Ivanhoe Strengths Essays - Swashbuckler Films, Films, British Films

Ivanhoe Strengths The greatest strengths of Ivanhoe were the themes of the novel. All the characters in Ivanhoe were in some way affected by the major theme of the hatred between the Saxons and Normans. The novel also answers many of the great questions of life. It mainly is a love triangle and of betrayal. The love triangle is threaded all throughout the book in many places and ultimately closes the novel with Ivanhoe and Rowena get married. Betrayal is spoke in the beginning of the book when Ivanhoe betrays Cetric by going on crusades. Cedric disowns Ivanhoe because he betrayed his father. The theme of hatred towards another group of people is threaded throughout the novel. Many factors contributed to this being the theme that was treaded through the novel. Fighting was occurring in many key parts of the novel between the two groups of people. The fighting told the reader that people from each side didnt like each other and wanted to kill one another. Attacks were also common. Gurth was attacked for doing nothing, just because he was part of Cedrics group. In closing, the theme of hatred towards another group was the strength of this novel. It was threaded throughout the novel and kept the reader with knowing what was going on. English Essays

The Trials and Triumphs of Robert E. Hayden

The Trials and Triumphs of Robert E. Hayden The poem that I chose was Those Winter Sundays written by Robert Earl Hayden. This poem is about a man who reflects back on his troubled childhood. As an adult, Robert can see that the bad things he endured as a child were not entirely his father?s fault. He realized the positive things that his dad did for him and regrets not saying Thank-you. There are many influences in which could have played a part in Those Winter Sundays. Some of the influences were differential treatment between siblings, verbal and physical abuse, and the lack of physical affection from his parents.Robert Hayden was born as Asa Bundy Sheffey on August 4, 1913 in Detroit, Michigan. His parents were Asa and Gladys Sheffey. Asa and Gladys were experiencing marital problems; they separated before the birth of their son. Gladys Sheffey felt confused; she wanted to be involved in her son?s life but could not manage it alone.English: Ann Arbor as seen from the University of ...She decided to give her son up for adop tion. A couple named William and Sue Ellen Hayden took young Asa in. The couple then had Asa?s birth name changed to Robert Earl Hayden.American poet, Robert Earl Hayden, had a reputation for finely crafted and powerfully meditative poems. He was raised in a poor neighborhood in Detroit. He was shuttled between the homes of his mother and that of his foster family, who lived next door for most of his childhood. Robert was unable to participate in sports, because of impaired vision. Robert spent most of his time inside where he would do nothing but read. In 1932, Robert graduated from high school and, with the help of a scholarship, attended Detroit City College (now known as Wayne State University).Robert Hayden published his first book of poems, Heart Shape in the Dust,

Prince George's County Community Hazards Research Paper

Prince George's County Community Hazards - Research Paper Example The county has been affected by a number of hazards which has resulted of loss of property and even lives. Some of these hazards are related to weather which have caused injuries and deaths to the people. Moreover, it is evident that the public are not informed about certain hazards and how to manage the same in the places in which they live in. According to report released by FEMA higher percentage of people are likely to build in floodplains areas due to the fact that they are not aware of the risks associated with the same (Association of State Floodplain Managers, 2008). Therefore, it is important to inform the public about the risks associated with building in floodplain areas. However, it is has been noted that in some cases the public are not aware that they are residing in floodplain areas and they only become aware of the same after purchasing property in flood areas and suffer the effects of the floods (Federal Emergency Management Agency, 2005). In Prince George’s C ounty the risk level of the existing hazards are described as medium high. These hazards include drought, severe storm, streambank erosion and winter storm. However, the river of risks is high when it comes to coastal floods and the Riverine flood hazards. Based on this the damages caused by the aforementioned risks are calculated using damages caused to the buildings, in addition to the value of replacing the buildings and also the age of the building. However, studies have indicated that damages which are as a result of wildland fire or drought are caused by the way human population utilize land. It has been pointed out that drought as a hazard within the county impacts negatively on the planning of the place and more specifically the agricultural sector. Nevertheless, the less it is hard to mitigate the damages that are caused to crops (Federal Emergency Management Agency, 2005). Hazards such as wildland fires influence areas with grass fields, brush, crops and even tress. Apart from resulting into loss f crops the same results into economic loss not only at the personal level but also the county. Additionally, when forests are burnt the planning area of the county is interfered with and human population is likely to encroach in the land. Streambank erosion as a hazard affecting the county on an annual basis is as a result of constant and increased river discharge. This makes the hydrology of the county to change. Presently, the officials of the county have indicated that streambank erosion causes a variety of problems ranging from minor to major ones. The hazard has resulted into infrastructures an aspect that has resulted into human population encroaching land that is publicly owned. Additionally, the winter storm which is another hazard that occurs in the area on an annual basis is mostly characterized by three aspects. These are high amount of moisture, lift and cold air which not only results into precipitation but also formation of cloud. In most caus es the winter storms that affect the Maryland negatively are as a result of jet streams which are in the middle attitudes cross and move to the continental United States (Prince George's County Department of Environmental Resources, 2011). Additionally, the degree of the storm varies in addition to the impacts caused by the same. For instance within the county cases of property

Case study Example | Topics and Well Written Essays - 250 words - 3

Case Study Example Businesses such as Easy car, Easy cafà ©, Easyvalue.com etc. besides the airline business Easy jet are examples of the above mentioned growth strategy. Similarly, the group has also adopted effective pricing strategies to attract its existing customers towards its current products. In addition, the group has also made necessary innovations in its existing products to improve the quality as well as has developed new products to reap higher profits and observe growth in its businesses. Conglomerate refers to a group of companies acquired or owned by a business group, a person or an organization. Easy group is quite truly a genuine conglomerate because it owns several businesses such as Easy internet cafà ©, Easy car, Easy jet, online and hotel ventures and has now plans to add new ones such as Easy cinema in the group’s business portfolio to increase annual revenues of the group. Yes, I would recommend Easy Group to enter in Cinema industry and apply its effective business model. Also, easy group has ability to compete in tough market conditions and has been successful in its past ventures. Thirdly, easy group has a solid business plan with very few weak points for its cinema Case study Example | Topics and Well Written Essays - 750 words - 24 Case Study Example The other issue seeks to implore on whether there is life beyond Earth, and lastly, the program seeks to understand the future of life on Earth. Astrobiology is the common denominator in all NASA space science activities. It bridges research in astrophysics, heliophysics and earth science. To further understand the principle interests of astrobiology, this discourse will look at the discipline in line with the three established issues. This is in recognition of the fact that the credibility and relevance of astrobiology lies in its pursuit to answer the fundamental questions of our origin, establishing our identity, and whether man is alone in the cosmos. Scientists seem to still not come up with a clear definition of what life is; they are still not clear on what being alive means. In perhaps the simplest way, life on Earth swaps energy and material with the environment. The common characteristics of life being that life forms grow, excrete, reproduce and are made up of genes stored in DNA and RNA structures and passed on to the next generation. Life also changes. These changes result due to alterations in the environment. However, life also alters the environment. Finally, it is clear that life is based on the chemistry of carbon and needs liquid water. An extremely constrained layer exists near the surface of Earth; this layer contains life in abundance as evidenced by microorganisms, plants, and animals. Unfortunately, this layer represents the only identified area that supports life in the entire Universe. Everyone by now acknowledges that the laws and concepts of chemistry and physics are in action all over the cosmos. This has led to constant enquiries on whether there is anything like general biology. More critically, there have been unending inquiries on life beyond Earth. Advanced science has been able to reveal that there exist other surfaces beyond Earth which are represented by planets orbiting the Sun. In the past 15

Comparing elements Essay Example | Topics and Well Written Essays - 500 words

Comparing elements - Essay Example "To love him so deeply still; and yet I'm here,"-an excerpt from William Trevor’s â€Å"The Room†, were words uttered by Katherine as a vivid evidence of her will to be free from her smoldering curiosity about the notion of deceit. Her fervor-less affair with an unnamed lover satisfied her curiosity as she finally said, â€Å"So, this is what it felt like for Phair†. Her primary aims were completed, however, she resumed her sexual ventures with her lover and made it as an alibi for her to gain entrance to her lover’s room in which she found a haven that will shield her from her dynamic fears. On the contrary, the entities in â€Å"The Storm† authored by Kate Chopin seemed to take adultery as an archway to cherish freedom. Monsieur Alcee Laballiere  and his wife Clarisse decided to set apart for some time. They esteemed freedom brought about by their provisional separation in different manners. â€Å"Devoted as she was to her husband, their intima te conjugal life was something which she was more than willing to forego for a while† this quote taken from Chopin’s text refers to freedom that served as Clarisse’s respite as she is fervently yearning to have another feel of her lighthearted moments as an unmarried woman.

Impact of Credit Default Swaps (CDS)

Impact of Credit Default Swaps (CDS) Chapter 1 : Introduction A Swap is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. Swaps can be used to create unfunded exposures to an underlying asset, since counterparties can earn the profit or loss from movements in price without having to post the notional amount in cash or collateral. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. The main objective of the project is to understand about Credit Default Swaps (CDS), its global footprint, its role in subprime crisis, its settlement in global arena and to check the feasible settlement of CDS in India, after its introduction in India, by understanding about Indian Credit Derivatives market. Research is concerned with the systematic and objective collection, analysis and evaluation of information about specific aspects to check the feasible settlement of CDSs in India. The development of financial derivatives in recent past is astounding when we consider its volume globally. But at the same time the product once created for hedging the risk currently allows you to bear more risk sometimes making the whole financial system to tremble. May be thats why Warren Buffet called it a financial weapon of mass destruction. Whatever it may be but derivatives have grown exponentially and are necessary for the market to flourish. The credit derivatives are nothing but the logical extension to the family of derivatives and have already made its presence felt globally. The credit derivatives have played a significant role in the development of debt market but also share a blame for the proliferation of subprime crisis. A credit default swap which constitutes the major portion of credit derivatives is similar to an insurance contract which allows you to transfer your risk to third party in exchange of a premium. Right from its origin as plain vanilla product for hedging purpose it has grown to very complex products and now has posed a question mark on its credibility. The subprime crisis started in what were regarded as the worlds safest and most sophisticated markets and spread globally, carried by securities and derivatives that were thought to make the financial system safer. The subprime crisis brings the complexity of securitized products and derivatives products, the human greedy nature, inability of rating agencies to gauge the risk, inefficiency of regulatory bodies, etc. to the fore. Although CDS was not the cause of the subprime crisis but it had cascading effect on the market and was considered as the reason for the collapse of American International Group (AIG). The lessons from the consequences of subprime crisis have helped in creating awareness about the regulatory frameworks to be in place which has increased the transparency, standardization, and soundness in the market. The various measures include formation of central counterparty for CDS, hardwiring of auction protocol and ISDA determination committee. On the backdrop of global crisis the movement of CDS is being watched carefully. The various data sources now provide data even on weekly basis. The efforts are being paid off and the market size of CDS has reduced considerably. And now with the central counterparties in place the CDS market will have more transparency and better control. After opening up of the economy the equity market of India have grown significantly bringing in more transparency. But the corporate bond market is still in undeveloped mode and the efforts being taken on developing it have not provided expected returns. Under this light, India is now all set to launch Credit Default Swaps which are expected to ignite the spark which will flourish the corporate bond market. Considering the cautious nature of RBI and the havoc created by CDS in global market the move by RBI is significant. From the move of RBI one can say as the knife itself is not harmful but it depends whether its in doctors hand or a robbers hand. Similarly CDS as a product is certainly not harmful but its utility will depend on the judicious use of the same. Chapter 2: Literature Review Derivatives The global economic order that emerged after World War II was a system where many less developed countries administered prices and centrally allocated resources. Even the developed economies operated under the Bretton Woods system of fixed exchange rates. The system of fixed prices came under stress from the 1970s onwards. High inflation and unemployment rates made interest rates more volatile. The Bretton Woods system was dismantled in 1971, freeing exchange rates to fluctuate. Less developed countries like India began opening up their economies and allowing prices to vary with market conditions. Price fluctuations made it hard for businesses to estimate their future production costs and revenues. Derivative securities provide them with a valuable set of tools for managing this risk. Financial markets are, by nature, extremely volatile and hence, the risk factor is an Important concern for financial agents. To reduce this risk, the concept of derivatives comes into the picture. Derivatives are products whose values are derived from one or more basic variables called bases. These bases can be underlying assets (for example forex, equity, etc), bases or reference rates. It is afinancial instrument(or more simply, an agreement between two people/two parties) that has a value determined by the future price of something else. Derivatives can be thought of as bets on the price of something.Itis the collective name used for a broad class offinancial instrumentsthatderivetheir value from other financial instruments (known as the underlying), events or conditions. Essentially, a derivative is a contract between two parties where the value of the contract is linked to the price of another financial instrument or by a specified event or condition. Asecurity whose price is dependent upon or derived fromone or more underlying assets.The derivative itself is merely a contract between two or more parties. Itsvalue is determinedby fluctuationsin the underlying asset.The most common underlying assets includestocks, bonds,commodities,currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.Derivatives are generally used as an instrument to hedgerisk, but can also be used forspeculative purposes. For example, wheat farmers may wish to sell their harvest at a future date to eliminate the risk of a change in prices by that date. The transaction in this case would be the derivative, while the spot price of wheat would be the underlying asset. Derivatives have probably been around for as long as people have been trading with one another. Forward contracting dates back at least to the 12th century, and may well have been around before then. Merchants entered into contracts with one another for future delivery of specified amount of commodities at specified price. A primary motivation for pre-arranging a buyer or seller for a stock of commodities in early forward contracts was to lessen the possibility that large swings would inhibit marketing the commodity after a harvest. The need for a derivatives market The derivatives market performs a number of economic functions: They help in transferring risks from risk averse people to risk oriented people They help in the discovery of future as well as current prices They catalyze entrepreneurial activity They increase the volume traded in markets because of participation of risk averse people in greater numbers They increase savings and investment in the long run The participants in a derivatives market Hedgers use futures or options markets to reduce or eliminate the risk associated with price of an asset. Speculators use futures and options contracts to get extra leverage in betting on future movements in the price of an asset. They can increase both the potential gains and potential losses by usage of derivatives in a speculative venture. Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit. Types of Derivatives Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts Options: Options are of two types calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Options generally have lives of upto one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. LEAPS: The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of upto three years. Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average or a basket of assets. Equity index options are a form of basket options. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are : Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions market has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an options to pay fixed and receive floating. Uses of Derivatives Derivatives may be traded for a variety of reasons. A derivative enables a trader to hedge some pre-existing risk by taking positions in derivatives markets that offset potential losses in the underlying or spot market. In India, most derivatives users describe themselves as hedgers (Fitch Ratings, 2004) and Indian laws generally require that derivatives be used for hedging purposes only. Another motive for derivatives trading is speculation (i.e. taking positions to profit from anticipated price movements). In practice, it may be difficult to distinguish whether a particular trade was for hedging or speculation, and active markets require the participation of both hedgers and speculators. A third type of trader, called arbitrageurs, profit from discrepancies in the relationship of spot and derivatives prices, and thereby help to keep markets efficient. Jogani and Fernandes (2003) describe Indias long history in arbitrage trading, with line operators and traders arbitraging prices between exchanges located in different cities, and between two exchanges in the same city. Their study of Indian equity derivatives markets in 2002 indicates that markets were inefficient at that time. They argue that lack of knowledge; market frictions and regulatory impediments have led to low levels of capital employed in arbitrage trading in India. However, more recent evidence suggests that the efficiency of Indian equity derivatives markets may have improved (ISMR, 2004). Development of derivatives market in India Derivatives markets have been in existence in India in some form or other for a long time. In the area of commodities, the Bombay Cotton Trade Association started futures trading in 1875 and, by the early 1900s India had one of the worlds largest futures industry. In 1952 the government banned cash settlement and options trading and derivatives trading shifted to informal forwards markets. In recent years, government policy has changed, allowing for an increased role for market-based pricing and less suspicion of derivatives trading. The ban on futures trading of many commodities was lifted starting in the early 2000s, and national electronic commodity exchanges were created. In the equity markets, a system of trading called badla involving some elements of forwards trading had been in existence for decades.6 However, the system led to a number of undesirable practices and it was prohibited off and on till the Securities and Exchange Board of India (SEBI) banned it for good in 2001. A series of reforms of the stock market between 1993 and 1996 paved the way for the development of exchange-traded equity derivatives markets in India. In 1993, the government created the NSE in collaboration with state-owned financial institutions. NSE improved the efficiency and transparency of the stock markets by offering a fully automated screen-based trading system and real-time price dissemination. In 1995, a prohibition on trading options was lifted. In 1996, the NSE sent a proposal to SEBI for listing exchange-traded derivatives. The report of the L. C. Gupta Committee, set up by SEBI, recommended a phased introduction of derivative products, and bi-level regulation ( i.e., self-regulation by exchanges with SEBI providing a supervisory and advisory role). Another report, by the J. R. Varma Committee in 1998, worked out various operational details such as the margining systems. The first step towards introduction of derivatives trading in India was the promulgation of the Securities Laws(Amendment) Ordinance, 1995, which withdrew the prohibition on options in securities. The market for derivatives, however, did not take off, as there was no regulatory framework to govern trading of derivatives. SEBI set up a 24-member committee under the Chairmanship of Dr.L.C.Gupta on November 18, 1996 to develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on March 17, 1998 prescribing necessary pre-conditions for introduction of derivatives trading in India. The committee recommended that derivatives should be declared as securities so that regulatory framework applicable to trading of securities could also govern trading of securities. SEBI also set up a group in June 1998 under the Chairmanship of Prof.J.R.Varma, to recommend measures for risk control in derivatives market in India. The report, which was submitte d in October 1998, worked out the operational details of margining system, methodology for charging initial margins, broker net worth, deposit requirement and real-time monitoring requirements. The Securities Contract Regulation Act (SCRA) was amended in December 1999 to include derivatives within the ambit of securities and the regulatory framework was developed for governing derivatives trading. The act also made it clear that derivatives shall be legal and valid only if such contracts are traded on a recognized stock exchange, thus precluding OTC derivatives. The government also rescinded in March 2000, the three- decade old notification, which prohibited forward trading in securities. Derivatives trading commenced in India in June 2000 after SEBI granted the final approval to this effect in May 2001. SEBI permitted the derivative segments of two stock exchanges, NSE and BSE, and their clearing house/corporation to commence trading and settlement in approved derivatives contracts . To begin with, SEBI approved trading in index futures contracts based on SP CNX Nifty and BSE-30(Sensex) index. This was followed by approval for trading in options based on these two indexes and options on individual securities. The trading in BSE Sensex options commenced on June 4, 2001 and the trading in options on individual securities commenced in July 2001. Futures contracts on individual stocks were launched in November 2001. The derivatives trading on NSE commenced with SP CNX Nifty Index futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. The index futures and options contract on NSE are based on SP CNX Trading and settlement in derivative contracts is done in accordance with the rules, byelaws, and regulations of the respective exchanges and their clearing house/corporation duly approved by SEBI and notified in the official gazette. Foreign Institutional Investors (FIIs) are permitted to trade in all Exchange traded derivative products. The following are some observations based on the trading statistics provided in the NSE report on the futur es and options (FO): †¢ Single-stock futures continue to account for a sizable proportion of the FO segment. It constituted 70 per cent of the total turnover during June 2002. A primary reason attributed to this phenomenon is that traders are comfortable with single-stock futures than equity options, as the former closely resembles the erstwhile badla system. On relative terms, volumes in the index options segment continues to remain poor. This may be due to the low volatility of the spot index. Typically, options are considered more valuable when the volatility of the underlying (in this case, the index) is high. A related issue is that brokers do not earn high commissions by recommending index options to their clients, because low volatility leads to higher waiting time for round-trips. Put volumes in the index options and equity options segment have increased since January 2002. The call-put volumes in index options have decreased from 2.86 in January 2002 to 1.32 in June. The fall in call-put volumes ratio suggests that the traders are increasingly becoming pessimistic on the market. Farther month futures contracts are still not actively traded. Trading in equity options on most stocks for even the next month was non-existent. Daily option price variations suggest that traders use the FO segment as a less risky alternative (read substitute) to generate profits from the stock price movements. The fact that the option premiums tail intra-day stock prices is evidence to this. Calls on Satyam fall, while puts rise when Satyam falls intra-day. If calls and puts are not looked as just substitutes for spot trading, the intra-day stock price variations should not have a one-to-one impact on the option premiums. SWAP In finance, a SWAP is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. These streams are called the legs of the swap. Conventionally they are the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. A swap is an agreement to exchange one stream of cash flows for another. Swaps are most usually used to:- Switch financing in one country for financing in another To replace a floating interest rate swap with a fixed interest rate (or vice versa) (Litzenberger, R.H)In August 1981 the World Bank issued $290 million in euro-bonds and swapped the interest and principal on these bonds with IBM for Swiss francs and German marks. The rapid growth in the use of interest rate swaps, currency swaps, and swaptions (options on swaps) has been phenomenal. Currently, the amount of outstanding interest rate and currency swaps is almost $3 trillion. Recently, swaps have grown to include currency swaps and interest rate swaps. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms. For example, one firm may have a lower fixed interest rate, while another has access to a lower floating interest rate. These firms could swap to take advantage of the lower rates. Different types of swaps:- Currency Swaps Cross currency swaps are agreements between counterparties to exchange interest and principal payments in different currencies. Like a forward, a cross currency swap consists of the exchange of principal amounts (based on todays spot rate) and interest payments between counterparties. It is considered to be a foreign exchange transaction and is not required by law to be shown on the balance sheet. In a currency swap, these streams of cash flows consist of a stream of interest and principal payments in one currency exchanged for a stream, of interest and principal payments of the same maturity in another currency. Because of the exchange and re-exchange of notional principal amounts, the currency swap generates a larger credit exposure than the interest rate swap. Cross-currency swaps can be used to transform the currency denomination of assets and liabilities. They are effective tools for managing foreign currency risk. They can create currency match within its portfolio and minimize exposures. Firms can use them to hedge foreign currency debts and foreign net investments. Currency swaps give companies extra flexibility to exploit their comparative advantage in their respective borrowing markets. Currency swaps allow companies to exploit advantages across a matrix of currencies and maturities. Currency swaps were originally done to get around exchange controls and hedge the risk on currency rate movements. It also helps in Reducing costs and risks associated with currency exchange. They are often combined with interest rate swaps. For example, one company would seek to swap a cash flow for their fixed rate debt denominated in US dollars for a floating-rate debt denominated in Euro. This is especially common in Europe where companies shop for the cheapest debt regardless of its denomination and then seek to exchange it for the debt in desired currency. Credit Default Swap Credit Default Swap is a financial instrument for swapping the risk of debt default. Credit default swaps may be used for emerging market bonds, mortgage backed securities, corporate bonds and local government bond. The buyer of a credit default swap pays a premium for effectively insuring against a debt default. He receives a lump sum payment if the debt instrument is defaulted. The seller of a credit default swap receives monthly payments from the buyer. If the debt instrument defaults they have to pay the agreed amount to the buyer of the credit default swap. The first credit default swap was introduced in 1995 by JP Morgan. By 2007, their total value has increased to an estimated $45 trillion to $62 trillion. Although since only 0.2% of Investment Companys default, the cash flow is much lower than this actual amount. Therefore, this shows that credit default swaps are being used for speculation and not insuring against actual bonds. As Warren Buffett calls them financial weapons of mass destruction. The credit default swaps are being blamed for much of the current market meltdown. Example of Credit Default Swap An investment trust owns  £1 million corporation bond issued by a private housing firm. If there is a risk the private housing firm may default on repayments, the investment trust may buy a CDS from a hedge fund. The CDS is worth  £1 million. The investment trust will pay an interest on this credit default swap of say 3%. This could involve payments of  £30,000 a year for the duration of the contract. If the private housing firm doesnt default. The hedge fund gains the interest from the investment bank and pays nothing out. It is simple profit. If the private housing firm does default, then the hedge fund has to pay compensation to the investment bank of  £1 million the value of the credit default swap. Therefore the hedge fund takes on a larger risk and could end up paying  £1million The higher the perceived risk of the bond, the higher the interest rate the hedge fund will require. Credit default swaps are used not only by investment banks, but also by other financial institutions. Corporate entities use credit default swaps either for protection purposes, to hedge or to sell. Investment banks are primarily affected by the buyers. If a number of major corporate entities have bought protection from the same investment bank, and all of them fail simultaneously, this will put pressure on the investment bank to pay out. Moreover, the credit risk caused by the above failure may lead to other risks, such as liquidity risk, market risk and operational risk. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Some of the top banks in America are carrying unknown gambling risks that no one has warned about, and they are all tied up in U.S. bank derivative portfolios (Edwards M, 2004). Commodity Swap A commodity swap is an agreement whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period. The vast majority of commodity swaps involve oil. A swap where exchanged cash flows are dependent on the price of an underlying commodity. This swap is usually used to hedge against the price of a commodity. Commodities are physical assets such as precious metals, base metals, energy stores (such as natural gas or crude oil) and food (including wheat, pork bellies, cattle, etc.). In this swap, the user of a commodity would secure a maximum price and agree to pay a financial institution this fixed price. Then in return, the user would get payments based on the market price for the commodity involved. They are used for hedging against Fluctuations in commodity prices or Fluctuations in spreads between final product and raw material prices. A company that uses commodities as input may find its profits becoming very volatile if the commodity prices become volatile. This is particularly so when the output prices may not change as frequently as the commodity prices change. In such cases, the company would enter into a swap whereby it receives payment linked to commodity prices and pays a fixed rate in exchange. There are two kinds of agents participating in the commodity markets: end-users (hedgers) and investors (speculators). Commodity swaps are becoming increasingly common in the energy and agricultural industries, where demand and supply are both subject to considerable uncertainty. For example, heavy users of oil, such as airlines, will often enter into contracts in which they agree to make a series of fixed payments, say every six months for two years, and receive payments on those same dates as determined by an oil price index. Computations are often based on a specific number of tons of oil in order to lock in the price the airline pays for a specific quantity of oil, purchased at regular intervals over the two-year period. However, the airline will typically buy the actual oil it needs from the spot market. Equity Swap The outstanding performance of equity markets in the 1980s and the 1990s, have brought in some technological innovations that have made widespread participation in the equity market more feasible and more marketable and the demographic imperative of baby-boomer saving has generated significant interest in equity derivatives. In addition to the listed equity options on individual stocks and individual indices, a burgeoning over-the-counter (OTC) market has evolved in the distribution and utilization of equity swaps. An equity swap is a special type of total return swap, where the underlying asset is a stock, a basket of stocks, or a stock index. An exchange of the potential appreciation of equitys value and dividends for a guaranteed return plus any decrease in the value of the equity. An equity swap permits an equity holder a guaranteed return but demands the holder give up all rights to appreciation and dividend income. Compared to actually owning the stock, in this case you do not have to pay anything up front, but you do not have any voting or other rights that stock holders do have. Equity swaps make the index trading strategy even easier. Besides diversification and tax benefits, equity swaps also allow large institutions to hedge specific assets or positions in their portfolios The equity swap is the best swap amongst all the other swaps as it being an over-the-counter derivatives transaction; they have the attractive feature of being customizable for a particular users situation. Investors may have specific time horizons, portfolio compositions, or other terms and conditions that are not matched by exchange-listed derivatives. They are private transactions that are not directly reportable to any regulatory authority. A derivatives dealer can, through a foreign subsidiary in the particular country, invest in the foreign securities without the withholding tax and enter into a swap with the parent dealer company, which can then enter a swap with the American investor, effectively passing on the dividends without the withholding tax Interest Rate Swap An interest rate swap, or simply a rate swap, is an agreement between two parties to exchange a sequence of interest payments without exchanging the underlying debt. In a typical fixed/floating rate swap, the first party promises to pay to the second at designated intervals a stipulated amount of interest calculated at a fixed rate on the notional principal; the second party promises to pay to the first at the same intervals a floating amount of interest on the notional principle calculated according to a floating-rate index. The interest rate swap is essentially a strip of forward contracts exchanging interest payments. Thus, interest rate swaps, like interest rate futures or interest rate forward contracts, offer a mechanism for restructuring cash flows and, if properly used, provide a financial instrument for hedging against interest rate risk The reason for the exchange of the interest obligation is to take benefit from comparative advantage. Some companies may have comparative advantage in fixed rate markets while other companies have a comparative advantage in floating rate markets. When companies want to borrow they look for cheap borrowing i.e. from the market where they have comparative advantage. However this may lead to a company borrowing fixed when it wants floating or borrowing floating when it wants fixed. This is where a swap comes in. A swap has the effect of transforming a fixed rate loan into a float Impact of Credit Default Swaps (CDS) Impact of Credit Default Swaps (CDS) Chapter 1 : Introduction A Swap is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. Swaps can be used to create unfunded exposures to an underlying asset, since counterparties can earn the profit or loss from movements in price without having to post the notional amount in cash or collateral. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. The main objective of the project is to understand about Credit Default Swaps (CDS), its global footprint, its role in subprime crisis, its settlement in global arena and to check the feasible settlement of CDS in India, after its introduction in India, by understanding about Indian Credit Derivatives market. Research is concerned with the systematic and objective collection, analysis and evaluation of information about specific aspects to check the feasible settlement of CDSs in India. The development of financial derivatives in recent past is astounding when we consider its volume globally. But at the same time the product once created for hedging the risk currently allows you to bear more risk sometimes making the whole financial system to tremble. May be thats why Warren Buffet called it a financial weapon of mass destruction. Whatever it may be but derivatives have grown exponentially and are necessary for the market to flourish. The credit derivatives are nothing but the logical extension to the family of derivatives and have already made its presence felt globally. The credit derivatives have played a significant role in the development of debt market but also share a blame for the proliferation of subprime crisis. A credit default swap which constitutes the major portion of credit derivatives is similar to an insurance contract which allows you to transfer your risk to third party in exchange of a premium. Right from its origin as plain vanilla product for hedging purpose it has grown to very complex products and now has posed a question mark on its credibility. The subprime crisis started in what were regarded as the worlds safest and most sophisticated markets and spread globally, carried by securities and derivatives that were thought to make the financial system safer. The subprime crisis brings the complexity of securitized products and derivatives products, the human greedy nature, inability of rating agencies to gauge the risk, inefficiency of regulatory bodies, etc. to the fore. Although CDS was not the cause of the subprime crisis but it had cascading effect on the market and was considered as the reason for the collapse of American International Group (AIG). The lessons from the consequences of subprime crisis have helped in creating awareness about the regulatory frameworks to be in place which has increased the transparency, standardization, and soundness in the market. The various measures include formation of central counterparty for CDS, hardwiring of auction protocol and ISDA determination committee. On the backdrop of global crisis the movement of CDS is being watched carefully. The various data sources now provide data even on weekly basis. The efforts are being paid off and the market size of CDS has reduced considerably. And now with the central counterparties in place the CDS market will have more transparency and better control. After opening up of the economy the equity market of India have grown significantly bringing in more transparency. But the corporate bond market is still in undeveloped mode and the efforts being taken on developing it have not provided expected returns. Under this light, India is now all set to launch Credit Default Swaps which are expected to ignite the spark which will flourish the corporate bond market. Considering the cautious nature of RBI and the havoc created by CDS in global market the move by RBI is significant. From the move of RBI one can say as the knife itself is not harmful but it depends whether its in doctors hand or a robbers hand. Similarly CDS as a product is certainly not harmful but its utility will depend on the judicious use of the same. Chapter 2: Literature Review Derivatives The global economic order that emerged after World War II was a system where many less developed countries administered prices and centrally allocated resources. Even the developed economies operated under the Bretton Woods system of fixed exchange rates. The system of fixed prices came under stress from the 1970s onwards. High inflation and unemployment rates made interest rates more volatile. The Bretton Woods system was dismantled in 1971, freeing exchange rates to fluctuate. Less developed countries like India began opening up their economies and allowing prices to vary with market conditions. Price fluctuations made it hard for businesses to estimate their future production costs and revenues. Derivative securities provide them with a valuable set of tools for managing this risk. Financial markets are, by nature, extremely volatile and hence, the risk factor is an Important concern for financial agents. To reduce this risk, the concept of derivatives comes into the picture. Derivatives are products whose values are derived from one or more basic variables called bases. These bases can be underlying assets (for example forex, equity, etc), bases or reference rates. It is afinancial instrument(or more simply, an agreement between two people/two parties) that has a value determined by the future price of something else. Derivatives can be thought of as bets on the price of something.Itis the collective name used for a broad class offinancial instrumentsthatderivetheir value from other financial instruments (known as the underlying), events or conditions. Essentially, a derivative is a contract between two parties where the value of the contract is linked to the price of another financial instrument or by a specified event or condition. Asecurity whose price is dependent upon or derived fromone or more underlying assets.The derivative itself is merely a contract between two or more parties. Itsvalue is determinedby fluctuationsin the underlying asset.The most common underlying assets includestocks, bonds,commodities,currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.Derivatives are generally used as an instrument to hedgerisk, but can also be used forspeculative purposes. For example, wheat farmers may wish to sell their harvest at a future date to eliminate the risk of a change in prices by that date. The transaction in this case would be the derivative, while the spot price of wheat would be the underlying asset. Derivatives have probably been around for as long as people have been trading with one another. Forward contracting dates back at least to the 12th century, and may well have been around before then. Merchants entered into contracts with one another for future delivery of specified amount of commodities at specified price. A primary motivation for pre-arranging a buyer or seller for a stock of commodities in early forward contracts was to lessen the possibility that large swings would inhibit marketing the commodity after a harvest. The need for a derivatives market The derivatives market performs a number of economic functions: They help in transferring risks from risk averse people to risk oriented people They help in the discovery of future as well as current prices They catalyze entrepreneurial activity They increase the volume traded in markets because of participation of risk averse people in greater numbers They increase savings and investment in the long run The participants in a derivatives market Hedgers use futures or options markets to reduce or eliminate the risk associated with price of an asset. Speculators use futures and options contracts to get extra leverage in betting on future movements in the price of an asset. They can increase both the potential gains and potential losses by usage of derivatives in a speculative venture. Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit. Types of Derivatives Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts Options: Options are of two types calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Options generally have lives of upto one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. LEAPS: The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of upto three years. Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average or a basket of assets. Equity index options are a form of basket options. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are : Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions market has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an options to pay fixed and receive floating. Uses of Derivatives Derivatives may be traded for a variety of reasons. A derivative enables a trader to hedge some pre-existing risk by taking positions in derivatives markets that offset potential losses in the underlying or spot market. In India, most derivatives users describe themselves as hedgers (Fitch Ratings, 2004) and Indian laws generally require that derivatives be used for hedging purposes only. Another motive for derivatives trading is speculation (i.e. taking positions to profit from anticipated price movements). In practice, it may be difficult to distinguish whether a particular trade was for hedging or speculation, and active markets require the participation of both hedgers and speculators. A third type of trader, called arbitrageurs, profit from discrepancies in the relationship of spot and derivatives prices, and thereby help to keep markets efficient. Jogani and Fernandes (2003) describe Indias long history in arbitrage trading, with line operators and traders arbitraging prices between exchanges located in different cities, and between two exchanges in the same city. Their study of Indian equity derivatives markets in 2002 indicates that markets were inefficient at that time. They argue that lack of knowledge; market frictions and regulatory impediments have led to low levels of capital employed in arbitrage trading in India. However, more recent evidence suggests that the efficiency of Indian equity derivatives markets may have improved (ISMR, 2004). Development of derivatives market in India Derivatives markets have been in existence in India in some form or other for a long time. In the area of commodities, the Bombay Cotton Trade Association started futures trading in 1875 and, by the early 1900s India had one of the worlds largest futures industry. In 1952 the government banned cash settlement and options trading and derivatives trading shifted to informal forwards markets. In recent years, government policy has changed, allowing for an increased role for market-based pricing and less suspicion of derivatives trading. The ban on futures trading of many commodities was lifted starting in the early 2000s, and national electronic commodity exchanges were created. In the equity markets, a system of trading called badla involving some elements of forwards trading had been in existence for decades.6 However, the system led to a number of undesirable practices and it was prohibited off and on till the Securities and Exchange Board of India (SEBI) banned it for good in 2001. A series of reforms of the stock market between 1993 and 1996 paved the way for the development of exchange-traded equity derivatives markets in India. In 1993, the government created the NSE in collaboration with state-owned financial institutions. NSE improved the efficiency and transparency of the stock markets by offering a fully automated screen-based trading system and real-time price dissemination. In 1995, a prohibition on trading options was lifted. In 1996, the NSE sent a proposal to SEBI for listing exchange-traded derivatives. The report of the L. C. Gupta Committee, set up by SEBI, recommended a phased introduction of derivative products, and bi-level regulation ( i.e., self-regulation by exchanges with SEBI providing a supervisory and advisory role). Another report, by the J. R. Varma Committee in 1998, worked out various operational details such as the margining systems. The first step towards introduction of derivatives trading in India was the promulgation of the Securities Laws(Amendment) Ordinance, 1995, which withdrew the prohibition on options in securities. The market for derivatives, however, did not take off, as there was no regulatory framework to govern trading of derivatives. SEBI set up a 24-member committee under the Chairmanship of Dr.L.C.Gupta on November 18, 1996 to develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on March 17, 1998 prescribing necessary pre-conditions for introduction of derivatives trading in India. The committee recommended that derivatives should be declared as securities so that regulatory framework applicable to trading of securities could also govern trading of securities. SEBI also set up a group in June 1998 under the Chairmanship of Prof.J.R.Varma, to recommend measures for risk control in derivatives market in India. The report, which was submitte d in October 1998, worked out the operational details of margining system, methodology for charging initial margins, broker net worth, deposit requirement and real-time monitoring requirements. The Securities Contract Regulation Act (SCRA) was amended in December 1999 to include derivatives within the ambit of securities and the regulatory framework was developed for governing derivatives trading. The act also made it clear that derivatives shall be legal and valid only if such contracts are traded on a recognized stock exchange, thus precluding OTC derivatives. The government also rescinded in March 2000, the three- decade old notification, which prohibited forward trading in securities. Derivatives trading commenced in India in June 2000 after SEBI granted the final approval to this effect in May 2001. SEBI permitted the derivative segments of two stock exchanges, NSE and BSE, and their clearing house/corporation to commence trading and settlement in approved derivatives contracts . To begin with, SEBI approved trading in index futures contracts based on SP CNX Nifty and BSE-30(Sensex) index. This was followed by approval for trading in options based on these two indexes and options on individual securities. The trading in BSE Sensex options commenced on June 4, 2001 and the trading in options on individual securities commenced in July 2001. Futures contracts on individual stocks were launched in November 2001. The derivatives trading on NSE commenced with SP CNX Nifty Index futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. The index futures and options contract on NSE are based on SP CNX Trading and settlement in derivative contracts is done in accordance with the rules, byelaws, and regulations of the respective exchanges and their clearing house/corporation duly approved by SEBI and notified in the official gazette. Foreign Institutional Investors (FIIs) are permitted to trade in all Exchange traded derivative products. The following are some observations based on the trading statistics provided in the NSE report on the futur es and options (FO): †¢ Single-stock futures continue to account for a sizable proportion of the FO segment. It constituted 70 per cent of the total turnover during June 2002. A primary reason attributed to this phenomenon is that traders are comfortable with single-stock futures than equity options, as the former closely resembles the erstwhile badla system. On relative terms, volumes in the index options segment continues to remain poor. This may be due to the low volatility of the spot index. Typically, options are considered more valuable when the volatility of the underlying (in this case, the index) is high. A related issue is that brokers do not earn high commissions by recommending index options to their clients, because low volatility leads to higher waiting time for round-trips. Put volumes in the index options and equity options segment have increased since January 2002. The call-put volumes in index options have decreased from 2.86 in January 2002 to 1.32 in June. The fall in call-put volumes ratio suggests that the traders are increasingly becoming pessimistic on the market. Farther month futures contracts are still not actively traded. Trading in equity options on most stocks for even the next month was non-existent. Daily option price variations suggest that traders use the FO segment as a less risky alternative (read substitute) to generate profits from the stock price movements. The fact that the option premiums tail intra-day stock prices is evidence to this. Calls on Satyam fall, while puts rise when Satyam falls intra-day. If calls and puts are not looked as just substitutes for spot trading, the intra-day stock price variations should not have a one-to-one impact on the option premiums. SWAP In finance, a SWAP is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. These streams are called the legs of the swap. Conventionally they are the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. A swap is an agreement to exchange one stream of cash flows for another. Swaps are most usually used to:- Switch financing in one country for financing in another To replace a floating interest rate swap with a fixed interest rate (or vice versa) (Litzenberger, R.H)In August 1981 the World Bank issued $290 million in euro-bonds and swapped the interest and principal on these bonds with IBM for Swiss francs and German marks. The rapid growth in the use of interest rate swaps, currency swaps, and swaptions (options on swaps) has been phenomenal. Currently, the amount of outstanding interest rate and currency swaps is almost $3 trillion. Recently, swaps have grown to include currency swaps and interest rate swaps. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms. For example, one firm may have a lower fixed interest rate, while another has access to a lower floating interest rate. These firms could swap to take advantage of the lower rates. Different types of swaps:- Currency Swaps Cross currency swaps are agreements between counterparties to exchange interest and principal payments in different currencies. Like a forward, a cross currency swap consists of the exchange of principal amounts (based on todays spot rate) and interest payments between counterparties. It is considered to be a foreign exchange transaction and is not required by law to be shown on the balance sheet. In a currency swap, these streams of cash flows consist of a stream of interest and principal payments in one currency exchanged for a stream, of interest and principal payments of the same maturity in another currency. Because of the exchange and re-exchange of notional principal amounts, the currency swap generates a larger credit exposure than the interest rate swap. Cross-currency swaps can be used to transform the currency denomination of assets and liabilities. They are effective tools for managing foreign currency risk. They can create currency match within its portfolio and minimize exposures. Firms can use them to hedge foreign currency debts and foreign net investments. Currency swaps give companies extra flexibility to exploit their comparative advantage in their respective borrowing markets. Currency swaps allow companies to exploit advantages across a matrix of currencies and maturities. Currency swaps were originally done to get around exchange controls and hedge the risk on currency rate movements. It also helps in Reducing costs and risks associated with currency exchange. They are often combined with interest rate swaps. For example, one company would seek to swap a cash flow for their fixed rate debt denominated in US dollars for a floating-rate debt denominated in Euro. This is especially common in Europe where companies shop for the cheapest debt regardless of its denomination and then seek to exchange it for the debt in desired currency. Credit Default Swap Credit Default Swap is a financial instrument for swapping the risk of debt default. Credit default swaps may be used for emerging market bonds, mortgage backed securities, corporate bonds and local government bond. The buyer of a credit default swap pays a premium for effectively insuring against a debt default. He receives a lump sum payment if the debt instrument is defaulted. The seller of a credit default swap receives monthly payments from the buyer. If the debt instrument defaults they have to pay the agreed amount to the buyer of the credit default swap. The first credit default swap was introduced in 1995 by JP Morgan. By 2007, their total value has increased to an estimated $45 trillion to $62 trillion. Although since only 0.2% of Investment Companys default, the cash flow is much lower than this actual amount. Therefore, this shows that credit default swaps are being used for speculation and not insuring against actual bonds. As Warren Buffett calls them financial weapons of mass destruction. The credit default swaps are being blamed for much of the current market meltdown. Example of Credit Default Swap An investment trust owns  £1 million corporation bond issued by a private housing firm. If there is a risk the private housing firm may default on repayments, the investment trust may buy a CDS from a hedge fund. The CDS is worth  £1 million. The investment trust will pay an interest on this credit default swap of say 3%. This could involve payments of  £30,000 a year for the duration of the contract. If the private housing firm doesnt default. The hedge fund gains the interest from the investment bank and pays nothing out. It is simple profit. If the private housing firm does default, then the hedge fund has to pay compensation to the investment bank of  £1 million the value of the credit default swap. Therefore the hedge fund takes on a larger risk and could end up paying  £1million The higher the perceived risk of the bond, the higher the interest rate the hedge fund will require. Credit default swaps are used not only by investment banks, but also by other financial institutions. Corporate entities use credit default swaps either for protection purposes, to hedge or to sell. Investment banks are primarily affected by the buyers. If a number of major corporate entities have bought protection from the same investment bank, and all of them fail simultaneously, this will put pressure on the investment bank to pay out. Moreover, the credit risk caused by the above failure may lead to other risks, such as liquidity risk, market risk and operational risk. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Some of the top banks in America are carrying unknown gambling risks that no one has warned about, and they are all tied up in U.S. bank derivative portfolios (Edwards M, 2004). Commodity Swap A commodity swap is an agreement whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period. The vast majority of commodity swaps involve oil. A swap where exchanged cash flows are dependent on the price of an underlying commodity. This swap is usually used to hedge against the price of a commodity. Commodities are physical assets such as precious metals, base metals, energy stores (such as natural gas or crude oil) and food (including wheat, pork bellies, cattle, etc.). In this swap, the user of a commodity would secure a maximum price and agree to pay a financial institution this fixed price. Then in return, the user would get payments based on the market price for the commodity involved. They are used for hedging against Fluctuations in commodity prices or Fluctuations in spreads between final product and raw material prices. A company that uses commodities as input may find its profits becoming very volatile if the commodity prices become volatile. This is particularly so when the output prices may not change as frequently as the commodity prices change. In such cases, the company would enter into a swap whereby it receives payment linked to commodity prices and pays a fixed rate in exchange. There are two kinds of agents participating in the commodity markets: end-users (hedgers) and investors (speculators). Commodity swaps are becoming increasingly common in the energy and agricultural industries, where demand and supply are both subject to considerable uncertainty. For example, heavy users of oil, such as airlines, will often enter into contracts in which they agree to make a series of fixed payments, say every six months for two years, and receive payments on those same dates as determined by an oil price index. Computations are often based on a specific number of tons of oil in order to lock in the price the airline pays for a specific quantity of oil, purchased at regular intervals over the two-year period. However, the airline will typically buy the actual oil it needs from the spot market. Equity Swap The outstanding performance of equity markets in the 1980s and the 1990s, have brought in some technological innovations that have made widespread participation in the equity market more feasible and more marketable and the demographic imperative of baby-boomer saving has generated significant interest in equity derivatives. In addition to the listed equity options on individual stocks and individual indices, a burgeoning over-the-counter (OTC) market has evolved in the distribution and utilization of equity swaps. An equity swap is a special type of total return swap, where the underlying asset is a stock, a basket of stocks, or a stock index. An exchange of the potential appreciation of equitys value and dividends for a guaranteed return plus any decrease in the value of the equity. An equity swap permits an equity holder a guaranteed return but demands the holder give up all rights to appreciation and dividend income. Compared to actually owning the stock, in this case you do not have to pay anything up front, but you do not have any voting or other rights that stock holders do have. Equity swaps make the index trading strategy even easier. Besides diversification and tax benefits, equity swaps also allow large institutions to hedge specific assets or positions in their portfolios The equity swap is the best swap amongst all the other swaps as it being an over-the-counter derivatives transaction; they have the attractive feature of being customizable for a particular users situation. Investors may have specific time horizons, portfolio compositions, or other terms and conditions that are not matched by exchange-listed derivatives. They are private transactions that are not directly reportable to any regulatory authority. A derivatives dealer can, through a foreign subsidiary in the particular country, invest in the foreign securities without the withholding tax and enter into a swap with the parent dealer company, which can then enter a swap with the American investor, effectively passing on the dividends without the withholding tax Interest Rate Swap An interest rate swap, or simply a rate swap, is an agreement between two parties to exchange a sequence of interest payments without exchanging the underlying debt. In a typical fixed/floating rate swap, the first party promises to pay to the second at designated intervals a stipulated amount of interest calculated at a fixed rate on the notional principal; the second party promises to pay to the first at the same intervals a floating amount of interest on the notional principle calculated according to a floating-rate index. The interest rate swap is essentially a strip of forward contracts exchanging interest payments. Thus, interest rate swaps, like interest rate futures or interest rate forward contracts, offer a mechanism for restructuring cash flows and, if properly used, provide a financial instrument for hedging against interest rate risk The reason for the exchange of the interest obligation is to take benefit from comparative advantage. Some companies may have comparative advantage in fixed rate markets while other companies have a comparative advantage in floating rate markets. When companies want to borrow they look for cheap borrowing i.e. from the market where they have comparative advantage. However this may lead to a company borrowing fixed when it wants floating or borrowing floating when it wants fixed. This is where a swap comes in. A swap has the effect of transforming a fixed rate loan into a float

History of American Politics :: essays research papers

Throughout American history there have been changes that have shaped the way we live today. Some of them are small things: for example the way we vote, the way requirements for a citizenship are obtain and other minor things that does not effect every person at any given time. There are also many consistent ways we have lived in America through our history such as: the two party systems and how we are represented have been constant for a long period of time in the United States. None of these things are as important as the end of segregation and our economic structure, capitalism. These two effect the entire country continuously throughout history, no matter who you are our what your beliefs or your political views. Capitalism is one of the longest and most important constants in America today. It's emphasis around the "America Dream" defines America and appeals to many countries, that you can own your own land, business, house, car, or almost anything you could ever want. This is the very essence that has separated the United States for the rest of the world for a long time. The idea that the harder you work and the better of a job you do will bring you financial success in your life. What would happen to America if we no longer had capitalism as our economic structure? There have been two times in American history when capitalism was almost taken away from us. If WWII had a different outcome, as it almost did, wouldn't the country be almost forced into Fascism? This may seem as a unlikely outcome but what would of happen to the "American Dream." During the Cold War it was a stand- off between Capitalism and Communism. If was a very tense time, and some say it was just luck or a toss of the dice that we didn't convert and the Soviets did. Since these changes would of happen in the last half-century the effects would still be felt in America. What would happen to the "American Dream"? The way that every one lived in this country would be completely changed. The way we did business, the way we bought clothes, when we went out to eat, everything. The reason of is because the Communism and Fascism are very extreme when compared to Capitalism. Fa! scism is extremely right wing and a dictator controls the government and his power is enforced by his military. Communism is extremely left of center which has many more citizen help programs such as: health care, medicare, welfare, in this country has a hard enough time dealing with

Derek Bentely Essay

Why Derek Bentley’s execution was important in changing attitudes to Capital Punishment? For serious crimes, such as murder, the government has introduced a punishment which is known as the Capital punishment. It’s a death penalty for the person who committed a crime. The government believed that the harshness in the punishment would deter crimes and also bring justice to the victim’s family. However, during the 20th centuary, there were concerns questioning the necessity of the death penalty.One of the controversial execution is of Derek Bentley, who was accused of murder and was executed as a result. On Sunday the 2nd November 1952, Bentley, aged 19, and Christopher Craig, aged 16 broke into a London Warehouse, intending to commite the crime of burglary. The arrival of the police at the scene sbotaged their intention and their plan to escape through the roof.In panic Criag shot one of the police, PC Sidney and killed him consequently. Eventhough both Craig and Bentley were charged with murder, it was only Bentley who was executed as Craig was under 18 and a law which was passed in 1933 stating that people under 18 could no longter be hanged restrained the execution of Craig. But the public’s concern was: was the exceution of Bentely fair at all? Since Bentley was known to have learning difficulties and had the mental age of 11, the local people though the execution was utterly unfair. In addition, Bentley didn’t own any weapon nor he pulled the trigger and shot the officer. This strongly suggests the injustice that’s in his execution and the poepl’s denail against it. This particular exceution changed many people’s attitudes toward Capital punishment overwhelmingly. People had gathered outside Wandsworth jail, where they showed great sympathy by singing and praying for him and also were protesting against the decision of the execution. Also, a petion of 200 members asking for the mercy of Bentley was passed around, to which the government showed no remorse to. Many pointed out that the mental age of Bentley is younger than Craig’s and this led to these protests against the useage of Capital punishment. To conclude, Bentley’s execution was one of the principal elements that has been the cause to abolish the Capital punishment and changed many people’s views as  it was inquitable to sentence someone with mental disabilities and who had not even committed murder to death.

The eNotes Blog How-to Sell Back YourTextbooks

How-to Sell Back YourTextbooks In high school, it is pretty commonplace to have textbooks provided for you- and,  assuming you return them, you dont have to pay a dime. But college students (or high schoolers  taking special classes with fancy books) know that books can get a little lets say pricey.  Though a more precise description would be something along the lines of astronomically expensive. Whatever it is that makes even the tiniest  textbook so darn expensive, theres something to be said for being able to sell it  once youre done with the class. It can be tricky to decide where to go to sell your used books because there are a lot of options out there to choose from; you may be wondering which website/store is the most reliable or where youll get the best bang for your buck (bang for your  book, if you will). So we  went ahead and took the liberty of doing that research for you: below  are  some easy-to-use and reliable methods of selling back textbooks  for the best prices you can get. Bookfinder.com Like any reputable company, BookFinder gives you the option to compare their offered buyback prices with competitors in hopes of ensuring that you get the best price for your used goods. Also a plus is that shipping costs are taken care of by the vendor- all you have to do is print out a shipping label and send it on in! Forbes,  Newsweek  and  The New York Times  have all recommended this service for students looking for a reliable online store (and its been in business since 1997, so they probably know what theyre doing). In addition to textbooks, BookFinder is more than willing to buy back just about any book youre looking to sell, so long as its in good condition. So if youre hanging on to some old novels and youre a little strapped for cash, this site is a good option for you. Amazon Trade-In Because Amazon is a well-known company, doing business with them feels much more secure to many possible buyers. Whats really nice about Amazon is that you can sell not only books, but you can also list any goods (from wearables to electronics) on their site all in one fell swoop. The store guarantees up to 80% of the original listing price, and for a buyback company, thats a pretty good deal. Disclaimer: that up to 80% means most likely not always 80%, but it probably happens occasionally. TextBookRush.com One problem with any market in a capitalist economy is that prices fluctuate,  and sometimes they fluctuate a lot. What this means for you and your pricey little book is that one day you might be quoted one price only to be told two days later that your book is worth $5-$10 less than what you thought. TextBookRush knows this and how frustrating market fluctuation can be, especially when you cant control the speed of a sale, so they guarantee you a quoted price for 20 days. This means that if they tell you your book is worth $20, no matter what the market price drops to in the next 20 days, your item will stay listed at $20, and thats pretty nifty. Also nifty is that TextBookRush offers you three payment options: cash, Paypal, or store credit (really nice if youre still in school and need to buy more potentially overpriced reading materials). And shipping is free.  And  they offer you the opportunity to rent books from them, and thats much cheaper than buying outright- plus it saves you the hassle of all this selling business. BookScouter.com BookScouter offers a lot of the same services as the previously listed sites, but has one nice  perk- you dont have to create  an account to do it. With no registration required, you can sell back your book the old-fashioned way (er, almost, as  you are still online, after all). Just find your book, compare the prices offered by interested vendors, ship your book- for free- and voila! As soon as the book is inspected for damage, your payment will go through and itll all be over. Phew. SellBackYourBook.com This one is something of a fan favorite. Though not as popular in the business world as BookFinder (with its fancy recommendations from  Forbes), SellBackYourBook boasts some pretty assuring testimonials from users: Thank you for such an easy and convenient buy back process! I got more for my books on your site than I got on any other site! You guys rock! You even bought back books that other sites would not buy. I am sold on selling my text books here! - Tiffane L. As an accredited business with the BBB, you can have faith that SellBackYourBook is going to deliver on their promises, meaning that you will get free shipping, there will be no auction process, and you will receive your payment within two days after your book arrives. Have another way you prefer to sell your books? Share in the comments below!

All My Sons †The Story of Joe Keller

All My Sons – The Story of Joe Keller Free Online Research Papers Parenting is a very difficult job; there are no exact guidelines on how to parent. Sometimes parents just don’t know where to draw the line, and that’s exactly what happened with Joe Keller in the novel All My Sons. During WWII, Joe Keller was in charge of a plant where they made special parts to machines like planes. In order to make more money he had put on default parts which caused the deaths of 21 pilots. Instead of taking the blame he blamed it on his partner in the business and he ended up in jail. â€Å"When you get older, you like to feel you accomplished something. My only accomplishment is my son.† This is a quote from Joe, it shows that he was into his family and wanted the best for them no matter what it took. Joe uses the excuse of doing it all for his son so that he could have a better life but a little extra money won’t make things that much better. It seems that Joe is just trying to live his life through his son. But selling default parts seemed to make them grow farther apart and was not a very efficient way of parenting. Joe is really considered a â€Å"Beast† because he killed people for money to better his sons’ life there are many other ways of doing that instead of killing innocent men fighting for our country. Joe is really thinking all about himself when he should think about all the other fathers whose sons died in the accident. There is no excuse for what he did and his biggest punishment is to live with the lie his whole life. Joe refused to accept responsibility, so he blamed it on his partner Steve Deever. â€Å"I was the beast, the guy that made 21 planes go down. Everyone thought I was guilty but I had a court paper that said I wasn’t.† Chris (Joe’s son) can’t be blamed for being mad at Joe, any human being would be, and Joe committed murder. Joe didn’t know when to stop when it came to making more money, he was greedy but had a good reason to be and that reason was that he had a family to support. Joe was a role model to his son and wanted his son to respect him but in the end it made his son detest him. Research Papers on "All My Sons" - The Story of Joe KellerThe Effects of Illegal ImmigrationCapital PunishmentQuebec and CanadaWhere Wild and West MeetThe Masque of the Red Death Room meanings19 Century Society: A Deeply Divided EraGenetic EngineeringTwilight of the UAWBringing Democracy to AfricaComparison: Letter from Birmingham and Crito

Jose Parla and His Works Essay Example | Topics and Well Written Essays - 1500 words - 1

Jose Parla and His Works - Essay Example Parla began experimenting as early as 1983 when he used canvas in order to translate his wall paintings and personal memories into a permanent mode. At this time, Parla used to illustrate the derelict landscape of urban settings, hence he wanted to transfer this into a medium that was more permanent than the walls that he used. This formed the basis of his contemporary paintings that he describes himself as being ‘’contemporary palimpsests’’ implying that his artistic works are a form of memory documents or segmented realities. Parla has a noteworthy collection of artwork that is presently displayed in various art locations around America and Europe. Parla’s collection has been driven by history and his own inspiration. Parla apart from doing his paintings collects works by other people who are part of his life history or contemporaries and friends whose artworks are in tandem with his art. Parla is dedicated to ensuring that his artworks go an extra level in proficiency and appeal to many. Parla has continued to read art history and he constantly visits various art galleries so that he improves on his artwork. Paintings by Parla characterize how cities of the world function as palimpsests. Parla creates visual tales of his experiences in various cities that he has visited. In these paintings, he illustrates urban landscapes of these cities. His works are calligraphic, multilayered and psycho-geographical, and he has incorporates these concepts into his paintings thereby enabling the viewer to find out about his perspective of the environment.

Cultural Event Report Essay Example | Topics and Well Written Essays - 500 words - 13

Cultural Event Report - Essay Example As announced, the exhibits during that particular day include: Read My Pins: The Madeleine Albright Collection; the Yves Saint Laurent: The Retrospective; Focus: Earth & Fire; Garry Winogrand: Women Are Beautiful; and Blue & White: A Ceramic Journey; among 22 events. There were two building in the premises: the North Building that housed the main museum, which is a seven-storey structure. Likewise, another building, the Frederic C. Hamilton Building house additional collections of the museum. Both architectural structures are forms of art in themselves as they used innovative styles and are uniquely designed. The Yves Saint Laurent: The Retrospective exhibit started on March 25, 2012 and would run until July 8, 2012. It showcased a remarkable collection of haute couture garments, photographs, drawings, and films that exemplify the evolving years of Saint Laurent as a designer. The way the garments, photographs, and memorabilia were presented was just magnificent and is highly indicative of the quality and excellent image that Saint Laurent has exuded through the years. The collection entitled The Dior Years were simply breath-taking in sublime perfection and beauty. Four haute couture garments were showcased in grey, black, white and red; in styles that embody timelessness. Likewise, in another showcase, The Shock of Colors, was equally awe-inspiring as the narrow room was apparently lined from floor to ceiling in a rainbow of fabric swatches, where the walls are covered with pages reportedly taken from Saint Laurent’s old notebooks. The merging of these swatches with the garments displayed effectively delivered the message to the viewing audience. There were still various designer pieces, such as the ‘Paris Rose’, the long evening dress in black and draped with pink satin ribbon on the bodice which was the centerpiece of the exhibit. All these magnificent displays represent years of artistic designs that are being shared