Key Sources of Financial Fragility-Free-Samples-Myassignmenthelp

Questions: 1.Describe three key sources of Financial fragility that led to the Financial Crisis 2.Discuss about the Central Banks response to the Crisis. 3.What is the relationship between financial development, growth and volatility? Answers: 1.The beginning of the US financial crisis can be traced back to 2008 following the collapse of Lehman Brothers Investment Bank. This was then followed by the 2009 EU Debt crisis which affected many European countries and finally the global economic downturn. In this essay, I describe the three main sources of the financial fragility that led to the above sequence of events. Securitization According to Diamond and Raghuran (2009), one of the reasons for the financial crisis can be blamed on securitization of assets. Following an increase in demand for housing and low interest rates, many banks began investing in mortgage based securities. A mortgage based security is a type of derivative whose price is based on the value of its mortgages used as collateral. The banks would then sell these securities to investors like hedge funds, pension funds, commercial banks and other institutions. In the process, they were also transferring their credit risk to these investors. As a result, these securities were deemed more profitable to banks and they opened up a new source of funding from traditional ways. As profits grew, demands of the bank and investors to invest in these securities also grew. As a result, banks began lending loans to anyone including subprime borrowers who had a higher risk of default. When the property bubble began to burst and mortgage prices started to fall, the price of the mortgage based securities became volatile and decreased in value. By then, most banks had these securities listed on their balance sheets. The drop in value made these securities worthless and banks were faced with liquidity problems as they were unable to borrow against them. Some went to the extent of becoming insolvent. To prevent the entire system from collapsing, big financial institutions had to be bailed out by the Feds and other governments. Short Term Debt The second reason provided by Diamond and Raghuran (2009) for the financial fragility was the heavy reliance by financial institutions on short term debt capital structures. In good times and periods of low interest rates, short term debt is favored by most institutions as it is cheaper than long term debt. However, as pointed above, a lot of these banks were holding mortgage based securities which were dependant on the value of real estate. Consequently, there was a maturity mismatch as the assets backing the short term debt were long term in nature. Furthermore, during the economic downturn, it was impossible to liquidate property and real estate in the short term. Thus banks were again faced with the risk of illiquidity and potential insolvency. Regulatory Failure and Deregulation The third reason for financial fragility is regulatory failures. There were many regulatory failures that led to the current crisis. For example, there was no strict regulation that existed on the transactions between the banks and other investors when selling the mortgage based securities that proved fragile under stress. These resulted in numerous layered transactions and almost every institution ended up holding these securities, either directly or indirectly, on their balance sheets. In addition, the numerous layers involved in the selling of these securities complicated the supervision process by the regulators. According to Kroszner and Melick (2009), the tools and approaches used for financial regulation prior to the crisis had not evolved along with the changes and sophistication of the financial system. As a result, they proved inadequate. Additionally, other regulatory failures included a decline in credit risk underwriting procedures. Traditionally, the process of offering loans was stricter but with the securitization, it became more relaxed. Furthermore, there was poor oversight by rating agencies on the lending process. In summary, we have observed that the emergence of sophisticated financial instruments coupled with short term debt structures were the key sources of the financial fragility that led to the crisis. This is evident from the way many US banks were moving away from traditional roles of just lending and investing in derivatives like mortgage based securities which they perceived to be more profitable with less strict underwriting procedures. The financial crisis also revealed weaknesses in the original supervisory structures of banks which proved to be inadequate and out of date. Consequently, it generated a need to strengthen the existing framework by tackling existing problems while identifying and preventing possible future threats to the system. 2.The central banks role is to maintain prices and stabilize inflation. According to Bernanke (2009) speech, the central bank (fed) did the following in response to the crisis. Ease monetary policy by cutting down the discount rate- In an effort to improve the economy and reduce inflation, the discount rate was brought down to its lowest rate of 1% over seven months. Provide short-term liquidity to financial institutions that are sound- This allowed institutions to borrow from the bank against the less liquid collateral. By providing liquidity they were reducing systematic risk. Directly provide liquidity to market players in specific credit markets. The aim of providing liquidity was to reduce concerns of rollover risk in cases where a borrower couldnt repay maturing commercial paper. Increase banks portfolio investment in long-term securities- The aim of this is to improve conditions in the mortgage markets by placing a downward pressure on the long term interest rate. 3.Theoretically, financial development should support economic growth as it allows for proper allocation of capital and resources. However, in reality, this may not always be the case as evidenced by the 2008 financial crisis. We observed that financial development came at a cost in terms of volatility. The new sophisticated instruments and multiple layers of transactions made the system vulnerable and fragile to shocks consequently leading to a downward spiral of the economy (Kroszner, 2012). On the other hand it can also be argued that financial development may reduce volatility through risk sharing and diversification. However, this effect may probably be more visible in less developed markets than mature markets like in the west. References Kroszner, R. (2012). Stability, Growth, and Regulatory Reform. Paris: Banque de France. Diamond, D., Raghuran, R. (2009). The Credit Crisis: Conjectures about Causes and Remedies. Cambridge: National Burea of Economics Research. Kroszner, R., Melick, W. (2009). The Response of the Federal Reserve to the Recent Banking and Financial Crisis. Rome: Brugel Institute and the Peterson Institute of International Economics. ernanke, B. (2009, January 13). The Crisis and Policy Response. Retrieved August 5, 2017, from www.federalreserve.gov/newsevent/speech/bernanke20120413a.htm Kroszner, R., Melick, W. (2009). The Response of the Federal Reserve to the Recent Banking and Financial Crisis. Rome: Brugel Institute and the Peterson Institute of International Economic.

Derivatives and Risk Management

Questions: 1. To propose specific hedging strategies which require you to describe the following: i. the exposures to be hedged, ii. what percentage proportion of the exposure is to be hedged, iii. which derivative(s) are to be used to hedge each exposure, iv. the number of derivative contracts for each hedge, v. the delivery months (or duration of swaps) for each derivative, and vi. the prices at the time of making the recommendation - futures prices, option strike prices (including an explanation of the choice of strike price(s)] and theinterest rate for currency swaps (you will need to research this- use actual data). 2. Is the company adequately hedged? Why or why not? What are your recommendations? Answers: Introduction: (1). In the present report, we have selected a company named, Sonic Health Care Limited for the presenting recommendations about different hedging strategies using different transaction exposures. Actual data of financial year 2015 has been used for the said purpose assuming the hedging horizon of mid- December and for future and options, expiry date of December has been considered (sonichealthcare.com). In current market scenario, there are transaction, translation and economic or operating exposure, which are required to be hedged. Transaction and translation exposure falls under accounting exposure. i. Exposures that are required to be hedged, considering the selected company Pacific Energy Limited can be done through the following instruments: Forward contract Derivatives Money Market Hedge Currency invoicing and risk sharing Exposure netting. Forward contract is an arrangement by which two parties, buyer and seller agrees to enter in a contract on the spot date of the event to make payment in future at an agreed currency rate which takes place over the counter (Chance and Brooks, 2015). Derivatives comprise of Futures and Options which derives their value from underlying share price. Unlike forward contract, derivates are traded on exchange with mark to market feature in case of futures whereas, in case of options buyer has the right and not obligation to buy or sell the securities before a future fixed date in form of call or put option (Cuong and Toan, 2016). Money market, currency invoicing is a market where currencies are bought and sold at the rates regulated by Reserve Bank for the purpose of hedging (Devalkar, Anupindi and Sinha, 2016). Exposure netting means the set off between receivables and payables, which eliminates the risk as well as cost of the hedging process (Feng, 2015). From the data and explanations provided in the annual report 2015 (sonichealthcare.com), Sonic Healthcare Limited seemed to use currency and derivatives exposures to hedge itself. In the year 2015 Sonic Healthcare hedged itself for around 164,000 $ from forward contract. ii. Traditionally, there were two extremes to hedge the exposures, fully hedge i.e. 100% and no hedge (0 %). However, this strategy of hedging is not advisable as both the extremes involve either huge cost or huge risk. Therefore, to present an optimum proportion of exposure to be hedged was derived by Fisher Black formula which is used universally. The formula has been derived using the three inputs i.e. expected return on market portfolio and volatility of portfolio and market exchange rate (Tessema, 2016). It has also noted that there is another approach for optimum proportion of exposure to be hedged which is 50 % approach, known as minimizing, maximizing regret. This method is advised for short time periods and when the market rates maintain consistency with Purchasing power parity (PPP). iii. As mentioned in the above points, derivatives that should be beneficial to use are forward contract, futures, money market and netting of exposure (Wing and Jin, 2015). These derivates have been suggested with regard to market risk elimination, low cost in the course of hedging and parity in purchasing power for both payer and receiver. iv. Sonic Healthcare limited has received on exercising options, net cash amounted to $13M and number of options granted to its Directors in the month of September 2015, 2,465,418 options to one director and 1,181,485 options to another director. Further, the number of options granted in the current financial year is represented with the help of the following figure.Figure 2: Table showing number of options granted Figure 3: Table showing option plan v. The duration of swap of derivatives is the difference between the duration of fixed- rate bond and floating- rate bond, which is derived by dividing the present value of cash flows by the price of, bonds (Tessema, 2016). vi. Future price for the year 2015 of Sonic Healthcare Limited (sonichealthcare.com) as per Australian stock exchange was 50.180 $ with ASX code- AAA while that of US contracts 394.6 $. Options strike prices of both the US and Australia stock exchange revolves in the same direction i.e. $ 52.19 to 301.6 $ in the month of December horizon. This strike price has been selected to express the market volatility in the both the stock exchanges while interest swap rate is around 4%- 5%. Hence, it is advisable that to hedge the cash flows, company can use option spread by buying an option in Australia Stock Exchange at strike price $52.19 while going short in US stock exchange. (2). In considerations with the available data and prices, Sonic Healthcare Limited is partially hedged in the financial 2015 as well as in the year 2014. This was analyzed from its annual report wherein effective income from cash flow hedging stands to around $ 164,000 in 2015 and $ 1,550 in the year 2014. Though it seemed to be a sound hedge exposure (Wing and Jin, 2015), it is being recommended that the entity should maintain the strategy in future years including more transaction exposures in money market. Conclusion: The present report has been dealt with the various types of hedging strategies in the market portfolio and the exposure used by Sonic Healthcare Limited considering the factual data available from various sources. It has been recommended further that the enterprise is adequately hedged along with evidences and reasons thereof. Reference List: Chance, D. and Brooks, R., 2015.Introduction to derivatives and risk management. Cengage Learning. Cuong, D.X. and Toan, N.Q., 2016. Derivatives as the Price Fluctuation Risk Management for Vietnamese Coffee Exporters.Research in World Economy,7(1), p.p59. Devalkar, S.K., Anupindi, R. and Sinha, A., 2016. Dynamic risk management of commodity operations: Model and analysis.Indian School of Business Research Paper Series. Feng, Q., 2015, June. The use of derivatives, corporate risk management and firm financial performance: Evidence from non-financial listed companies in Zhejiang province, China. InEducation Management and Management Science: Proceedings of the International Conference on Education Management and Management Science (ICEMMS 2014), August 7-8, 2014, Tianjin, China(Vol. 7, p. 55). CRC Press. Tessema, A.M., 2016. Accounting for derivatives and risk management activities: The impact of product market competition.International Journal of Accounting and Information Management,24(1), pp.82-96. Wing, L.C. and Jin, Z., 2015. Risk management methods applied to renewable and sustainable energy: a review.Journal of Electrical and Electr

Poe, Edgar Allen The Masque Of The Red Death Essays -

Poe, Edgar Allen: The Masque of the Red Death Period C The Masque of the Red Death Poe uses heavy symbolism throughout the story to convey his underlying theme: the inevitability of death and the futility of trying to escape death. The prince's name, Prospero, generally denotes happiness and prosperity. The Prince possesses these characteristics yet is faced with a plague that he desperately attempting to avoid. This oxymoron is used to hint that this man of exuberance will soon be faced with tragedy. The fires in each of the suite rooms serve as a representation of death. Poe depicts them to be "a heavy tripod, bearing a brazier of fire that projected its rays through tinted glass?But in the western or black chamber, the effect of the firelight upon the dark hangings through the blood tinted panes was ghastly in the extreme, and produced so wild a look upon the countenances of those who enter it that there are few?bold enough to set foot within it". The description is meant to produce a mysterious atmosphere in the west in contrast to a propitious one in the east. This can relate to the pattern of the sun's movement. The sunrise in the east represents light and new life for the day. However, the sunset in the west means the end of a day and darkness. Poe uses the element of darkness as a visual representation of death. The black clock is also a symbolic element in Poe's story. "Its pendulum swung to and fro with a dull, heavy, monotonous clang; and when the minute hand made the circuit?it was observed that the giddiest turned pale, and the more aged and sedate passed their hands over their brows as if in confused reverie or meditation". The timepiece represents the rapid passing of time in life. Every time the clock strikes the hour, the musicians quit playing and all of the revelers momentarily cease their celebrating. It is as though each hour is "to be stricken" upon their brief and fleeting lives. To emphasize the brevity of life, the fleeting of life and time, and the nearness of death, Poe reminds the reader that between the striking of each hour, there elapses "three thousand and six hundred seconds of the Time that flies." The significance of the seventh room is apparent throughout the entire story. Black usually symbolizes death, and it tends to be used in connection with death. Furthermore, in describing the black d?cor of the room, the narrator says it is "shrouded" in velvet, shrouded being a term generally referring to death. In addition, the window panes are "scarlet-a deep blood color." The relationship between blood and death is an essential aspect because Poe wants the reader to have a visual image of the blood flowing down the walls as a form of death. This is an obvious reference to the "Red Death". When the masked "Red death" makes his appearance, he moves rapidly from the Eastern room (symbolic of the beginning of life) to the Western room (symbolic of the end of life). In addition, the black chamber furthers Poe's theme. The prince rushes "hurriedly through the six chambers", but as he approaches the unwanted "guest", his dagger stops, and he falls dead upon the black carpet. This signifies that death cannot be destroyed (or avoided) as Prospero tries to prevent his fate from occurring. It is a universal force against humankind that holds "illimitable domain over all". Significantly, the appearance of the "Red Death" at midnight is propitious and symbolic. This is the end of the day, and, by analogy, the end of life. The "unwanted" guest's costume additionally contains some meaning. The mask portrays the message that death is an event that cannot be predicted. It is undetectable; a matter disguised as a variety of things in which its victims are unable to escape from. Death is superior to all defying powers and can overcome anything, as it overcomes Prospero's "impenetrable" walls to claim his victims. Poe is highly successful in showing the importance of symbolism to visualize death. His creative meanings behind several objects in the story further his reinforce theme of death's inevitability.

Introduction Paragraph - Five Tips For Writing An Effective Introduction Paragraph

Introduction Paragraph - Five Tips For Writing An Effective Introduction ParagraphA sample introduction paragraph is one of the many introductory papers and argumentative essays that you need to write before entering the college admissions process. In fact, it is essential to prepare a strong opening statement before heading into the rest of your essay. Here are five tips for writing a great opening paragraph.Remember that the most important point to begin your opening paragraph is to start with an interest-based statement. It is important to tell the reader about yourself, and give a detailed description of what that person can expect to find when they come to read your essay. You need to relate a question to this topic to get them interested, but you also need to be able to relate a specific example to give your reader a sense of the kind of writing they should expect.It is also very important to repeat yourself, but only a little bit. Remember that the introduction paragraph shoul d only be three sentences long. This will make it easy for you to hit all the right points and will keep your readers from missing a single word of the rest of your essay. You want to make sure that you take your time and that you never skip over a point that you are not entirely sure of.Beginning your introductory paragraphs with a question will get you in the habit of taking an interest in your own topic. It will also get you to think about what the question means. The introduction paragraph is an opportunity to ask the reader a question and to explain it. It is also an opportunity to explain your answer to the question as well, if you are comfortable with that topic.A good introduction paragraph is also an opportunity to look at the entire paragraph, rather than just the question at the beginning. It is also an opportunity to put the reader in the place of a reader who has just completed reading your essay. The introduction paragraph is where you will give the reader a glimpse of who you are and what you have to offer them. It is also a chance to get into the readers' minds and to make sure that they have made up their mind about your topic.Remember that you will always have to work hard to make sure that your opening paragraph makes a good impression on the reader. It is a good idea to start the introduction paragraph with a question and a review of your title. It is also a good idea to begin each paragraph with a question, but the information in the second paragraph should be the last thing to be examined. Again, the purpose of your introduction paragraph is to make it clear to the reader why they should be interested in your topic.One other piece of advice that you will want to consider when writing your opening paragraph argumentative essay is to always be positive about your subject. This may sound like an obvious point, but it is true. If you are negative about your topic, your readers will feel that the information presented to them is not helpful.Yo u will also want to make sure that the information that you present to the reader is something that they can use as an interesting addition to their college curriculum. There is no better way to convince your readers that they need to pay attention to your essay than to make it something that they will enjoy. It is also important to remember that an effective introduction paragraph makes up the majority of your introduction, so you do not want to skip it.

Free Essays on Histroy Of Accounting Practice In The UK

â€Å"During the 20th century financial accounting regulation appears to have developed as a series of responses to the evolving requirements of an ever-more complex and inter-related business environment. Describe the general development of financial accounting regulation in the United Kingdom from 1970 to the present day, and critically evaluate the influences that have given rise to each of the major developments.† The role of financial accounting in today’s business environment is undeniably important. The information provided by accountants can have major influences over a number of different people and parties, from a firm’s management team, to an external investor. Here in the UK, we have a large and complex stock market system as well as broad based community of investors. As such, it is vital that the profession be properly regulated and monitored. The fundamental principle upon which all UK regulation is based, is that accountants should be constantly striving to ‘provide a true and fair view’ to any interested parties. Traditionally, accounting regulations have been formulated loosely around the main principles of accounting, such as the prudence convention, the going concern convention, etc. This approach to accounting regulation did however leave the actual methods of application of these conventions up to the preparers of the financial information. In 1970, the accounting profession establish its own self regulated body – this was the Accounting Standards Steering Committee (ASSC). There were a number of reasons why the body was set up, however it was done primarily as a reaction to a number of financial scandals in the 1960s. Other influences included the establishment of similar bodies in the USA, as well as the threat of governmental influence on the accounting profession, which nobody wanted. The ASSC later became known as simply the ASC (Accounting Standards Committee), but not... Free Essays on Histroy Of Accounting Practice In The UK Free Essays on Histroy Of Accounting Practice In The UK â€Å"During the 20th century financial accounting regulation appears to have developed as a series of responses to the evolving requirements of an ever-more complex and inter-related business environment. Describe the general development of financial accounting regulation in the United Kingdom from 1970 to the present day, and critically evaluate the influences that have given rise to each of the major developments.† The role of financial accounting in today’s business environment is undeniably important. The information provided by accountants can have major influences over a number of different people and parties, from a firm’s management team, to an external investor. Here in the UK, we have a large and complex stock market system as well as broad based community of investors. As such, it is vital that the profession be properly regulated and monitored. The fundamental principle upon which all UK regulation is based, is that accountants should be constantly striving to ‘provide a true and fair view’ to any interested parties. Traditionally, accounting regulations have been formulated loosely around the main principles of accounting, such as the prudence convention, the going concern convention, etc. This approach to accounting regulation did however leave the actual methods of application of these conventions up to the preparers of the financial information. In 1970, the accounting profession establish its own self regulated body – this was the Accounting Standards Steering Committee (ASSC). There were a number of reasons why the body was set up, however it was done primarily as a reaction to a number of financial scandals in the 1960s. Other influences included the establishment of similar bodies in the USA, as well as the threat of governmental influence on the accounting profession, which nobody wanted. The ASSC later became known as simply the ASC (Accounting Standards Committee), but not...

Haematology Exam Questions Coursework Example | Topics and Well Written Essays - 4500 words

Haematology Exam Questions - Coursework Example Anaemia is a medical condition in which the number of the red blood cells is low. This low number of the red blood cells is as a result on the reduction in the production of the red blood cells and an increase in loss of the red blood cells. Production of red blood cells takes place in the bone marrow and a body needs vitamin B12, iron and folic acid in order to produce more of the red cells. Deficiency on these three components causes anaemia develops.(c)  Explain the laboratory results you would expect in a case of iron deficiency anaemia for the following parameters and state reference ranges:i.  HaemoglobinThe concentration of haemoglobin   will be low meaning that there is a poor circulation of oxygen into the body since the iron containing compound (haemoglobin) in the red blood cells have reduced. The normal levels of   haemoglobin   in adults males is 130-170 g/L and in adult females is 120-150 g/L.ii.  Mean cell volume (MVC)MVC is an estimate in the volume of the red blood cells. In case of iron deficiency, the Mean Cell Volume will be a low. Normal mean cell volume in adults is 83-101fL.iii.  Red Cell CountThe red blood cell count is the estimation on the number of the red blood cell per litre of blood. In case of a deficiency in iron, there will be abnormally a low number of the red blood cell. The normal range in adult males is 4.5-5.5Ãâ€"1012/L and in females is 3.8-4.8Ãâ€"109/L.In case of iron deficiency, the Mean Cell Haemoglobin is either low or high. The normal range of MCH is 27-32 pg in adults. v. Reticulocyte Cou

Advocacy letter Essay Example | Topics and Well Written Essays - 250 words

Advocacy letter - Essay Example If there was only a small amount of trash, they picked it up and put it into a plastic bag. They then took this same plastic bag out of the restroom, and took an elevator to go to another floor. One student was eating a muffin in the elevator, and he then pushed a button that a janitor had touched with dirty gloves. Also janitors went to from one classroom to another to empty the trashcans in each room. They touched all of the classroom door knobs with dirty gloves. In the hospital, they did the same thing. They went from patient’s room to another to empty trash cans and hampers. If there was only a small quantity of trash or dirty linen, they transferred this into one bag to save trash bags. Janitors never changed their gloves both in school and in the hospital, and also they touched the dirty area first and then the clean area with the same gloves. Janitors usually have a low educational background. They need to be educated in the concept of germs and how germs are spread. They need to know what the clean areas and the dirty areas are, so that they can start working in the clean area first before touching the dirty ones. The best way to solve this problem is to provide a compulsory training program for all janitors which deals with issues like the way germs are passed on, and the dangerous implications of using the same gloves over and over again. I recommend that you consider implementing this suggestion immediately, for the sake of all our patients, visitors and