Positive and negative aspects of globalisation

Positive and negative aspects of globalisation This study debates the positive and negative aspects of globalisation and attempts to determine the impact of the phenomenon on the lives of modern day humans. Globalisation is undoubtedly the defining feature of the contemporary world (International .2006, p 101-111). Economic globalisation, the driver of this phenomenon, concerns the growing interdependence of different national economies that is taking place because of the continuance and growth of international trade in commodities and services, rapid advancement and spread of technologies, flow of international capital across states, and movement of people across geographic borders (Kim Zurlo, 2008, p 130-141). Economic globalisation is in another sense fundamentally driven by the ever growing desire of organisations and people across the world to take advantage of modern day opportunities, earn more money and grow in financial and economic terms (Kim Zurlo, 2008, p 130-141). Globalisation has come about and is spreading rapidly because of two important factors; advances in areas of science and technology and the global economic policies of powerful nations and organisations (Kim Zurlo, 2008, p 130-141). Astonishing advances in areas of science and technology have made it far simpler, easier, and cheaper for people to talk to each other across vast distances and exchange information and documents (International .2006, p 101-111). The growth of the Worldwide Web and the Internet have made huge amounts of information and data available to people in rich and poor countries, developed and developing economies, and in near and remote locations. Every person on this earth with a small personal computer and a broadband connection has as much information as any other. He or she can communicate across the world, find organisations and businesses, and engage in economic, cultural and social activity (International .2006, p 101-111). Advances in transportation tech nology have reduced costs of transportation immensely in terms of ocean freight costs and air fares, making it significantly easier for people to travel across vast distances and send both goods and services to distant locations (International .2006, p 101-111). Whilst globalisation has been facilitated by the many tools generated by science and technology, it has been initiated and encouraged by neo-liberal western economies like the United States, the UK and the wealthy countries of Western Europe (Boyer, 1993, p 10-12). These nations found themselves in control of the global economy after the collapse of the Soviet Union and initiated a number of economic and trade policies for the reduction of trade barriers and the movement of capital, production and service facilities, and people across nations. (Boyer, 1993, p 10-12) Such initiatives enabled the western nations to gain access to the huge markets in Asia, Latin America and Africa that they had lost in the wake of the demise of colonialism and enabled powerful western business organisations to use their financial and physical resources to establish and increase their business hegemony across the world (Gibson, 2003, p 59-73). The initiation and implementation of economic liberalisation policies by the majority of developing countries, at the instance of the IMF and the World Bank, provided western MNCs access to virgin new markets teeming with opportunity, and to good quality production and service facilities at costs that were unimaginable in the advanced economies (Gibson, 2003, p 59-73). Globalisation, whilst fed and facilitated by such factors, has increased rapidly in recent years and has assumed a life and a character of its own that now appears to be irreversible and beyond the control of any particular nation or group of nations (Standing Alber, 2000, p 99-119). The economies of various countries of developed economies and developing nations are now so interdependent that any effort to go against the trend seems to be absurd and doomed to failure (Standing Alber, 2000, p 99-119). Whilst globalisation, both economic and cultural, now appears to be irreversible, its impact continues to be fiercely debated (Standing Alber, 2000, p 99-119). Supporters of globalisation point to the enormous economic advancements that have been achieved by national economies, both in the developed and in the developing world, during the last two decades (International .2006, p 101-111). They state that the forces of globalisation, which have resulted in high levels of interaction between the peoples of different nations, in terms of exchange of goods, capital and people, and have been instrumental in bringing about unprecedented and astonishing growth in economic activity and cultural exchange, will also bring about greater convergence of global society in terms of economic and social equality between the people of rich and poor nations and the creation of a convergent global social and economic order (International .2006, p 101-111). Critics of globalisation are however equally forceful in their opinion of globalisation being little other than a tool of western nations for increasing their international economic and political hegemony (Tonelson, 2002, p 6-12). Such critics argue that the MNCs, like Nike, Gap, Coca Cola, IBM, who are the fundamental drivers of economic globalisation, are using every available opportunity to increase their profitability and are routinely engaging in a range of oppressive activities in the developing countries (Brecher Costello, 1994, p 1-4). They are on one hand using their resources and skills to establish market dominance over smaller, less resourced and less skilled local entrepreneurs and taking away from them their rightful markets (Brecher Costello, 1994, p 1-4). They are on the other hand exploiting the widespread economic poverty and need that exists in the developing world to obtain goods and services at cheap rates (Brecher Costello, 1994, p 1-4). Economic globalisatio n, such people state, far from creating convergence, is actively increasing the divergence between global societies (Brecher Costello, 1994, p 1-4). Recent years, they argue, have witnessed an increase in the economic differences between rich and poor societies, rather than in any meaningful convergence. Globalisation they state is resulting in a race to the bottom with increasing inequalities between different segments of people (Rudra, 2008, p 15-21). This short study takes up the debate between these two positions with reference to actual examples from rich and poor nations and strives to relate policy debates with actual realities. It strives to examine both sides of the debate and analyse whether globalisation in its present form will bring about greater economic and cultural harmony or should be moderated in the interest of social justice and equality. Race to the Bottom The race to the bottom represents a new economic phenomenon that is essentially an offspring of increasing globalisation (Tonelson, 2002, p 6-12). The concept results from the desires of developing economies in the contemporary globalised scenario for greater levels of FDI (Foreign Direct Investment) to boost their per capita GDP (Rudra, 2008, p 15-21). Such FDI is invited by developing countries for the installation of production facilities for domestic as well as international consumption. Many developing economies invite FDIs and foreign participation in their economies by promising (a) opportunities to MNCs for engaging cheap and skilled labour, and (b) freedom of action with regard to hiring and firing of workers (Rudra, 2008, p 15-21). The current boom in FDIs is being driven by the desire of MNCs to establish production and service locations in low wage areas, where governments allow organisations to operate without inconvenient restrictions (Gibson, 2003, p 59-73). The passage of various free trade agreements, another integral component of the globalisation phenomenon, provides little by way of protection of the rights of workers (USLEAP, 2010, p 1). Although South America constitutes the largest supplier of bananas to the US, banana farmers and workers are continually battling injustices, poor and insecure working conditions and insufficient wages (USLEAP, 2010, p 1). Such desires and circumstances have resulted in an ongoing initiative by various MNCs to reduce their production costs by seeking out countries and regions that offer cheap wages and have low regulatory controls (Gibson, 2003, p 59-73). MNCs, in their desire to achieve high profits, actively search for countries without labour regulations in order to construct factories and begin production of goods with swiftness and at remarkably low costs (Gibson, 2003, p 59-73). With some countries offering tax incentives for specific periods of time in return for investment in factories, MNCs are also able to reduce their total overhead costs by choosing their production locations with care (Gibson, 2003, p 59-73). The desire for developing economies to attract foreign investment often leads to intense competition between nations in offering more attractive production environments, which in other words translates into availability of workers with cheaper wages and slack labour regulations (Balko, 2010, p 1). Such actions essentially result in the constant depression of wages to workers and to poor working conditions. MNCs, in their desire for cheaper production costs and greater profitability, bring about a race to the bottom where workers are exploited continuously, compelled to work for low wages in difficult working conditions, and face risks of unemployment, whenever MNCs locate more favourable locations and decide to take their business and manufacturing facilities elsewhere (Balko, 2010, p 1). A 2000 BBC report revealed an alarming incidence of child workers and adverse working conditions at the Nike and Gap sweatshops in Cambodia. Subsequent to the expose, both companies stopped operatio ns in Cambodia leaving hundreds jobless (Balko, 2010, p 1). This race to the bottom, experts on globalisation state, is resulting, not just in greater inequality between the rich and the poor, but in an all enveloping phenomenon that is diminishing the lives and the environments of the people of developing countries (Tonelson, 2002, p 6-12). China and India provide numerous examples of how multinationals are exploiting workers (Chan, 2003, p 21- 28). American MNCs constantly ask for lower prices from their suppliers in China. The resultant reduction in wages to workers is thereafter cloaked by incorrect payroll reporting (Chan, 2003, p 21- 28). Dan McDougall (2008) states that companies like Gap and Esprit, both of which are widely recognised fashion brands, use subcontractors in India that surreptitiously use child labour behind closed doors and employ local toughs to keep visitors away. Local factory owners in India dodge labour regulations and powerful labour unions in order to employ an ever growing force of poor rural children. Many such children, especially those engaged in the textile sector, damage their eyesight and hands from long hours of work in badly lit rooms. Their growth is adversely affected by having to sit in abnormal positions in uncomfortable work stations. Most of them do not have fixed working hours or supportive trade unions. The wages of child workers are sometimes less than 20% of adult wages (McDougall, 2008, p1). The UN-HABITAT (2004), in a recent publication, states that the benefits of globalisation, in terms of improvements in incomes and economic growth are being negated by the rapid and unplanned urbanisation of cities, greater inequality and increased poverty. The movement of jobs and money to cities and states that can provide cheap labour is fuelling this race to the bottom. It is estimated that approximately 2 billion people, 75 % of the combined present day population of India and China, will live in slums by 2030. Amongst the worst affected by the reduction of barriers to the mobile modern day industries are female workers, whose wages and working conditions have reduced significantly. This race to the bottom is not just limited to the poorer developing nations. Even productive industrial cities like Detroit and Chicago have lost significant shares of their available jobs, because of production activities being shipped abroad by numerous business organisations (UN-HABITAT, 2004, p 1-2). Convergence and the Race to the Top Whilst the apprehensions and worries evidenced by modern day economists and experts on globalisation are very real and cause for immense concern, it would be foolish to deny the significance of the changes brought about by globalisation (Boyer, 1993, p 15-29). The composition of trade has for example changed dramatically over the last two decades. Both developing and industrialised countries now trade in competing products (Neto Viega, 2009, p 16-25). Whilst western economies, ever since the days of the industrial revolution, has exported manufactured products with high value addition, even as the rest of the world has traditionally exported primary commodities with low margins, more than 70% of the exports of developing countries are now constituted of manufactured items. Services, which until recent years were essentially local in nature, are progressively increasing their share of global trade (Neto Viega, 2009, p 16-25). Much of this shift in composition of trade has been accompanied with global redistribution of employment, as well as production (Boyer, 1993, p 15-29). Developing countries have now become important suppliers of numerous industrial goods. The advanced economies are also being able to sustain their economic growth with the support of an ever growing services sector in the developing countries (Boyer, 1993, p 15-29). MNCs, it cannot be denied, have contributed to such structural changes by shifting their operations to locations that are proximal to markets and have low labour costs (Boyer, 1993, p 15-29). Many countries that have been able to integrate into the global trading scheme are growing faster, obtaining better access to technology and capital, improving their productivity and achieving higher living standards (Boyer, 1993, p 15-29). China and India provide good examples of the adoption of sound economic and development strategies that take advantage of globalisation opportunities and yet ensure protection from its ill effects (Chan, 2003, p 21- 28). China has been regularly achieving an annual GDP growth rate in excess of 10% on the back of an export led economy that services markets across the world (Chan, 2003, p 21- 28). Such economic growth has changed the lives of millions of people and brought them above the poverty line (Chan, 2003, p 21- 28). The poverty rate in India remained stagnant from the late 1940s to the early 1980s despite the best efforts of a succession of socialist governments. The countrys growth rate spiked after the adoption of liberalisation policies i n the early 1980s. The growth rate soon crossed 6% and the country was able to cut poverty in half in the ensuing two decades (Rudra, 2008, p 30-39). There is also a hard body of evidence to suggest that the growing economic interdependency of the contemporary globalised era will inevitably compel most countries and organisations to adopt similar managerial and social processes to bring about a homogenisation of national, fiscal and social policies (Boyer, 1993, p 15-29). Such adoption of technologies and processes are being witnessed in China and India and will progressively pervade the developing world (Boyer, 1993, p 15-29). Supporters of globalisation argue that higher economic growth and incomes will automatically result in greater financial resources with states, which can then be used for improvement of social security and the quality of life of disadvantaged population segments and bring about improvements in education, skills and earning power (Boyer, 1993, p 15-29). Such processes will inevitably converge across nations to bring about improvements in the quality of life of millions of people across the globe and bring about a race to the top (Boyer, 1993, p 15-29). These arguments are of course supported by enormous data on the improvement in employment figures, higher incomes and better quality of life of people in the developing countries that have embraced globalisation. Discussion Globalisation has very clearly brought about immense benefits to the peoples of both developed and developing nations (International .2006, p 101-111). Whilst the developed economies have been able to use the huge markets and cost economic production bases that have opened up in the developing regions of Asia, South America, Africa and East Europe to sustain and grow their economies, the developing countries have been able to use their bank of skilled and unskilled people to increase employment, incomes, education and quality of life in their nations (International .2006, p 101-111). Mathematically and logically the situation appears to be a win-win situation for both the developed and the developing world and should hypothetically over time lead to a homogeneous mass of people across the world with converging political, social and economic processes and improved qualities of life (International .2006, p 101-111). Unfortunately the situation is hardly as simple as this. The ongoing process of globalisation is actually being carried forward by the actions of numerous international business organisations (Standing Alber, 2000, p 99-119). Many of these organisations are aiming to maximise their profits by exploiting each and every opportunity that is becoming available to them, because of (a) the eagerness of developing countries to accept their investment, and (b) the rather undeveloped legal infrastructural and social security systems in such countries (Standing Alber, 2000, p 99-119). Such circumstances are leading to numerous instances of oppression of vulnerable people, destruction of valuable environmental habitat, and elimination of local skills, cultures and even societies (Standing Alber, 2000, p 99-119). Relentless depletion of Philippines forest area from 35 to 20 percent is a direct result of the down levelling effect of globalisation (Brecher Costello, 1994, p 1-4). Local governm ents and regulatory authorities are in most cases ill-equipped and incapable of preventing such injustices from taking place (Standing Alber, 2000, p 99-119). The impetus of globalisation has also essentially come about from the development of a neo-liberal global economic order that allows international business organisations to do much as they please and renders national governments incapable of bringing in safeguards to protect their people, without losing out on fresh as well as existing investment (Tonelson, 2002, p 18-26). The situation is further compounded by the lack of a global regulatory body for the control of international trade and commerce from the humanistic perspective (Tonelson, 2002, p 18-26). Whilst much of international effort in the area of globalisation has focused on the facilitation of international business through the easing of capital and tariff barriers and recent years are seeing the growth of an international lobby for the protection of the global environment, there is no body or apparatus that protects the rights of workers and other segments of society who can be hurt by the rampant and uncontrolled actions of international business organisations and their local suppliers (Tonelson, 2002, p 18-26). The need of the hour is for the formation of a global body that will take concerted and joint action to protect the international society, and particularly that of the developing world, from the effects of the many unfortunate imbalances that can occur because of the desperation of local governments for attraction of investment and the propensity of business organisations to forsake social concern for organisational profit (Tonelson, 2002, p 18-26). Conclusions This study debates the positive and negative aspects of globalisation and attempts to determine the impact of the phenomenon on the lives of modern day humans. Globalisation is undoubtedly the defining feature of the contemporary world. Supporters of globalisation point to the enormous economic advancements that have been achieved by national economies, both in the developed and in the developing world, during the last two decades. They state that the forces of globalisation, which have resulted in high levels of interaction between the peoples of different nations, in terms of exchange of goods, capital and people, and have been instrumental in bringing about unprecedented and astonishing growth in economic activity and cultural exchange, will also bring about greater convergence of global society in terms of economic and social equality between the people of rich and poor nations and the creation of a convergent global social and economic order. Critics of globalisation are however equally forceful in their opinion of globalisation being little other than a tool of western nations for increasing their international economic and political hegemony. Such critics argue that the MNCs, who are the fundamental drivers of economic globalisation, are using every available opportunity to increase their profitability and are routinely engaging in a range of oppressive activities in the developing countries. Whilst the apprehensions and worries evidenced by modern day economists and experts on globalisation are very real and cause for immense concern, it would be foolish to deny the significance of the changes brought about by globalisation. The need of the hour is for the formation of a global body that will take concerted and joint action to protect the international society, and particularly that of the developing world, from the effects of the many unfortunate imbalances that can occur because of the desperation of local governments for attraction of investment and the propensity of business organisations to forsake social concern for organisational profit.

Why special needs children should be mainstreamed

This article spends the bulk of its clip informing the reader of the different facts behind the history of mainstreaming instruction. It begins with a glossary of different footings that are used when discoursing mainstreaming. This glossary becomes rather utile, in that it relates the reader to terminology such as, IDEA, which is the Persons with Disabilities Education Act, or IEPT which is Individualized Education Planning Team. It so moves on to the background of mainstream instruction. It shows the economic facets every bit good, demoing that to educate a mentally impaired kid it costs about three times the sum it does to educate a kid that is non mentally impaired. It so goes on to advert how Michigan has gone supra and beyond the federal Torahs when related to mainstream instruction. The article concludes by adverting the rapid growing of particular instruction, which besides means an addition in the demand for mainstreaming these kids. This article is a firsthand history of what one instructor has learned after learning kids that have been mainstreamed. She makes three points about what demand to be realized about mainstreaming in her article. The first thing she points out is a immense barrier towards mainstreaming. The writer points out that kids that are mentally impaired and mainstreamed, are by and large self-aware about it, and hence do non desire to pull attending to themselves, and so make non inquire inquiries, because they do non desire to look foolish. She so points out that kids that are non mentally impaired do non inquire inquiries because they do non desire to be looked at as the dense pupil. Another point that this writer makes is that mentally impaired pupils need one-on-one contact with a instructor, which can be hard when being mainstreamed, and being in category with 30 or more other pupils. This article was really enlightening, in demoing the differences between mainstreaming instruction for mentally impaired pupils, and the thought of inclusion. Perles points out that the chief difference between the two is the sum of support the pupil gets from instructors and other staff. Another big difference between the two is the outlook of the pupil. When being mainstreamed a mentally impaired pupil is expected to larn at a similar gait as the other pupils, although a small spot slower, when traveling through inclusion the outlooks are much lower, but are still related to what is expected of the other pupils. The thought behind mainstreaming is to assist a pupil better academically and socially by being given higher outlooks, and being around other pupils. The thought behind inclusion is assisting mentally impaired pupils better socially by puting them in schoolrooms with other pupils, instead than concentrate on faculty members. This article points out non merely some of the benefits of mainstream instruction, but besides some marks to state whether or non a pupil should be mainstreamed or non. The writer points out instantly that taking whether or non to mainstream a kid is a personal pick for any parent of a particular needs kid. She so mentions some of the factors one should see when make up one's minding whether or non to mainstream their kid. First, a parent should see the noise degree of a schoolroom, and whether their kid would be able to work with an increased noise degree, as compared to a schoolroom that contains other mentally impaired pupils merely. Another of import factor is how the kid behaves normally in public, if the kid is person that is non capable of acting themselves around other people in public, so they would non profit from being mainstreamed. The writer goes on to advert that mainstreaming can hold positive effects on all kids, the mentally disabled kids gain the societal accomplish ments, and derive friendly relationships, while other kids, without those disabilities learn how to handle people that are different than they are. This article attempts to present the reader to the construct of mainstreaming mentally impaired kids in public instruction. The writer starts the article by specifying what inclusion is. He so points out that there are two chief types of inclusion. Inclusion itself is when particular demands kids spends a few categories with general instruction classs, and so pass the remainder of the twenty-four hours with the particular instruction categories, whereas Full-inclusion is when particular needs kids spend the full twenty-four hours in general instruction categories. Full-inclusion frequently means that there is either no particular instruction schoolroom, or that there are really few pupils in at that place, with merely one or two instructors. As the writer points out, inclusion is popular for a few grounds, first it follows the American with Disabilities Education Act ( aka IDEA ) , and the Rehabilitation Act of 1973. Another large ground that inclusion is a popular thought is that it is cost effectual, by incorporating mentally disabled pupils into general instruction schoolrooms, schools do non necessitate to engage as many staff members as they would if they were unable to mainstream those pupils. Arguably the biggest job confronting inclusion is the deficiency of general instruction instructors being trained so that they are able to learn both the mentally disabled pupils and the other pupils reasonably, without being excessively hard on the mentally handicapped, and without being excessively simple for the remainder of the category. This article looks at the practicality of inclusion. The writer spends most of the article informing the reader about some of the jobs that face inclusion, and the practicality of it. She mentions that one of the biggest jobs confronting inclusion is that the instructors need to be trained in how to learn, non merely general instruction pupils, but besides mentally impaired pupils, and non merely separately, but both at the same clip. What the reader needs to recognize, nevertheless, is that the writer is non merely playing Satans advocator for inclusion, but instead, the writer is indicating out the defects with full-inclusion, which is easy the more hard of the two when it comes to execution. Unfortunately, many of the points that are brought up in this article that have become outdated, and this is non the mistake of the writer. The article was originally published in October 1997. Over the last 13 old ages, while the jobs that are brought frontward by the writer have non been sol ved, but at that place have been paces to better these jobs, and they are being solved reasonably quickly. This article informs the reader of what an inclusive school is like. The writer points out that if inclusion is traveling to be successful, so the mentally impaired pupils need to be viewed the same as any other pupil, by every other pupil. Until this happens, inclusion can non be considered complete, or successful. The writer besides includes a chart of things that inclusion seeks to make in any schoolroom, things that it tries to make less of, and things it tries to make more of. This includes things like Less whole category teacher-directed direction and More attending to affectional demands and the changing cognitive manners of single pupils. If inclusion is traveling to work so schools need to turn to the points that this writer brings up, and either work out the jobs associated with them, or implement the different thoughts. This article sets out to open the eyes of the reader to the existent grounds behind the mainstream motion. The writer points out instantly the grounds that she believes mainstream instruction has become such a popular thought. The writers first ground for the popularity behind the popularity it has incurred is cost. It is a batch cheaper to pay for a few instructors that can learn both mentally disabled kids, and general instruction kids, than wage for instructors for each separately. The ground is non so that schools can do more money by non paying for single particular instruction teachers, but instead because schools are confronting more and more budget cuts, particularly in Michigan, schools need to happen manner to cut costs, and by doing particular needs kids take category with general instruction pupils the school does non hold to pay for an excess teacher. The writer so mentions that this is all being done deceivingly, by mentioning that this is being done so that mentally im paired kids are treated with equality, when compared to other kids, people decide that these kids need to be mainstreamed, and the terminal consequence is that they may non be acquiring the instruction they would be acquiring if they were non being mainstreamed. This article is alone from the remainder in that it non merely supports the thought of mainstream instruction, but the article lists seven stairss that parents of mentally disabled kids should travel through to assist find whether or non they should see mainstreaming their kid. The writer besides mentions that while mainstreaming is something to see, there are certain fortunes that one needs to believe about earlier merely presuming that mainstreaming their kid is the right manner to travel. Before one determines that they will partake with a mainstream-style instruction for their kid they need to see the badness of their kids damage. If their kid is badly impaired, or needs a batch of single attending, so the kid can non work in a mainstream environment, and it would destroy the categories that they would go to. But, if you determine that your kid will be able to manage mainstream instruction, they should. There have been surveies that have shown that kids that go through mainstream instruction go more functioning parts of society than those that were isolated in merely particular instruction schoolrooms. One key point that the writer did do is that mainstream instruction demands to turn to the demands of the mentally impaired kid, while still turn toing what the other pupils need academically. This article decidedly seems to be the most cheerful about mainstream instruction. The writer references that for mainstream instruction to work parents necessitate to be involved, but allow the kids believe they are the ground that everything is working so good. While the parents need to let their kids to believe this duty is theirs entirely, the parents besides play a important function in how effectual mainstream instruction will be for their kid. The parents need to back up their kids, while keeping a moderately high degree of outlooks for their kids, and this manner the pupil will make their maximal potency. One really of import factor that the3 writer points out is that, while parents can presume that the people in charge of running mainstream instruction have their kids best involvement in head, the parents are the lone people that are traveling to be worried about their kid above all else. Parents need to be the figure one advocator for their kid, or they will non acquire wha t they want out of mainstream instruction. This article points out something that none of the others has, mainstream instruction does non merely impact the parents, and mentally handicapped kid. Mainstream instruction affects the full household, siblings can frequently clock feel isolated from their parents when all of this attending is traveling to merely one of their kids. The writer points out that one thing that parents should look into is happening some signifier of support for everyone in the household.

Interest Rate Risk

INTEREST RATE RISKQ1. Which of the following correctly defines Basis Risk? (MCQ)A company having a variable interest rate for a specific loanA company having a fixed interest rate for all loansThe risk of the difference of interest rate amount set on assets & liabilitiesA company has a similar quantity of assets & liabilities, having a different basis for their floating rate(2 marks) This information relates to Q2 & Q3.Rotec Co wants to borrow $30,800 in two months' time ; is seeking to save them from any interest risk. The bank has explained an agreement to provide hedging for Rotec Co. This agreement can lock interest rates for future. The borrowing will be for three months. The forward rate agreement is as follows: 2 months V 3 months 3% – 4.5%2 months V 5 months 4.2% – 5.1% Q2. Calculate the interest amount to be paid if the actual rate will be 3% in two months' time? (MCQ)$161.7$231$392.7$924(2 marks) Q3. Calculate the refund amount by the bank if the actual rate will be 6.3% in two months' time? (MCQ) $46.2$92.4$138.6$161.7(2 marks) Q4. A company is looking at the following options to hedge itself from interest risks. Which of the following will support the cause? (MRQ) SmoothingMoney market agreementsMatchingDealing with home currency(2 marks) Q5. A yield curve is a relationship between yield ; maturity dates of similar bonds. Select the appropriate yield curve. (P;D)Short-term bonds have lower yield due to their risk Long-term yields have lower yield due to the downfall in the economy Short/Long – term bonds provide a close equal yield FLAT YIELD CURVE NORMAL YIELD CURVE INVERTED YIELD CURVE(2 marks) Q6. Select the appropriate theories in relation to different interest rates on different securities. (P;D)Investors needing high returns for long-term security contracts The assumption by an investor that higher interest rates are due to future inflation Security markets are separate from each other ; have distinct customers GOVERNMENT POLICY MARKET SEGMENTATION THEORY LIQUIDITY PREFERENCE THEORY EXPECTATION THEORY(2 marks) Q7. Select the appropriate option relating to the usefulness of the yield curve. (HA)Yield curve may indicate the economy position TRUE FALSEYield curve may be helpful in decision making with respect to loan ; but not interest TRUE FALSE(2 marks) Q8. Which of the following contract have long-term validity? (MCQ)Currency FuturesInterest rate OptionsInterest rate Swaps Forward rate agreements(2 marks) Q9. Select the appropriate option in relation to interest rate futures. (HA)If the need for Borrowing, Selling the futures now ; Buying them back at the close date TRUE FALSEIf the need for Deposit, Selling the futures now ; Buying them back at the close date TRUE FALSE(2 marks) Q10. Which of the following statements is correct? (MCQ)Currency futures have a range of closeout datesInterest rate options are cheaper than Forwarding rate agreementsForward rate agreements lapse if unused in the given time periodSwaps are unable to be exercised if the amount ; time periods are different(2 marks) Q11. Yakut wants to borrow money from the bank in three months' time by using a collar transaction. Which of the following statements are true in relation to the collar transaction? (MRQ) Yakut will buy a cap agreementBank will buy a cap agreementYakut will sell a flooring agreementBank will sell a flooring agreement(2 marks) Q12. Uma Co wants to deposit money into Hale Ltd, a banking institution. Hale has offered a collar transaction. Which of the following statements are correct? (MRQ) Bank will sell a cap agreementUma Co will sell a cap agreementUma Co will sell a flooring agreementBank will buy a flooring agreement(2 marks)INTEREST RATE RISK (ANSWERS)Q1. DA company having a variable interest rate for a specific loan (Floating interest rate risk)A company having a fixed interest rate for all loans (Fixed interest rate risk)The risk of the difference of interest rate amount set on assets & liabilities (Gap risk)A company has a similar quantity of assets & liabilities, having a different basis for their floating rate (Basis risk) Q2. CInterest Payment = [30,800 Ãâ€" (3% Ãâ€" 3/12)] = $231Payment Extra = [30,800 Ãâ€" ({5.1 – 3} % Ãâ€" 3/12)] = $161.7Total cost = 231 + 161.7 = $392.7 Q3. BInterest Payment = [30,800 Ãâ€" (6.3% Ãâ€" 3/12)] = $485.1Refund = [30,800 Ãâ€" ({6.3 – 5.1} % Ãâ€" 3/12)] = $92.4Total cost = 485.1 – 92.4 = $392.7 Q4.Smoothing, Maintaining a balance between fixed & floating borrowing rates (Correct)Money market agreements not exist (Incorrect)Matching, Matching assets & liabilities with same interest rates (Correct)Dealing in home currency, the technique of dealing foreign currency risk (Incorrect) Q5.Short-term bonds have lower yield due to their riskNORMAL YIELD CURVE   Long-term yields have lower yield due to the downfall in the economy INVERTED YIELD CURVE Short/Long – term bonds provide a close equal yield FLAT YIELD CURVENORMAL YIELD = Sign of economic boom INVERTED YIELD = Sign of economic recessionFLAT YIELD = Sign of transition from boom to recession or vice versa Q6.Investors needing high returns for long-term security contracts LIQUIDITY PREFERENCE THEORY The assumption by an investor that higher interest rates are due to future inflation     EXPECTATION THEORY Security markets are separate from each other & have distinct customers   MARKET SEGMENTATION THEORY The government policy of keeping interest rates high may effect in keeping short-term interest rates higher than long-term rates. Similarly, a government may also keep very low short-term interest rates. Q7.Yield curve may indicate the economy position TRUE Yield curve may be helpful in decision making with respect to loan & but not interest FALSEYield curves help in both loan & interest decision making. Q8. CAll other agreements are less than a year. Q9. If the need for Borrowing, Selling the futures now & Buying them back at the close date TRUE If the need for Deposit, Selling the futures now & Buying them back at the close date FALSEIf the need for Deposit, Buying the futures now & Sell them back at the close date Q10.Currency futures have a range of closeout dates, has specified date (False)Interest rate options are cheaper than Forwarding rate agreements, are expensive (False)Forward rate agreements lapses if unused in the given time period, have to close out at the given time (False)Swaps are unable to be exercised if the amount & time periods are different, it can only be exercised if timing & the amount are same hence (True) Q11. Yakut will buy a cap agreementYakut will sell a flooring agreementCap is an interest rate ceiling limiting the interest rate. Floor sets a lower limit of interest rates. Q12.Bank will sell a cap agreementBank will buy a flooring agreementCap is an interest rate ceiling limiting the interest rate. Floor sets a lower limit of interest rates.

Financial Perspectives In The Current Climate Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1476 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? The means of financial is the planning, organizing, directing and controlling, so it must applying general principles to financial resources of the company. The decisions in investment contain fixed assets investment, it called as capital budgeting. Don’t waste time! Our writers will create an original "Financial Perspectives In The Current Climate Finance Essay" essay for you Create order The current assets in investment also one of decisions in investment, so it called as working capital decisions. The decisions in financial, it related to the raising of finance from difference resources which will depend on type of source, period of financing, cost of financing and the returns. The decisions in dividend, the finance manager is the one must take decision on net profit distribution. The net profits are separated into two: Dividend to the shareholders = Dividend and the rate will be decided. Retained profits = amount of retained profits will be confirm depend on the expansion and variety of plans of the company. 3.3.1.3 Objectives of financial The financial is basically worried with earnings, allocation and control of financial resources. The objectives will be: To make sure regular and enough supply of funds. To make sure enough returns to the shareholders, it depend on the earning capacity, market price and potential of the shareholders. To make sure safety on investment, example, every fund supposed to invest in safety business so that can get enough return. To plan good capital structure, there must be good and fair arrangement of capital so that a balance is maintained between debit and fairness capital. To make sure its advantageous funds, like the funds should use in maximum level in low cost. Functions of Financial Funds investment: A decision have to make from finance manager for keeping funds into money making ventures, so that it is safety on investment and regular returns. Cash management: A decisions need to make from finance manager to cash management section. The most important thing is the cash, the cash doing many purposes like paying worker salaries, electricity bill, water bill, rent, wages, creditors, maintenance of stock, buying of new materials, etc. Financial controls: Plan, obtain and use the funds its not only job for finance manager but he also need to control in finances by doing control in cost and profit, financial prediction, ratio analysis, etc. Choices of funds source: For extra funds to be obtain, so the company got choices like Issue of shares. Loans from banks and financial agent. Estimate of capital requirement: The finance manager has to make prediction of capital requirement in the company, it depend on estimated costs and profits, future programmers and policies. So that, it will increase earning capacity of the company. Purpose of capital composition: After estimate process has be done, the capital structure need to decide. This involves in debit analysis for short-term and long-term. It will depend to the quantity of capital in the company and extra funds which have to be raised from outside parties. How the reduced quality product would affect the company financially Effects for finance: Internal effects Rework Delays Re-designing Shortages Failure analysis Re-testing Low grade Downtime Human error Production problem External effects Complaints Redoing services Warranties Customer not satisfy Reduce of sales Environmental cost All this internal effects and external effects is the major thing that will affect the company finance. The financial analysis in the shoe manufacturing operation Financial Analysis Solved With Business Intelligence System This is Business Intelligence (BI) software allows the company to store their databases in this system and it also easy for employees, management and company partners to work fast. This software can store up to 2 terabyte of data. This system save a lot of costs and improve company operation system. BI Software has capable to do reporting, analyzing and monitoring, so it allows the users to make better decisions every day. Analyze data to the journal entry: Users require the ability to observe revenue and cost to journal entries. This allows users to identify suspect items. Electronically distribute financial reports in securely: It be protected to make sure users can only access financial data for which they have privileges. Deliver accurate financial data in Microsoft Excel format: Provide static financial reports in Excel data, plus got extra features like interactive by providing access to all of the underlying data. Financial data to detect material problem in few second. Financial analysis has so many areas to analysis, the areas is: Balance Sheet Analysis This is one of the basic reports of corporate accounting. The Balance sheets are created multiple times during the close cycle to prove exactness before the final report is released to shareholders, government agencies and the public. Business Intelligence enables to combine of the balance sheet to more rapidly than Enterprise Resource Planning (ERP) system, it for saving time to close. The most fundamental level of reporting is the automated combine system in balance sheet and the electronic sharing of the report is so safety for all authorities. Sample Report 3.3.3.1 Balance Sheet Profit and Loss /Income Statement Analysis The revenue and costs is the main component of Securities and Exchange Commission (SEC) filings and is also a helpful tool for understanding the strength of a business. Officer like Executives and managers are keep observe to the profit and loss actual versus budgets and forecasts to make sure their business is running well. It automatically generated profit and loss reports let managers to see current revenue, costs, and profitability, time over time and business unit comparisons, and actual to plan. Business intelligence also create more accurate quarterly and annually performance analysis, it allows to show complete revenue and cost components, and enables more advanced margin and contribution assessment. Sample Report 3.3.3.2 Income Statement Cash Flow Analysis This is one of the standard components of certain Securities and Exchange Commission (SEC) filings that summarize the operating activity of a business and its ability to generate cash. Professionals like executives and accounting expert depending on cash flow if they want make decisions in financing, operating and investing. Normal financial systems are not capable to handle large amounts of transaction-level of data, it will take several hours to complete cash flow reports and cannot give out these reports automatically. The Business intelligence provides automatic, close to real-time generation and provide of the cash flow statement. Business intelligence analysis including foreign currency exposure, payables schedules, and cash flow predictions to make sure investments in short-term and long-term instruments are aligned with cash requirements. Sample Report 3.3.3.3 Cash Flow Analysis Accounts Receivable and Accounts Payable Analysis The Company has Accounts Receivable (A/R) and Accounts Payable (A/P) to handle operating cash flow. Standards A/R and A/P reports includes the value of accounts that are 30, 60, or 90 days overdue, monitoring distribution of receivables across customers, and reviewing payment trends for vendors across periods. More complicated analysis includes predicting potential bad debts, forecasting cash outlays, and tracking invoices and journal entries to the corresponding accounting representative. The A/P and A/R functions are benefitting thing. Sample Report 3.3.3.4 Accounts Payable and Accounts Receivable Analysis Financial Budgeting and Forecasting The executives and managers continually revisit forecasts as actual are reported to find out how their business is performing relative to plan. Forecast reports allow detailed analysis by budget owners at every level of the organization and set the stage for determining sources of revenue and spending priorities. From simple reporting on actual performance versus budget to more difficult what if scenario creation and predictive modeling, organizations use business intelligence to make fact-based business plans and better monitor performance. Business Unit: North America Quarter: Q1 2007 Business Unit Owner: Amanda Phillips Account Actual QTD QTD Budget ($) QTD Budget Variance($) REVENUE Product License $ 65,236,584 $ 78,523,698 $ (13,287,114) Services $ 56,325,874 $ 51,232,156 $ 5,093,718 Other $ 2,154,885 $ 7,654,896 $ (5,500,011) TOTAL $ 123,717,343 $ 137,410,750 $ (13,693,407) COSTS Salaries $ 53,663,095 $ 52,610,878 $ (1,052,218) Rent $ 33,639,034 $ 34,325,545 $ 686,511 Fixed Allocations $ 5,026,205 $ 5,128,780 $ 102,576 Sales and Marketing $ 19,238,306 $ 19,630,925 $ 392,618 Communications $ 325,432 $ 451,023 $ 125,592 TOTAL COSTS $ 111,892,071 $ 112,147,150 $ 255,079 CONTRIBUTION $ 11,825,272 $ 25,263,600 $ (13,438,328) Sample Report 3.3.3.5 Financial Budgeting and Forecasting Risk Management In credit risk, agreement risk, currency risk, cheating risk, and audit risk all are becoming increasingly key components of risk that should be controlled by corporations and government agencies. Credit risk management, by combining data from publicly available sources with corporate customer and sales data, focuses on the purpose of credit ratings, credit risk exposure in a particular country or industry, or the impact of increased customer defaults. Currency risk analysis involves valuation of exchange rate. Cheating risk analysis, through the use of statistical data, can uncover the activity linked to the fake events. Business intelligence, by enabling the use of data and statistical techniques for risk detection and management, can get wider worker populations to help mitigate the various forms of corporate risk. The Clothing Company Credit Rating Total Credit Line Credit Available % Credit Line Available Deposits and Other Assets Payment History Ocean Airline Aaa $ 575,138 $ 57,892 10% $ 8,503,990 Good Global Industries Bbb $ 651,822 $ 324,587 50% $ 9,637,840 Fair The Clothing Company bbb $ 452,846 $ 325,698 72% $ 6,695,781 Fair Financial Instruments Aaa $ 373,053 $ 372,154 100% $ 5,515,962 Good NSP Co. Bbb $ 360,991 $ 123 0% $ 5,337,613 Poor Great Motors AAA $ 369,115 $ 89,654 24% $ 5,457,734 Good Light Food Aaa $ 261,363 $ 154,789 59% $ 3,864,513 Fair Eyeshapers Inc. Aaa $ 172,513 $ 65,218 38% $ 2,550,777 Poor Internet Solutions LLC Bbb $ 153,339 $ 125,698 82% $ 2,267,270 Good University of Vienna Aaa $ 173,818 $ 154,898 89% $ 2,570,073 Good Sample Report 3.3.3.6 Credit Risk Assessment