Behavioralism & Political Science

The field of Political Science is a field that is rich in issues and knowledge. It contains many issues that may be subject of inquiry. In this field, many queries have been made and many researches have been performed. The years have shown an evolution of research processes involving many different methods and approaches, targeting different goals, and focusing on different aspects of an issue.One of the most popular of these approaches is the behavioralist approach. The behavioralist approach has been used in many inquiries in Political Science and has been subject of analyses of many scholarly works pertaining to the field.In this essay, I will examine two of such works. The first of them is David Sanders â€Å"Behaviouralism†; and the second is Robert A Dahl’s â€Å"The Behavioral Approach in Political Science: Epitaph for a Monument to a Successful Protest†. David Sanders’ â€Å"Behaviouralism† is a quick look at some of the important concepts involved in behavioralist studies. This involves an examination of the core question â€Å"what do actors involved actually do and how can we best explain how they do it? † It emphasizes the quest of behavioralists for reliability and truth.This can be shown through the use of quantitative, in addition to qualitative, measures or statistical techniques, the attempt to explain all empirical evidence or at least a representative sample, and the requirement of falsifiability. It emphasizes on the criteria of being internally consistent, consistent with other theories explaining related phenomena and capable of generating empirical predictions. The article also delved on the criticisms thrown against behavioralism. Among these is the tendency to emphasize what can be easily measured and what can be easily observed.This results to a failure to comprehend the â€Å"big picture† because of the focus on smaller aspects of an issue that is capable of measurement. However, as th e Sanders wrote, this is not to say that â€Å"all examples of behavioral research are flawed†. Behavioral research has vast contributions to the understanding and explanation of social behavior.This strength, according to Sanders, is derived mainly from the â€Å"determination to pursue forms of analysis that are capable of replication†. On the other hand, Robert A. Dahl’s â€Å"The Behavioral Approach in Political Science: Epitaph for a Monument to a Successful Protest† is a historical and evolutionary account of the theory of behavioralism. It touches on the main concepts and ideas behind the theory, such as the main question involved in behavioral research, the scientific nature of its purpose, the goal of discovering uniformities and indicating the consequences of such patterns, and use of quantitative tools whenever possible (767). However, the article’s main focus is on how the approach has originated and evolved through time.According to Da hl, the behavioral approach was originally a â€Å"protest movement within political science†. It resulted from â€Å"a strong sense of dissatisfaction with the achievements of conventional political science†¦ and a belief that additional methods and approaches either existed or could be developed† (766). The article then goes on to discuss the reactions to the behavioral approach and its contributions in the field of research, especially in voting studies (769-770). It finished its discussion with a prediction of the future of behavioralism as a research approach in the field of political science.Dahl believes that, from being a movement of protest, the behavioralist approach will â€Å"slowly decay as a distinctive mood and outlook† and â€Å"will become, and in fact already is becoming, incorporated into the main body of the discipline,† thus marking its success as a research approach (p. 770). The introduction of behavioralism provided a good bri dge between the purely qualitative approach to social science research and the systematic, reliable and verifiable methodologies of quantitative research.It is undeniable fact that social science research is a complex arena where various actors, factors and circumstances interact to produce results that is often not uniform and regular, unlike in the field of hard science. Most factors are difficult to isolate and measure. Trends are difficult to establish and changes easy and research results have a higher margin of error. This is due to the fact that the subjects of social science research are mostly individuals or entities composed by individuals.This is why, for a very long time, most research methodologies in social science are too flexible and indefinite. The inherent difficulty of measuring social science phenomena prevented the field from developing a research methodology as rigid as that in the hard science. This difficulty is the reason why, despite the attempts to achieve the reliability of the scientific method, behavioralism remains to be mostly qualitative, thus using quantitative methods only when possible.While many people recognize the contribution of behavioralism in the field of political science, many people also throw criticism to its validity as a method. The main contribution of behavioralism that sets it apart from other approaches is also the source of these criticisms—measurability and verifiability. While these criticisms may actually true, they do not render behavioralism useless. The task of a researcher is not only to employ a research method and accept the results as it is. A good researcher knows that his data may be polluted or compounded.Due to the complexity of political science phenomena, a researcher should not only be able to identify and isolate the factors that should be measured, it should also know the other factors that may affect or even pollute the results of his research. He should know that his methods are not perfect and there is probability for mistakes. This is especially necessary in the field of political science where the possibility of compounding is high the opportunity to make a research that encompass all factors is low. Both Dahl’s and Sander’s articles are incomplete discussions of the Behavioralist approach.This is partly due to the fact they are only parts of a whole collection of articles in a book. Therefore, their goal is not actually to give a comprehensive discussion of behavioralism, but rather to give and discuss only a few of its aspects and main features. Their foci are only on certain aspects of the approach. Therefore, while the discussion may not be said to be exhaustive and comprehensive as regards behavioralism as the articles’ subject matter, they are exhaustive and comprehensive within their respective limits.First, Robert A. Dahl was able to provide a comprehensive presentation of the origin and development as an approach. He was abl e to identify the reason the approach was introduced and the factors that facilitated its growth. He was also able to note the changes that the approach has undertaken and some of its most notable contributions in research. It even provided a prediction of the future of behavioralism. On the other hand, David A. Sanders provided a very brief but complete discussion of the essence of behavioralism, including its strengths and weaknesses as a research approach.While the discussion is not too in-depth to the point of being technical, the discussion is sufficient for a person, even with a non-political science background to understand what behavioralism is and what sets it apart from other theories. The articles by both authors are well-supported. Dahl’s article was supported by specific facts in history that are cited to facilitate the discussion about the development of behavioralism. These facts and details show the quality of research that went into the work.Sanders’ a rticle, on the other hand, is supported by illustrations. Since the discussion is as regards relevant concepts, the approach is more of illustrating the dynamics of behavioral approach through the use of examples. As for the style of writing, Robert Dahl's article reaches more to the audience because of its style of writing. The use of the word â€Å"I† and the insertion of several personal insights while discussing hard facts contributed to the dynamic and smooth reading process that the reader may experience while reading the article.The paradox one may experience while reading is that, while the article tackles about development, something which may be done with just a recital of facts, Dahl was able to made the discussion something that is not a mere recital of facts, but an expression of his own insights. Therefore, the author avoided putting distance between him and his article and made the article his own. The audience of the article is those that belong to the field. This may be gleaned from the fact that the focus is on development and not on concepts.There is an assumption that the readers already have basic understanding of the theory of behavioralism, and can thus relate to what the author is saying. Such initial understanding of behavioralism is necessary for the reader to be able to relate to what the author is discussing and form a personal evaluation as regards the validity of the author's observation. Sanders' style of writing takes the opposite form of than of Dahl's. His is a more formal discussion of the concepts. His article is more appropriate for readers who are just being introduced to behavioralism.The discussion may be as formal as a discussion in political science may allow, but the language used is simple and easy to comprehend. It discussed behavioralism from its core concepts to the ideas which revolved around it such as scientific approach and quantitative research. Unlike Dahl, Sanders places a distance between him and hi s article by using a formal format in the discussion. Dahl and Sanders articles offer a comprehensive discussion of behavioralism. However, read apart, they are limited only as to their specific purposes—Dahl’s as to the development of behavioralism and Sanders’ as to the core concepts and ideas involved.All in all, both articles are satisfactory pieces about behavioralism. They are clear, concise and informative, without being too rigid and technical. They are straight to the point, elaborating only when needed. They are both useful, especially for new students of Political Science. References: Dahl, R. A. `The Behavioural Approach in Political Science: Epitaph for a Monument to a Successful Protest`, American Political Science Review, vol. 55, no. 4 (1961), pp 763-772.Sanders, David `Behaviouralism` in Marsh, David and Gerry Stoker, Theory and Methods in Political Science (Basingstoke: Palgrave, 2002) ch. 2..

Importance of Internet Essay

Books and libraries have long held a position of esteem and regard within civilized societies. Books are the stoic, unchanging witnesses of our past; ghosts in our social conscience; memories of dreamers and the pale laughter from jestered spirits of discontent and revolutionary ideas. Books are the intimate lovers of readers everywhere, beguiling and beckoning travel to places and situations that open the mind and create a foundry of glowing, shiny alloys melded with the brittle iron of the present. Books have the power to lift us from poverty, shift our thinking and empower the powerless with knowledge. This, of course, is why they must be burned, banned and limited to only the privileged. Book burning  has a lot of negative connotations that make many uncomfortable. Burning a book just any ol’ book, serves little purpose. In order to be effective libricide, or biblioclasm, must be supported with thoughtful selection, social responsibility and a healthy dollop of justice and righteous indignation. Before one starts brainstorming and making a list of books to burn for a Church agape group or disciple project, consideration of the recommended code of conduct from international  Memory Hole  experts is helpful. Quote:Are Teachers Becoming Obsolete? How the Internet is slowly replacing formal education By Scott Ijaz From good-natured websites that provide free medical advice, to disturbing ones that explain how to build a firework bomb out of an onion and tin foil, digital dilettantes can learn all sorts of things by surfing the Web. Students often use the Internet’s broad array of information to educate themselves. By presenting course material as a teacher would, websites cater to students who prefer teaching themselves by simplifying the self-education process. Selfscholar. com organizes and connects students with academic tools and resources. The website provides links for free downloadable textbooks, assembles learning communities comprised of students from all over the world who are interested in learning the same topic, and even has a section that teaches languages. Selfscholar. com also has a feature that allows its â€Å"students† to instant message a live tutor. Mike Spuzzilo, a second year mechanical engineering major, said about the site, â€Å"Everything you need is in one spot. If I come across a tough homework problem, I can type it into YouTube,† he said, adding, â€Å"A digital teacher will appear, taking me step by step with a similar problem.Spuzzilo remarked that the process makes more sense to him. â€Å"I learn easier that way,† he said. He notes that the Internet better meets his needs. â€Å"[The resources online] are accessible whenever you can get an Internet connection. University teachers can only help out as their schedule permits. It is much more convenient,† Spuzzilo said. Top tier schools like The London School of Economics, MIT and Yale embrace the advent of self-educational websites through Open Course Software. Open Course Software streams recorded lectures from the classroom into the audience’s room. The Internet viewer who doesn’t drop a dime experiences the same explanations as the students in the classroom who pay high-end tuition dollars. Nathan Shubick, a second year student studying  physics, better comprehended the online explanation than the classroom’s. â€Å"I went to the oyc. yale. edu, and listened to one of their teachers explain the same material on a podcast,† remarked Shubick. Shubick favored the Internet source over his classroom teacher. â€Å"Turns out, the Yale professor authored the textbook which my university teacher refers to in class. It was easier to learn coming from the horse’s mouth,† he said. With such an ample and diverse array of resources, students question emptying their pockets to pay for university tuition if the same material is accessible on the Internet without charge. Karen Diaz, the librarian at OSU responsible for managing online courses, emphasized the advantages of university schooling while pinpointing the shortcomings of an online education. Diaz stressed the importance of learning in person. â€Å"First-hand experience are things you cannot experience in a free online environment,† she said. Whereas the classroom is geared toward meeting individual’s needs, the Internet tries to accommodate the larger population. Supporters of formal education believe that student peers and mentors improve the structure of the overall learning environment. â€Å"You have the chance to interact with the instructor, ask questions, seek clarification or alternate explanations, and seek out help outside of class,† Diaz said. State-of-the-art facilities add another important dimension to the educational setting by applying what a student learns into everyday life. â€Å"There is a big difference between knowing how to do a lab involving a titrate and actually doing it,† Diaz said. The large quantity of online information doesn’t necessarily ensure its quality.

Reason My Grandparents Immigrate to Malaysia

Topic: The reasons my grandparents immigrated to Malaysia Nowadays, there are millions of Chinese living overseas. For me, I am the third generation of overseas Chinese in Malaysia. My grandparents came from a small village in Chaozhou Prefecture of Guangdong Province, China. They immigrated to Malaysia after World War II for several political, economic and societal reasons. In 1930’s, China was in a state of disorder due to the incessant fighting between warlords. People lived in deep distress. Unfortunately, the war of resistance against Japan broke out in 1937.The Japanese Imperial Army suddenly occupied a large area of China. My grandparents’ hometown was not invaded by the Japanese Army since it was only a small village. However, it faced scarcity of food. Many residents died of starvation, including my great-grandmother. My grandparents followed other villagers and fled to Fujian province. After that, they had been working in a rich family to earn a living for the following 8 years. Finally, in 1945, Japan surrendered. For U. S. A, Britain, Russia and for Japan itself, it symbolized the arrival of peace.Yet, for China, it just marked the resumption of the civil war between Nationalist Party and Chinese Communist Party. Both of the two parties wanted to control China. Nobody knew when another war would break out. The potential war would undoubtedly plunge Chinese people into misery and suffering again. Besides, people only saw a scene of devastation everywhere in China. The economic environment was worse than before. My grandparents found it harder to live in China after the war than before it.Millions of Chinese from Fujian and Guangdong province fled to South-east Asia, the so-called â€Å"Nanyang†, to seek a better life. Many of them chose Malaya (the predecessor of Malaysia) to start their new life. In Malaya, the political environment was much stable then. Before the war, the peninsula was occupied by Britain. The British colonist spared no effort in maintaining the stability of Malaya as they didn’t want any instability to interrupt their plundering of wealth in the colony. My grandparents thought that they could get an easy life in Malaya.They would at least not be destitute and homeless there. Since 19th century, thousands of Chinese flowed to Malaya because of the opportunities for employment in the mining, plantations and businesses. The peninsula has an abundance of natural resources. British colonists were rapidly developing the tin mining industry, rubber, and palm oil farming on the land. There was a high demand of manpower in the peninsula. Consequently, British colonist had been importing a large number of Chinese laborers into Malaya.Apart from that, the success stories of Chinese businessmen like Tan Tock Seng, Tan Kah Kee and Lee Kong Chian kept inspiring my grandfather and other Chinese. Therefore, they didn’t mind travelling thousands of miles to Nanyang. They believed that it w as a land where they could survive and become rich. According to the World Population Years’ report, there were about 1. 8 million Chinese living in Peninsular Malaya in 1947. Overseas Chinese had already formed a big community in Malaya. People who came from same the province and spoke the same dialect lived and worked together.Therefore, it was not a problem for my grandparents to adapt themselves in this new community. All these factors caused my grandparents to make this tough decision. It’s really hard for them to leave their homeland and become a citizen of another country. However, they might have been killed in another war if they had stayed in China. The day-to-day struggle of survival overrode all other things such as the unwillingness to leave the place where they had grown up. They were forced to immigrate. (605 words) It's my essay for English course in University. So embarrassing†¦Ã¢â‚¬ ¦

Real Estate Investment Essay Example | Topics and Well Written Essays - 2250 words

Real Estate Investment - Essay Example Once the situation changes the other way (as it always does), the higher rates of interest in Italy will become predominant & the boom in real estate may receive a setback. There are also several instances wherein the seller turns out to be a fraud, who goes absconding after having got the reservation money. The situation is particularly precarious in the case of costly deals where 20-30% amounts to a large amount of money. Therefore, proper verification of the credentials of the other party is a must in order to thwart such occurrences. It is absolutely true to say that a dollar invested today would have an enhanced worth say three years down the line. But, this case is true provided other factors remain fairly constant. For example, if the political situation or the law & order scenario of an area is not alright or gets worse at any time between these years, then concerns among the buyers or financiers would ultimately work towards the education in the value of the property. In worse cases, the property may become useless such as I the instance of war or ethnic strife. As Italy has been a fairly peaceful nation, this fear is not supposed to dampen the spirits of investors. But nevertheless, one must always take this aspect into consideration at the time of investment planning.The interest rates in Italy hover in the range of around 2%, which is a bit more than that in the US. Therefore, it is advised that anyone desirous of seeking a mortgage especially for costlier properties, conduct an efficient forecast abut h is/her repayment options in order to avoid problems in the future. In spite of the boom in real estate in Italy, homeowners generally buy their property as something to live in rather than regard it as a form of investment. Therefore, when the need arises for selling that property especially after long periods of stay, the property value is set to fetch much lesser than the prevailing market due to any factors such as the age of the property, the amount of wear & tear, the forecast of the repairing costs that need to be undertaken by the buyer in advance etc. Another major disadvantage of investing in homes in Italy is that the majority of the mortgages are based on variable rates and as such, these interest rates keep changing fro area to area or company to company in particular. Therefore, the buyer may end up paying more while seeking a mortgage loan fro one company while there could be others offering it at reduced rates. Thus, this calls for a sense of responsibility on the part of the buyer to have an idea of the interest rates charged by the different mortgage companies. There is also an increasing trend towards direct purchasing through the phone or Internet. There have been instances in the past wherein investors have been duped by phony agents who pose as the real owners of a property or act as mediators. The reason has been attributed to the fault on the part of the investor to verify the authenticity of the property or it sellers. In most cases, the investor does not even inspect the site that is proposed to be purchased. The only solution is to verify the property & its seller either by himself or through trusted representatives, usually one's lawyers.In the case of a seller or in case the

To what extend has govermental policy been a factor in explaining each Essay

To what extend has govermental policy been a factor in explaining each country's development trajectory - Essay Example This can be shown with historical evidence beginning from the development of Britain as an industrialised nation due to the colonisation policies of the time to the current mandates of the IMF and the World Bank which are supposed to help developing nations. Admittedly, it can be said that certain situation and policies might be forced upon some nations and not really accepted by the government therefore calling them government policy is rather an obtuse notion. However, it must be realised that the sovereignty of a government is not infringed upon simply because it has been given some recommendations by the United Nations or other international bodies who aim to help the country in need. Therefore, any policies established or created by the government have to be seen according to the letter of the law which makes it government policy. During the age of colonisation, the British Empire ruled an area over which the sun never set. The government policy of expansion and increased utilisation of colonies like the Americas and India certainly helped the economic and social development which took place at home. The input gained from commerce, farming and export of material to the American continent was the fundamental reason that led to the industrial revolution and the growth of Britain as a powerhouse amongst its European neighbours. A detailed record of the relationship between the American colonies and the homeland of Britain shows that the conquest of the Americas can be taken as a founding mechanism and a cornerstone of the industrial revolution that took place in Europe (Hamilton, 1929). Credit must also be given to the scientific development which was slowly taking shape in those times as well as the philosophical changes to the concept of government, but without the governmental policy to support colonisation efforts; such

DQ1JPart1 and DQ2 Bridget Essay Example | Topics and Well Written Essays - 250 words

DQ1JPart1 and DQ2 Bridget - Essay Example Documentation is very important because it provides a way to keep a written or computerized record of the work performed by the workers. â€Å"Documentation justifies employment actions, from recruitment and selection to resignation, retirement or termination† (Mayhew, 2012). The manager is responsible for the performance of his subordinates. A system that allows the employees to rate themselves is a great idea. Such a system can inspire motivated employees to achieve a higher level of performance. A potential problem of self-evaluation is employees exaggerating their level of performance (Bacal, 2012). Constructive criticism is an important element of any appraisal system. Employees have to be willing to listen to the opinions of others and accept that they may have deficiencies that must be improved. The use of training and development can enhance the skills and capabilities of the employees. Human resource professionals and managers must document their work. An example of a documentation process is the time cards that employees use when they punch into work. These cards must be saved in case there area any payroll issues associated with the payment to an employee. An industry in which proper documentation is imperative towards the ability of the professionals to provide a proper service is the medical industry (Nyu,

Halecar and Mid Lans Automotive Two cultures merge Coursework - 1

Halecar and Mid Lans Automotive Two cultures merge - Coursework Example The first is that there is the need to bring together two potentially conflicting cultures and practices under one single corporate structure(Armstrong, 2012). The second issue includes adjusting the individual HR practices and systems in each of the organisations in order to eliminate errors and inefficiencies of the past(Armstrong & Taylor, 2014). The purpose of this paper is to critique the circumstances relating to the systems and practices of the two companies. This will be done on the context of historical practices and processes. From there, the paper will recommend a way forward in improving the HR system, organisational culture and other practices for the achievement of the corporate strategy of the newly formed car manufacturer – Mid Lancashire Automotive. The facts of the case brings to the fore, important pointers and issues that can be used to diagnose HR and Organisational Behaviour concerns. These issues can be used to streamline the structures of the new company, Mid Lancashire Automotive and give the blueprints for the creation of a new and a better entity that will achieve better results. The ultimate end is to develop a good HRM strategy that will operate within an appropriate Corporate Strategy to ensure efficiency and effectiveness that will lead to competitive advantage and ensure the survival of the new company in turbulent times. There are three main classes of issues that are of relevance to this analysis. First of all, there is a case of the issues inherent in HaleCars. Secondly, there are issues with Mid Lancs which come with unique implications for a new human resource management strategy. Finally, there are the conflicts that will arise as a result of trying to link up the two entities into one entity. The organisational culture of HaleCars is one that is built around the specialisation and focus of the firm because they only do a few cars at a given point in time and this kind of bespoke and extreme

To what extent were ancient historians concerned to achieve a high Essay

To what extent were ancient historians concerned to achieve a high standard of objectivity in the production of their narratives - Essay Example Many a scholar has commented that even if objectivity is achieved by a historian, such objectivity always remains confined within the narration of the facts that are presented sequentially. According to (RÃ ¼sen, 2), the best definition of history must include the sense and meaning within the expression of time in the past, present and future. The connectivity of these aspects of time utilizes the main mental form of presentation that narration offers. Narration gives past, present and future some meaning to human life by relating experience to expectation. It is therefore correct to state narratives as the form in which history is stored in human minds and assists them to orientate themselves in temporal change. Objectivity in historical narratives has been analyzed to act as a yardstick of validity, integrity and truth in narratives. The main purpose of narrative objectivity can be said to be the linking impact of historical occurrences and the cumulative complement that each part of history gives to the other. In ancient historical narratives, there was lack of linkage of historical ideas from different writers and time. Objectivity was lacking due to the fact that there was no platform to refer one’s work from pre-existing similar ideas. Many inconsistencies were identified in ancient narratives when comparisons of such uniformed texts were done. Later, ancient historical narratives adopted the truth claim of connecting history to valid explanations of events. The validity of the majority of ancient texts is highly questionable, partly due to the fact that the literacy levels were limited. Majority of ancient historical texts were primary sources since the authors were the first to generate and write on the topics. Modern historical narration has however adopted a more literature perspective in offering validity to events and occurrences. Almost every topic in history has been explored and the relevant information backed up in form of databases.

The Impact of IFRS for SMEs on UK companies Essay

The Impact of IFRS for SMEs on UK companies - Essay Example All of these entities have the option to adopt corresponding accounting tiered reporting framework under a certain purpose (Baker and Wallage, 2000). For instance in the United Kingdom (UK), publicly accountable entities are required to adopt full international financial reporting standard (IFRS) while those non-publicly accountable entities are required to use IFRS for SMEs. On the other hand, small companies are required to adopt financial reporting standard for smaller entities (FRSSE). However, these different entities have the option to adopt whatever reporting framework they need or most suited to their individual system (Jermakowicz et al., 2006). For instance, in the UK, small companies may have the opportunity to either apply full IFRS or IFRS for SMEs. Small company is defined as having less 250 employees and there are 571 listed of them in the UK in 2010 (Andrews, 2010). Financial reporting standards such as IFRS are designed especially in advanced economies (Tyrrall et al ., 2007). In line with this, there is a strong link between economic system and financial reporting standards. In the UK, it is without question that organisations may eventually adopt it due to complexity of their business operations. However, in the midst of this assurance, it is still important to individually understand how each organisation responds to existing financial reporting standards considering the system they have with them. In line with this, the European Union for instance is trying to call the attention of stakeholders in order to participate in the implementation process (Larson and Herz, 2011). However, in the midst of this strong effort, there is still a need to consider how exactly this will create an impact on the individual stakeholders with specific systems they are adopting. Furthermore, there is certainly an ongoing issue about the effectiveness of using regular IFRS and IFRS for SMEs. Thus, organizations are faced with various considerations on what report ing framework to use in the first place to effectively contribute maximum benefits into their business. For instance, one of the important issues is concerning about cost and successful efforts in adapting to international accounting reporting standards (Cortese and Irvine, 2010). In accounting, an organisation is always faced with issue concerning cost and success of implementing activities. The entire activity does not only employ the idea, but the corresponding compatibility. Companies have ideas on the good thing about creating their own standard about financial and tax accounting reporting and their strong link so as to ensure flexibility in the application process (Street and Larson, 2004). On the other hand, in adopting specific financial reporting framework companies especially in Europe are not only concerned with the costs it may incur. They are also looking forward to the other benefits it may contribute to their organisation (Jermakowicz and Tomaszewski, 2006). The benef its however may vary on what financial reporting standard they employ. Little is known about the impact of IFRS for SMEs on the UK companies. Mostly, the regular or full IFRS have been used and widely evaluated in its performance though. Objective of the study The proponent will assess top ten best small companies in 2010 in the UK

TORT Essay Example | Topics and Well Written Essays - 2250 words

TORT - Essay Example Nevertheless, in Home Office v Dorset Yacht Co ([1970] AC 1004 (HL) it was suggested that Lord Atkin’s rationale remained applicable unless the specific circumstances merited exclusion of the dictum. As a result, commentators argued that the pendulum had swung too far in favour of claimants, which was reinforced by the decision pertaining to proximity in terms of who the duty of care was owed to in Anns v Merton LBC ([1972 2 All ER 492). The decision in of Anns v Merton London Borough ([1978] A.C. 728) asserted that the proximity test relies on a consideration of the nature of the relationship between the parties and Lord Wilberforce asserted that: â€Å"in order to establish that a duty of care arises in a particular situation... the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity ... such that in the reasonable contemplation of t he former, carelessness on his part may be likely to cause damage to the latter- in which case a prima facie duty of care arises†. However, subsequent decisions have struggled with this and in practice the courts have sought to water down the ramifications of Lord Wilberforce’s dictum in Anns v Merton as highlighted by the decisions in Peabody Donation Fund v Sir Lindsay Parkinson ([1984] 3 All ER 529) and Yuen Kun-yeu v AG of Hong Kong ([1987] 2 All ER 705). Moreover, in Rowling v Takaro Properties ([1988] 1 All ER 163) Lord Keith highlighted the point that a literal application of the judicial rationale in Anns v Merton could risk courts not taking into account all relevant factual considerations when evaluating whether or not to impose a duty of care. This line of thinking was reinforced by Lord Templeman’s dictum in CBS Sons v Amstrad ([1988] 2 All ER 484) which suggested that the decision in Anns undermined the purpose of negligence liability and risked open ing the floodgates of claims. In highlighting the implications of Lord Wilberforce’s test in Anns, Lord Templeman commented that Anns: â€Å"put the floodgates on the jar, a fashionable plaintiff alleges negligence.† Whilst the post Anns decisions clearly tried to avoid the literal implications of the Wilberforce test, the duty of care test was clarified by the decision in the case of Caparo Industries v Dickman ([1990] 1 All ER 568). In Caparo v Dickman ([1990]1 ALL ER 568), the House of Lords confirmed the following three stage test to determine whether a duty of care exists: 1) Whether the consequence of the defendant’s actions were reasonably foreseeable; 2) Whether there was sufficient proximity to impose a duty of care; and 3) Whether it is fair, just and reasonable to impose a duty of care. Moreover, Lord Bridge focused on the interrelationship between foreseeability and proximity elements for the existence of duty of care. To this end, Lord Bridge commen ted that â€Å"necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law

Race in America issues Essay Example | Topics and Well Written Essays - 1250 words

Race in America issues - Essay Example This minority group has experienced numerous atrocities and injustices over the years. Likewise, racial segregation has dominated admissions in schools where whites get preference over the blacks. These inequalities intensify the abhorrence between the white and blacks to the detriment of economic and social development in the United States. Affirmative action has succeeded in remedying these inequalities and therefore it should be sustained at all cost in order to enhance a civilized society as the nation purports to be. Through remarkable struggles of the African American minorities, they managed to sensitize the whites to adopt mechanisms of correcting and bridging the gap occasioned by racial prejudices. Affirmative action was embraced as a result. Precisely, mere recognition and affirmation to halt past injustices is not enough remedy for the over two hundred years of racism, oppression, racial discord and discrimination. Efficient programs like affirmative action and the Voting Rights Act effectively address these injustices. The minorities have embraced these actions with a sigh of relief but the cons view disprove these efforts especially affirmative action which hey accuse as reverse discrimination. Though these have significantly addressed the issue of racism, the battle is yet far from being over as some people would claim. Racial disorder and intense prejudice are still apparent in the society today. The African Americans still occupy the minority facet. The whites disregard them both at school and at places of work. The whites have reluctantly denied them the dignity they deserve. Admissions and recruitments are not purely on merit. From these expositions, it is apparent that racism is still a major problem and therefore these programs should not only remain in place but properly enforced too. Discrimination still persists in the fields of employment, contract businesses as well as education. An appropriate insight is given by evaluating the impact of affirmative action bans in education. This will deduce the necessity of retaining affirmative actions and such other measures which shall aim at improving the welfare of the racial discriminated minorities. Notably, the nation as it goes through a historical demographic transformation, there is a dire need to equally equip all the students irrespective of their race, with apt training that will enhance the sustenance and expansion of technology and research (Garces 2012). It should not be ignored that these young stars who have been traditionally excluded, make up a far larger proportion of the future generation. Denying them these skills then the nation risks future low levels of competitiveness around the globe. Of importance is to identify and nurture talent among all groups in order to enhance advancement (Garces 2012). Unfortunately, many states have banned affirmative action with regard to employment, education, and contracting decisions in public institutions (Garces 2012 ). This is to the detriment of the minority African Americans. It is a continuity of suppression towards his group. A practical example is evident in Texas State when it banned affirmative action with regard to admission in graduate education following the ruling in Hopwood v. State of Texas (Garces 2012). The ban resulted in reduced enrollment of the marginalized students in graduate studies especially in law and medical fields (Garces 2009). The

Organisational change Essay Example for Free

Organisational change Essay The author Gareth Morgan, uses a metaphor when describing organisational change. The title of his book Riding the waves of change suggests that change is a very dynamic process and for like surfers, managers and their organisation have to ride on a sea of change that can twist and turn with all the power of the ocean. The ocean representing the organisations internal and external environment. John Harvey-Jones (1993, p21) once said organisations need to adapt or perish. This is still as relevant now as it was in the 1990s. Change is due to a number of internal and external triggers. External triggers include, political, economic, social, technological and environmental factors and an increase in competition. Internal triggers are changes within the organisation. Change is now a major issue in which organisations, managers and their employees have to face. Organisations who fail to adapt to this dynamic environment in a suitable and appropriate manner, could face organisational failure, causing problems for individual jobs and careers. Managers need a pro-active mindset where they need to anticipate and confront challenges of the future, rather than manage in relation to events that have already occurred. When facing organisational change, managers must consider the people whom the change is affecting. These would include the people within the organisational environment, for example, staff, and the people outside the organisation, for example, customers and other stakeholders. There are many types of organisational change, each type affecting the individual in a different way. Change can be distinguished by considering how deeply the change affects the organisation. Buchanan, Claydon and Doyle, (1999) carried out a survey of management experiences of change. The findings suggest that organisational change can create fear, fatigue and cynicism. Elizabeth Kubler-Ross (1969) found that when dealing with something traumatic and stressful, people go through a number of phases, known as the coping cycle. This has been used to understand peoples responses to organisational change, a situation where people often find it hard to cope. The five stages of the Kubler-Ross response coping cycle disguises peoples individual differences. We may omit some stages, revisit particular stages or pass through them more or less quickly than others. From an organisational outlook, this can be a useful tool when trying to detect where in the response cycle a person may be, during organisational change and guidance and support can be offered when necessary. Managers need to contemplate how much pressure staff can take from organisational change. The relationship between pressure and performance can be described in the Yerkes-Dodson law (1908). The law states that task performance increases as our state of arousal increases, and that beyond some optimal point, we become overwhelmed by the level of stimulation or pressure, and our performance starts to fall. With changes being imposed, people have to spend time learning new things, adapt to new systems and procedures, develop new knowledge and use new skills and behaviours. The organisation cannot stop functioning while this happens and this can lead to the initiative fatigue which Buchanan, Claydon and Doyle found during their survey, mentioned earlier. Peoples arousal levels can be pushed beyond their optimum performance point where change initiatives are frequent. However, Morgan feels it is important to view people as key resources, encouraging them to relish change, blending specialist and generalist qualities, managing in an environment of equals, and making education a continual process. If people have skills in a number of jobs within the organisation, they will be more flexible to change. Management need to know what levels of pressure people are experiencing. There are a number of indicators which can reveal, among other things, that people are working under too much pressure prompting management to reduce the pressure. These measures may include: * Unexplained absences * High rate of sickness * Labour turnover * More customer complaints * More employee grievances * Accidents and mistakes Resistance to change is common, however, people find change threatening. Those involved are presented with new scenarios, new problems and challenges. Change can be ambiguous and unclear. Many people find change, or the thought of change frustrating. Where Huczynski and Buchanan emphasise that change can be a problem for existing employees, Morgan focuses on the importance of managers recruiting people who enjoy learning and relish change and to motivate employees to be intelligent, flexible and adaptive. Tony Eccles (1994), identified thirteen possible sources of resistance which managers should consider when managing chance in the organisation: * Ignorance This may cause a failure to understand the problem * Comparison A solution may be disliked because an alternative is preferred * Disbelief People may feel that a proposed solution will not work * Loss The change may have unacceptable personal costs * Inadequacy The rewards from change are not sufficient * Anxiety People fear of being unable to cope with the new situation * Demolition This is where change threatens to destroy existing social arrangements * Power cut Sources of influence and control will be eroded * Contamination New values and practice are repellent * Inhibition The willingness to change is low * Mistrust Management motives for change are considered suspicious * Alienation Other interests are more highly valued than new proposals * Frustration The change will reduce power and career opportunities There are potentially as many different reasons for resisting change as there are individuals affected by change in the first place. Through a set of approaches which involves the use of a range of management techniques and stakeholder analysis, resistance to change can be managed. Stakeholders are those people or groups with an interest in the organisations activities. There are three types of stakeholder, each should be managed differently: Internal stakeholders exist within the boundaries of the organisation. They are employees and management Connected stakeholders are those outside the organisation, such as suppliers, customers and shareholders External stakeholders include the state, local authorities, the public, pressure groups etc People within an organisation are affected by change and therefore respond differently to specific change proposals. Anticipating responses becomes possible when one understands the stakeholders concerned with a particular organisational change. John Kotter and Leo Schlesinger (1979) identified six methods for overcoming resistance: 1. Education and commitment Managers need to inform the people whom the change involves and affects about the nature of the problem prompting change. Their objections, perceptions and knowledge should be shared with these people to avoid misunderstandings which can cause resistance. It helps to get the facts straight, and to identify and resolve opposing views. There must be a large amount of trust between management and employees if this approach is to be used. Managers should pay special attention to skills that increase their power to communicate, to create shared understanding. 2. Participation and involvement By involving those people who resist change in the planning and implementation of it, their fears will be reduced about the impact of changes on them. Collaboration can reduce opposition and encourage dedication. If managers are to use this approach, it is important that the individuals have satisfactory knowledge and ability to contribute effectively. 3. Facilitation and support Peoples feelings may be altered towards change and they may be able to accept it if they are offered support to overcome the fears and anxieties. 4. Negotiation and agreement When imposing change, it is important to consider those affected who have a certain degree of power over the organisation. A mutually agreeable compromise may be necessary, through trading and exchange. 5. Manipulation and co-optation When proposing change to a particular group or stakeholder it may be necessary to deliberately appeal to their specific interests, sensitivities and emotions, deliberately emphasising the benefits and playing down the disadvantages. Co-optation involves giving key resistors direct access to the decision making process, perhaps giving them for example, high status management positions. 6. Implicit and explicit coercion This is where management abandons any attempt to reach an agreement and results in the use of non-violent force or threats. This could mean firing the individual, demoting them or to obstruct their promotion and career prospects. This may be appropriate when no agreement is being made between management and those concerned with the change. For effective change implementation, managers should enforce change with full cooperation. Employee involvement is very important for managers to overcome resistance and encourage employees to welcome the prospect of change in the organisation. Management should carefully think of leadership styles to managing change because this can help reduce the resistance to change. By adopting a collaborative style of management, employees will willing participate in key decisions affecting their and the organisations future. One experience of organisational change that sticks in mind was the appointment of a new manager at a hotel where I was employed. When I first began working there, the original manager lacked leadership skills. Internal communications were poor, for example, when the restaurant opening times changed, staff were not informed properly or not informed at all by management. Staff had to rely on word of mouth from other members of staff which often led to misinterpretation. Management did, not listen to problems which staff encountered. Management didnt care which led to staff not caring. The hotel had room for improvements, but these improvements were not implemented. The customer was not the focus of any decision-making and their requirements were not met. This resulted in a great loss of business over a short period of time. When new management was appointed, I experienced complete change in the organisation. Staff views were listened to, their ideas for improvement in the hotel were taken into consideration and often carried out. Internal communications were improved and staff felt more involved with the business. With the manager being focused, this led to staff sharing this attitude. Customers were at the focus of every business making decision, their opinions were listened to. The hotel experienced complete innovation which staff and customers were happy with. Within a short time, business picked up again and still continues to. Morgan agrees with Huczynski and Buchanans view that people resist change, but feels that if people are educated and trained to do more one job in the organisation there will be a lesser feeling of loss of security and certainty. He believes in schemes that guarantee employees an income and a role in the organisation, but not a specific role. In this way, security is defined in financial terms-rather than in terms of the right to discharge a particular set of duties or responsibilities- and the organisation provides suitable retraining and development programs. Change demands innovation, and innovation demands that the creative potential in people is unleashed. Many people have come to see themselves as having a clear place in their organisations, whether in terms of their immediate job or career. This trend needs to be reversed to create a situation in which people recognize and accept change, and rise to meet the challenges it brings. Huczynski and Buchanan tend to focus on the negative effects people experience when change occurs, which I believe to be an old fashioned view. I agree with Morgan, who talks more about the positive aspects of change people experience, where people today, like a challenge and have more opportunities and are encouraged to learn more skills. Negatives are seen as opportunities. Morgan believes that it is important to view people as a key resource, encouraging them to relish change, blending specialist and generalist qualities, managing in an environment of equals, and making education a continual process. When managing change, managers need to consider the people whom the change is affecting. Staff should be considered and informed to ensure widespread participation within the business when the change takes place. Management should try to build a culture where their employees share their values and aims, and a company wide acceptance to the change is adopted. The common problem of resistance to change can be helped and possibly overcome through a number of management techniques and leadership styles. Staff should be asked to identify and develop new opportunities in the organisation. This kind of orientation can invigorate and empower people to reach the leading edge of change and stay there. It is also important to consider the customer when managing change in the organisation because in todays marketing orientated attitude to business, all decision making and planning must be based around customers requirements. This is an important factor contributing to the success of the organisation. Connected stakeholders, for example suppliers, also need to be considered and informed of the change. Their views and opinions need to be heard and taken into account. When dealing with stakeholders who have a certain degree of power over the organisation, it may be appropriate to negotiate and compromise with them. This will reduce any conflict which could lead to major problems for the organisation in the long run. Managers should use the views and needs of customers and other key stakeholders as a mirror in which they see and understand their own strengths and weaknesses, and act on these insights to reshape their relations with the environment. It is also important to consider the organisations competitors when managing change. Is the change going to create an advantage or disadvantage to competitors? Will the change encourage new competitors? Clearly, any program of change involves a high degree of skill in people management since people are at the very centre of the change. By considering the people factors when managing change, the change will be successful.

Forex Market Case Study Analysis

Forex Market Case Study Analysis Preface Just as stranger walk on path last arrive at their destination; project work is like a path after walking in which students can gain experience knowledge that can be stepping stone towards their success. It is such a work that enhances each every individual working capacity knowledge. The Importance of Thesis is that it is blending of both theoretical practical knowledge. Through the thesis, I got a golden change to have guidance under professionals senior executives which can definitely be a platform of establishing themselves. During my thesis work I visited AMA Library, Gujarat Chamber of Commerce and SBI which helped us a lot to gain information about Forex derivatives. This opportunist of thesis provided to me was not only a platform to develop enhance my appetite of learning but also served a fusion of the theoretical concept their practical application in corporate world. INTRODUCTION: To make a profit from the forex market of International trade you have a grip on mainly five key factors that affects a currency value. When making our trades we analyze five key factors which are as follows. Interest Rates Economic Growth Geo-Politics Trade and Capital Flows Merger and Acquisition Activity Interest Rates: Interest income and capital appreciation these two methods we can use to make profit from different in terms of countries interest rates. Interest Income. Every currency in the world comes attached with an interest rate that is set by its countrys central bank. All things being equal, you should always Buy currencies from countries with high-interest rates and Finance these purchases with currency from countries with low-interest rates. For example, as of the fall of 2006, interest rates in the United States stood at 5.25%, while rates in Japan were set at .25%. You could have taken advantage of this rate difference by borrowing a large sum of Japanese yen, exchanging it for US dollars and using the US dollars to purchase bonds or cds at the US 5.25% rate. In other words, you could have borrowed money at .25%, lent it out at 5.25%, and made a 5% return.Or you could save yourself all the hassle of becoming a money lender by simply trading the currency pairto affect the same transaction. Capital appreciation. Asa countrys interest rate rises, the value of the countrys currency also tends to rise this phenomenon gives you a chance to profit from your currencys increased value, or capital appreciation. In the case of the USD/JPY spread in 2005 and 2006, as the US interest rates stayed higher than Japans, the dollar continued to increase in value. Investors who traded yen for dollars gained from interest income as well as the US dollars capital appreciation. Economic Growth. Economic Growth is next factor when predicting a countrys currency movements.The stronger the economy, the greater the possibility that the central bank will raise its interest rates in order to the growth of inflation.Andthe higher a countrys interest rates, the bigger the likelihood those foreign investors will invest in a countrys financial markets.More foreign investors mean a greater demand for the countrys currency.A greater demand results in an increase in a currencys value. Hence economic growth inspires higher interest rates inspires more foreign investment inspires greater currency demand which inspires an increase in the currencys value. Geo-Politics. The currency market is the only market in the world that can be successfully traded on political news as well as economic releases.Because currencies representcountries rather than companies and any disturbance to the political landscape will oftentimes affect the direction in which the exchange rate moves. The key to understanding speculative behavior with respect to any geopolitical unrest is that speculators run first and ask questions later.In other words, whenever investors fear any threat to their capital, they will quickly retreat to the sidelines until they are certain that the political risk has disappeared.Therefore, the general rule of thumb in the currency market is thatpolitics almost always trumps economics. Trade and Capital Flows Before ever making a final prediction regarding the movement (or trend) of a particular currency you should determine whether or not the currency is dependent on its countrys capital or trade flow. Capital flow refers to the amount of investment a country receives from international sources. Trade flow is the income resulting from trade. Some countries can be very dependent their capital flow, while other countries are extremely sensitive to trade flows. Mergers and Acquisitions Merger and acquisition activity is the least important factor in determining the long-term direction of currencies. It can be the most powerful force in stagingnear-term currency moves.Merger and acquisition activity occurs when a company from one economic region wants to make a transnational transaction and buy a corporation from another country. For example, a European company wants to buy a Canadian asset for $20 billion, it would have to go into the currency market and acquire the currency to affect this transaction.Typically, these deals are not price sensitive, buttime sensitivebecause the acquirer may have a date by which the transaction is to be completed. Because of this underlying dynamic, merger and acquisition flow can exert a very strong temporary force on FX trading, sometimes skewing the natural course of currency flow for days or weeks. OBJECTIVE: Main Objective is for getting in depth knowledge of my topic. To critically analyze the Forex market of International trade. To analyze the five key factors that moves the Forex market and how to make profit out of them. To analyze the present data and forecasting a future movement of Forex market. METHODOLOGHY: * Introduction of the topic in detail. * For predict market movement I am using two methods like fundamental analysis and technical analysis. Technical analysis includes Candlestick Charts and Moving Averages (Simple and Exponential) SOURCES: Primary source  · Taking interview of the expertise in the Forex market. Secondary source  · Use Books, Magazines, Newspapers, Research papers and Internet as secondary sources LIMITATIONS:  · I have to follow only these five factors for move the Forex market.  · Interview is the only primary research in the Forex market.  · Inflation is the main factor which moves the Forex market but which is not included in the five factors.  · Merger and Acquisition is the least important factor. CHAPTER 1: INTRODUCTION OF FOREIGN EXCHANGE Foreign Exchange is the method or process of conversion/converting one currency into another currency. Currency becomes money and legal tender for a country. But for a foreign country it becomes the value as a commodity. Since the commodity has a value its relation with the other currency determines the exchange value of one currency with the other. It is just the game of supply and demand. For example, the US dollar in USA is the currency in USA but for India it is just like a commodity which has a value which varies according to demand and supply. Foreign exchange is one of the economic activity which deals with the means and methods by which rights to wealth expressed in terms of the currency of one country are converted into rights to wealth in terms of the current of another country. It involves the investigation of the method which exchanges the currency of one country for that of another. Foreign exchange can also be defined as the means of payment in which currencies are converted into each other and by which international transfers are made also the activity of transacting business in further means. Most countries of the world have their own currencies. The US has its dollar, France its franc, Brazil its cruziero and India has its Rupee. Trade between the countries involves the exchange of different currencies. The foreign exchange market is the market in which currencies are bought and sold against each other. It is the largest market in the world. Transactions conducted in foreign exchange markets determine the rates at which currencies are exchanged for one another, which in turn determine the cost of purchasing foreign goods financial assets. The most recent, bank of international settlement survey stated that over $900 billion were traded worldwide each day. During peak volume period, the figure can reach upward of US $2 trillion per day. The corresponding to 160 times the daily volume of NYSE. CHAPTER 2: ORIGIN OF THE FOREX MARKET The FOREX trading traces its history to centuries ago. Different currencies and the need of exchange them had existed since the Babylonians. They are credited with the first use of paper notes and receipts. In that time the value of goods were expressed in terms of other goods which were called as Barter system. The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system. Coins were initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of todays modern currencies. Before the First World War, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom and it appearing attractive to other nations who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy. However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the governments currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called Run on banks. The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in FOREX market activity. From 1931 until 1973, the FOREX market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the FOREX markets during these times was little. Inorder to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility. Nearthe end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis. TheBretton Woods system came under increasing pressure as national economies moved in different directions during the 1960s. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970s following president Nixons suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits. Thelast few decades have seen foreign exchange trading develop into the worlds largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjustforeign exchange ratesaccording to their perceived values. TheEuropean Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. InAsia, the lack of sustainability of fixedforeign exchange rateshas gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable. Whilecommercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The FOREX exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions. At present it also includes the dot com booms and the World Wide Web. The size of the FOREX market now dwarfs any other investment market. Theforeign exchange marketis the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in theforeign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that FOREX market is a lucrative opportunity for the modern day savvy investor SHORT INFO OF FOREX The history of FOREX trading was traced centuries ago. Different countries need different currencies and the need of exchange them had existed since the Babylonians. It is said that Babylonians were the first one who used paper notes and receipts. During those days, goods were exchanged for another goods based on the value of both the goods, which was known as barter system. But this system had some limitations and this lead to encourage establishing more generally accepted medium of exchange. It was also important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system. Coinswere initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of todays modern currencies. Beforethe First World War, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom and it appearing attractive to other nations who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy. However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the governments currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called Run on banks. The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in FOREX market activity. From 1931 until 1973, the FOREX market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the FOREX markets during these times was little. Inorder to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility. Nearthe end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis. TheBretton Woods system came under increasing pressure as national economies moved in different directions during the 1960s. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970s following president Nixons suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits. Thelast few decades have seen foreign exchange trading develop into the worlds largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjustforeign exchange ratesaccording to their perceived values. TheEuropean Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. InAsia, the lack of sustainability of fixedforeign exchange rateshas gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable. Whilecommercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The FOREX exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions. At present it also includes the dot com booms and the World Wide Web. The size of the FOREX market now dwarfs any other investment market. Theforeign exchange marketis the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in theforeign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that FOREX market is a lucrative opportunity for the modern day savvy investor CHAPTER 3: METHODS OF QUOTING EXCHANGE RATES There are two methods of quoting exchange rates. Direct method: For change in exchange rate if foreign currency is kept constant and home currency is kept variable, then the rates are stated be expressed in ‘Direct Method E.g. US $1 = Rs. 45.50. Indirect method: For change in exchange rate if home currency is kept constant and foreign currency is kept variable, then the rates are stated be expressed in ‘Indirect Method. E.g. Rs. 100 = US $ 2.5116 With the effect from August 2, 1993, all the exchange rates are quoted in direct method, i.e. US $1 = Rs. 45.50 GBP1 = Rs. 79.82 Method of Quotation In the Forex market there are two rates like one is for buying and one is for selling rates. This helps in eliminating the risk of being given bad rates i.e. if a party comes to know what the other party intends to do i.e., buy or sell, the former can take the latter for a ride. There are two parties in an exchange deal of currencies. To begin the deal one party asks for quote from another party and the other party quotes a rate. The party asking for a quote is known as ‘Asking party and the party giving quote is known as ‘Quoting party The advantages of two way quote. Ø It automatically ensures alignment of rates with market rates. Ø The market constantly makes available price for buyers and sellers. Ø Two-way price limits the profit margin of the quoting bank and comparison of one quote with another quote can be done immediately. Ø It is not necessary for any player in the market to show whether he intends to buy or sell foreign currency but this ensures that the quoting bank cannot take advantage by manipulating the prices. Ø Two-way quotes lend depth and liquidity to the market and which is very essential for efficient. Ø In two-way quotes for the first rate is the rate for buying and another rate is for selling. We should understand here that in India the banks which are authorized dealers, always quote rates. So the rates quote buying and selling is for banks will buy the dollars from him so while calculation the first rate will be used which is a buying rate, as the bank is buying the dollars from the exporter. Ø The same case will happen inversely with the importer, as he will buy the dollars from the banks and bank will sell dollars to importer. BASE CURRENCY Even if a foreign currency can be bought and sold in the same way as a commodity but theyre use as a minor difference in buying/selling of currency aid commodities. Unlike in case of commodities, in case of foreign currencies two currencies are involved so, it is necessary to know which the currency to be bought and sold is and the same one is known as ‘Base Currency. BID OFFER RATES The buying and selling rates are also referred to as the bid and offered rates. In the dollar exchange rates referred to above, namely, $ 1.6288/96, the quoting bank is offering (selling) dollars at $ 1.6288 per pound while bidding for them (buying) at $ 1.6296. So in this quotation the bid rate for dollars is $ 1.6296 while the offered rate is $ 1.6288. The bid rate for one currency is automatically the offered rate for the other. In the above example, the bid rate for dollars $ 1.6296, is also the offered rate of pounds. CROSS RATE CALCULATION US Dollar is the most trading currency in the forex market. In other words one support of most exchange trades is the US currency so margins between bid and offered rates are lowest quotations if the US dollar. The margins tend to widen for cross rates, as the following calculation would show. Consider the following structure: GBP 1.00 = USD 1.6288/96 EUR 1.00 = USD 1.1276/80 In this rate structure, we have to calculate the bid and offered rates for the euro in terms of pounds. Let us see how the offered (selling) rate for euro can be calculated. Starting with the pound, you will have to buy US dollars at the offered rate of USD 1.6288 and buy Euros against the dollar at the offered rate for euro at USD 1.1280. The offered rate for the euro in terms of GBP, therefore, becomes EUR (1.6288*1.1280), i.e. EUR 1.4441 per GBP, or more conventionally, GBP 0.6925 per euro. Similarly, the bid rate the euro can be seen to be EUR 1.4454 per GBP (or GBP 0.6918 per euro). Thus, the quotation becomes GBP 1.00 = EUR 1.4441/54. It will be eagerly noticed that in percentage terms the difference between the bid and offered rate is higher for the EUR: pound rate as compared to dollar: EUR or pound: dollar rates. CHAPTER 4: ADVANTAGES OF FOREX MARKET The Forex market is by far the largest and most liquid in the world but also day traders have up to now focused on looking for profits in mainly stock and futures markets. This is mainly due to the restrictive nature of bank-offered forex trading services. There are Advanced Currency Markets (ACM) offers both online and traditional phone forex-trading services to the small investor with minimum account opening values starting at 5000 USD. There are many advantages to trading spot foreign exchange as opposed to trading stocks and futures. These are the some advantages as under. Commissions: ACM offers foreign exchange trading commission free. This is in sharp contrast to (once again) what stock and futures brokers offer. A stock trade can cost anywhere between USD 5 and 30 per trade with online brokers and typically up to USD 150 with full service brokers. Futures brokers can charge commissions anywhere between USD 10 and 30 on a round turn basis. Margins requirements: ACM offers a foreign exchange trading with a 1% margin. In laymans terms that means a trader can control a position of a value of USD 1000000 with a mere USD 10000 in his account. By comparison, futures margins are not only constantly changing but are also often quite sizeable. Stocks are generally traded on a non-margined basis and when they are, it can be as restrictive as 50% or so. 24 hour market: Foreign exchange market trading occurs over a 24 hour period picking up in Asia around 24:00 CET Sunday evening and coming to an end in the United States on Friday around 23:00 CET. Although ECNs (electronic communications networks) exist for stock markets and futures markets (like Globex) that supply after hours trading, liquidity is often low and prices offered can often be uncompetitive. No Limit up / limit down: Futures markets contain certain constraints that limit the number and type of transactions a trader can make under certain price conditions. When the price of a certain currency rises or falls beyond a certain pre-determined daily level traders are restricted from initiating new positions and are limited only to liquidating existing positions if they so desire. The controlling of daily price volatility is the main mechanism but in effect since the futures currency market follows the spot market anyway the following day the futures market may undergo what is called a gap or we can say also in other words the futures price will re-adjust to the spot price the next day. In the OTC market no such trading constraints exist permitting the trader to truly implement his trading strategy to the fullest extent. Since a trader can protect his position from large unexpected price movements with stop-loss orders the high volatility in the spot market can be fully controlled. Sell before you buy: Equity brokers offer very restrictive short-selling margin requirements to customers. This means that a customer does not possess the liquidity to be able to sell stock before he buys it. When initiating a selling or buying position in the spot market a trader has exactly the same capacity in margin wise. In spot trading when you are selling one currency you are necessarily buying another. CHAPTER 5: FOREX EXCHANGE RISK The Risk Management Guidelines are primarily an accent of some good and prudent practices in exposure management. They have to be understood and slowly internalized and customized so that they yield positive reimbursement to the company over time. Any business is open to risks from movements in competitors prices, raw material prices, competitors cost of capital, foreign exchange rates and interest rates, all of which need to be (ideally) managed. Forex Risk Everywhere in the world risk is attached. Without risk there is no gain. Also the FOREX is not risk-free. Like if you are trading with substantial sums of money and there is always a possibility that trades will go against you.Also there are several trading tools so that can minimize your risk and with caution and above all education the FOREX trader can learn how to trade profitably and while minimizing losses. Risks Assuming you are dealing with a reputable broker and there are still risks to FOREX trading. Transactions are subject to unexpected rate changes, volatile markets and political events. Exchange Rate Risk: Exchange rate risk which refers to the fluctuations in the currency prices over a long trading period. The Prices can fall rapidly which are resulting in substantial losses unless and until stop loss orders are used when trading FOREX. And so stop loss orders specify that the open position should be closed if currency prices pass a predetermined level. Stop loss orders can be used in conjunction with limit orders to automate FOREX trading limit orders specify an open position should be closed at a specified profit target. Interest Rate Risk: It can result from discrepancies between the interest rates in the two countries which represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction. Credit Risk: It is the possibility that when the deal is closed one party in a FOREX transaction may not honor their debt and this may happen when a bank or financial institution declares insolvency. The Credit risk is minimized by dealing on regulated exchanges which require members to be monitored for credit worthiness. Country Risk: Country risk is connected with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with exotic currencies than with major currencies that allow the free trading of their currency. Limiting Risk in your FOREX currency trading system FOREX trading can be very risky but there are ways to limit your risk and financial exposure. Every FOREX trader should have a trading strategy for knowing when to enter and when to ex Forex Market Case Study Analysis Forex Market Case Study Analysis Preface Just as stranger walk on path last arrive at their destination; project work is like a path after walking in which students can gain experience knowledge that can be stepping stone towards their success. It is such a work that enhances each every individual working capacity knowledge. The Importance of Thesis is that it is blending of both theoretical practical knowledge. Through the thesis, I got a golden change to have guidance under professionals senior executives which can definitely be a platform of establishing themselves. During my thesis work I visited AMA Library, Gujarat Chamber of Commerce and SBI which helped us a lot to gain information about Forex derivatives. This opportunist of thesis provided to me was not only a platform to develop enhance my appetite of learning but also served a fusion of the theoretical concept their practical application in corporate world. INTRODUCTION: To make a profit from the forex market of International trade you have a grip on mainly five key factors that affects a currency value. When making our trades we analyze five key factors which are as follows. Interest Rates Economic Growth Geo-Politics Trade and Capital Flows Merger and Acquisition Activity Interest Rates: Interest income and capital appreciation these two methods we can use to make profit from different in terms of countries interest rates. Interest Income. Every currency in the world comes attached with an interest rate that is set by its countrys central bank. All things being equal, you should always Buy currencies from countries with high-interest rates and Finance these purchases with currency from countries with low-interest rates. For example, as of the fall of 2006, interest rates in the United States stood at 5.25%, while rates in Japan were set at .25%. You could have taken advantage of this rate difference by borrowing a large sum of Japanese yen, exchanging it for US dollars and using the US dollars to purchase bonds or cds at the US 5.25% rate. In other words, you could have borrowed money at .25%, lent it out at 5.25%, and made a 5% return.Or you could save yourself all the hassle of becoming a money lender by simply trading the currency pairto affect the same transaction. Capital appreciation. Asa countrys interest rate rises, the value of the countrys currency also tends to rise this phenomenon gives you a chance to profit from your currencys increased value, or capital appreciation. In the case of the USD/JPY spread in 2005 and 2006, as the US interest rates stayed higher than Japans, the dollar continued to increase in value. Investors who traded yen for dollars gained from interest income as well as the US dollars capital appreciation. Economic Growth. Economic Growth is next factor when predicting a countrys currency movements.The stronger the economy, the greater the possibility that the central bank will raise its interest rates in order to the growth of inflation.Andthe higher a countrys interest rates, the bigger the likelihood those foreign investors will invest in a countrys financial markets.More foreign investors mean a greater demand for the countrys currency.A greater demand results in an increase in a currencys value. Hence economic growth inspires higher interest rates inspires more foreign investment inspires greater currency demand which inspires an increase in the currencys value. Geo-Politics. The currency market is the only market in the world that can be successfully traded on political news as well as economic releases.Because currencies representcountries rather than companies and any disturbance to the political landscape will oftentimes affect the direction in which the exchange rate moves. The key to understanding speculative behavior with respect to any geopolitical unrest is that speculators run first and ask questions later.In other words, whenever investors fear any threat to their capital, they will quickly retreat to the sidelines until they are certain that the political risk has disappeared.Therefore, the general rule of thumb in the currency market is thatpolitics almost always trumps economics. Trade and Capital Flows Before ever making a final prediction regarding the movement (or trend) of a particular currency you should determine whether or not the currency is dependent on its countrys capital or trade flow. Capital flow refers to the amount of investment a country receives from international sources. Trade flow is the income resulting from trade. Some countries can be very dependent their capital flow, while other countries are extremely sensitive to trade flows. Mergers and Acquisitions Merger and acquisition activity is the least important factor in determining the long-term direction of currencies. It can be the most powerful force in stagingnear-term currency moves.Merger and acquisition activity occurs when a company from one economic region wants to make a transnational transaction and buy a corporation from another country. For example, a European company wants to buy a Canadian asset for $20 billion, it would have to go into the currency market and acquire the currency to affect this transaction.Typically, these deals are not price sensitive, buttime sensitivebecause the acquirer may have a date by which the transaction is to be completed. Because of this underlying dynamic, merger and acquisition flow can exert a very strong temporary force on FX trading, sometimes skewing the natural course of currency flow for days or weeks. OBJECTIVE: Main Objective is for getting in depth knowledge of my topic. To critically analyze the Forex market of International trade. To analyze the five key factors that moves the Forex market and how to make profit out of them. To analyze the present data and forecasting a future movement of Forex market. METHODOLOGHY: * Introduction of the topic in detail. * For predict market movement I am using two methods like fundamental analysis and technical analysis. Technical analysis includes Candlestick Charts and Moving Averages (Simple and Exponential) SOURCES: Primary source  · Taking interview of the expertise in the Forex market. Secondary source  · Use Books, Magazines, Newspapers, Research papers and Internet as secondary sources LIMITATIONS:  · I have to follow only these five factors for move the Forex market.  · Interview is the only primary research in the Forex market.  · Inflation is the main factor which moves the Forex market but which is not included in the five factors.  · Merger and Acquisition is the least important factor. CHAPTER 1: INTRODUCTION OF FOREIGN EXCHANGE Foreign Exchange is the method or process of conversion/converting one currency into another currency. Currency becomes money and legal tender for a country. But for a foreign country it becomes the value as a commodity. Since the commodity has a value its relation with the other currency determines the exchange value of one currency with the other. It is just the game of supply and demand. For example, the US dollar in USA is the currency in USA but for India it is just like a commodity which has a value which varies according to demand and supply. Foreign exchange is one of the economic activity which deals with the means and methods by which rights to wealth expressed in terms of the currency of one country are converted into rights to wealth in terms of the current of another country. It involves the investigation of the method which exchanges the currency of one country for that of another. Foreign exchange can also be defined as the means of payment in which currencies are converted into each other and by which international transfers are made also the activity of transacting business in further means. Most countries of the world have their own currencies. The US has its dollar, France its franc, Brazil its cruziero and India has its Rupee. Trade between the countries involves the exchange of different currencies. The foreign exchange market is the market in which currencies are bought and sold against each other. It is the largest market in the world. Transactions conducted in foreign exchange markets determine the rates at which currencies are exchanged for one another, which in turn determine the cost of purchasing foreign goods financial assets. The most recent, bank of international settlement survey stated that over $900 billion were traded worldwide each day. During peak volume period, the figure can reach upward of US $2 trillion per day. The corresponding to 160 times the daily volume of NYSE. CHAPTER 2: ORIGIN OF THE FOREX MARKET The FOREX trading traces its history to centuries ago. Different currencies and the need of exchange them had existed since the Babylonians. They are credited with the first use of paper notes and receipts. In that time the value of goods were expressed in terms of other goods which were called as Barter system. The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system. Coins were initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of todays modern currencies. Before the First World War, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom and it appearing attractive to other nations who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy. However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the governments currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called Run on banks. The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in FOREX market activity. From 1931 until 1973, the FOREX market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the FOREX markets during these times was little. Inorder to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility. Nearthe end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis. TheBretton Woods system came under increasing pressure as national economies moved in different directions during the 1960s. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970s following president Nixons suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits. Thelast few decades have seen foreign exchange trading develop into the worlds largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjustforeign exchange ratesaccording to their perceived values. TheEuropean Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. InAsia, the lack of sustainability of fixedforeign exchange rateshas gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable. Whilecommercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The FOREX exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions. At present it also includes the dot com booms and the World Wide Web. The size of the FOREX market now dwarfs any other investment market. Theforeign exchange marketis the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in theforeign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that FOREX market is a lucrative opportunity for the modern day savvy investor SHORT INFO OF FOREX The history of FOREX trading was traced centuries ago. Different countries need different currencies and the need of exchange them had existed since the Babylonians. It is said that Babylonians were the first one who used paper notes and receipts. During those days, goods were exchanged for another goods based on the value of both the goods, which was known as barter system. But this system had some limitations and this lead to encourage establishing more generally accepted medium of exchange. It was also important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system. Coinswere initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of todays modern currencies. Beforethe First World War, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom and it appearing attractive to other nations who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy. However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the governments currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called Run on banks. The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in FOREX market activity. From 1931 until 1973, the FOREX market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the FOREX markets during these times was little. Inorder to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility. Nearthe end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis. TheBretton Woods system came under increasing pressure as national economies moved in different directions during the 1960s. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970s following president Nixons suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits. Thelast few decades have seen foreign exchange trading develop into the worlds largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjustforeign exchange ratesaccording to their perceived values. TheEuropean Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. InAsia, the lack of sustainability of fixedforeign exchange rateshas gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable. Whilecommercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The FOREX exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions. At present it also includes the dot com booms and the World Wide Web. The size of the FOREX market now dwarfs any other investment market. Theforeign exchange marketis the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in theforeign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that FOREX market is a lucrative opportunity for the modern day savvy investor CHAPTER 3: METHODS OF QUOTING EXCHANGE RATES There are two methods of quoting exchange rates. Direct method: For change in exchange rate if foreign currency is kept constant and home currency is kept variable, then the rates are stated be expressed in ‘Direct Method E.g. US $1 = Rs. 45.50. Indirect method: For change in exchange rate if home currency is kept constant and foreign currency is kept variable, then the rates are stated be expressed in ‘Indirect Method. E.g. Rs. 100 = US $ 2.5116 With the effect from August 2, 1993, all the exchange rates are quoted in direct method, i.e. US $1 = Rs. 45.50 GBP1 = Rs. 79.82 Method of Quotation In the Forex market there are two rates like one is for buying and one is for selling rates. This helps in eliminating the risk of being given bad rates i.e. if a party comes to know what the other party intends to do i.e., buy or sell, the former can take the latter for a ride. There are two parties in an exchange deal of currencies. To begin the deal one party asks for quote from another party and the other party quotes a rate. The party asking for a quote is known as ‘Asking party and the party giving quote is known as ‘Quoting party The advantages of two way quote. Ø It automatically ensures alignment of rates with market rates. Ø The market constantly makes available price for buyers and sellers. Ø Two-way price limits the profit margin of the quoting bank and comparison of one quote with another quote can be done immediately. Ø It is not necessary for any player in the market to show whether he intends to buy or sell foreign currency but this ensures that the quoting bank cannot take advantage by manipulating the prices. Ø Two-way quotes lend depth and liquidity to the market and which is very essential for efficient. Ø In two-way quotes for the first rate is the rate for buying and another rate is for selling. We should understand here that in India the banks which are authorized dealers, always quote rates. So the rates quote buying and selling is for banks will buy the dollars from him so while calculation the first rate will be used which is a buying rate, as the bank is buying the dollars from the exporter. Ø The same case will happen inversely with the importer, as he will buy the dollars from the banks and bank will sell dollars to importer. BASE CURRENCY Even if a foreign currency can be bought and sold in the same way as a commodity but theyre use as a minor difference in buying/selling of currency aid commodities. Unlike in case of commodities, in case of foreign currencies two currencies are involved so, it is necessary to know which the currency to be bought and sold is and the same one is known as ‘Base Currency. BID OFFER RATES The buying and selling rates are also referred to as the bid and offered rates. In the dollar exchange rates referred to above, namely, $ 1.6288/96, the quoting bank is offering (selling) dollars at $ 1.6288 per pound while bidding for them (buying) at $ 1.6296. So in this quotation the bid rate for dollars is $ 1.6296 while the offered rate is $ 1.6288. The bid rate for one currency is automatically the offered rate for the other. In the above example, the bid rate for dollars $ 1.6296, is also the offered rate of pounds. CROSS RATE CALCULATION US Dollar is the most trading currency in the forex market. In other words one support of most exchange trades is the US currency so margins between bid and offered rates are lowest quotations if the US dollar. The margins tend to widen for cross rates, as the following calculation would show. Consider the following structure: GBP 1.00 = USD 1.6288/96 EUR 1.00 = USD 1.1276/80 In this rate structure, we have to calculate the bid and offered rates for the euro in terms of pounds. Let us see how the offered (selling) rate for euro can be calculated. Starting with the pound, you will have to buy US dollars at the offered rate of USD 1.6288 and buy Euros against the dollar at the offered rate for euro at USD 1.1280. The offered rate for the euro in terms of GBP, therefore, becomes EUR (1.6288*1.1280), i.e. EUR 1.4441 per GBP, or more conventionally, GBP 0.6925 per euro. Similarly, the bid rate the euro can be seen to be EUR 1.4454 per GBP (or GBP 0.6918 per euro). Thus, the quotation becomes GBP 1.00 = EUR 1.4441/54. It will be eagerly noticed that in percentage terms the difference between the bid and offered rate is higher for the EUR: pound rate as compared to dollar: EUR or pound: dollar rates. CHAPTER 4: ADVANTAGES OF FOREX MARKET The Forex market is by far the largest and most liquid in the world but also day traders have up to now focused on looking for profits in mainly stock and futures markets. This is mainly due to the restrictive nature of bank-offered forex trading services. There are Advanced Currency Markets (ACM) offers both online and traditional phone forex-trading services to the small investor with minimum account opening values starting at 5000 USD. There are many advantages to trading spot foreign exchange as opposed to trading stocks and futures. These are the some advantages as under. Commissions: ACM offers foreign exchange trading commission free. This is in sharp contrast to (once again) what stock and futures brokers offer. A stock trade can cost anywhere between USD 5 and 30 per trade with online brokers and typically up to USD 150 with full service brokers. Futures brokers can charge commissions anywhere between USD 10 and 30 on a round turn basis. Margins requirements: ACM offers a foreign exchange trading with a 1% margin. In laymans terms that means a trader can control a position of a value of USD 1000000 with a mere USD 10000 in his account. By comparison, futures margins are not only constantly changing but are also often quite sizeable. Stocks are generally traded on a non-margined basis and when they are, it can be as restrictive as 50% or so. 24 hour market: Foreign exchange market trading occurs over a 24 hour period picking up in Asia around 24:00 CET Sunday evening and coming to an end in the United States on Friday around 23:00 CET. Although ECNs (electronic communications networks) exist for stock markets and futures markets (like Globex) that supply after hours trading, liquidity is often low and prices offered can often be uncompetitive. No Limit up / limit down: Futures markets contain certain constraints that limit the number and type of transactions a trader can make under certain price conditions. When the price of a certain currency rises or falls beyond a certain pre-determined daily level traders are restricted from initiating new positions and are limited only to liquidating existing positions if they so desire. The controlling of daily price volatility is the main mechanism but in effect since the futures currency market follows the spot market anyway the following day the futures market may undergo what is called a gap or we can say also in other words the futures price will re-adjust to the spot price the next day. In the OTC market no such trading constraints exist permitting the trader to truly implement his trading strategy to the fullest extent. Since a trader can protect his position from large unexpected price movements with stop-loss orders the high volatility in the spot market can be fully controlled. Sell before you buy: Equity brokers offer very restrictive short-selling margin requirements to customers. This means that a customer does not possess the liquidity to be able to sell stock before he buys it. When initiating a selling or buying position in the spot market a trader has exactly the same capacity in margin wise. In spot trading when you are selling one currency you are necessarily buying another. CHAPTER 5: FOREX EXCHANGE RISK The Risk Management Guidelines are primarily an accent of some good and prudent practices in exposure management. They have to be understood and slowly internalized and customized so that they yield positive reimbursement to the company over time. Any business is open to risks from movements in competitors prices, raw material prices, competitors cost of capital, foreign exchange rates and interest rates, all of which need to be (ideally) managed. Forex Risk Everywhere in the world risk is attached. Without risk there is no gain. Also the FOREX is not risk-free. Like if you are trading with substantial sums of money and there is always a possibility that trades will go against you.Also there are several trading tools so that can minimize your risk and with caution and above all education the FOREX trader can learn how to trade profitably and while minimizing losses. Risks Assuming you are dealing with a reputable broker and there are still risks to FOREX trading. Transactions are subject to unexpected rate changes, volatile markets and political events. Exchange Rate Risk: Exchange rate risk which refers to the fluctuations in the currency prices over a long trading period. The Prices can fall rapidly which are resulting in substantial losses unless and until stop loss orders are used when trading FOREX. And so stop loss orders specify that the open position should be closed if currency prices pass a predetermined level. Stop loss orders can be used in conjunction with limit orders to automate FOREX trading limit orders specify an open position should be closed at a specified profit target. Interest Rate Risk: It can result from discrepancies between the interest rates in the two countries which represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction. Credit Risk: It is the possibility that when the deal is closed one party in a FOREX transaction may not honor their debt and this may happen when a bank or financial institution declares insolvency. The Credit risk is minimized by dealing on regulated exchanges which require members to be monitored for credit worthiness. Country Risk: Country risk is connected with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with exotic currencies than with major currencies that allow the free trading of their currency. Limiting Risk in your FOREX currency trading system FOREX trading can be very risky but there are ways to limit your risk and financial exposure. Every FOREX trader should have a trading strategy for knowing when to enter and when to ex