Western Nations Trade and Exchange in the 18th Century an Example of the Topic History Essays by

Western Nations Trade and Exchange in the 18th Century What was the role of the trade and exchange in the western nations in the 18th century? Trade resulted as a result of the communication that started to take shape in the prehistoric times. In the past it included exchange of goods and services or exchange of goods for services. In the 18th century trade or commerce was the backbone of many western nations. Other words they much valued trade as it earned them a lot of money. Curtin strongly believed that trade and exchange represented the key external stimuli to development. This is what in a nutshell this essay is all about. Need essay sample on "Western Nations Trade and Exchange in the 18th Century" topic? We will write a custom essay sample specifically for you Proceed During the 18th century, the key economic principles of Western nations were government expenditure and revenues, agricultural production and the foreign trade. In Western Europe at this period, it was believed that the welfare of all people would be taken care of if all nations embraced the policy of free trade as opposed to the military expeditions. As Maynard Keynes once put it, the individuals welfare is more important than that of the nation. The free economy to him meant that the majority would be the decision makers as opposed to the government. It was believed that if people were allowed to budget on their revenues, job opportunities and on what to use or save than, then the quality of life would be uplifted. According to Adam Smith in his book the wealth of nations, the government was supposed to regulate the free trade economy by ensuring that the operation mechanisms were in place and were followed to the letter. These were things such as monopoly regulation and enforcement of business contract. Before the 18th century the Britains economy was largely dependent on agriculture and military aggressions but it slowly evolved into an urbanized and industrial economy in the 18th century and in the next centuries. (Jan de Vries, 1976; 52-78) The industrial economy that took place in Britain in the 18th century involved exchange of goods and services. People started relying on trade unlike before when they relied on agriculture economy. Trade and exchange made people to reassess their social obligations as well as their family structures. In the past, most families relied on the rural economy but in 18th century they abandoned this strategy and embarked on a capitalist and urban economy. This involved terms and contracts, markets, trade, currencies and bills of exchange. The prosperity that the Western nations achieved due to this trade set a stage for transforming these nations from urban economy to capitalism. The urban economy started as a simple exchange of stock, keeping shops or in short what can be referred to as the exchange of material culture and then into a fully-fledged industrial economy. The western world started to value trade when they realized that it was the only source of money that was used to finance all its military operations. According to (Curtin P., 1984; 25-85) military conquest proved itself not to be enough and for this reason he believed that the role that trade and exchange would play in transforming the history of mankind would be very crucial as it is the only external stimuli that can bring change in our societies. He believes that external stimulation is the single most important as far as change and development in various fields such as art, technology and science are concerned. Inoder to traditionally integrate the income that can be used to cater for social welfare can be obtained, (Marianna B. 2005) a nation like Britain looked for overseas colonies where they could establish their business and exploit the local market of these colonies that were yet untapped. The basic approach to the international trade depends on the expected benefits either in terms of growth or welfare improvement. Economic gains increased whenever nations pursue cross-border commerce took place. This is because whenever you offer something new in the market and this makes people curious to try it out. This is what western nations believed in trade and trade as they discovered that military operations in search of wealth was costing them very much than what they anticipated. They started focusing more on the trade and exchange. The Britains economy thus stretched to each and every corner of the continent except in Antarctica. Its rapidly growing market economy earned Britain enormous benefits that led to the development of manufacturing and industrial economy. Another reason that perhaps led Britain to go overseas in search of market for its products was the fact that mercantilism had well established itself properly in this country something that made other nations to start thinking of the same. They realized the local industries would only achieve that by protecting the local industries by taxing and other duties. This made this commerce unprofitable and they had to look for alternatives. From then henceforth, every time it conquered an oversea territory, it monopolized it with its products and a classic example of this is the North America where half of the British products were exported. (Blanning T. 2000; 291-303) The policy of trade and exchange as a stimulus to change was evident and successful in the Ottoman Empire. Here this government regulated the international trade by giving some states the trading rights. He allowed some states to conduct trading activities and while he restricted some. This ensured that there was continuous inflow of such products that his empire would not provide for the people. Nations that had very weak external stimuli remained poor while others that had strong stimuli became rich and dominant. (Hancock D.1995; 123) This research has come to the conclusion that trade and exchange are the external stimuli to change. Many western nations realized this long before and that is why they were more prosperous than others as in the past they only relied on military operations. These western nations that are prosperous started. While pursuing international affairs, these nations they were well aware of the importance of protecting their own industries back at home. This is why a country like Britain introduced what was called Corn Laws that were made to protect the agricultural market at home. That is why if any country wants to prosper, then it should extend its business hands to various parts like the way European nations were doing in the 18th century. References: Curtin P. D. Cross Cultural Trade in World History. Cambridge: Cambridge University Press. 1984; 25-85. Marianna B. Cross Cultural Trade and Internal Institutional Stability. Hancock D. Citizens of the World: London Merchants and Integration of the British _ Atlantic Community. 1735-1785. New York: Cambridge University Press. 1995: 123. Blanning T. Eighteen Century: Europe 1688-1815. Oxford University Press, 2000: 291- 303 Jan de Vries. The economy of Europe in an Age of Crisis, 1600-1750. New York: Cambridge University Press. 1976: 52-78.

Home Health Aide Essay Example

Home Health Aide Essay Example Home Health Aide Essay Home Health Aide Essay Facilities that offer formal L ETC services typically provide living accommodation for people who require onsite delivery of aeronautically supervised care, include Eng professional health services, personal care and services such as meals, laundry y and housekeeping. 2) Hornet care supportive care provided in the home . Care may be provided by licensed healthcare professionals who provide medical care needs or by professional caregivers who provide daily care to help to ensure the activities of daily living (Dalais) are met. Inhume medical care is Often and more accurately referred to as home health h care or aroma care. Often, the term home health care is used to distinguish it from n medical care, custodial care, or privatively care which is care that is provided by peers ones who are not nurses, doctors, or other licensed medical personnel. Inpatient care the care of patients whose condition requires admission to a hospital Progress in modern medicine and the advent of comprehensive outpatient clinics ensure that patients are only admitted to a hospital when they are extremely ill or AR e have severe physical trauma ) Outpatient Care Ambulatory care or outpatient care is medical care provided on an outpatient basis, including diagnosis, observation, consultation, treatment, intervention, and re habitation services. This care can include advanced medical technology and procedures even whew n provided outside Of hospitals. 5) Occupational health refers to the identification and control of the risks arising from physical, chem. kcal, and other workplace hazards in order to establish and maintain a safe and health y working environment.

Introduction for lab report Iron in Soil and Coal Essay - 1

Introduction for lab report Iron in Soil and Coal - Essay Example Coal falls in the group of organic contaminants of soil. The iron concentration on in coal is limited compared to the iron in soil. As a result, the carbonaceous soils from coal mineral wastes provide an effective control for acidity in leachate. Iron appears in different forms in the soil. Its concentration in the soil can affect the drinking water due to the environmental concentrations in some parts of the world. This calls for the need for measuring the iron concentration in soil and coal. Various analytical methods are available for arsenic measurement in various environmental samples. Some of them include neuron activation, hydride generation atomic absorption and the inductively coupled plasma atomic emission spectrometry. Most of these approaches require expensive equipment to measure the iron concentration in soil. However, the Spectrophotometer is effective equipment in measuring the iron in coal and soil. The sample is placed in a hydrochloric acid solution followed by a measurement of Spectrophotometer using silver diethyldithiocarbamate which is the reagent that forms colour. From the colour outcome, the concentration of iron in the coal or soil is determined (Paolo Desogus

Branding Kony2012 case study Essay Example | Topics and Well Written Essays - 2000 words

Branding Kony2012 case study - Essay Example The main objective of this study is to answer the question how does self branding influence consumer behavior in relation to how they respond to advertisements. Successful branding occurs when a particular product, company name or symbol is easily identifiable and common among the target group to the extent that they relate to it. Successful brands influence consumer decisions in terms of what they wear, what they eat and what they associate themselves with (Fan, 2002). This is because of the role brand advertising plays in encouraging individuals to identify with a particular company and its brands. Different approaches are often employed by companies and organizations to bring out their messages to the masses through various media and try as much as possible to appeal to their emotions and impact on their actions and decisions regarding the brand. Each person has their own natural desire to express their own feelings and identify with the things they like. With this proposition in mind, companies have learned to position themselves and their brands in a manner that they can be relied upon by the people to express their character and identity (Fan, 2002). This research study aims at examining the reasons behind self branding and the impact it has had on consumer behavior across the globe. This study makes use of the ‘KONY 2012’ campaign as the main case study from which reliable observations can be drawn and analyzed. KONY 2012 is a short film produced by Invisible Children Inc to create awareness about Joseph Kony, an African militia and cult leader who is an international criminal and a fugitive of the International Criminal Court. By creating this awareness, the Invisible Children Inc would bring to light the atrocities committed by Joseph Kony in Central Africa in relation to kidnapping children and using them as child soldiers and sexual objects. The organization would then sensitize people to come together and stop Kony’s operations i n Central Africa and bring him to justice. The video achieved unprecedented success having had over 97 million views on the video sharing website, YouTube and over 21.9 thousand likes on Vimeo. The KONY 2012 short video has been dubbed as the most viral video clip of all time. The video was released to the internet on March 5th 2012. It is one of the most successful advertising campaigns ever and largely helped invisible Children to further its mission. At the end of the campaign, about 3.7 million people across the globe had identified with KONY 2012 and the company behind the campaign and about 3.7 million people pledged their support for the campaign by purchasing action kits sold by the company. From this case study, this research observes and identifies a powerful strategy deployed by advertisers to position their brand in a way that it can be used by people who want to express certain aspects of their identity through the brand. When KONY 2012 set out to establish their brand they began by grabbing the viewers attention with an emotionally gripping story directed by Jason Russell who introduced a boy name Jacob from Uganda, Africa. He describes what he went through when the rebel group L.R.A (Lord’s Resistance Army), lead by Joseph Kony, kidnapped him and like many other children, boys and girls are captured and forced into the rebel army to

Education Inquiry Essay Example | Topics and Well Written Essays - 3000 words

Education Inquiry - Essay Example Blalock states that he wrote the book to confront the perennial problems that all social scientists face and it was his desire to ask two questions. Those two questions are, "Why aren't we doing better, and how can we improve" (Blalock, 1984, p 6). In order to answer those two questions, we as social scientists/researchers must understand the background and environment in which we must toil. There are a number of "very tough intellectual challenges stemming from the complexity of the social world we are attempting to study" (Blalock, 1984, p 6). Blalock points out that we need to understand those intellectual challenges and the interplay of our individual intellectual backgrounds, interests and behaviors with those challenges. The answers to these questions are what we consider as we continue the process of research. James M. Black said that "One of the most important features of the training of research scholars is the acquisition of skills required to conduct sound scientific investigations" (Black, 1976, pg 6). We understand that there are a number of pitfalls and bias that w... ntly will encounter as individuals in attempting research projects and that we will need to understand what and who we are in order to be proficient in our jobs and careers.. If we first work at gaining the skills that we need to answer those questions then our projects will be more readily presentable and understood by those we are attempting to influence. One of the understandings that we must address is the characteristics of scientific research. Black says that "sociology has the following characteristics of science; 1. sociology is empirical, 2. sociology is theoretical, 3. sociology is cumulative, 4. sociology is non-ethical" (Black, 1976, p 5). The book goes on to explain that empirical means that it is based on observation and reasoning, theoretical is the attempt to summarize complex observations in abstract, logically related propositions, cumulative shows how sociological theories build upon one another and that by being non-ethical means that sociologists do not ask whether particular social actions are good or bad, they merely seek to explain them. Social Research/ pg 3 The non-ethical statement could be the most important one of the four. As social scientists, a problem that we will almost always (in ourselves) is the urge to judge social actions, and present them as good or bad. That is not our job when conducting a research project. Our job should be conducted along the lines of maintaining the research process with stringent guidelines. As social scientists we must adhere to those guidelines in order for our presentation(s) of the material to be taken seriously. If we advocate the use of the material in certain ways, whatever ways those are, then we are no longer social scientists but could be considered as social advocates.

The importance to auditing of concept of audit risks

The importance to auditing of concept of audit risks Messie, Glover, Prawitt Boh, Margaret , 2007 stated that audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. In simple terms, audit risk is the risk that an auditor will issue an unqualified opinion when the financial statements contain material misstatement. ISA 200 states that auditor should plan and perform the audit to reduce audit risk to an acceptably low level that is consistent with the objective of an audit. (Auditing and Assurance Standard) AAS-6(Revised), Risk Assessments and Internal Controls, identifies the three components of audit risk i.e. inherent risk, control risk and detection risk. Audit risk model: AR = IR x CR x DR. Where, AR= Audit risk (the risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated) IR = Inherent risk (the risk that an assertion is susceptible to a material misstatement, assuming there are no related controls) CR = Control risk (the risk that a material misstatement that could occur in an assertion will not be prevented or detected on a timely basis by the entitys internal control) DR = Detection risk (the risk that the auditor will not detect a material misstatement that exists in an assertion) The objective in an audit is to limit audit risk to a low level, as judged by the auditor. When conducting an audit, the auditor should consider materiality and its relationship with audit risk. The level of detection risk can be considered only after considering the level of inherent and control risks. While planning an audit, the auditor should keep in mind that the audit risk is to be kept at an acceptably low level. The range, efficiency, efficacy, nature and timing of the procedures performed by the auditor will determine the level (i.e. high or low) of detection risk The major purpose of audit risk models is to help the auditor to obtain a given degree of confidence that the financial statements do not contain a material error. Economic considerations are not explicitly taken into account, and the focus is rather on effective audit risk control. In the second approach, audit decision models are more comprehensive in nature as compared to audit risk models: a broader set of factors are taken into account (such as, audit risk, audit costs, etc.). This type of model may serve as an aid for auditors to identify an efficient and cost effective way by which a suitable level (i.e., cost minimizing) of confidence can be achieved. Audit risk is fundamental to the audit process because auditors cannot and do not attempt to check all transactions. It would be impossible to check all of transactions, and no one would be prepared to pay for the auditors to do so, hence the importances of the riskà ¢Ã¢â€š ¬Ã¢â‚¬Ëœbased approach toward auditing. Traditionally, auditors have used a risk-based approach in order to minimize the chance of giving an inappropriate audit opinion, and audits conducted in accordance with ISAs must follow the risk based approach, which should also help to ensure that audit work is carried out efficiently, using the most effective tests based on the audit risk assessment. Auditors should direct audit work to the key risks (sometimes also described as significant risks), where it is more likely that error in transactions and balances will lead to a material misstatement in the financial statements. It would be inefficient to address insignificant risks in a high level of detail, and whether a risk is classified as a key risk or not is a matter of judgment for the auditor. Generally Accepted Auditing Standards (GAAS) establish a model for carrying out audits that requires auditors to use their judgment in assessing risks and then in deciding what procedures to carry out. This model often is referred to as the audit risk model. The model allows auditors to take a variety of circumstances into account in selecting an audit approach. For example, the model calls for auditors to have an understanding of the clients business and industry, the systems employed to process transactions, the quality of personnel involved in accounting functions, the clients policies and procedures related to the preparation of financial statements, and much more. The model requires auditors to gain an understanding of a companys internal control, and to test the effectiveness of controls if the auditor intends to rely on them when considering the nature, timing and extent of the substantive tests to be carried out. For example, if controls over sales and accounts receivable are strong, the auditor might send a limited number of accounts receivable confirmation requests at an interim date and rely on the controls and certain other tests for updating the accounts to year end. Conversely, if controls are not strong, the auditor might send a larger number of accounts receivable confirmations at year end. The model requires an assessment of the risk of fraud (intentional misstatements of financial statements) in every audit. Based on the auditors assessment of various risks and any tests of controls, the auditor makes judgments about the kinds of evidence (from sources that are internal or external to the clients organization) needed to achieve reasonable assurance. On the one hand, GAAS set forth numerous requirements or matters that auditors should consider; on the other hand, the need to exercise audit judgment is embedded throughout GAAS. Handbook Section 5130, Materiality and Audit Risk in Conducting an Audit. Approved recently by the CICAs Auditing Standard Committee (AuSC), explains the meaning of the terms material misstatement and audit risk and looks at the objective of an audit. In short, while any decision involving materiality, audit risk and the extent of testing will ultimately come down to a question of professional judgments, it is hoped Section 5130, by providing some tools to assist with those judgments, will helps improve audit quality and reduce the potential for under over auditing. Walker, Robert (Mar 1990) answer question why spend time to asses audit risk? The real reason reliance on the internal control is less efficient than reliance

Call Of The Wild :: essays research papers

Buck was the loyal companion of Judge Miller. He was a free dog, allowed to go as he pleased throughout the large estate. Buck hunted with Judge’s sons, escorted the girls, even went swimming in the pool, it was the ideal life for a dog and it was soon about to change. It was 1897 and the Klondike strike was luring men to the north. Buck lived in the sunny Santa Clara Valley, a far extreme from the north where he would soon be taken. It all happened when the gardener, trying to settle his dept took Buck for a walk, one that he would not return from. He was transferred form one person to another until he was bought by Perrault. Perrault was a fair and caring Canada Mail carrier. The first days on the sled team where a new experiences for Buck. When his instincts stopped he learned on from his companions. Each dog had to take care of himself as Perrault only had so much time on his hands. If there was one problem it was with his companion Spitz. The two of them where aimed at each others throats from the day they met. It was a constant battle of who was king of the hill, one that would end in the others death. That day came when the team was chasing a rabbit through the woods. Buck was in the lead just inches behind the prey, when Spitz took a shortcut and jumped on Buck. It was a life and death struggle, Buck was bigger, Spitz was skilled. In the End Bucks shear strength prevailed. Once the job was done, Buck was under a new owner. The duty was not to get the fastest time but to pull the most. It was grueling, heavy work each day. The team soon grew tired and slow, it was boring work and Buck hated it. The Driver promised rest as soon as they finished. Unfortunately the government decided to sell tired dogs instead of resting them. The new drivers when Hal and Charles. They where inexperienced gold seekers, and where traveling with a woman. They knew nothing when it came to traveling, packing double what they should have been and wasting time. When the dogs had trouble pulling, Hal bought more instead of lightning the load. The big problem came far into the trip when the ran out of food.

International Finance: Study Notes

1) Market seeker design strategy focuses on current market, and current consumer’s needs for quick return on investment. For example US automobile firms manufacturing in Europe for local consumption are an example of market-seeking motivation. 2) Raw Material seekers extract unfinished goods used in the manufacture of a product. For example, a steelmaker uses iron ore and other metals in producing steel. A publishing company uses paper and ink to create books, newspapers, and magazines. Raw materials are carried on a company's balance sheet as inventory in the current assets section. 3) Political safety seekers acquire or establish new operations in countries that are considered unlikely to expropriate or interfere with private enterprise. For example, Hong Kong firms unvested heavily in the United States, United Kingdom, Canada, and Australia in anticipation of the consequences of China’s 1997 takeover of the British colony. ) Production Efficiency seekers produce in countries where one or more of the factors of production are underpriced relative to their productivity. Labour-intensive production of electronic components in Taiwan, Malaysia, and Mexico is an example of this motivation. 5) Knowledge seekers operate in foreign countries to gain access to technology or managerial expertise. An example, German, Dutch, and Japanese firms have purchased US located electronics firms for their technology. Source: Investopedia Question 2: Political risk is a type of risk faced by investors, corporations, and governments. It is a risk that can be understood and managed with reasoned foresight and investment. Broadly, political risk refers to the complications businesses and governments may face as a result of what are commonly referred to as political decisions—or â€Å"any political change that alters the expected outcome and value of a given economic action by changing the probability of achieving business objectives. †. Political risk faced by firms can be defined as â€Å"the risk of a strategic, financial, or personnel loss for a firm because of such nonmarket factors as macroeconomic and social policies (fiscal, monetary, trade, investment, industrial, income, labour, and developmental), or events related to political instability (terrorism, riots, coups, civil war, and insurrection). †Portfolio investors may face similar financial losses. Moreover, governments may face complications in their ability to execute diplomatic, military or other initiatives as a result of political risk. A low level of political risk in a given country does not necessarily correspond to a high degree of political freedom. Indeed, some of the more stable states are also the most authoritarian. Long-term assessments of political risk must account for the danger that a politically oppressive environment is only stable as long as top-down control is maintained and citizens prevented from a free exchange of ideas and goods with the outside world. Understanding risk as part probability and part impact provides insight into political risk. For a business, the implication for political risk is that there is a measure of likelihood that political events may complicate its pursuit of earnings through direct impacts (such as taxes or fees) or indirect impacts (such as opportunity cost forgone). As a result, political risk is similar to an expected value such that the likelihood of a political event occurring may reduce the desirability of that investment by reducing its anticipated returns. There are both macro- and micro-level political risks. Macro-level political risks have similar impacts across all foreign actors in a given location. While these are included in country risk analysis, it would be incorrect to equate macro-level political risk analysis with country risk as country risk only looks at national-level risks and also includes financial and economic risks. Micro-level risks focus on sector, firm, or project specific risk. Political risks are classified as follows: 1) Blocked Fund – Term for â€Å"reserving† funds by one bank for the benefit of another bank. Blocking of funds is an often used banking procedure to ensure that the same funds are not used twice. Often more beneficial to an investor than a bank guarantee. ) Ownership – Is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property. Ownership involves multiple rights, collectively referred to as title, which may be separated and held by different parties 3) Religion Heritage – Is the faith in which a person was predominantly raised or the faith a person's parents or previous generations have traditionally held. 4)Terrorism – Is the systematic use of terror especially as a means of coercion. No universally agreed, legally binding, criminal law definition of terrorism currently exists. Common definitions of terrorism refer only to those violent acts which are intended to create fear (terror), are perpetrated for a religious, political or ideological goal, deliberately target or disregard the safety of non-combatants (civilians), and are committed by non-government agencies. Some definitions also include acts of unlawful violence and war. The use of similar tactics by criminal organizations for protection rackets or to enforce a code of silence is usually not labeled terrorism though these same actions may be labeled terrorism when done by a politically motivated group. The word â€Å"terrorism† is politically and emotionally charged, and this greatly compounds the difficulty of providing a precise definition. Studies have found over 100 definitions of â€Å"terrorism†. The concept of terrorism may itself be controversial as it is often used by state authorities to delegitimize political or other opponents, and potentially legitimize the state's own use of armed force against opponents (such use of force may itself be described as â€Å"terror† by opponents of the state). Terrorism has been practiced by a broad array of political organizations for furthering their objectives. It has been practiced by both right-wing and left-wing political parties, nationalistic groups, religious groups, revolutionaries, and ruling governments. An abiding characteristic is the indiscriminate use of violence against noncombatants for the purpose of gaining publicity for a group, cause, or individual. 5)Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to discourage imports and prevent foreign take-over of domestic markets and companies. This policy contrasts with free trade, where government barriers to trade and movement of capital are kept to a minimum. In recent years, it has become closely aligned with anti-globalization. The term is mostly used in the context of economics, where protectionism refers to policies or doctrines which protect businesses and workers within a country by restricting or regulating trade with foreign nations. Source: Wikipedia Question 3: Hedging means reducing or controlling risk. This is done by taking a position in the futures market that is opposite to the one in the physical market with the objective of reducing or limiting risks associated with price changes. Hedging is a two-step process. A gain or loss in the cash position due to changes in price levels will be countered by changes in the value of a futures position. For instance, a wheat farmer can sell wheat futures to protect the value of his crop prior to harvest. If there is a fall in price, the loss in the cash market position will be countered by a gain in futures position. Hedging is a mechanism to reduce the risk of adverse price movements of an asset. It’s an investment undertaken to reduce the risk of adverse movements of the underlying assets. We all agree with the fact that in investment risks and returns are the two sides of a coin. The underlying asset can be a security, currency, debt instruments or a commodity like crude oil. A Perfect Hedge is an offsetting investment which completely eliminates the risk of the price movements. However, this is practically not possible, as all investments do carry a risk. Reason for hedging Participating in hedging has reasons that are connected with price risk. Typically, traders take part in hedging so they can more effectively plan on set pricing (often employing the hedge ratio). Considering of course, gold or silver futures for instance as a hedge against inflation and falling currencies. Farmers, growers and producers alike near the source hedge to get a lock on pricing at some appointed time. Often they buy futures basically in order to protect against price drops. Producers, manufacturers and large consumers are commonly in the practice of hedging but rather to get a better handle on their cash flow or finished product/service costs. Surely in commodities that are known to be volatile in nature, where prices need a stabilization factor. Example : Where precious metals are used as raw materials. Trucking companies, the airlines and transportation companies all hedge to lock in lower prices. Electricity generation, in its used of natural gas also provides ample reason for hedging. Larger food companies needing the ingredients of grains and wheat flour for breads, cereals and baked goods (not to mention coffee and cocoa) and hedge for price protection. When successful it becomes an integral part of delivering their product to consumers. Some companies even hedge so that consumers may not be so hard pressed in the event of price climbs, perhaps seen as unreasonable by consumers. Reason against hedging The management of financial risk is difficult and conceptually demanding. Probably the most difficult issue is the actual recognition of where and how much financial risk is being incurred. Example: An Australian metal producer who borrows in USA as a partial hedge because their product is priced in USD in world markets. The problem with this â€Å"hedge† is that it actually would increase risk. The AUD is a commodity currency and when metal prices fall the AUD will generally be weaker. This means that our metal exporter finds that their USD loan is costing those more in AUD terms at the same time as revenue is collapsing. The reason for the problem is that the company failed to recognize the correlation between metal prices and the AUD exchange rate. Source: wikipedia Question 4: A balance of payments (BOP) sheet is an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, and financial capital, as well as financial transfers. The BOP summarizes international transactions for a specific period, usually a year, and is prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts of loans and investments, are recorded as positive or surplus tems. Uses of funds, such as for imports or to invest in foreign countries, are recorded as a negative or deficit item. When all components of the BOP sheet are included it must balance – that is, it must sum to zero – there can be no overall surplus or deficit. For example, if a country is importing more than it exports, its trade balance will be in deficit, but the shortfall will have to be counter balanced in other ways – such as by funds earned from its foreign investments, by running down reserves or by receiving loans from other countries. While the overall BOP sheet will always balance when all types of payments are included, imbalances are possible on individual elements of the BOP, such as the current account. This can result in surplus countries accumulating hoards of wealth, while deficit nations become increasingly indebted. Historically there have been different approaches to the question of how to correct imbalances and debate on whether they are something governments should be concerned about. Since 1974, the two principal divisions on the BOP have been the current account and the capital account. The current account shows the net amount a country is earning if it is in surplus, or spending if it is in deficit. It is the sum of the balance of trade (net earnings on exports – payments for imports) , factor income (earnings on foreign investments – payments made to foreign investors) and cash transfers. Its called the current account as it covers transactions in the â€Å"here and now† – those that don't give rise to future claims. The capital account records the net change in ownership of foreign assets. It includes the reserve account (the international operations of a nation's central bank), along with loans and investments between the country and the rest of world (but not the future regular repayments / dividends that the loans and investments yield, those are earnings and will be recorded in the current account). Expressed with the standard meaning for the capital account, the BOP identity is: [pic] The balancing item is simply an amount that accounts for any statistical errors and assures that the current and capital accounts sum to zero. At high level, by the principles of double entry accounting, an entry in the current account gives rise to an entry in the capital account, and in aggregate the two accounts should balance. A balance isn't always reflected in reported figures, which might, for example, report a surplus for both accounts, but when this happens it always means something has been missed—most commonly, the operations of the country's central bank. An actual balance sheet will typically have numerous sub headings under the principal divisions. For example, entries under Current account might include: †¢ Trade – buying and selling of goods and services Exports – a credit entry o Imports – a debit entry ? Trade balance – the sum of Exports and Imports †¢ Factor income – repayments and dividends from loans and investments o Factor earnings – a credit entry o Factor payments – a debit entry ? Factor income balance – the sum of earnings a nd payments. Especially in older balance sheets, a common division was between visible and invisible entries. Visible trade recorded imports and exports of physical goods (entries for trade in physical goods excluding services is now often called the merchandise balance). Invisible trade would record international buying and selling of services, and sometimes would be grouped with transfer and factor income as invisible earnings. In the case of any particular country, a balance reflecting the ratio of monetary receipts from foreign countries to total payments to foreign countries, as computed for a year, quarter, or other period of time. A favorable balance of payments results when receipts exceed payments, whereas an unfavorable balance of payments, or deficit, results when the reverse is true. The balance of payments reflects the diverse economic relations that exist between countries and lead to various international payments; these relations include foreign trade and the export of capital. The balance of payments also reflects international relations in the political, scientific, technological, and cultural spheres; this is seen, for example, in expenditures that arise from the maintenance of representations in foreign countries, from trips by official delegations and tourists, from the acquisition of patents and licenses, and from private transfers. In developed capitalist countries, the chief principals in international economic relations are private companies, including those engaged in commerce, industry, banking, insurance, and transport. The balance of payments forms as the spontaneous result of many isolated transactions an operation, for which no accurate account can be maintained. The balance of payments tables compiled in bourgeois states therefore represent only an approximate evaluation of receipts and payments. The item in the balance of payments tables that is called errors and omissions provides particular evidence of this fact. The balance of payments encompasses only the payments actually made during a given period. By contrast, the balance of international indebtedness, or balance of claims and liabilities, is the ratio of the foreign claims of a given country to the foreign liabilities of that country. The balance of payments in capitalist and developing nations includes scores of diverse items, which usually are grouped in the following categories, as recommended by the International Monetary Fund: foreign trade (exports and imports of commodities), services (including transport, tourism, insurance, government expenditures, banking services, and income from investments), unilateral transfers, the movement of long-term capital, the movement of short-term capital, change in the gold and currency reserves, and errors and omissions. The first three categories constitute the current account balance of payments, the next two are the balance of capital movements, and the last two are the balancing items. Analysis of the balance of payments is very important in describing a country’s place in the system of international economic relations, especially with respect to world trade. When receipts from the export of commodities consistently exceed import payments, this generally points to a country’s strength in world markets; this was the case with Japan and the Federal Republic of Germany in the late 1960’s and early 1970’s. On the other hand, import payments that exceed export earnings are an indication of economic difficulties related to the deficit of the balance of payments; this was the position of the USA in these same years. An important item in the current account balance of payments concerns the receipts and payments for foreign investments. This item reflects profit received from abroad and paid abroad, in the form of dividends, interest, and so forth. The profit represents a source of enormous income for capital-exporting imperialist states with large capital investments abroad, either in the form of direct investments or in the form of loans and credits. In 1971, for example, the income of Great Britain from foreign investments was ? 667 million, more than double the positive trade balance. The profit from foreign capital investments repatriated to the United States amounted to $10. 7 billion in 1971 and was the second most important item of receipts in the nation’s balance of payments, after the income from export commodities. This attests to the role of the United States as the center of financial exploitation in the capitalist world. The overwhelming majority of developing countries are importers of capital, and payments on foreign investments are one of the chief reasons for the overall balances of payments deficits. The payments on foreign investments absorb an ever greater portion of the export earnings of the developing countries. Foreign military expenditures are also included in the current account balance of payments. These expenditures are due to imperialist states’ policy of aggression and the maintenance of numerous military bases abroad. This is one of the most important reasons for the deficit in the balance of payments and the ensuing monetary crises. The enormous rise in state military and political expenditures abroad underlies the chronic deficit in the US balance of payments. Expenditures from the early 1960’s through the early 1970’s totaled more than $100 billion, some 40 percent more than the surplus for all other items in the USA’s balance of payments. Capital movement as reflected in the balance of payments is primarily in the form of the movement of long-term capital. Long-term capital movement includes direct investments, which provide for full ownership of enterprises or control of their operations; portfolio investments, made in the form of investments in overseas securities; and loans, credits, and subsidies. The export of capital—the outflow of capital from a given country—is reflected as an expenditure in the balance of payments; the import of capital, on the other hand, represents an influx of funds and is included as income. The export of capital, for example, to the developing countries, causes a flow of profit from the countries where the foreign capital has been placed; this ultimately has a negative effect on the balance of payments of the countries receiving foreign capital. At the same time, increased export of capital sometimes directly worsens the balance of payments of the imperialist states. The export of capital and military expenditures are precisely the reasons for the balance of payments deficit in the USA. The movement of short-term capital is related to the way money on deposit in foreign banks is constantly transferred between countries. These transfers are to a significant degree related to speculation with respect to change in exchange rates or interest on deposits. The indicator of a surplus or deficit of the balance of payments is important in describing the economic situation of a country. In capitalist nations, several methods are used for determining this balance; in the USA, for example, three methods are employed. The balancing indicator is most often the balance of the current transactions and the balance of the change in the gold and currency reserves. Various methods are used to regulate the balance of payments. One basic method involves the export of gold when there is a deficit balance and the import of gold when there is a surplus balance. The chronic balance of payments deficit in the USA in the 1960’s and early 1970’s led to a significant outflow of gold and a reduction in US gold reserves. The balance of payments deficit may also be covered by increasing short-term or long-term debts to creditor nations, which accumulate the corresponding obligations of their debtors. Because the gold reserves of the capitalist and developing countries are limited, foreign credits and loans are becoming the basic means of covering the balance of payments deficit; this is especially true in the case of developing countries. To improve the balance of payments situation, capitalist states frequently resort to a currency devaluation, which helps increase export receipts from tourism, the import of foreign capital, and so forth. The balance of payments situation of a capitalist country is a basic factor in determining the state of that country’s currency. For example, the crisis of the US dollar basically resulted from a sharp deterioration in the US balance of payments, which had a deficit of almost $10 billion in 1972. The US government was forced to devalue the dollar in 1971 and 1973 because of the drop in gold and currency reserves and the increase in foreign debts, both of which were caused by the chronic balance of payments deficit. In socialist countries, foreign economic relations are based on the state monopoly of foreign trade and the foreign-exchange monopoly. The balance of payments is planned as a component part of a general plan embracing the national economy, foreign trade, and currency. Payments of the member countries of the Council for Mutual Economic Assistance (COMECON) are mutually balanced through long-term planning of trade and payments between the countries; payments in transfer rubles are used. Because of the foreign-exchange monopoly, the balance of payments does not influence the situation of the monetary units of the socialist countries. In relations with the capitalist states, the Soviet Union and other socialist countries avoid balance of payments deficits through the planned use of foreign-exchange and gold resources and anticipated foreign-exchange receipts. Source: Finance Asia Question 5: Annualized  Ã‚  Ã‚   =  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Forward Price – Spot Price  Ã‚  x  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  12  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  x  100% Forward Premium  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚   Spot Price  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  # of months   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   forward Direct Quotation represents the value of a foreign currency in dollars (number of dollars per currency). In this case, the Japanese Yen is taken as the local currency and USD is taken as the foreign currency. Direct = ((120 -140) / 140)*(12 / 6)*100 = – 28. 5714% forward discount Indirect = 1 / Direct = 1/-28. 5714% = 3. 5% forward discount Question 6: A  type of diagram  where the curve falls at the outset and eventually rises to a point higher than the starting point, suggesting the letter J. While a J-curve can apply to data  in a variety of fields, such as medicine and political science, the J-curve effect is most  notable in both economics and private equity funds; after a certain policy or investment is made, an initial loss is followed by a significant gain. An example  of the  J-curve effect  is seen in economics  when a country's trade balance initially  worsens following a devaluation or depreciation of its currency. The higher exchange rate will at first correspond to more costly imports and less valuable exports, leading to a bigger initial deficit or a maller surplus. Due to the competitive, relatively low-priced exports, however, a country's exports will start to increase. Local consumers will also purchase less of the more expensive imports and focus on local goods. The trade balance eventually improves to better levels  compared to before devaluation. In private equity funds, the J-curve effect occurs when  funds experience negative returns for the first several years. This is a common experience, as the early years of the fund include capital drawdown and an investment portfolio that has yet to mature. If the fund is well managed, it will eventually recover from its initial losses and the returns will form a J-curve: losses in the beginning dip down below the initial value, and later returns show profits above the initial level. The theory of the J-curve is an explanation for the J-like pattern of change in a country's trade balance in response to a sudden or substantial depreciation (or devaluation) of the currency. Consider the adjoining diagram depicting two variables measured, hypothetically, over some period of time; the dollar/foreign exchange rate, E$/*, and the US current account balance, CA = EX – IM. The exchange rate is meant to represent the average value of the dollar against all other trading country currencies and would correspond to a dollar value index which is often constructed and reported. Since the units of these two data series would be in very different scales, we imagine the exchange rate is measured along the left axis, while the CA balance is measured in different units on the right-hand axis. With appropriately chosen scales we can line up the two series next to each other to see whether changes in the exchange rate seem to correlate with positive or negative changes in the CA balance. Source: Investopedia Question 7: Tax is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labor equivalent (often but not always unpaid labour). A tax may be defined as a â€Å"pecuniary burden laid upon individuals or property owners to support the government, a payment exacted y legislative authority. † A tax â€Å"is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority† and is â€Å"any contribution imposed by government whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name. † The legal definition and the economic definition of taxes differ in that economists do not cons ider many transfers to governments to be taxes. For example, some transfers to the public sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments. Governments also obtain resources by creating money (e. g. , printing bills and minting coins), through voluntary gifts (e. g. , contributions to public universities and museums), by imposing penalties (e. g. , traffic fines), by borrowing, and by confiscating wealth. From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the public sector levied on a basis of predetermined criteria and without reference to specific benefit received. In modern taxation systems, taxes are levied in money; but, in-kind and corvee taxation is characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as Canada Revenue Agency, the Internal Revenue Service (IRS) in the United States, or Her Majesty's Revenue and Customs (HMRC) in the UK. When taxes are not fully paid, civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration) may be imposed on the non-paying entity or individual. Taxes are sometimes referred to as â€Å"direct taxes† or â€Å"indirect taxes†. The meaning of these terms can vary in different contexts, which can sometimes lead to confusion. An economic definition, by Atkinson, states that â€Å"†¦ direct taxes may be adjusted to the individual characteristics of the taxpayer, whereas indirect taxes are levied on transactions irrespective of the circumstances of buyer or seller. According to this definition, for example, income tax is â€Å"direct†, and sales tax is â€Å"indirect†. In law, the terms may have different meanings. In U. S. constitutional law, for instance, direct taxes refer to poll taxes and property taxes, which are based on simple existence or ownership. Indirect taxes are imposed on events, rights, privileges, and acti vities. Thus, a tax on the sale of property would be considered an indirect tax, whereas the tax on simply owning the property itself would be a direct tax. The distinction between direct and indirect taxation can be subtle but can be important under the law. The Advantages of Direct and Indirect Taxes Governments collect taxes by direct and indirect means. An example of a direct tax is payroll tax, where tax is deducted by an employer from an employee's income, and paid directly to a collection agency, such as the Internal Revenue Service in the United States. An indirect tax is a tax which is not paid directly to the collection agency by the person paying the tax, but goes an intermediary, who then passes the tax to the collection agency. Sales taxes are examples of indirect taxes. Progressive Advantage of Direct Taxes One advantage of direct taxation is that it is easy to apply in a progressive manner. Progressive taxes are a fair way of generating revenue, because multiple rates of taxation can be applied, based on the ability of the tax payer to pay the tax, especially if tax rates increase marginally. For example, a government may apply income tax to earnings at a rate of 10 percent, for all income earned up to $20,000. Then it applies a rate of 15 percent to income over $20,000. A person earning more than $20,000 will pay tax at a rate of 10 percent on the first $20,000 earned, and only pays 15 percent on earnings over that amount. Progressive, marginal, direct taxation is therefore fair because higher earners bear a greater part of the tax burden, based on their ability to pay higher rates of tax. Transparency of Direct Taxation Direct taxes, which go directly by the person bearing the burden of the tax, are transparent taxes. For example, when an employer deducts taxes from the wages of an employee, the employee can see the amount of tax deducted, as it is included on his or her wage statement, or pay-slip. Self-employed tax payers can also see the amount of tax they need to pay to the government, hen they complete their tax returns. In a democracy, tax transparency means that governments have to justify taxes they impose to their voters, and tax-paying voters always aware of the tax burdens imposed on them by politicians. Environmental Benefits of Indirect Taxation Governments use Indirect taxes, such as taxes added to the price of goods and services, to modify the behaviour of individuals in order to help a chieve environmental goals. For example, the true price of gasoline, at point of delivery to the public is low. The price does not encourage people to reduce their use of gasoline by using public transport, or buying more fuel-efficient vehicles. If a government wishes to reduce the use of gasoline as part of an environmental protection goal, it can artificially inflate the price of gasoline to the consumer, by imposing a sales tax to increase the price. When a government imposes a high enough tax on gasoline, it results in a reduction of demand for gasoline, and thus aids the government in implementing its environmental policy. Source: Wikinvest Question 8: The Bretton Woods system was established in 1944 as the major capitalist powers initiated a program of national regulation aimed at containing the contradictions of the world economy and preventing the development of socialist revolution. Its demise in 1971 inaugurated a new stage, characterised by the development of globalised production and the domination of an international financial market. When the US pulled the rug from under the previous system it did so in order to maintain its position of global hegemony in the new economic order which was beginning to emerge. It managed to do so but at great cost. The free market program it has so strenuously promoted over the past 30 years has intensified all the contradictions of the capitalist mode of production. At the same time, starting with the unilateral decision of August 15, 1971, the basis for collaboration between the major capitalist powers has been narrowing. The combined impact of these two processes has created the conditions for major economic, social and political upheavals in the world capitalist economy in the period immediately ahead. Source: Wordiq Question 9: There are many factors that influence the exchange rate of US dollar. Generally speaking, there are mainly four reasons: first, the health condition and the rate of return for investment of the US economy, secondly, the balance of international payment in the US, thirdly, the level of interest rates in the US compared with those in other countries, and fourthly, the rate of inflation. The following might be the reason why it’s expected to continue tight throught to the basement floor: †¢ Massive budget and trade deficits. †¢ Ultra-low interest rates. (Zero on the short end. ) †¢ $59 trillion in unfunded liabilities for Social Security, Medicare and Medicaid. Bernanke conjuring extra trillions out of thin air to buy Treasuries and mortgage-back securities and patch various holes in the U. S. economy. There is no reason to believe any of these problems will vanish in the months ahead. Yet the dollar will soar in 2010. Here’s why†¦ Two Reasons for a Dollar Rebound There are two main forces that could drive the dollar high er: †¢ All the problems mentioned above are already well recognized and priced into the greenback. †¢ Dollar psychology is overwhelmingly bearish. Just as 10 years ago, investors couldn’t imagine Internet stocks doing anything but soaring higher. Five years ago, they couldn’t imagine real estate doing anything but barrelling down the same one-way street. Record lows for the dollar are coinciding with enormous confidence that the dollar has nowhere to go but down. When extreme valuations are accompanied by unbridled optimism or abject pessimism, it virtually always marks a turning point – and an opportunity. This is no exception. Commentators seem to forget that all currency values are contingent. You can’t just look at fundamentals in the United States. You have to look at them abroad, too. And there isn’t uch out there right now that’s terribly positive†¦ America’s Fellow Heavyweights Have Problems, Too Take Europe, for example†¦ †¢ Eurozone: In the third quarter, the 16-nation Eurozone grew at a 1. 5% annual rate. The U. S economy, by comparison, grew at 3. 5%. European consumers and most business sectors are still feeling the pain from the deepest recession since the 1930s. The continent is likely to be the weakest region for global expansion next year, according to Julian Callow, Chief European Economist at Barclays Capital in London. †¢ United Kingdom: This is no bastion of strength, either. Europe’s biggest economy outside the Eurozone is still in recession, due to overly indebted British households and tight credit. British GDP contracted at an annualized 1. 6% in the third quarter. †¢ Japan: The world’s second-largest economy has its own problems, too. At 172% of GDP, Japan’s government debt is by far the largest among rich nations. What’s more, it’s expected to reach 200% next year – and hit 300% within a decade. Rising social security costs and the weak economy are the primary culprits. The new government there is trying to prevent a double-dip recession by spending even more. But with government debt soaring to records, talk of new stimulus measures is already pushing up long-term rates and threatening to curtail the impact of fresh spending. Source: Economics help Question 10: Standard deviation is a widely used measurement of variability or diversity used in statistics and probability theory. It shows how much variation or â€Å"dispersion† there is from the â€Å"average† (mean, or expected/budgeted value). A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data are spread out over a large range of values. Technically, the standard deviation of a statistical population, data set, or probability distribution is the square root of its variance. It is algebraically simpler though practically less robust than the average absolute deviation. A useful property of standard deviation is that, unlike variance, it is expressed in the same units as the data. Note, however, that for measurements with percentage as unit, the standard deviation will have percentage points as unit. In addition to expressing the variability of a population, standard deviation is commonly used to measure confidence in statistical conclusions. For example, the margin of error in polling data is determined by calculating the expected standard deviation in the results if the same poll were to be conducted multiple times. The reported margin of error is typically about twice the standard deviation – the radius of a 95 percent confidence interval. In science, researchers commonly report the standard deviation of experimental data, and only effects that fall far outside the range of standard deviation are considered statistically significant – normal random error or variation in the measurements is in this way distinguished from causal variation. Standard deviation is also important in finance, where the standard deviation on the rate of return on an investment is a measure of the volatility of the investment. When only a sample of data from a population is available, the population standard deviation can be estimated by a modified quantity called the sample standard deviation [pic] Risks can be reduced in four main ways: Avoidance, Diversification, Hedging and Insurance by transferring risk. Systemic risk, also called market risk or un-diversifiable risk, is a risk of security that cannot be reduced through diversification. Participants in the market, like hedge funds, can be the source of an increase in systemic risk and transfer of risk to them may, paradoxically, increase the exposure to systemic risk. Unsystematic risk also called the diversifiable risk or residual risk. The risk that is unique to a company such as a strike, the outcome of unfavorable litigation, or a natural catastrophe that can be eliminated through diversification. A ratio developed by Nobel laureate  William F. Sharpe to measure risk-adjusted performance. The  Sharpe ratio  is calculated by subtracting the risk-free rate – such as  that of the  10-year U. S. Treasury bond –  from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The Sharpe ratio formula is: [pic] The Sharpe ratio tells us whether a portfolio's returns  are due to smart investment decisions or a result of excess risk. This measurement is very useful because  although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a risk-less asset would perform better than the security being analyzed. A variation of the Sharpe ratio is the Sortino ratio, which removes the effects of upward price movements on standard deviation to measure only return against downward price volatility. The Treynor ratio (sometimes called the reward-to-volatility ratio or Treynor measure), named after Jack L. Treynor, is a measurement of the returns earned in excess of that which could have been earned on an investment that has no diversifiable risk (e. g. Treasury Bills or a completely diversified portfolio), per each unit of market risk assumed. The Treynor measure is similar to the Sharpe measure, but the Treynor measure uses the portfolio’s beta instead of the portfolio’s standard deviation. The Treynor measure is calculated as follows: (rp – rf) / ? p In this equation, rp = the average return on the portfolio, rf = the average risk-free rate, and ? p = the weighted average beta of the portfolio. The Treynor measure is found by dividing the portfolio risk premium by the portfolio risk as measured by the beta. An asset’s Treynor measure in isolation also means little. It also must be measured against the market’s Treynor measure, which is calculated by dividing the market risk premium, or the return on the market minus the risk-free rate by the beta of the market, which is 1. 0. If the asset’s Treynor measure is greater than the market’s Treynor measure, the asset has outperformed on a risk-adjusted basis. Source: Investopedia SECTION B: ESSAY QUESTIONS Question 1: One of the primary uses of PPP is in lessening the misleading effects of shifts in a national currency. This is particularly an issue when calculating a nation's Gross Domestic Product (GDP). For example, if the riel falls in value to 80% of its value on the dollar, the GDP as expressed in US dollars will also drop to 80%. This does not accurately reflect the standard of living in that country (a common use of GDP), however, because the devaluation of the riel is most likely due to international trade issues that will not yet have had any effect on the average Cambodian. By using purchasing power parity, however, one is not misled by the temporary devaluation of the riel in relation to the dollar — a Big Mac ® still costs 9,000 riel in Cambodia and $3 USD in the US, and so the Big Mac ® index exchange rate remains the same. Purchasing power parity is, of course, an imperfect device for determining things such as GDP, as the exchange rate will vary based on the basket item used for the index. This effect is lessened by looking at a large sample of commodities, rather than one or two, but this simply minimizes the problem rather than eliminating it entirely. It is also worth noting that PPP lumps items together into broad classes, not taking into account things such as quality — a hat is a hat is a hat, and its value in the index remains static, even though a shoddy hat's value on the international market would be much lower than a well-made hat's value. According to interest rate parity the difference between the (risk free) interest rates paid on two currencies should be equal to the differences between the spot and forward rates. If interest rate parity is violated, then an arbitrage opportunity exists. The simplest example of this is what would happen if the forward rate was the same as the spot rate but the interest rates were different, then investors would: 1. borrow in the currency with the lower rate 2. convert the cash at spot rates 3. enter into a forward contract to convert the cash plus the expected interest at the same rate 4. nvest the money at the higher rate 5. convert back through the forward contract 6. repay the principal and the interest, knowing the latter will be less than the interest received. Therefore, we can expect interest rate parity to apply. However, there is evidence of forward rate bias. Covered interest rate parity Assuming the arbitrage opportunity described above does not exist, then the relations hip for US dollars and pounds sterling is: (1 + r? )/(1+r$) = (? /$f)/(? /$s) where r? is the sterling interest rate (till the date of the forward), r$ is the dollar interest rate, /$f is the forward sterling to dollar rate, ?/$s is the spot sterling to dollar rate Unless interest rates are very high or the period considered is long, this is a very good approximation: r? = r$ + f where f is the forward premium: (? /$f)/(? /$s) -1 The above relationship is derived from assuming that covered interest arbitrage opportunities should not last, and is therefore called covered interest rate parity. Uncovered interest rate parity Assuming uncovered interest arbitrage leads us to a slightly different relationship: r = r2 + E[? S] where E[? S] is the expected change is exchange rates. This is called uncovered interest rate parity. As the forward rate will be the market expectation of the change in rates, this is equivalent to covered interest rate parity – unless one is speculating on market expectations being wrong. The evidence on uncovered interest rate parity is mixed. The effect proposes that if the real interest rate is equal to the nominal interest rate minus the expected inflation rate, and if the rea interest rate were to be held constant, that the nominal rate and the inflation rate have to be adjusted on a one-for-one basis. Real interest rate = nominal interest rate – inflation rate. In simple terms: an increase in inflation will result in an increase in the nominal interest rate. For example, if the real interest rate is held at a constant 5. 5% and inflation increased from 2% to 3%, the Fisher Effect indicates that the nominal interest rate would have to increase from 7. 5% (5. 5% real rate + 2% inflation rate) to 8. 5% (5. 5% real rate + 3% inflation rate). International Fisher Effect theory that the currency of a nation with a comparatively higher interest rate will depreciate in value in comparison to the currency of a nation with a comparatively lower interest rate. It further implies that the extent of depreciation will be equal to the difference in interest rates in those two nations. It is based on the observation that the level of real interest rate in an economy is closely linked to the level of local inflation rate and is independent of a government's monetary policies. Thus, in general, the higher the inflation rate, the lower the value of currency. Source: Investopedia Question 2: Firstly, Comparative advantage was first described by Robert Torrens in 1815 in an essay on the Corn Laws. He concluded it was to England's advantage to trade with Portugal in return for grain, even though it might be possible to produce that grain more cheaply in England than Portugal. However, the concept is usually attributed to David Ricardo who explained it in his 1817 book On the Principles of Political Economy and Taxation in an example involving England and Portugal. In Portugal it is possible to produce both wine and cloth with less labor than it would take to produce the same quantities in England. However the relative costs of producing those two goods are different in the two countries. In England it is very hard to produce wine, and only moderately difficult to produce cloth. In Portugal both are easy to produce. Therefore while it is cheaper to produce cloth in Portugal than England, it is cheaper still for Portugal to produce excess wine, and trade that for English cloth. Conversely England benefits from this trade because its cost for producing cloth has not changed but it can now get wine at a lower price, closer to the cost of cloth. The conclusion drawn is that each country can gain by specializing in the good where it has comparative advantage, and trading that good for the other. Example: Two men live alone on an isolated island. To survive they must undertake a few basic economic activities like water carrying, fishing, cooking and shelter construction and maintenance. The first man is young, strong, and educated. He is also faster, better, and more productive at everything. He has an absolute advantage in all activities. The second man is old, weak, and uneducated. He has an absolute disadvantage in all economic activities. In some activities the difference between the two is great; in others it is small. Despite the fact that the younger man has absolute advantage in all activities, it is not in the interest of either of them to work in isolation since they both can benefit from specialization and exchange. If the two men divide the work according to comparative advantage then the young man will specialize in tasks at which he is most productive, while the older man will concentrate on tasks where his productivity is only a little less than that of the young man. Such an arrangement will increase total production for a given amount of labor supplied by both men and it will benefit both of them. Imperfect market refers to a type of  market that does not operate under the rigid rules of perfect competition. Perfect competition implies an industry or market in which no one supplier can influence prices, barriers to entry and exit are small, all suppliers offer the same goods, there are a large number of   suppliers and buyers, and information on pricing and process is readily available. Forms of imperfect competition include monopoly, oligopoly, monopolistic competition, monopsony and oligopsony. Thirdly, a product life cycle refers to the time period between the launch of a product into the market till it is finally withdrawn. In a nut shell, product life cycle or PLC is an odyssey from new and innovative to old and outdated! This cycle is split into four different stages which encompass the product's journey from its entry to exit from the market. The product life cycle theory is used to comprehend and analyze various maturity stages of products and industries. Product innovation and diffusion influence long-term patterns of international trade. This term product life cycle was used for the first time in 1965, by Theodore Levitt in an Harvard Business Review article: â€Å"Exploit the Product Life Cycle†. Anything that satisfies a consumer's need is called a ‘product'. It may be a tangible product (clothes, crockery, cars, house, and gadgets) or an intangible service (banking, health care, hotel service, airline service). Irrespective of the kind of product, all products introduced into the market undergo a common life cycle. To understand what this product life cycle theory is all about, let us have a quick look at its definition. This cycle is based on the all familiar biological life cycle, wherein a seed is planted (introduction stage), germinates (growth stage), sends out roots in the ground and shoots with branches and leaves against gravity, thereby maturing into an adult (maturity stage). As the plant lives its life and nears old age, it shrivels up, shrinks and dies out (decline stage). Similarly, a product also has a life cycle of its own. A product's entry or launching phase into the market corresponds to the introduction stage. As the product gains popularity and wins the trust of consumers it begins to grow. Further, with increasing sales, the product captures enough market share and gets stable in the market. This is called the maturity stage. However, after some time, the product gets overpowered by latest technological developments and entry of superior competitors in the market. Soon the product becomes obsolete and needs to be withdrawn from the market. This is the decline phase. This was the crux of a product life cycle theory and the graph of a product's life cycle looks like a bell-shaped curve. Let us delve more into this management theory. Source: Buzzle Question 3: | | |Belize |Costa Rica | |Earnings before taxes | |1,000,000. 00 |1,500,000. 0 | |corporate income tax Rate | |0. 4 |0. 3 | |Tax | |400,000. 00 |450,000. 00 | |Earnings after taxes | |600,000. 00 |1,050,000. 00 | | | |300,000. 0 |525,000. 00 | |Dividend wtax rate   | |0. 1 |0 | |Dividend wtax amount | |30,000. 00 |0 | |Remitted amount after wtax | |270,000. 00 |525,000. 0 | | | | | | |Current US Corporate income tax rate | | |5% | |Dividend received by US parent after US Corporate tax | | |26,2500. 00 | |Net Dividend Received | |270,000. 0 |498,750. 00 | | | | | | |Total Earning before tax |250,000. 00 | | | | | | | | |Total Dividend received by Gramboa |768,750. 0 | | | |Total Tax pa id |906,250. 00 | | | | | | | | |Overall effective tax  rate |36. 35% | | | Question 4: Option 1 – No Hedging Assume that the expected spot rate in 90 Days is indeed $1. 7850/?. Now: a) 90 days putX = 1. 75P = 0. 015 b) 90 daysX = 1. 71P = 0. 01 3 months laterExercise Option (a) Received = (1. 75 – 0. 015) * 3mil = $5,205,000. 00 Answer: Do Not exercise Option 2 – Forward Hedge Buy a forward hedge at 90 Days forward rate at $1. 7550/? Now enter F @ 1,755 Money receivable in $ = 1. 755 x 3m = $5. 265m Option 3 – Money Market Hedge 1) Day 1 – Borrow ? , Amount borrowed = ? (3m / (1 + (14/4) /100)) = ? 2,898,550. 00 2) Day 1 – Convert all ? to $ = $1. 762 x 2,898,550. 00 = $5,107,246. 00 Option 1: Put $5,107,246. 0 to US bank @ 6% Option 2: Use $5,107,246. 00 as capital investment 3 months later:Option 1 Received ? 3 mil to pay ? 3 mil to British Bank Dollars in pocket = $5,107,246. 00 * (1+6%* 3/12) = $5,183,854. 69 Option 2 Received ? 3 mil to pay ? 3 mil to bank $5,107,246. 00 (1+12%*3/12) = $5,260,463. 00 Conclusion Money market is the best option as the m oney received is more than Put option hedge. Forward hedge resulted in receiving more than money market hedge wheras no hedging is assuming that the expected spot rate is reached but that is leaving it to chance. — END OF ASSIGNMENT–

Edgar Allen Poe Essays - Edgar Allan Poe, The Cask Of Amontillado

Edgar Allen Poe Essays - Edgar Allan Poe, The Cask Of Amontillado Edgar Allen Poe 2/96 The short story writer which I have chosen to research is Edgar Allen Poe. After reading one of his works in class, I realized that his mysterious style of writing greatly appealed to me. Although many critics have different views on Poe's writing style, I think that Harold Bloom summed it up best when he said, Poe has an uncanny talent for exposing our common nightmares and hysteria lurking beneath our carefully structured lives. ( 7) For me, this is done through his use of setting and narrative style. In many of Poe's works, setting is used to paint a dark and gloomy picture in our minds. I think that this was done deliberatly by Poe so that the reader can make a connection between darkness and death. For example, in the Pit and the Pendulum, the setting is originally pitch black. As the story unfolds, we see how the setting begins to play an important role in how the narrator discovers the many ways he may die. Although he must rely on his senses alone to feel his surroundings, he knows that somewhere in this dark, gloomy room, that death awaits him. Richard Wilbur tells us how fitting the chamber in The Pit and the Pendulum actually was. Though he lives on the brink of the pit, on the very verge of the plunge into unconciousness, he is still unable to disengage himself from the physical and temperal world. The physical oppreses him in the shape of lurid graveyard visions; the temporal oppreses him in the shape of an enormous and deadly pendulum. It is altogether appropriate, then, that this chamber should be constricting and cruelly angular (63). Setting is also an important characteristic is Poe's The Fall of the House of Usher. The images he gives us such as how both the Usher family and the Usher mansion are crumbling from inside waiting to collapse, help us to connect the background with the story. Vincent Buranelli says that Poe is able to sysatin an atomosphere which is dark and dull. This is one of the tricks which he laregely derived from the tradition of the Gothic tale (79). The whole setting in the story provides us with a feeling of melancholy. The Usher mansion appears vacant and barren. The same is true for the narrator. As we picture in our minds the extreme decay and decomposistion, we can feelas though the life around it is also crumbling. Narration is also an element in Poe's short story style that appears to link all of the stories together. He has a type of creativity which lets the reader see into the mind of the narrator or the main character of the story. Many of the characters in Poe's stories seem to be insane. The narrator often seems to have some type of psychological problems. For exapmle, In Poe's The Cask of Amontillado, the story opens with a first person narrator (Montresor) speaking about the planning of Fortunato's death. By the anger and remorse that Montresor has for Fortunato, one might think that this was a recent incident. It is not until the very end of the story that we realize, that the entire event occurred fifty years ago. David Herbert Lawrence says, To the characters in Poe's story, hate is as inordinate as live. The lust of hate is the inordinate desire to consume and unspeakably possess the soul of the hated one, just as the lust of live is the desire to possess or be possessed be the beloved, uterly. (33). Poe's stories often have narrators that feel extreme hate or extreme love for another character in the story. Another example of Poe's narrative style is seen in his story entitled, The Black Cat, where the narrator seems to have an obsession with pets. He has one special pet which is a black cat. Although their original relationship with each other is one of respect and love, the situation soon changes. The narrator becomes somewhat possessed with the hate for the car. He turns against his wife and stabs his cat in the eye. By the end of the story, he killed his wife in an attempt to

The eNotes Blog To Teach a Mockingbird LetsDiscuss

To Teach a Mockingbird LetsDiscuss A school district in Biloxi, Mississippi, recently made waves when it decided to pull Harper Lee’s To Kill a Mockingbird from required reading in its school. The reason? The language made students â€Å"uncomfortable.† Banning books has long been a problem in the United States  and one that (justifiably) infuriates the general public. If we are a country founded on freedom and, therefore, free speech, censoring books in the public school system is one of the most defiant actions against the Bill of Rights. Yes, books may contain ideas or introduce lifestyles that make us uncomfortable, but it is the right and even the responsibility of each student to make their own assumptions and opinions. By banning books, we are simply taking away knowledge that enhances and expands student perspectives- the exact opposite of what education should be. Teachers also play a large role when teaching To Kill a Mockingbird and discussing powerful topics. Controversial books generally deal with thematic content that can be difficult to teach appropriately. To Kill a Mockingbird has, for years, been a springboard for discussion on racism, a topic that can be difficult to bring up in classrooms. Unfortunately, there may be detrimental effects when a teacher overlooks certain aspects of the novel. For example, what are the full implications of Lee’s artistic choices when developing her characters of color? Take Calpurnia: when students view her through Scout’s eyes, what potential lessons could students internalize about the role of black women? Banning books is not the answer, but perhaps the school district in Biloxi was onto something, just not for the right reasons- districts can select only a few number of works they choose to teach a year, and  To Kill a Mockingbird has traditionally been on the syllabus for decades. Perhaps there should be room for more recent works that touch on the same topics in a different approach. Conversely, it has remained on the syllabus for extremely valid reasons, as it pushes students to expand their perspectives. All of this leads to a pivotal question: should we continue to teach To Kill a Mockingbird in high schools? Let’s explore both sides. No, We Should Not Teach To Kill a Mockingbird: I first read To Kill a Mockingbird in eighth grade, and it’s a novel I still hold dear to my heart because of the classroom discussions that left a lasting impact on me. I remember learning about lynchings and about the United States’s ugly past; I became more aware of the world I lived in and how the US treats black people and how history influences where we are today. These are huge, important lessons that I believe need to be taught in school. To Kill a Mockingbird was an effective way to do that. However, I recently realized who this book is intended for: white people. My school was primarily white and in my English class, specifically, we had no black students. I didn’t even think about the implications of what being a black student and learning about race from a very white perspective would be like. As author Alice Randall  points out, â€Å"the black child who has been verbally abused by being called a ‘nigger’ in the schoolyard could be more hurt hearing that word taught in the classroom† To Kill a Mockingbird is regularly taught to readers at a young-ish age. While eighth graders and high schoolers are typically able to possess the reading comprehension to understand it, they may not be in the position to fully understand it. It may be more appropriate for adults, with its thematic content and nuanced subject matter, but six-year-old Scout’s point of view misleads many to believe that it is targeted at a younger audience. To Kill a Mockingbird can be taught to be more than just teaching empathy or understanding that the â€Å"n-word is bad.† To Kill a Mockingbird can be used as a perfect example of what white saviorism is, of understanding that Atticus is just as flawed as the rest of us, and that there is so much more to racism than just individuals who hold racist beliefs- it’s an entire system. The issue here is that it’s not always taught through this lens. Atticus Finch is often thought of as a beacon of morality, and his teachings on empathy have been used by children and parents alike. However, his character is more complicated than this. Written from Scout’s young perspective, it’s easy to see Atticus through her eyes, as a hero. If we look at him from a more critical lens, Atticus emerges as a white savior. In media, white saviorism is when the story focuses on a white character who acts to help a non-white character. Unfortunately, the non-white character is reduced to a prop while the white character is glorified. One could argue that Atticus shouldn’t be taught as a civil rights hero (as he so often is) since he only worked with the system, not against it. Malcolm Gladwell, in his article for The New Yorker, writes that â€Å"Finch will stand up to racists. He’ll use his moral authority to shame them into silenceWhat he will not do is look at the problem of racism outside the immediate context of Mr. Cunningham, Mr. Levy, and the island community of Maycomb, Alabama.† Furthermore, To Kill a Mockingbird focuses on Atticus and his attempt to â€Å"save† Tom Robinson but provides no insight into Tom Robinson’s perspective. In fact, To Kill a Mockingbird completely ignores the perspectives and viewpoints of any black characters. When Robinson is lynched, we do not have to deal with the devastating effects of the lynching (what happens to his family, etc.); instead, we get to safely lie in bed with Scout and have Atticus read to us as we happily end the novel. If we want to use literature to begin the discussion on racism in the US, perhaps we should turn towards works written by people of color, for people of color, about people of color. To Kill a Mockingbird does the opposite, focusing on Atticus and his relationship to Tom Robinson and his attempts to â€Å"save† him in an unjust society. I could go on about how Atticus compares himself to a Klan member, how he does little to confront the overt racists in Maycomb, and how he fails to practice empathy himself. He’s a complex character who possesses numerous nuances that are often overlooked when teaching the novel. His faults can lead to important discourse- discourse that we need in our society right now because so many of us fall into the trap of the â€Å"accommodation† mindset rather than â€Å"reformation† one to the systemic injustices in our society. This requires highly qualified teachers and ones who understand the complexities of the novel and how to teach it appropriately, a tall order for all schools in the nation that end up teaching To Kill a Mockingbird. To Kill a Mockingbird is a work of literary genius- do not get me wrong. But, what makes it such an everlasting piece of work are its often overlooked complexities when teaching it to our students. This can be harmful and especially problematic because there is so much more to the book than just a feel-good, coming-of-age novel. When it becomes misconstrued as just that, we lose sight of the more important ideas of the novel: race in the US- the very thing we use to defend To Kill a Mockingbird in the first place. Yes, We Should Teach To Kill a Mockingbird: We should teach To Kill a Mockingbird because students are neither too inexperienced nor too young to learn and understand deeper issues. It may require more effort to effectively teach this novel, but it undoubtedly pays off. Education is about pushing limits, making things uncomfortable, and forcing us to face the reality we live in. What good does it do to shield students away from things that could potentially make them uncomfortable? To Kill a Mockingbird forces us to confront things we may not necessarily want to confront. Racism, whether subtle or overt, still exists and by banning it, or not teaching it, only causes a disservice to students. This book is unparalleled in its emotional effects; it’s often the first novel  that students are introduced to them that really makes them feel, both enlightened but also inspired. Shouldn’t that count for something? And, sometimes those feelings also include discomfort which should not be a reason to toss it, but instead a reason to teach it. Leonard Pitts Jr., columnist, stated  that â€Å"some of those discomfited by Lees book are African American. It makes no difference. In literature, as in protest, the audiences discomfort is often a sign the message is being received. It can offer an invaluable opportunity to consider, reconsider, debate, teach, learn, reflect, and grow.† Lee’s timeless classic can be read at varying points in our lives, and while it may not be geared towards children, it should be introduced in schools at some point. That first introduction can be the beginning of larger discourse and hopefully an extended journey with understanding the book and all of its complexities. If perhaps the first time we read it and the concept of white saviorism or Atticus’s failure to practice empathy usually goes over our heads, we are still left with other important elements of the novel. As with many literary classics, we gain more from reading them after we’ve gained more life experience. It would be impossible to expect a teacher to cover every single lesson a book can provide. That’s why we have literature classes and why we teach books written hundreds of years ago- there’s always more to learn from a book and that should not be a reason to rule it out in the classroom. Furthermore, To Kill a Mockingbird is thought-provoking and stimulating to many students- qualities that can get students excited to actually read it. We are immediately pulled in by Scout’s voice and the riveting plot of Tom Robinson’s trial. It explores issues of morality, identity, and growing up, which are themes all children face today. And, yes, it explores racism, which is certainly something children need to begin to understand and discuss. To Kill a Mockingbird may have the potential to be problematic under certain circumstances, but ultimately it is a coming-of-age book that enlarges students’ perspectives while also providing hope, which is much needed in our society today. What do you think? Should we continue to teach To Kill a Mockingbird in high schools? Why or why not? Let us know in the comments! Featured image via hollywoodreporter.com.

'Do pesticide residues in food pose a significant risk to consumer Essay

'Do pesticide residues in food pose a significant risk to consumer health - Essay Example Studies revealed that residues of pesticides remain in the crops for some time that eventually enter the cycle of the food chain. If these chemicals can kill and destroy the pests, they can also pose a potential danger to human beings. A safe level is then studied by researchers to establish the tolerable amount of pesticide residues that can ingested and does not endanger human beings. Incidents from around the globe reveal that human beings suffer from pesticide poisoning or overdose that has adversely affected life and health. This occurred despite stringent regulation by government regulatory agencies. Can pesticide be continuously used so that crops can be grown in abundance and free of disease but still not endanger the life of human beings? Without pesticide, farmers and growers will suffer great losses when pests and diseases attack their farms. But on the consumer end, death and illness can result. A balance has to be made so that both the production and consumer sides can b enefit. Pesticides that can be used in plants must be approved by regulating agencies (Food Standards Agency 2004). Introduction Pesticide is a general term that refers to a wide array of products used to decimate pests in the house, agricultural farm, etc. such as insect killers (called insecticides), mould and fungi killers (or fungicides), weedkillers (herbicides), slug pellets (molluscicides), rat and mouse killers (rodenticides), plant growth regulators, and bird and animal repellents (Health and Safety Executive 2009). United States Environmental Protection Agency (2010) included disinfectants and sanitizers (for kitchen or laundry), chemicals used for swimming pools, personal insect repellents, baits and sprays for cockroaches, and powders and sprays for fleas and ticks. There are natural pesticides such as pyrethrums (taken from chrysanthemum plant) and others are modified forms of natural chemicals (Health and Safety Executive 2009). For several decades, pesticides are bein g used by food growers in order to make the produce look good and abundant (Health and Safety Executive 2009). The chemicals used in regulating the growth of plants (e.g. one that slows down sprouting in potatoes) are likewise classified as pesticides and are regulated (Food Standards Agency 2004). Without using pesticides, the crops can lose their quality (Food Standards Agency 2004) making them not saleable in the market. Pesticide is used primarily for the benefits it can offer. In the farm, it protects the crops from pesky insects, weeds and fungi that cause diseases in plants (Health and Safety Executive 2009). Farm crops grow healthy and protected from diseases by pesticides (Food Standards Agency 2004). It also prevents rats, fungi and insects from contaminating the food while under storage (Health and Safety Executive 2009). In most instances, there are trace amounts of the chemicals used that remain inside or around the produce after harvest or while being stored (Food Stan dards Agency n.d.). These chemicals are called pesticide residues, and also include traces that result from the breakdown of pesticides (Food Standards Agency n.d.). It is sometimes necessary that a pesticide must stay longer on the crop to effectively protect it (Food Standards Agency n.d.). Exhaustive studies are conducted by regulatory agencies in collaboration with scientific institutions to confirm the report submitted by a company about the pesticide intended to be sold to the public. Upon the grant of approval, the