Dozier: Foreign Exchange Market and Forward Contract

Dozier Industries has three options to choose from when deciding on the best way to handle their first non-US dollar denominated receivable: 1. Entering into a forward contract in which Dozier would sell forward British Pounds. 2. Execute a spot market transaction to create a synthetic forward hedge. 3. Do not hedge against any fluctuations between the Pound and the Dollar. For the purpose of the analysis, there are several assumptions made which are pertinent to the analysis that follows (see appendix). Forward Contract Hedge The first option available to Dozier Management to hedge the risk of the Great British Pound (GBP) depreciating against the United States Dollar (USD) is to enter into a contract to sell forward ? 1,057,500 for USD in 90 days. Therefore, on April 14th, when Dozier receives the remaining GBP from the security system contract, it would be required to deliver these GBP to the counterparty of the forward contract. This option would make the firm immune to any fluctuations in the value of GBP relative to USD over the next 90 days as the firm would lock in the USD/GBP exchange rate for their receivable of ? ,057,500. At the current 3-month forward rates of (1. 4198 USD/GBP), Dozier would capture guaranteed proceeds of $1,501,438. 50. Dozier also received ? 117,500 as deposit for the contract. The firm could sell this deposit on the spot foreign exchange market at the current rate of 1. 437 USD/GBP and receive $168,847. 50. Investing the proceeds of the deposit in a U. S. money market accou nt would yield $171,988. 00 in 90 days. It is important to note that since the contract was settled on December 3rd, the GBP depreciated by over 3% (from (1. 820 to 1. 437 USD/GBP). As a result of this movement, the USD value of the deposit was reduced by the same 3% from $174,135. 00 to $168,847. 50. Under the strategy of using the forward contract hedge, the firm would be assured of receiving a total of $1,673,426. 50 ($1,501,438. 50 plus $171,988. 00). Given the total cost of the project of $1,642,783, the firm would realize a profit of $30,643. 50, a margin of 1. 87%. This profit margin would be significantly below the projected 6% return. Spot Market Hedge An alternative to the forward contract hedge is Dozier could create a matching liability for the GBP receivable by borrowing GBP from the bank, immediately exchanging the GBP for USD in the spot foreign exchange market and then investing the USD proceeds in a three month deposit. At the time the receivable comes due, Dozier would use the GBP proceeds to repay the liability and keep the USD amount of the three month profit. These series of transactions would eliminate the risk of the depreciation of the Pound. GBP funding is available at a rate of 15% (13. 50% GBP prime rate plus 150 basis point credit spread). To create a GBP liability of ? 1,057,500 GBP in 90 days, the firm would need to borrow its present value of ? 1,021,188. 50. The firm would then receive $1,467,447. 88 at the current exchange rate. As the USD investment would be over $1. 0 million it would be classified as a large deposit and qualify for the premium interest rate. As in the previous scenario, Dozier would immediately exchange the ? 117,500 deposit into $168,847. 50. The total proceeds of $1,636,295. 38 could then be invested in a deposit bearing 8%, earning interest of $31,787. 57 over 90 days. The firm would receive a total of $1,668,082. 4 from the initial deposit, the principle and interest in the three month investment. Given the project costs stated above, the firm would realize a profit of $25,299. 94, representing a margin of 1. 54%. Spot Market Hedge The final option available to Dozier Management is to leave the 1,057,500 GBP receivable un-hedged. If the GBP were to appreciate against the USD over the next 9 0 days, Dozier would reap the full benefit of this appreciation. Conversely, should the GBP depreciate versus the USD over the next 90 days, Dozier would suffer a loss equal to the percent depreciation of the pound to the dollar. In a scenario where the USD/GDP exchange rate moves by  ±10%, the Dozier’s profits would range between negative $96,471. 13 (or 5. 9% of cost, making the project a loss) and $207,819. 16 (or 12. 65% of cost, effectively doubling the profit margin). Conclusion Dozier can capture a profit through both of the hedging strategies albeit it being smaller than the target six percent originally built into the bid. An un-hedged position is unacceptable due to the firm’s recent financial difficulties – it is critical that Dozier profits from this initial venture into this new market. While leaving the receivable un-hedged alternative does offer the greatest potential profit at the current prevailing FX rates, these profits are not guaranteed (see appendix for profit/loss possibilities given GBP/USD FX fluctuations). Given the importance of locking in a profit and the uncertainty of the GBP/USD future exchange rates, we recommend Dozier hedges the ? 1,057,500 receivable by exchange rate in Appendix Assumptions: †¢All transactions are executed immediately. †¢All transaction costs surrounding the forward contract are negligible. †¢All rates given in Exhibit 4 will not fluctuate over the 90 day time span. Deposits over $1 million are eligible for the three month deposit rate. Calculation of Profits: Spot Market Hedge Deposit Amount $ 168,847. 50 Interest Received $ 28,507. 45 Principal Amount $ 1,467,447. 88 Total $ 1,664,802. 82 Cost of Project $ 1,642,783. 00 Interest on Initial Deposit $ 3,280. 12 Net Profit on Project $ 25,299. 95 Profit Margin on Project1. 54% Currency Forward Hedge Receivable GBP $ 1,057,500. 00 Short GBP $ (1,057,500. 00) Long USD @ 3 month Fwd $ 1,501,438. 50 Deposit $ 168,847. 50 Cost of Project $ 1,642,783. 00 Interest on Initial Deposit $ 3,140. 50 Net Profit on Project $ 30,643. 50 Profit Margin on Project1. 87% Profit Margin Scenario Analysis FX Rates% ChgUSD EquivalentCost of ProjectDepositProfit/LossProfit Margin 1. 30 -10. 0% $ 1,374,323. 87 $ 1,642,783. 00 $171,988. 00 $ (96,471. 13)-5. 87% 1. 31 -9. 0% $ 1,388,205. 93 $ 1,642,783. 00 $ 171,988. 00 $ (82,589. 07)-5. 03% 1. 33 -8. 0% $ 1,402,228. 21 $ 1,642,783. 00 $ 171,988. 00 $ (68,566. 79)-4. 17% 1. 34 -7. 0% $ 1,416,392. 13 $ 1,642,783. 00 $ 171,988. 0 $ (54,402. 87)-3. 31% 1. 35 -6. 0% $ 1,430,699. 13 $ 1,642,783. 00 $ 171,988. 00 $ (40,095. 88)-2. 44% 1. 37 -5. 0% $ 1,445,150. 63 $ 1,642,783. 00 $ 171,988. 00 $ (25,644. 37)-1. 56% 1. 38 -4. 0% $ 1,459,748. 11 $ 1,642,783. 00 $ 171,988. 00 $ (11,046. 89)-0. 67% 1. 39 -3. 0% $ 1,474,493. 04 $ 1,642,783. 00 $ 171,988. 00 $ 3,698. 04 0. 23% 1. 41 -2. 0% $ 1,489,386. 91 $ 1,642,783. 00 $ 171,988. 00 $ 18,591. 91 1. 13% 1. 42 -1. 0% $ 1,504,431. 23 $ 1,642,783. 00 $ 171,988. 00 $ 33 ,636. 2 2. 05% 1. 44 0. 0% $ 1,519,627. 50 $ 1,642,783. 00 $ 171,988. 00 $ 48,832. 50 2. 97% 1. 45 1. 0% $ 1,534,823. 78 $ 1,642,783. 00 $ 171,988. 00 $ 64,028. 77 3. 90% 1. 47 2. 0% $ 1,550,172. 01 $ 1,642,783. 00 $ 171,988. 00 $ 79,377. 01 4. 83% 1. 48 3. 0% $ 1,565,673. 73 $ 1,642,783. 00 $ 171,988. 00 $ 94,878. 73 5. 78% 1. 50 4. 0% $ 1,581,330. 47 $ 1,642,783. 00 $ 171,988. 00 $ 110,535. 47 6. 73% 1. 51 5. 0% $ 1,597,143. 77 $ 1,642,783. 00 $ 171,988. 00 $ 126,348. 77 7. 69% 1. 3 6. 0% $ 1,613,115. 21 $ 1,642,783. 00 $ 171,988. 00 $ 142,320. 21 8. 66% 1. 54 7. 0% $ 1,629,246. 36 $ 1,642,783. 00 $ 171,988. 00 $ 158,451. 36 9. 65% 1. 56 8. 0% $ 1,645,538. 83 $ 1,642,783. 00 $ 171,988. 00 $ 174,743. 83 10. 64% 1. 57 9. 0% $ 1,661,994. 22 $ 1,642,783. 00 $ 171,988. 00 $ 191,199. 22 11. 64% 1. 59 10. 0% $ 1,678,614. 16 $ 1,642,783. 00 $ 171,988. 00 $ 207,819. 16 12. 65% Notes: *All numbers rounded to the nearest one-hundredth decimal place. *No probability weighting given to each sc enario.

The schematization of aesthetics was founded in Ancient times

The schematization of aesthetics was founded in Ancient times, which is manifested in Plato and Aristotle’s philosophies. Plato stance on aesthetic is very negative because it can distract the innate nature of soul. But his pessimism on aesthetics specifically of arts in general is best represented in his conjecture that an art â€Å"is thrice removed from reality†. Aristotle, on the other hand, has positive note on aesthetics because he sees art as representation of Forms or of truth. From these two ancient philosophers, the debate and conceptualization of aesthetics has transformed greatly in different periods. Friedrich Nietzsche posits that aesthetics is a means of preservation, meaning, beauty for him is encapsulated in terms of life prolongation. Leo Tolstoy postulated that aesthetics is based on peasant artistry because these workers understand the beauty of life. The complexities of aesthetics have metamorphosized throughout the progression of different civilizations and epochs of philosophy. In line with this, contemporary aestheticians like Jun'ichiro Tanizaki and Susanne K. Langer joined the bandwagon to advance aesthetics epistemic views. And these contemporary philosophers agreed on one point, that aesthetics or the valuation of beauty, as well as, its intricacies, nuances and elements, is greatly influenced by geographic positioning. This assertion was deduced from the fact that in every period novel idea on aesthetics sprouted wherein this period shaped new debates on the topic at hand. In summation, each period in philosophy supplemented new keys on the development of philosophy. In Tanizaki’s In Praise of Shadows, he juxtaposed Oriental aestheticism to Western aestheticism wherein he highlighted the significance of going back to the remnants of the past because it served as the defining moment of every stance on arts. He argued that one must embrace his own aesthetics even if it is tarnished and old because it is the precursor of one’s culture and tradition, and therefore, any concept of beauty from foreign culture must be disregarded altogether since it can eradicate the innate nature of one’s aesthetics. This is very prominent in the character of Tanizaki because when he was just a budding novelist he appreciated Western aestheticism, which has influenced his writing during those times, until he realized that he must represent Japanese concept of arts and beauty through literature. Tanizaki conjectured that the key note in Japanese concept of beauty is founded on the ideas of shadow. The architectural blueprint of traditional Japanese highly embodies shadows manifested through the quiet and murky interiors, which emanates a nostalgic atmosphere due to the independent existence and presence of shadows.   Tanizaki reinforced his idea of shadow in the articulateness of beauty in the form of polished tableware, temple toilets, kimonos, and Japanese stage, which are highly affected by the intensity of its dark spectrum. In lieu to this, Tanizaki pointed out that if light was applied on Japanese aesthetics all of its essence will diminish because light is the attribute of Western aestheticism, and likewise will happen if darkness was incorporated to Western arts. His basis on the above mentioned arguments is embedded on his credence on the delineation of Western culture and Japanese culture. According to Tanizaki, Western citizens in ancient times give importance to gold because it emanates unspeakable beauty when candlelight reflects it. On the other hand, Japanese people vehemently dislike light because it exposes the imperfection of their own white skin. According to Thomas J. Harper (translator of In Praise of Shadows), Tanizaki distinguish Japanese aestheticism based on shadows because it shows an unfathomable yet beautiful reverence and somberness, which is lacking in the magnificently lit arts of the West. Like Tanizaki, Langer also believed that one’s perception of aesthetics is dependent of his geographic positioning. At the first chapter of her book entitled Philosophy in a New Key: A Study in the Symbolism of Reason, Rite, and Art, she defined philosophy as â€Å"characterized more by the formulation of its problems than by its solutions of them†[1], which implies that each groups or societies see things in different perspectives and in their perception of things, they have their own understanding of what they see and have their own questions about it. Therefore, when it comes to beauty or aesthetics definitive schema, each society has the authority to posit their own stance about it, and mostly their stance is deeply rooted in culture and tradition. Tanizaki’s key of aesthetics is logically plausible in Langer’s philosophy since she espoused a relativistic means of understanding the nature of things and the contingency of the universe, in context with aesthetics. But Langer has her own philosophic inclination on beauty, wherein her key is discourse and representation. For Langer, aesthetics expresses the emotive form of arts through symbols and logic. But it must be noted that she saw that the main problem in expressing aesthetic is the means of expressing it. According to her, music possesses a degree of mood or emotion towards the meaning of life wherein it represents a form of epistemic valuation and truth. This music that embodies a certain feeling of purely perceptible matters can be expressed in innumerable manners, but the musician has to figure out which manner because wrong choice of manner will annihilate the content of its emotion and its purity. In toto, Langer saw philosophy as perpetually progressing, as well as aesthetics, because different epochs have either discovered or created a new key to elucidate the universe. She purported that the fecundity of new keys in the philosophical realm will always exists because human understanding is innately transformational. Unlike most philosophers like Bertrand Russell who argued that novel ideas in philosophy is impossible because what is left to humanity is to recycle old philosophies, Langer believed that the pasts has influenced on our present cogito but it does not necessarily follow that it will shape the present landscape of philosophizing. The point is that man’s rationality is not fixed; therefore present and future generation can discover or create a new motif of intellectual intercourse, which will eventually define the philosophy of their period. Tanizaki and Langer’s philosophies on aesthetics are significant because of its willingness and openness to the possibility of new keys, in terms of new perspectives and theories. It broadens the horizon of philosophical enterprise since new schemes and conceptualizations are doomed to realization. The only danger on their stance on the concept of â€Å"new keys† is that it jeopardized the universality of things, specifically of aesthetics or beauty. Their postulate that aesthetics valuation is based on geographic positioning or dependent of one’s social constructs breathes relativism, meaning, every perspective on aesthetic is sound and valid, or to put it simply â€Å"beauty is in the eye of the beholder†. And worse, the innateness of aesthetics seems impossible to be exposed because of diverse perceptions on it. REFERENCE: Langer, Susanne K. Philosophy in a New Key: A Study in the Symbolism of Reason, Rite, and Art 3rd edition ed: Harvard University Press, 1957. Tanizaki, Junichiro. In Praise of Shadows. Trans. Charles Moore, Edward G. Seidensticker and Thomas J. Harper: Leetes Island Books 1980. [1] Langer, Susanne. Philosophy in a New Key: A Study in the Symbolism of Reason, Rite, and Art.   Harvard University Press, 1957 p.4.

Innovators Dna Summary

The innovator’s DNA Summary This book focused directly on individual creativity in the business world and was based on a study of business innovators. The goal of the eight-year collaborative study was to put innovative entrepreneurs under a microscope and attempt to determine how they came up with their innovative ideas. In searching for answers, the study uncovered the origins of creativity, as well as the disruptive business strategies implemented in particularly innovative companies.They studied the habits of 25 innovative entrepreneurs and surveyed more than 3,000 executives and 500 individuals who had either started innovative companies or invented new products (pg. 4). The central question that was proposed to these individuals was, â€Å"Do I know how to generate innovative, even disruptive, business ideas? And do I know how to find creative people or how to train people to think outside the box? These are questions that seem to stump senior executives, who understand that the ability to innovate is the ‘secret sauce’ of business success. (pg. 7)† Their research had led them to identify five discovery skills that differentiate creative executives from executives. These were associating, questioning, observing, networking and experimenting. By innovators developing these skills, they are able to produce services and products that are superior to their competitors. However, the book also states that just because an idea is innovative, it does not guarantee the result will always be a financial success. So, one must be mindful of the fact that these discovery skills are critical for creating innovative business ideas, but they don’t always ensure success.

Personal Statement Example | Topics and Well Written Essays - 750 words - 25

Personal Statement Example Secondly, information is the starting, but not the finish point for critical thinking. Knowledge creates motivation, without which person cannot think critically. To generate a complex idea, you need to rework a lot of facts, ideas, texts, theories, concepts. The ability to think critically has anyone at any age, not only students, but even first-graders accumulate enough experience and knowledge. Of course, the children `s ability to think will still be improved with training, but even kids are able to think critically and quite independently. Speaking about the practical side of this issue, I would like to cite as the example driving a car. In fact it is a complex skill that is not howling, like the ability to ride a bike. Before I got behind the wheel, I had to pass a certain theoretical training. It did not required to memorize certain rules, but it was preferable to understand exactly how they work, where and why they are applied. The beginner, who is driving the first time, makes hundreds of unnecessary movements, because he has no necessary skills. During training I got them, but it was forbidden to ignore the instructions instructor. From the point of view of experienced driver each situation on the road is unique in some extent and requires the driver to take quick and optimal solutions. Often the conflict may be solved not in one way, but two, three or more, starting from the selection of the route, speed, and direction of the detour. It requires to time to evaluate the traffic situation in whole with all its con sequences. In each level of studying there is a complex area of skills based on elementary actions. You must go to the macro level to achieve real results. Similarly, in critical thinking we rarely make only one elementary thing. Thus we have to combine or use a lot of the basic skills of critical thinking. Even reading can be called an activity on macro level. When we read, we

How has the fund fared Essay Example | Topics and Well Written Essays - 750 words

How has the fund fared - Essay Example Furthermore, a company cannot be able to pay dividends if it is not making profits. Supposing a company is going through financial difficulties, such as high cost and declining sales that lead to losses, it becomes very difficult to afford funds to pay dividends to its shareholders. In such a situation, the company is forced to cut the dividends paid to its shareholders in order to conserve cash so the company can continue existing. It is for this reason that we shall assume that the dividends paid by the three companies will depend on their returns. Therefore, as shown in the table above, Berkshire Hathaway (NYSE) will be able to pay the highest level of dividends followed by General Electric (NYSE) and finally Microsoft (NASDAQ). Considering dividends payout as the factor determining the performance of the fund, Berkshire Hathaway (NYSE) will be the most attractive whilst Microsoft (NASDAQ) will be the least attractive. What where your biggest mistakes and successes? To evaluate ho w well or bad our fund has performed, it is important to reflect on different ways that are used in measuring stock performance. What is more important in doing this depends on the current type of investment and the exact information that we are seeking. For example, considering that we intend to sell our stocks in the short-term, with the aim of making profit, then the most important consideration will be assessing whether the market price of our stock is souring, declining, or if it has reached a plateau. With this in consideration, it will appear like we made a mistake by investing in Microsoft (NASDAQ) because its price is declining. Alternatively, if we assume a buy-and-hold kind of investment, then we shall be more concerned about the value of the stock many years to come, in which case the most important factor to consider is whether each stock has a pattern of earnings growth, which yields future expansion (Ryan and Deci, 2004). The other important aspects to consider when i nvesting include reward and risk. Measuring stock risk can be a bit difficult and that is why it was easy to make a mistake when investing in this fund. However, it is very easy to measure how the individual stocks performed from the financial statements - this measure could have been successfully used because the profitability performance reflects how the shares faired, at-least in the short-run. In other words, the profitability of these companies reflected their share price appreciation. In view of this, investment in Berkshire Hathaway (NYSE) was a very successful decision, but investment in Microsoft (NASDAQ), whose share price performed poorly, was a bad investment. Despite the fact that investment in a company such as Berkshire Hathaway (NYSE) was a success because the company’s profitability as well shares performance was remarkable, the aspect of risk, which is more difficult to measure, can turn an investment that was preserved successful in the short-run unsuccessf ul in the long-run. Actually the issue of risk becomes even more difficult because different individuals have different perspectives of what risk entails. Some individual may perceive that a risky stock is the one that is not worthy its price, and that a stock is less risky when the price that was paid to purchase it is considerably below the company’

Why do policy makers see the family as central to the solutions of Essay

Why do policy makers see the family as central to the solutions of social problems - Essay Example In this paper, I will discuss the problem of older people in the United Kingdom and see why this issue related to the family is so important for policy makers. The demographics of the United Kingdom have been changing over the years in a manner that the proportion of older people is increasing. As a result of higher life expectancy at birth as well as above 65 and lower birth rates - at 2.2 per woman - the proportion of the elderly is expected to grow even further (Jeevans, 2004). It is estimated that by 2025, over 30 percent of the UK population will be above the age 55. Not just that, the government projects that as early as 2014, the number of people above 65 will be higher than those below 16. In 1981, the life expectancy of men at 60 was another 16 years while that of women was another 21 years. In 2003, it was 20 for men and 23 for women. The government projects that in 2026, it will be 24 and 27 for men and women respectively (Jeevans, 2004). According to the International Longevity Centre - UK (2006), the population in the UK and Wales is expected to grow by 6.5 million till 2031, of which 5.6 million will be above 65 years and 2.3 million above 80 years. The south east and north-west parts of the country have the highest number of people above 65 years while the east Midlands and the east are expected to have the highest growth in the number of elders by 2028. Although the baby boomer generation looks at ageing in a considerably different manner than did earlier generations, with more people above 65 having gainfully employed lives and 30 percent of people above 75 helping out other older people who are in need (Jeevans, 2004), there are frequent media reports of institutional abuse on the elderly, particularly on those who suffer from dementia or learning disabilities. According to the International Longevity Centre - UK (2006), 1 in 100 people in the UK suffer from dementia. The figure is 1 in 20 for the age group between 70 and 79 years, 1 in 5 for people between 80 and 85 and 1 in three for those above 90. Hence, the issue of abuse takes crucial importance for such elders who are not able to look after themselves. The prevalence of elder abuse While the proportion of older people in the population of UK, there is also an increasing tendency of treating seniors in an abusive manner. Although there is little academic research on elder abuse in the United Kingdom, the lack of social awareness regarding this problem subjects older people to pathetic conditions at the twilight of their lives. To make things worse, elder abuse is quite prevalent in the family setting, making this a concern for social policy makers. The most comprehensive study on elder abuse was conducted by Ogg and Bennett (1992) who surveyed a sample of about 2,000 people. They found that about 5 percent of the elders above 60 years of age suffered verbal or psychological abuse while 2 percent suffered physical or financial abuse from family and relatives. However, it must also be noted that not many older people would like to report abuse from the family. A survey by the Community and District Nursing Association found in 2003 elder abuse was as prevalent as 88 percent and 12 percent of elders reported abuse at least once

International Acoounting theory Essay Example | Topics and Well Written Essays - 1000 words

International Acoounting theory - Essay Example The process of cutting down disparities among national accounting regulations, also referred to as the process of harmonization, has undoubtedly made steps forward since profound work began on it as freshly as 1967. Taking into account the dissimilarities that are present between the accounting goals of nations at various levels of progress and with various legal structures, possibly the astonishing thing is that any development at all has been accomplished in such short notice (McCarthy 2003). There are several theoretical assumptions of categorizing countries when taking into account their accounting requirements. One apparent difference is between the democracies and the authoritarian administrations that govern a great portion of the world. This difference does not match up efficiently to a partition between free enterprise and centrally regulated economies, because there are democracies such in the case of India with a considerable section of the economy in the control of state-owned and state-regulated enterprises, and there are those countries which are communist such as Hungary and Yugoslavia that leave capacity for a number of free enterprise (Solomons 1986). The relevance of this difference for financial accounting depends in the contribution of private investors as well as the capital market. They will commonly be much more relevant in free enterprise economies, and financial accounting will function in the same way more important role in the allocation and dist ribution of scarce resources (ibid, 53). Another evident difference is between the industrialized nations of North America, Europe, Australia and Japan and developing nations of Asia and Africa. Once again, the distinction is one of scale rather than of type. Every country is developing or retrogressing, and accounting has its task to fulfil in that growth in all of them. Majority