Financial Risk Management Essay Example | Topics and Well Written Essays - 1000 words - 1

Financial Risk Management - Essay Example Businesses in order to increase the return or to reduce the level of risk associated with product (financial product) are increasingly making use of financial derivates in the respective portfolios. Among the range of derivatives being used in market following few derivatives are most commonly used (Culp, 2011): Futures contracts ( facilitating transfer of asset on future date at an agreed price) Options (Call option or put option facilitates the purchasing or selling option to buyer or seller to an agreed date and price. To mention as the name implies options are not obligations). Swaps (Exchange of cash flow with another cash flows for gaining the required benefit) Hybrid (derivates that mix the features of more than one securities with financial engineering) Using these and others financial product of derivative category suiting to the need of the business as well as individuals financial marketers take advantage of derivatives to develop desired fashion portfolio or value of bala nce sheet. Derivatives allow hedging of the risks from various domains. Such as market risk, interest rate risk, model risk etc (Functional Finances, n.d). For instance, the interest rate risk can be hedge using derivative such as Interest Rate Swap (IRS) contract. Various risk measurement factors are used to evaluate the risk such as (Hentschel & Smith Jr, 1995): Beta measures the risk in the context of equities. Stock risk is measured in relevance to the market with beta. With respect to bond market, the modified duration assess the risk associated with interest rate risk. Interest rate risk is the relevant risk to bond. Modified risk play similar role for bonds as played by beta for equities. Delta measures the risk of change in value of future, forward or option over shorter period of time owing to the change in asset prices Gamma is a measure of change in delta as the stock prices chances. This is effective for the hedging the change in the delta. Vega measures the relationship between the volatility and options value. Rho is a risk measures for assessing the change in the call option prices with respect to the variation in the risk-free rate. Theta is another measure for the derivatives’ risk measurement. For the change in the value of the option with respect to change in time factors (such as time to maturity) that does not abruptly changes like other factors. Hence single product of derivative (option) offers wide risk factors for hedging and these are from market risk perspectives only. Credit risk, model risk, concentration risk are other risk measures that offers greater variation in risk management for derivatives (Functional Finances, n.d). Therefore, adding derivative and hedging risk from critically valuing above mentioned risk factors can add significant returns to the portfolio while trading off higher risk to lower risk or un-affordable risk to affordable risk. Various measures are useful in various financial conditions and even combin ation of measures is useful (Homaifar, 2004). For instance, a balanced portfolio (portfolio with fixed income and equity particulars) generates risk from equity segment in order to generate the higher return. In addition as the name signifies, portfolio is balance and has the fixed income

Analyze the physiological and psychological reactions to stress Essay

Analyze the physiological and psychological reactions to stress - Essay Example No matter what the intensity of stress, its victim reacts to it physically and emotionally. This paper is going to elaborate: Physiological reactions to stress include high blood pressure, gastrointestinal problems, fluctuations in the chemical composition of body fluids, insomnia, addiction to smoking or alcoholism, and other illnesses. Individuals are apt to show different levels of these physiological responses to a particular stressor (Koslowsky, 1998, p. 90). When an individual is undergoing a stressor, such as, being jammed up in traffic when an exam is going to start in a few minutes, an increased heart rate occurs as a stress-response due to the discharge of certain hormones, like adrenaline and cortisol, into the blood. The individual’s respiratory system takes in extra oxygen. Blood gets thickened and is directed more toward imperative muscles which become tightened in preparation for some unexpected action. When the individual comes out of the stressor, heart rate reduces allowing blood to come to its normal constitution and hormone level gets down to normal. All of these physiological stress-reactions are not independent. These depend on psychological responses, that is, orders given by the nervous system or the sensors of the body. When an individual senses that he is in stress, his brain sends orders through neurons or nerve cells to different parts of the body which brings about changes in the physiology. The individual jammed in traffic senses that he is in great stress, his nervous system accepts these signals and passes them over to the neurons which make the body function accordingly. He tends to be irritable and there is an intense startling response. Another psychological reaction is suffering through nightmares and repeated thoughts or flashbacks about the stressor. Under a stressor like the death of a relative, the psychological responses may include getting shocked,

Giant impact theory Assignment Example | Topics and Well Written Essays - 250 words

Giant impact theory - Assignment Example Grains of dust collided and formed bigger objects known as planetesimals. During collisions, many planetesimals break up during collision but the larger ones survive and become protoplanets and later planets. If these planetesimals had remained stationary, the solar system would be made of thousands of small objects such as planetesimals without any planets. Life would have been possible in small objects. Alternatively, planets would have been small. The third scenario is solar system would have formed. Larger planets have more internal heat to lose compared to smaller planets. In addition, there is proportionally smaller surface area to lose the heat from. The larger the planet, the bigger the less the surface are per unit volume. Small worlds or planets cool faster than the big world. When the planets completely cool off, they become geologically dead (Seeds, Michael and Backman 15). Planet earth is yet to cool of completely and this means it is geologically active. Activities taking place at the core of the earth are responsible for volcanism, movement of tectonic plates, cratering and others. Bigger plants are more geologically active. If rotation is faster, geologic activities

Psychology - Memory, Attention & Performance Essay

Psychology - Memory, Attention & Performance - Essay Example ory serves as a filing cabinet in our brains but one that only holds files for a short period of time, up to a minute or so without having practiced or rehearsed information. After such time, those memories (files) are either discarded completely as they are either not important and not worth remembering or are not properly filed into long term memory, or they are in fact filed into our long term memories from short term memory. The capacity of short term memory is limited as is its ability to hold information for long periods of time. Long Term memory has not only a much larger capacity than sensory and short term memory, but also a much longer retention ability. In some cases, long term memory can retain information for a lifetime. Such can be the case with a phone number that is practiced within the an individual’s memory though repetition, this number may remain in the person’s long term memory for the span of their entire life. The types of long term memory are implicit memory and explicit memory. Most memory that we can actually readily access is considered explicit memories. Explicit memories can be grouped into either declarative or episodic memories. Episodic memories deal with personal events whereas declarative memory deals with general but factual information. Implicit memory is more subconscious memories that we don’t necessarily realize that we remember but that does in fact influence our behaviors. Reasons why the memory of a healthy person may fail can be environmental such as medication induced memory loss. Some analgesics (pain killers) and anti -anxiety medications can cause memory loss in healthy persons. In many cases, memory loss can be due to a normal aging process, â€Å"People with memory loss due to something other than normal aging, such as Alzheimers disease, may feel that somethings not quite right, but theyre unable to pinpoint whats bothering them. Rather than call attention to a memory lapse, they may behave as if

Farmland Drainage System Assignment Example | Topics and Well Written Essays - 500 words

Farmland Drainage System - Assignment Example The developers of the system have a crucial role in determining which materials are the most environmentally friendly to be used within the system. They determine what implements are the most environmentally friendly at the most affordable price. The aim of the project is to minimize costs and increase efficiency of land use. The financiers of the projects have a crucial role in determining whether the implements used to create the system are environmentally friendly to be consumed by other users. However, they make this decision based on the profitability of the available options. It is crucial that they maintain an objective approach towards their responsibility to the society through CSR. The farmers who may potentially implement this drainage system have the final say as to whether they have all the facts to make an informed decision as pertains the effects the system would have on their land and their productivity. Environmental Pollution is one of the greater problems facing societies worldwide. It is said that environmental pollution (air pollution to be precise) causes 20% of deaths around the world annually, according to data gathered by the World Health Organization in partnership with the World Bank. Air pollution through carbon emissions from factories, automobiles and the day-to-day activities of the human race affects the ozone layer in negative ways. This pollution has led to the intoxication of clouds, leading to acid rain. This kind of rain water is detrimental for farm use and as such, there has to be consideration of the location of the land on which the drainage system would be used. Owing to pollution, global warming has resulted in the drastic change in weather patterns. The normal seasonal patterns have been affected in terms of their timing and their severity. Summers have been found to be extremely hot while winters have been extremely cold. This situation may impede the effective use of the drainage system. It

International Financial Accounting and Social and Environmental Theory Essay

International Financial Accounting and Social and Environmental Theory - Essay Example The primary issue concerning social and environmental theory is the way the society determines developments, goals, and innovations in accounting practice. It is generally agreeable that the society and environment in which accounting practices are applicable affects its development to some extent. However, the extent and the framework with which the social and environmental theory has influenced current accounting practices is a matter of dispute. Actors in this theory are the members of society being users, accountants, and generally stakeholders of accounting practices. Development of Accounting Practices Stakeholders in the society are considered to have control over accounting practices, their developments, and the directions in which such developments take place, to some extent within a given social setting. The influence of practices and developments is referred to as agency, where stakeholders in the society have the ability to influence accounting practices toward attaining some end. The level of accounting practices largely depends upon the kind of environment those stakeholders come from. Social and environmental structures are the interactions of stakeholders with societal cultures and norms that define them. The structures range from those of family setting, organizational and a country in general. It is agreeable that developments, innovations, and the general progress of accounting research varies from one country to another with respect to social, cultural and environmental differences. International financial accounting places its current practices on the heterogeneous aspect, despite globalization and efforts of researchers towards standardizing the practice (Humphrey, 2007, p.74). Institutional, family level and country structures are to some extent the result of stakeholders using and maintaining their use in accounting through a combination of purposive actions and their beliefs. Social and environmental efficacy is the ability of stakehold ers to cause changes in accounting practices, with respect to corporate social responsibilty. Although it is generally considered that people are to some extent products of the society and environments, this consideration does not imply that individuals will possibly decide to resist societal and environmental influences, either collectively or individually. Corporate social responsibility thus brings up treatment of accounting practices as activities of conventional accounting researched with universal preconceptions and assumptions to mainstream financial accounting. This approach assumes that the community is the main user of information and accounting practices in general. More to this approach, corporate social responsibility places environmental and social reporting at the epicenter of an examination of the purpose of information in agreement between the society and organization (Gray, Kouhy and Lavers, 1995, p.48). Accounting practice stakeholders in the social circle encompa ss researchers, teachers, practitioners, and academicians as influential thinkers who are concerned with social and environmental accounting. Current practices can be generally tied to high level of interactions and discussion

Assignment 9 Essay Example | Topics and Well Written Essays - 1000 words

Assignment 9 - Essay Example He brings his personal experiences and concerns while working at General Motors Assembly line. We are bound to understand him better as he uses his voice to bring out the actual nature of activities and also to let us know the real account of issues as they are. This leads us into taking a position that would not have been possible if such a case was historical in totality. Moreover, he exhibits a different working setting where someone can evade tasks assigned to him or her without eminent consequences, thus delegating the same to another person at the expense of that party. The interests of a person should not be a priority over those of the entire organization. One should strive to provide the best effort for the benefit of the organization and personal utility. For example, Hamper would skive his duties by teaming up with another person, ‘’double up’’ hence when that person did both working, he would hover around in the industry or even reading. Having the ability to do whatever he wants, Hamper jeopardizes the activities of GM as no one seems to care what happens regardless of the expectations. This way he puts personal interests first at the expense of the organization. He seems more interested at how well he can spend time outside the assembly line forgetting that he is duty bound to deliver. The working environment doesn’t seem to favor his bid to have an enjoyable stay. Discipline is also a key to any successful entity. This stipulates and thus lays a framework of how employees should carry out themselves since this is the source from which the external environment paints a general picture of the organization. The common effort of everyone is therefore called to task. In his book, Hamper fails to display any of these as he operates at his will to any direction he feels like. On one hand, the organization ought to institute penalty programs that must be applied judiciously to those who fail to attain the discipline thre shold and on the other hand ensure that the common effort is safeguarded. Moreover, General Motors offers the best state of affairs however according to the author he uses various diversions in order kill boredom and monotony of work. He also never tries to change the situation although the work unions are never harsh to negotiate with. The unions seems to be selective and discriminatory since the writer, apart from managing in his own way, finds it even easier to maneuver his way through them. These serve to give him more room to work uninterrupted even when things don’t seem to work well. The work environment today poses a great challenge to those entrusted with responsibility since one has to deliver to the stakeholders and other interested parties. This entails the account of every single resource used in the verge of the operations of the organizations. The same will enable match efforts utilized with the results realized. The working milieu seems relaxed and without cle ar cut strategies and rules all of which tend to cover rights and specific duties of employees. These regulations have to be adhered to with strictness if the company has to realize its goals of his and thus objectives. The foregoing is not a true account of what happens at GM. ‘Rivethead’ displays a work environment where one person works for two therefore giving room for the other one to be away for a couple of hours. The author, in an attempt to forget all his tribulations in the assembly line