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–

Alternative Obligation Essay

GENERAL RULE: The right to choose belongs to the debtor/ obligor Except: When the right has been expressly granted to the creditor Right of choice of debtor not absolute. LIMITATION ON THE DEBTOR’S CHOICE (1) The debtor cannot choose those prestations which are (a) impossible , (b) unlawful ,or (c) which could not have been the object of the obligation. (2) Only one prestation is practicable (3) The debtor cannot choose part of one prestation and part of another prestation. (Art 1199) Communication of notice that choice has been made * The debtor must choose and communicate his choice to the creditor. * The alternative obligation will be converted into a simple obligation * The proof and form of notice may be made by orally or in writing, expressly or implied. Effect when only one is practicable * The debtor loses his right of choice when only one alternative prestation is practicable of performance. When debtor may rescind contract * If the debtor could not make a choice due to the creditor’s act of making prestations impossible, debtor may RESCIND the contract with damages. Rescission creates the obligation to return the things which were the object of the contact together with their fruits, and the price with its interest. * If the debtor is being prevented to choose only a particular prestation, and there are other available, he is free to choose from them, after notifying the creditor of his decision The effects of loss or impossibility of the alternative prestation BEFORE the right of choice is exercised. * Once the debtor has communicated his choice of alternative prestation to be performed to the creditor, the obligation becomes simple * If the chosen alternative is lost without the fault of the debtor, the obligation will be extinguished. * If the chosen alternative is lost due to the fault of the debtor, the obligation will be converted into monetary consideration in the form of damages. * Effect if one or some of the alternative prestations in the alternative obligation are lost BEFORE the debtor has communicated his choice to creditor * The consequence will really depend upon whether the right of choice was given to the debtor or to the creditor. A. When the right of choice belongs to the DEBTOR * If the loss is due to FORTUITOUS EVENT a) If all alternative prestation are lost, the alternative obligation extinguished. (Article 1174) b) If two or more alternative prestations remain, the debtor can still exercise his right of choice and choose from any remaining alternative prestation(Article 1200) c) If only one of alternatives remain, there is no more alternative obligation but only a simple obligation. * If loss is due to DEBTOR’s FAULT a) If all the alternative prestation are lost, the alternative obligation is converted into monetary consideration as indemnity for damages. The basis for the computation of the amount to be paid by the debtor will be the value of the last thing or service lost plus damages. b) If two or more of alternative prestation remain, the debtor can still exercise his right of choice and choose from any of the remaining alternatives (ART 1200) c) If only one alternatives remain, there is no more alternative obligation but only simple obligation. B. When the right of choice belongs to the CREDITOR * If the loss is due to a FORTUITOUS EVENT The effect s are the same as where the right of choice belongs to debtor * If the loss is due to DEBTOR’S FAULT a. If all the alternative prestations are lost, the alternative obligation is converted into monetary consideration as indemnity for damages. The basis for the computation of the amount to be paid by the debtor will be the value of any of object chosen by the creditor (because he is given the right of choice) plus damages. b. If two or more prestations remain, the obligation is still alternative . The creditor has the option to either: b. 1 choose from among the remaining alternatives b. 2 chose the lost object. The debtor will be then liable for the value of lost object chosen by the creditor plus the damages. FACULTATIVE OBLIGATION. * is one where only one prestation has been agreed upon but the obligor may render another in substitution * The right of choice belongs only to the DEBTOR * Once the substitution is made, the obligation is converted into a simple one to deliver or perform the substituted prestation. * The substitution also becomes effective only from the time the debtor communicates to creditor his choice to perform the substituted prestation. Alternative and Faculative Obligations Distinguised The differences are as follows : 1) Number of prestations Alternative- several prestation are due but compliance with one is sufficient. Faculative- only one prestation is due although the debtor is allowed to substitute 2) Right of choice Alternative- the right of choice may given to creditor or third person Faculative- the right to make substitution is given only to the debtor 3) Loss through a fortuitous event Alternative- the loss of one or more through a fortuitous event does not extinguish the obligation Faculative- the loss of the thing due extinguishes the obligation 4) Loss through fault of debtor a) Alternative- the loss of one through the fault of debtor does not render him liable. Faculative- the loss of the thing due through his fault makes him liable b) Alternative- where the choice belongs to the creditor, the loss of one alternative through the fault of the debtor gives rise to liability. Faculative- the loss of the substitute before substitution through the fault of the debtor does not render him liable. Effect on loss of the thing in Facultative Obligation BEFORE SUBSTITUTION * The debtor is not liable if the substitute prestation is lost whether due to his fault or to a fortuitous event. * If the original prestation is lost by virtue of a fortuitous event, the obligation is extinguished. AFTER SUBSTITUTION * The debtor is not liable if the original prestation is lost whether due to his fault or to a fortuitous event. * If the substitute is lost, the liability of the debtor depends upon whether or not the loss is due to his fault. FACULTATIVE OBLIGATION * is one where only one prestation has been agreed upon but the obligor may render another in substitution * The right of choice belongs only to the DEBTOR * Once the substitution is made, the obligation is converted into a simple one to deliver or perform the substituted prestation. * The substitution also becomes effective only from the time the debtor communicates to creditor his choice to perform the substituted prestation. Alternative and Faculative Obligations Distinguised The differences are as follows : 5) Number of prestations Alternative- several prestation are due but compliance with one is sufficient. Faculative- only one prestation is due although the debtor is allowed to substitute 6) Right of choice Alternative- the right of choice may given to creditor or third person Faculative- the right to make substitution is given only to the debtor 7) Loss through a fortuitous event. Alternative- the loss of one or more through a fortuitous event does not extinguish the obligation Faculative- the loss of the thing due extinguishes the obligation 8) Loss through fault of debtor c) Alternative- the loss of one through the fault of debtor does not render him liable Faculative- the loss of the thing due through his fault makes him liable d) Alternative- where the choice belongs to the creditor, the loss of one alternative through the fault of the debtor gives rise to liability. Faculative- the loss of the substitute before substitution through the fault of the debtor does not render him liable. Effect on loss of the thing in Facultative Obligation BEFORE SUBSTITUTION * The debtor is not liable if the substitute prestation is lost whether due to his fault or to a fortuitous event. * If the original prestation is lost by virtue of a fortuitous event, the obligation is extinguished. AFTER SUBSTITUTION * The debtor is not liable if the original prestation is lost whether due to his fault or to a fortuitous event. * If the substitute is lost, the liability of the debtor depends upon whether or not the loss is due to his fault.

Cause of homelessness

Homelessness in Australia can be defined in three categories; ‘Primary homelessness’ which is experienced by people without conventional accommodation, ‘Secondary homelessness’ is experienced by people who frequently move from one temporary shelter to another and ‘Tertiary homelessness’ which is experienced by people staying in accommodation that falls below minimum community standards. The first stimuli picture shows a person who is living though primary homelessness, living on the streets with only a few blankets to sleep with. Homeless people generally feel embarrassed, isolated and depressed; they are also cold, hungry and become lonely. They usually need medical attention, medications, blanket, clothing and in need of a friendship. In Australia there are 105, 237 people affected by homelessness and 27% of them are under 18. There are 59% of them either living in overcrowded dwelling or supported accommodation and the other 41% are living on the streets or in boarding houses specify designed for the homeless. There are many causes that lead to homelessness in Australia, some of which include; long term unemployment, shortage of affordable rental housing, poverty, mental illness and the exiting of state care or prison. Domestic violence is the largest cause of homelessness in Australia. Homelessness can also be caused by family breakdown, sexual assault, drug and alcohol addictions, gambling and social isolation. Some people especially adolescences are homeless because they were kicked out of home, have a lack of education or were abandoned by their family and friends. Homelessness usually results in being away from family, friends and the rest of the community so it is difficult to maintain school or further study which leads to them being vulnerable to long term unemployment and chronic ill-health. Homeless Australians are often excluded from participating in social, recreational, cultural and economic opportunities. All of these present factors of homelessness led to people having depression, poor nutrition, poor dental health, substance abuse, mental health issues and may even results in suicide. Children who experience homelessness are more likely to become homeless as adults and raise families who, in turn, may also become homeless. The causes and consequences of homelessness are also talked about throughout the New and Old Testament. Showing us that over time, the injustice of homelessness has not changed, we are still fighting the same battles. In the bible passage by Isaiah (58:7) in the Old Testament he writes, â€Å"Is it not to share your food with the hungry and to provide the poor wanderer with shelter when you see the naked, to clothe them and not to turn away from your own flesh and blood? † The injustice issue of homelessness is discussed in this passage; it explains that to be a true catholic means sharing and giving to the poor and not to turn away from them just because they are without homes. The second bible passage that relates to homelessness is a passage from Matthew (8:20) in the New Testament, where he writes â€Å"Jesus replied, â€Å"Foxes have dens and birds have nests, but the Son of Man has no place to lay his head. † Matthew is telling us that Jesus was comparing animals having homes to people having none and how that is unfair. Both scripture references relate to the issue of homelessness in contemporary society as people are still being sent to the streets while animals are being put in homes and people are still looking down on the homeless and not fulfilling their roles as Catholics. Also both scripture reference relate to the beatitude â€Å"Blessed are the meek, for they shall inherit the earth, which means bless the poor (homeless) as they are a part of the earth. As well as homelessness issues being discussed in the bible, we as Catholics also learn about homelessness from the catholic social teaching. Catholic Social Teaching, are the teachings of the Church on social justice issues. One of the Catholic Social Teaching is ‘Human Dignity Human Rights’ teaching. The concept of Human Dignity is the main concern of Catholics thinking about human rights. The Catholic Church believes that each person is created in the image and likeness of God and is therefore equal in dignity and equal rights. Human dignity is absolute: a person does not ever lose their dignity, example; from being in poverty. Respecting ones dignity implies that the individual has access to the basic necessities of life which enable them to live humanly, which homeless people do not, as in most cases they are living in rough conditions (e.  g. on the street with no shelter). Papal social teaching refers to the teachings of the Popes throughout history that have dealt with the social issues of human life. The Papal teaching by Pope John XXIII in 1961demonstated Catholic’s views on human dignity and human rights, this is stated when he wrote, â€Å"The amount a worker receives must be sufficient, in proportion to available funds, to allow him and his family a standard of living consistent with human dignity. † This can be evident though the reaching out to those in need e. g. The homeless and giving employees a sufficient pay to be able to live a for filled life. Another of the Catholic Social Teaching is ‘The Common good’ teaching, it tells us that the rights and needs of others, individuals and the community must be balanced with the common good and always respected. The Papal teaching written by Pope John Paul II In 1990 discusses the Common good, when it states, â€Å"this love of preference for the poor, and the decisions which it inspires in us, cannot but embrace the immense multitudes of the hungry, the homeless†. This could be demonstrated by caring for the homeless and by showing the homeless that we can help them and that we respect them. One catholic organisation working to solve the issue of homelessness in Australia is St. Vincent De Paul. One catholic organisation working with injustices such as homelessness, in Australia is St. Vincent de Paul and its ‘Matthew Talbot Homeless Services’. Its aims include, being strongly committed to a range of issues that put men, women and families at risk of homelessness. Its activities include; having13 services for single homeless men including the Matthew Talbot hostel and outreach services in the inner city. The hostel caters for 100 men each night, has 80 outreach beds and help for those with mental health issues. The service also has special initiatives for women and children and up to 20 families who are escaping domestic violence and / or homelessness. The service is committed to helping those who are homeless, addressing issues of alcohol and other drug usage and to breaking the cycle of homelessness and domestic violence. The Matthew Talbot Homeless Service achieves their goals for helping the homeless though their activities and projects. Homelessness is a major social injustice in contemporary Australian society, The Scripture references, Social Catholic Teachings and Papal teachings also show that homelessness has been an issue for Catholics thought history and though the help of Catholic organisations the issue of homelessness is being fought and will hopefully one day is won. ESSAY TWO A well know catholic figure that is actively engaged in social justice issues in Australia is Father Chris Riley. Social justice refers to the formation of a just society, where justice refers to more than just the administration of laws, it is the idea of a society in which all individuals and groups are treated fairly and equally. Issues with social justice refer to when individuals or groups are not being treating with the same basic human rights as someone else, e. g. people who are homeless or in poverty. Father Chris Riley is a priest who has devoted his life to working with social injustice issues such as homelessness. Father Chris Riley (Riley) grew up in Victoria and at the age of 14 decided that he wanted to work with homeless young people. He was influenced by the 1938 movie Boys Town, which was loosely based on the work of Father Edward Flanagan. Straight from school Riley joined the Salesian religious order to become a Catholic priest and after graduating as a teacher and taking his vows, he worked for two years with the Boy’s Town charity in Sydney. While working at a school in Sydney later on in life, he saw one of the students crying in the freezing rain, this led him to working with that student and many other homeless people. This resulted in Father Chris Riley setting up the Youth of the Streets to help the chronically homeless, a highly successful organisation that has become known worldwide. Father Chris Riley is the founder and CEO of the organization dedicated to helping young Australians in trouble for the past 35 years. As CEO of Youth Off The Streets, Father Riley oversees the operation of over 35 programs that employ over 180 staff and involve more than 250 volunteers. He has also implemented innovative behaviour strategies to help young people deal with a history of trauma, abuse and neglect. Youth Off the Streets first started with a single food van run by Riley, delivering meals to young homeless people on the street of Kings Cross, now the organisation is running four high school crisis accommodation, rehabilitation facilities, counselling and parenting programs in New South Wales. His work as a priest and a principle at Boys Town High in Sydney led him to pursue the work he is achieving now and without that experience Father Chris Riley would not be working with youth who are faced with social justice issues. Riley now spends hours on the road driving to different charities and organizations and working with the social injustice of homelessness on a day to day basis. Getting released from Boy’s Town school to work on the streets with homeless youth with one van, it’s believe that there is no such thing as a child born bad, it is only bad circumstances, bad environments such as violent household or broken families that consequently led to bad choices made by the child, that has made him so successful. Social injustice is when individuals or groups are not being treating with the same basic human rights as someone else. An Australian Catholic figure, Father Chris Riley works with social justice issues such as homelessness, though his organisation Youth Off The Streets. His religious identity and life experiences led him to work in this area. His passion and strong believe in what’s right has meant that he has successfully helped thousands of people rehabilitate and go on to lead a happy and fulfilling life.

Theory and Personal Development - Person centered and Psychodynamic Essay

Theory and Personal Development - Person centered and Psychodynamic Counseling - Essay Example Freud was a student of von Brucke's and took on many of his ideas regarding psychology. The psychodynamic approach is epitomized by classic psychoanalysis, in which the patient seeks to experience the "truth" about themselves through breaking down the defenses that have built up to prevent them from reliving the events and processes in their past that have created the problems they are experiencing in the present day. This approach states that present conditions have identifiable causes in the past. Cause and effect is at work. Within my own life psychodynamic counseling might be suitable for uncovering my feelings and experienced in growing up with a brother who had learning disabilities and who received attention and financial support from my parents that at the time I felt was being withheld from me. Psychodynamic counseling might enable me to answer the question of whether this now distant feeling of being rejected influences me today. Are there stresses within my present personal relationships that reflect this past feeling of abandonment Sibling rivalry is of course a generally accepted fact of most psychological models, but in my case is it exasperated and thus lengthened because of the unique circumstances of my relationship with my brother The psychodynamic approach might also be used to explore the fact that I had a "caretaker" role within my family at a comparatively young age, due to my mother's multiple pregnancies and what I now identify as post-partum depression. Did I become self-reliant to an unhealthy extent, thus distancing myself from people Again, this type of approach would seek to uncover the true nature (and thus influence) of these past experiences and seek to apply them to my present psychological state. In the psychodynamic state, the past is indeed prologue to present. Further, it is almost determinative in nature (Parkes, 1971). In contrast, the person-centered, or humanistic counseling, would concentrate upon the manner in which I perceive myself consciously in the present and would only consider my childhood as it directly affects my present situation. Thus the fact that I desire to have children, but have so far been unable to get pregnant might be explored vis--vis my mother's bad pregnancy experiences. This past would be a direct effect upon my conscious mind however, rather than the sub/unconscious influence that might prevail within the psychodynamic model and which would thus need to be revealed to me through my psychotherapist. As Jacobs (1986) suggests, the psychotherapist needs to be sure that he/she does not dominate the process to the degree that the actual subject is lost within a morass of interpretation. I am also presently considering whether if my husband and I do have children they will experience the same poor childhood that I did. Essentially, will I be as bad a mother as my mother was The person-centered approach would take this question at face value - and essentially assume that my mother was indeed a bad mother - and explore how this belief influences me in the present day. Psychodynamic counseling would explore how I had come to the conclusion that my parents were bad parents, and what effect it had

Finance Course Work Essay Example | Topics and Well Written Essays - 1000 words

Finance Course Work - Essay Example (Gitman, 2011) Finance is often defined as the art of managing financial resources, which includes activities such as arranging these resources in the least expensive manner and, investing any surplus resources in order to reap extra margins. (Gitman, 2012) Moreover, it also includes the understanding of the basic operations in order to ensure the best management of the funds that are available to the manager. Finance also helps in assessing the financial strength of the company through the use of ratio analysis that helps one understanding various aspects of the firm such as liquidity, efficiency, profitability and leverage, while the most important principle of finance is based upon discounting the value of financial resources such as money, bonds and expected cash-flows with respect to time. (Brigham, 1998) The collapse of Lehman Brothers on 15th September 2008 had devastating impact on the confidence of the general investor throughout the world that led many financial managers to question the rules and regulation that dictate the environment of the business (The Guardian, 2011) Financial crisis have hardly known to be isolated to themselves, in fact they spread like any contagious disease that often triggers the collapse throughout the world. ... However, the scope of financial environment is not limited to technical institutions only as it also includes various other organizations with which one may enter in any kind of financial transaction, as financing and investment activities are never limited to the listed companies only. (Gitman, 2012) TIME VALUE OF MONEY Suppose that Mr. B borrowed an amount of ?100 from Mr. A in the year 1987. Today, Mr. B came back and returned that ?100 to A and exclaimed that he had finally paid off all his old debts. Would one consider the act of Mr. B as just and sound? The answer would be negative as the same amount of money is more worth than it would tomorrow. (Van Horne, 2008) Thus the concept of time value of money is based on the fact that money loses its worth every second due to factors such as inflation and reinvestment risk, therefore a ?1 of today is lesser worth of ?1 of yesterday. (Brigham, 1998) Future Value of a Sum As we already mentioned above about the reinvestment risk, it is the rate at which money can be reinvested for a specific period of time. (Brigham, 1998) Therefore, future value is the nominal amount of money that one will possess after a certain period at a given reinvestment rate, usually an interest rate. To illustrate with an example, consider that A invests ?100 at 10% interest rate for two years. In the first year A will earn ?10 on ?100, however at the start of the second year, the balance in A’s account will be ?110, therefore the interest that A will earn in the 2nd year will be on ?110 which should come out as 11. Thus A’s account balance at the end of the 2nd year will be ?121. This nominal value of ?121 is the future value of ?100 at the interest of 10% after the period of 2

Analysis of the Film Star Trek Essay Example | Topics and Well Written Essays - 750 words

Analysis of the Film Star Trek - Essay Example Technology has played a big role in shaping global politics and global powers, which in turn affects the global economy. It is evident that technological advancements in a country determine its international economic influence. For instance, the US holds its current position in global politics and economy due to its state of technology. Other nations such as China and India have invested a lot in technology to gain international recognition. The film also illustrates the key sectors that countries invest their technology. The first area of interest is communication. Unlike past technology, modern communication devices have numerous capabilities and therefore numerous implications for the governance of a country. The film indicates the greater development of technology and therefore greater impacts on governance. Since the time of the scientific revolution, the government has played a great role in the development of science and technology (Asherman 134). For instance, the most sophis ticated technology is applied to the production of military types of equipment. In addition, the current mobile technology was applied by the military before communication devices for civilians were made. This indicates the influence that political governments have on science and technology. Space science the other aspects of technology that is of interest to the global leaders. Different world powers have a keen interest in space technology at their own capacity. America was the first country to conduct successful space explorations with the 1960 s landing on the moon been their climax in space exploration. This made Russia initiate its own space exploration programs aimed at countering the efforts of the US. Their 1970 s landing on the moon came as a surprise attack to the US. Tensions and rivalry between the US and Russia heightened during the cold war and each of these powers used its space exploration programs to demonstrate its military capabilities. Since the end of the cold war, space exploration has not received much progress and enthusiasm. This is a contradiction since missions conducted in the 1960 s and 70s did not involve the state of the art technology that is available in the modern world (Asherman 34). This indicates that political systems in the world are critical to such discoveries. Recently the Chinese and Indians have shown their interests in continuing the works initiated by Americans and Russians. China and India have launched their own satellites into space and they intend to send astronauts to the moon. The progress has been made by China and India indicates the shift of political and economic power from the west to the east. Although the film depicts the capabilities that technology has over governance, it also shows the negative aspect of technology on governance. The film demonstrates incidences of attacks on communication systems. Cyber attacks are the next battlefield in the modern world. Incidents of cyber attacks have been repo rted in various countries. This shows the role that technology plays in shaping global politics. Iran has reported cyber attacks on computers that operate its controversial nuclear facilities. According to BBC news agencies, the cyber attacks that were carried out on Iranian nuclear facility have the capabilities of slowing Iran’s nuclear ambitions for a period of five years.  Ã‚  

Biofuel Synthesis Project Proposals Essay Example | Topics and Well Written Essays - 1000 words

Biofuel Synthesis Project Proposals - Essay Example As a means of ensuring objective adoption of green energy like biodiesel, education stakeholders have decided to integrate concepts of biofuel in college and university curriculum (Tuohy and Saddler 28). Currently, concepts of biofuel in learning institutions are delivered to students through both theoretical and practical lessons. This means that chemistry students will not only learn about the theoretical construct of biofuel production, but they will also conduct small scale practical projects within a laboratory setting. Therefore, this proposal extrapolates on the necessary aspects of chemical synthesis meant to facilitate actual production of biodiesel within a learning environment. The main objective of this project is to simulate a real production process used in synthesis of market biodiesel. The entire experiment will operate within the boundaries placed by material and equipment constrains. This means that procedures used may fail to totally emulate typical steps employed in commercial production of biodiesel. However, one goal of the project is to synthesize small quantity of a biodiesel from available raw materials, and test whether the final product possesses required characteristics of biodiesel. This experiment will not only enable students to apply theoretical knowledge that they have acquired in class, but will also transform theoretical fantasies and create a sense of realistic accomplishment in chemistry. Apart from establishing a discrete link between theoretical and practical concepts, this experiment also aims at promoting individual participation in group work. In addition, strict adherence to all synthesis steps helps students in learning abo ut procedural execution of laboratory processes. In order to optimize the synthesis process and ensure production of quality biodiesel, this experiment will be conducted in a strategic and procedural manner. The first strategy involves establishing harmony between materials and equipment available

PUBLIC SECTOR- EDUCATION Essay Example | Topics and Well Written Essays - 2500 words

PUBLIC SECTOR- EDUCATION - Essay Example The concept of the Welfare State, as Barr (2004) postulates, lacks precision and as such no single faceted definition can be best termed as best describing it. The reason behind the above statement is as a result of the fact that welfare stems its meaning from an array of sources that go beyond activities that fall within the province of the state. Moreover, there are a whole range of modes for delivering services to citizens that are deemed welfare services. Some of the services that are entailed in the welfare kitty are funded by the state but the same state does not produce this services. Some of the services are produced publicly but their delivery is free. Some of the services are brought by the private sector with some acquired by persons whereupon they get financing from the state. Despite the fact that the limits of welfare are not clearly stated the concept of the welfare state is used as a diminutive hand for the activities of the state in 4 wide areas. Barr (2004) postulat es that primarily, these services are education and healthcare as well as housing, food and other services that are enjoyed on welfare. Our study will be based on education. The major aims of the Welfare State are best described under 4 general groups. Welfare ideally, is formulated with the objective of supporting living standards, and diminishing the inherent inequalities and by doing so it strives to desist from cost explosion as well as deters actions that are conducive to adverse selection as well as moral hazard. All the above stated aims of the Welfare State are achieved through maintaining administrative costs on the low as well as structuring the welfare system with models that do not condone abuse of power by those that are charged with running the welfare system. The road that led to assenting to the above objectives in the U.K commenced with the liberal reforms in 1906 to nineteen fourteen as Marcuzzo (1996) observes. The kingdom was not fully

Discrimination Law Case Study Example | Topics and Well Written Essays - 4500 words

Discrimination Law - Case Study Example Despite the fact that it is one of the most important types of the law in the UK, it nevertheless is widely regarded as one of the most cumbersome, inconsistent and complex legislation. This is due to the fact that that the person might be discriminated on many reasons and sometimes it might be difficult to distinguish between actual discrimination and legitimate actions that employer might take in the interest of the company. However, one should consider two main types of discrimination- sex and racial discrimination in order to evaluate the efficiency of the current anti discriminatory legislation in the United Kingdom; moreover, the British anti discrimination legislation should conform to the anti-discriminatory legislation of the EU. The case of Bilka-Kaufhaus GmbH v. Karin Weber Von Hartz is widely regarded as one of the most important cases in the anti-discriminatory legislation practice of the EU. One should recall the main features of this case. According to the documents provided in the case Bilka 1(which was a supermarket at the Western Germany) had occupational scheme for the workers employed by it. Despite the fact that scheme had been changed several times it was still regarded as an indispensable part of the contracts signed between workers and employers. Since 1973 the contract had stipulated that part-time workers could receive pensions only if they worked full time at least 15 years in the period of twenty years. Mrs Weber( who was working part-time) brought litigation against Bilka claiming that the above mentioned methods of paying pension was the violation of the article 119 of the EEC treaty (as this methods of the payments, in her opinion discriminated women against men, as women were more likely to be employed part time in order to look after their children). Bilka refuted these allegations and asserted that there were strong economic grounds for excluding part time workers from its pension's scheme, as the employment of full time workers lowered ancillary cost and provided more opportunities for the using of staff throughout all opening hours. According to the information provided by the company it paid 81.3 percent of its pensions to women, whereas women constituted only 72 percent of its work force, thus in view of Bilka's representatives there was no sex discrimination in the scheme mentioned. The case was still being considered at the Bundesarbeitsgericht and the court provided the following questions: whether there was indirect discrimination in the scope of the article 119 of the treaty and whether the company should modify the scheme so to accommodate workers who had to look after their families. In view of the representatives of the United Kingdom the scheme mentioned did not violate the article of 119 of the treaty as this article did not regulate the issue mentioned, moreover citing the case of Defrenne v Sabena, ECR they claimed that article 119 regulated pay discrimination between men and women and thus it could not be applied to other elements of employment. It also claimed that Council Directive on the implementation of the principles of equal pay between men and women that was submitted by the commission on 5 May, 1983 was the proof of the fact that the pension schemes were covered not by the article 119, but rather by Articles 117 and 118. Nevertheless, the Commission hold the view that the schemes mentioned fell within the scope of

The Importance of Management and Marketing within Business Essay

The Importance of Management and Marketing within Business Organization and the Impact of Technology - Essay Example This research will begin with the statement that it is difficult to define management in few words because of the complex parameters involved in the management process. In simple terms, management is the process of dealing or controlling things or people. One of the most common function of management is getting things done through others. â€Å"According to Henri Fayol, "To manage is to forecast and to plan, to organise, to command, to coordinate and to control† whereas Peter Drucker, defined Management as a multi-purpose organ that manages business and manages managers and manages workers and work". From the above definitions, it is evident that management is highly complex term which has got multi-dimensions. On the other hand, marketing is a process of informing the customers about the value or utility of a product or service, and to encourage the customers to purchase it. â€Å"It is defined as the process of determining the needs and wants of consumers and being able to deliver products that satisfy those needs and wants. Marketing includes all of the activities necessary to move a product from the producer to the consumer†. Management is a process which helps to achieve; group goals, Optimum Utilization of Resources, reduction of costs. It is a process which establishes sound organization and equilibrium. Moreover, it helps the society to achieve prosperity. Man, material, machine, and money are the four most important resources of an organization. Management is the process, which helps the coordination of all these organizational resources. For example, finance department is responsible for the management of money in an organization. Same way, human resource department look after the manpower resources whereas engineering or production department look after the machineries and materials. Even though different departments are controlling the organizational resources, it is the process of management, which helps them to utilize these resource s judiciously so that the organization benefits from these resources. Many people have the illusion that management is a function restricted only to the executives of an organization. In fact, Management is a function usually undertaken by people of all calibre. For example, a housekeeper is responsible for managing the resources of a house properly whereas a construction worker is responsible for managing the works assigned to him. A housewife manages the education of her children while her husband manages other family matters. In short, management is a function which can be seen everywhere. It is impossible for this world to move a step forward without management of different kinds. All organizations depend upon group efforts. Group action and joint efforts have become necessary in every walk of life. Management is required wherever two or more people work together to achieve com ­mon objectives. The success in group efforts depends upon mutual cooperation among the members of t he group. Management creates teamwork and coordination among specialized efforts. Management is indispensable in all organizations whether a business firm, a govern ­ment, a hospital, a college, a club, etc. Management is a creative force which helps in the optimum utilization of resources. No two individuals are alike. This is true in the organizational world also. It should be noted that current organizations are heavily globalized so that they forced to employ people from different parts of the world. Diversity helps organizations in many ways. At the same time diversity creates lot of problems also. Coordination of diverse workforce is extremely difficult. Management is the process, which helps human resource managers to coordinate diverse workforce effectively.

Men & Women Age Differently Essay Example for Free

Men Women Age Differently Essay †¢ The average life expectancy is currently 78 years old, but was at 49 years at the turn of the century. †¢ There is a widening age gap between men and women, such that among women who are 65-69, there are 81 guys for every 100 girls in the population. †¢ NY Times stated that the prospects for men are brighter than women. †¢ Men that survive beyond the age of 85 are more likely than women to be in better health and to have more remaining independent life years. †¢ More men than women over the age of 85 are married than women, and women are more prone to disabling effects of chronic condition while men are prone to fatal and chronic conditions. †¢ 23% of women age 85 or older are at poverty level, while men are at 16%. †¢ The nation’s oldest and fastest growing population today is dominated by a disproportionately large number of unmarried women who are likely to be poor and impaired. †¢ Women value friendship more than men, thus when a man is widowed- it is likely that he is alone while his friends are still married. †¢ Men’s income after the age of 85+ seems to be substantially less than the income of women the age 85+. †¢ Men and women approach things differently, where women are more likely to ask for help and men are less likely to ask for help. †¢ So, there is a sample study that was done and the men in this sample study were more likely to be married, and less likely to be physically impaired – in contrast to the women who are more dependent for personal assisted living and closer with their children, where men are not! †¢ 3 Competencies required to adapt to community living such as exercising control over the physical environment, maintaining social integration, and sustaining a sense of well being and motivations.

Canadian forests Essay Example for Free

Canadian forests Essay Gary Paulson’s Hatchet is set in Hampton, New York, but mainly in the north Canadian forests, in particular a region known as the Canadian Shield. The main characters of the novel are Brian Robeson, the protagonist, a thirteen year old boy; his parents; and two pilots, one of whom flies Brian into north Canada before giving up the ghost at the controls, and the second pilot who rescues the young boy stranded in the wilderness. The main events of the novel revolve around Brian, who travels by airplane, Cessna 406, from his hometown, Hampton, New York, to visit his father who is working as a mechanical engineer in a Canadian oil field. The young boy’s parents are divorced, and this is the first summer that Brian is going to spend with his father after the divorce. Brian travels as a single passenger in the airplane, before the pilot of the plane dies of a heart attack leaving the young boy to crash land the airplane all by himself. The plane lands in an isolated lake somewhere in the north Canadian forests. And, Brian possesses nothing to face the tragedy, except a hatchet that his mother had presented to him before his departure. The hatchet thus becomes the boy’s tool for survival in the wilderness. He must figure out how to make fire by striking the hatchet’s blade against a rock. He must also figure out what to eat in order to survive. Moreover, he must deal with unusual circumstances such as the presence of a bear, a porcupine, a moose, a skunk, in addition to a tornado. Eventually, the boy learns to hunt and fish after making special tools for himself. The events proving Brian’s ability to manage himself in the wilderness are very important in the novel. The last major event occurs after a violent storm that hits the forest and tosses the wreckage of the airplane to the land surface. The teenager manages to break into the airplane to recover the survival pack. He finds a transmitter in the pack, which, upon activation, connects him to a pilot who finally comes to rescue him in an airplane. The main conflict in the novel is between Brian, the protagonist, and nature, the antagonist. The young boy must find a way to overcome the unusual circumstances he finds himself in. He must struggle against threats posed by wild animals as well as natural disasters. Similarly, he must fight against his own natural tendency to give up in the face of the difficulties that confront him. Another conflict presented in Hatchet is between Brian’s natural, emotional weakness and the strength that he needs to gain emotional freedom. The boy knows a Secret about his mother that had led to his parents’ divorce. Time and again the Secret confronts him with emotional distress. Yet, Brian must learn to let go of the distress and face the challenge of accepting his circumstances as they are. The novel thus deals with maturity – the theme of growing up from boyhood to manhood. Brian has no human being to rely on at the time that he is stranded in the wilderness. Yet, he must face all sorts of dangers to find his way out of his troubles, both emotional and physical. The major strength of the novel is that Brian succeeds despite all odds, using his intelligence as best as possible. He finds his way out. Hence, his story becomes a lesson for all teenagers who may or may not face the kinds of challenges that Brian faces. The story is also recommended for young readers of fifth and sixth grades, who are sure to be inspired by Brian’s spirit of strength and endurance. As a matter of fact, even adults may be able to remind themselves about the resilient, surviving spirit of humanity by reading Hatchet. Thus, the novel may be recommended for all readers.