Delinquency Deterrence Response Essay

It is said that the human psyche can be an unpredictable trap of musings. Considerations that can once in a while lead to positive or negative activities. Does the real danger of discipline stop or does it empower adolescent wrongdoing? This inquiry happens to hold two answers one being yes and the other no. Adolescent wrongdoing has existed for a considerable length of time however as we as a whole realize it's anything but a difficult that sprouts for the time being. Adolescent misconduct is a showed express that is found out and its causes are showed from in the home (useless or broken), school (strain to succeed), companions (peer weight) and family (need to scape for reasons unknown or another). As per Thomson Learning Inc. Adolescent Delinquency: The Core (2005), for certain youngsters and teens the danger of discipline is practical to such an extent that this technique gives a chance to those people to do right. This might be on the grounds that the people sound point of view and the authorization of discipline either has been as of now implemented or the dread of being gotten is excessively high of a cost for the person to acknowledge. Then again there are kids and adolescents who don't ear discipline or whatever other outcomes that may originate from their awful activities. Moreover, for certain people the idea of being rebuffed just rankles and urges a few people to proceed with their awful ways. It s said that all together for a plant to develop and sprout it must be taken care of and sustained. This procedure is the same with regards to bringing up kids and adolescents. At the point when youngsters or adolescents are brought up in broken homes with guardians that support awful conduct and no order empower these people to foul up. Living in a home ith guardians that devour liquor, take medications, take and gathering all the time urges these people to get reprobate. A youngster or adolescent being brought up in that kind of condition may expect and be urged to believe that it is alright to live that way. Being urged by friends to foul up isn't right however to be energized by ones own parent is viewed as a demonstration that regards hindering to any kid or youngsters life. The purpose behind this is on the grounds that results and adjustment for their awful activities doesn't exist (Thomson Learning Inc. 005). A few instances of general discouragement, explicit prevention and situational wrongdoing counteraction techniques are as followed. General prevention fundamentally is if an individual accepts that they will be trapped in a represent model like holding up a comfort store and their discipline will be executed to the fullest for that wrongdoing. There is the likelihood that the wrongdoing won't be perpetrated on the grounds that the discipline far exceeds the wrongdoing. Explicit prevention is utilized to diminish the likelihood of having a recurrent perp. A case of explicit prevention is the three strike law. This technique doubtlessly expresses that an individual who is gone after for a similar offense will go to prison for carrying out a similar wrongdoing on a third offense. There are no breaks or reasons because of the way that the three strike laws were actualized from a past offense. Situational wrongdoing anticipation is the capacity to decrease and control the propensities of hoodlums by making their activities harder to submit. This should be possible by having neighborhood watch bunches related to police watch at mimicked times. Storekeepers can have cameras put in subtle regions of their stores alongside having altered evidence glass or window bars on their stores. The key in situational mindfulness is to make the guilty party mulls over their activities and in what capacity will it advantage them in the event that they are gotten (Thomson Learning Inc. , 2005). As children growing up we were constantly informed that anticipation was in every case superior to a fix. We were additionally informed that for our terrible decisions made there will consistently be ramifications for those activities. Knowing our limits we generally remained inside them. My folks instructed us directly from wrong and they guided us through our youth directly into our young and juvenile years. It is as I would see it through their hands on ways and continually being dynamic in our lives we avoided inconvenience. It is my conviction that wrongdoing avoidance techniques are consistently the best to begin with. At the point when an individual understands that it is more enthusiastically to carry out a wrongdoing whether it is through parental contribution or due to the components that are set up they may discover something that will be more gainful than stumbling into difficulty. .

Woman In The Dunes Movie Review Example | Topics and Well Written Essays - 1000 words

Lady In The Dunes - Movie Review Example As he set out for his campaign, he was late and in this manner missed the last transport back to the city. The locals offer him a spot to go through the night, controlling him down a rope stepping stool to a house that is under a sand quarry (Morris 1). This is the home of a young lady called Kyoko Kishida, who lives alone as her significant other had passed on because of a dust storm. She is utilized to uncover sand for development by the residents, and keep it from covering the house. On getting up the next morning, the stepping stool that he had moved down on was gone. He understands that it was a snare, as the residents compel him to remain there and help the lady in uncovering the sand. Finding that it was the villagers’ plan for him to remain there forever, he makes a few getaway endeavors, yet they all come up short (Crowther 1). Afterward, he discovers that the lady is OK with the existence that she lives since she knows no other life. His principle task is attempting to make sense of how to escape from his caught life, and simultaneously, exist together with the lady. The story later takes a turn in that, with time, Jumpei and Kyoko have a solid physical fascination for one another (Morris 1). They later adjust to one another and become sweethearts, in spite of their enduring in restriction. The maker has delineated how life can end up being what was not anticipated. The terrible circumstance for Jumpei winds up getting him a lady to adore. The predicament for Kyoko additionally gets her a man to cherish. The two persisted for long, yet they at long last profit by it. The paper portrays a portion of the ideas, topics and characters got from the film, after basic examination, concentrating on the principle thought of the maker. Jumpei Nikki’s character The film depicts a developing character named Jumpei. Toward the start, Jumpei is depicted as an entomologist on a field work undertaking. Here, he shows up as an unassuming, gullible and in quisitive researcher, who believes that the residents are amicable enough just to offer him a spot to remain for the evening (Morris 1). Afterward, when he finds that the residents deceived him, he obviously is incensed. Reality hits and he centers around getting away from an existence of anguish. Now, Jumpei is not, at this point an innocent researcher, yet a solid, certain man whose edginess touches off a character loaded with fierceness, center and assurance towards one objective (Crowther 1). Jumpei’s change of character, because of an unpleasant circumstance, is representative to the typical human life. It portrays the human life as one characterized in constrainment and detainment. This shows how a difficult spot can drive the adjustment in character of an individual, whereby the endurance intuition kicks (Morris 1). Kyoko Kishida’s character Suffering, desolate, work, steadiness, are the characteristics that ring a bell, while considering Kyoko Kishida. She is a lady living alone in a risky domain, living on the edge, attempting to guarantee that the propelling sand doesn't expend her home. She is additionally a widow who lost her significant other and child to a dust storm (Crowther 1). The young lady is confronted with a perpetual undertaking, to burrow sand for the villagers’ use. In any case, shockingly, this is her way of life; the main life she knows and is eager to bite the dust for. Having lived under such conditions for all intents and purposes as long as she can remember, she can manage Jumpei into acknowledgment. The representative centrality of this is to show the concurrence between two individuals from various foundations. Jumpei is an unpleasant, anxious man, while Kyoto is without a care in the world (Morris 1). Fascination After Jumpei’s a few bombed endeavors to get away, he starts to get consumed into the better approach forever. He understands that the young lady, from her experience, is his absolute best at endurance (Crowther 1). Afterward, they end up having a sexual fascination towards each

Sample on Age Discrimination in Employment

Sample on Age Discrimination in Employment Age Discrimination in Employment Sep 13, 2019 in Management Introduction Todays civilization is a world, in which young age is associated with being quicker, shrewder, more competent, more industrious, and being a less burden of the organization. Recently, the contemporary society has adopted the age discrimination against the older Americans in order to rationalize the economic and cost-effective requirements of the market, in general. Reaching an old age can become a disheartening experience because of the fear for further employment. The age discrimination in employment should not be an issue that an older person of the labor age has to fear; nevertheless, currently, it is one of the most popular forms of discrimination. This research paper analyzes the meaning of discrimination and age discrimination, in particular; the present-day laws concern the phenomenon of the age discrimination and the incidence of such discrimination. In addition, the paper explores some advantages and disadvantages of the older labor force, and some approaches to prevent any age discrimination at the working place. Age Discrimination at the Workplace Firstly, the notion of discrimination means depriving somebody of any benefits or rights because of subjective reasons such as race, sex, religion, age, etc. Discrimination considers the classes instead of the personal virtues. Several different types of discrimination can be seen at various workplaces, such as the ones of the gender, age, skin color, religious beliefs, country, and race. Specifically, the age discrimination refers to a biased or uneven treatment of a member of staff by an employer because of his or her age. Facing any kind of discrimination is a challenge, with which the workers have to fight. As employees become older, they join a vulnerable social group that has to be secured against any prejudicial or unjust treatment. The age factor can be the basis in the court of law for a harassment claim. Nevertheless, the United States Supreme Court failed to rule whether a worker can go to court for the age harassment under the Age Discrimination in Employment Act or not. However, the federal appellate and trial courts have reported that a claim for the age harassment does exist in the judicial context. Chat now Order now Today, the number of the age harassment claims increases due to a workers age-biased remarks by the management and colleagues. The worker provides the remarks as the evidence that the age was the reason for the hostile environment and prejudiced decisions. Even if the workers do not claim the age harassment, they can employ it in order to prove that the employer was unfair because of the age prejudice. The Current Laws on the Age Discrimination According to AARP (2014), the Age Discrimination in Employment Act (ADEA) is a federal law that protects the employees rights in any organization. Additionally, the law covers all the job applicants of forty and above age from the age discrimination. The Act considers the people of all ages and allows setting the particular age frames and other qualities of the applicants, which meet the Act's demands. The Age Discrimination in Employment Act is not applied to the elected bureaucrats, autonomous contractors, and military staff (Morgeson, Reider, Campion, Bull, 2008). Moreover, the law does not consider employers with more than twenty employees, public service organizations, federal bodies, state and local administration, as well as labor organizations having at least twenty-five exceptions (AARP, 2014). Protection and Benefits of the Laws As stated by AARP (2014), the Age Discrimination in Employment Act prohibits any age discrimination in decisions regarding numerous issues: contracting, dismissal, layoffs, remuneration, welfares, promotions, demotions, performance appraisals, or any other affairs at the workplace. Under the Age Discrimination in Employment Act, organizations cannot use the age factor in hiring or firing employees or name a specific age is perfect in their job advertisements. It is a debatable but not an unlawful issue to request the birthdate or graduation year in the job application. On the other hand, the companies cannot set the age restrictions for the training platforms, strike back against the employees who file charges because of age discrimination, and forcing the employees retire at specific age (Henry Jennings, 2004). The law also forbids issuing any rules and regulations that can have a negative impact on the older personnel; most of them seem to be age-neutral although being more austerely on the aged employees. An illustration is a school that claims it will never employ teachers with over-twenty-years work experience. The rules and activities that have an unreasonably negative effect on the older employees are illegal unless the employer can confirm they target the goal other than the age discrimination. Besides, the Age Discrimination in Employment Act provides people with the chance to take part in the employers benefit plans considering the age aspect (U.S. Equal Employment Opportunity Commission, n. d.). The companys management also can never decrease the benefits taking age as the decisive factor, except in the case the cost of offering the benefit increases with age. Under these circumstances, the employer must spend the same cost for giving the welfares to the older employees as it does for the young personnel in order to adhere to the Age Discrimination in Employment Act. For instance, the cost of giving life insurance rises with the age; therefore, an employer does not infringe the Age Discrimination in Employment Act if the company spends the same amount of money to purchase the same life insurance for young and old employees despite the younger workers getting greater coverage for the same premium. In line with AARP (2014), it is unlawful to discriminate people on the basis of their age at the workplace and any public service. The instances of discrimination can include unpleasant remarks concerning someones age. Even though the law does not criminalize simple teasing, casual remarks, or rare cases of a middle character, harassment is unlawful when it is so recurrent or humiliating that it creates an aggressive or hostile working atmosphere. The harasser can be the casualty's manager, co-worker, and other people, for example, a customer, as well as a companys policy meant for everybody, irrespective of age. Therefore, any harassment is unlawful if it has an undesirable impact on the workers and focuses on any subjective classification (Henry Jennings, 2004). Todays Age Discrimination Prevalence AARP (2014) states that the age discrimination at the workplace becomes a complicated challenge to most workers; therefore, it should be effectively addressed as soon as possible. The cases of the age discrimination were reported during the Great Recession. Even today, it is rather challenging to win a filed complaint on the concern. However, several ways can be applied to solve the case. The age discrimination has developed into a global concern that influences the effectiveness at the workplace. A number of companies prefer younger employees to work in their organizations, believing that they will ensure better production and will strive for stiff competition. On the other hand, some organizations prefer older workers since, as a rule, they are more knowledgeable and committed employees. Although the older employees may be somewhat maltreated, the today's philosophy proves that the younger employees are shrewder and focused on the success. With the older workers in play, the organizations have discovered the fact that, as a person gets older, his or her productivity decreases for numerous reasons with the key cause being age. Organizations also have to spend a lot on the older workers because of the frequent health concerns. They consider that an older employee will have higher rates of truancy and revenue while performing at the lower levels as compared to their younger colleagues. Advantages and Disadvantages of the Older Workforce Ivancevich and Konopaske (2013) pay attention to the application of Human Resource Management methodologies in the existent organizational situations and states. First of all, the primary advantage is that the older workforce is more skilled because they might have been working for the company for a long period; consequently, they have the valuable background and skills. Older employees seem to have bigger salaries and better welfares; therefore, some organizations choose younger employees since they are more economical. Ivancevich and Konopaske (2013) consider this situation the wage discrimination practice, which costs the organizations time and money since it leads to decreased productivity and quality. .fod-banner { display: table; width: 100%; height: 100px; background-color: #04b5af; background-image: url('/images/banners/fod-banner-bg-1.png'), url('/images/banners/fod-banner-bg-2.png'); background-position: left center, right center; background-repeat: no-repeat; } .fod-banner .button { min-width: 120px; } .fod-banner-content { height: 100px; display: table-cell; vertical-align: middle; color: #ffffff; width: 100%; text-align: center; padding-top: 5px; padding-bottom: 5px; } .fod-banner-content > span:first-child { font-size: 15px; font-weight: 100; } .fod-banner-content-discount-text { font-size: 16px; } .fod-banner-content-discount-text span { font-size: 18px; color: #ffe98f; font-weight: bold; } .fod-banner-content-image { vertical-align: middle; } .fod-banner img.fod-banner-content-image { width: auto; } @media all and (min-width: 993px) and (max-width: 1320px) { .fod-banner { background-image: none; } } @media all and (min-width: 845px) and (max-width: 992px) { .fod-banner-content > span:first-child { font-size: 18px; } .fod-banner-content-discount-text { font-size: 20px; } .fod-banner-content-discount-text span { font-size: 24px; } } @media all and (max-width: 740px) { .fod-banner { background-image: url('/images/banners/fod-banner-bg-2.png'); background-position: right center; background-repeat: no-repeat; } } @media all and (max-width: 670px) { .fod-banner { background-image: none; } .fod-banner-content { padding: 15px 10px; } .fod-banner img, .fod-banner-content-discount-text { display: block; margin: 0 auto; } .fod-banner-content > span:first-child { font-size: 28px; } .fod-banner-content-discount-text { font-size: 20px; } .fod-banner-content-discount-text span { font-size: 24px; } } Limited time offer! Get 15% OFF your first order Order now The older employees usually follow the idea that the tasks have to be performed completely and flawlessly in order to get an effective result. The workers have to be practical in their job; they pledge their loyalty and commitment to the company. On the other hand, other companies desire younger workers because they strive for excellence, and always desire to make a good impression, and have a motivation to establish a new life in their households. As a result, the youngsters are inexpensive and flexible workers; their readiness and willingness to learn new for the improvement of their life conditions. Sometimes, the younger personnel are discriminated against by the older employees because of their inexperience and recent graduation from schools or colleges. The younger workers can easier acclimatize in the working atmosphere and acquire knowledge in the modern technology if some organizational training are performed. The Methods of Preventing the Age Discrimination at the Workplace Ivancevich and Konopaske (2013) explore the managerial orientation, supporting the consideration that the Human Resource Management is crucial for the managers in all units, teams, or groups. The organizations can take some actions in order to ensure that the age discrimination is not a challenge in any company units; for example, it can prepare some training concerning the age discrimination as a growing concern for the modern business world. In addition, the management should re-evaluate the approaches towards the older employees at the workplace and review the corporate policies, training programs, recruiting techniques, and assessments in order to avoid any prejudiced considerations and consequences. Moreover, the companies should consider the implementation of the preventative trainings on the age bias, conducting an audit for evaluating the organization's culture and discover how the staff feels about the older employees and how those ideas influence the workplace. The companies should launch the new strategies to involve the older adult personnel and build moral and effective production schemes by proving the older employees that they are valued. Conclusion In conclusion, the workers frequently undergo common challenging problems in the Human Resource Management like recruitment, training, efficiency, and job security, as well as the conflict resolution. It is very challenging to eliminate discrimination from the labor market since each organization has diverse groups of employees with different features. The age discrimination at the workplace and some of the seeming advantages and disadvantages of an older labor force calls for the need to mitigate the condition as soon as possible. In addition, the approaches discussed are strongly recommended for the companies that aim at successful production and workers satisfaction. Therefore, the employers should understand the meaning of the age discrimination phenomenon and be aware of the laws. Moreover, they should change their outlooks accordingly. Under the Age Discrimination in Employment Act, the company employees have access to the employers benefit plans owing to their age.

Its because they are human beings - 1891 Words

Sitting down at Barnes and Noble, or Starbucks, with a coffee and a tasty blueberry muffin, doesn’t seem so complicated. A problem that might arise, is there an electrical plug nearby to plug in the lab top just in case the battery gets low on power? Simple enough, the coffee is just right and the internet is up and running. What better morning could there be? Such simple freedoms everyone takes for granted, never a second thought to whether this is allowed? Who can purchase food and drink here? Is the color of my skin the right color? Stopping to consider what are my civil rights? How did we get here, a point in time where an individual has civil rights? Looking back do we realize the hard work of those who stood up to injustice†¦show more content†¦From the point of the first Africans arriving in the America’s, as slaves, up to King’s tireless work for change, they knew â€Å"through painful experience that freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed.† (224) King was doing just that, demanding the world’s attention, because â€Å"oppressed people cannot remain oppressed forever. The yearning for freedom eventually manifests itself, and that is what has happened to the American Negro. Something within has reminded him of his birthright for freedom, and something without has reminded him that it can be gained.† (230) King took time and was careful with the details when he wrote the â€Å"Letter from Birmingham Jail†. So, whose fault was it? Who was most responsible for the oppression of the African-Americans? King concluded the white moderate, the middle class, was the reason. They needed their orderly lives to stay unchanged. They were so use to doing what they wanted, which included segregation. King’s letter noted his disappointment â€Å"with the white moderate.† (227) King had â€Å"reached the regrettable conclusion that the Negro’s great stumbling block in his stride toward freedom† was the â€Å"white moderate† who was â€Å"more devoted to â€Å"order† than to justice; who prefers a negative peace which is the absence of tension to a positive peace which is the presence of justice; who constantly says, â€Å"I agree with you in the goal you seek, but I cannot agree withShow MoreRelatedArtificial Intelligence And Human Intelligence 1312 Words   |  6 Pagesmachines displaying it’s own intelligence. The practical uses for computers making their own decisions is a very important technology to develop, because this would allow the deployment of robots in environments too harsh for humans to brave, such as other planets, or even war zones. 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Somalia at War Essay - 995 Words

Africa is a rich continent with an abundance of resources, diverse cultures, exotic people and exciting traditions, yet it seems as though it is perpetually facing armed conflict (Lukunka, 2012). Of the conflicts Africa is facing currently, Somalia is the center for some of the largest conflicts. The history of Somalia has been hit with conflict after conflict, not only between rival clans but also with other countries, most recently between not only regional powers but also the US and Al-Qaida. The current conflict in Somalia differs from the rest due to the number and type of players involved; the large numbers of foreign players involved in local affairs and the role radical Islam is playing in the conflict. With most of the†¦show more content†¦interest. Among those are oil and global trade, maritime security, armed conflicts and violent extremist that are tied to radical Islamic views like al-Qaeda. With protecting the homeland being one of the U.S. top priorities Al-Qaeda and their sympathizers are their number one concern. U.S. interest in Somalia has shifted back and forth over the decades with changing security and strategic interest. Currently U.S. interest in Somalia range from piracy, trade, humanitarian issues, broader regional stability and terrorism, with the principle interest to the U.S since 9/11 being terrorism. With extremist such as youth militants and Al- Shabaab clearly stating their jihadist intentions and abundant opportunity to cause disorder both in Somalia and abroad, the international community is left wondering if these insurgent groups have the long term means to implement their religious visions or whether the government, with or without help, will be able to fight them. 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(Funk Wagnalls, 1900) Ancient structures, ruined cities, and stone wa lls found in Somalia, is evidence of a country that once thrived with a sophisticated civilization (p. 132). Somalia is a country that was once known for its rich geographical location located near oil wells in the Persian Gulf and a mainstream for internationalRead MoreSomalia vs. Us1573 Words   |  7 PagesSomalia vs United States Somalia, which is about the size of Texas, is a small country located in Eastern Africa next to the Indian Ocean. The United States, which is located on the Western Hemisphere, is bordered by Mexico and Canada and is between the Pacific and Atlantic Oceans. Separated not only by the Atlantic Ocean, Somalia and the United States are also separated by the differences in economies and populations. These two countries that are quite opposite in size have some similaritiesRead MoreThe Spread of Urbanization in the World Essay examples864 Words   |  4 Pagesbe said for developing countries like Somalia. The purpose of urbanization is drive the economic development, innovations, jobs, and modernize living conditions. Urban cities can have disadvantages also like over population, elimination of some cultural traditions, and pollution. Urbanization requires a strong government and military or police system. Somalia was once a beautiful country but it was destroyed by war and weak government regulation. In 1991 Somalia government began to crumble and lostRead More20th Century Somalia1656 Words   |  7 Pages20th Century Somalia Somalia is a country located in the Horn of Africa. It is bordered by Ethiopia to the west, Djibouti to the northwest, Kenya to the southwest, the Gulf of Aden to the north, and the Indian Ocean to the east. With the longest coastline on the continent, its terrain consists mainly of plateaus, plains, and highlands. It is made up of the former British Protectorate of Somaliland and Italy’s former Trust Territory of Somalia. Somalia’s modern history began in the late 1800’sRead MoreWar or Peace? Essays1496 Words   |  6 PagesIf you think about war and then think about peace is war really all that bad? Without wars there would basically be no human life because no one would have anything really. Wars are defiantly not all good but they are also not all bad if there are not a bunch of them. A successful war in transition to peace was the Guatemalan war of 1960-1996 because they are still living in a bit peaceful country today but are making major progress. An example of an unsuccessful war in transition to peace is the

Moral Permissibility of Torture Free Essays

To most, torture is seen as action with a single definition that defines it, but in fact there are different types of torture that Henry Shue discusses in one of his articles. According to Shue there are rare conditions under which torture could be morally justified, but he does not endorse neither the interrogational torture not the terroristic torture. Although Shue agrees with illegality and morally wrongness of torture, he explains how one may go about defending torture and how it could possibly be morally justified. We will write a custom essay sample on Moral Permissibility of Torture or any similar topic only for you Order Now Henry Shue begins his article discussing torture with constraints which allows the victim to â€Å"surrender† and comply with the demands of the torturer. According to the Constraint of Possible Compliance (CPC), â€Å"the victim of torture must have available an act of compliance which, if performed, will end the torture† (Shue 427). With the aim of interrogational torture being to extract information from a person with holding it, this torture appears to satisfy the constraint of possible compliance, since it offers an escape, in the form of providing the information wanted by the torturers, which affords some protection against further assault. In practice there are evidently only a few pure cases of interrogational torture. For the most dominant type of torture that occurs today is considered to be terroristic. Terroristic torture is meant to put fear in not only the victim, but also all those who oppose that government. The victim’s suffering is being used as a means to end over which the victim has no control over. Terroristic torture cannot satisfy the constraint of possible compliance because its purpose, intimidation of persons other than the victim of the torture, cannot be accomplished and may not even be capable of being influenced by the victim of the torture. If terroristic torture were actually to be justified, the conditions would of course have to be met. The first condition Shue defines is the purpose being sought through the torture would need to be not only morally good, but also supremely important. These purposes would then have to be selected by criteria of moral importance which would themselves need to be justified. The second condition described is that the torture would presumably have to be the least harmful means of accomplishing the supreme goal. With the terrible pain and harm that is associated with terroristic torture, this condition could rarely be the case in this type of torture. The last condition Shue defines is it must be absolutely clear for what purpose the erroristic torture was being used, what would constitute achievement of that purpose, and when the torture would end. Henry Shue believes these three conditions will never be met primarily because terroristic torture tends to become a routine procedure in methods of governing and once it is set in motion by that government it would gain enough momentum to become a standard operating procedure within the government. Shue also describes how governments to choose to try and prove themselves to other nations, over eliminating themselves from the fight. How to cite Moral Permissibility of Torture, Essay examples

The Crucible in 1953 Essay Example For Students

The Crucible in 1953 Essay When Arthur Miller wrote the play, The Crucible in 1953 the contemporary audience could relate to the play due to the media coverage that was occurring at the time. This era was concerned with the political movement communism, for example the McCarthy trials. These were court hearings where people were accused of being involved with communism. Millers play was seen by the contemporary audience as relevant because of the effects of mass hysteria- the destruction of the community in Salem. Miller felt that the play had relevance although he didnt no write it for that. The play is set in Salem, Massachusetts, involving a small community of Puritans. Puritans lived by the Bible and believed if you followed the teachings you were assured a place in heaven. The Puritans in the play have fled England from fear of prosecution. They fear for their lives because they have contradicted the Church of England. The Puritans accused the church of being too extravagant, such as the windows and the decoration being too bright and distracting. They also disapproved of the church being run by the King and not by the people. Arthur Miller based the play on real evidence he collected from the transcripts of the Salem witch trials. Therefore he was able to base his main characters, the Proctors, on an actual couple who were tried for witchcraft. Two of the plays main themes, which run throughout, are honesty and deceit, and the easily spread mass hysteria. We first see the use of deceit in the opening scenes and both of them involve Abigail Williams. This is shown when she is having a passionate word with John Proctor, I know you, John. I know you. This seemingly innocent sentence has a hidden meaning, if she knows John Procter she is using the biblical term, which means that she has had an affair with him. This shows her being deceitful due to the fact she has slept with a married man, and hasnt told anyone about it. We also see her lying to others, for example when she is cornered and questioned by Parris regarding the events in the wood she says not I sir, Tituba and Ruth this lying is obvious as the audience is well aware that she was involved. John Procter seems dishonest at the beginning of the play, but this is not continued through the remainder. The audiences emotion towards him change dramatically when we find out he has told his wife that he has committed adultery. This shows very clearly that he is honest because he wants so save his marriage to Elizabeth, and has sacrificed a great deal by telling her about the affair. The wide spread hysteria is shown at many points in the play but the majority is to do with the girls in the village and their performances when accusing people of witchcraft. When one of the girls pretends to shiver the rest copy and  the whole effect must be extremely terrifying to the person being accused. In the yellow bird scene as soon as Abigail pretends to see a small bird high up in the rafters of the courthouse all of the girls start screaming and pointing this clearly outline the rapid spread of the hysteria. The judges and the other people present in court, all start to look for the small creature. When we first see Abigail Williams in Act One the audience can see through the innocent and pure girl that she wants to be portrayed as, because they can see her sinister and bossy ways. Now look you, and Ill make you wish youd never seen the sun go down. She engages the audience emotions by being the character everyone loves to hate. She seems to be the evil person in the play to represent Satan. Arthur Miller has used stage directions excellently, when Abigail is talking, an icy tone and with a flash of anger really helps us picture Abigail as a spoilt girl who likes to get her way, no matter what she does. This character remains deceitful throughout the play so the audiences emotions do not change towards her. Though we do feel sympathetic towards here when her uncle is constantly questioning her about the events in the wood. Romeo Juliet Act 3 Scene 5 EssayThe audiences emotions are played with dramatically at the end of each chapter. At the end of act one, the tension is high because the girls have just accused  certain people in the village of being witches. I saw Goody Hawkins with the devil! I saw Goody Bibber with the devil! I saw Goody Booth with the devil! This builds up the tension due to its short snappy sentence structure and repetition. In the second act the end again is full of drama as Abigail accuses Elizabeth of witchcraft, and Johns true love for Elizabeth is shown, I will bring you home, I will bring you soon. In the last part of act three John is double-crossed by Mary. She says that Proctor is in league with the devil, he wake me every night, his eyes were like coals and his fingers claw my neck, and I sign, I signà ¢Ã¢â€š ¬Ã‚ ¦ The audience is stunned at this revelation of Mary Warren. When she was supposed to be against Abigail and the other girls, she has changed and gone running back to them these again shows deceit amongst the characters. In the final chapter the tension is feverishly high throughout but nevermore so then in the last five pages. John Proctor goes against all of his morals and lies to save his life. He is about to hand Danforth the written confession but will not part with it I have confessed myself! God does not need my name nailed upon the church! God sees my name; God knows how black my sins are! It is enough! This makes the audience realise how courageous and brave John Proctor is. It also presents to us how Holy he is, by saying, God knows this shows the audience that Proctor believes God knows he is innocent and therefore all knowing, like the Bible states. This is when the audience emotions are engaged to the play the most because we feel sympathetic to John Proctor for needing to die for his beliefs and being accused of something that he is so opposed to. The tension reaches a dramatic climax towards the end of the play when Miller uses dramatic irony to great affect. Elizabeth is called into the courthouse to announce her husband a lecher, we know that John has admitted to it, but Elizabeth doesnt. It is ironic that the audience knows something that the characters in the play dont. This scene had a gradual build up and you know something sensational is about to happen; Elizabeth the woman who cannot lie, does lie. When she clearly states to all of the court that her husband is not a lecher, she has lied thus putting her husband in great danger and compromising Christian ideas. Having discussed the many ways in which Miller engages the audience I believe he has accomplished this successfully through his use of many techniques including stage directions dramatic irony and the use of characters. He engages the audiences emotions effectively by building up tension throughout the play and reaching a climax in the final chapter. By doing this he allows the audience to become  involved in the play and the characters situations.

Gattaca Why Vincent Has Exceeded His Potential Essay Example

Gattaca Why Vincent Has Exceeded His Potential Paper Gattaca is a science fiction film written and directed by Andrew Niccol. It is about a mans struggle to follow his dream despite being pre-determined by the society in which he lives to not be able to achieve it. Gattaca shows that people can in fact exceed the potential that society and their genes place on them. This is seen in the characters of Vincent and Director Joseph who both exceed their expected potential. Director Josephs claim that humans cannot exceed their potential when referring to the navigators at Gattaca is clearly false because Vincent and has infact exceeded his potential. Vincent is concieved naturally without the help of genetic engineering technology which gives geneticists the ability to choose, what genes they want to keep in the fetus and what genes they want to eliminate based on the parents choice and budget. Because he is concieved naturally which is considered an unorthodox form of reproduction by Vincents society, he is born with a high probability of many genetic problems and defects such as manic depression, attention deficit disorder, heart disorder, myopia and is born with a life expectancy of 30. years. As Vincent grows older he falls in love with the cosmos and decides to pursue a career in space but is quickly rebuked by his parents because of his inferior genetic characteristics specifically his heart disorder. Despite this negative feedback from his parents he decides to apply at Gattaca hoping that he wont be discriminated against because of his genetic profile. However Vincents hope shatters as his application is declined, and is forced to work as a cleaner at Gattaca. We will write a custom essay sample on Gattaca Why Vincent Has Exceeded His Potential specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Gattaca Why Vincent Has Exceeded His Potential specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Gattaca Why Vincent Has Exceeded His Potential specifically for you FOR ONLY $16.38 $13.9/page Hire Writer When his fellow workmate asks him why he cleans the screen immacutely he responds arrogantly by saying If the glass is clean, itll be easier for you to see me when im on the other side of it. Because he is not following his dream, Vincent decides to become a barrowed ladder which is a person who uses the genetic identity of another for a purpose such as getting a particular job or in Vincents case getting into Gattaca. Vincent borrows the indentity of Jerome Morrow a professional swimmer born genetically engineered up to perfection. Jerome has been hit by a moving vechicle which has paralyzed him from the waist down and thus making him unable to swim anymore. Jerome Morrow supplies Vincent with blood, urine, hair and skin samples so that he is able to get into Gattaca. Vincent passes the interview which is a urine test, and quickly becomes one of Gattacas elite navigators and achieves his dream of going to space, despite being born with genes that pre-determined him to be lower and inferior member of society, he manages to chieve the impossible getting into a prestigious space academy and achieves his dream of becoming a space navigator. Vincent however is not the only one who has exceeded his genetic potential. In the society in which Vincent lives, the elite or the people with the perfect genome are considered to be not only genetically perfect but also morally perfect. An example of this is depicted vividly in the movie when Vincents eyebrow sample containing invalid genes is found near the crime of the murderer mission director. Vincent is quickly regarded as the main suspect in the crime simply because is an invalid a person born naturally through sexual intercourse. The assumption that is made is that people who are valids or people who have perfect genes cannot commit an imperfect immoral act such as murder and therefore the main suspect has to be by definition an invalid. This assumption however is false because the person responsible for the murder turns out to be Director Joseph himself. Director Joseph is a good example of a person who exceeds his potential by comiting an act of murder. Before Joseph is convincted of murder and while he was being questioned he told the detectives that There isnt a violent bone in my body which is a classic manifestation of what how Vincents society views people with perfect genes as morally perfect people. Because Direct Joseph has in a sense rebelled against his genes (assuming that morality is a genetic characteristic) he has exceeded his potential and proves that perfect genes does not necessarily equal high rectitude. In conclusion, the film Gattaca shows that people can and do exceed their potential. This is seen in the characters of Director Joseph and Vincent who both exceed the potential that society has given them. Vicent exceed his potential by getting into Gattaca even though he is born genetically inferior and considered a lower class member of society while Director Joseph exceeds his potential by commiting the act of murder which is not expected and not programmed in his genes.

Why Every CoSchedule Employee Gives A Book Report - CoSchedule

Why Every Employee Gives A Book Report If you work at , you’ve done a book report in front of the entire team. Yes, a book report. Just like the kind that you used to do in the fourth grade in front of the entire class. Why? It’s already a fairly common practice among startups to assign new hires a book or two to read once they join the team. For us, however, there is one book that is just so special that we need to follow up and make sure they’ve read it. At , that book is Linchpin by Seth Godin. Here’s why. How Linchpin Turned Me Into An Entrepreneur Linchpin is an important book for me on a very personal level. I read it at a critical time during my career. I was working at a small advertising agency and felt like nothing more than a cog in a wheel. It certainly didn’t feel like my work was â€Å"art† and I certainly didn’t feel like I had the permission to do something else. I was stuck. For me, Linchpin was a wakeup call. In his book, Seth Godin outlines a few key perspectives: All work is art. The linchpin is indispensable because they ship. The first step is to give yourself permission. The key point for me was the third theme: permission. Up until that point in my career, I hadn’t given myself the permission to not be a cog. I was stuck in world where cogs were appreciated and artists weren’t. I needed a wakeup call to leave my job, start a business, and relentlessly pursue my art. Five years later, after giving myself permission and working my tail off, my art is now 100% activated in , and the lessons learned from Seth continue to pay off. They mean a lot to me, and they are something that  I like to share with our entire team. So, we require all team members to read the book within their first 90 days of work, and give a book report on what they’ve learned. It’s has become a happy tradition. The Business Case For  Requiring Book Reports From Your Team So, why should you require a book report for members of your team? Well, here are five of the major benefits that our team has realized from this quirky practice. 1. It Helps Us Foster A Consistent Culture Startup culture is frequently (and mistakenly) defined by the Xbox or PlayStation in the break room. At , we don’t have any gaming consoles in our break room. Rather, we define ourselves by the core principles of the company: Maintain a Passion for Product Think Big Hold a Bias for Action Never Settle Every Customer Matters Trust in your Team While the book Linchpin doesn’t specifically address all of these values, it goes a long way in doing so.  By doing company book reports, I believe we have found a scalable way to instill some of these values in our team members, and ensures that it stays in place no matter how much we grow. Company book reports create a scalable way to instill your core values across all team members.Core values like â€Å"maintain a passion for product† or â€Å"never settle† build off of the concept of our work as art, whereas â€Å"hold a bias for action† encapsulates Godin’s concept of shipping.  I could easily make an argument for how each of these values relates to a principle in the book, so it’s really ideal preparation for working at . 2. It Enables a Culture  of Shipping One of my favorite themes of Linchpin is the constant encouragement to ship the project that you have been working (or sitting) on. In the book, Seth outlines the force against shipping as the â€Å"lizard brain.† The lizard brain is a negative fear-monger that prevents us from reaching our potential. As a startup, however, â€Å"shipping† is literally our most important job. We have to learn how to outsmart our lizard brain and beat the fear that will keep us from starting and creating something new. New blog content, new features, new ideas in action, and crazy marketing experiments are essential to a startups survival. It is essential to your startup’s survival that you keep shipping. Never fear failure! #startupOne of my favorite questions to challenge our teams with is â€Å"what can you ship today.† Sometimes this involves breaking a larger project down into smaller pieces, and other times it means pressing publish on a product or idea that we are hesitating on, just to see what happens. Either way, equipping our team members with a mentality of shipping keeps us running like a startup. Fast, willing to take risks, and even more important, willing to learn from our mistakes and move forward. 3. It’s A Reminder That Work Is Art The concept that â€Å"all work is art† is usually the hardest to accept by new team members. We’ve been taught that art is something you do with paint or musical instruments, but Seth makes the argument that human output, whatever it might be, is our art. This could be writing, customer service, code, or actually painting, but the medium doesn’t matter. The art is the delivery of your unique gift to the world. Art is the delivery of your unique gift to the world @garrett_moonArt is much more about doing the best work that you were created and enabled to do than it is about any specific method. This makes it a universally valuable concept for anyone who joins our team. 4. It’s A Shared Experience As a leader, I believe that one of my jobs is to create shared experiences for our team. Shared experience build teams, by giving everyone something in common. Knowing that every team member before you has completed the same task is valuable, and gives everyone that works with us common ground and a shared experience to lean on. This is a small but powerful team building tool. The book report process also teaches us something about our newest team members. It builds connections, and that is always a good thing. 5. It’s A Tradition This may seem simple, but reading Linchpin and doing a book report is just a tradition around here. Justin and I have required it since we started our first company in 2010, and the tradition has stuck. Now, it is one of those things that makes , , and that’s a good thing. Do you have any traditions in your startup? If not, maybe it’s time to add a â€Å"company book report† to your on-boarding checklist. Is a book report program right for you? â€Å"Linchpin thinking† obviously has a lot to do with our team here at , but I understand that it may not be right for you. Chances are, however, that some book would be a good fit. What book could your team adopt as a company read? It’s worth noting that many of these same benefits I outlined above could be accomplished at any time during your company's life cycle. Even if you’re no longer a startup, pick a book or a take a vote, and read it together as a company. Conclude this process with a verbal book report by each participant and pass the tradition down to all of your new hires. You’ll be glad you did! Maybe you already have a â€Å"company book† and you just need to add the book report portion. If so, here’s a breakdown of how we do this for our team. You can also download our pre-built worksheet that will work you through the entire book report process top to bottom. How Runs Its Book Report Program Every team member is supplied with a complementary copy of Linchpin on day one. If they prefer a Kindle or audio version of the book, we will also provide that upon request. Team members are give 90 days to complete the book, but they aren’t allowed to consider it completed until performing a formal â€Å"book report† in front of the entire team. We follow up on this requirement during our mandatory 90 day review to keep everyone honest. Once team members are ready to give their book report, they are giving a standard format of three questions that they must answer. I’ve included these questions in the pre-built worksheet that you can download here. Book reports are verbal and usually last between two and five minutes during our weekly all-hands meetings. In some cases we do accept written versions of the book report as well. Once a book report is complete we all clap and provide a bit of encouragement to the person giving the book report. As a prize, they also get a sticker of their choice from our bag of stickers – usually well stocked with unique selections from StickerMule or other places. The Final Case For a Company Book Report: It’s Fun Having every employee complete a book report is unique and memorable. In all honestly, it’s fun. I love hearing our team’s thoughts and comments about the book, even from a few people who didn’t like it all that much. The diversity of opinions and interpretations is always fascinating, and helps me understand the people I work with every day. We   always learn a thing or two about he people we work with, and that’s definitely a good thing.

Lucozade Company International Expansion Essay Example | Topics and Well Written Essays - 2500 words

Lucozade Company International Expansion - Essay Example Introduction Lucozade Company is a trademark name that is used to encompass a series of sports energy drinks, which are produced by the GlaxoSmithKline Company. The energy drink alongside Ribena is currently being produced in Royal Forest Factory in  Cole ford,  Gloucestershire, in the  Forest of Dean. Although Lucozade is presently known as Lucozade Energy, it was previously branded Lucozade. The drink contains a series of flavors, which depend with the taste, and preference of the individual consumer. It contains a series of still, fruit based, isotonic energy drinks, which are designed mainly for use to the original Lucozade sport and other physically demanding activities. Moreover, the company has developed a brand known as Lucozade sport lite, which is a sugar free substance and was launched in 2011 mainly for diabetic people. Other flavors that come along with this drinks include, Orange, Raspberry, Tropical, Cherry, Lite- Orange, Lite- Lemon & Lime, and Lite- Cherry. Bac kground Lucozade Company was started in 1953 in Brent ford, England. However, William Owe, a chemical analyst from Newcastle-Upon-Tyne, started the events that started the company in 1927. Owen’s original idea was to come up with a soft drink that would be primarily used by ailing patients to boost their energy. The product was marketed in UK under the brand name Glucozade but later, the product was rebranded to Lucozade. The company has rebranded severally since then, which has been informed by several breakthrough insights by consumer psychologist Roy Langmaid, who recognized that there was a need to shift the brand's associations away from illness and towards empowerment. Expanding In Saudi Arabia and Saudi Drink Sector Lucozade Company is a major sponsor of events and sports globally. The company also sponsors various athletes in different sports. The recommendation by most countries has cautioned the company not to exceed 700k Cal per liter and 0.01% ethanol. This has ma de the energy drink to be forbidden in most Muslim countries. However, the Muslim council made a ruling that it would be religiously safe to use the energy drink. However, it is recommended for people to take Lucozade in case they are suffering from diarrhea. This is because during this condition, a great deal of fluid and electrolytes are lost from the body. However, it is scientifically claimed that the drink does not contain enough electrolytes to be suitable for electrolyte replacement. The sports and energy drink industry in Saudi Arabia can be analyzed and depicted well according to the Porters Five Forces Model. Porters Five Forces Model is arguable the most important tool for analysis since it is based on fundamentals of competitive advantage. The model deals with forces outside the model which influences the nature of competition in the industry, which is the microenvironment and so, the industries likely profitability (Ekeledo, 2003, p.68). The Saudi Marketing Environment Lucozade Company has to understand the dynamics of the industry and the Saudi Arabian market in order to compete favorably and effectively in the marketplace. This model describes the forces, which describe the forces that drive competition (Madsen & Servais, 1997, p. 561). These forces include rivalry between existing sellers, influence of consumers on the market, seller-supplier influence, the potential threat of new market entrants as well as threat of substitute products (Zahra

A personal statement for master Essay Example | Topics and Well Written Essays - 750 words

A personal statement for master - Essay Example I was usually the winner, because I could always rely on my calculations to win the large majority of overall rounds in the long term. This sense of winning from the poker games stimulated my interest in studying the relevant courses of statistics even further. However, I do not believe that this use of statistics would be good for actual gambling, because if I was not doing it just to entertain friends I would lose the objectivity needed for the calculations. Statistics is still full of barriers for non-professionals to read or understand. This is obvious from Mark Twains famous quote, â€Å"There are three kinds of lies: lies, damned lies, and statistics†. In my opinion, non-professional people may be surprised or even feel cheated if a 95% probability failed, so a 99% significant level may be something they would accept more easily. However, despite peoples lack of trust in the reliability of statistics, they really do need a reliable probability or statistics result to help them make the sensible choice when confused or unsure. I met with just this kind of problem during my two periods of internship. I was a three-month part-time cleaner of Runnymede campus in the summer of 2007. At the end of each term, all rooms need to be cleaned, so the workload available determines the number of full-time workers. During summer holidays, there are many European students who would come for their short vacations on campus. Thus, some part-time cleaners are needed to deal with the increased workload. However, the number of European students is variable, and the campus doesn’t start these employees appointments several months before their arrival. Even by employing part-time cleaners, the campus couldn’t catch up with the sudden increase of cleaning work. Many rooms couldn’t be cleaned on time, so the campus had to reduce the amount of students that were received. I was interested in this problem, which was quite similar to a question

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