Investment And Financial Data On Non Financial Firms Finance Essay - Free Essay Example

Sample details Pages: 6 Words: 1789 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Table 1 provides descriptive statistics on the investment and financial data for the sample of the 15 listed non-financial firms during the period 2000-2009. The sample consists of firms operating in 4 different sectors. It is to be noted furthermore that for the purpose of the descriptive analysis, the use of LOG was not taken into account. Inspection of the table reveals a high variation of investment among the listed non financial firms. The mean of the ratio of investment to total assets is 0.046, while the standard deviation is 0.072 which is about one and a half times the mean. The sample average Tobins Q of 0.72 reflects market expectations of quite strong growth opportunities for the firms. The mean of the leverage is 0.13 which suggests there is not so much reliance on long term debt finance and thus firms are not so highly leveraged. Don’t waste time! Our writers will create an original "Investment And Financial Data On Non Financial Firms Finance Essay" essay for you Create order 5.2 Table 5: Correlation among Independent Variables Investment Leverage Profitability Cash Flow Sales Tobins Q Investment 1 Leverage -0.09 1 Profitability 0.29 -0.08 1 Cash Flow 0.29 -0.07 0.85 1 Sales 0.74 0.10 0.42 0.48 1 Tobins Q -0.07 0.18 0.09 0.12 -0.05 1 Table 3 presents Correlation Coefficients for the variables used to assess the impact of leverage on firm investment. Investment is negatively correlated with leverage and Tobins Q. Except for Tobins Q where a positive relationship was expected, the other variable support the theory and gives the expected results as the case of leverage supporting the Agency Theory. But this negative related Tobins Q can be explained using the Low and high growth firms statement. This positive relation for profitability and business size is consistent with the pecking order theory and trade-off theory. Cash flow For instance, profitability may be positively related to cash flows since high cash flows may help in day to day running of a firms business. As seen in the above table, the correlation between profitability and cash flow are high, which is 0.8489. Fixed or random table Table: Random and Fixed tests Variables Fixed Random Coefficient p-value Coefficient Leverage -0.23 0.00 -0.22 Profitability 0.22 0.30 0.21 Cash flow -0.30 0.25 -0.30 Tobins Q 0.57 0.04 0.42 Sales 0.72 0.00 0.75 R-square = 0. 5886 Prob F = 0.0000 corr(u_i, Xb) = 0 No of Observation: 150 No of Company: 10 The Random Effect Model as well shows that not all variables are significant. However, the value of R-squared (R-sq) is 0.5886. This shows that the independent variables of the current model explain 58.86% of the investment opportunities of Mauritian firms. In fixed effect test, leverage, TobinQ, sales are significant in explaining investment. In the random effect model, only leverage, and sales are significant. Table 3: Hausman Test Hausman Probchi2 = 0.65 According to the Hausman test the Probchi2=0.65 as seen in Table 3. The result obtained show that the random effect model is the appropriate model to use. The random effect assumes that the error term is uncorrelated with the dependent variables. Random effect tests Table: Random test Variables Coefficient p-value t-ratios Leverage -0.21 0.00 -9.94 Profitability 0.14 0.03 2.15 Cash flow -0.22 0.00 -2.78 Tobins Q 0.17 0.07 1.84 Sales 0.76 0.00 32.97 The results, shown on the Table , are rather encouraging since the significance of the overall regression illustrates the existence of a relationship between investment opportunities and the determinants analysed. Apart from Tobins Q, all the other determinants are significant to the model. The most interesting factor, however, is given by the fact that all of the coefficients of the exogenous variables have the predicted sign except cash flow which is negative. Leverage Our variable of interest, i.e., the leverage is statistically significant at 1% and is negatively related to net investment as 1 unit increase of leverage ratio leads to a 21.43 % decrease in net investment suggesting that capital structure plays an important role in the firms investment policies. This implies that as leverage increases, firms in the sample struggle to increase investment. In fact, net investment decreases, as firms tend to become more dependent on debt as a source of long term financing. T The negative effect of leverage of firm investment tallies with the underinvestment and overinvestment theory and furthermore, As Myers (1977) stated earlier, that leverage is negatively related to investment because of an agency problem between shareholders and bondholders. If managers work in the interest of shareholders, they may give up some positive net present value projects in the interest of shareholders due to debt overhang. The theories of Jensen (1986), Stulz (1990) and Grossman and Hart (1982) also claimed leverage to have a negative effect on investment but their arguments are founded on agency problems between managers and shareholders. They believed that firms with free cash flow but low growth opportunities may invest or overinvest such that the manager may take on projects with negative NPV. But, such strategy is not costless to the manager, especially if the capital market takes into account such potential opportunism or if there is a take over of the firm by anothe r company, managers tend to increase leverage and pay out cash as interest and principal. Furthermore, there are direct costs involved in raising external funding, such as underwriting and administrative fees. There is also potential financial distress costs associated with using external finance. For example, as leverage increases, other things being equal, there may be a higher probability of the firm facing financial distress. In this case, the firm may incur direct bankruptcy costs such as legal expenses and trustee fees and indirect costs such as the disruption of operations, loss of suppliers or customers and the imposition of financial constraints. The present value of these expected costs should be reflected in current financing costs. Finally, there are issues of taxation, shareholder dilution, control of information, the need to maintain flexibility and liquidity that may also have an impact on a firms financing choices. Financial factors may therefore affect the cost and availability of capital and so influence the investment decision Profitability The coefficient for profitability is 13.79 which is statistically significant at 3.1% and is positively related to investment. It indicates that the operating efficiency of the total funds over investments is positive. Usually, high profitability also attracts funds from investors for expansion and growth. Furthermore, it contributes towards the social overheads for the welfare of the society and there is an effective use of capital. This result is consistent with the empirical literature whereby Myres, 1984 stated that firms prefer to finance new investments from retained earnings and raise debt capital only if the former is insufficient, the availability of internal capital depends on the profitability of the firm. This fact is in line with the pecking order theory Cash Flow From the results obtained from table above, it can be noted that cash flow is significant at 1% but it is negatively related to investment opportunities since as 1 unit increase of cash flow ratio leads to a 22.47 decrease in net investment. The overall negative and significant coefficient of cash flow suggests that overinvestment is severed in overinvesting firms if they hold more cash. According to Jensen (1986) as the free cash flows of overinvesting managers increase, so should the overinvestment, as they have more funds to waste The contradicting and statistically weak result might be explained by the fact that cash holdings for the funding of projects are of relatively little relevance to the studied group of firms, since the studied firms should have favorable access to external capital by being listed. Thus, the firms might fund their projects directly by share or debt issues, instead of building cash reserves. Possessing free cash flow is rather beneficial for a firm, but having excessive dormant cash flow is relatively is not good. When free cash flow is present and shareholding monitoring is incomplete, the typical manager-shareholder monitoring agency problem arises. Managers have a tendency to overinvest even in negative NPV projects while shareholders would prefer dividends to eliminate the free cash flow. Cash flow is rather used maybe for paying out dividend, debt-finance share repurchase, and the like. As argued by Whited (1992), Gomes (2001), Alti (2003), Cummins et al. (2006) among others, one important caution in the analysis that might explain the contradictory findings in the literature is that cash flow might convey information about the firms future investment opportunities. When this is the case, a significant cash flow and investment relationship might be observed that reflects increased investment opportunities rather than signalling financing frictions. In other words, the observed relation between cash flow and investment might be a spurious effect resulting from the inability to control for investment opportunities in the underlying investment equation. The investment of firms with higher leverage may be more sensitive to cash flows than that of firms with lower leverage. The increased debt servicing obligations resulting from higher leverage mean that the available cash flows of higher-geared firms are smaller and thus they have less of a buffer against disturbances. Sales It can be seen that firms are utilizing their total assets efficiently and it reflects the ability in producing large sales volume. The estimates of sales is 75.94 and the variable is statistically significant at 1%. Sales revenue does not support the popular belief that firm with more debt are investing to a lesser degree than their sales would suggest. This finding corresponds to that of Kopcke and Howrey (1994) who found that investment of 396 companies was not dependent on the sales revenue of the firms. Tobins Q From the table, it can be seen that Tobins Q is statistically insignificant at 6.5% and is positively related with investment. The regression estimate is 17.44. Firms which have a propensity to expand the scale of the business and managements ability to carry out such a policy is constrained by the availability of free cash flows and this constraint can be further tightened via financial leverage. The issuance of debt engages the firm to pay cash as interest and principal, forcing the managers to service such commitments with the funds that may have otherwise been allocated for investment projects. Hayashi (1982) explained that the Tobins Q variable should be an adequate enough variable to explain firm investment. However, if a major impact of Tobins Q is the presence of bubbles, forms of irrationality such as herding and other factors, then it might not be a statistic that captures the relevant information about profitability of projects invested in. In addition, he assumes that the market is fully efficient, the firm exhibits constant returns to scale and importantly, these firms have no market power. HIGH AND LOW GROWTH FIRM Arrellano and Bond Test Table: Arrellano and Bond Variables Coefficient p-value t-ratios Investmentlag -0.18 0.79 -0.26 Leverage 0.04 0.82 0.23 Profitability -0.33 0.94 -0.07 Cash flow 0.50 0.91 0.11 Tobins Q 0.73 0.78 0.27 Sales 0.06 0.97 0.04 The GMM results show that investment lag is not significant. There is no causality in investment. Sargan Tests Sargan p-value : 1.000 The p-value is above the 0.05. It indicates that the model is valid. The model passes the sargan test. Abond test abond p-value Order 1 Order 2 0.79 0.26 The p-value for both of Order 1 and Order 2 is greater than 0.05. There is no evidence of serial correlation in the dataset.

The Hawaiian Monk Seal, Or Monachus Schauinslandi

The Hawaiian monk seal, or Monachus schauinslandi, was one of the original species to be placed under the Endangered Species Act that was enacted in 1973. As of 2010, the population of the monk seal is approximately 1,100, with an annual decrease of approximately 4.5%. The Hawaiian monk seal is primarily found on the Northwestern Hawaiian Islands that are made up of coral reef atolls, seamounts, banks, and shoals. This is due to the fact that the monk seals primarily forage on the barrier reefs of the atolls, on submerged reefs, and on banks further from the atolls (Curtice et al, 2011). The monk seals are primarily benthic forgers and will search for food in a broad depth range up to 500m and over different substrates (National Marine†¦show more content†¦The population decline in monk seals is due to several different factors with the biggest reason due to the low pup and juvenile survival rates (Curtice et al, 2011). At the Kure Atoll on the Northwestern Hawaiian Islands , 32 pups were observed in 1964 and 30 pups were observed in 1965. Of these pups born, all but one died or disappeared within 60 days after birth. This was also seen in the 1970’s at Green Island and Kure Atoll, where a mean population of 17 and 14 seals, respectively, was counted on these beaches, with a birth total of 10 showing a population decline of 70% (Gilmartin et al, 2011). The juvenile survival rate is still seen today with one in five monk seals surviving to the reproductive age, with one year old seals having the highest mortality rates (Norris et al, 2011). One of the reasons this is occurring is due to human interaction. Adult females who are near birth or who have just given birth are very sensitive to disturbance (Gilmartin, Johanos, DeMaster, Henderson, 2011). In 1960, the U.S. Coast Guard built a station on Green Island that was previously unoccupied to humans, and as a result of this the female monk seals would encounter humans almost daily causing the fe male monk seals to leave that preferred hauling and birthing sites and go to beaches that were highly affected by flooding, shark predation, and

A Woman Of No Importance monologue Essay Example For Students

A Woman Of No Importance monologue Essay A monologue from the play by Oscar Wilde NOTE: This monologue is reprinted from A Woman of No Importance. Oscar Wilde. London: Methuen Co., 1916. MRS. ARBUTHNOT: I will never stand before God\s altar and ask God\s blessing on so hideous a mockery as a marriage between me and George Harford. I will not say the words the Church bids us to say. I will not say them. How could I swear to love the man I loathe, to honour him who wrought you dishonor, to obey him who, in his mastery, made me to sin? No; marriage is a sacrament for those who love each other. It is not for such as him, or such as me. Gerald, to save you from the world\s sneers and taunts I have lied to the world. For twenty years I have lied to the world. I could not tell the truth. No, Gerald, no ceremony, Church-hallowed or State-made, shall ever bind me to George Harford. Men don\t understand what mothers are. I am no different from other women except in the wrong done me and the wrong I did, and my very heavy punishments and great disgrace. And yet, to bear you I had to look on death. To nurture you I had to wrestle with it. Death fought with me for you. All women have to fight with death to keep their children. Death, being childless, wants our children from us. Gerald, when you were naked I clothed you, when you were hungry I gave you food. Night and day all that long winter I tended you. No office is too mean, no care too lowly for the thing we women loveand oh! how I loved you! And you needed love, for you were weakly, and only love could have kept you alive. Only love can keep any one alive. And boys are careless often, and without thinking give pain, and we always fancy that when they come to man\s estate and know us better they will repay us. But it is not so. The world draws them from our side, and they make friends with whom they are happier than they are with us, and have amusements from which we are barred, and interests that are not ours; and they are unjust to us often, for when they find life bitter they blame us for it, and when they find it sweet we do not taste its sweetness with them. . . . You made many friends and went in to their houses and were glad with them, and I, knowing my secret, did not dare to follow, but stayed at home and closed the door, shut out the sun and sat in darkness. My past was ever with me. . . . And you thought I didn\t care for the pleasant things of life. I tell you I longed for them, but did not dare to touch them, feeling I had no right. You thought I was happier working amongst the poor. That was my mission, you imagined. It was not, but where else was I to go? The sick do not ask if the hand that smooths their pillow is pure, nor the dying care if the lips that touch their brow have known the kiss of sin. It was you I thought of all the time; I gave to them the love you did not need; lavished on them a love that was not theirs. . . . And you thought I spent too much of my time in going to Church, and in Church duties. But where else could I turn? God\s house is the only house where sinners are made welcome, and you were always in my heart, Gerald, too much in my heart. F or though day after day, at morn or evensong, I have knelt in God\s house, I never repented of my sin. How could I repent of my sin when you, my love, were its fruit. Even now that you are bitter to me I cannot repent. I do not. You are more to me than innocence. I would rather be your motheroh! much rather!than have been always pure. . . . Oh, don\t you see? don\t you understand! It is my dishonour that has made you so dear to me. It is my disgrace that has bound you so closely to me. It is the price I paid for youthe price of soul and bodythat makes me love you as I do. Oh, don\t ask me to do this horrible thing. Child of my shame, be still! .u353eda88a390c780db09e65f0685c7d4 , .u353eda88a390c780db09e65f0685c7d4 .postImageUrl , .u353eda88a390c780db09e65f0685c7d4 .centered-text-area { min-height: 80px; position: relative; } .u353eda88a390c780db09e65f0685c7d4 , .u353eda88a390c780db09e65f0685c7d4:hover , .u353eda88a390c780db09e65f0685c7d4:visited , .u353eda88a390c780db09e65f0685c7d4:active { border:0!important; } .u353eda88a390c780db09e65f0685c7d4 .clearfix:after { content: ""; display: table; clear: both; } .u353eda88a390c780db09e65f0685c7d4 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u353eda88a390c780db09e65f0685c7d4:active , .u353eda88a390c780db09e65f0685c7d4:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u353eda88a390c780db09e65f0685c7d4 .centered-text-area { width: 100%; position: relative ; } .u353eda88a390c780db09e65f0685c7d4 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u353eda88a390c780db09e65f0685c7d4 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u353eda88a390c780db09e65f0685c7d4 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u353eda88a390c780db09e65f0685c7d4:hover .ctaButton { background-color: #34495E!important; } .u353eda88a390c780db09e65f0685c7d4 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u353eda88a390c780db09e65f0685c7d4 .u353eda88a390c780db09e65f0685c7d4-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u353eda88a390c780db09e65f0685c7d4:after { content: ""; display: block; clear: both; } READ: The Sorceress Monologue Essay

Gold Fluctuation Essay Example

Gold Fluctuation Essay It provides insurance against extreme movements that often occur like war, economic crisis, changing monetary policies and so on. Individual or institutional investor tend to invest more in gold in order to diversify their portfolio by not only holding the US dollar as a reserve but also gold as well to hedge against the falling price of US dollar, to hedge against inflation, to provide higher liquidity at the time of urgency and to provide insurance and economic security against unexpected events like the recent economic crisis. There are certain factor that influences the price f gold from time and again. Some of these factors are US dollar currency, central bank policies, inflation, US economy, demand and supply of gold and other macro economic variables. Many Asian countries like India, Russia, Sri Lanka, and China are presently making a great initiative towards buying out more gold to protect their wealth and to hedge against the falling price of US dollar. Gold is regarded as o ne of the highly traded commodity in the commodity market. Recent economic crisis that has started from the US has led to some fluctuation on the gold price. This is because the weakening of the US dollar currency and strengthening of the gold price has led the international investor to focus more on investing on the gold rather than foreign currencies especially US dollar. So, there has been an increase in the commodity market for trading of gold and other commodity in international market. Likewise, the gold investor are also increasing in Nepal with some of the commodity market already started trading the gold and other commodities. Purpose/ Objective of the Study: The purpose of the study is to make in depth analysis of the factors that influence the gold future. Since, the change in the price of the gold has major influence on other commodities and currencies so it is very important to understand the gold and its relationship with various other factors like US dollar, inflation, demand and supply, central bank policies and other macro economic variables. This study is mainly conducted to know how the gold price fluctuates irrespective of the change in the dollar value, inflation, demand and supply and central bank policies around the world. Methodology: We will write a custom essay sample on Gold Fluctuation specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Gold Fluctuation specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Gold Fluctuation specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We base our study on the secondary source of information available in the market, articles, journal, and webpage and research paper. This study also comprises some of the opinion from the experts in the gold futures, which are included in the part of our analysis.. Scope of the Study: Some of the major scopes of the study are listed below: †¢ This study is conducted to understand the common factors that influence the gold futures price in the world financial market. †¢ We don’t recommend basing any investment decision in the results of this study, and this study is only for the academic purpose. The study is done only for academic purpose, which is based on the secondary information from different journals, articles, research papers and web pages. So, this doesn’t include detail research on the actual market. However, some of there will be some of the practical example illustrated on the relevant topic wherever necessary. †¢ The study reflects the gold pr ice relationship with the factors that are common in overall world economy not only to those factors that are specific to the particular economy. Limitation of the Study: This project report is prepared under considerable limitations and some of those are listed below: †¢ Time constraint: Due to limited time, we have not been able to explore the other component of our study like numerical calculation and trend analysis of the factors that influences the gold future. †¢ Information source constraint: The limited information in this study does not serve as a basis for the investor for investing in the real market. We did not have enough access to more relevant and valuable articles. The investor need to have further detail analysis and research before investing in the gold future in real market. Scope constraint: We have limited the scope of our study by identifying and focusing in six factors that influences the gold price. There can be factors other those mentioned in this study that have effects on the gold price. From our preliminary web-based analysis we identified six factors that affect the gold price. Structure of the paper: The study of this paper begins with first identifying the major common factors that influence the gold price in international level. These factors are then further analyzed and elaborated with some theoretical concept, practical insight and evidences. The factors identified are as common to the world economy, however there might be other factors than those identified, which might influence the gold price and might differ from country to country. Finally, we have drawn some conclusion based on our analysis and a brief highlight on the gold future market in Nepal. Chapter II CONCEPTUAL FRAMEWORK There has been a tremendous increase in the trading of gold in the international commodity market. People are more attracted towards investing more on the gold market primarily because of the following reasons: Gold as a hedge against inflation Gold is considered as the hedge against inflation. Inflation is basically caused by the increase in the supply of currency. The value of the currency is decreased when there is monetary inflation. And we know that the price of gold increase when there is monetary inflation. So one can keep gold as reserve to safe from the inflation risk. The most consistent factor determining the price of gold is inflation-the price goes up with the rise in inflation rate. It has negative correlation with other investment portfolios like stocks bonds, bills. etc. E. g. at the end of world war II, when there was highest inflation rate, the rate of return on stocks was ighly in negative but the price of the gold was far positive. Oil, Inflation and Gold Though the price of the oil and the gold are far different, it is no doubt that the price of oil reflects to the price of gold. If oil prices rise or fall sharply, investors can expect a corresponding reaction in gold prices as well. When the oil price climbed from 325%, $2. 44 to $10. 36 in between 197 2 and 1974, gold price had rose 268% from $47. 45 to $174. 76. Gold as a hedge against declining the dollar In the international market, the price of gold is determined in the value of dollar. With the decline of the value of the dollar, the price of gold rises. The U. S. dollar is the worlds reserve currency, it is the primary medium for international transactions and the currency held as reserves by the worlds central banks. Now it has been backed by the gold, the dollar has been only the medium. Gold as a safe haven There are myriad of tensions in the world economy, anyone can erupt with little or no warning. Gold has been considered as the crisis commodity because it safeguards the other investments. Every factor that causes other investments to suffer may let the price of gold to rise. When there is any crisis specially or there is banking crisis, public begins to distrust paper assets and turns to gold for a safe haven. When all else fails, governments rescue themselves with the printing press, making their currency worth less and gold worth more. Gold has always raised the most when confidence in government is at its lowest. Gold as a store of value Warren Buffet has said about Gold: It gets dug out of the ground in Africa or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. One major reason investors look to gold as an asset class is because it will always maintain an intrinsic value. E. g. if one could purchase a set of the cloth with the value of 1 ounce of then fashion, he can also purchase the set of cloth but of modern design and fashion with the same 1 ounce of gold at this time. It means that Gold act as the storage of the wealth. Gold as a portfolio Diversifier Gold is negatively correlated with the dollar value and hence negatively correlated with all other financial market, such as stocks and bonds. So it is the most effective way of diversifying the portfolio by investing into the gold. It is the safest way of investment; it protects the wealth from total loss because there will be the intrinsic value in any time in future. But there is a chance of complete eruption of total money due to crisis in other investments. Gold is an safe part of a diversified portfolio because its price increases in response to events that erode the value of traditional paper investments like stocks and bonds. Chapter III FACTORS INFLUENCING GOLD FUTURES Present days we see that there has been a great fluctuation in the price of gold, with increase in its price. This has alerted all the gold investor either individual investor or institutional investor or country to think once again. So, as a rational investor we need to understand the basic idea behind the gold price upward and downward movement. To understand this movement in the gold price we need to understand all those common factors that influence the gold futures. So, some of these factors that influence the gold futures like US dollar currency, central bank policies, inflation, demand and supply and macro economic variables are illustrated below with some practical insight linked with the theoretical concept as well. Factors that Influence the Gold Future: 1. US dollar and gold price 2. Central bank reserve policy and gold price 3. Demand and supply of gold and its effects in the price 4. Inflation and gold price 5. Investment demand and gold price 6. Geopolitical scenario, macroeconomic changes, and gold price 1. US dollar and gold price: When we talk about gold and US dollar, it is important to reassess how gold really relates to the dollar. The fact is that gold almost never changes in value. It is the dollar that revalues in relationship to gold. For example, in 1920 a good quality mens suit could be purchased with a typical $20 gold piece. A similar quality suit today can be purchased with about the same amount of gold. There exists a reciprocal relationship between the gold price and dollar. The reason that gold and the dollar generally trend in opposite directions is that in one respect gold is just another currency. As a result, when the dollar weakens on the foreign exchange market over an extended period then the US dollar gold price will generally rise during the same period; and when the dollar strengthens over many months then US dollar gold price will usually fall. This is the real scenario which we have been observing currently in the world financial market, where the dollar is weakening and the price of gold is sky rocketing. It doesn’t mean that the percentage change in dollar has equal percentage change in gold price, but when we look over the charts of the dollar and gold and compare, it quickly becomes apparent that the two have been inversely correlated since the floating currency system came into being in the early 1970s. But to our surprise, if we see the data of gold and dollar from May through December 1993, the traditional relationships prove to have broken down. Gold has long been regarded by investors as a good protection against depreciation in a currencys value, both internally (i. e. against inflation) and externally (against other currencies). In the latter case, gold is widely considered to be a particularly effective hedge against fluctuations in the US dollar, the worlds main trading currency. The reason for the inverse relationship between gold and the US dollar is because both are seen as a global, worldwide currency. Pre 1971 the two colluded as a world gold standard whereby the US dollar and gold were pegged together. At that time one Troy ounce of gold could be swapped for US$35. Before 1971 any central bank in the world could ask America to settle its debts in gold. But post 1971 they could only ask for US dollars. When the central bank demands more gold or began to hoard more gold as a reserve than the price of the US dollar falls and vice versa. These days the value of dollar is declining due to the central banks around the world are making an initiative to hold more gold as a reserve against the dollar, which has resulted an influence in the US dollar currency. The figure below indicates the gold price and US dollar movement from 1970s to 2000s, which shows that there is inverse relationship between the trends. When US dollar is declining then ther is rise in gold price and vice versa. Although the percentage change is not same, but there still exists an inverse relationship between gold price and US dollar. [pic] Fig: Relationship between US dollar and Gold price 2. Central bank reserve policy and gold price: Since central banks typically buy US dollars to store their foreign exchange reserves but recent days there has been shift in the decision of the central bank around the world to hold more reserve of gold against the world’s sole eserve US dollar to hedge against the fall in US dollar value. So central banks around the world are investing more in gold to hedge against the falling price of US dollars from the foreign currency reserve they hold. This decision of the central banks around the world had led to increase in the price of the gold. Some of the recent example of such decision undertaken by the central bank around world can be Reserve Bank of India, Russian Central bank a nd many other central banks of Asian countries including China. The decision to further increase the gold reserve by the central bank of Asian countries including China as a hedge against the bullish trend of gold has led to further increase in the price of gold. Asian central banks hold 2. 6 trillion US dollars in foreign exchange reserves. So, most of these reserves are expected to be invested on the buying gold as an alternative reserve to US dollar, which will definitely led the price of gold to rise with the fall in US dollar. Recent steps undertaken by some of the central bank that influenced the price of gold are: Federal Reserve: The present initiative undertaken by the Federal Reserve to keep the interest rate low and increase the money supply whenever it feels necessary to improve liquidity has resulted the pressure on the dollar price and benefited the gold price against the dollar. So, such decision and actions undertaken by the Federal Reserve influence dollar value with the resulting impact on the gold price. †¢ Indian central bank: After India’s central bank—the Reserve Bank of India (RBI)—bought 200 tons of gold from the International Monetary Fund (IMF) last month has made some positive fluctuation on the price of gold. At the same time more central banks are taking various initiatives to step up their gold reserves. †¢ Russian central bank: Central bank of Russia decision to buy out 30 tons of gold from its own gold mining has also led to influence the price of the gold. †¢ China’s central bank: Central bank of china had built up its gold reserves by 454 tons since 2003 to 1,054 tones, making it the world’s sixth largest holder of the precious metal. Russian central bank has also given an initiative on buying more gold in the near future as diversifying reserves because of the fall in the dollar price. This also shows that Russia’s gold reserve probably rose by $790 million to $23. 1 billion, which has a great influence on the gold price. †¢ Sri Lankan’s central bank: Central bank of Sri Lanka has bought 10 tons of gold worth $375 million as part of a restructuring of IMF financial resources †¢ Mauritius Central Bank: Mauritius bought 2 tons on for $71. 7 million from IMF also has led to increase on the price of gold. The IMF executive board approved the sale of 403. 3 tons of gold in September. IMF currently holds roughly 3,000 tons of gold, is the worlds third-largest official holder of the precious metal after the US and Germany. This decision of IMF to sale the gold to different central banks has led to influence the gold price. Why do central banks hold more gold? Its influence on the gold price As we have seen from the recent examples that most of the central bank are moving their decision towards holding more gold reserve as an alternative to world’s sole reserve currency US dollar. The reason for central bank for holding more gold can be one of the following reasons: †¢ Diversification: As we have popular saying that don’t put all your eggs in one basket. So, recent days the central bank wants to minimize their risk by diversifying their reserve into gold holding. As the dollar and gold price represents the world’s reserve. So, holding the reserve in gold will minimize the risk of falling price of US dollar i. e. in simple sense to hedge against the falling price of gold. Thus, central bank makes take an initiative to hold gold as a diversification to minimize risks. †¢ Economic Security: Gold is a unique asset in that it is no one elses liability. Its status cannot therefore be undermined by inflation in a reserve currency country. Nor is there any risk of the liability being repudiated. Gold has maintained its value in terms of real purchasing power in the long run and is thus particularly suited to form part of central banks reserves. In contrast, paper currencies always lose value in the long run and often in the short term as well. Because of this the central bank holds gold. †¢ Hedge/ Insurance against uncertain events: This can be best illustrated with the present economic crisis that led to affect the international monetary system. Owning gold is thus an option against an unknown future. It provides a form of insurance against some improbable but, if it occurs, highly damaging event. Such events might include war, an unexpected surge in inflation, a generalized crisis leading to repudiation of foreign debts by major sovereign borrowers, a regression to a world of currency. In emergencies countries may need liquid resources. So, gold is liquid and is universally acceptable as a means of payment and can also serve as collateral for borrowing. Because of this the central bank holds gold. Some of the largest gold reserves holding countries of the world as of December, 2009 are listed in the table below: Rank |Country/ Organization |Gold (tonnes) | |1 |US |8,133. 5 | |2 |Germany |3,407. 6 | |3 |IMF |3,005. 3 | |4 |Italy |2,451. 8 | |5 |France |2,435. 4 | |6 |China |1,054. 0 | |7 |Switzerland |1,040. | |8 |Japan |765. 2 | |9 |Netherland |612. 5 | |10 |Russia |607. 7 | So, when then central banks of these major gold reserve holding countries make a decision to buy or sell t he gold reserve, then there arises a change and fluctuation on the price of the gold and the US dollar. 3. Demand and supply of gold and its effects in the price The price of gold has also been influenced by the demand and supply of gold in the international market. This demand and supply of gold and its influence on the gold price are discussed below: Demand of Gold The demand of the gold is extensively high in today’s market. It may be due to the less supply and its vast uses in many sectors. The demand of the gold is diverted mostly in the industries, jewelry fabrication and to some extent to the lines of credit. The extensive functionality and the physical/chemical properties of the gold are the main reason behind its increase in demand. Some of the major sectors where there is large demand of gold are: a. Jewelry demand The demand of gold in jewelry accounts about 2/3 of its demand in world. Jewelry has been the world’s largest category of the consumer goods. The demand in jewelry is driven by a combination of the affordability and desirability of consumers. It rises during the period of price stability and declines when there is price volatility. The jewelry consumption has been increasing, though there is a steadily trend of rising price. The demand of gold for jewelry is high especially in Asian countries like India, Pakistan, Sri Lanka, Nepal and others. b. Investment Demand There is no doubt that the investment in gold has been increased considerably in recent years. The trading of gold in international commodity market has been increasing drastically in recent days. It is not easily measurable of the gold demand in over the counter market. However, the increase in investment has represented the strongest growth in demand. There are wide ranges of reasons why the people seek to invest in gold. The major reasons are the positive price outlook and expectations that the demand will continue to outstrip its supply. The investment in gold can take many forms, some investor trade it in contract without physical delivery. c. Industrial demand Gold’s extensive property like resistance to corrosion, high thermal and electrical conductivity, high malleability and ductility explained why its demand has been increasing in the electronic components and human surgery. Gold is used in the medical applications due to its compatibility, resistance to bacterial colonization and corrosion. Several researches have uncovered a number of new practical uses of gold such as catalyst in fuel cells, in chemical processing and controlling pollution. The uses of gold in electronics, metal plating and coatings, cancer and heart treatment are the exciting areas of its uses. . Other forms of gold demand The central bank keeps the reserve either in dollar or gold. There is a great chance of lowering the value of dollar rate thus creating the great risk. So in order to minimize that risk the central bank has started to deposit the gold as their reserve. Similarly, the Chinese government has started to put their trade surplus in the form of gold. The chinese government has also allowed their citizens to own and keep gold with them. These scenarios has also created the scenario to increase the demand of gold. Gold is taken as the â€Å"crisis hedge†. There is a great threat from the country’s turmoil and the inflation risk, which is out of the control of anyone. So people are scared about the assets in the paper form. They started to keep gold as the reliable asset. This trend has also created the demand of gold in consumer level. Supply of the Gold a. Mine production The main source of the gold production is mining. Gold is produced almost in all continents. The global mine production is relatively stable because mining in new places just serve as the replacement of the current production. There is no significant growth in the total production. The average global production is approximately 2485 tonnes per year over the last five years. The lead time of the gold mining is relatively longer (i. e. longer than 10 years), so production is inelastic and the changes in price don’t have the quick response. b. Recycled gold There is the supply of the gold through the recycled gold compensating to the less production. This has helped to stabilize the supply and price. In between 2004 and 2008, the recycled gold has contributed an average 28% to annual supply. The gold has great recycling property; it can be molded and remolded by melting down and reuse without losing much of its physical and chemical properties. c. Central banks The supranational organizations such as International Monetary Fund (IMF) and central banks hold the stocks of gold as reserve assets. The government also holds around 10% of its official reserves as gold but the proportion varies in different countries. This source has been a net seller since 1989 contributing an average of 447 tonnes to annual supply. However the sales rom these sources are decreasing in recent years. In 2008, it was just around 246 tonnes. d. Gold Production Gold is extracted from its ore. The extracted ore is treated, processed and refined. The largest ore is the Rand refinery in Germiston, South Africa in terms of largest capacity. The largest ore in terms of output is the Johnson Mathew, USA. The gold refined is sold to the bullion dealers who trade it to the jewelry or industry or the inves tors. The bullion dealers facilitate the free flow of gold and underpin the free market mechanism. Supply/ demand in western gold market Annual   western   world   gold   supply   (a) + (c) |Annual   western   world   gold   demand   (a) + (c) |Annual   western   world   gold   | | | |deficits | Y e a r |Annual mine production (b) (metric tons) |Annual production growth rate   (%) |Annual consumer demand (b) (metric tons) |Annual consumer demand growth rate   (%) |Demand (metric tons) |Supply (metric tons) |Prod. Deficit (a) (metric tons) | |1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 |1382 1446 1698 1686 1814 1948 2145 2020 947 2089 2069 1992 |13. 8 4. 6 17. 4 (0. 7) 7. 6 7. 4 10. 1 (5. 8) (3. 6) 7. 3 (1. 0) (3. 7) |1529 1571 1786 1688 1942 2340 2478 2590 2891 2763 2700 3007 |1. 9 2. 7 13. 7 (5. 5) 15. 0 20. 5 5. 9 4. 5 11. 6 (4. 4) (2. 3) 11. 4 |1529 1571 1786 1688 1942 2340 2478 2590 2891 2763 2700 3007 |1382 1446 1698 1696 1814 1948 2145 2020 1947 2089 2069 1992 |-147 -125 -88 -2 -128- -392 -333 -570 -944 -674 -631 -1015 | | The demand of the gold is growing while the supply through mine production is flat -more or less constant production. The 10 year supply/demand data show that the gold demand exceeded to the supply in all years. In 1995 the demand exceeds the supply by 1. 5 times and the deficit is 1015 tonnes. The deficient of the gold can be observed in the US and India where the shops are completely bare of gold, Indian Banks was empty of gold and silver. US Mint has suspended coin production. 4. Inflation and the gold price: As we have already discussed that there exists the inverse relationship between the gold price and US dollar currency. So, when the inflation of the US economy goes up then the dollar becomes weaker as a general economic sense, which will ultimately led to increase in the price of the gold. This is because the central bank around the word will buy out more gold as a reserve in order to hedge against the falling value of US dollar. Thus, the inflation in the US economy has a chain reaction which will ultimately led to increase in the gold price with weakening US dollar. Some of the empirical data from the past shows how gold price responded to the inflation in the US economy. From the peak in1980 the inflation rate declined but cumulative inflation climbed steadily upward. But rather than keeping up with inflation the price of Gold fell from the peak of $850 per ounce down o under $300 in 2001. But in inflation adjusted dollars the scene is even worse. The 1980 peak in 2007 inflation adjusted dollars was over $2100 and it fell to under $346 losing a whopping 84% of its value. So even though inflation rose gold fell because the fear level was low (and possibly because governments worldwide manipulated the price). While gold prices do tell us some-thing about the inflation rate, it need not be either that inflation raises gold prices or that higher gold prices cause inflation. Some third factor, such as the money supply, may influence both. The monetary policy of central bank s to adjust their inflation rate in the economy has certain influence on the gold price. As for instance in the US economy, a monetary policy designed to bring down inflation, as in the early 1980s, might have a different impact than one promoting a stable, low-inflation environment, like that of the 1990s. Thus, we can observe that the price of gold movement and Inflation has positive relationship. It means that when the inflation increases then the price of the gold also moves upward. 5. Investment demand and gold price: Investment demand of gold is a relatively new concept which is gaining popularity among investors in later years. We have seen that traditionally demand of gold basically came from- central bank holdings and jewelry demand. But due to growing geopolitical tension, power shift, and many other reasons, investors are investing in gold as a hedge against macro economic downturn, more specifically against the inflation. People take gold as a safe heaven investment and belief in its long term store value. This changing perception of people is supported by the availability of various types of instruments through which they can invest in gold. The kinds of investment alternatives for gold are: a. Gold futures b. Shares of gold exchange traded funds c. Shares of gold mining companies As the purpose of this study is to discuss about the factors affecting the gold prices, we will not be discussing all these alternatives further. To put things in perspective, it is necessary to state that the total amount of gold derivative traded every day around the world is more than 1000 tonnes of gold. Whereas, the total value of physical gold traded every year is around 10000 tonnes. This implies that the physical gold market is less than 2% of gold derivative market (Understanding Gold; Paul Van Eden; theMiningweb. com; 2000). Gold futures contract and the gold exchange traded funds are the most popular forms of gold derivatives. In 2009 alone the investment demand for gold went up by massive 25% (Ajay Mitra; World Gold Council; Dec 2009). This sort of additional demand is putting more pressure on the price of the gold and is one of the major reasons behind the recent rise in the price of gold in 2009. Recent rise in gold price can be attributed Reasons behind rise in investment demand of gold: The reasons are very simple. First the returns on gold have left far behind the returns on other investment alternative, such as stocks and bonds. In 2009, average returns on gold investment stood between 25-35%. A close analysis of average returns from gold and SP since 1999 will show that, had anyone invested $10,000 in gold in 1999 that would have grown to $33,754 (i. e. a profit of 238%). And had that investment was made in SP then it would have incurred a loss of $3,987 (i. e. a loss of 40%). These data show that gold investments are beating stock market in terms of returns and this is switching investors from stock market to the gold investment market. Following bar diagram summarizes the average returns on gold and SP 500 from 1999 to 2008. Comparison of returns of gold and SP 500 between 1999 2008 [pic] It is clear from the above table that gold (G) have beaten SP 500 (S) in seven out of ten years. In 1999 the returns were equal and SP 500 produced higher returns only in 2000 and 2001. MEX (Mercantile Exchange Nepal) gold futures, a real life example of investment demand: Since MEX started its operation about a year ago, a significant number of Nepalese investors have traded on gold futures contracts: bought and sold. As of today MEX does not allow settlement of contract by physical exchange of gold so all the trading is settled through taking the opposite position. Here we see, nobody has purchased or sold actual gold but they have through their long positions they have added to the total demand of gold. Similar activities are observed in most of the emerging nations- India, China, Indonesia, Malaysia, and others. The impact of such activities is that they have all prov

Top 5 Inventions Since 1945

Top 5 Inventions Since 1945 Free Online Research Papers Top Five Innovations Since 1945 Imagine your life with no cell phone , computer or Internet, wouldnt you go crazy?Where would the world be without the cell phone the satellite, the M.R.I., the personal computer, or the Internet? Without these innovative objects the world would be at a standstill. There would be no cellular communication, people would not know if they had brain tumors or cancer, or other various diseases. Without the M.R.I, without personal computers people would not be able to accomplish tasks required in their day to day jobs, and without the Internet, well we wouldnt be able to do extensive research for this project. The cell phone provides people with the necessary communication needed for their lives. Cell phones allow everyone to stay adequately connected with one another. The first cell phone was created in 1973 by Dr. Martin Cooper. Nowadays, cell phones do far more then just calling, they allow the user to text message, email, listen to music, take pictures, and access the Internet. All with blazing fast speed getting faster every day with the new 3G networks. With all these features, a cell phone enhances productivity, such as emailing clients on the go or checking show times at a movie theater when a computer is not present. If people lose their cell phones, they would not know what to do. Communications between people would be cut off. The world would not allow proper cellular communication. Another important invention since 1945 is the M.R.I. Another very important invention is the M.R.I. M.R.I. stands for Magnetic Resonance Imaging. The M.R.I. was invented by Dr. Raymond V. Damadian in 1973. The M.R.I offers people a new way to take a closer look at peoples brains, hearts, arteries, and other bodily parts for microscopic analysis. The M.R.I looks much more extensively beneath the humans skin to see even the littlest things that could affect a humans life, such as blood clots, and tumors. Without M.R.I. technology many people would suffer from unknown deformities within their body. The M.R.I. has helped many people out and has developed a tremendous amount over the past years. The results of the M.R.I. are very thorough and can show details of the scan that would never be seen even by the best doctors in the world. Another thing about the M.R.I. is that the machine is relatively compact for its greatness. The clarity of the scans is what places this machine above all others. Moreover, the personal computer also helps a nd create convenience to many people. The personal computer is necessary for everyday personal and business related tasks. A personal computer is used to program and control everything from machinery to writing a paper of the top five inventions since 1945. Personal computers allows communication between business related work as well as personal matters. Personal computers also provide entertainment for its users. This includes videos, games, music, and photographs. Before the personal computer, typewriters were the method that someone would use to create a typed word documents. However, personal computers make creating word documents a breeze. Personal computers allow a user to create various programs and share them with one another. Personal computers, could be argued to be, the best invention in the history of the world. Another invention that impacted the world to many degrees, that would not be possible without the computer, is the Internet. The Internet is a central intelligence base for virtually everything that exists in the world today. The Internet allows people to communicate, share files such as, music, pictures, and videos. The Internet also provides a second part to many people businesses. The businesses can conduct more business than what they already do in the store on-line. The Internet can increase the productivity of almost everyone who has a computer. If you are working on a project it is much quicker to just go to Wikipedia or Google than it is to search through an actual encyclopedia page by page, until you find every last detail you need. Therefore this makes a students very stressful life a lot easier. Another new great thing that the Internet has to offer are sites such as Facebook that allow people of all ages to communicate and chat post pictures and videos and set a real time status of what theyre doing. People think it would be easy to give up the Internet, but in fact a lot of peoples lives are spent on the Internet. Without satellites communications would be nearly impossible. The Satellites that we have in space today control almost every wireless device. The first satellite that was launched into space was the Sputnik launched by the Russians in 1957. Every wireless cell phone signal, call, email, or text message goes through the Satellites. The satellites also control television for the television providers such as DirectTV. The world would enter a kind of Stone Age with no satellites because without it these cell phones would not work, Internet would not work, and t.vs would not have service. As you can see, it is clear as to what the five greatest inventions are since 1945. All the above stated are what make up are highly technological society. Without these innovative inventions our society would consist of corruption and unnecessary hardships geared towards everyday activities. Our modern day society would not function properly, if we were lacking these five best innovations. These five innovations not only provide a luxury and a form of convenience, but also provide a sense of security during your day to day lives. These five beneficial innovations provide a world with a better understanding and a higher level of convenience that without, would crumble into pieces. Research Papers on Top 5 Inventions Since 1945Incorporating Risk and Uncertainty Factor in CapitalThe Project Managment Office SystemBionic Assembly System: A New Concept of SelfGenetic EngineeringWhere Wild and West MeetMarketing of Lifeboy Soap A Unilever ProductAnalysis Of A Cosmetics AdvertisementAnalysis of Ebay Expanding into AsiaRiordan Manufacturing Production PlanPETSTEL analysis of India

Implementation of International Legal Standards in The Investment Assignment

Implementation of International Legal Standards in The Investment Legislation of Uzbekistan - Assignment Example Uzbekistan has freedom and independence in development of industry in line with national goals. In addition, there is also an opportunity for Uzbekistan becomes the main investment location preferred by both regional and foreign investors. There is also an opportunity for Uzbekistan to become a base for production in the regional market. Its central location provides a large market especially the home market. The country has freedom in the utilization of new resources as a result of the development of new export markets and advanced technological progress. Law for in foreign investment Uzbekistan allows investors (foreign) to engage in wide range business opportunities that are not legislatively prohibited. Foreign investors investment in Uzbekistan through legal means that include branch establishment, real property acquisition and buying of shares. There are no legal preconditions stipulating nationals to have interests of ownership in foreign investments except in banking sector. The government encourages joint ventures of local partners and foreign investors. Foreign investors have to register with Justice Ministry to get legal rights as persons. These imply that foreign investment laws in Uzbek have opened the door to all forms of business investors in the available business opportunities. Entry requirements for foreign investors are therefore straight with minimal performance requirements. In Uzbekistan, the right for investors to exit and repatriation of funds are guaranteed. However, in practice, entry requirements for investors especially individual investors are controlled by the government. The investors will have to negotiate with Uzbek government on key issues that relate to joint agreements of a joint venture, acquisition of government-controlled assets, application for tax incentives and raw material importation rights.  

Racial profiling in nj and ny among 18 -32 year males Essay

Racial profiling in nj and ny among 18 -32 year males - Essay Example In the two states, the issue has been documented on several occasions. In New Jersey, law enforcement was shaken in 1999 when state police commanders admitted to using racial drug-courier profiles to stop motorists on the New Jersey Turnpike and the Garden State Parkway. In New York, incidents such as the beating and sodomizing of Abner Louima by Police Officer Justin Volpe and the police shooting of Amadou Diallo on the steps of his Bronx apartment building raised a public outcry from minority communities. President George Bush addressed the issue before congress where he reported that he had asked Attorney General John Ashcroft to develop specific proposals to end the practice, Claudia Perry, (2008). My hypothesis for this research is that: Arbitrary police searches and investigations are targeted at 18-32 year-old males who belong to minority races in New York and New Jersey. The independent variable here is arbitrary police searches and investigations (racial profiling) while the two dependent variables are being an 18-32 year-old male and belonging to a minority race such as African America, Hispanic, Oriental or Arab. Previous studies that have been carried out on racial profiling helped to expose the problem and focus attention on it. One such study carried out by Gene Callahan and William Anderson on the practice of racial profiling found that the practice is more prevalent in investigations involving drugs and victimless crimes in general. They found that most of those targeted by law enforcement agents for field and station interrogation were from minorities. The 55% of the victims were Hispanics with roots in South America and Mexico. However, the main limitation of their research was that it only concentrated on drug related cases and suspicions, Gene Callahan and William Anderson (2002). Another study was carried out by Thevenot Chad of the Criminal Justice Policy Foundation in 1999. The foundation monitors abuses of the American legal