Study "Economics / Finance / Banking" Essays 661-715

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Lending Institutions, Health Care Research Paper

… These two institutions derive their sheer existence from developed nations contributing capital to facilitate lending to financially troubled economies. The volume of capital contributed and the political power a country wields in the global arena determine the voting power within these institutions (Finlay, 2007). The strong and wealthy economies in the globe exact their influence by having their own directors in the board with the other 150 member countries electing 19 directors. This shows the likely influence that few developed nations have in the formulation of development policies with developing countries like India.

IMF is the institution countries go to when in financial trouble exerts it policy by dictation requirements for structural adjustments as a condition for funding. The structural adjustments are meant to open the country's economy to the world leveraging it to undertake trade with other countries. This condition allows a country to sell its output and increase it potential for paying off its debts to the institution. The power that an institution like IMF has in influencing economic development of a developing nation is immense. Considering its approval rating the global scenario, it is observable that it is unlikely for the institution to award funding to un-credit worth counties. This alone will determine the volume and type of foreign investment a country will receive. If IMF grants funding to a developing country, there will a high inflow of foreign investment since this serves as an indicator for the countries potential to grow. This will trigger potential increases in economic output, higher levels of human labor uses and an increase in trade between the country and other economies.

The World Bank works similarly follow stringent frameworks guidelines of the SAP focusing on developing specific projects in countries. As opposed to IMF's framework of money lending, the World Bank undertakes to implement projects that propagate improvement of human capital and economic potential. The implementation of projects under the World Banks follows from approval from the board of directors and a country's potential meet the desired economic growth (D. E. Bloom & Canning, 2008). This potential is ascertained when, a country implements the desired structural adjustment and puts in place mechanisms to allow World Bank monitor its activities.

These institutions serve to open up developing economies such as India to global trade and expose their policies to completion in the global scenario. IMF and the World Bank awarding funding or initiating development projects in country, serves to increase global investor confidence. This allows local and foreign investors to deploy their capital in a country. It also puts in place mechanisms to exploit the economic resource within the country. Under the World Bank projects, Funding countries such as India have benefited from development of human capital through training and setting up medical facilities in the country. This has put in place potential for labor to contribute to economic development by providing skilled labor and increasing output. In a scenario where the labor force is healthy, more output is achievable allowing for… [read more]

Finance Assessment of the Financial Term Paper

… 10






Table 11; Receivables Days



Financial Year Ending







Receivables turnover














Table 12; Total Asset Turnover



Financial Year Ending














Total assets














Table 13; Net Working Capital Turnover



Financial Year Ending














Net working capital







NWC turnover









Profitability is a primary measure of business performance, indicating the level of return a firm is creating using its assets.

Table 14; Gross Profit Margin



Financial Year Ending














Gross profit







Gross profit margin







Table 15; Net Profit Margin



Financial Year Ending














Net profit (after tax)






Net profit margin







Table 16; Return on Assets



Financial Year Ending







Net income






Total assets














Table 17; Return on Equity



Financial Year Ending







Net income






Total equity







Return on equity








Market value

Market value ratios deal the value of the firm relating to different measures such as share price, book value etc.

Table 18; Market Value Ratios



Financial Year Ending







P/E ratio







Market to book ratio







Price to sales







Price to cash flow








Assessment both firms appear to have some advantages. Both companies are showing an increased level of revenue generation, but they both face increasing operating costs. In the short-term UPS is to have suffered the most, with significant costs faced in 2012. The solvency ratios for the short-term appear to be more favorable for UPS, however, with the attempt to acquire TNT which subsequently failed, the organization may have been preparing a large number of current assets ready to make the acquisition, increasing the short-term liquidity. In both cases both UPS and FedEx appear to be satisfactorily solved.

In the longer term, UPS has a much higher gearing, with significantly higher proportional levels of debt. UPS has higher levels of debt compared to equity, and is seeing a… [read more]

Rothschild Family Descended Essay

… A group of Rothschild banks still exists, controlled by Rothschild Continuation Holdings, which is a Swiss-registered company (Corti, 2001). Other financial holding companies and banks are also part of the Rothschild empire, and the Rothschild name has been synonymous with power and money (Corti, 2001). As a multinational banking family, the Rothschilds have not been able to escape their fame, although many of them today live low-key lives that would not show their substantial wealth to others (Ferguson, 2000).

In addition to being very wealthy and dedicated to a number of causes, the Rothschild give generously to charities throughout the world (Corti, 2001; Ferguson, 2000). Art often imitates life, and a number of films have told the Rothschild family story, with some getting it more accurate than others (Wilson, 1988). Their wealth and power have also inspired songs, stories, and poetry, as well as a Broadway musical (Corti, 2001). Conspiracy theories about the family are common, including one that states the family actually controls the entire world's wealth and all the financial institutions (Ferguson, 2000). Some also believe that the Rothschilds have enough power to control whether countries go to war, but none of these theories have ever provided any proof that they are accurate (Ferguson, 2000).

With great wealth generally comes great responsibility, and few families have had the wealth and responsibility that has been bestowed upon the Rothschilds (Corti, 2001). However, the family has kept their wealth for centuries, and has taken what they have been given seriously. That is much more than many families who have amassed wealth have done, making the Rothschilds popular and appreciated in their own circles and by those who do not have wealth but who have been helped by the family's generous gifts to charity (Corti, 2001). With the value of their contributions, they have made a difference in many lives.


Corti, E.C.C. (2001). Rise of the House of Rothschild, B. Lunn (translator), NY: Books for Business.

Ferguson, N. (2000). The House of…… [read more]

Credit Ratings the Company Research Paper

… Lastly, as it has beenexplained regarding the rules of NRSRO in the June 2007's adoptingrelease of the Commission, it is being studied by the Commission if itwill be suitable to require the disclosing of additional kind ofperformance statistics as an… [read more]

International Finance the Currency Term Paper

… International Finance

The currency that I have chosen is the South African rand (ZAR). The spot rate for the rand on January 26th (the site doesn't give the 23rd) was .0897, which equates to 11.14 rand to the dollar.

As a general rule, the U.S. dollar is gaining strength on resource-based currencies like the CAD and AUD, so the ZAR is probably going to be the same. The rate on the rand in 6 months might be 11.60 rand to the dollar or 0.0862. This is my projection, not the current forward rate in the market, and this is for illustrative purposes.

Everbank is offering 3.50% on a 6-month rand CD.

The interest rate on USD for 6 months is 0.35%

Currency Selected

South African rand


Spot 1/26/14


mo CD, ZAR

mo CD, USD

Spot conversion



ZAR, 6 mos



Forecast rate


Convert back to USD


Proceed (loss)


Benchmark return


Benchmark profit


With this example, it would be better to invest in the USD CD, rather than do the conversion into rand. The rand appears to be attractive at face value, because if offers a much higher rate -- 3.5% compared with 0.35% for the USD. However, the rand is also expected to continue to decline in the next six months. The result is that the decline in the value of the rand is in this example going to be greater than…… [read more]

Business -- Corporate Finance A-Level Coursework

… Business -- Corporate Finance -- Time Value of Money

Comparisons of Facebook, Inc., Google, Inc. And Yahoo!, Inc. (all numbers in Thousands)

Facebook, Inc.:

Its debt-to-equity ratio:

$1,885,000.00 (total liabilities) / $115,297,000.00 (total equity) = .02.

Profit margin, return on assets, and return on equity ratio:

Profit margin = Gross Profit / Net Sales = 3,725,000/32,000 = 116.40625

Return on Assets = Net Income * / (Beginning + Ending Total Assets) / 2 = 32,000/(6,331,000 + 15,103,000 )/2 = .003.

Return on Equity Ratio = Net Income/Total Shareholders Equity* = ____%

= 32,000 / 11,755,000 = .0027%.

3) Beta: "N/A"

4) Riskiness: The company's actual debt ratio is less than its optimal debt ratio. It is not a takeover target. It has good projections for its return on investment and cost of capital. Facebook, Inc. chose to keep its debt-to-equity ratio low because it pursued equity financing, particularly through its relatively recent IPO. Therefore, Facebook, Inc. is not a risky investment (Damodaran, 2005, p. 90).

5) Current ratio and quick ratio:

Current Ratio = Current Assets / Current Liabilities = 11,267,000/1,052,000 = 10.7101

Quick Ratio = Cash + Marketable Securities + Accounts Receivable / Current Liabilities (Credit Research Foundation, n.d.)

= 2,384,000 + 7,242,000 + 488,000 / 1,052,000 = 9.6141 (Yahoo, Inc., 2013).

b. Google, Inc.:

1) Its debt-to-equity ratio is $22,079,000 (total liabilities in thousands) / $352,000,000 (total equity in thousands) = .06. (Yahoo! Inc., 2013)

2) Profit margin, return on assets, and return on equity ratio:

Profit margin = Gross Profit / Net Sales = 29,541,000 / 10,737,000 = 2.7513.

Return on Assets = Net Income * / (Beginning + Ending Total Assets) / 2

= 10,737,000/(72,574,000 + 93,798,000) / 2 = 0.1291.

Return on Equity Ratio = Net Income/Total Shareholders Equity* = ____%

= 10,737,000/71,715,000 = 0.1497%.

3) Beta: 0.96

4) Riskiness: Google's debt-to-equity ratio is far higher than is Facebook's. It may have chosen to have a higher debt-to-equity ratio because It chose to invest in projects that carried a great deal of debt.

5) Current ratio and quick ratio:

Current Ratio = Current Assets / Current Liabilities = 60,454,000/14,337,000 = 4.2166.

Quick Ratio = Cash + Marketable Securities + Accounts Receivable / Current Liabilities

= 14,778,000 + 33,310,000 + 9,729,000 / 14,337,000 = 4.0327.

c. Yahoo!, Inc.:

1) Its debt-to-equity ratio is debt-to-equity ratio is $2,543,053 (total liabilities in thousands) / $37,540,000 (total equity in thousands) = .06.

2) Profit margin, return on assets, and return on equity ratio:

Profit margin = Gross Profit / Net Sales = 3,366,000/3,945,479 = 0.8531.

Return on Assets = Net Income * / (Beginning + Ending Total Assets) / 2

= 3,945,479/(14,782,786 + 17,103,253)/2 = 0.2475.

Return on Equity Ratio = Net Income/Total Shareholders Equity* = ____%

= 3,945,479/14,560,200 = 0.2710.

3) Beta: 0.94.

4) Riskiness: Yahoo's debt-to-equity ratio is far higher than is Facebook's. It may have chosen to have a higher debt-to-equity ratio because it chose to invest in projects that carried a great deal of debt.… [read more]

United States Essay

… The future of the one dollar bill is uncertain at this point. There have been attempts to use coins for this denomination in the past. Silver dollars have been commonplace for a long time, and the Sacajawea dollar was the latest significant attempt to replace the bills with coins. Most other countries that have bills of a similar value have already moved to coins for this denomination, for several reasons. The first reason is that coins are cheaper and easier to produce than bills. The second is that coins are less likely to be counterfeited than are bills. Many of the other U.S. notes have undergone design changes in recent years to make them more difficult to counterfeit, and this is something that is likely to happen with the one dollar bill as well.

The Sacajawea dollar coin never really caught on with the American public, and the dollar bill had fended off another challenger. The two dollar bill is considered unlucky by many and was therefore never relevant, and silver dollars were never that popular. Thus, many Americans have resisted attempts to change away from one dollar bills and there have not been any recent attempts to eliminate the dollar bill. There is the possibility, however, that pragmatism will win over and the dollar bill will eventually be replaced with coins. Resistance elsewhere was overcome quite quickly once the changeover occurred. Moreover, dollar bills are used so frequently that they quickly become dirty and dog-eared, and some would say unhealthy as well. Aside from economic reasons, however, there is no compelling reason to do away with the dollar bill. If the American people want a dollar bill instead of a dollar coin, they should have it, since they are the ones whose taxes pay the U.S. Treasury and U.S. Mint. The dollar bill should stay.

References (2013). The dollar bill collector. Retrieved November 4, 2013 from

Tolles, L. (no date). The history of the dollar bill. University of North Carolina. Retrieved November 4, 2013 from… [read more]

Economics the Following Graph Term Paper

… At P=30, demand for the good is 24 and supply is 10. Therefore, there is a shortage of 14 units (24-10), as there is far more demand in the market than there is supply in the market.

At P=60, demand is 12 and supply is 19. Thus, there is a surplus in the market of (19-12) 7 units. The producers are producing 7 more units at this price than consuemrs are willing to purchase.

2. The demand and supply curves for rental housing in Avalon are as follows:

The equilibrium point is at $350, where demand is 120 and supply is also 120.

b. If the population of Avalon increases, demand increases by 50 units at each price level, the new demand and supply curves are as follows:

The new equilibrium point is at $400, where demand and supply are both at 140.

c. In this case, there has been a shift upwards in the supply curve. The supply is higher because the demand has pushed the price up. So…… [read more]

North and South: Different Term Paper

… When the government needed still more money it instituted the income tax. Thus, the North laid the foundations for the future Internal Revenue Service.

The South had no means of collecting a federal tax, for their Constitution afforded the Confederate States no such right. For that matter, neither did the Constitution of the Union. But what the Constitution of the Union stated never stopped the Union government from doing what it wanted. This sense of overstepping the Constitution was a main cause of hostility between the North and the South.

The two did differ culturally as well, which was another reason for hostility. For example, the North was much more densely populated with persons of varying ethnicities. It was also more densely populated. 71% of all Americans lived in the North. Virtually all steel production was done in the North. Northerners were businessmen and Republicans who believed in science, technology and modern education. Southerners tended to be less "educated," their time spent mainly on large plantation farms. The Southern culture was primarily Protestant-Baptist, whereas the Northern states and cities had been formed by Protestant-Puritans as well as a large influx of Catholics from Ireland and Continental Europe. The Southern way of life was much slower, more genteel. The Northern way of life was much more fast-paced, much more industrial, and much more urban. Big city life was not part of the Southern way. Southern hospitality, however, was something that the South did offer. And, of course, the South had the "peculiar institution" of slavery, whereas the only slaves in the North were the wage slaves and those in debt to the banks.

Essentially, life was entirely different in the North from the South. Each held different occupations, different pastimes, and different backgrounds. The North and the South were the equivalent of two different countries sharing one border. When one tried to dominate the other, war became inevitable.


"Economy in the Civil War." The Civil War. Shmoop. 27 Oct 2013. Web.

"North and South: Different Cultures, Same Country." 27 Oct 2013.


"Economy in the Civil War." The Civil War. Shmoop. 27 Oct 2013. Web.

"Economy in the Civil War." The Civil War. Shmoop. 27 Oct 2013. Web.

"North and South: Different…… [read more]

Economics Term Paper

… It's a fruit salad of an argument, as opposed to something coherent. The U.S. military is, last I checked, the most innovative military in the world today. That's all government spending. Airlines are private enterprises and in the U.S. they are basically the worst in the world, with the lowest amount of innovation, and when they do innovate it is to the detriment of consumers (if you want me to smile, that's $5). But here's the thing. Schools have vast stacks of literature produced each year with respect to studies of how to improve schools, so lack of innovation in education is a straw man. The post office will innovate or perish -- government is just keeping it on life support for now, but that's not sustainable. The military is in a competitive environment, so it does innovate. Innovation is something that occurs where there is a need for innovation. Some industries stagnate, usually due to high entry barriers that reduce competitive threat. The rules of economics don't change just because one dislikes government.

5. Elected officials use their political power to get re-elected. This is a poor use of political power, but validity is in the hands of the voters, and in this case the voters are too apathetic to challenge it. This does not really impact business. While we'd all prefer the government does its job, businesses seems pretty good at having their interests taken care of. We might not have a budget or a coherent immigration strategy, but we've sure signed a lot of trade agreements. So a government cycle might cause problems for non-business interests, but business has no worries.

6. Pollution fees are an imperfect solution, but the principle is fine. Charging for externalities is a good way to get people to recognize those externalities, instead of having them dumped on society and government. Marketable permits is a dumber concept, because it creates a pollution floor for pollution. Fees do not create a floor, but rather encourage business to reduce pollution to nothing.

7. Like choosing your preferred method of breaking a leg, there is no "least-damaging" protectionist measure. They both distort the market, leading to lower competition and higher prices. They are both applied in the same ad hoc manner, creating even bigger messes as some countries are favored more than others. It is better to take a more WTO approach and drop these things as much as possible, rather than talking out of both sides of your mouth about how great free trade is and then imposing barriers every time a lobbyist comps you a trip to Vegas. All protectionist measures are…… [read more]

Investment Scenarios Term Paper

… With fewer loan-able funds available, banks and other financial institutions must ration the funds, causing interest rates to climb and fewer investments projects. Net result: Higher interest rates, less capital invested.

In this case, the economy is slowing from a reduction in the loans available and a withdrawal of foreign direct investment capital. This is causing interest rates to spike as there is less money in the banking system with a focus on reducing liquidity. Moreover, there is also the realistic possibility of higher inflation. This is taking place, with central banks raising interest rates to prevent them from increasing further. The effects are that consumers have stopped spending and businesses are laying people off. This is indicating how the economy is falling into a steep recession that is fueled by inflation. ("Kiplinger Economic Outlooks," 2013) (Hall, 2009)

Recently, there has been concerns about this kind of scenario happening. This is because there are fiscal challenges facing the U.S. government / states and the economy is not growing as fast as it should be. The combination of these factors is creating fears about a similar situation occurring from the 1970s. This is when the economy expanded after the Arab oil embargo of 1973 and the recession of 1974. From 1975 to 1978, there were declining interest rates and the economy started to recover. However, after this time, is when it experienced a new round of inflation. This led to a spike in interest rates, in order to combat the sharp increase in prices. The result is the economy went into a deep recession which lasted from 1980 to 1982. This scenario is important, as it is indicating what a potential slow down will look like in the future. ("Kiplinger Economic Outlooks," 2013) (Hall, 2009)


Kiplinger Economic Outlooks. (2013). Retrieved from:…… [read more]

Business Cycle Analysis Research Paper

… The Book of Vital World Statistics. London: Crown.

English News China. (2013, January 17). China's 2012 Fixed Asset Investment Up. Retrieved from

MISH's Global Economic Trend Analysis. (2012, September 26). Is China Burning? Retrieved from

Morally Bankrupt. (2013). China's Figures. Retrieved from:

Morrison, W. (2013, July 17). China-U.S. Trade issues. Retrieved from Congressional Research Service:

National Bureau of Statistics of China. (2013). Retreived from:

Roberts, D. (2013, July 26). Diving Unemployment in China. Retrieved from Bloomberg Businessweek: (2013). China. Retrieved from:

Talk, F. (2013, August 26). China Charts That Look Bullish. Retrieved from U.S. Global Investors:

The Economist. (2010, November 4). Nominally cheap or really dear? Retrieved from

The Economist. (2012, May 24). Chinese Spending, Public and Private. Retrieved from

Trading Economics. (2013, September). China Interest Rates. Retrieved from

Trading Economics. (2013, January). China Money Supply. Retrieved from

Trading Economies. (2013, January). China GDP. Retrieved from

Trifunov, D. (2012, October 26). China Surpasses U.S. When it Comes to Foreign Direct Investment. Retrieved October 2013, from Global Post:

Wesley, D. (2011). Chinese Soft Landing. Retrieved from:

World Bank. (2013). Various Statistics. Retrieved from:

Xinhu, G. (2013, January 18). China's GDP growth eases to 7.8% in 2012. Retrieved from

Figure 2 - Trends in China's GDP

Figure 4- Private Consumption (Blue) (Wesley, 2011)

Figure 5 - Unemployment Conundrum

Figure 6 - Productivity v. Median Income

Figure 7 -- Interest Rate Comparisons

Figure 10 - Real and Nominal Exchange Rate

Figure 11 - Trade Balance (Durden, 2010)

Figure 13 - Shanghai Trends

Figure 15? SEQ Figure * ARABIC "2" - Consumer Confidence Comparison (China Internet Watch, 2013)

Figure14 - Housing Issues (Another Bubble, 2011)

Figure 15 - Debt to GDP… [read more]

Carbon Emissions During Recent Decades Essay

… " (Taylor) The reality is that the tax affects everyone, taking into account that companies have to increase their prices in order to be able to keep part of their profits.

The Australian society as a whole has experienced a series of economic issues as a result of the carbon tax being implemented. Individuals like Abbott lobby against the tax both with the purpose of having the masses understand the degree to which the tax affects them personally. "On average, households will be around $550 better off in 2014?15 than they would have been with the carbon tax in place. This is about taking the pressure off electricity and gas bills." (LEGISLATION TO REPEAL THE CARBON TAX)

The main point is that removing the carbon tax is most likely to improve the Australian economy. With countries like the U.S. And China continuing to express little interest in carbon dioxide emissions, it seems like communities from around the world practically have to choose between damaging their economy or damaging their environment (Gardner). While the former seems like the moral way out for most people, the truth is that the latter seems much more effective when regarding matters from a financial point-of-view.

The Australian carbon tax has had disastrous consequences on the country's economy. Moreover, it appears that the majority of Australians were able to predict this and actually opposed the tax. "A June 2011 poll revealed that almost 60% of Australians opposed the tax, while just 28% favored the scheme (the rest undecided)." (Bell)

All things considered, it is difficult to determine whether the tax was actually a failure. The truth is that it is perfectly normal for someone to support the repeal when considering the consequences that the tax has had on the Australian society. However, the tax itself should be praised on the role that it played in having people understand how important it is for them to fight pollution. Carbon dioxide is becoming more and more of a problem in the contemporary society and legislation such as the Australian carbon tax seem to be the best solution. Even with this, the only solution for the Australian public to avoid suffering more harm as a consequence of the limitations the tax imposes would be for it to be repealed.

The federal government would have to find a balance between the carbon tax and an instance in which carbon dioxide is no longer taxed. The gas is certainly responsible for much of the environment's deterioration but control needs to be exercised one step at a time rather than suddenly. While it is pointless to discuss whether or not individuals like Abbott are trying to take advantage of the situation with the purpose of gathering voters, the truth is that the carbon tax in its current form is seriously damaging the Australian society and needs to be repealed.

Works cited:

Bell, L. "Australian Voters Energetically Reject Concocted Climate Crisis And Carbon Tax Disasters." Retrieved October 19, 2013, from

Gardner, T.… [read more]

Economics Explaining Airline Ticket Prices Term Paper

… Figure 2; Increase in demand

If the airline has a surplus, with more seats available that the expected demand, the decreases in demand result in a decrease in price as the demand curve moves to the left and the point at which is crosses the supply line will be a lower price. These scenarios all assume that the supply remains the same. The complexity emerges when more than one airline has flights on the same route, as the supply will not all be in the control of a single airline, but the level of supply still impact on the way prices are determined; if one airline reduces the supply the other airlines may also benefit from that reduced supply.

For the airline that has tickets to two different destinations at the same price, although the underlying costs are different, the prices have been determined by that demand not by the costs. It makes economic sense that both flights should continue, although one is likely to be more profitable than the other. Even if the longer distance flight is not making a profit, it may still be worth running it, if it supports other profit making flights, such as connecting flights. Therefore, it is the demand that is impacting on the prices, not the underlying costs, and the viability of the flights relates to the cost and realizable revenue. If the loss making flights do not support sufficient profit it is likely that the airline would decrease the supply, by reducing the frequency of the flights, or withdrawing from that route, which would redress the supply and demand equation, as it would reduce the supply in line with the reduced demand and may hold…… [read more]

Consumer Demand Essay

… This section also seeks to explain the difference between accounting costs and economic costs and demonstrate the nature of fixed, variable, and marginal costs.

A supply decision is described as an expressed willingness and ability to manufacture a product at varying prices (Shiller, 2009, p.99). This concept is a by-product of the question of the quantity of products that can be produced and the question of what quantity should be produced. Therefore, production is an important element for understanding a supply decision because of its role in determining the availability and price of products and services in the market. While the production process is influenced by several major factors, the most essential question in this process is the quantity of resources needed to product a specific good. This question is answered by the production function, which shows the link between inputs of capital and labor and the outputs of products and services (McGahagan, n.d.). In essence, the production function reveals the maximum quantity of producible goods in light of combination of various input factors.

The production function is based on efficiency, capacity, marginal physical product, and law of diminishing returns. The law of diminishing returns states that the marginal physical product of any production or manufacturing factor such as labor will start to decline at some point as it's increasingly used in a particular production setting. This implies that the marginal physical product of any variable input reduces with increased use with a specific quantity of fixed inputs. It's also known as the law of variable proportions since it's an actual generalization made by economists regarding the nature of technology despite the possibility to merge similar production factors in different portions to produce the same product (Johnson, n.d.).

Since the production function does not reveal how much a company will want to produce, the firm must examine the costs of production in order to maximize profits rather than production. The evaluation of production costs is the second step in making supply decisions after the production function. During this process, the firm must examine fixed costs, variable costs, and marginal costs, which are important aspects of determining the total costs. Fixed costs are costs that don't increase with increase in output since they do not vary with the output rate such as rent. As the name suggests, variable costs are costs those that vary with the output rate and determine increases in the total costs. Generally, these are costs of production that change when the output rate is changed such as the costs of materials and labor. Marginal costs are the most important factors in short-term supply or production decision because they are changes in total costs after the production of one or more output unit. The other important costs in production are economic costs and accounting costs. The main difference between economic and accounting costs is essential difference between dollar and resource costs where economic costs focus on dollar value of all resources while accounting costs are explicit dollar outlays… [read more]

USA Business Cycle Research Paper

… The two large ones are the Dow Jones Industrial Average and the NASDAQ index. The latter is more related to high-tech and blue-chip stocks while the former is a catch-all for other types of companies. The Dow Jones average has… [read more]

Amzn Company Overview Amazon Term Paper

… This means that operating income declined to just 1% of total revenue in 2012, a very fine line that is close to a loss. Combined with the increase income tax, Amazon slipped from profit to loss over the course of… [read more]

Business Environment in Taiwan Research Paper

… S. territory. This will allow the U.S. raw material suppliers (for Taiwan's ICT sector) to freely interact with their existing and potential clients and follow-up through their own visits at a later stage to Taiwan. The Ministry of Economic Affairs… [read more]

Exchange Markets Global Credit Essay

… This means that for much of the world, interest rates are tied to the availability and performance of the Euro on currency trade markets.

2. In your own words, relate the importance of a CDS to the Credit Crisis of 2007-2009.

In the latter part of the 2000s, the global community was afflicted with a sudden and disastrous downturn of the world's credit markets. The culprit was identified as subprime lending, in which individuals who were not otherwise suited for the terms of their repayment conditions were awarded with large scale loans such as mortgages. When a sudden downturn in the stock market produced evidence that numerous major banks were not in a position to repay withdrawing investors, collections and foreclosure became threat to subprime borrowers.

A major culprit that was less readily identified, however, would be the Credit Swap, a transactional strategy which became exceedingly popular in the financial trading markets in the years just before the credit crisis took hold. According to the text by Microchnik (2010), "CDS are meant to simply shift economic risk to those parties most willing and able to bear it without adding systemic risk to the economy, during the recent financial crisis the unregulated and pervasive CDS market actually contributed to systemic risk." (p. 1)

However, they had the otherwise unintended effect of creating a scale of risk so considerable that those very banks which gave foundation and stability to the world economy began to tumble. Indeed, it was this overburdening of risk taken on by the investment banks that would ultimately lead to the wave of collections against less-than-optimal borrowers. The Credit Swap phenomenon was the spark that set the credit crisis in motion.


Kennon, J. (2012). The Basics of LIBOR. About Investing.

Microchnik, M. (2010). Credit Default Swaps and the Financial Crisis. Academic Commons.

Moffett, M.H., Stonehill A.I., & Eitemen, D.K. (2012). Fundamentals of multinational finance (4th Ed.).…… [read more]

Hsbc in Japan and Australia Dissertation

… Reach agreement on core questions for each Board member based on the assortment criteria

8. Assess candidates against the agreed selection criteria

9. Make and link final selection decision

Some recommendations on how possible problems could be eliminated from this process are many. One thing is to use more technology. The less technology, the more problems. For example using the web helps some organizations to advertise across the world and reach candidates that are more diverse in addition to allowing the corporation to publicize quickly whenever vacancies start to come up. Also using more test are helpful in getting rid of some problems. Candidates should take aptitude tests which are designed to match their critical skills e.g. numerical, mechanical, verbal, or spatial cognitive. For sure roles, trained interviewers can use character questionnaires.


Carbon copy. (2013, Aug 05). Education.

Bell, S. (2004). Inflation-plus targeting at the reserve bank of Australia. The Australian Economic Review, 37(4), 391-401. Horesh, N. (2008). "Many a long day": HSBC and its note issue in republican china, 1912-1935. Enterprise & Society, 9(1), 6-43.

HORESH, N. (2013). Money for empire: The Yokohama specie bank monetary emissions before and after the May fourth (wusi) boycott of 1919. Modern Asian Studies, 47(4), 1377-1402.


Hughes, L. (2012). Climate converts: Institutional redeployment, industrial policy, and public investment in energy in japan. Journal of East Asian Studies, 12(1), 89-117,159.

Hussain, G.R., & Zurbruegg, R. (2007). Awareness of Islamic banking products among Muslims: The case of Australia. Journal of Financial Services Marketing, 12(1), 65.

Kelly, H.F. (2002). Focus on the economy: "with a little help from our friends." Real Estate Issues, 27(3), 30 -- 32.

Kelly, H.F. (2002). Focus on the economy: "with a little help from our friends." Journal of Real Estate Portfolio Management, 8(4), 30-32.

Kerr, C. (1995). Human resourcing following a merger. The International Journal of Career Management, 7(2), 7.

Leeson, G.W. (2007). Bernhard ebbinghaus: Reforming early retirement in Europe, japan and the U.S.A. European Sociological Review, 23(5), 665-666.

Lu, Q. (2008). Government control, transaction costs, and commitment between the honking and shanghai banking corporation (HSBC) and the Chinese government. Enterprise & Society, 9(1), 44-69.

Luis, A. (2013). Macro and micro prudential regulatory failures between banks in the United Kingdom and Australia 2004-2009. Journal of Financial Regulation and Compliance, 21(3), 241-258.

Macve, R., & Chen, X. (2010). The "equator principles": A success for voluntary codes? Accounting, Auditing & Accountability Journal, 23(7), 890-919.


Murray, G., & Peetz, D. (2013). RESTRUCTURING OF CORPORATE OWNERSHIP IN AUSTRALIA THROUGH THE GLOBAL FINANCIAL CRISIS. The Journal of Australian Political Economy, (71), 76-105.

Ross,… [read more]

Jpmorgan Chase, in 2012 Application Essay

… Mobile banking continues to dominate in the banking industry. However, mobile banking faces challenges of possible hacking. Hackers may tamper with software that allows automated online transactions and derail the entire process. The banks are taking appropriate measures that would help safeguard clients the effects of software intrusion. Security and privacy contacts are essential to avoid entrusting individuals operating the software for automated banking from revealing any important security details. Billing organizations must acknowledge all the terms and conditions set in privacy and security contracts with the banks. Consumer service providers in mobile banking must also acknowledge contracts on privacy and security of the mobile banking system used.

Banks have automated fraud discovery systems designed to safeguard software that supports automated transactions. Computerized systems automatically discard fraudulent transactions. Secured networks are applicable in the mitigation of risks and fraud that mobile banking customers may experience. Business law is also applicable to the protection of software used in mobile banking. Billing organizations and service providers must conform to laws that govern fiduciary duty between them and the bank. Banks, therefore, have robust security to safeguard against any possible fraud that may occur in mobile banking.


Bradgate, R. & White, F. (2007). Commercial Law. New York, NY: Oxford University Press.

Fein, M. (2011). Securities Activities of Banks. New York, NY: Aspen Publishers Online.

Rob, A. (2008). Obedience as the foundation of fiduciary duty. Journal of Corporation Law, 34 (1), 43-97. Retrieved from

Statsky, W. (2011). Essentials of Torts. New York, NY: Cengage Learning.

Tepper, P. (2011). The Law of Contracts and…… [read more]

Turkey's Economy the Economic Indicators Research Paper

… Turkey's Economy

The economic indicators of a country provides professionals with information regarding the relationships among the various factors that influence the collective and individual welfare of citizens. Hence, links among factors such as inflation, GDP, and unemployment can offer insight into how the dynamic of these factors work together to achieve certain effects. Such information can also help policymakers to create economic solutions for the purpose of providing better for the country and is citizens. Unemployment, for example, can be mitigated by creating policies around an understanding of the country's GDP, inflation rates, and how these interact with each other. In Turkey, for example, a relatively close positive correlation is found between GDP and inflation, whereas unemployment is inversely correlated with these.

An unemployed person can be defined as someone who is of age and sufficiently able bodied to perform work, but who has no source of formal income. In other words, minor children who are living with their parents cannot be considered to be unemployed. Unemployment in Turkey and elsewhere is especially prevalent among young people, who, just having left school and before entering higher education, have not built up sufficient experience and skills to enter the full range of the job market.

Unemployment in general can relate to several factors. These can be directly related to the five type of unemployment identified by Oskay, Seda, and Ibrahim, which include: Frictional Unemployment, Structural Unemployment, Demand Deficient Unemployment, Seasonal Unemployment and Hidden Unemployment.

Frictional unemployment is experienced by former employees who have left their existing work or have been dismissed. Unemployment occurs for as long as they look for work. Structural unemployment occurs when the industry changes due to influencing factors such as technology or migration. In Turkey, and example of this is lower employment levels in the agricultural sector and a rise in urbanization. Demand deficient unemployment is closely related to…… [read more]

Coporate Finance/Accounting the First Area Case Study

… The goal, of course, is to not fail to meet your earnings by a penny, as well as to not exceed expectations by too much -- since doing so could dramatically later future expectations and throw off the smooth, regulated meeting of earnings. Companies play this game, of course, because it helps to bolster their stocks. The public and the financial community in general is greatly impressed by companies that meet their earnings over a sustained period of time. There are many different ways in which companies can subtly manipulate their earnings to meet the expectations of analysts. One is to defer recording revenue until it is advantageous to do so -- a similar process may involve losses. The point, of course, is to keep investors pleased by demonstrating stability.

I was astounded to find out that the history of writing and record keeping can be traced back to accounting and the management of pecuniary resources. I always thought that writing was created for some high literary pursuit of which I could not conceive. Moreover, I was almost certain that record keeping was began for the purpose of history -- such as to denote the fact that an ancient king had 27 wives or to trace the lineage of such a person. The bible certainly alludes to the latter fact, although that was written well after most of the events described in the article "Antecedents of the Accounting Profession."

I also believed that this same concept applied to Scribes, and was shocked to see that they dealt less with history than…… [read more]

Calculate the Profit-Maximizing Price Economics Term Paper

… Based on the data in the table, the company will not make profit this year because the Total costs are higher than the total revenue no matter the quantity the firm produced.

(iii). The company might increase its profit level in the next year if the firm decrease its total costs of production.

Fig 1: MC, D, MR Curves

2a.Demand curves for GGC's product in the Western Market

Q = 5,013.824-0.25P

P = 20,055.296 -- 4Q,

Q = 5,013.824-0.25(1,995)

Q= 5,013.824 -- 498.75


P = 20,055.296 -- 4(4515.07)



Substitute Eq 1 and Eq 11

1995 = 20,055.296 -- 4Q,




1995 = 20,055.296 -- 4Q,

Demand curves for GGC's product in Western Market

Price ($)


Total revenue

Marginal revenue




































Demand curves for GGC's product in Eastern Market



Total Revenue

Marginal Revenue































-1757990,4…… [read more]

WACC Bender Initial Investment Research Paper

… Debt financing includes such things as long-term loans, so there is always some sort of risk that goes along with this type of procedure. When used properly debt financing allows you to pay for new buildings, equipment and other assets used to grow your business before you earn the necessary funds. This can be a great way to pursue an aggressive growth strategy, especially if you have access to low interest rates.

Care must be taken before taking on this sort of commitment. The most obvious disadvantage of debt financing is that you have to repay the loan, plus interest. Failure to do so exposes your property and assets to repossession by the bank. Debt financing is also borrowing against future earnings. This means that instead of using all future profits to grow the business or to pay owners, you have to allocate a portion to debt payments. Overuse of debt can severely limit future cash flow and stifle growth.…… [read more]

Glass Steagall Act 1933 Financial Services Modernization Act 1999-2000 Research Paper

… Glass Steagall


Congress voted in November of 1999 to repeal the depression-era act that separated the commercial and investment banking industries which blurred the distinction between commercial and investment banking considerably (Fraser & Hebb, N.d.). This gave banks substantially more power to design operations and took a long-term effort to tear down all the legal walls. Some have argued that this also introduced a "culture of recklessness" (Weissman & Donalue, 2009). The area two specific areas, the regulatory environment that created the asset bubble in the mortgage-based collateral and the rapid growth of structured instruments, that led to the mortgage industry "mispricing" various assets that ultimately led to the crash of investor's confidence in the entire financial system (Ngassam, 2013).

The argument that was used to justify bank deregulation was that the public would ultimately be better off by banks having more control over their operations, markets, and investment activities. It was also argued that regulations were redundant because the market and competition would act to naturally regulate the industry through competition and natural mechanisms. This would in turn lead to more product innovations and consumers would be able to drive this trend by choosing which products and services that they valued. Another item that also drove the move to deregulation was technology. Significant advancements in technology made infrastructure possible that could not only give banks more control of their activities and streamline accounting tasks. This worked to reduce transaction costs giving banks an advantage to move towards greater quantities of scale.

After the banks became deregulated they were also now permitted to grow larger through mergers and acquisitions. Thus larger banks bought up smaller banks quickly and as a result the entire industry consolidated rapidly. The consumer generally benefited from these acquisitions because they now had access to a wider range of products and services. Not only did the power of banks expand domestically, but this trend…… [read more]

Financing Foreign Trade Capstone Project

… The Export- Import bank provides direct loans, guarantees, and insurance to help finance U.S. imports when the private sector is either unwilling or unable to do so. The OPIC provides political risk insurance and finance to support U.S. investment in developing countries (Congressional Research Service, 2011). The Ex-Im Bank and OPIC address market failures by helping to offset foreign governments (in this case Australia) export promotion efforts. Regarding financing of AUSFTA (Australia United States Free Trade Agreement) a non-discriminatory environment was created. Financing of the foreign trade was defined with respect to all insurance and insurance related services; banking and other financial services; and services incidental or auxiliary to a service of a financial nature (Congressional Research Service, 2011). The scope of application is applied to measures by either country that impact financial institutions located in the territory of the country controlled by persons of other country; investors from let's say U.S. Or Australia who have invested in financial institutions located in either the U.S. Or Australia; the investments of investors of the other country in financial institutions located in that country; and finally, cross-border trade in financial services by service supplies of the other country (Congressional Research Service, 2011).

There are a number of agricultural products that are traded between Australia and the United States notable among them: Beef, Dairy, Tobacco, Cotton, Peanuts, Avocados, chicken, pork, Florida citrus, stone fruits, corn apples, and Californian table grapes. For the United States citizens who export to Australia, the foreign trade financing is facilitated by the Ex-Im Bank and the OPIC especially under circumstances when private financers are unable or unwilling to come in. The National Export Initiative (NEI) also finances small and medium sized enterprises that export.

References List

Alomar, K. (2007). Doing Business with China: Taming the Dragon. Secured Lender, 63(4), 68-


Congressional Research Service. (2011). International Trade and Finance: Key Policy Issues for the 112th Congress. Retrieved from

Oxley, A. (2001). Report: An Australia-United States Free Trade Agreement- Issues and Implications. Retrieved from… [read more]

Stock Investment Analysis Term Paper

… Mutual Fund Analysis

Investment management can be an extensive endeavor even for the most astute managers. For one, investment performance is often measured for the short-term which is counterproductive to wealth accumulation. Due in part to this short-term nature of fund expectations, managers often engage in activities that ultimately reduce shareholders. Aspects such as portfolio turnover create tax inefficiencies for shareholders as management quickly buy and sell "hot" stocks. High expense ratios make it harder for managers to outperform the market, as they must do so by at least the amount that they charge in fees. By chasing short-term performance, management often neglects undervalued securities with strong long-term potential. As such, fund managers must constantly juxtapose the interest of shareholders with the interest of the overall fund (Bogle, 2007). By focusing solely on long-term investments, a significant decline will often cause investors to withdraw or redeem funds at precisely the wrong moment. However, if funds are successful over the short-term, an influx of funds quickly enters causing higher fee income for the manager who is paid based on the percentage of assets held (Burton, 1996).

When analyzing the FLCSX, many of the problems mentioned above become very profound in regards to the overall performance of the fund. Relative to the S&P 500, the fund has lagged substantially. The fund YTD has returned approximately 7% while the S&P 500 has risen over 15% so far this year. I attribute this discrepancy to many of the prevailing issues listed above. For instance, according to Yahoo Finance, the portfolio turnover of the fund is 64%. The manager is exchanging roughly two-thirds of the funds shares yearly. This is very costly as investors, not the manager, are paying for the transactions cost, and capital gains taxes. In addition, the 1% expense ratio causes another headwind for the investors performance as they must achieve a 16% return just to break even with the markets 15% return (16% increase- 1% expense ratio= 15%).

Now in regards to the overall holdings of the fund, they are much diversified. The top ten holdings are spread among varying companies and industries which help to smooth out growth. However, too much diversification makes the fund mediocre in its return potential. If the mutual fund diversifies too much, it will tend to act more like an index fund rather than a mutual fund. In this instance, the higher expense ration relative to the index fund is not justified. When analyzing the top 10 holdings of the firm, one quickly realizes that the manager is positioning the fund for an economic rebound. 23% of the funds assets are in financial services which have lost large amounts of value since the financial crisis. JP Morgan Chase (JPM) is the largest holding of the fund accounting for roughly 3% of the funds assets. Wells Fargo (WFC) is the third largest holding accounting for another 2% of the funds holdings. Wells is very interesting as it also is the largest mortgage originator in the country.… [read more]

Interwar Period Should Be Remembered Essay

… ¶ … interwar period should be remembered only as a time of deep political instability, unsettling social and economic change, constantly overshadowed by the prospect of another world war. Do you agree?

While many are inclined to believe that the interwar period was a time of deep political instability, unsettling social and economic change, constantly overshadowed by the prospect of another world war, the reality is that society experienced much progress during this era. Even with the fact that many nations got actively involved in an arms race during the period, people were also concerned about advancing spiritually and culturally. By 1936, for example, the U.S.S.R. came to be "based on new, plentiful, modem technical equipment, with a powerfully developed heavy industry and an even more developed machine-building industry." (Stalin) This shows that people focused on progressing in general, not only from a military point-of-view.

It is wrong to generalize when concerning the interwar period, as it has actually been very complex and as it has made it possible for society as a whole to understand that people were capable of putting across intricate thought in spite of the fact that they were bombarded with information making it difficult for them to refrain from being negatively affected by the First World War and by the arms race. One of the most explanatory ideas demonstrating this is the wave of women who were determined to change society's understanding of gender differences during the period (Beddoe).

Industries in a series of domains emerged during the interwar era as people became more and more obsessed with material values. Technological progress was one of the only viable solutions to improve living standards and the general public thus got involved in this process. Mass production is a principal concept that experienced rapid progress during the interwar period and this reflected positively on technology, taking into account that things that seemed impossible up to that time eventually came to be perceived as particularly easy to perform (Filene).

Political ideologies that saw notable progress in the period, such as fascism, have certainly taken their toll on the world. However, they…… [read more]

International Financial System the Country Capstone Project

… Australia is also a trading hub for Asia and has in the past seen an uplift in GDP and GNP based on the effects of a strong Asian economic growth (Akhtar, Faff, Oliver, 2011). While the Asian nations' economic impact on the global economy is more distributed, it is significant on Australia as the banks in this nation also underwrite many of the development and new venture initiatives throughout Southeast Asia and China (Akhtar, Faff, Oliver, 2011). The mining industry in Australia has a significant impact on exchange rates, as the majority of finished ore and materials are high-value exports (Lonergan, 2004). Due to all of these factors, the Australian exchange rate will continue to stay at a relatively flat growth rate, dropping over the short-term due to Asian economic fluctuations and the mining industry experiencing a slight pause in growth.

4. If possible, find out what kind of exchange rate system your country has (floating, fixed, pegged, etc.).

As of December 12, 1983 Australia has been on a floating exchange rate system as the government believed it would be more accurate in its assessment of current economic conditions.


Akhtar, S., Faff, R., & Oliver, B. (2011). The asymmetric impact of consumer sentiment announcements on Australian foreign exchange rates. Australian Journal of Management, 36(3), 387.

Lonergan, W. (2004). Foreign exchange rates in Australian Mining Company valuations. JASSA, (4), 2-7.

Richards, N.D., Simpson, J., & Evans, J. (2009). The interaction…… [read more]

Remote Industry Description Term Paper

… Business

Economic Influences on the Future of Starbucks

Starbucks is the largest chain of coffee shops in the U.S. In line with many other businesses, the organization suffered financially as a result of the 2009 recession. However, when looking to the future, the economic conditions appear to provide for an optimistic outlook; positive influences are emerging for Starbucks as both purchasers and as sellers. The costs of the inputs appear to be constrained, and in some cases falling, while there are emerging opportunities for the firm to increase internal efficiencies as well as increase sales. Lower costs and increases in sales accompanied by improvements in efficiency will not only lead to a higher nominal profit, they will also lead to performance improvements and a better profit margin, as long as the potential can be realized.

Looking first at the input costs, many of the costs will reflect the underlying commodity prices. One of the most important and apparent inputs are the coffee beans. Starbucks buys only high quality Arabica beans. While the cost of Arabica beans was very high in 2011, in the 2012/13 season there has been a surplus of coffee beans due to a bountiful harvest, which has lead to significant decline in the price of coffee (Josephs, 2013). Starbucks arranges contract for the purchase of Arabica beans in advance in order to ensure they have sufficient supplies of the required input, but they are still able to benefit from the lower prices (Starbucks, 2012). The contracts used by Starbucks are undertaken on a "price to be fixed" basis, where the firm will fix the price at a future date, with reference to the spot prices (Starbucks, 2012). The firm pays a premium on the beans, but a lower spot price will result in lower costs. Other potential cost benefits exist in terms of the potential for increased levels of productivity. It has been estimated that over the next five years the coffee industry will be able to achieve an average improvement of 1.2% per annum, which will have a beneficial impact on the overall costs.

However, there are also some negative influences. Dairy prices within the U.S. have been showing an upward trend, which shows no sign of abating (Economagic, 2013). The price of oil is also expected to increase (, 2013). The United States is not a coffee producing nation, so imports coffee as well as other inputs. The costs will rise where the cost of transportation increases. Overall rising energy costs will also have a negative impact due to the energy needs of operations,…… [read more]

Business Financing and the Capital Term Paper

… In today's economy, a business considering raising business capital through debt financing or equity options should critically examine the costs and benefits of each measure. This will help the business to avoid sticking with debts that cannot be repaid while lessening cost of capital, managing cash flow, and focusing on growth (Coplan, 2009). The other factors for the firm to consider include the stage the business is in, industry regulations for assets, receivables and inventory, amount of repayments, and overall business goals.

In some cases, a business may decide to raise capital from a foreign investor because it's a good portfolio that provides numerous growth opportunities and lessens risks. Seeking capital from a foreign investor is used because of acknowledging the significance of being diversified. This implies that a business seeks to generate capital from a foreign investor to obtain different asset classes since a selected combination of investments minimizes risks and maximizes return (Sharp & Hua, 2004). However, the process of seeking capital from a foreign investor is associated with certain risks and rewards. Some of the major risks of this process include foreign exchange rate risks and political risks while the rewards include minimal economic risk and the likelihood to access top-performing firms with a specific industry.

Relationships between Risk and Return for Common Stocks vs. Corporate Bonds:

Common stocks and corporate bonds are examples of different securities with varying levels of risk and return. While common stocks have the highest investment risks and highest probable returns, corporate bonds have minimal risks and lower potential returns. The historical relationship between risk and return for common stocks vs. corporate bonds is attributed to making the right choice regarding the company to invest in. Generally, common stock holders receive more payment because of better performance. However, in the event of a bankruptcy, these holders have a relatively weak claim to payment than corporate bond holders. Furthermore, common stock holders are the last to be paid in such an incident, which demonstrate the high risk of these financial instruments.

Despite of their differences in risks and returns, these investments require considerable risk aversion measures by the investor. One of the major ways for risk aversion or risk reduction in a portfolio or investment is diversification. Diversification helps in risk reduction in a portfolio through providing exposure to more investment opportunities. The varying investment opportunities in turn enable the investor to lessen risks through maximizing returns. Furthermore, through diversification, an investor can be able to develop a balanced portfolio that minimizes risks and maximize returns.

In conclusion, business financing and capital structure is a process that involves the use of various financial instruments and processes depending on certain factors like the type, size, and overall goal of the business. Notably, one of the major concepts used in business financing and the capital structure is financial planning that helps to determine a firm's current and future financial position. Financial managers should use the various financial concepts effectively during the process in order to… [read more]

Economy Has Been Impacted Term Paper

… ¶ … economy has been impacted by a number of factors which are increasing the overall amounts of volatility. To fully understand why certain polices have been perused requires examining the decisions that were made and the effects they are having on everyone. This will be accomplished by looking at the Keynesian economic philosophy, the role of consumer confidence and how it impacts aggregate demand. Together, these elements will highlight the underlying strengths and weakness.

The chapter that was examined is illustrating the challenges that can impact the economy during recessions. The Keynesian theory is providing governments with the ability to deal with these issues and reduce the negative effects of these events on everyone. This is because it understands the primary drivers of growth most notably: consumption, investment, government spending and net exports. These different areas will have an impact on aggregate demand and ensure that consumers continue to spend money. This will have a positive or negative influence on the unemployment rate (depending upon the underlying amounts of economic activity which is occurring). (Schiller, 2010)

According to Keynes, during times of severe economic distress, these variables will determine if a recession occurs and the length of it. This is based upon events which happened during the Great Depression. In this case, consumer demand declined dramatically in 1929 and continued well into the 1930s. One of the ways that helped to restore full unemployment and economic growth was through the industrialization of different economies from World War II. This provided them with added levels of aggregate demand (based upon the large amounts of government spending). (Schiller, 2010)

These experiences helped Keynes to realize that government can provide added levels of stimulus during times of economic distress. It will help to encourage consumer spending and have positive effects on businesses. They will begin hiring new workers and economic growth will resume back to normal levels. (Schiller, 2010)

To achieve these objectives others tools can be utilized in the process to spur demand. The most notable is to reduce taxes in order to encourage increased amounts of spending. This has been utilized during the 1960s, 1980s, the early 2000s and in the recent recession (from 2008 to 2009) in order to stimulate economic growth. The results are that this helps to encourage economic activity. (Schiller, 2010)

However, it will also lead to an increase in the national debt with the government utilizing deficit spending to achieve these objectives. Keynes believes that this is something which is acceptable. This is because he feels that these levels will decline through an increase in the total amounts of taxes received from more people contributing to economic growth. (Schiller, 2010)

These insights matter to me personally, by describing how different events occur and the way to reduce the negative consequences associated with them. This is because recessions are the direct result of a decrease in consumer spending. These reductions will have ripple effects on economic activity and the way it impacts hiring / business decisions… [read more]

Impact of Pricing Options Essay

… Price Dynamics

In finance, a price or premium is either paid or received for purchasing or selling certain options. This is typically split into either intrinsic value or time value. Intrinsic value is defined as the difference between the underlying price and the strike price -- or the value in which the option has in the market. Time value is the extra value that compensates for the risk in which the writer/seller undertakes over time. Options, of course, are derivative contracts that give the holder the option (the right) to purchase or sell at a specific price at a specific time (Investopedia, 2013). In economics, prices are a way to measure the value of a good or service through the basis of a security. The overall idea is that in a free market economy, the market price reflects the way supply and demand interacts. In other words, pricing a good or service should equate to the quantity and quality of what the market demands, and then in turn by the marginal utility between different buyers and sellers (e.g. A camel might be worth more in one culture and a first edition book in another). This, of course, may be distorted by government regulations, taxation or tariffs, the environment, and the availability of the service or product (Friedman, 1990).

The Black-Scholes pricing model is a mathematical model that looks at a financial market through derivative investment instruments. This method is popular for options markets and statistical modeling has shown that the BS price is relatively close to the observed price. The model was introduced in 1973 in an academic paper from the Journal of Political Economy. Within this scholarly paper, the authors published a partial differential equation that helps understand the price of options over time. The overall idea behind this theory is to attempt to perfectly hedge the option of buying and selling the asset to attempt to eliminate risk. In the BS theory, this hedge is known as delta hedging and implies that there is actually only one true and correct price for the option (Black & Scholes, 1973). At times, this model is known as the Black-Scholes-Merton model since it was Merton who published a more thorough addition to the model, winning he and Scholes (Black was dead) the 1997 Nobel Prize in Economics (Nobel Foundation, 1997).

In practice, the BS model is used because it is easy to calculate and gives a useful approximation when looking at the direction in which price moves. It is also an important basis for more refined models and is reversible and can be used as an input to other ways to quote option prices. According to most scholarship, it is limited because it underestimates extreme moves, assumes stationary processes with continuous time and trading. This means that while valuable, sometimes the BS model fails to incorporate many market discrepancies and risks (Wilmott, 2008).

The binomial options pricing model (BOPM) provides a…… [read more]

Macroeconomics Summary in the Eighth Assessment

… Macroeconomics Summary

In the eighth edition of his seminal textbook Essentials of Economics, Bradley R. Schiller provides a comprehensible yet comprehensive review of the theoretical concepts which are central to microeconomics and macroeconomics, while also utilizing relatable real-world examples to… [read more]

Investors Perceptions Attitude Towards Financial Derivatives Article Review

… Investors Perceptions

In the last several years, investors are having changing attitudes and perceptions about financial derivatives. This is because of the opportunity to increase their overall profit margins and reduce risks (depending upon the strategy that is utilized). In… [read more]

Audit Reports Involve Increased Communication. The System Research Paper

… ¶ … audit reports involve increased communication. The system at which it offers information is too condensed and does not provide new insight into anything. In fact, their pass/fail system lacks adequate financial statement detail. Accountants, managers, their disagreements or… [read more]

Financial Markets in Their Essay

… In this case, however, the British government does have a hammer in the open market transactions of the Bank of England. Investment banks can always move the issue to their clients; the key is to sell out the issue to the investment banks, and the threat of being left out of open market transactions might be sufficient to ensure compliance. This may not be orthodox, but it does allow for the extraction of full value for the British taxpayer, something that appears to have failed to occur with many past privatisations.

Works Cited:

Damodar, A. (no date). Chapter 7: Capital structure: Overview of the financing decision. Stern School of Management. Retrieved April 18, 2013 from

Grout, P., Jenkins, A. & Zalewska, A. (2001). Privatisation of utilities and the asset value problem. CMPO Working Paper Series No. 01/41. Retrieved April 18, 2013 from

Hawkins, N. (2010). Privatization revisited. Adam Smith Research Trust. Retrieved April 18, 2013 from

Kopcke, R. & Rosengren, E. (1989). Are the distinctions between debt and equity disappearing? An overview. Federal Reserve Bank of Boston. Retrieved April 18, 2013 from

Lowe, J. (2008). Value for money and the valuation of public sector assets. HM Treasury. Retrieved April 18, 2013 from

Myers, S. (2005). Still searching for optimal capital structure. Journal of Applied Corporate Finance. Vol. 6 (1) 4-14.

Oxlade, A. (2011). British Gas shares have increased 12 times in value in the 25 years since privatisation. This is Money. Retrieved April 18, 2013 from

Phillips, P. & Sipahoglu, (2004) Performance implications of capital structure: Evidence from quoted UK organisations with hotel interests. The Service Industries Journal. Vol. 24 (5) 31-51.

Schofield, P. (2002). Implementing Privatisation: The UK experience. Her Majesty's Treasury. Retrieved April 18, 2013 from… [read more]

Margin Call: Cinema Research Proposal

… Margin Call:

Cinema is often used to provide metaphorical insight into society, and sometimes attempts to explain why things are as they are and what led to society's current state. While documentaries are often used to provide insight into these… [read more]

Managerial Economics Question Set III a Market Reaction Paper

… Managerial Economics Question Set III

A market has only 2 sellers. They are both trying to decide on a pricing strategy. If both firms charge a high price, then each firm will experience a 5% increase in profits. If both firms charge a low price, then each firm will experience a 3% increase in profits. If Firm 1 charges a high price and Firm 2 charges a low price, then Firm 1 will experience a 1% increase in profits and Firm 2 will experience a 6% increase in profits. If Firm 2 charges a high price and Firm 1 charges a low price, then Firm 2 will experience a 2% increase in profits and Firm 1 will experience a 7% increase in profits.

Construct a payoff matrix for this game.


High Price

Low Price


High Price

5% / 5%

1% / 6%

Low Price

7% / 2%

3% / 3%


Firm 1 / Firm

Increase in Profit

Decrease in Profit

Determine whether each firm has a dominant strategy and, if it does, identify the strategy.

This payoff matrix produces a dominant strategy for Firm 1, because when it charges lower prices, the result is either identical 3% gains for both firms when Firm 2 charges low prices, or a 7% to 2% disparity in favor of Firm 1. This is a dominant strategy for Firm 1 because no matter how Firm 2 responds to lower prices, it cannot produce higher gains than its competitor. Firm 2 has the same dominant strategy in this scenario, to charge lower prices, because this route produces identical 3% gains in profit when Firm 1 matches, and a 6% to 1% disparity in favor of Firm 2 when Firm 1 charges higher prices.

Determine the optimal strategy for each firm.

The optimal strategy for Firm 1 is to charge low prices while Firm 2 charges high prices, a scenario which generates a 7% increase in profits for Firm 1, as opposed to a 2% gain for its…… [read more]

Finance Different Investment Assessment Tools Capital Budgeting Essay

… Finance

Different Investment Assessment Tools

Capital budgeting will require the ability to assess different types of investment. There are various tools which may be used to evaluate potential investments, each of which has advantages and disadvantages. The four main methods are net present value, possibility index, and internal rate of return and payback period. In order to assess how the tools may be utilized, and which may be most suitable for assessing and investment each of these four assessment tools will be reviewed.

Net Present Value

The net present value is an assessment tool which allows for the value of an investment to be assessed in today's money. The process involves taking the future net cash flows (revenue less expenses) and discounting them to allow for the time costs money (Bodie et al., 2010). The discount that is applied may be the expected rate of inflation, but more commonly it will be the weighted average cost of capital for the firm, as that will reflect the cost of the investment, and the opportunity cost (Bodie et al., 2010). The future cash flows will be discounted, and once the cash flows each is discounted an added together, there will be a deduction of the initial investment. If the resulting figure is more than zero, the investment will provide a positive return after allowing for the discount. If the figure is zero or less, the project is not providing the required return to cover for the cost of money.

The net present value is a popular tool, as it allows for different types of investment, for example those with different investments amounts, and over different periods, to be evaluated and compared using the same assessment tool (Bodie et al., 2010). The process…… [read more]

Career Planning Term Paper

… Investment Banker Plan

Traveling throughout life without goals and objectives can leave a student of business lost and without a practical purpose. Before moving forward in one's career path it is often necessary to look back upon past successes and failures to give context and shape to the future. The purpose of this term paper is to evaluate my current career path of investment banker and discuss the alignment of this selection with other parts of my personality. This essay will then discuss the necessary steps that still need to be taken by myself in order to sustain my effort towards my career objectives. These steps will be displayed in a both a short-term (6-18 months) and long-term (2-5 years) fashion. Finally a summary about this discussion will conclude with my own learning points I absorbed throughout this process.

Where I Have Been

In order to understand my position in life and how this position relates to my career of becoming an investment banker it is necessary to rate my current career performance. My current position working in a commercial bank is a good place to start in the banking field. During this time, I have learned the ropes about banking principles. More importantly however, I have learned the fine art of customer service and how my behavior and sales acumen contribute to me and my company's success in this area of business.

Banking has seen many changes in the last few years, and I have been lucky to have been witness to this evolution. King (2012) suggested that "investment banking is very broad, so you could find yourself gaining experience in everything from the back office to HR, finance and it." This exposure appears to have helped me on my career path and has given me some solid background on which I may base my future objectives upon.

Attaining my MBA has been more enjoyable and more practical than I orginally thought it would be. I have learned much in both specific and general ways of applying myself and my academic skills towards my career path of becoming an investment banker. This preparation appears to be very necessary. Stephenson (2012) described investment banking as heavily dependent upon the skills just mentioned. She suggested that "However, its definitely not a career choice for the faint hearted. Intense pressure to get the deal done, and long business hours, mean that personal and leisure time are often sacrificed. And while tremendous rewards await those that reach the top of the profession, it's a very steep climb to get there. For those who leave, a tour-of-duty at a 'Bulge Bracket' Investment Bank serves as a world-class training ground for other professions, and an impressive addition to your resume."

Where I am at and What I need to Improve on

It appears that I am on somewhat of a clear pathway towards achieving my goal of becoming an investment banker. Since I am not there yet, there are things I still must address in… [read more]

Government Taxation Term Paper

… Government Taxation

Major Tax Structures

Income Tax

Sales Tax

Property Tax

Advantages and Disadvantages of Income Tax

Revenue Production


Economic Effects

Advantages and Disadvantages of Sales Tax

Revenue Production


Economic Effects

Advantages and Disadvantages of Property Tax

Revenue… [read more]

Role of Central Banks in Monitoring Dissertation

… ¶ … role of central banks in monitoring and regulating economic and financial matters. I plan to outline examples of central banks, what powers central banks possessed and currently possess, and what specific ways central banks monitor and/or regulate. My key research questions are: What is a central bank? What kinds of strategies should be adopted to generate regulation and effective monitoring? How do central banks monitor and regulate currently? How did central banks monitor and regulate in the past?

This particular topic is of interest to me because it allows me perspective on something that directly affects me and billions of others around the world. I should know where my money is made and who controls things like loans and interest rates. Money is apart of modern society and who controls that money should be known and understood. This might be an interest to others who wish to have knowledge on their finances and how the central bank's influence affects their ability to lend and their creditors transparency level. Articles and journals of central banks like the Federal Reserve along with keywords such as: central bank, federal reserve, financial monitoring, regulation will help to search for concepts and data that will generate concrete information.

Other methods to use can be blogs of popular economists who perhaps might share information of how central banks interact and communicate with other facets of the government. This will build on the role central banks play. One problem I expect to encounter along the way is lack of available current resources due to needing a paid subscription. This kind of paper will be exploratory. I want to find out why central banks have/had the abilities they do and how they are using these abilities…… [read more]

Budget Spending Discussion Chapter

… ¶ … economic times and in bad, public managers will often need to review their budgets and suggest areas in which their budgets may be reduced. Read Question 1 at the end of Chapter 4 in your text and propose how you would approach reducing the School of Public Affairs at Enormous State University budget by 5%. Begin with the strategies offered in your text and try to find articles or information on how cutbacks are handled in your city or state.

Collecting ideas from other schools and similar large universities (e.g. Smithtown patches, 2013; and CSU (2011) that also had to cut their budgets, we may propose the following:

Certain subjects could be eliminated with only the most important and popular ones retained.

Certain divisions could be likewise eliminated and the duties of various employees cut-out or doubled.

Washington Governor Gregoire cut his education budget by introducing less school day. The university could do this too.

University bus transportation (if there is) can be eliminated. Budgetary cuts can be introduced to university meals

5. Other options can include student tuitions increases, less paid furloughs for employees, and cuts in employee benefits, enrollment cuts, workforce reductions, and cuts to administration.

National Budget Simulation: The Committee for a Responsible Federal Budget. Stabilize the Debt Simulator -

Imagine that you are an Economic Advisor to the President and need to provide a plan for reducing the federal debt.

What were the major changes you made to the budget to reach the goal? Why did you choose those changes over others -- " what were the trade-offs involved? How will the changes you made affect different groups of citizens? Do you think these changes would be politically feasible?

Defense -- First and foremost, I would reduce troop levels in Iraq and consider other, less costly, ways of ensuring national security. Domestic politics (partisan affairs) impacts foreign policy sometimes making defense more costly than it needs to be. Zellizer (2010) shows that this was the case with Bush who chose to see Iraq as a War. Clinton, on the other hand, took the path of legality to shape his policies. Cuts can be introduced into national security and foreign policy by evaluating the rationality and nuances of the president's impact on foreign policy.

Tax cuts _ I would also increase tax cuts on a specific population, namely the very wealthy. Tax rate should be raised for both wealthy and the middle-class, but that it should be raised in different rates for unearned income and earned income. In other words, those who earn minimal wage should be exempt from tax, whilst certain brackets should have an increase of 10% per bracket. The super wealthy…… [read more]

U.S. Economic Policies for Pakistani Essay

… U.S. Economic Policies for Pakistani

What could the U.S. government do to increase the opportunities for Pakistani firms to sell their goods in the United States?

The United States of America are bound to stand firm with any country that has the determination to develop a better future by looking for gratitude of liberation for its citizens. Free markets and free trades have brought out the ability of separating the society based on poverty. Therefore, the United States is willing to work hand in hand with individual countries such as Pakistan. The whole region and the entire global community play a critical role in establishing a world that experiences freedom of trade and oversee enhanced prosperity. The United States is determined to offer extensive development assistance using the New Millennium Challenge Account to countries that govern in a just manner and makes investments in their own people, and motivating the freedom of economy. The United States is also bound to steward the world in attempts to stop or rather decrease the toll of many diseases including HIV / AIDS. Human dignity demands necessary and non-negotiable freedom, which is each person's birthright in all civilizations. In the history of freedom, war and terror has always been a threat in Pakistan. Humanity today, has the potential to increase the triumph of freedom over all of these foes. The United States present forward their responsibility to steward this exciting endeavor in Pakistan.

A strong global financial system develops the worldwide national security by simply seeking freedom and prosperity in the world at large. Economic growth on the foundation of free markets and free trades creates employment and increases incomes. These also assist people to move out of poverty, legal reform and spurs economic, and the struggle against corruption and strengthen the habits of liberation. America will endorse growth of the economy and freedom of the economy beyond the shores of America. Every government is accountable for developing their original economic policies and dealing with their own challenges of the economy…… [read more]

Global Political Economy Why Yet an Additional Book Review

… ¶ … Global Political Economy

Why yet an additional book in International Political Economy (IPE), the reader might ask? Because this is an extremely practical concern, the writer discusses at the start why he thinks this book is distinct and beneficial reading for those pupils starting major researches in this industry. IPE became a scholastic discipline in the 1970s, making it among the more youthful industries in the social sciences. It is likewise an industry still marked by significant controversy and fundamental distinctions of technique in concept, technique as well as in the recognition of the industry's main concerns. The center of gravitation of the industry has actually altered substantially because we started our researches in exactly what was then a really brand-new topic. Much current research in the industry has actually actively engaged with and used economic concept and ideas in a manner that would have been viewed as lost or hazardous in the 1970s and 1980s. The writer hopes that pupils who concern research IPE with little or no background in economics will discover this book beneficial, however additionally hopes that economics pupils thinking about political economy concerns will discover that it enhances their awareness of the cons in addition to the pros of economic techniques to political economy concerns and to the comparative strengths of government.

In training IPE to upper undergraduates and masters pupils at the London School of Economics and Government (LSE) for a number of years, the writer discovered that there was no solitary text that offered a fairly succinct review of IPE concept and methods. Beyond the United States as well as in the LSE in specific, Susan Strange still casts a long shadow. As one of the creators of the subject and of IPE researches at the LSE, her iconoclasm as well as forthrightness motivated a generation of pupils, a few of whom passed to instruct and research in the topic. Her antagonism to economics as a social science is populared. She dismissed most economics as mainly removed from the real life, as the modern-day equivalent of the argument in between middle ages monks over the lot of angels that can fit onto a pinhead. Whether this position was warranted, her mindset assisted to take area for IPE as a different discipline in its very early days. It additionally made her some admirers within economics, along with a substantial quantity of antagonism and straight-out termination. Later on in her occupation, Strange was similarly important of those academics, particularly in the United States, who she regarded as too vulnerable to the attractions of economics with its pretensions to value-free social science.

The rapprochement in between IPE, comparative politics and economics that started in the 1980s has actually increased to the point where much modern IPE perhaps takes its main motivation from economic concept as opposed to from international relations or government normally. This book in part mirrors this state of affairs, however it additionally attempts to examine exactly what we have actually discovered… [read more]

Managerial Economics Question Reaction Paper

… )

2.) How important is saving for a household and the economy? How much should be saved?

In the wake of the devastating recession which rocked global financial markets during the last few years, the importance of saving and spending within one's means has been heightened for a generation accustomed to the free flow of credit and lending. Even as average incomes in America have risen to their highest historical levels, "U.S. household debt as a share of income has increased steadily during the past quarter of a century ... (and) this debt to income ratio has soared, reaching nearly 135% in 2007" (Gwartney, et al., 2010). The federal government's rampant lending and spending of money borrowed from its own Social Security program, or increasingly the Chinese government, mirrors the average American family's inability to save money on a consistent basis. This has led to a disturbing "paradox of excessive consumption and deficient saving (as) you cannot have a strong, healthy economy if all or most households face financial troubles, because they are spending just about everything they earn (or can borrow) on consumption" (Gwartney, et al., 2010). To address this issue, families with the means to do so should devote at least 10% of their salaries to a savings account of some…… [read more]

Canadian Economic System Term Paper

… "

The article ends on an optimistic note concluding that hopefully events such as the joint Congress in Montreal, the International Summit in Quebec City, MP Mauril Belanger's new role and the special committee on co-ops will improve the economic climate for co-ops. The result, she believes would be a better world.

Article Two: Peter Strozniak (January 22, 2013) Three Credit Unions in Canada Plan To Merge by July. Credit Union Times

Three credit unions - Affinity Credit Union, Advantage Credit Union and Spectra Credit Union -- are intending to merge by July under the name of Affinity Credit Union becoming one of the ten largest credit unions in Canada.

Credit unions differ from conventional initiatives in that they are member-owned financial cooperatives, that, similar to cooperatives, are democratically controlled by its members, and conducted for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members. Many credit unions also provide a positive outcome to the community in that they support community development or provide some other sustainable project. This is a part of their outcome.

The positive outcome of this mergence is that, according to Scott Flavel, board president of the $2.9 billion Affinity CU:

"We each have a strong commitment to enhancing service for members and look forward to combining the expertise, knowledge and experience of our teams of staff, which is our most valuable resource in meeting that need."

The merger is also promising in that it provides for growth and further diversification in both the rural and urban markets and provides members with greater resources.

Mergence needs approval of members. Once given, the merged credit union will manage $4.5 billion in assets and serve more than 140,000 members from 76 branches in 68 communities across…… [read more]

Industrialized Countries Growth Research Paper

… Growth

Hong Kong and Singapore face similar situations with respect to their economic growth. Both are Chinese-run city-states with limited natural resources, a history of British rule and a desire to build harmonious and prosperous societies. This paper will examine how these two economies are seeking to encourage continued economic growth, now that both are among the world's developed nations.

From a structural point-of-view, Hong Kong's economic policy is guided by the Commerce and Economic Development Bureau. This Bureau exists to provide a unified strategy on matters that facilitate economic growth such as broadcasting, telecommunications, innovation, investment promotion and external commercial relations. The objective is to have coherent, consistent and reliable policy that is specifically designed to facilitate trade (CEDB, no date).

Building on this superstructure, Hong Kong has implemented specific pushes for economic growth in given industries. Hong Kong prefers to focus on service industries where it believes it has competitive advantage, such as education services, medical services, testing and certification, innovation and technology, environmental industries and cultural, creative industries (Hong Kong Economic and Trade Office, 2009). The SAR government funnels resources specifically into the promotion of these businesses both to stimulate supply and demand, and it sets policies through its government bodies that are designed to encourage growth in these particular target areas. The Hong Kong government specifically supports industries that it feels serve the SAR's needs, and avoid those it feels do not contribute to Hong Kong's growth, such as low-wage labour industries (So, 2013).

Singapore's government also supports the development of business. There were some differences in the approach to Singapore's growth. Historically, Singapore has controlled its economy more tightly than Hong Kong, for example with a managed-float currency regime to promote exports, versus Hong Kong's free float regime (Lim, 2008). Other differences in the Singapore model include reliance on state-controlled immigration, dominance of multinationals and government-linked corporations and a relative absence of large home-grown corporations like would be found in other major Asian economies (Ibid).

Singapore's need for labour growth, combined with an absence of space for new immigrants, has led it to focus as Hong Kong has on high-value manufacturing and service industries, for example electronics and biomedical manufacturing…… [read more]

Large Scale Restructuring Has Taken Book Review

… The study is highly recommended for being read by researchers and students of economic geography, regional economics, and urban development practitioners.

Own reflection

The study is exhaustive in context of case studies that it uses for elaborating the thesis case. By comparing the 'inner-city' development of London with that of San Francisco, Vancouver, and Singapore provides adequate theoretical data to build the case for 'new inner city' economy. However, the book does not narrow down its scope, enough for students to conveniently comprehend the theoretical areas being covered. This however is related to the continuing nature of the scope of study that the author has undertaken.


DaCosta, M.N. (2010). A Review of "The New Economy of the Inner City: Restructuring, Regeneration and Dislocation in the Twenty-First-Century Metropolis." Journal of the American Planning Association, 76(4), 521-522.

Graham, S., & Marvin, S. (2001). Splintering Urbanism, Networked infrastructures, technological motilities and the urban condition. Journal of Urban Technology, 9(3), 109-113.

Hutton, T. (2008).The new economy of the inner city: restructuring, regeneration and dislocation in the 21st century metropolis. London: Routledge.

Hutton, T.A. (2006). Spatiality, built form, and creative industry development in the inner city. Environment and Planning, 38(10), 1819-1841.

Hutton, T.A. (2009). Trajectories of the new economy: regeneration and dislocation in the inner city. Urban Studies, 46(5-6), 987-1001.

Scott, A.J. (2006). Creative cities: conceptual issues…… [read more]

Federal Reserve and Foreign Trade Term Paper

… Fed

Faced with a long-term slowdown in economic growth and persistently-high unemployment, the Federal Reserve has undertaken some unusual tactics in order to try to spur the economy. These seldom-used actions were forced because interest rates are already near the zero bound, leaving the Fed's more conventional stimulus options unavailable. One unusual tactic is the widely-publicized multiple rounds of "quantitative easing," where the Fed "changes the composition and/or size of its balance sheet to ease liquidity or credit conditions" (Blinder, 2010). This strategy involved buying back longer term bonds in order to pump liquidity into the banking system. The normal monetary policy strategy is to buy or sell short-term treasuries to manage liquidity; the move to do this with long-term treasuries. This "pushes down long-term rates by shrinking term premiums" (Ibid). Quantitative easing is considered to be less reliable as a means of spurring an ailing economy, and is not as powerful as more traditional mechanisms such as changing the overnight rate. However, in recent years the overnight night rate has been near zero, leaving no room for that policy lever. Having already engaged in open market transactions with short-term treasuries, the Fed adopted the quantitative easing tactic to lower long-term rates. By lowering the term premium, more short-term investment is encouraged.

Another policy lever the Fed has adopted recently is to begin a new program of purchases of mortgage-backed securities. The Fed also noted that it intends to keep this program until the unemployment rate has lowered past a certain point. The former strategy is another form of stimulus monetary policy, but with another different asset type. These asset purchases are intended to lower long-term interest rates and spur consumer spending. With lower rates, the Fed hopes to generate spending on new cars, housing and consumer durables (Yellen, 2013). The Fed rate guidance serves as a buffer against criticism of its programs. Past efforts to infuse money into the economy were met with criticism that they would lead to high rates of inflation (Aversa, 2010). While that inflation never materialized, the Fed felt that offering specific guidance for raising the Fed funds rate and ending its asset purchases would give confidence to the markets that the Fed would not preside…… [read more]

Depository Institutions and Mutual Funds Article Review

… The purpose of the article is to explain the underlying factors fueling this financial migration, from distrust of major banks after the recession and resulting bailouts to a simple yearning for old fashioned customer service, while also posing the question of whether or not credit unions represent a viable alternative to banks for the average American. According to Kim, "with their fatter yields and lower fees, credit unions are having little trouble attracting depositors these days & #8230; (and) many are also positioning themselves as a more wholesome alternative to Wall Street bailouts, bank seizures and predatory lending scandals, offering trustworthy advice and good customer service" (2011). The reporter relies on a wealth of statistical data to provide the credit union trend veracity, referencing a Wall Street Journal analysis of data from the Federal Reserve, the National Credit Union Administration and the Treasury Department which found that "credit unions' share of the total household-savings market climbed to 10% in March, from 9.5% a year earlier" (Kim, 2011). Anecdotal evidence is also used to further support Kim's thesis, as the article describes the success of Otero Federal Credit Union in Alamogordo, N.M., where deposit growth has continued to flourish. While the majority of this article focuses on the positive benefits of credit unions as an alternative to major banks, Kim achieves the necessary sense of objectivity by assuring readers that credit unions have decided disadvantages as well. Limitations on membership eligibility, a focus on deposit products, less sophisticated wealth management services are among Kim's chief complaints with the credit union industry. Overall, however, the article makes it clear that for families struggling with exorbitant account fees, unreceptive customer service, or other dissatisfaction with major banking institutions, the personalized service and financial independence offered by credit unions may be the perfect substitute.

Having read Kim's article and considered her points carefully, an informed reader may be left with a series of questions that demand further reflection. If customer service is so influential on the average American's financial planning process, why are credit unions focusing on satisfying their clients demand for superior customer service when traditional banks have failed to do so? Purely from the standpoint of a depository institution, how do credit unions compare with big banks in terms of consistent profitability and sustainable investment account growth, and are customers sacrificing a certain level of expected value for the benefits afforded by personalized customer service? The first question is important to consider because, with their reputation already sullied after the ignominy of the federal banking bailout, major depository institutions like Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo should be actively prioritizing customer service in an effort to rebuild their shattered sense of brand loyalty. If these massive banking conglomerates are willingly allowing small depositors to flee for the safer confines of the local credit union, this could signal a major shift in the nation's economic structure. The second question is intriguing because, as Kim remarks multiple times in her article,… [read more]

Taxes on Producers Essay

… Offshore Accounts

An offshore bank is one that is located outside of the country of residence of the depositor usually in a low-tax region that provides certain financial advantages to the depositor. The advantages may include the following:

• Low or no taxation

• Easy access to deposits

• Greater bank security and secrecy

• Greater political, local, or financial stability.

Some offshore banks also provide higher interest rates and are less expensive in maintaining due to decreased government intervention and lower overheads. Tax is also not deducted from interest. These facilities also offer opportunities that may not be available from conventional banks such as uncommon investment opportunities, anonymous bank accounts, and higher or lower loan rates. Finally, although not exclusively, these offshore banks may be linked to other structures such as offshore companies, trusts or foundations, which may have specific tax advantages for some individuals.

These offshore accounts are usually located on islands hence the description.

The Cayman Islands

The Cayman Islands is a British-owned territory located in the western Caribbean ocean. Its economy, fueled by tourism and its economic benefits, total 70-80% of its GDP. The Cayman Islands, in other words, profits hugely from its offshore banking services.

The Cayman Islands chose to become a British owned overseas Territory in 196s and, by so doing, relieved itself from direct tax enabling it to maintain one of the highest standards of living in the world. 40 of the world's largest banks, consequently, made their home in this region and more than 80,000 international companies registered in the Cayman Islands.

Advantages of banking in the Cayman Islands.

Some of the advantages include the following:

• No capital gains tax, corporation tax, withholding tax, property tax, payroll tax, or income tax payable by employees.

• Absence of government intervention, allowing free transfer of funds in and out of the Islands, in any currency, with equal freedom to open and maintain accounts in any currency.

• There are no reserve asset requirements.

• There is legal confidentiality of client…… [read more]

Adam Smith He Generally, Indeed Term Paper

… 1). Although "Smith failed to put his two books together in a single coherent system of thought," he nevertheless demonstrated the connection between altruistic or otherwise moral actions and individual self-interest by highlighting how self-interested actions, when taken on a collective scale, can work towards a greater social good (Smith, 1998, p. 17). Furthermore, he pointed out that one need not intend to act altruistically to actually do so, because the wonder of the invisible hand is the fact that it acts without its individual constituent members being aware of it.

Ultimately, the most important takeaway from a careful study of Adam Smith's life and work is the fact that economics cannot be understood or discussed outside the context of human behavior and moral decision-making, because the behavior of markets and economies is entirely dependent on the subjective calculations of individuals. Recognizing this forces one to consider the sorry state of contemporary economics, which for the most part fails to account for both the inequalities inherent in human societies and the centrality of subjective moral and self-interested calculations in individual economic decisions. Understanding the centrality of moral philosophy to Adam Smith's economic work should force contemporary economists to reevaluate the moral content of their theories.


Smith, A. (1869). The wealth of nations. New York:…… [read more]

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