Tuesday, August 25, 2020
Hearing misfortune - Research Paper Example This paper investigates the reasons for, and determination and accessible treatment for hearing misfortune. The sorts of hearing misfortune and their effect on the prosperity of people with hearing hindrance, just as on the general public, are featured. The reason for hearing misfortune or etiology can be promptly obvious like an ear contamination or hoarding of ear wax in the outer ear channel and can likewise be inconclusive, for example, in the instances of non-syndromic sensorineural hearing misfortune (Connelly, 2005). For the most part, the significant reasons for hearing misfortune incorporate over the top commotion, ototoxic response to drugs, maturing, hereditary legacy or birth deformities, diseases, and head or ear injury. Presentation to destructive commotion makes harm touchy internal ear structures, called hair cells, prompting noised-initiated hearing misfortune. Hair cells are little tactile cells that are answerable for the change of sounds into electrical signs, which are then sent to the mind for observation. When harmed, hair cells can barely develop back, making loss of hearing lasting. Both the decibel levels of and oneÃ¢â¬â¢s separation to sounds are similarly pivotal in deciding the possible dangers for clamor initiated hearing misfortune. Rehashed presentation to sounds at or higher than 85 decibels can disable hearing while a one-time introduction to a much exceptional sound like blast can bring about hearing misfortune (NIDCD, 2008). In the mean time, chemotherapy medications and radiation utilized for the treatment of youth malignant growth initiate harm to hearing. High portions of radiation may bring about ear wax develop or irritation in the external ear, solidness of eardrum or center ear bones, or liquid develop in the center ear, which can prompt hearing misfortune (Landier and Ruccione, 2008). Further, radiation can prompt harm to the internal earÃ¢â¬â¢s hair cells, bringing about a sensorineural hearing misfortune. Hearing misfortune because of viral and bacterial contaminations, for example, in syphilis, toxoplasmosis, mumps, bacterial
Saturday, August 22, 2020
Section 1 Social Influence The impact that words, activities, or nearness of individuals have on our perspectives, musings, sentiments and conduct Construal The manner in which individuals decipher the social condition. (How would you understand somebody's conduct? Is it pleasant, impolite and so on? ) Individual contrasts parts of characters that makes individuals novel Social psych examinations the person with regards to a social circumstance, and it plans to distinguish all inclusive human instinct qualities that makes everybody powerless to social impacts, paying little mind to social class or culture Fundamental attribution mistake xplaining our own or other people groups' conduct dependent on character qualities alone. Thinks little of social impact Behaviorism Approach to understanding conduct through just fortifying properties of occasions. (Constructive, adverse, discipline, operant molding) Gestalt psych Studies abstract manner by which an item shows up in people groups' br ains, as opposed to the goal, physical properties of the subject. Like seeing a composition all in all rather than the total of its parts. Confidence how much one perspectives oneself as great, capable and decentSocial cognizance how individuals select, decipher, recollect and utilize social data to settle on decisions and choices. Section 2 Hindsight Bias Exaggeration of the amount one could foresee a result in the wake of realizing that it previously happened Observational technique No irregular task, not test, view and record estimations of regular conduct Difficult to break down certain conduct which happen once in a while or in private (people groups' readiness to help an assault casualty Ethnography Study of societies by seeing from within ie being a piece of it Interrater dependability eliability of a trial dependent on level of understanding from at least 2 free appointed authorities Archival examination Secondary source data dependent on chronicled records like papers, jour nals and so forth. Be that as it may, data is restricted and might be deficient or off base, and it is extremely unlikely to demonstrate it Correlational strategy 2 factors that are estimated and straight relationship watched Correlation coefficient degree to which 2 factors are straightforwardly identified with each other Surveys Asked inquiries regarding mentalities or behaviorCan judge connection between factors that are hard to watch and are fit for testing agent sections of the populace Random determination To guarantee great portrayal. Test technique arbitrary task to various conditions, guaranteeing that there is no inclination Each respondent has equivalent possibility of being picked with no predisposition. Guarantees conditions are indistinguishable with the exception of the autonomous variable Independent Variable that is changed to check whether it affects some other variable Dependent Variable that is impacted by the free variable.Dependent variable relies upon the degr ee of free factor. p-esteem Significant if the worth is under 5% that the outcomes may be because of chance components. Inner legitimacy Degree to which things inside the test measure the build. Nothing other than the autonomous variable can influence the needy variable. By controlling for every superfluous variable and irregular task External legitimacy Extent to which investigation can be summed up to different circumstances Psychological authenticity degree to which mental procedure in an analysis are like those that happen in regular lifeCover story masked form of an examination's actual reason. This increments psych authenticity as the story causes individuals to feel they are in a genuine occasion. Field inquire about Increases outer legitimacy by considering conduct outside the lab in normal settings Replications Ultimate trial of outside legitimacy. Summed up to various settings, individuals and so on. Meta-investigation Averages aftereffects of at least 2 examinations to ch eck whether the impact of a free factor is solid. Essential research Done absolutely just wondering to discover answers Applied research Intends to tackle specific issues Cross-social researchResearch finished with different societies to check whether mental procedures are available or if one of a kind to specific societies Informed agree Agreement to take an interest, full attention to the idea of investigation that is clarified ahead of time Deception Misleading members about evident motivation behind examination Institutional audit load up surveys reasearch and its ethicality previously permitting it to be led. must incorporate at any rate 1 researcher, nonscientist and individual nonaffiliated with foundation. Questioning Explaining to members the genuine motivation behind investigation and what happened toward the finish of the trial. Section 3 Automatic thinkingUnconscious, automatic, easy Controlled reasoning is progressively effortful and purposeful Schemas mental structures that compose our insight about the social world, which impact the data we notice, think and recollect. Applied to race or sex, diagrams are generalizations. We have outlines since they assist us with making sense of whats going on. Openness degree to which outlines and ideas are at the cutting edge of people groups' brains and in this manner liable to be utilized when making decisions about the social world. Preparing Automatic reasoning. Procedure by which ongoing encounters increment availability of a mapping, attribute or idea. ome incessantly open due to past experience Ã¢â¬ continually dynamic and prepared to use to decipher equivocal circumstances available in light of the fact that it is identified with a present objective open on account of ongoing encounters Self-satisfying Prophecy Prediction that makes an occasion work out as expected dependent on encouraging comments among conviction and conduct Peoples desires for what another resembles - > impacts how they act to the individual - > causes a response reliable with people groups' unique desires - ; makes desires materialize Often happens however in certain events, people groups' actual nature will win out in social interactionJudgmental heuristic mental procedure and alternate way to make snappy and viable decisions. Utilizing patterns. Accessibility heuristic Basing a judgment on self or others on the straightforwardness with which you carry something to mind. Connected to openness. Be that as it may, once in a while what is effortlessly reviewed isn't run of the mill of by and large picture, prompting incorrectly ends Representativeness heuristic Classifying something as indicated by the fact that it is so like a common case. Like how comparable Wang Nan is to all China individuals. Or then again scoring admirably in tests since asian Base Rate Information about relative recurrence of individuals from various classes in the populationContents of our Schemas is impacted by our way of life Differences in Western and Eastern Culture Western: Analytic Thinking Ã¢â¬ concentrating on properties of articles without considering encompassing setting (individualistic culture impact) Eastern: Holistic Thinking Ã¢â¬ center around the general setting, in manners that items identify with one another (aggregate culture) Controlled reasoning that is cognizant, purposeful, intentional and effortful. Can turn on and off voluntarily. Counterfactual reasoning intellectually changing some part of the past as a method of envisioning what would have been. Aiyah why never get gold however I got silverThought concealment Attempt to abstain from contemplating something we would want to overlook. Like ex gf, stomachache and so on. Observing procedure Ã¢â¬ programmed part, looks for proof that the undesirable idea is going to interrupt the cognizance. At that point the working procedure Ã¢â¬ controlled part becomes possibly the most important factor. The effortful endeavor to divert onesel f by discovering another thing to consider. At the point when one is deficient in vitality or distracted (under intellectual burden), the working procedure releases the meddling idea unchecked prompting hyperaccessibility Ã¢â¬ the undesirable idea happens with high recurrence The metal you make an effort not to consider something, the more it encroaches. Carelessness boundary People for the most part have a lot of trust in the exactness of decisions (sure pass! sure this definite that) break this obstruction by tending to carelessness straightforwardly, giving chance of them being off-base show individuals legitimately some fundamental measurable and methodological standards to figure out how to reason effectively, and trusting they will apply these standards CHAPTER 4 Social Perception investigation of how we structure impressions of and make derivations about others Nonverbal correspondence how individuals impart deliberately or accidentally without words. ody language, contact a nd so forth. Mirror neurons synapse that react when we play out an activity and when we see another person play out a similar activity. At the point when individuals yawn, we yawn. naturally and automatically. Encode Express nonverbal conduct like grinning Decode To decipher the importance of nonverbal conduct. was the grin real or snide 6 significant feelings that can be perceived diversely bliss, misery, dread, outrage, shock, appall. Possibly scorn and pride. Influence mixes one piece of the face registers one feeling while another part enrolls an ifferent feeling. mix of outrage and nauseate. This makes deciphering now and again off base Display rules specific to each culture, and direct the sort of feelings individuals should appear. Insignias signals with clear, surely knew definitions Ã¢â¬ center finger, gangsta Implicit character hypothesis Type of diagram used to aggregate different character characteristics. Somebody who is thoughtful is additionally liberal Relying on co nstructions may lead us to make wrong suppositions, may even retreat to sterotype One culture's understood character hypothesis may be unique in relation to another.America has Ã¢â¬Å"Artistic personalityÃ¢â¬ however Chinese have no blueprint for that. Attribution hypothesis how we surmise reasons for individuals' conduct Internal attribution Attribute a conduct to somebody's very own characteristics didn't give cash cos egotistical External attribution Attribute conduct to a circumstance outside of individual's qualities didn't give cash cos train was coming Covariation model To shape a sound and legitimate attribution about what caused a conduct, we
Friday, July 31, 2020
An Afternoon In/Out Of The Snow How and what would I write in the utter absence of the ever-present presence of our preexisting expectations of admissions blogs, unburdened of the literary coherency associated with the formal duties of a prefrosh psychopomp? The answer is about to be served implicitly atop an egocentric slice of my life on a lazy IAP Saturday. 12:40 PM Nature precipitates relentlessly upon Cambridgians freezing bodies, the confetti to its gleeful schadenfreude. As I exit a building, a discretized gradient of snowfall upon stairs illustrates a simple probability distribution. 12:50 PM I brave the snow down 3rd Street, a hotbed of the eco-friendly hipsteria that visibly permeates Cambridge, and hike to Voltage Coffee, whose abilities satisfy the rare intersection of (a) producing coffee good enough that I will actually trade money for the transient pleasure of drinking it, and (b) assembling a vegetarian sandwich savory enough to sate my carnivorous appetite. 1:00 PM Ive gained entrance to the club, and can dispense with these hipster pretenses. Shedding argyle sweater vest, false muttonchops, and sustainably-harvested calabash smoking pipe, I roll up my mental coding sleeves, pull up a terminal, and rake impatiently at the disorganized heap of code and configurations that aspire to 6.470 fame. Adjacent are two disillusioned 20-somethings echoing the mantra, I know what I want, but not how to get there. For them, I weep frozen tears of vicarious unfulfillment into my delicious sandwich. But for myself and my fearless 6.470 teammates, I foresee only the sweet, sleepless taste of victory. 1:55 PM I bundle up and continue along my irreversible temporal journey. It is as cold, as they say, as though we were in hell, and a sports team facing proverbially bad odds had won some international competition or other. 2:05 PM It is the second day of Bad Ideas, the weekend that East Campus devotes annually to bad ideas. Events in swing: grilling in the snow, and chaining together electrical appliances and powerstrips until something blows out. But much badder, more exciting ideas are scheduled for the remainder of the day: playing chess with pieces made out of chocolate (with the addendum that you must eat captured pieces), testing your capacity for deceit while hooked up to a polygraph, human dog sledding, eating as many tacos as possible and/or watching others slowly hate themselves as they finish off their stack of tacos, and running up and down the tallest building in Cambridge as many times as possible in four hours. An alumnus of my hall is actually the record holder for the Green Building Run, having completed forty-eight circuits one adrenaline-pumped year. Surprisingly, its among the least of his inhuman characteristics. 2:06 PM I stumble inside. Several pounds of snow instantly melt off my shoulders and run down my laptop bag. East Campus is notable for its architectural similarities to a brick oven, and while this turns it into a miserable, sweat-filled sauna during the summer, it is arguably the ultimate winter haven. Having individually controllable thermostats in each room doesnt hurt, either. 2:15 PM Drafting this blog post. Reese supports me in presence if not in spirit, like an unwieldy pet rock. 3:00 PM email, email, email 3:50 PM Zealous 6.470 teammate and infamous motorized unicyclist Stephan 13 joins the party, his enthusiasm tempered only by Ruby on Railss unwillingness to install properly on his computer. 4:00 PM It turns out using NTFS partitions messes with file permissions in a way that prevents Rails from doing what we want it to do. Stephan decides to reformat his hard drive and reinstall both of his operating systems. We are very sad for the next two hours. 4:15 PM Comparing camera lenses Working on thesis proposal ? one of these things is tougher than the others ? 5:45 PM Tiffany 12 is sick. I eschew the trappings of hardcoreness and brew her a flowery, hot pink tea. 5:55 PM Work is briefly interrupted for a DISNEY SINGALONG the next twelve hours I will spare you the hideously uneventful details of working collaboratively on Ruby on Rails between three different operating systems. For the most part, we alternately cursed, wrangled with our configuration files, and made food. I marinated slowly in my own impotence, but at least I was toasty and well-fed. Heres hoping your snow days are more eventful than mine, readers. Stay warm and be cool.
Friday, May 22, 2020
The 1920s was a decade of economic prosperity for the country. In 1923, the aggregate income of the country totaled $74.3 billion. This number expanded by 17 percent to $89 billion by the end of 1929. The prosperity generated during this decade remained chiefly in the pockets of those whose incomes were in the top one-tenth of one percent of the population. According to a study done by the Brookings Institute, in 1929 the top 0.1 percent of Americans had a combined income equal to the bottom 42 percent (McElvaine, 1984 p. 38). At the time of the market crash, four-fifths of the nation s citizens had no savings account but the highest earners, the 0.1 percent, had more than one-third of all savings (McElvaine, 1984 p. 38). To illustrate this discrepancy of wealth, automobile industrialist Henry Ford serves as a good example. Ford s reported annual income was in excess of $14 million (Baughman, 1996) when the average annual income for a worker was $750. In today s money, Ford s annua l salary would exceed $350 million (Hoffman, 1992 p. 155). The economic divide between rich and poor grew during the 1920s mainly because the manufacturing output (production) rose by more than a third during this decade. We will write a custom essay sample on Main Causes of the Great Depression or any topic specifically for you Only $17.96 $11.86/page The nation s economy was weakened by an over-supply of products. All economies are stimulated by consumer spending. The affluent bank the greatest proportion of their income but the lower earners must spend all of their income on basic necessities such as food, clothes, housing, and services. When a disproportionate part of the country s wealth is in the pockets of the wealthy, an insufficient number of dollars are being circulated throughout every stage of commerce.
Sunday, May 10, 2020
The purpose of this experiment was to perform a wittig reaction, the horner-emmons wittig specifically, reacting an aldehyde with an ylide to make an alkene. This particular variation of the wittig reaction has several advantages: It gives only the trans product; it uses a much milder base that is easier to handle; and it gives a water soluble byproduct which is easy to separate from the product. The reason that these advantages occur is a change in the structure of the ylide. Instead of a tripheylphosphine ylide, we use a diethylphosphonate ylide. The protons are much more acidic and its byproduct is negatively charged. The reason why we chose to create trans-stilbene is become of its many practical applications. Stilbene exists asÃ¢â¬ ¦show more contentÃ¢â¬ ¦This modification is similar to a standard Wittig reaction in that the first step, which has already been done for you, is the reaction of a trialkyl phosphite with a suitable alkyl halide as shown below in two steps: In the first step the trialkyl phosphate acts as a nucleophile and, in a typical Sn2 reaction, forms a phosphonium salt. The salt is unstable and a halide ion X displaces R in the Sn2 manner to form a dialkylphosphonate. It is the phosphonate that, in the presence of base, is converted to a Wittig-like reagent. Normally the Wittig reagent is an ylid and neutral, but the modified Wittig is analogous to the carbanion of an aldol intermediate. Due to its resonance forms, the phosphonate anion is able to attack the carbonyl much like acarbanion in an aldol reaction to give an oxyanion species. This is where the analogy with the aldol reaction fails. The oxyanion undergoes a reaction analogous to nucleophilic substitution at an unsaturated center to form the olefin, normally as the E isomer, and a water soluble phosphonate anion. In this particular experiment, diethyl benzylphosphonate is used with benzaldehyde as the carbonyl component. Since phase transfer conditions are used, we can u se a weaker base, the hydroxide ion. The reactivity o the anion formed is very high, resulting in excellent yields of trans-stilbene. The trans form of Stilbene is more favored than the sterically hindered cis form. AlthoughShow MoreRelatedPreparation Of The ( 2 Nitrophenyl ) Acrylate Using The Wittig Reaction1287 Words Ã |Ã 6 Pages3-(2-Nitrophenyl)acrylate Utilizing the Wittig Reaction Introduction: The Wittig reaction, named after Georg Wittig, produces an alkene from an aldehyde or ketone reacting with a phosphonium ylide (a Wittig reagent). The Wittig reaction is typically stereoselective, which makes the Wittig reagents more difficult to work with but use of the Wittig with different allyl substituents prove to make the Wittig more versatile which can lead to the synthesis of a wide range of alkenes, styrenes, stilbenes, and 1,3-dienes which
Wednesday, May 6, 2020
It was a cold winterÃ¢â¬â¢s day, the snow lay thick on the ground but surrounding the house there were no footsteps left from visitors bringing packages on the cold icy morning. We were the only visitors calling on this freezing day.IÃ¢â¬â¢d arrived at the house many times before, even dreamt about it as a smaller child, it was the kind you read about in books. We will write a custom essay sample on Short story: The Musician or any similar topic only for you Order Now Well I say big it was bigger than ours but then most houses in the county were. It was white and wooden with a broken swing on the porch, maybe a little run down but it wasnÃ¢â¬â¢t anything that a few hours of hard grafting wouldnÃ¢â¬â¢t fix. Well the drains they leaked too but I could live with that, as in the summer when I came walking down here with my friends I could smell daisies and all kinds of flowers growing in the fields. We always peeped through the window at the man inside. He interested us so much,not that we ever saw him but all the stories that weÃ¢â¬â¢d heard about him from our parents about the myths of his life before telling us we shouldnÃ¢â¬â¢t come and torture that nice old man, well what were we to do? We were just curious. We approached the house as we did each weekend with a bag of stonesÃ¢â¬ ¦.. Inside the house sits a musician trying desperately to write a decent song a song thatÃ¢â¬â¢s listenable to. He waits in his rocking chair swaying to and fro, pipe in one hand pen in the other, desperately searching for the right words to touch the paper. As he begins he names his song Ã¢â¬Å"The Song of The WorldÃ¢â¬ Why? I donÃ¢â¬â¢t know; maybe he thought it would bring hope to his sad lonely life or perhaps he could think of nothing better. The man lives alone. He dreams of days gone by and wishes that he could relive those moments of his youth. Nobody visits. Nobody calls. The grey trees outside growl a lonely kind of call to the man as if trying to tempt him outside so they can warn him of something. The floorboards below him creak as if there is another presence in the house. There isnÃ¢â¬â¢t of course. There never is. He used to have so much, wife, children but now he has little more than a hovel. He visits the graveyard every day and has done since the accident. Many myths have built up around him in the town. Well thatÃ¢â¬â¢s just what our town is like; every ones business is your own. No one ever wanted to help him but still he continues to create beautiful music for everybody. How do I know so much about him? Well I am the first visitor heÃ¢â¬â¢s had for twenty years. He doesnÃ¢â¬â¢t speak much but when he does he seems upset as if he is recalling the past, the past no one has cared about for what seem like an eternity. The first smile I have seen from him is after heÃ¢â¬â¢s succeeded with the first line and as he continues his smile grows. The phone continues to lie dormant. No relatives call, No friends from days gone by give him a second thought, perhaps itÃ¢â¬â¢s easier to forget he exists. He moves his pipe, puts down his pen. Slowly he stands the smile no longer on his face. He begins to weep. I am not sure what to do till he finishes crying. He describes how people used to want to listen to his music though now they prefer to make up stories and throw things at his home. Suddenly I was wrapped with guilt; it had only been a bit of harmless fun I decided I was going to help the man whom I had tormented for so long. Each day during my summer holidays I would take fresh pies from my mother to him and I would listen to his stories. I would not know how much was real and how much was make-believe but I didnÃ¢â¬â¢t really care we became best of friends and now he was happier he found it easier to write his songs again. One day I stole his songs and took them to a recording company. I came running back eager to tell him IÃ¢â¬â¢d got him a recording contract. Apparently I had broken his trust. That was the last I ever saw of him. He felt heed sooner be as he was. Even so, after that summer we never threw things at his house again. How to cite Short story: The Musician, Papers
Wednesday, April 29, 2020
Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. Essay Example
Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. Essay Economics of the Financial System Show how transactions in derivatives can be used to either hedge risk or to open speculative positions. Derivatives have become popular in response to the increasing volatility and complexity of financial markets. A diverse range of new financial products have been created to enable market participants to handle the risks arising from trade in securities and to speculate on future expected movements in securities prices, without direct trade in the assets themselves. Derivative contract creates a promise to deliver or trade an underlying product at some time in the future. The contract gives one party a claim on an underlying asset or cash value of the asset, at a fixed date in the future. The other party is contractually bound to meet the corresponding liabilities. Financial derivatives are traded on organized market such as LIFFE (London International Financial Futures Exchange) and through the intermediation of the clearing house system, there is more flexibility of exchange, and the risk of credit default is reduced. The two parties need not know each other they only have to satisfy the exchange that they are creditworthy to transact. The initial purpose of derivative contracts was to allow traders to hedge risk which they faced in the cash market. Two of the most popular derivative instruments are financial futures and options. Financial futures commit the parties to buy or sell underlying assets at set prices on an agreed future date. The benefit of financial futures in its most basic form can be exemplified by a poultry farmer who is worried about the risk of price fluctuations in eggs for instance. He knows in 8 months he will sell a certain quantity of eggs. We will write a custom essay sample on Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. specifically for you FOR ONLY $16.38 $13.9/page Hire Writer He can hedge against this risk by selling (going short) an eight month Ã¢â¬Å"futureÃ¢â¬ in eggs. The Ã¢â¬Å"futureÃ¢â¬ will consist of a standard amount of chicken to be exchanged in eight months, at an agreed fixed price on the day the Ã¢â¬Å"futureÃ¢â¬ is sold. The agent buying the eggs goes long, and is bound by contract to purchase the eggs in 8 months. A premium reflecting the risk of price fluctuation would be charged by the agent. If all goes well, the rate of profit on future contract can be very high but not without considerable risk. Investing in securities expose investors to many risks, the most important is the risk of an unexpected fall in the value of an investment. Likewise, not investing also exposes them to opportunity risk; the risk that future prices of portfolio of asset would rise thereby making it more expensive to acquire. Derivatives market offer investors an efficient way of managing some of the risks incurred in investment by purchasing derivative instruments. This allows them to attain desired adjustment to risk without having to trade in the underlying securities and sometimes gaining a profit. Hedging has become increasing popular as it helps investors to protect against the future value of their portfolio. An investor with a portfolio of cash, bonds and shares can take out a hedge to protect the future sale price of her portfolio by selling a corresponding amount of the appropriate futures contract. Risk could be hedged through options or future contracts. Hedging through future contracts involves taking a position in financial futures contract that will incur a gain to offset a loss in their existing investment portfolio. For example, Amana Mutual Fund manages a large portfolio of stocks. The portfolio manager speculates the prices of stock will fall over the coming month but will increase again after that time. They would like to hedge their portfolio against a loss over that period. A stock index futures contract with a month to settlement date is offered on the Dow Jones Industrial Average stock index at an index level of 20,000. Amana chooses to sell a futures contract on this index because it reckons that this index is strongly correlated with its existing stock portfolio. In a month, at the stipulated settlement date, Stanford will purchase the same contract. If stock prices plunge over this period, the index will fall as well, and so will the futures contract on the index in response. Amana will profit on its future position, because the future price paid at which the index is sold will be less than price paid for the index at settlement date. After a month, the stock market falls as anticipated, and the futures price of the DJIA is at an index level of 19,000. DJIA futures contract are rated at ? 10 the DJIA index, so Amana stands to gain. Sold DJIA futures for 20,000; receives 20,000 times ? 10 =? 00,000 Purchased DJIA futures for 19,000; owes 19,000 times ? 10 =? 190,000 Gain is ? 200,000 ? 190,000 = ? 10,000 This shows that Amana benefits from selling a DJIA futures contract. Amana has gained from a market decline, which can partially counterbalance the loss on its existing stock portfolio. However, to hedge a huge stock of portfolio, Amana would have to take a short position that had a value equal to the size of its entire stock po rtfolio. Options give one party the right, but not the obligation, to buy (or sell) at a set price on an agreed future date. Future Contracts are a means of avoiding risk but at the cost of eliminating opportunity. A trader may prefer to hedge risks through options so he can take advantage of an unexpected upswing. If hedgers of an equity portfolio sell futures contracts against their position to protect their portfolio and see the stock market go up rather than down as they presumed, they would not be able to take advantage of the upswing. It is therefore advisable to use future contracts when the investor is certain of future outcome as the contract fixes the value of an asset. However, hedging via options is more expensive as it protects from downside loss while leaving upside potentials open with the right but no obligation to purchase asset at a fixed price. Derivatives allow firms to hedge against security prices and interest rate movements, the latter being the most actively traded future contract used by banks and treasury managers. A pension fund manager holds an equity portfolio which closely resembles the US stock market in its compositions. If he thinks the US market is going to fall and wishes to turn his portfolio into cash. He has two choices, he could either sell shares which would not be as profitable because share prices might be depressed if it is a large portfolio plus it is time consuming. Or she could simply sell stock index futures against her portfolio. If accurate, the loss incurred on her equity portfolio will be counterbalanced by a profit on her financial futures position. Derivatives reduce the cost of protection through sophisticated risk management. Firms that are adversely affected by interest rate movements can take particular position in derivative securities to offset the effect of interest rate movement thereby reducing risk. By coming into a Ã¢â¬Ëforward rate agreementÃ¢â¬â¢ a company treasurer can fix the cost of borrowing which will be required on some future date, thus avoiding the risk of fluctuating interest rates in the prevailing period. Interest rate future contracts can be used to match the interest rate characteristics of the bankÃ¢â¬â¢s asset and liabilities portfolios. Market makers can hedge the risk resulting from significant positions in equities or bonds by buying offsetting contracts in equity or interest rate futures. Interest rate futures specify the amount of the notional bond and its interest- rate coupon, for instance a ? 50,000 nominal 15-year treasury bond with a 10 per cent coupon. Traders using futures to hedge against risk to which they are exposed in the cash market are seeking to lock into existing exchange or interest rates on future transactions. Once a firm has traded out of its open position in the cash market it no longer needs the hedge in the futures market. Howe ver, the use of futures to hedge to hedge against interest rates for instance can give rise to basis risk. Basis risk is the risk that fluctuations in future prices will differ from movement in the price of risk being hedged. Firms are also faced with exchange rate risks, in the absence of fixed exchange rates or monetary unions, firms must take action to protect themselves against these risks by taking out contracts which carry the opposite risk to that which they face in the underlying market. Another advantage of financial futures contract is that they offer both traders and investors the ability to take a short position in the underlying security; sell something they do not have. Traders may think a financial market is falling, by selling future contracts and buying them back later after the price has fallen they would be able to gain profit in a bear market. Derivatives help to combat adverse effects of volatile commodity prices on the economy as forward prices tend to be less volatile than spot prices. Since the spot price of a security can be offset by the sale of future contracts, the risk of holding securities is neutralized. Hedging is the basic motivation for a lot of businesses trading in financial derivatives market. Nonetheless, speculation is just as popular as derivatives allow firms and investors to take positions in the securities on the basis of their expectations of movements in the underlying financial asset. In other words, derivatives are instruments that allow market agents seeking profit gain to gamble on movements in the prices of other instruments without being required to trade in them. Furthermore, speculation provides liquidity in the markets and enables it to operate efficiently. Speculative positions are required to offset any imbalance which may arise from hedging transactions, and active speculation in response to small price movements ensures that any temporary imbalance would not lead to a drastic price change thereby reducing volatility. Derivative markets respond to information quicker than cash market. Therefore it allows speculators to predict with accuracy cash market prices and return of their investment. For example, a speculator who presumed that interest rate was likely to rise or a currencyÃ¢â¬â¢s value decline would go short in the particular asset by selling a future contract. Derivatives permit traders to build an open position with speed, traders usually close this position when they have achieved profit objective. If anticipated profits are unlikely, they cut losses before delivery date. Investors could either purchase call or put options for speculative purposes. Call options are bought by investors who speculate a rise in price of underlying stock. An investor pays the option premium and becomes the owner of a call option he is entitled to the right to purchase stock at the exercise price up to the time of expiration date. The advantage of this is that investors have secured a price to be paid for stocks and therefore gain a profit in secondary market of stock prices rise. Tayo purchased a call option on British Telecoms (BT) Plc. for $3 per share, with an exercise price of $75 per share. She decides to exercise her option at the expiration date if the market stock price is above $75 at the time. Tayo wants to find out what her possible profit outcomes are per share under the different prices of Boots plc. stock. Possible Outcomes for Investment in a Call Option Possible price of boots plc stock at expiration($)| Premium paid($)| Amount Received from Exercising Option($)| Profit share from investment($)| 71| 3| Option not exercised| -4| 76| 3| 1| -2| 78| 3| 3| 0| 82| 3| 7 | 4| 85| 3| 10| 7| At any price above $75 but below $78, Tayo will exercise the call option but make a loss. For instance, at the price of $76, she can exercise the option by buying the stock at $75 and selling them for $76. However, with a premium of $3 to be paid, she incurs a loss of $2 on her investment. At the price of $78, tayo breaks even and at any price beyond that she makes a profit from this call option. On the other hand, put options are purchased by investors who expect a fall in price of assets. The contract is set at a predetermined rate lower than the current market price, so if prices do plunge further investors earn a profit from put option. This leverage allows speculative investments to be used to take advantage of specific profit opportunities or to insure a portfolio against risk. For an options contract, there has to be a corresponding seller (or writer) to the purchaser of an option, who is prepared to accept the increased risk exposure and the premium has to be large enough to compensate risk. The buyer of a call option acquires the right to buy specified instrument. For example, an investor who speculates that euro will rise against the US dollar could buy a euro surplus giving the right to buy euro at a specified price, say $0. 60 =? 1. If the spot exchange rate were to rise to $0. 68 =? 1, the option holder could acquire euro at $ 0. 60 under the terms of the option and sell them in the spot market at $0. 68. As the price of the underlying product rises, so too will the profit that can be made from exercising the option. The buyer of a call option thus assumes a long position in the underlying product. Swaps are a huge market. The first major example of a derivative trade occurred between the World Bank and IBM in 1983. The World Bank was lending in Swiss Francs and wanted to borrow in Swiss Francs, but it had depleted all its borrowing options, hence it faced rising costs. On the other hand, IBM was a dollar borrower but had never borrowed in Swiss Francs as it had no use for the currency. Nonetheless, Salomon Brothers, the investment bank set up a deal with IBM because IBM could borrow Swiss Francs at a cheaper rate than the World Bank could, so both institutions borrowed currencies they did not need. IBM in Swiss Francs and World Bank in dollars, this was done simultaneously and they converted proceeds into currencies they did need. Salomon Brothers was the Ã¢â¬ËwriterÃ¢â¬â¢ of the debt obligation and because of their dealings with each other; both institutions faced a lower interest rate. All of the above gives evidence that derivatives are a powerful instrument in combating risks and making profits from speculation amongst other. However, Warren Buffet warns that derivatives are not without its curses. He likens derivatives to Ã¢â¬Å"hellÃ¢â¬ ¦. easy to enter and almost impossible to leaveÃ¢â¬ and states that increasing trade in it pose a mega-catastrophic risk for the economy as it pushes companies onto a Ã¢â¬Ëspiral that can lead to a corporate meltdownÃ¢â¬â¢. For example, derivatives trading were held partially responsible for the collapse of the stock market in 1987. The story being that stock market trader anticipated a decline in the price of stocks that weekend. Immense orders to sell were made at brokerage houses and many traders automatically sold futures in shares of major corporations. This panic and wrong speculation destabilised stock markets and contributed to the volatility of the cash market. An example closer to home is the losses of ? 91 million made by traders at NatWest Capital Markets (the investment banking arm of the National Westminster Bank in London) in 1995 and 1996 on deutschmark and sterling options. In Conclusion, financial derivatives , although not without faults, has become a major global growth industry as financial agents have become increasingly assertive and innovative in their use of futures, options and swaps to hedge risks and take speculative positions. References 1) http://news. bbc. co. uk/1/hi/2817995. stm Accessed on the 20th April 2010 2) http://www. globalresearch. ca/index. php? context=vaaid=8634 Accessed on the 28th April 2010 3) Howells P Bain K (2007) Financial Markets and Institutions, London: Prentice Hall 4) Mervyn K. Lewis (1999) The Globalization of Financial Services, Cheltenham: Elgar Reference Collection 5) Rutterford J Davison M (2007) An Introduction to Stock Exchange Investment, New York: Palgrave Macmillan 6) Howells P Bain K (2002) The Economics of Money, Banking and Finance, Essex: Pearson Education 7) Henderson R (1993) European Finance, Berkshire: McGraw Hill Book Company 8) Gitman L Madura J (2001) Introduction to Finance, Boston: Addison Wesley 9) Heffernan Shelagh (1996) Modern Banking in Theory and Practice, Chichester: Wiley 10) A. D Bain( 1992) The Economics of the Financial System, Oxford: Blackwell