Online Enrolment System

Introduction Background of the study: Automation and online transaction is not relatively new here in our country and more so abroad. In fact it is a growing fad abroad and is beginning to crop up in our country gradually, where bank transactions, business dealings and buying and selling take place. It is very convenient to do online transactions because one does not have to actually be in the supermarket, department store, drugstore or bookstore in order to buy things needed.All it takes is a computer that has an internet connection, and one can instantly place the order. Sooner or later, the product is at the doorstep. Online enrollment is to a certain extent a new fad. The Online Enrolment system of the Ateneo de Zamboanga University serves as a vital part in the life of every student upon entering the university, it gives the student the impression on how the whole institute manages and manipulate in the entire body.The Online enrolment system provides less time consuming and dat a consistency, it stores details of students, year, and section. The enrolment is designed for authorized user of the school office that enables them to produce information required by the different people in the school. Computerized systems help the organization to flourish their everyday life. It is important in such a way that it benefits not only the students but the administration as a whole. It lessen the workload, and provides accurate information.Last June 2012, the Ateneo de Zamboanga University implemented the online enrolment system to lessen the enrollment time, speeds up file management, and minimize inaccuracies and errors. Online Enrolment system is a good example of computer generated process. This can lessen the workload and provides accurate information needed of the university. As a result, it will benefit not only the student but the company as a whole. This study that we are doing is to define the benefits of the students, the advantage and disadvantages, and th e Impact to the students here in the Ateneo.

Chinatown: Jj Gittes Within the Archetype of Noir Heroes

However, director Roman Planks quickly ushers his leading man Into a theater of absurdity, perversion and tragedy thin the family, not as a concept, or cultural Ideal, but one composed of complex characters bonded by intricate relationships and harrowing pasts. With sass's Chinatown, Planks manipulates noir motifs and archetypes masterfully to create a personal statement of anguish and pessimism, with Sites as his detective to whom human limitations apply, a real man measured against the faculties of noir heroes.The script, written by Robert Town, recalls that of The Big Sleep, wherein a seemingly regular case unravels Into a cluster of mysteries, the answer to which eludes the detective, and at times even the audience, throughout the film. It departs from the classic noir models in its character development and by consistently returning the horrors and repercussions of the case to the character's personal lives.Sites' coaxed investigation and, according to the real Evelyn Mylar, poo r detective work plays an Integral role and Implicates him in the murder of Hollies – who not only had no mistress but was attempting to prevent Noah from gallon control of the city water supply. When Slates becomes Involved with Hollow's widow, their relationship regresses accordingly to the Noir template of romance, wherein it does not take long to fall for and get in deep with a broad, but, surprisingly, neither of their motives fit the archetypes we expect.Throughout the film, Sites is hanging by the threads of Evelyn multifaceted deception, but she has nothing to benefit from her lies. While she may have the cold expressions and overwhelming sexuality of a femme fetal, her only desire Is to separate her daughter from the wicked Noah Cross, who fathered both women. â€Å"We expect her to be a vessel of sex; In fact, she turns out to e the victim† Anymore writes (207). Similarly, the detectives pursuit to discover the truth behind Evelyn seems to stem from a genuine investment in her life, along with a desire to make up for past failures.Even when encounters between the two fulfill noir qualifiers, they resonate with a sense of authenticity, both physical and emotional. Such is the scene where Sites strikes Evelyn, of which Anymore writes that â€Å"no scene In detective melodrama†¦ L's more emotionally charged† (210). The incestuous truth behind the relationships of Noah Cross, Evelyn, and their daughter introduces an element of personal tragedy, and a villain who revels in proving himself capable of truly anything.Instead of presenting the family as an ideal our culture was losing to modernity, Planks and Town created a portrait of evil destroying the lives of innocent people without any motive. Parallels are often drawn between this facet of the film and the murder of the director's pregnant wife by the of those of the Greek tradition and the deeply personal expressions of existentialism and absurdist by Campus and Sartre. Each of these situations finds Sites morally and emotionally challenged in ways ROR leading roles of the genre were not and, ultimately, a victim.I disagree with Anymore entirely when he calls the character as a â€Å"hothead and Bulgarian† (206) and think that he misinterpreted the detective's sincerity when describing his business as an â€Å"honest living. † Unlike many of many of noirs leading men in the past, Sites does not revel in the city underbelly and is not entertained by the nastiness inherent to its citizens. Having seen it all has made him passive, and in his own way, empathetic. When the fake Mrs.. Mylar alleges of Hollow's affair, he responds by attempting to turn her away instead of Jumping to capitalize on her feign, hysterical state. Mrs.. Mylar, do you love your husband? † he asks. â€Å"Then go home and forget everything. † The cynicism is present, in his tone, his one liners, but as a result of the agony he has not been able to shake since Chinatown. He is a man that has been on the losing end of corruption for too long. His time in Chinatown caused him to lose more than his conscience, â€Å"putting' Chainmen away for spitting' in the laundry' and â€Å"doing' as little as possible,† but a woman that was close to him and a piece of his sanity.He is wary of being taken from, and of seeing Justice undone and the truth obscured, the rich getting richer at the publics expense. By solving the drought and land grabbing conspiracy he has a chance to compensate for the corruption he was forced to watch go unpunished in the past. By saving Evelyn, he can save the woman he lost. The district attorneys assertion to him that â€Å"you may think you know what's going on, but you don't† looms over his thoughts, desperate to right something in the deteriorating world of 1937, L. A. The connection between the character and director are undeniable.

“Discussion on any three specialized branches of accounting

1. 1 Introduction: Accounting is a very interesting field. Accountancy is the science of recording classifying and summarizing transactions so that relation with outsiders is exactly determined and result of operation during a particular period can be calculated and the financial position as the end of the period may be shown. There are many specialized branches of accounting. In our assignment we discuss only three specialized branches of accounting. They are cost accounting, managerial accounting and human resource accounting.In the case of cost accounting cost calculations are done keeping historical and estimated costs cost accounting and the process calculating costs vary accounting to nature of business manufacturing activity or operating activities. Managerial accounting applies to all types of businesses–service, merchandising and manufacturing. Managerial accounting deals with the needs of the management rather than strict compliance with generally accepted accounting principles. It involves budgeting and forecasting, financial analysis, cost analysis, evaluation of business decisions, and similar areas.Human resource accounting is an extension of the Accounting principles of matching the costs and revenues and of organizing data to communicate relevant information. The Quantification of the value of Human resources helps the management to cope up with the changes in its quantum and quality so that equilibrium can be achieved in between the required resources and the prove. Human Resource Accounting provides useful information to the management. 1. 2 Objectives: (1) To know about the three specialized braches of accounting. (2) To know about their importance. (3) To know about their limitations.(4) To know about their effect in decision making. 1. 3 Limitations: (1) Lack of accounting knowledge. (2) Lack of information (3) Shortage of time 2. 1. 1Cost Accounting: Cost accounting is the accounting of the cost. It is made of two words- Cost and Ac counting. The term cost denotes the total of all expenditures involved in the process of production. Thus, it covers the costs involved in the production and the cost involved while receiving it. Accounting, on the other hand, collects and maintains financial records of each income and expenditure and make avail of such information to the concerned officials.Thus, cost accounting is a practice and process of cost which determines the profitability of a business concern by controlling the cost with the application of accounting principle, process and rules. Cost accounting includes the presentation of the information derived there from for purposes of managerial decision making. Thus, cost accounting is an arts as well as science. It is science because it is a body of systematic knowledge having certain principles. It is an art as it requires the ability and skill with which a cost accountant is able to apply the principles of cost accounting in various managerial problems.According to W. W. Bigg – â€Å"Cost accounting is the provision of such analysis and classification of expenditure as will enable the total cost of any particular unit of production to be ascertained with reasonable degree of accuracy and at the same time to disclose exactly how such total cost is constituted. † According to R. N. Carter, â€Å"Cost accounting is a system of recording in accounts the materials used and labor employed in the manufacture of a certain commodity or on a particular job. † Thus, cost accounting is considered as an art as well as science.It is also a prime part of accounting system which records systematically the cost involved in raw materials and labor used in the process of production and the same time determines the total cost and unit cost of product, the process of recording classifying and analyzing of cost is the cost accounting. 2. 1. 2 Importance of Cost Accounting: Management of business concerns expects from Cost Accounting detailed cost information in respect of its operations to equip their executives with relevant information required for planning, scheduling, controlling and decision making.To be more specific, management expects from cost accounting information and reports to help them in the discharge of the following functions: (a) Control of material cost: Cost of material usually constitutes a substantial portion of the total cost of a product. Therefore, it is necessary to control it as far as possible. Such a control may be exercised by- (i) Ensuring un-interrupted supply of material and spares for production. (ii) By avoiding excessive locking up of funds/capital in stocks of materials and stores. (iii) Also by the use of techniques like value analysis, standardization etc. to control material cost.(b) Control of labour cost: It can be controlled if workers complete their work within the standard time limit. Reduction of labour turnover and idle time to help us, to control labour cost. (c) Control of overheads:Overheads consists of indirect expenses which are incurred in the factory, office and sales department; they are part of production and sales cost. Such expenses may be controlled by keeping a strict check over them. (d) Measuring efficiency: For measuring efficiency, Cost Accounting department should provide information about standards and actual performance of the concerned activity.(e) Budgeting: Now-a-days detailed estimates in terms of quantities and amounts at* drawn up before the start of each activity. This is done to ensure that a practicable course of action can be chalked out and the actual performance corresponds with the estimated or budgeted performance. The preparation of the budget is the function of Costing Department. (f) Price determination: Cost accounts should provide information, which enables the management to fix remunerative selling prices for various items of products and services in different circumstances.(g) Curtailment of loss during the of f-season: Cost Accounting can also provide information, which may enable reduction of overhead, by utilizing idle capacity during the off-season or by lengthening the season. (h) Expansion: Cost Accounts may provide estimates of production of various levels on the basis of which the management may be able to formulate its approach to expansion. (i) Arriving at decisions: Most of the decisions in a business undertaking involve correct statements of the likely effect on profits. Cost Accounts are of vital help in this respect.In fact, without proper cost accounting, decision would be like taking a jump in the dark, such as when production of a product is stopped. 2. 1. 3 Limitations of Cost accounting: Cost Accounting is not an exact science like other branches of accounting but is an art which has developed through theories and accounting practices based on common sense and reasoning. These practices are changing with time. There is no stereotyped system of cost accounting applicable to all industries. It lacks uniform procedure. Concepts, methods and techniques of cost accounting understood and applied differently by different industries.It is used only by big enterprises. The limitations of cost accounting are as follows: 1. The system is more complex: Cost accounting needs to identify the different types of expenses and allocation of expenses is considered as a complicated system of accounting. It needs different forms and formulas to collect the data and preparing the reports. Also it requires number of steps in ascertaining such details. So it involves a more complex system. More complex and complicated system of cost accounting is one of the limitations facing by the cost accounting. 2. It is expensive:In installing and maintaining cost accounting system requires more man power and resources. More analysis, allocation and absorption of overheads requires considerable amount of additional work. If the expenses incurred in ascertaining the cost is more than what is derived from it, then the process of cost accounting is meaningless. In short, the expenses of cost accounting should not be more than the profit derived from cost accounting. Many companies do not adopt cost accounting owing the fact that it is more expensive and not economical. 3. Inapplicability of costing method and technique:Technique and methods of cost accounting differ from organization to organization. One standard method is not adequate for all the requirement of different organizations. It depends on the nature of business and the type of service/product manufactured by the firm. If wrong technique or method is used, it will affect the result. So inapplicability of same costing method and technique is the one of the main limitation of cost accounting. 4. Not suitable for small scale units: One of the limitations faced by the cost accounting in installing it in all types of business is that it is not applicable to small scale units.Through the traditional accounti ng, small scale units can control the cost effectively. 5. Lack of Accuracy: Use of notional cost such as standard cost, estimated cost etc. would not bring out the actual cost of the product. So the cost accounting lacks the accuracy of its results. 6. Lacks social Accounting: Social accounting is outside the scope of cost accounts. Cost accounting fails to take into account the social obligation of the business. 7. Need preparation of frequent reconciliation to verify accuracy: Results shown by cost accounts differ from those of financial accounts.Preparation of reconciliation statements to verify the accuracy is frequently required. This leads to unnecessary increase in workload. 8. Duplication of Work: Many industrial units function effectively and control the cost effectively with the financial accounting. Preparing cost accounting is unnecessary for them and it involves duplication of accounting work. 9. Use of Secondary Data: Cost accounting depends on financial statements fo r a lot of information. Any errors or short coming in the information will affect the results. 10. Lack of cooperation of employees: Cost accounting depends heavily on the cooperation of employees concerned.Lack of cooperation of employees will affect the overall performance of cost accounting. Non-cooperation or opposition from employees will affect the results. 11. Does not control Cost by itself: Cost accounting will not control the cost. It only brings out the possibility of areas which needs control. If the organization does not have an efficient management, the reports and results brought out by the cost accountant is useless. So cost accounting will not control the cost by itself. It needs an effective and efficient management to use it. 12. It is based on estimation and previous data:Most of the data used by a cost accountant is based on estimation of indirect costs, assumptions and previous data. Not using the actual data and costs is the limitation of cost accounting. 13. It only brings out the cost of goods or services: To find out the operational results, we need to depend on financial accounting. Cost accounting will not bring forth the financial status of the company. 14. It serves the information need of the management: We cannot depend on cost accounting for the financial information required by the shareholders, creditors, employees and the society at large.It only serves the requirement of information needed by the management. 15. Not useful for determining the tax liabilities: We cannot treat cost accounting as a basis for determining the tax liabilities of the business. Financial accounting is required for the determination of tax liabilities. 2. 1. 4 Cost Accountings effect on decision making: Managers make decisions that govern how a company reaches its goals. Many of these goals have financial aspects, such as revenue and profit targets. The level of costs included in such decisions has a major impact on the finances of the company.Relia ble reporting of actual costs, accurate estimation of projected costs and the appropriate integration of such costs in managerial decisions is a key component of business operations that meet their targets and further the goals of the company. Relevant Costs: Typical managerial decision making selects one of two or more alternatives. Costs that remain the same no matter which alternative the manager chooses are not relevant to the decision. In a cost-based decision on out-sourcing, a manager has to consider the cost of the subcontract and the savings in-house.For example, if the company still has to pay the full rent despite having fewer employees, the rent is not a relevant cost. If the company can move to a smaller location and pay less rent, the rent becomes relevant. Fixed Costs: The type of cost impacts a manager's decision making. Fixed costs are totals that remain the same independently of the volume of production. Higher production levels result in a reduced cost-per-unit as far as fixed costs are concerned. Typical fixed costs are facility related, such as heating and insurance.They are important for managerial decisions regarding optimal production levels because they influence the product cost and, through the cost, the pricing and profit levels. Variable Costs: A type of cost with a different impact on managerial decisions is the variable cost. Variable costs stay the same on a cost-per-unit basis, but their totals increase with the volume of production. Typical variable costs are materials used in production and direct labour to make the products. Variable costs are important for overall company budget decisions and planning for financing.Managers add variable costs as per-unit-costs times’ production volume to fixed costs to determine total production costs. Step Costs: Step costs are a combination of fixed and variable costs that a manager has to consider to avoid major discrepancies in cost calculations. They act as fixed costs up to a c ertain limit and then change to a new value. Typical step costs are those associated with machine capacity or batch processing. If production volume exceeds certain limits, costs rise substantially to a new, higher level as the company needs an additional machine or has to produce an additional batch.The importance of including step costing in managerial decision making is to either avoid exceeding step limits or to include the relevant higher costs. 2. 2. 1 Management or Managerial Accounting: Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term.Small business managers can leverage this powerful tool to hel p make their business more successful by understanding how management accounting benefits common business decision contexts. According to the Institute of Management Accountants (IMA): â€Å"Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy†.The Institute of Certified Management Accountants (ICMA) states â€Å"A management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking†. Management accountants therefore are seen as the â€Å"value-creators† amongst the accountants.They are much more interested in forward looking and taking decisions that will affect the future of the organization, than in the historical recording and compliance (score keeping) aspects of the profession. Management accounting knowledge and experience can therefore be obtained from varied fields and functions within an organization, such as information management, treasury, efficiency auditing, marketing, valuation, pricing, logistics, etc. 2. 2.2 Importance of Management or Managerial Accounting: The main aim of managerial accounting is toimprove the efficiency and quality of operationsby providing program owners and all others with suitable and applicable cost based performance information to permit for nonstop improvement in distributing the output to outcome the stockholders. Managerial accounting has been developed and used with all from the beginning times to help all the directors to understand the costs of running a project.Modern managerial accounting is created during the industrial rev olution during the difficulties of running a large scale business which show the way to the development of scheme for recording and checking costs to help business proprietors and managers to finalize and make conclusions. So, to conclude, for any business unit starting from the smallest business activity to the largest multinational business to be succeeded requires the use of managerial accounting concept and practices. This accounting provides data to owners for preparation and scheming of rating products and services for customers too.The main focus of managerial accounting is to help the managers for making better decisions. Because of all these reasons, businesses and organizations hire on managerial accountants and thereby, they are becoming integral persons of decision making teams instead of just data providers. 2. 2. 3 Limitations of Management or Managerial Accounting: Though management accounting is helpful tool to the management as it provides information for planning, controlling and decision making, still its effectiveness is limited by a number of reasons. Some of the limitations of management accounting are as follows: 1.Based On Accounting Information: Management accounting is based on data and information provided by financial accounting and cost accounting. As such the correctness and effectiveness of managerial decisions will depend upon the quality of data provided by cost and financial accounts. So, effectiveness of management account is limited to the reliability of sources of information.2. Lack of Knowledge: The use of management accounting requires the knowledge of number of related subjects. Deficiency in knowledge in related subjects like accounting principles, statistics, economics, principle of management etc.  will limit the use of management accounting. 3. Intensive Decisions: Decision taking based on management accounting that provide scientific analysis of various situations will be time consuming one. As such management ma y avoid systematic procedures for taking decision and arrive at decision using intuitive. And intuitive limit the usefulness of management accounting. 4. Management Accounting Is Only A Tool: The tools and techniques of management accounting provide only information and not decisions. Decisions are to be taken by the management and implementations of decisions are also done by management.5. Evolutionary Stage: Management accounting is still in a development stage and has not yet reached a final stage. The techniques and tools used by this system give varying and differing results. It is still named as internal accounting and/ or operational accounting. 6. Personal Prejudices and Bias: The interpretation of financial information may differ from person to person depending upon the capability of the interpreter. Analysis and interpretation of data and information may be influenced by personal basis. As such, the objectivity of decision may be affected by personal prejudices and bias.7. Psychological Resistance: Changes in traditional accounting practices and organizational set up are required to install the management accounting system. It calls for a rearrangement of the personnel and their activities and framing of new rules and regulations which generally may not be liked by the people involved. 8. Persistent efforts: The conclusions draws by the management accountant are not executed automatically. He has to convince people at all levels. In other words, he must be an efficient salesman in selling his ideas. 9.Wide scope: Management accounting has a very wide scope incorporating many disciplines. It considers both monetary as well as non-monetary factors. This all brings inexactness and subjectivity in the conclusions obtained through it. 10. Top-heavy structure: The installation of management accounting system requires heavy costs on account of an elaborate organization and numerous rules and regulations. It can, therefore, be adopted only by big concerns. 1 1. Opposition to change: Management accounting demands a break away from traditional accounting practices.It calls for a rearrangement of the personnel and their activities, which is generally not like by the people involved. 2. 2. 4 Managerial Accountings effect on decision making: Small business owners are faced with countless decisions every business day. Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term. Small business managers can leverage this powerful tool to help make their business more successful by understanding how management accounting benefits common business decision contexts. Relevant Cost Analysis:Managerial accounting information is used by company management to determine what should be sold and how to sell it. For example, a small business owner may be unsure where he should focus his marketing efforts. To evaluate this decision, an accounting manager could examine the costs that d iffer between advertising alternatives for each product, ignoring common costs. This process is known as relevant cost analysis and is a technique that is taught in basic managerial accounting courses. The same process can be used to determine whether to add product lines or discontinue operations. Activity-based Costing Techniques:Once the company has determined what products to sell, the business needs to determine to whom they should sell the products. By using activity-based costing techniques, small business management can determine the activities required to produce and service a product line. Embedded in this information is the cost of customers. Deciding which customers are more or less profitable allows the business owner to focus advertising toward the consumers who are the most profitable. Make or Buy Analysis: A primary use of managerial accounting information is to provide information used in manufacturing.For example, a small business owner may be considering whether t o make or buy a component needed to manufacture the company's primary product. By completing a make or buy analysis, she can determine which choice is more profitable. While this technique is certainly useful, small business owners should only use these analyses as a factor in the decision. There could be other non-financial metrics that are important to consider that would not be part of the analysis. Utilizing the Data: Managerial accounting information provides a data-driven look at how to grow a small business.Budgeting, financial statement projections and balanced scorecards are just a few examples of how managerial accounting information is used to provide information to help management guide the future of a company. By focusing on this data, managers can make decisions that aim for continuous improvement and are justifiable based on intelligent analysis of the company data, as opposed to gut feelings. Information: Accounting management is usually referred to as managerial acc ounting or cost accounting. The main role of accounting managers is to analyze the financial information of a company and to make future decisions for the company.All the decisions accounting managers make are for internal company use only. The information they provide is not given to outside sources at all; it is strictly for upper-level management and owners of the company. The information they provide is used only to increase a company's profitability. Revenues: One of the main roles of accounting managers is to study the revenues of a company. Studying the revenues consists of examining all sources of revenues and looking for ways to increase them. Accounting managers try to make decisions the company can implement that will increase overall revenues.This includes ways of increasing sales and other ways of increasing revenues such as renting out extra space. Expenses: Expenses in a business need to be controlled and monitored. One way company increases profitability is by elimin ating or decreasing unnecessary expenses. Management accountants examine all expenses and look for ways to decrease them. Often this involves cost accounting, which is a process of calculating production costs of goods, and finding the most efficient way of making them and the most efficient quantity they should make at a time.Decisions: With the revenues and expenses analyzed, accounting managers determine what parts of the company are working well and what needs to be changed. This is where the managers make decisions and they give this information to those above them who will implement the ideas they have. Budgets and Forecasting: Another role of accounting managers is determining a budget and forecasting future plans and goals. With the information they've analyzed, part of their job is to create a realistic budget for the company to follow.They also forecast future ideas for increased growth within the company. 2. 3. 1 Human resource Accounting: Generally we can say that, Human Resource Accounting (HRA) is the process of assigning, budgeting, and reporting the cost of human resources incurred in an organization, including wages and salaries and training expenses. In other words, Human Resource Accounting is the process of identifying and reporting the Investments made in the Human Resources of an Organization that are presently not accounted for in the conventional accounting practices.In simple terms, it is an extension of the Accounting Principles of matching the costs and revenues and of organizing data to communicate relevant information. The Quantification of the value of Human Resources helps the management to cope up with the changes in its quantum and quality so that equilibrium can be achieved in between the required resources and the provided information. The American Accounting Association’s Committee on Human Resource Accounting (1973) has defined Human Resource Accounting as â€Å"the process of identifying and measuring data about hu man resources and communicating this information to interested parties†.HRA, thus, not only involves measurement of all the costs/ investments associated with the recruitment, placement, training and development of employees, but also the quantification of the economic value of the people in an organization. Flamholtz (1971) too has offered a similar definition for HRA. They define HRA as â€Å"the measurement and reporting of the cost and value of people in organizational resources†. At last, we can say that, Human Resource Accounting is the process of assigning, budgeting, and reporting the cost of human resources incurred in an organization, including wages and salaries and training expenses.It’s the activity of knowing the cost invested for employees towards their recruitment, training them, payment of salaries & other benefits paid and in return knowing their contribution to organization towards its profitability. 2. 3. 2 Importance of Human Resource Account ing: Human Resource Accounting provides useful information to the management, financial analysts and employees as stated below:- Human Resource Accounting helps the management in Employment and utilization of Human Resources.It helps in deciding transfers, promotion, training and retrenchment of human resources. It provides a basis for the planning of physical assets via human resources. It helps in evaluating the expenditure incurred for imparting further education and training of employees in terms of the benefits derived by the firm. It helps to identify the causes of high labor turnover at various levels and taking preventive measures to contain it. It helps in locating the real cause for low return on investment, like improper or under-utilization of physical assets or human resources or both.It helps in understanding and assessing the inner strength of an organization and helps the management to steer the company well through the most averse and unfavorable circumstances. It p rovides valuable information for persons interested in making long term investments in the firm. It helps the employees in improving their performance and bargaining power. It makes each employee understand his contribution towards the betterment of the firm via the expenditure incurred by the firm on him. 2. 3. 3 Limitations of Human Resource Accounting:Human Resource Accounting is the accounting methods, systems, and techniques, which coupled with special knowledge and ability, assist personnel management in the valuation of personnel in their knowledge, ability and motivation in the same organization as well as from organization to organization. It means that some employees become a liability instead of becoming a human resource. HRA facilitates decision making about the personnel i. e. either to keep or to dispense with their services or to provide mega-training. There are many limitations which make the management reluctant to introduce HRA.Some of the Attributes are:- 1. There is no proper clear cut and specific procedure or guidelines for finding costs and value of human resources of an organization. The systems which are being adopted have certain drawbacks. 2. The period of existence of Human Resource is uncertain and hence valuing them under uncertainty in future seems to be unrealistic. 3. The much needed empirical evidence is yet to be found to support the hypothesis that HRA as a tool of management facilitates better and effective management of human Resources. 4.As human resources are incapable of being owned, retained, and utilized, unlike the physical assets, there is a problem for the management to treat them as assets in the strict sense. 5. There is a constant fear of opposition from the trade unions as placing a value on employees would make them claim rewards and compensations based on such valuations. 6. In spite of all its significance and necessity, the Tax Laws don’t recognize human beings as assets. 7. There is no universally a ccepted method of the valuation of Human Resources. 2. 3. 4 Human Resource Accountings effect on decision making:The effect of human resource investments as well as other decisions and management styles are now represented as a human resource condition precedent to the ultimate productivity or effectiveness of the organization. HRA is not useful to the management alone in achieving its economic goals. It could also be the source of important information for investment decision purposes. The inclusion of appropriate human resource data in published financial statements would, in all likelihood, make such statements for more meaningful in predicting future performance which is, of course, the principal concern of investors (Jawaharlal Lal, 2009).When managers go through the process of HRA measurement treating human resources as capital assets, they are more likely to make decisions that treat the company's employees as long-term investments of the company. Flamholtz (1976) describes t he HRA paradigm in terms of the â€Å"psycho-technical systems† (PTS) approach to organizational measurement. According to the PTS approach, the two functions of measurement are: first, process functions in the process of measurement and second, numerical information from the numbers themselves.Whereas one role of HRA is to provide numerical measures, an even more important role is the measurement process itself. The HRA measurement process as a dual function attempts to increase recognition that human capital is paramount to the organization's short and long-term productivity and growth. When managers go through the process of measuring human resources, they are more likely to focus on the human side of the organization and are more likely to consider human resources as valuable organizational resources who should be managed as such.These are also the effects which are necessary in decision making- Employment and utilization of Human Resources. Information for persons intere sted in making long term investments in the firm. Locating the real cause for low return on investment. Planning of physical assets via human resources. Deciding transfers, promotion, training and retrenchment of human resources. 3. 1 Findings: 1. From our assignment we find the specialized branches of accounting. 2. This assignment helps us to know about the importance and limitations of cost management and human resource accounting. 3.From this assignment we also find how cost, management and human resource accounting effect in decision making. 3. 2 Recommendation: 1. If we want to apply cost accounting in all business related sectors this system should be simple. 2. we think cooperation of employees is necessary for the overall performance of cost accounting. 3. cost accounting should not be expensive. 4. Management accounting knowledge should be broader. 5. We think proper clear cut and specific procedure or guidelines should be created for finding costs and value of human resou rces of an organization. 6.Universally accepted method should be created for the valuation of Human Resources. 3. 3 Conclusion: Cost accounting is not an exact science like other branches of accounting but is an art which has developed through theories and accounting practices based on common sense and reasoning. Management accounting is helpful tool to the management as it provides information for planning, controlling and decision making, and the main aim of managerial accounting is to improve the efficiency and the process which provides useful information to the management, financial analysts and employees.

Urban Tourism Essay Example | Topics and Well Written Essays - 3000 words

Urban Tourism - Essay Example Tourism involves movement to another place for leisure, business, or recreational purposes like site-seeing, and seeing, meeting, and experiencing other cultures (Azizi, 2011, p.1). Urban tourism then refers to the movements of these tourists, domestic or international, to the towns and cities to enjoy the recreational facilities or business opportunities in the urban centers. Tourism is a phenomenon that has been in existence from the ancient times. Tourism has since grown to become a common leisure activity that is practiced across the globe (Azizi, 2011). Hundreds of millions of tourists are received at different tourist sites across the globe each year and the trend has been rising steadily over the past. The social, economic, and technological developments recorded in different parts of the world could be the factors contributing to the increase in tourism witnessed in different parts of the world. The modern efficient means of transport and communication has enhanced the abilit y of individuals to travel to different parts of the world relatively quicker. A foreign tourist may not require the help of the natives or local agents to locate some tourist center or other facilities that they may require courtesy of the modern technology like the internet maps to locate some place.The towns and cities play important roles in promoting the modern tourism industry and this explains the increase that has been recorded in urban tourism. The urban centers provide the main entrance for the international and even the domestic tourists in a country. The centers are often served with international transport and communication networks that provide convenient means of conveyance of the tourists. The centers are terminals for the air transport systems, rail transport, and major highways in a given country. Good infrastructure in the urban centers is an attraction for tourist activities. Similarly, the urban centers are endowed with historic attributes like waterfronts, attr active urban design, museums and theatre halls, conference facilities, exhibition centers, and facilities to host cultural and social functions like sports and festivals (Ruetsche, 2006, p.1). The forests and trees grown in the urban centers make them better environments in which individuals can work or spend their leisure activities (Dwyer et al, 1992, p.229). The urban centers are cosmopolitan and hence experience of a new culture is an attractive feature as well. Urban tourism has been an important industry generating incomes to many cities over the past years. In this view, cities across the globe strive to be attractive to the local and foreign tourists (City Mayors, 2011). The management of the cities makes efforts to improve on aspects like the infrastructural facilities in the cities, improved social amenities, and high level of security for the tourists, and, of course, excellent tourist attraction features in the cities. Tourism is often attached to the hospitality industr y since the tourists are the

Description of Project Management Essay Example | Topics and Well Written Essays - 1000 words - 2

Description of Project Management - Essay Example The first step is for the team and customer to identify set of stories that exhibit the system functionalities that the end product should possess. In the next stage, the project team reads and discusses the stories obtained from the first stage and these stories are ordered according to the estimated duration of story implementation. Here big stories are disintegrated into small stories. There is always difficulty in estimating the effort required for a particular item. It is also difficult to estimate the time that the same may take. To solve this issue, several to-do things are availed so as one can easily make judgments regarding which stories are lengthy and time-consuming. A story may have two to eight points depending on its difficulty. This is done for all the stories in the list. However, the Gantt chart is simple and easy to use since it only includes the drawing and the painting of bars in different colors. Nicholas and Steyn (67) argue that the Gantt chart experiences delays which are especially true when multiple activities that require the same resources are scheduled for the same time. When resources are not sufficient to satisfy the needs of all of them, some activities must be delayed. There are uprising criticisms about the network methods because they incorporate assumptions and yield results that are unrealistic sometimes. The importance of networks is that they show precisely the interdependencies of the project's activities and also the scheduling affects the latter have on each other. I object this suggestion by Nicholas and Steyn (62) on the grounds that the resources are not always available. This, therefore, considers the scheduling of projects with resource constraints and the effects of these constraints on workload fluctuation and project duration. A

Advanced Corporate Finance - 'Company Valuation is an art not a Essay

Advanced Corporate Finance - 'Company Valuation is an art not a Science.' - Essay Example Valuation of a company is very difficult and it takes a lot of efforts for the company to access the right price of the company. There is however never a right or wrong price for a company and the price of companies depends a lot on a number of different factors. The main aim of this essay is to understand and highlight the various aspects for valuing of a company. Also aims to evaluate and argue about the various aspects of the company. It is essential to note that any business person entering into a business should have a valid exit plan. An exit plan from the market is very essential for any business. This is mainly a consideration when a business requires leaving the markets either due to a loss or even when a business plans to dissolve. As a part of the exit plan, the most essential point to be noted that while entering into a business the business person should also consider one aspect i.e. what the business is worth. Business valuation is an industry by itself (Feechan, 2006). The valuation of business can be done by the company itself or even by professional companies that mainly deal with business valuations. The valuation of companies can be based on a number of different aspects, like the net assets, discounted cash flows, etc. These valuations however do not give the full view and story of the company (Bytestart, 2008). There are a number of different modes for companies to be valued. The correct use of the various available valuation formulae will give a better view of the company and will help also provide for the amounts that a buyer might be interested in paying for the company, however this is not necessarily the selling price as the company can only be sold at a price that the buyers will be willing to pay. It is in the case of both the parties, the sellers want to gain as much as possible and the buyers want to pay as little as possible. This however cannot be argued as both the parties are always justifiable in both the cases

English literature Essay Example | Topics and Well Written Essays - 3500 words

English literature - Essay Example ell, they have not hesitated on a single occasion to reject any single possibility to attain it, even at the cost of inflicting unimaginable effect of harm to their fellow human beings. Such desperate attempt of power mongering commenced centuries ago but as the civilization has progressed it has taken a more brutal and naked form. Aristotle perhaps visualized the ongoing process of crime against humanity; thus, he remarked prophetically, â€Å"The fact is that the greatest crimes are caused by excess and not by necessity. Men do not become tyrants in order that they may not suffer cold; and hence great is the honor bestowed, not on him who kills a thief, but on him who kills a tyrant.† (Aristotle, Part VII) On the other hand it quite astonishing to see that no matter how much the tyrants and power mongers attempt to inflict the torture over humanity but they have not been able to destroy the spirit and essence of humanity completely. Human beings, even in today’s world of moral corruption as well as mutual distrust are ready to stretch their hands for helping others. Through literature, music and different other forms of arts they protest against such senseless process of crime against humanity by their human counterparts. Through analysis of certain stories and a movie Born on the Fourth of July, we will try to understand whether mutual struggle of human beings has really been able to retain human nature and values. At the same time we will also see to which magnitude crime against humanity has extended its scope to violate the bond of human fellowship. 1. Born on the Fourth of July/ This film was released in the year 1989 and has been made by deriving inspiration from the autobiography with the same name, from a veteran of Vietnam War, Ron Kovic. Though Ron was born and brought up in a family, having a strong patriotic background but after observing the reality of the Vietnam War though his own eyes, Ron was completely disillusioned about the act of warfare.

Business Plan Term Paper Example | Topics and Well Written Essays - 2250 words

Business Plan - Term Paper Example The business is to be set on rented premises within the University. The current target market has no serious competition basing on a study that clearly indicated that no individual or institution had seriously considered kitting fans (Kurtz, MacKenzie, & Snow, 60). This is with respect to their sports with the aim of encouraging them to actually participate in the events at leisurely levels as opposed to watching and cheering from the sidelines. The niche is cut by the fact that fans only put on new replica outfits meant to identify with their teams but majority rarely try out their respective sports of interest. Provision of cheaper outfit should encourage participation hence a new market. This can also be seen as a way of offering excellence personal training kit for the very active and lively sportsmen at the expediency of their training grounds (Kennedy 2000). Through provision of carefully sourced used equipment not easily found within the city, Brave hearts intends to command personalized customer attention at an affordable price hence a great business opportunity (Hiebing & Cooper, 89). The Student has secured a central location in the city for easier correspondence with external customers. This should provide a collection point easily accessible from any part of the city through all available means of transport. Proper shop layout combined with Student’s knowledge and interest should make Brave hearts Sportswear Investment a worthwhile and profitable venture. Four years from now, Brave hearts Sportswear Investments will be one of the best suppliers of used but quality sports gear within the country with a fully satisfied customer base. This should translate to annual revenues of over two million by being consistent in timely delivery, reasonably priced products and organizing sports events for both professional and regular sports enthusiasts.

IT Resources (Outsource or Insource) Essay Example | Topics and Well Written Essays - 750 words

IT Resources (Outsource or Insource) - Essay Example Outsourcing and Insourcing have merits and demerits as far as an IT organization is concerned. This paper briefly compares the merits and demerits of outsourcing and insourcing. Outsourcing helps IT companies to exploit the cheap and efficient labour market of the foreign countries. For example, India is a country in which lot of IT professionals are searching for jobs whereas America is a country which searches for IT professionals. In other words, insourcing would be a costly affair in America compared to outsourcing. The IT job which may cost $ 10000 in America can be completed from India for around $ 5000. In short outsourcing is cost effective compared to insourcing. Tax benefits are another advantage enjoyed by the IT companies as far as outsourcing is concerned. Outsourcing jobs were exempted from heavy taxes since it is completed in another country. Outsourcing increases the capabilities of an IT company as far as their production capacity is concerned. For example, a company cannot take large volume of works or works beyond its capacity if it is strictly adhere to insourcing. On the other hand, there is no limit for an It company for taking orders if it opt for outsourcing. In fact, software developers are the larger segment of an IT organization as far as total employees of an IT organization are concerned. Outsourcing will help an organization to keep only the required staff permanently and there is no need for that organization to keep more production staff even at off seasons. Outsourcing helps the IT companies pay only for the services they receive. In other words, nonproductive costs will be considerably reduced if a company opts for outsourcing. Thus, Operational control is more in insorcing than in outsourcing. For example, an IT company can speed up the production processes if it is going on in the same country whereas it is difficult to speed up the production processes if it is going on in a foreign country. Communication problems may not be there if the production processes are done domestically whereas in outsourcing communication problems between the outsourcer and outsourcee can take place. Increased competitive power is another advantage of outsourcing. â€Å"Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas of your business† (The Advantages and Disadvantages of Outsourcing, 2009). Outsourcing will help an IT organization to undertake jobs beyond their expertise. For example, if a particular software expert is not available with an IT organization, it can opt for outsourcing for getting that job done. Thus the organization can take jobs even beyond the areas of its expertise and thereby it can increase its competitive power. The possibility of exploitation of better technologies is another advantage of outsourcing. It is not necessary that IT functions developed equally in two different countries. For example, African countries are techn ologically weaker countries. It is possible for these countries to access better technologies from other countries with the help of outsourcing. Better managerial control is the major advantage of insourcing over outsourcing. When a job is performed domestically, the managers can ensure that it meets all the requirements. On the other hand the managers will get the taste of the finished product only after the completion of the

Evaluate the classical theistic concept of God with particular Essay

Evaluate the classical theistic concept of God with particular reference to Thomas Aquinas - Essay Example It is no surprise that Classical theistic concepts of God fundamentally propose the existence of God. But how exactly? Aristotle perceived God as the first principle, the unmoved mover, the ‘primary essence’ (Metaphysics 12.8; 1074a36-39). Thomas Aquinas depicts ‘one first immovable Being, a primary cause, necessarily existing, not created; existing the most widely, good, even the best possible; the first ruler through the intellect, and the ultimate end of all things’ (Aquinas 1270, art.III). One can begin here to see the entirety with which classical theists tend to view the extent of the existence of God. It appears primarily elusive, but it seems that this very elusiveness fuels its rigorous withstanding against criticisms. But can one capture a more specific concept of omnipotence, of the deeper concept of the existence of God? Omnipotence, being the central concept of God’s existence, requires a more thorough definition in order to evaluate its resilience (or failing) against alternative theories. While one recognises that the task at hand is not to merely describe how Aquinas depicts the existence of God, and which arguments he refers to in order to strengthen his theory, it is also valuable in understanding further his theory. For, in order to criticise a theory, one must attempt to understand, and thus analyse it in all of its splendour. One cannot deny that Aquinas does indeed adopt an interesting stance; he expresses what God is not, and in doing so, provides a beautifully crafted set of attributes, of which God is. Concerning his main work on the issue, Summa Theologica, one grasps the strength with which he approaches and then deals with the difficult issue of plausibly testifying to the existence of God. But by predicting criticisms and answering them thus, he not only testifies to the existence of God, but builds a fortress of reason around it, preventing immediate weakening attacks from critics. Omnipotence is maximal

A review of Risk Assessment Methodologies Essay

A review of Risk Assessment Methodologies - Essay Example Furthermore, a risk-management process will help you prioritize these issues should you lack the resources necessary to address them all immediately. 1. Establish the risk assessment team. The team is formed to collect, analyze and report the assessments to the management. It is important that all aspects of the activity work flow be represented on the team, including human resources, administrative processes, automated systems, and physical security. The reason is to plan things before hand so that it becomes easy to go by. The team members on the other hand will have to attend and participate in the meetings, they will have to take the responsibility of achieving goals and objectives. The team members will also have to work hard for effective teamwork and communications, share responsibility for all team decisions and share knowledge and expertise with the team. The team members would themselves have to provide leadership where appropriate and last but not the least, will have to participate in training sessions where required. 2. Set the scope of the project. ... should identify at the outset the objective of the assessment project, department, or functional area to be assessed, the responsibilities of the members of the team, the personnel to be interviewed, the standards to be used, documentation to be reviewed, and operations to be observed. When the scope of a project is discussed, the output is in terms of time and cost. Scope is important because experience team members would know how changes in scope cause an issue. As the things proceed scopes do change, as the team members are not aware of the actual outcomes of things. 3. Identify assets covered by the assessment. Assets may include, but are not limited to, personnel, hardware, software, data (including classification of sensitivity and criticality), facilities, and current controls that safeguard those assets. It is key to identify all assets associated with the assessment project determined in the scope. 4. Categorize potential losses. Identify the losses that could result from any type of damage to an asset. Losses may result from physical damage, denial of service, modification, unauthorized access, or disclosure. Losses may be intangible, such as the loss of the organizations' credibility. It is only after knowing these losses can the team think of threats that may occur. More than one individual gathers the potential loss or anything concerning this. Everyone can give his or her own comments. The more different possibilities are taken out, the more prepared a team becomes incase of an event. 5. Identify threats and vulnerabilities. A threat is an event, process, activity, or action that exploits a vulnerability to attack an asset. Include natural threats, accidental threats, human accidental threats, and human malicious threats. These could include power

Coca Cola and Pepsi Profitability Analysis Essay Example for Free

Coca Cola and Pepsi Profitability Analysis Essay Gross profit margin(2013) = 100 Ãâ€" 28,433/46,854 = 60.68% Gross profit margin(2012) = 100 x 28,964/ 48,017=60.32% Gross profit margin(2011) = 100 x 28,326 = 60.86% Source: PepsiCo Inc. Annual Reports Gross profit margin (2013) = 100 x 35,172/66,415 = 52.96% Gross profit margin (2012) = 100 x 34,201/65,492 = 52.22% Gross profit margin (2011) = 100 x 34,911/66,504 = 52.49% Gross profit margin is a resource for paying extra expenses and future cutbacks. Coca-Cola Co. gross profit margin declined from 2011 to 2012 but then inclined from 2012 to 2013. However, it did not reach the level of 2011. PepsiCo Inc.s gross profit margin, on the other hand, decreased from 2011 to 2012 however it improved from 2012 to 2013 go over 2011’s level. Comparing the two companies, Coca-Cola Co. has a higher gross profit margin which shows superior fraction of revenue existing to coat operating and other costs. Net Profit Margin (USD $ in Millions) Coca-Cola Co. 2013 2012 2011 Net Income Before Minority Share of Earnings, Equity Income, and Nonrecurring items 8,584 9,019 8,572 Net Sales 46,854 48,017 46,542 Net Profit Margin 18.32 % 18.78 % 18.42 % Source: Coca-Cola Co. Annual Reports Net Profit Margin (2013) = 100 x 8,584/ 46,854 = 18.32% Net Profit Margin (2012) = 100 x 9,019/48,017 = 18.78% Net Profit Margin (2011) = 100 x 8,572/46,542 = 18.42% PepsiCo 2013 2012 2011 Net Income Before Minority Share of Earnings, Equity Income, and Nonrecurring Items 6,740 6,178 6,443 Net Sales 66,415 65,492 66,504 Net profit margin 10.15 % 9.43 % 9.69 % Source: PepsiCo Inc. Annual Reports Net Profit Margin(2013) = 100 x 6,740/66,415 = 10.15% Net Profit Margin(2012) = 100 x 6,178/65,492 = 9.43% Net Profit Margin(2011) = 100 x 6,443/66,504 = 9.690% Net profit margin is an indicator of profitability, computed as net income divided by revenue. It measures how much out of every dollar of sales a company actually keeps in earnings.(Wintner Tardif, 2006, p349)Coca-Cola Co. net profit margin improved as of 2011 to 2012 although decreased drastically starting 2012 to 2013.PepsiCo Inc. net profit margin go down beginning of year 2011 to year 2012 but after that recovered from 2012 to 2013 going beyond the level of 2011. The figures above indicate that Coca-Cola Co. has a elevated profit margin compare to PepsiCo Inc., which indicates more cost-effective corporation which better control its costs compared to Coca-Cola Inc. Total Asset Turnover (USD $ in Millions) Source: Coca-Cola Co. Annual Reports Total assets turnover(2013) = 46854/90055 = 0.52 Total assets turnover(2012) = 48017/86174 = 0.56 Total assets turnover(2011) = 46542/79974 = 0.58 PepsiCo Inc. 2013 2012 Net revenue 66415 65492 Total assets 77478 74638 Total assets turnover 0.85 0.87 Source: PepsiCo Inc. Annual Reports Total assets turnover (2013) = 66415/77478 = 0.85 Total assets turnover (2012) = 65492/74638 = 0.87 Coca-Cola Co.s net profit margin enhanced from 2011 to 2012 nevertheless go  down considerably as of 2012 toward 2013. PepsiCo Inc.s net profit margin, on the other hand, worsens since 2011 to year 2012 but raised the following year exceeding the level of 2011. The figures above indicate that PepsiCo Inc. has a higher Total Assets Turnover comparing to Coca-Cola Co. which shows that PepsiCo turns its assets faster into sales. Asset Turnover is connected to Return on Assets (ROA) through Du Pont formula. DuPont Return on Assets (ROA) (USD $ in Millions) Coca-Cola Co. 2013 2012 2011 Net Profit Margin 18.32% 18.78% 18.42% Asset Turnover 0.52 0.56 0.58 Return on Assets(ROA) 9.52 10.51 10.68 Source: Coca-Cola Co. Annual Reports ROA(2013) = 18.32% x 0.52 = 9.52 ROA(2012) = 18.78% x 0.55 = 10.51 ROA(2011) = 18.42% x 0.58 = 10.68 PepsiCo Inc. 2013 2012 Net Profit Margin 10.15% 9.43% Asset Turnover 0.85 0.87 Return on Assets (ROA) 8.62 8.20 Source: PepsiCo Inc. Annual Reports ROA(2013) = 10.15% x 0.85 = 8.62 ROA(2012) = 9.43% x 0.87 = 8.20 The ROA numbers provides investors with an overview of how efficiently the business is converting the investment into net income. (Gibson, 2009) Coca-Cola Co. ROA decreased starting of 2011 to 2012 as well as as of 2012 towards 2013. PepsiCo Inc. ROA, on the other hand, declined from year 2011 to 2012’s level however later inclined since 2012 towards 2013, however it did not reach the level of 201l. Nevertheless, Coca-Cola has a higher the ROA numbers compare to PepsiCo. which shows that the business earns more capital on a smaller amount of investment. DuPont Return on Equity(ROE) (USD $ in Millions) Coca-Cola Co. 2013 2012 2011 Net Income 8,584 9,019 8,584 Total Shareholder Equity 33,173 32,790 31,635 Return on Equity (ROE) 25.87% 27.50% 27.13% Source: Coca-Cola Co. Annual Reports ROE(2013) =100 x 8,584/33,173 = 25.87% ROE(2012) = 100 x 9,019/32,790 = 27.50% ROE(2011) = 100 x 8,584/31,635 = 27.13% PepsiCo Inc. 2013 2012 2011 Net Income 6,740 6,178 6,443 Total Shareholder Equity 24,279 22,294 20,588 Return on Equity(ROE) 27.76 % 27.71 % 31.29 % Source: PepsiCo Inc. Annual Reports ROE (2013) = 100 x 6,740/24,279 = 27.76% ROE(2012) = 100x 6,178/ 22,294 = 27.71% ROE(2011) = 100 x 6,443/20,588 = 31.29% Return on Equity (ROE) determines how sound a company makes use of reinvested earnings to make more earnings. ROE is utilized as a common hint of the business effectiveness. In other words, what amount of revenue the business is capable to generate with the resources provided by its stockholders. (Gibson,2009) Coca-Cola Co.s ROE increased as of 2011 towards 2012 except that later declined considerably from 2012 to 2013.PepsiCo Inc.s ROE, on the other hand, decreased starting year 2011 to 2012 but then slightly rise  up from 2012 to 2013. Based on the numbers above, we can conclude that PepsiCo Inc. has a competitive advantage over Coca-Cola Co. because it has a higher ROE, which means that is growing profits without pouring new capitals into business. References Wintner, S., Tardif, M. (2006)Financial Management for Design Professionals: The Path to Profitability. MA: Kaplan AEC Education. Retrived from: http://finance.yahoo.com/news/abercrombie-fitch-no-profits-just-225850116.html?session-id=7b3af266ae1a387aaf0cfe6dca24ba10 Gibson, C. (2009)Financial Reporting Analysis. Using Financial Accounting Information (11the Ed) MA: South-Western Cengage Learning, Mason,OH

Concepts of Belonging in Urban Development

Concepts of Belonging in Urban Development In this contemporary era where everything changes rapidly, people no longer relate themselves to just one discipline, but are cross-disciplinary. In the process of transition, the exchange of culture as well as information, the experience that one has and the knowledge that one gains is almost an instant experience. Often these instant experience and knowledge that one absorbs are incomplete due to the cutting short of information and over-emphasizing on the main point which subsequently result in a losing gap in between the original information to what we received. One might feel a sense of lost in time, history, memories and the lost in a sense of attachment, consistency, thus question our belonging; where is our home? How do we define belonging then? Can our belonging be fixed? In chapter 1 of the paper, I will discuss home as a metaphor of belonging; an anchor point. However, in this contemporary era, to name a place as the home that we belong can be superficial as the place that we belong are often not fixed. What give us the sense of belonging then? To discuss about belonging, unavoidably we associate it to a space. This Dissertation paper discusses two kinds of space the tangible space and the intangible space. Often, Space as an abstract notion seems boundless; we think of space as just air between one object and the other.[1] Space speaks more than just air molecules. Space with boundaries can be seen as a form or a thing. Space as an idea can be regarding individual perceptions which can be both conceptual and physical. These individual perceptions can be seen as the collective memory through ones experience. How do spaces give us a sense of belonging if our sense of space are often relate to the sense of place which are often unfixed. Despite of the uncertainty of our sense of place, what might give us a sense of continuity is probably the memory that were collected in the space which thus give us a sense of belonging. Memories exists in the past, present and future which thus creating a sense of continuity in a human existence timeline. Moving on from individual home to a nation, Chapter 2 addresses the lost of memory in city due to the urban development in Singapore. It will look into a brief history of Singapore Urban housing and city development, the significant of building as a time-marker that give us the sense of belonging and how the constant construction and destruction of building and places resulted in the lost of fixed identity. Is the lost of memory a lost of our belonging and identity or has it build a unique belonging and identity for Singaporean? As often been said, our belonging and identity are often been cultivate through arts and culture. In that sense, our local museum thus holds an important role in cultivating, preserving and passing on histories and cultural values to the masses. As much as we perceive the knowledge and history in the museum as a fact passing through from generation to generation, can the museum display and exhibition not be political constructed? Hence, even though Singapore government tried to preserve our â€Å"local identity† if we have ever or belonging through the form of arts and culture, the belonging that we perceive is still a constructed identity. Hence, a paradox and it seems like our identity is always in a confusion. Where do we belong? Chapter 1:- Belonging; Memory Belonging has been expounded as a possession, a member of a group such as a family, a school and a nation, ultimately belonging is about the relation of human being. Through the relation with peoples group, spaces and structure, human being thus creates their own identity. The sense of belonging and identity will also suggest a sense of security and stability. Hence, this sense of belonging becomes crucial in human life. Often, the sense of belonging has its relation associated with rooted-ness a sense of attachment towards a space; an attachment to our home. ‘For our house is our corner of the world. As has often been said, it is our first universe, a real cosmos in every sense of the world†¦[2] Author Gaston Bachelard explained in his book The Poetics of Space that the notion of home is a space where one is born and lives permanently. Home has often been idealized as an utopia space where there is a sense of continuity, security and perfection. Permanence is an important element in the idea of home as it suggests rooted-ness and a sense of immortality. In Space and Place the perspective of experience, Yi-Fu Tuan argued that home is the centre of the world; home is the focal point of a cosmic structure[3]. Both author explained home as the centre of ones world and it makes sense to say that our belonging is very much about our attachment to our roots; our home. The word centre will means origin which carries the meaning of beginning which is what Bachelard mentioned as the first universe; the centre of ones world. When and how do one has a sense of home then? Often the notion of home is blurred with the notion of house. ‘Here space is everything, for time ceases to quicken memory Memories are motionless, and the more securely they are fixed in space, the sounder they are.[4] Home as an abstract notion can be boundless. In the quotes above, Bachelard explained that what is being housed in the space (home) is the memories that has been created in the space. Home is a space where we root ourselves at and the most important element that gives us that sense of rooted-ness or attachment to a home is memory. Memory would also mean knowledge, history and memories; memory is an attempt to remember, recall or to record events, objects or even emotion. It is through these collective memories of a space that give us that sense of attachment and a kind of certainty toward oneself. As such, I would draw a boundaries that home is an emotional-mental state of belonging. Memory exists in the past, present and future which create a sense of continuity or immortality. Memory thus gives us a sense of security and certainty. As what Yi-Fu Tuan had mentioned in his writing, the value of a place is the experience that one created in that space. It is through the intimate human relationship and the familiarity of a space that one created a sense of attachment towards a space. Belonging, like memories should be fixed so as to attain a sense of stability. Memory is an abstract notion that requires to be objectified in order to be seen or understand and house plays the role in objectifying these abstract memories, it is a place that helps giving the meaning and value to home. House on the other hand, is a shelter that one goes to when sick, where intimate activities happen; a place or location that helps us to relate our past history and event. House in this case is a physical state of belonging. In a lot of ways, objects can be seen as spaces with boundaries and is malleable.[5] Objects in a house are like footages that give a trace and history of the inhabitant that once presence. The following images are a series of photograph by Singapore photographer, Ho Hui May. This series of artwork entitled Domestic Dystopia, 2007 presents a purview interior of an abandon house. [6] Domestic Dystopia Ho Hui May Photography series, 2007 In this series of photograph, Ho presented abandon objects of the domestic space after the inhabitants had move on. Those abandon objects suggests the lifestyle or characteristic of the inhabitants, almost like a 3-dimentional narrative of the past. For example the forest wall paper at the bottom right side represents 2 layers of nature. One layer of the wall paper can be seen as a natural ongoing process of ageing and decaying due to elements such as sunlight, water, oxygen and other natural substances and is peeling, fading and tearing off from the wall. Another layer of the wall paper presents an image of the forest which can also be read as the owners desire to have a piece of nature while living in a city. Hence, objects such as the wall paper gives clues of the life of the inhabitants. Objects inhabit space, and when attention is directed to an object, it is also directed to the space it occupies.[7] The function of the house thus is also a place to keep and collect object. The se functions can be seen as the collection and re-collection of memories. Objects in our life thus give us a sense of home and belonging. However, objects are originally neutral and meaningless. It is through the experience and relation of objects and people in that space, we insert our emotion and meaning to it and hence creating sentimental values to the object. Therefore, the question now is to what extend are those objects valuable when the meaning of it are constructed? Our house is also an object that is physically constructed and can be politically constructed as well. In that sense, how can we have a true sense of home and belonging if the memory and experience that we perceive are constructed? In Hos series of photograph; objects in the image are discarded. House in this case is also an object that has been discarded. If the objects in life are significant in provoking or capturing memories, why do people still abandon objects? Choosing objects to be abandoned and objects to be brought along are essential in the cities. Chapter 2: Urban development: abandon and constructive memory The city is a place of large settlement; a community of houses and buildings. Walking from one end to the other end, we can easily recognize the features in the cities. There is a sense of familiarity in the city that we lived in. Familiarity is to recognize, to remember or to recall things. It is through that sense of familiarity; the personal memories and the cultural history that we collected in the city that gives us a sense of belonging. The city that we lived in and return to eventually thus is our hometown; the centre of our world. Our hometown is a place where we rooted ourselves in. Unlike home which is built upon the individual experiences and personal memories, the city herself has an image to portray, the city that we lived in is being shape politically and economically so as to achieve economic growth and progression especially that of urban cities. In this chapter, I will like to take Singapore urban development as a case study and local artists responses to the issue of urban development and housing to discuss about the lost of memories and thus the lost of a fixed belonging to the Singaporean. Tracing back from the early days of Singapore Independency till today, she had boosted rapidly into a developed country. In the early days, the fundamental objective of Singapore housing development is to provide a shelter for every citizen. With the problem of housing shortage in the beginning of Singapore Independency, the Housing and Development Board (HDB) was established to provide the citizen with adequate standard of living, the local architect also strike for freedom to promote culture to the mass through national building.[8] With the increase of standard of living and income of the citizen, they no longer just desire for basic amenities but desire for a higher standard of living which result in a constant construction and destruction of buildings in Singapore. Shifting and relocating thus become common. In a lot of ways, our sense of place or location gives us the sense of identity, belonging and pride to the city that we lived in. Building of different time thus stands an important role in marking history of a city; they are almost like artefacts that connect us to our past; a reminder of historical event that once took place, the political and personal experience that once present. Two of the remarkable buildings in Singapore is the City Hall and Old Supreme court. over the years, Singaporean had witnessed many political events such as the japanese surrender, the national day and many more and the building together with the old Supreme court is currently preserved as a Singapore heritage building. Though building is being preserved but the function is not there anymore. (explain)It becomes a trademark of history, an attraction for tourist but no longer function as how it should be. What is the point of preserving when the function is no longer there? Singapore is a country that has been lost and found, found and lost again. (Quoted from Ho Tzu yen film) Many of our local artists have responded to the rapid urban transition with their art. One of our local film/ documentaries maker Tan Pin Pin has responded these issues in her documentaries such as the Invisible City and Moving House. Moving house speaks about the lost of tradition in the midst of Singapore land development. The documentary focuses on the Chews family who went to pay a visit to their parent at their tomb. That visit to the tomb was the last as they would have to dig out the bodies as the government had decided to develop that piece of land. â€Å"We should have a permanent cemetery so that the tradition can continuedtradition had die off.† quoted from Mr Chew. As of a tradition, it is necessary for dead bodies to be buried underground as a respect for the death. Each year during special occasion such as the Qing Ming festival, the Chew family will visit their parents tomb, almost like a picnic as Mr Chew mentioned. The bones of their parent were then cremate. What is lost is not just the lost of tradition but also the joy of gathering that they used to have. Singapore land development can be endless. Reason being that more public housing is required to cover population needs. There is no limit to our desire for space. After development is re-development, moving is re-moving whether or not it is voluntary, is no longer important. Moving house had highlighted our endless desire for space and better standard of living and in the mean time, highlighting our yearns for the past to be continue, a contradicting feeling in the midst of progressing into a world class society. Hence, the transforming of cityscape had also result in a lost of history. It somehow prompts us the question that in order to progress, do we have to discard the past? Are we ready to do that? Is it necessary to abandon/ disregards our past to pursue a ‘better future? How much can we give up actually? Over the years, we slowly identify the issue of urban development through the local artwork. Many lost memories were represented again as a form of art. Not having a fixed memory and belonging had affected artist in many way. Many had approach it in a sentimental manner, sometime in quite a negative way. Many of them chose to have our local HDB flats or construction sites as their subject matter. Interesting, the following photographer that I am going to introduce does not took the usual gigantic boxes as his subject matter instead, ‘junk that he collected as his subject. Chua Chye Tecks wonderland, 2007 is a series of photograph of junk, unwanted, abandon objects that he collected, to date this series consists of 500 pieces of images. Through these images, there are two main opponents that we have to take notes on; the idea of collecting and the idea of abandon in relation to the city. The idea of collecting plays an important part in this work as a way of indicating our social stature, professional affiliation, value system and personal taste. Another thing to consider is the objects being abandon; the ownership of physical object that hints our loftiest longings and deepest anxieties. With each purchase, we throw something away; by existing, we throw; because we move on, we throw. Also to note is that Chua does not keep any of this object as well. With each that he had collect and photograph, he abandoned it as well. Lastly, we consider the methods of presenting it first, objects are placed individually on a clean turquoise background, almost like lifting the value of the junk, giving it a new life. Every object or set of objects, here was no less exquisitely cared for and to read the image as objects existing inside a camera frame almost as preserved memories. As much as we are reluctant to give up on what is valuable to us, we still ought to do so in order to progress†¦ is this voice of the citizen or the voice of government? Chuas work is interesting as it reflects on how much we had abandon in the process of urbanization and to collect it again is to recollect memory, thus memory being lost and found. As compared to Pin Pins film, it reflects how one has to give up in the the process of urbanization despite of ones resistant to change. In the process of change, one long for a sense of permanency, a fixed belonging. What image is Singapore trying to portray at the end of the day when its limited history are slowly faded away over the years? Whether or not Singapore has a rich history and culture are not important as compared to economic growth. This prompt the question of whether the progression and development into a better yet ever-changing rapid lifestyle changes our view of what is to be casted off and what is to be collected in the process? Has Singapore come to realize the lost of memory in the city To question about what has been lost, what do we discard in the process of progression, what we yearn and what we desire to retain goes down to the question of choice and it was clear that we had chosen for economic growth than having the history that give us a fixed belonging. These choices might not be make by the citizen but the government. The government has probably realise the crucial needs to cultivate our national identity; our belonging. As much as our short history had been constantly being buried underneath with the rapid urban development, Singapore in the mean time is trying to construct identity. As often been said, where we belong are often cultivate through the arts and culture that we belong to. Thus, one essential ways to input these lost of history or memory is through local art. What is the role of arts and culture in cultivating our national identity then? Chapter 3: The paradox What is singapore culture? Multi- culture. Mixture of east and west. Rojak. Anything and everything becomes our culture. The Renaissance city plan[9] is a proposal that the government come out every five year and the recent plan will be to go all out to developed the image of an global art city. With this proposal, lots of funding were put into art spaces, schools and institution such as LaSalle college of the Arts, Nanyang Academy of Fine Arts(NAFA), the Singapore Arts Museum(SAM), Asian Civilian Museum(ACM), the National history museum as well as the National art gallery that is opening this year. The aims of this proposal is nevertheless to be an global art city, however what is contradicting is that as much as Singapore aims to go global, it still want to retain the sense of local through event such as Singapore art show. So what is Singapore aiming at the end of the day? She wants an image of everything and anything. She is trying to give encouragement for art yet maintaining tight restrictions on arts and culture. Through inclusion of artwork in public spaces and the incorporation of tasteful design and landscaping in the neighbourhood, we can widen peoples exposure to and appreciation of arts and its relevance in everyday life. (esplanade for cultural activities, government funding for art institution BUT still maintaining tight restrictions on art and cultural work) (wanting to go global and in the mean time wanting to stay localwhat is local?) However, can we really perceive the memory that we collected in the museum as our belonging when the exhibition can be politically constructed or frame? In that sense, what we perceive as our belonging; our home is constructed. Hence, how the city is shaped somehow shape that we are as an individual being. Lynn C. Robertson, Space, objects, minds, and brains (New York, N.Y. : Psychology Press, 2004), 1. Gaston Bachelard, The poetics of space, trans. Maria Jolas (Boston, Mass. : Beacon Press, 1994), 4. Yi fu tuan 149 Ibid, 9. Robertson, 3. Domestic Dystopia provides an insight into six interiors of dilapidated houses in Singapore. Each photograph reveals the traces of footsteps and impressions left behind by previous occupants, encapsulating these moments in their personal histories in a snapshot of time. Most of these houses have been abandoned and are left in a state of disrepair. By becoming a translator, Ho takes on the task of translating the deep sense of loss and nostalgia she feels when she is inside these houses onto a series of photographs. Picture credit: Curating lab: 100 remix workshop organised by the National University of Singapore museum partnership with National Art Council of Singapore Robertson, From building dream- tan pin pin explain

Analysis of Momentum in Indian Stock Markets

Analysis of Momentum in Indian Stock Markets LITERATURE REVIEW The first study on momentum based investment strategy was documented way back in 1967. Levi (1967) claims the success of trading strategy based on buying stock with current price significantly higher than the average of last 27 weeks generate significant positive abnormal returns. However Jensen Bennington (1970) argues that the trading rule based on relative strength proposed by Levi was the one out of sixty eight trading strategies he tested and while tested for out of the sample test period it did not outperformed the buy hold strategy and hence was attributable to selection bias. Test of contrarian investment strategies was stealing the show fund managers were found busy picking stocks based on relative strength in US market. Majority of mutual funds examined by Grinblatt Titman (1989) note the tendency of fund managers to buy the stocks that have seen price increase in last quarter. Apart from that Value Line rankings of mutual funds that were largely based on relative strength also enjoyed high predictive power. The success of mutual funds investing on the basis of relative strength and high predictive power of value line rankings (Copeland Myres (1982)) provide some evidence of success of investment strategies based on relative strength. The academic literature suggests contrarian returns generate abnormal returns whereas value line rankings and mutual funds generating abnormal returns based on relative strength strategy are in stark contrast of each other. A seminal study by Jegadeesh Titman (1993) solves the puzzle by providing an explanation based on different of investment horizons considered by mutual funds using momentum strategies and contrarian strategies advocated by academic literature in late eighties and early nineties. Jegadeesh and Titman (1993) using US market data from 1965-1989 found not only the evidence of long term success of contrarian investment strategy but also found that momentum strategies generate significant positive returns in medium run over 3-12-month holding periods. They documented the reversal of momentum after about nine months. Their study suggests that in short run for about 3-12 months holding period momentum strategy generate significantly positive returns while in long run for the holding period of 1-3 years contrarian strategy generates significantly positive returns. Conrad and Kaul (1993) also find evidence from US market that the contrarian strategy is profitable for short-term (weekly, monthly) and long-term (2-5 years, or longer) intervals, while the momentum strategy is profitable for medium-term (3-12-month). As mentioned earlier the results of Jegadeesh and Titman (1993) had thrown a new light on seminal study of De Bondt Thaler (1985, 1987) and found evidence of short term momentum precedes long term reversal. Although all the results provided strong evidence of market inefficiency, different studies documented different explanations for such returns. Fama French (1996) presents result based on multifactor CAPM using size and MV/BV ratio to explain various anomalies in asset prices including momentum as well as contrarian returns and claim that market efficiency is intact. However the study failed to explain the presence of short term momentum using the multifactor model and hence short term momentum anomaly remains unexplained. Several behavioural explanations were found and presented to jointly explain the short-run cross-sectional momentum in stock returns documented by Jegadeesh and Titman (1993) and the long-run cross-sectional reversal in stock returns documented by DeBondt and Thaler (1985). Daniel, Hirshleifer, and Subrahmanyam (1998) (DHS hereafter) assume that investors are overconfident about their private information and overreact to it. If these investors also have a self-attribution bias, then investors attribute success to their own skills more than they should and attribute failures to external noise more than they should. The consequence of this behaviour is that investors overconfidence increases following the arrival of confirming news. The increase in overconfidence furthers the initial overreaction and generates return momentum. The overreaction in prices will eventually be corrected in the long-run as investors observe future news and realize their errors. Hence, increased overconfidenc e results in short-run momentum and long-run reversal. As against the above cited behavioral explanation to short term momentum and long term reversal, some scholars argue that the returns from these strategies are just compensation for taking additional risk or may be the product of the data mining. Most noteworthy of all Conard and Kaul (1998) argue that the profitability of momentum strategies may be the result of data-mining and momentum portfolio shows positive returns in any post ranking period is true irrespective of the length of test period. Thus Conard and Kaul (1998) suggest that there is no case of long term reversal. This is diagonally opposite to what the behavioral models suggests where after short term momentum prices will reverse to more fundamental levels. In fact, the criticism of Conard and Kaul (1998) led to another study by Jegadeesh and Titman (2001) where they used out of the sample test by using data from 1991 to 1998 an overlapping test period compared to their 1993 study where they used data form 1965-89. Their study also eliminated small firms from the study to check whether the earlier momentum returns were actually dominated by small, high-risk and illiquid stock or otherwise. Though they focus on short term momentum in their study choosing two year holding period post formation but they also tested post holding period returns from the period of two to five years after formation. They present some very interesting results. The momentum profits of Jegadeesh and Titman (1993) continued in 2001 also with almost same magnitude for same holding period that actually has proved that the earlier momentum profits were not the result of data-mining. It also suggests that unlike small firm effect where after the published research on superior returns on small firms compared to their large counterparts, superior returns on small firms disappeared in subsequent studies using data from the periods after the small firm effect from earlier studies got published, that means market has learnt quickly and hence such superior returns disappeared however momentum returns were still present with the same magnitude in 2001 as they were in 1993 study suggest that momentum returns are not just the temporary anomaly but it may have to do with some systemic cognitive bias which sustains for a long time. It also proves that momentum profit is just not the result of some small, illiquid and risky stocks and most noteworthy the reversal found in their post holding period cumulative returns, which render support to the explanations of behavioral theorists and provides evidence against the Conard and Kaul hypothesis. As far as studies in Asian markets are concerned Chang (1995) found abnormal profits of contrarian strategies in the Japanese markets. Chui (2000) found significant positive abnormal returns with contrarian investment strategy in Japanese and Korean markets. Hameed Ting (2000) found evidence of market overreaction hypothesis (contrarian strategy) in Malaysia. Kang (2002) found significant short term positive returns with contrarian strategy in Chinese markets. On the other end, Hameed Kusandi (2002) found no evidence of contrarian profits in six Pacific Basin markets. While Rouwenhorst (1998) and Griffin Martin (2005) found existence of momentum in many non-US countries, the quantum of momentum returns in non-US countries was small, and in the case of Asia, insignificant. For example, Griffin (2005) estimates average monthly returns of 0.78%, 0.77% and 0.40% for the Americas (excluding the US), Europe and Asia respectively. End of the Beginning or Beginning of the End†¦ The big bull has fallen down, investors have lost their vision, and experts knowledge went futile with the downturn of the global economies. When the markets were on peak, the funds across the world have flooded in the global economies. Policy makers had lot of confidence on the market, that it will help the economy to grow at faster pace. The market excelled 21000 points which was more ahead then the growth of the economy of India. But that does not seem true for the world economies, as the crisis had hit badly in USA and other parts of world which insisted FIIs and other investors to withdraw their money and markets crashed, went to 7000 points, where investor lost everything and policies could not work to take them up to the level. What was the reason of the crash? What will be the result of the market? Is this the end of the beginning or beginning of the end? Indian market is the strong base of determining the financial system of the country. Majority of the financial decisions are dependent on the stock market other financial market. Indian stock market serves a link to banking and other financial policies which provides impetus to the industry. Indian stock markets heavily based on the sentiments of the clients (market players) also of the market makers. The crash or boom (in a period/ year) determines the structure of the Indian capital system. The boom in the market (year till 2008) has brought many changes in the performance of mutual funds, insurance (ULIPS), investment products which led the country into the inflow of the money supply in the market. Till 2007-08 the market was running at its best, touched the heights, but the global crash in the market became a typhoon took away major players organizations into the quick sand of the recession. The insights from the market were not showing positive sign in anyways, so whether this was a new platform or just a time (economic) cycle. Prologue to decline†¦ Earth provides enough to satisfy mans need, but not greed. -M.K.Gandhi The market crash started with the fall of big financial organizations in the USA in the world like Lehman Brothers, AIG, Freddie and Fannie and many more. The failures were primarily due to exposure into Subprime loans Credit default swaps issued to insure these loans the issuers devolved resulted into bank failures steep reduction in the price of equities worldwide. The economic crisis led many world markets to suspend the trade due to fall in price. On October 8, 2008 Indonesian stock market halted trading, after a 10 % drop in one day. The crash of 2008 was around 21% which was little less than 1987 (Times of London). Beginning of October month was Black in the world market. The Dow Jones volumes were low and the industrial average fell over 1874 points which was worst weekly decline. The Icelandic stock market was into pitiable situation where the markets had been suspended for 3 days i.e. 9, 10 13 October. On October 24 many of the worlds stock market experienced the worst decline, with around 10% drop in the indices. Source: http://en.wikipedia.org/wiki/File:OMX_Iceland_15_SEP-OCT_2008.png The above graph shows the steep and the worst decline a market could ever witness. The Iceland stock market crashed up to unpredictable level. The trading had been suspended for 3 days because of the crash in the market. This situation was visible in all global stock markets, because of financial crisis in USA. Hence, the worst was yet to be experienced by the global markets market players. The Indian stock markets were also badly hit the confidence of people was shattered. The markets were not showing the positive sign in any of the context people had no clue about the next jump or next level of the market. Market experts were expecting the markets will be into recuperation at the earliest, but things were not going the way it had been desired. Source: Hindubusinessline.com Indian market which has shown strong performance till 2007, but from January it plummeted more than 3000 points on all the stock prices by October 2008, it had touched the 7000 (BSE) line. The continuous unpredictable scenarios in the stock market led many investors and institutional investors to withdraw their money because of negative performance of the markets. The above shown graph is depicting the dream turned into nightmare for global domestic investors. The Beehive capitalism†¦ Everything that goes up without base falls steeply with great force. The same situation has happened with the world economies. The supreme economy of the world has become the devil for the small economies, leading major big companies to file for the bankruptcy. The global meltdown is the result of Financial Hybrids Innovations, which has been actively traded all across the world markets. The investment bankers, banks, financial institutions were actively relied on these new and innovative models, which has yet to gain the acceptance across the world. The main accused element for collapse is â€Å"Credit crisis†, in which the US banks got the regulations to lend money to the people having no sufficient background to get the loans. These kind of loans were termed as NINJA loans (NO INCOME, NO JOBS, NO ASSETS), given in abundance by the US banks. Emerging economies like India, China and other big economies were initially considered to be the places which will remain unaffected from the distortion of crisis. But despite of the strong fundamentals Indian economy dipped into the crisis. The stock market had lost more than 50% of its value (source: economic times), which shattered the hopes of the Indians. There was continuous monitoring by the Central Bank (Reserve Bank of India) on the market trend. The tornado of crisis had destroyed most of the stock markets, banks and financial institutions after soaring to the new heights of investment. The below mentioned graph depicts the movement of BSE Sensex SP CNX Nifty Source: SEBI Bulletin November 2008. BSE Sensex closed at 9788 on October 31, 2008 as against 12680 on September 30, 2008, a fall of 3072 points (almost 24%).The month of October 2008 had been the most volatile month, where Sensex recorded a high of 13055.67 on October 1, 2008 low of 8509.56 on October 27. Nifty closed 2886 on October 31 against 3921 against 30 September 2008. By the end of a month Nifty registered the fall of 1035 points (almost 27%). The market had shown unpredictability of the base stability level, dissuading more and more investors to take exit from the market. The Financial crisis: A Sub-prime loan is a type of mortgage loan made to borrowers who have at least one of the following characteristics: (1) Low credit scores; (2) The inability to post the traditional 20 percent down-payment for a home; and/or (3) The inability to fully document their income. The subprime crisis is not the result of recent financial innovations and developments, but it is the outcome of lax capitalism policies which had been developed by the US government. In the fifties American government passed a legislation to delink the commercial banking investment banking. The legislation stated implied that a commercial bank cannot open an investment bank. In 70s European American economies faced slowdown, due to which these banks were finding difficult to invest their investible surplus. This time the East Asian economies were liberalizing their economies, due to which the capital from western economies started moving to these economies. After the huge influx of capital into these economies, Asian bubble gets burst, forcing the western economies to introduce new financial measures to invest into the markets. These circumstances and the need of new financial avenues led the US European economies to trade into the new financial products, by liberalizing the norms for Commercial Investment Banks. The liberalization in the regulations led to the introduction of the Mortgaged products (a prime cause of crisis). In the late 90s US mortgage lender began offering the mortgage products to would be â€Å"home buyers† who could not qualify for a mortgage loans. Millions of Americans Europeans, who previously could not afford to buy home, were obtaining these mortgages, due to which great Demand of home (boom) took place leading to shoot of real estate prices. The above diagram shows how the base of subprime crisis took place in the global markets. The downfall in the economies is considered to be as the Dominoes Effect. The lax screening of borrowers, large capital accumulation capitalized market structure created a bubble which could not be ceased from getting expand. The whole cycle got mitigated with the introduction of new instruments in the financial markets. The sub prime crisis is about the collapse of the unregulated, $3 trillion over-the-counter market for complex structured assets, some of which happen to contain sub prime residential mortgages. The semiannual global financial stability report by IMF said that declining US housing prices and rising delinquencies on the residential mortgage market could lead to losses of $565 billion. When combining these factors with other market factors, it puts potential losses at about $945 billion which is almost 25% of the $24trillion global credit market. Financial innovations were brought into the market to make the products work in the market. The Mortgage products started to conflagrate the US European markets, where such loans started becoming the pool of assets (Risky) and been traded in the market. Hence, due to this many other factors got the impetus ultimately resulted into the uncontrollable bubble of mortgage, which gets burst and deepened the world economies into the recession. The subprime crisis has affected the global economies resulting into the fall of big financial corporation like Lehman Brothers, Bear sterns, AIG, Freddie Fannie, and many more big organizations of whom one cannot think to get fail. The sizes of the organization (exposure) were in plethora that it was not possible for the US European government to revive these financial institutions. AIG, one of the largest insurance companies (Private) became government undertaking due to the impacts of financial crisis. SUB PRIME OVERVIEW: Source: The India Economic Review 2008. (Dec 08) The whole system works in three stages, Stage First consist of Borrowers lenders; Second stage consists of the creation of SpecialPurpose Vehicle (SPV) with the inclusion of legal intermediaries. The last (third) stage consists of investors those who had invested their money into the riskier assets including the investment banks. In stage first agent enters between borrowers and lenders, accepting the collateral and also factoring the future price rise. The agents accept the loans, who previously could not even qualify for the approval, now getting loans from the banks other lenders. The housing price bubble allowed many borrowers to get loans easily because of the high house prices. The loans were mortgaged on a larger scale by creating the pool of similar group of mortgage assets through Special Purpose Vehicle (SPV) given the risk involved on the pool of assets. In second stage, SPVs were created all the liabilities were transferred into bankruptcy remote securitization trust or SPV. Underwriters were used to issue market the MBS (mortgage backed securities). These securities were divided into different tranches, which were of similar securities. The rating agencies were to give rating to these tranches of securities. The ratings were given to the tranches based on the risk, priority of payment of the funds. Higher ratings were given to those tranches benefiting from the credit enhancements the MBS generates or credit insurance purchased from third party bond insurer. In third stage, Institutional or individual investors such as hedge funds or managers of Collateralized Debt Obligations (CDOs), purchase the securities and then re-securitize the MBS, along with other assets, into a CDO. The Commercial Papers (CP) generated in the initial years was all sold and there was demand for more. Consequently the SPVs started producing more CPs or MBS. The sale of the same only meant that the SPVs were flush with funds. These funds were to be invested somewhere so, the agents were pressed to bring in more borrowers. The lending norms were further diluted to accommodate lesser and lesser deserving borrowers in order to deploy the huge funds available. The consequent spiral that got generated only led to the continued dilution of the Capital Adequacy and Prudence norms. The system went burst once the housing prices turned negative turning the very foundation of subprime lending upside down. The turmoil of subprime has been expected of more than $ 3 trillion, which is too big for any country to even imagine of recuperating. The impact on Indian market was slow but had been proved acute on the stock market due to the constant humongous withdrawal of FIIs loss of confidence in the consumers (investors). Mortgage: Huge pack of cards†¦ The magnanimous crisis which all started with lax policies of US government, provided impetus for the Fed Reserve to implement new structures in the economy. The capitalist policy was looking very attractive to the market players, but the policy was hollow from the fundamentals. It all started with the Alan Greenspans reformative structures models in the financial markets, led to turmoil in the global economies. The US Fed Bank Clinton government in 1999 passed Gramm-Leach-Bliley Act (GLBA) which had abjured the old Glass-Steagall Act which had regulated the Investment Banks, Banks Insurance industries. The new legislation has unregulated the Wall Street Investment Banks and commercial banks. This deregulation has enlarged the gamut of activities in the financial activities of the commercial banks other financial institutions. The deregulation had been further reintroduced by legalizing gambling activities into financial sector, a prohibition that had been in place after 1907 financial crisis. The steps towards deregulation of the US markets had converted the US markets into a big casino. Securities Exchange Commission (SEC) in 2004 took a step towards the deregulation on the financial activities by removing the ceiling on risk that the largest American investment banks could take on Securitized loans. By this time, no one would have thought that the deregulation will result into large speculation create a bubble in the market. Lastly, the Securities and Exchange Commission took the last step toward deregulating financial markets when in the month of July 2007, weeks before the onset of the subprime crisis; it removed the â€Å"uptick† rule for short selling any security. The housing bubble was fed by extraordinarily low interest rates low lending standards (norms) for mortgages. The excessive monetary liquidity short term interest rates fell to 1%, which led to high borrowing of loans from the banks, resulted into the big bubble of mismanagement of financial activities. After the tech bubble burst in 2001 the recession, the Fed (Greenspan) aggressively lowered the Federal funds rate from 6.5 percent to 1 percent in 2004, the lowest since 1958. The lowered interest rates reduced lending standards made the banks to lend the money known as ‘ Predatory Lending to the borrowers who did not have capabilities to qualify for the loans, but with the mortgage lending, excessive loans were provided to these lenders as they (banks) were getting big bonuses for bearing risk on these loans. Non-traditional home loans were advanced to borrowers who had no documented incomes. Some loans were interest only loans with down payments of 5% or less . Some were Adjustable Rate loans (ARMs), with low interest rates for one or two years to be reset later at much higher rates. In 2006 around 25% of American mortgages were subprime and close to 20% were ARMs. Mortgage lenders and Home buyers presumed that home prices were not going to fall on a national basis. THE NEW ALCHEMY OF FINANCE The subprime crisis is the result of new financial products in the market the deregulation of the financial activities for the FIs. The main reason of such lending was the facility with which subprime lenders could sell their risky mortgages upstream to bigger players, investments banks for example, which undertook to buy them, pool them into mortgage bonds and re-channel them into new financial instruments through a process of aggressive securitization. The Structured Investment Vehicles (SIVs) which fall into the large class of derivative products came under various names such as Collateral Debt Obligations (CDOs). They had the characteristics of short term asset based commercial paper that were backed by the underlying income producing mortgage assets downstream and were graded according to a certain risk of default. More than 1 trillion half dollars of these asset backed financial products were sold in all over the world. Another new financial instrument that made matters much worse and led directly to the crisis: the Credit Default Swaps. Due to lack of government regulation, this product has become a weapon of mass destruction. In order to protect against the risk of default on the new asset-backed securities (ABS), some insurance companies but also some investment banks themselves began to issue bilateral â€Å"insurance† contracts against the newly created ABS. These were called Credit Default Swaps (CDS), which were supposed to protect the investment instruments against the default on asset based securities. The issuer of ABS could buy the protection against the default by paying a premium. This was a financial innovation, the so-called â€Å"insurance against default†, that opened the floodgates of money to be invested in the new financial instruments. Indeed, it allowed investors such as pension funds and other institutions which have a fiduciary obligation to buy only high-qualit y securities, to legally buy artificially highly rated (but risky) ABS securities, or to invest in hedge funds which specialized in leverage trading in derivative products. But the problem was that the issuance and use of such financial â€Å"insurance† contracts were not regulated by any government agency, because the word â€Å"insurance† was not used; instead, they were considered as simply a protection against the â€Å"default† of payment on a financial security. And thats where the gambling part enters the picture: only ten percent of CDS are genuine insurance contracts held by investors who really own asset-backed securities (these are covered CDS); 90 percent of them are rather held by speculators who trade CDS, while not owning any asset-backed securities to be protected (these are naked CDS). Economy as Casino: The gamut of gambling that US government Fed has created was even unimaginable, allowed big participation into these new investment instruments. Credit Default Swaps (CDS) can be bought and sold by speculators who are not directly involved in the mortgage business. Because of the 2000 Commodity Futures Modernization Act passed by Congress, no state has the power to regulate this new form of sophisticated gambling. The result is astounding: it is estimated that the notional value of credit default swaps outstanding today is about $ 62 trillion (four times the size of the US economy). This is an indication of popularity of the â€Å"naked† CDS innovation was as a way to bet on the collapse of the entire asset-backed securities construction. This was also a clear sign that, in a crisis, it would be all but financially impossible for the issuers of CDS to meet their obligations. In other words, disaster was just around the corner. This is an event that any regulatory agency should have seen coming. When housing prices hit the expected top of their cycle, in the 2005, and began falling, especially in 2006, the price for CDS s was still relatively low. So, some astute speculators undertook to buy CDSs and simultaneously began selling short the ABS that had been issued by investment banks, such as Lehman Brothers, in the correct expectation that mortgage-backed securities were bound to lose value with the expected rise in home foreclosures and mortgage defaults. This is how unimaginable spiral got created by the steps undertaken by Fed Reserve US government which ultimately result into the great burst ever faced in the history globally. GRAMM-LEACH- BILLEY ACT 1999 The Gramm Leach Billey Act 1999 (GLBA) passed by US government in the year 1999 with a view of security data integrity in the market. The GLBA repealed the part Glass Steagall act of 1933, which had opened the market among the banking companies, securities companies insurance companies. The GSA had prohibited any one institution from acting as any combination of an investment bank, a commercial bank and or an insurance company. But the GLBA allowed commercial banks, investment banks, securities firms, insurance companies to consolidate. The act was announced in the 1993 finalized in 1994, allowing many big corporations to merge to enhance their range of activities take the benefit of the deregulation. The law was passed to legalize these mergers on a permanent basis. The law has not fully deregulated the previous act, but they had relaxed the norms and allowed the FIs to have non financial assets. GLBA was amended with some part of the Bank Holding Company act of 1956. The crucial aspect of the GLBA stated that no merger can go ahead until the financial holding institutions, or affiliates receives a â€Å"less than satisfactory (SIC) rating at its most recent CRA exam†. GLBA compliance was mandatory; whether a financial institution discloses non public information or not, there must be a policy in place to protect the information from prospective threats in security data integrity. The law was segregated into three main aspects: FINANCIAL PRIVACY RULE: This rule requires FIs to provide each consumer with a privacy notice at the time the consumer relationship is established and annually afterwards. The notice must explain the information collected about the consumer, where that information is shared, how that information is used and how that information about the consumer is protected. The consumer must be notified give consent about any change at any point of time. Each time the privacy notice is reestablished the consumer has the right to opt it again. SAFEGUARDS RULE: The safeguards rule requires FIs to develop a written information security plan that describes how the company is prepared for, and plans to continue to protect clients non public personal information. This plan must include the following; Denoting at least one employee to manage the safeguards. Constructing a thorough on each department handling the non public information. Develop, monitor test a program to secure the information. Change the safeguards as needed. The Safeguards Rule forces financial institutions to take a closer look at how they manage private data and to do a risk analysis on their current processes. PRETEXTING PROTECTION: The GLBA encourages the organizations covered by GLBA to implement safeguards against pre texting. Pre texting means when someone tries to access the personal nonpublic information without proper authority approval. Thus the institutions having covered under the GLBA, needs to have control safeguard the information of their client, to prevent the details from any misuse. CRITICISM AND DEFENSE: There Analysis of Momentum in Indian Stock Markets Analysis of Momentum in Indian Stock Markets LITERATURE REVIEW The first study on momentum based investment strategy was documented way back in 1967. Levi (1967) claims the success of trading strategy based on buying stock with current price significantly higher than the average of last 27 weeks generate significant positive abnormal returns. However Jensen Bennington (1970) argues that the trading rule based on relative strength proposed by Levi was the one out of sixty eight trading strategies he tested and while tested for out of the sample test period it did not outperformed the buy hold strategy and hence was attributable to selection bias. Test of contrarian investment strategies was stealing the show fund managers were found busy picking stocks based on relative strength in US market. Majority of mutual funds examined by Grinblatt Titman (1989) note the tendency of fund managers to buy the stocks that have seen price increase in last quarter. Apart from that Value Line rankings of mutual funds that were largely based on relative strength also enjoyed high predictive power. The success of mutual funds investing on the basis of relative strength and high predictive power of value line rankings (Copeland Myres (1982)) provide some evidence of success of investment strategies based on relative strength. The academic literature suggests contrarian returns generate abnormal returns whereas value line rankings and mutual funds generating abnormal returns based on relative strength strategy are in stark contrast of each other. A seminal study by Jegadeesh Titman (1993) solves the puzzle by providing an explanation based on different of investment horizons considered by mutual funds using momentum strategies and contrarian strategies advocated by academic literature in late eighties and early nineties. Jegadeesh and Titman (1993) using US market data from 1965-1989 found not only the evidence of long term success of contrarian investment strategy but also found that momentum strategies generate significant positive returns in medium run over 3-12-month holding periods. They documented the reversal of momentum after about nine months. Their study suggests that in short run for about 3-12 months holding period momentum strategy generate significantly positive returns while in long run for the holding period of 1-3 years contrarian strategy generates significantly positive returns. Conrad and Kaul (1993) also find evidence from US market that the contrarian strategy is profitable for short-term (weekly, monthly) and long-term (2-5 years, or longer) intervals, while the momentum strategy is profitable for medium-term (3-12-month). As mentioned earlier the results of Jegadeesh and Titman (1993) had thrown a new light on seminal study of De Bondt Thaler (1985, 1987) and found evidence of short term momentum precedes long term reversal. Although all the results provided strong evidence of market inefficiency, different studies documented different explanations for such returns. Fama French (1996) presents result based on multifactor CAPM using size and MV/BV ratio to explain various anomalies in asset prices including momentum as well as contrarian returns and claim that market efficiency is intact. However the study failed to explain the presence of short term momentum using the multifactor model and hence short term momentum anomaly remains unexplained. Several behavioural explanations were found and presented to jointly explain the short-run cross-sectional momentum in stock returns documented by Jegadeesh and Titman (1993) and the long-run cross-sectional reversal in stock returns documented by DeBondt and Thaler (1985). Daniel, Hirshleifer, and Subrahmanyam (1998) (DHS hereafter) assume that investors are overconfident about their private information and overreact to it. If these investors also have a self-attribution bias, then investors attribute success to their own skills more than they should and attribute failures to external noise more than they should. The consequence of this behaviour is that investors overconfidence increases following the arrival of confirming news. The increase in overconfidence furthers the initial overreaction and generates return momentum. The overreaction in prices will eventually be corrected in the long-run as investors observe future news and realize their errors. Hence, increased overconfidenc e results in short-run momentum and long-run reversal. As against the above cited behavioral explanation to short term momentum and long term reversal, some scholars argue that the returns from these strategies are just compensation for taking additional risk or may be the product of the data mining. Most noteworthy of all Conard and Kaul (1998) argue that the profitability of momentum strategies may be the result of data-mining and momentum portfolio shows positive returns in any post ranking period is true irrespective of the length of test period. Thus Conard and Kaul (1998) suggest that there is no case of long term reversal. This is diagonally opposite to what the behavioral models suggests where after short term momentum prices will reverse to more fundamental levels. In fact, the criticism of Conard and Kaul (1998) led to another study by Jegadeesh and Titman (2001) where they used out of the sample test by using data from 1991 to 1998 an overlapping test period compared to their 1993 study where they used data form 1965-89. Their study also eliminated small firms from the study to check whether the earlier momentum returns were actually dominated by small, high-risk and illiquid stock or otherwise. Though they focus on short term momentum in their study choosing two year holding period post formation but they also tested post holding period returns from the period of two to five years after formation. They present some very interesting results. The momentum profits of Jegadeesh and Titman (1993) continued in 2001 also with almost same magnitude for same holding period that actually has proved that the earlier momentum profits were not the result of data-mining. It also suggests that unlike small firm effect where after the published research on superior returns on small firms compared to their large counterparts, superior returns on small firms disappeared in subsequent studies using data from the periods after the small firm effect from earlier studies got published, that means market has learnt quickly and hence such superior returns disappeared however momentum returns were still present with the same magnitude in 2001 as they were in 1993 study suggest that momentum returns are not just the temporary anomaly but it may have to do with some systemic cognitive bias which sustains for a long time. It also proves that momentum profit is just not the result of some small, illiquid and risky stocks and most noteworthy the reversal found in their post holding period cumulative returns, which render support to the explanations of behavioral theorists and provides evidence against the Conard and Kaul hypothesis. As far as studies in Asian markets are concerned Chang (1995) found abnormal profits of contrarian strategies in the Japanese markets. Chui (2000) found significant positive abnormal returns with contrarian investment strategy in Japanese and Korean markets. Hameed Ting (2000) found evidence of market overreaction hypothesis (contrarian strategy) in Malaysia. Kang (2002) found significant short term positive returns with contrarian strategy in Chinese markets. On the other end, Hameed Kusandi (2002) found no evidence of contrarian profits in six Pacific Basin markets. While Rouwenhorst (1998) and Griffin Martin (2005) found existence of momentum in many non-US countries, the quantum of momentum returns in non-US countries was small, and in the case of Asia, insignificant. For example, Griffin (2005) estimates average monthly returns of 0.78%, 0.77% and 0.40% for the Americas (excluding the US), Europe and Asia respectively. End of the Beginning or Beginning of the End†¦ The big bull has fallen down, investors have lost their vision, and experts knowledge went futile with the downturn of the global economies. When the markets were on peak, the funds across the world have flooded in the global economies. Policy makers had lot of confidence on the market, that it will help the economy to grow at faster pace. The market excelled 21000 points which was more ahead then the growth of the economy of India. But that does not seem true for the world economies, as the crisis had hit badly in USA and other parts of world which insisted FIIs and other investors to withdraw their money and markets crashed, went to 7000 points, where investor lost everything and policies could not work to take them up to the level. What was the reason of the crash? What will be the result of the market? Is this the end of the beginning or beginning of the end? Indian market is the strong base of determining the financial system of the country. Majority of the financial decisions are dependent on the stock market other financial market. Indian stock market serves a link to banking and other financial policies which provides impetus to the industry. Indian stock markets heavily based on the sentiments of the clients (market players) also of the market makers. The crash or boom (in a period/ year) determines the structure of the Indian capital system. The boom in the market (year till 2008) has brought many changes in the performance of mutual funds, insurance (ULIPS), investment products which led the country into the inflow of the money supply in the market. Till 2007-08 the market was running at its best, touched the heights, but the global crash in the market became a typhoon took away major players organizations into the quick sand of the recession. The insights from the market were not showing positive sign in anyways, so whether this was a new platform or just a time (economic) cycle. Prologue to decline†¦ Earth provides enough to satisfy mans need, but not greed. -M.K.Gandhi The market crash started with the fall of big financial organizations in the USA in the world like Lehman Brothers, AIG, Freddie and Fannie and many more. The failures were primarily due to exposure into Subprime loans Credit default swaps issued to insure these loans the issuers devolved resulted into bank failures steep reduction in the price of equities worldwide. The economic crisis led many world markets to suspend the trade due to fall in price. On October 8, 2008 Indonesian stock market halted trading, after a 10 % drop in one day. The crash of 2008 was around 21% which was little less than 1987 (Times of London). Beginning of October month was Black in the world market. The Dow Jones volumes were low and the industrial average fell over 1874 points which was worst weekly decline. The Icelandic stock market was into pitiable situation where the markets had been suspended for 3 days i.e. 9, 10 13 October. On October 24 many of the worlds stock market experienced the worst decline, with around 10% drop in the indices. Source: http://en.wikipedia.org/wiki/File:OMX_Iceland_15_SEP-OCT_2008.png The above graph shows the steep and the worst decline a market could ever witness. The Iceland stock market crashed up to unpredictable level. The trading had been suspended for 3 days because of the crash in the market. This situation was visible in all global stock markets, because of financial crisis in USA. Hence, the worst was yet to be experienced by the global markets market players. The Indian stock markets were also badly hit the confidence of people was shattered. The markets were not showing the positive sign in any of the context people had no clue about the next jump or next level of the market. Market experts were expecting the markets will be into recuperation at the earliest, but things were not going the way it had been desired. Source: Hindubusinessline.com Indian market which has shown strong performance till 2007, but from January it plummeted more than 3000 points on all the stock prices by October 2008, it had touched the 7000 (BSE) line. The continuous unpredictable scenarios in the stock market led many investors and institutional investors to withdraw their money because of negative performance of the markets. The above shown graph is depicting the dream turned into nightmare for global domestic investors. The Beehive capitalism†¦ Everything that goes up without base falls steeply with great force. The same situation has happened with the world economies. The supreme economy of the world has become the devil for the small economies, leading major big companies to file for the bankruptcy. The global meltdown is the result of Financial Hybrids Innovations, which has been actively traded all across the world markets. The investment bankers, banks, financial institutions were actively relied on these new and innovative models, which has yet to gain the acceptance across the world. The main accused element for collapse is â€Å"Credit crisis†, in which the US banks got the regulations to lend money to the people having no sufficient background to get the loans. These kind of loans were termed as NINJA loans (NO INCOME, NO JOBS, NO ASSETS), given in abundance by the US banks. Emerging economies like India, China and other big economies were initially considered to be the places which will remain unaffected from the distortion of crisis. But despite of the strong fundamentals Indian economy dipped into the crisis. The stock market had lost more than 50% of its value (source: economic times), which shattered the hopes of the Indians. There was continuous monitoring by the Central Bank (Reserve Bank of India) on the market trend. The tornado of crisis had destroyed most of the stock markets, banks and financial institutions after soaring to the new heights of investment. The below mentioned graph depicts the movement of BSE Sensex SP CNX Nifty Source: SEBI Bulletin November 2008. BSE Sensex closed at 9788 on October 31, 2008 as against 12680 on September 30, 2008, a fall of 3072 points (almost 24%).The month of October 2008 had been the most volatile month, where Sensex recorded a high of 13055.67 on October 1, 2008 low of 8509.56 on October 27. Nifty closed 2886 on October 31 against 3921 against 30 September 2008. By the end of a month Nifty registered the fall of 1035 points (almost 27%). The market had shown unpredictability of the base stability level, dissuading more and more investors to take exit from the market. The Financial crisis: A Sub-prime loan is a type of mortgage loan made to borrowers who have at least one of the following characteristics: (1) Low credit scores; (2) The inability to post the traditional 20 percent down-payment for a home; and/or (3) The inability to fully document their income. The subprime crisis is not the result of recent financial innovations and developments, but it is the outcome of lax capitalism policies which had been developed by the US government. In the fifties American government passed a legislation to delink the commercial banking investment banking. The legislation stated implied that a commercial bank cannot open an investment bank. In 70s European American economies faced slowdown, due to which these banks were finding difficult to invest their investible surplus. This time the East Asian economies were liberalizing their economies, due to which the capital from western economies started moving to these economies. After the huge influx of capital into these economies, Asian bubble gets burst, forcing the western economies to introduce new financial measures to invest into the markets. These circumstances and the need of new financial avenues led the US European economies to trade into the new financial products, by liberalizing the norms for Commercial Investment Banks. The liberalization in the regulations led to the introduction of the Mortgaged products (a prime cause of crisis). In the late 90s US mortgage lender began offering the mortgage products to would be â€Å"home buyers† who could not qualify for a mortgage loans. Millions of Americans Europeans, who previously could not afford to buy home, were obtaining these mortgages, due to which great Demand of home (boom) took place leading to shoot of real estate prices. The above diagram shows how the base of subprime crisis took place in the global markets. The downfall in the economies is considered to be as the Dominoes Effect. The lax screening of borrowers, large capital accumulation capitalized market structure created a bubble which could not be ceased from getting expand. The whole cycle got mitigated with the introduction of new instruments in the financial markets. The sub prime crisis is about the collapse of the unregulated, $3 trillion over-the-counter market for complex structured assets, some of which happen to contain sub prime residential mortgages. The semiannual global financial stability report by IMF said that declining US housing prices and rising delinquencies on the residential mortgage market could lead to losses of $565 billion. When combining these factors with other market factors, it puts potential losses at about $945 billion which is almost 25% of the $24trillion global credit market. Financial innovations were brought into the market to make the products work in the market. The Mortgage products started to conflagrate the US European markets, where such loans started becoming the pool of assets (Risky) and been traded in the market. Hence, due to this many other factors got the impetus ultimately resulted into the uncontrollable bubble of mortgage, which gets burst and deepened the world economies into the recession. The subprime crisis has affected the global economies resulting into the fall of big financial corporation like Lehman Brothers, Bear sterns, AIG, Freddie Fannie, and many more big organizations of whom one cannot think to get fail. The sizes of the organization (exposure) were in plethora that it was not possible for the US European government to revive these financial institutions. AIG, one of the largest insurance companies (Private) became government undertaking due to the impacts of financial crisis. SUB PRIME OVERVIEW: Source: The India Economic Review 2008. (Dec 08) The whole system works in three stages, Stage First consist of Borrowers lenders; Second stage consists of the creation of SpecialPurpose Vehicle (SPV) with the inclusion of legal intermediaries. The last (third) stage consists of investors those who had invested their money into the riskier assets including the investment banks. In stage first agent enters between borrowers and lenders, accepting the collateral and also factoring the future price rise. The agents accept the loans, who previously could not even qualify for the approval, now getting loans from the banks other lenders. The housing price bubble allowed many borrowers to get loans easily because of the high house prices. The loans were mortgaged on a larger scale by creating the pool of similar group of mortgage assets through Special Purpose Vehicle (SPV) given the risk involved on the pool of assets. In second stage, SPVs were created all the liabilities were transferred into bankruptcy remote securitization trust or SPV. Underwriters were used to issue market the MBS (mortgage backed securities). These securities were divided into different tranches, which were of similar securities. The rating agencies were to give rating to these tranches of securities. The ratings were given to the tranches based on the risk, priority of payment of the funds. Higher ratings were given to those tranches benefiting from the credit enhancements the MBS generates or credit insurance purchased from third party bond insurer. In third stage, Institutional or individual investors such as hedge funds or managers of Collateralized Debt Obligations (CDOs), purchase the securities and then re-securitize the MBS, along with other assets, into a CDO. The Commercial Papers (CP) generated in the initial years was all sold and there was demand for more. Consequently the SPVs started producing more CPs or MBS. The sale of the same only meant that the SPVs were flush with funds. These funds were to be invested somewhere so, the agents were pressed to bring in more borrowers. The lending norms were further diluted to accommodate lesser and lesser deserving borrowers in order to deploy the huge funds available. The consequent spiral that got generated only led to the continued dilution of the Capital Adequacy and Prudence norms. The system went burst once the housing prices turned negative turning the very foundation of subprime lending upside down. The turmoil of subprime has been expected of more than $ 3 trillion, which is too big for any country to even imagine of recuperating. The impact on Indian market was slow but had been proved acute on the stock market due to the constant humongous withdrawal of FIIs loss of confidence in the consumers (investors). Mortgage: Huge pack of cards†¦ The magnanimous crisis which all started with lax policies of US government, provided impetus for the Fed Reserve to implement new structures in the economy. The capitalist policy was looking very attractive to the market players, but the policy was hollow from the fundamentals. It all started with the Alan Greenspans reformative structures models in the financial markets, led to turmoil in the global economies. The US Fed Bank Clinton government in 1999 passed Gramm-Leach-Bliley Act (GLBA) which had abjured the old Glass-Steagall Act which had regulated the Investment Banks, Banks Insurance industries. The new legislation has unregulated the Wall Street Investment Banks and commercial banks. This deregulation has enlarged the gamut of activities in the financial activities of the commercial banks other financial institutions. The deregulation had been further reintroduced by legalizing gambling activities into financial sector, a prohibition that had been in place after 1907 financial crisis. The steps towards deregulation of the US markets had converted the US markets into a big casino. Securities Exchange Commission (SEC) in 2004 took a step towards the deregulation on the financial activities by removing the ceiling on risk that the largest American investment banks could take on Securitized loans. By this time, no one would have thought that the deregulation will result into large speculation create a bubble in the market. Lastly, the Securities and Exchange Commission took the last step toward deregulating financial markets when in the month of July 2007, weeks before the onset of the subprime crisis; it removed the â€Å"uptick† rule for short selling any security. The housing bubble was fed by extraordinarily low interest rates low lending standards (norms) for mortgages. The excessive monetary liquidity short term interest rates fell to 1%, which led to high borrowing of loans from the banks, resulted into the big bubble of mismanagement of financial activities. After the tech bubble burst in 2001 the recession, the Fed (Greenspan) aggressively lowered the Federal funds rate from 6.5 percent to 1 percent in 2004, the lowest since 1958. The lowered interest rates reduced lending standards made the banks to lend the money known as ‘ Predatory Lending to the borrowers who did not have capabilities to qualify for the loans, but with the mortgage lending, excessive loans were provided to these lenders as they (banks) were getting big bonuses for bearing risk on these loans. Non-traditional home loans were advanced to borrowers who had no documented incomes. Some loans were interest only loans with down payments of 5% or less . Some were Adjustable Rate loans (ARMs), with low interest rates for one or two years to be reset later at much higher rates. In 2006 around 25% of American mortgages were subprime and close to 20% were ARMs. Mortgage lenders and Home buyers presumed that home prices were not going to fall on a national basis. THE NEW ALCHEMY OF FINANCE The subprime crisis is the result of new financial products in the market the deregulation of the financial activities for the FIs. The main reason of such lending was the facility with which subprime lenders could sell their risky mortgages upstream to bigger players, investments banks for example, which undertook to buy them, pool them into mortgage bonds and re-channel them into new financial instruments through a process of aggressive securitization. The Structured Investment Vehicles (SIVs) which fall into the large class of derivative products came under various names such as Collateral Debt Obligations (CDOs). They had the characteristics of short term asset based commercial paper that were backed by the underlying income producing mortgage assets downstream and were graded according to a certain risk of default. More than 1 trillion half dollars of these asset backed financial products were sold in all over the world. Another new financial instrument that made matters much worse and led directly to the crisis: the Credit Default Swaps. Due to lack of government regulation, this product has become a weapon of mass destruction. In order to protect against the risk of default on the new asset-backed securities (ABS), some insurance companies but also some investment banks themselves began to issue bilateral â€Å"insurance† contracts against the newly created ABS. These were called Credit Default Swaps (CDS), which were supposed to protect the investment instruments against the default on asset based securities. The issuer of ABS could buy the protection against the default by paying a premium. This was a financial innovation, the so-called â€Å"insurance against default†, that opened the floodgates of money to be invested in the new financial instruments. Indeed, it allowed investors such as pension funds and other institutions which have a fiduciary obligation to buy only high-qualit y securities, to legally buy artificially highly rated (but risky) ABS securities, or to invest in hedge funds which specialized in leverage trading in derivative products. But the problem was that the issuance and use of such financial â€Å"insurance† contracts were not regulated by any government agency, because the word â€Å"insurance† was not used; instead, they were considered as simply a protection against the â€Å"default† of payment on a financial security. And thats where the gambling part enters the picture: only ten percent of CDS are genuine insurance contracts held by investors who really own asset-backed securities (these are covered CDS); 90 percent of them are rather held by speculators who trade CDS, while not owning any asset-backed securities to be protected (these are naked CDS). Economy as Casino: The gamut of gambling that US government Fed has created was even unimaginable, allowed big participation into these new investment instruments. Credit Default Swaps (CDS) can be bought and sold by speculators who are not directly involved in the mortgage business. Because of the 2000 Commodity Futures Modernization Act passed by Congress, no state has the power to regulate this new form of sophisticated gambling. The result is astounding: it is estimated that the notional value of credit default swaps outstanding today is about $ 62 trillion (four times the size of the US economy). This is an indication of popularity of the â€Å"naked† CDS innovation was as a way to bet on the collapse of the entire asset-backed securities construction. This was also a clear sign that, in a crisis, it would be all but financially impossible for the issuers of CDS to meet their obligations. In other words, disaster was just around the corner. This is an event that any regulatory agency should have seen coming. When housing prices hit the expected top of their cycle, in the 2005, and began falling, especially in 2006, the price for CDS s was still relatively low. So, some astute speculators undertook to buy CDSs and simultaneously began selling short the ABS that had been issued by investment banks, such as Lehman Brothers, in the correct expectation that mortgage-backed securities were bound to lose value with the expected rise in home foreclosures and mortgage defaults. This is how unimaginable spiral got created by the steps undertaken by Fed Reserve US government which ultimately result into the great burst ever faced in the history globally. GRAMM-LEACH- BILLEY ACT 1999 The Gramm Leach Billey Act 1999 (GLBA) passed by US government in the year 1999 with a view of security data integrity in the market. The GLBA repealed the part Glass Steagall act of 1933, which had opened the market among the banking companies, securities companies insurance companies. The GSA had prohibited any one institution from acting as any combination of an investment bank, a commercial bank and or an insurance company. But the GLBA allowed commercial banks, investment banks, securities firms, insurance companies to consolidate. The act was announced in the 1993 finalized in 1994, allowing many big corporations to merge to enhance their range of activities take the benefit of the deregulation. The law was passed to legalize these mergers on a permanent basis. The law has not fully deregulated the previous act, but they had relaxed the norms and allowed the FIs to have non financial assets. GLBA was amended with some part of the Bank Holding Company act of 1956. The crucial aspect of the GLBA stated that no merger can go ahead until the financial holding institutions, or affiliates receives a â€Å"less than satisfactory (SIC) rating at its most recent CRA exam†. GLBA compliance was mandatory; whether a financial institution discloses non public information or not, there must be a policy in place to protect the information from prospective threats in security data integrity. The law was segregated into three main aspects: FINANCIAL PRIVACY RULE: This rule requires FIs to provide each consumer with a privacy notice at the time the consumer relationship is established and annually afterwards. The notice must explain the information collected about the consumer, where that information is shared, how that information is used and how that information about the consumer is protected. The consumer must be notified give consent about any change at any point of time. Each time the privacy notice is reestablished the consumer has the right to opt it again. SAFEGUARDS RULE: The safeguards rule requires FIs to develop a written information security plan that describes how the company is prepared for, and plans to continue to protect clients non public personal information. This plan must include the following; Denoting at least one employee to manage the safeguards. Constructing a thorough on each department handling the non public information. Develop, monitor test a program to secure the information. Change the safeguards as needed. The Safeguards Rule forces financial institutions to take a closer look at how they manage private data and to do a risk analysis on their current processes. PRETEXTING PROTECTION: The GLBA encourages the organizations covered by GLBA to implement safeguards against pre texting. Pre texting means when someone tries to access the personal nonpublic information without proper authority approval. Thus the institutions having covered under the GLBA, needs to have control safeguard the information of their client, to prevent the details from any misuse. CRITICISM AND DEFENSE: There