacall both are beautiful, young, quick-witted and seemingly independent. Melville’s attempt to Americanize himself proved successful—his name he changed in honor of American novelist Herman Melville and he often wore a cowboy hat. Though Bob le flambeur is very much a tribute to Hollywood film noir, Melville manages to make it his own through quirky camera shots, over-the-top narration, and the set of beautifully grimy Paris streets. Melville’s Tools of Bob le flambeur Essay -- Herman Melville French Fi Melville’s Tools of Bob le flambeur Removing the sound from Melville’s Bob le flambeur might lead one to believe that he or she is watching a Hollywood film noir, circa 1950. Melville, though not professionally trained as a director, manages to create an oddly stirring and quirky French film shrouded in the sheer curtain of Hollywood film noir. Though he retains much of the Hollywood style, he also employs tools of his own—camera movement and voice-over—to embrace the film in Melville-vigilante-style. Melville uses the trademarked tools of the noir film. For example, high key lighting and, therefore, deep shadows play a key determinant in one of the first scenes of Bob le flambeur. After establishing the setting through the reflection on a darkened window pane, the camera pans left to reveal five or six men standing around a table, lit only by the hanging lamp at least one foot below each of their chins. This leaves the men’s faces encompassed by darkness, forcing the audience to watch their hands and the gambling that is taking place. While all these factors—high key lighting, flooding shadows, tall, looming men, gambling, and near silence—all lend to the typical noir style, Melville uses odd camera movements to remain distinct. Within the same scene, there is a shot of Bob rolling dice; the camera swoops upward, as though coming from underneath the table, and ends up in a high angle shot, shooting downward at the dice. Now, combine that sweeping movem ent with the next cut, and Melville’s distinction appears. After the dice have been rolled, there is a three-quarter shot of Bob, who claps his hands once and walks off screen left. Suddenly, the camera lurches forward, as if to catch a glimpse of something that li... ...lationship can be seen in Hawks’ 1944 film To Have and Have Not; Humphrey Bogart plays stern and experienced Harry Morgan, a man involved with Lauren Bacall’s character, Slim, a husky-voiced, wise young woman who butts heads with men. While the characters are written in the same essence, the acting in these cases also seems similar; Roger Duchesne and Humphrey Bogart both are older, stoic and serious where Isabel Corey and Lauren Bacall both are beautiful, young, quick-witted and seemingly independent. Melville’s attempt to Americanize himself proved successful—his name he changed in honor of American novelist Herman Melville and he often wore a cowboy hat. Though Bob le flambeur is very much a tribute to Hollywood film noir, Melville manages to make it his own through quirky camera shots, over-the-top narration, and the set of beautifully grimy Paris streets.

Societal Observations of Identity in Brave New World

Societal Observations of Identity in Brave New World Aldous Huxley’s novel Brave New World is one of future observations and assumptions. Huxley makes observations about a society that has lost individual identity and replaced it with collective identity. To prove this the following points will be addressed, Huxley uses John, the savage to demonstrate the loss of identity, he uses John because he is an individual and shows the variance between him and those living in Brave New World. When Lenina and Bernard visit the savage reservation they are shocked and disgusted at the way they live which shows the different between their individuality.The novel is set in the Brave New World where everyone does their given jobs without questioning and everything is stable. To demonstrate how Brave New Worlds society has lost individual identity Huxley uses John. John is from the savage reservation were everyone is an individual, John is taken back to Brave New World and is shocked at the l oss of individuality. â€Å"The Savage stood looking on, â€Å"O brave new world, O brave new world†¦Ã¢â‚¬  In his mind the singing words seemed to change their tone.They had mocked him through his misery and remorse, mocked him with how hideous a note of cynical derision! † This quote demonstrates what John thinks of Brave New World. He thinks it is a horrible place whereas those who live in Brave New World are not individuals and all believe Brave New World is the only right place to live. It also shows how John would quote Shakespeare separating him from the crowd, he is an individual. John was shocked at how they live in Brave New World, Lenina and Bernard went to the savage reservation and were also stunned at how they live there.Huxley uses the plot of Lenina and Bernard visiting the savage reservation in order to express the how those in Brave New World have lost their individuality. He compares the savage reservation and the Brave New World to make it clearer t o the readers just how much identity has been lost in Brave New World. â€Å"Oh! Look. What the matter with him? † Lenina is disgusted at an old man who has wrinkled skin. Lenina has never seen an old person as in Brave New World they do not grow old and they all look the same, no individuality. The hatchery in Brave New World is where everyone is created nd 96 identical people are made. The setting of the hatchery is used to show how all the people in Brave New World are designed to do exactly what they are conditioned to. Once they are created they are conditioned to do a certain job, to take soma which ensures they have no emotion and to be happy with who they are. â€Å"We also predestine and condition. We decant our babies as socialized human beings, as Alphas or Epsilons, as future sewage works or future directors of hatcheries. † This quote illustrates how their future is chosen for them, they are created for a certain job and have no problem with doing it.They have no individuality. Huxley uses characters, setting and plot to prove that the people of Brave New World have lost individuality. Huxley makes observations about a society that has lost individual identity and replaced it with collective identity. This is proven through the use of John the savage who is an individual, Lenina and Bernard’s trip to the savage reservation and how much they hated it, and by the hatchery where they create all the people who are designed specifically to do a certain job. Those in Brave New World are not individuals and have only a collective identity.