Plan on a Smoking in Pregnancy-Samples for Students-Myassignment

Question: Make a Project Arrangement on a Smoking in Pregnancy. Answer: Presentation The essential focal point of the venture is to annihilate the impacts that relate to smoking in pregnancy. The objective populace is ladies of childbearing age (18) in Illinois state who are pregnant or have possibilities to have youngsters in future. The run time of the task is four years. The time span will be adequate in the combining of the activities center destinations and the sub-targets (strategic and operational goals). The spending plan of the venture will be $65000. The activity will be blended to hold pregnant ladies who are increasingly educated about the medical advantages of being without smoking. Foundation and setting Medical problem The greater part of the children in Illinois State that have been destined to pregnant ladies who were smoking have been of a lower weight, conceived rashly, contract the Sudden Infant passing Syndrome and some are brought into the world with birth abnormities. Smoking can be characterized as the inward breath of tobacco through its items either legitimately or in a roundabout way. The impacts of smoking on the unborn children are not brought about by the smoking of the mother alone however even constantly and third-hand smoking. Recycled smoking alludes to the inward breath of tobacco smoke from a stogie from a smoker. The inward breath of this smoke has the impacts of decreasing the heaviness of the infants, prompts ear issues, improvement of asthmatic and lung diseases that induce SIDS among babies after birth(1). Third-hand smoking portrays the inward breath of the remaining parts of stogie that could have stopped up on family things like covers after the smoking of cigar(2). Infants that take in the third-hand smoke are probably going to agreement to inhale issue related diseases. The venture will join every one of these definitions to achieve its foreordained targets completely. Network Illinois State will be the essential topographical zone of core interest. The focused on populace will be ladies Medical problem defense Significance Identify that smoking during pregnancy is a factor that has added to high mortality passings because of the unfriendly impacts that infants are presented to. The mother additionally is presented to wellbeing dangers that are identified with smoking(1). Evasion of smoking among pregnant ladies has medical advantages that are not constrained to; Infants Infants are brought into the world progressively develop. Abrupt newborn child passing disorder probabilities are checked. Infants are brought into the world solid with the correct loads and liberated from breathing issues Instances of stillbirths are controlled. Mother Increasingly solid during pregnancy Diminished intricacy at the hour of conveying the child. The teeth will be more white that is liberated from the dim earthy colored stains from tar in the stogie. The skin will have an all the more even tone which is liberated from wrinkles. The ladies will be proactive and in a superior spot to deal with the child. The affectability to smell or to taste will be improved. Patterns Information that is explicit to the Illinois state is right now not accessible. The examples that will be utilized will identify with the United States measurements on the issue. The insights show that more than 40000 people in the United States kick the bucket because of second-hand smoking(1).The pervasiveness of tobacco use in ladies is 13.7%. 23.6% of ladies smoked during pregnancy, 10.8% utilized stogies during pregnancy, and 16% smoked in the wake of conceiving an offspring. Significance/Costs of the Trends Information identifying with the costs that legitimately depict the smoking based impacts among pregnant ladies isn't accessible. There is proof that smoking is regular among pregnant ladies yet there are no points of interest on the costs that are related with tobacco use in pregnancy. Endeavors are in progress to use the Smoking-Attributable Mortality Morbidity and Economic Costs (SAMMEC). SAMMEC will help in the age of information that will evaluate the costs that will give a meaning on the costs that the wellbeing division causes in the expanded smoking in pregnancy(2). The SAMMEC will establish the investigation of the immediate and circuitous expenses related with the mortality and the dreariness. The SAMMEC is an apparatus that is utilized in the controlling of tobacco utilization among people in the USA. Mediations Human services suppliers guarantee that pregnant ladies that visit the medicinal services places in Illinois are screened of any tobacco substances in their frameworks. The aftereffects of the tests are then sent to the network activity program organizers who render social insurance administrations to the influenced ladies. Testing for smoking is urgent at whatever point one visits a wellbeing place simply like some other test.The government has apportioned adequate assets regarding offices to help in the provision of clinical consideration to the influenced ladies. Proof based systems are used with the goal that the social insurance administrations are customized to fit the requirements of the objective population(6). The people group is consolidated in the diminishing of the cases that are identified with smoking in ladies. For example, it is associated with instruction programs that sharpen the ladies on the impacts of tobacco use in pregnancy.The wellbeing parental figures manage people in order to make a road for observing of the influenced gathering in order to understand the viability of the network activities. Practicality Illinois state has had a few projects that have added to the health of pregnant ladies as smoking is concerned. The supporting associations incorporate; Battle for Air Climb Lung Force American Lung Association Proof for objective, targets, and sub-goals Objective Exploration that is identified with dynamism in the human services giving to the populace. Sub-Objective 1.1: It is to the human services clear that when instruction activities are made to the social insurance providers, at that point information the board will improve to a 8% sound level. The quantity of casual parental figures will decay by an expected 5%. Sub-Objective 1.2: With the expert wellbeing parental figures, the nature of clinical consideration will improve by 5% with occurrences of expert undue consideration decreased by 2.5% which is honorable constantly 2019. Target 2: Combination of network programs, the legislature and the tobacco creating companies(2).The offer is to guarantee the help of the significant partners in the decreasing of the tobacco use by pregnant ladies. Sub-Objective 2.1 Network programs, the administration and tobacco organizations ought to be sharpened on the importance of annihilation of tobacco utilization among pregnant ladies thus that they can completely bolster the program that means to decrease its wellbeing effects(3). Sub-objective 2.2 Guideline of advertising of the tobacco items ought to be actualized to lessen the temptations of the showcasing procedures among ladies of childbearing age(4). Objective From the two goals recorded, the chief point of the venture is altogether annihilate the smoking in pregnant ladies to understand a solid network Medical problem examination Essential partners: Ladies to be moms Infants conceived by smoking ladies Optional partners: Families Companions Human services suppliers Tobacco organizations The administration Undertaking accomplices: American Lung Association Objective, goals, and sub-targets Objective: To destroy smoking in pregnant ladies in Illinois State Goals and sub-targets Target 1: Expanding the capability level by 7% among the clinical guardians in the following five years. Sub-objective 1.1: Expanding information the executives by 8% by 2019. A decrease in the quantity of casual parental figures. Sub-objective 1.2: Proficient undue consideration will be diminished by 2.5%, and the nature of clinical consideration will improve by 5%. Target 2: Mix of the considerable number of partners on the side of the destruction of smoking in pregnancy. Sub-objective 2.1: Teaching of the partners of the significance of smoking free pregnant ladies Sub-objective 2.2: Guideline of advertising of tobacco programs through media stages. References Suzuki K, Sato M, Zheng W, Shinohara R, Yokomichi H, Yamagata Z. Impact of maternal smoking suspension previously and during early pregnancy on fetal and youth development. Diary of Epidemiology. 2014 Jan 5; 24(1): p. 60-6. Novakovic B, Ryan J, Pereira N, Boughton B, Craig JM, Saffery R.. Postnatal solidness, tissue, and time explicit impacts of AHRR methylation change in light of maternal smoking in pregnancy. Epigenetics. ; 9(3): p. 377-86. Dolan CV, Geels L, Vink JM, Beijsterveldt CE, Neale MC, Bartels M, Boomsma DI. Testing causal impacts of maternal smoking during pregnancy on offsprings externalizing and disguising conduct. Conduct hereditary qualities. 2016 May 1; 46(3): p. 378-88. Skripak JM. Relentless impacts of maternal smoking during pregnancy on lung capacity and asthma in young people. Pediatrics134(Supplement 3): S146-.S146. 2014 Nov 1. Dior UP, Lawrence GM, Sitlani C, Enquobahrie D, Manor O, Siscovick DS, Friedlander Y, Hochner H.. Parental smoking during pregnancy and posterity cardio-metabolic hazard factors at ages 17 and 32. Atherosclerosis. 2014 Aug 31; 235(2): p. 430-437. Chamberlain C, O'Mara?Eves An, Oliver S, Caird JR, Perle SM, SJ, Thomas J. Psychosocial intercessions for supporting ladies to quit smoking in pregnancy: The Cochrane Library.; 2013 Oct 23. A. H. Examples of stopping smoking during pregnancy and subtypes of preterm birth. In141st Tong VT, Dietz PM, Morrow B, D'Angelo DV, Farr SL, Rockhill KM, England LJ. Patterns in smoking previously, during, and after pregnancyPregnancy Risk Assessment Monitoring System, United States, 40 locales, 20002010. 2013 Nov 8; 62: p. 1-9. Castrillo SM, Rankin KM, David RJ, Collins Jr JW.. l. ;18(10). Little for-gestational age and preterm birth across ages: a populace based investigation of Illinois births. Maternal and youngster wellbeing diary. 2014 Dec 1; 18(10): p. 2456-64. Rockhill KM, Tong VT, Farr SL, Robbins CL, D'Angelo DV, England

United States as a World Superpower

Ashley Torgerson Dr. Earthy colored International Relations second May, 2012 United States as a World Superpower The ascending to the status of world super force doesn't occur incidentally. To investigate the excursion to the top, we should perceive the battles and hindrances that were survived. As Americans we can gladly say that we live in a nation with comprehensively perceived matchless quality. As expressed before, it was anything but a simple title to acquire. Thinking back from the beginning of time we can see explicit instances of how we started our ascent to control and what it has taken to protect our power.Some of our later history has indicated that numerous individuals are addressing how much longer we will have the option to hold this force. I anyway feel firmly that America can stay a world superpower. America was not generally observed as one of the world’s superpowers. Our ascent to control was centered around a couple of unmistakable main thrusts. These incor porate the ascent of free enterprise, military predominance, and a financial blast all which happened from Post war period, for example, World War II and the Cold War (Baker p. 10). These components added to the picking up of America’s power.It is additionally imperative to take a gander at the variables that enabled America to keep this force. Those impacts were encircled around America’s capacity to turn into a command power in the universal framework, and keeping up a steady economy (Mandelbaum p. 213). History has demonstrated numerous instances of nations rising and tumbling from power. Because of this numerous Americans feel they we are on a comparative way. Adding to this descending way is the expanding intensity of Asian and Middle Eastern (Bar p. 41). Of these nations China is perceived as one with the most potential.China has increased an expanding job on the planet framework through material abilities, hard powers, and through human or social capacities or d elicate forces. (Gilley p. 245) China’s greatest draw is its material abilities since it has driven the country to become one the universes quickly developing ventures. â€Å"During the three decades to 2010, China accomplished maybe the most quick continued pace of monetary improvement throughout the entire existence of the human species, with its genuine economy developing just about 40-overlay somewhere in the range of 1978 and 2010. † (Unz p. 12) While this shows the immense intensity of China’s financial area, its delicate forces can't be over looked.The Chinese work power bolsters its inner interest for items as well as supports that of the several different nations the items are transported as well (Unz p. 11) Without a huge talented work power this may not be conceivable. From these reasons we can presume that China is taking steps the correct way of super force and in years to come may even outperform the United States. In spite of the fact that the eme rgency of intensity battle is happening, America won't go down without a battle. â€Å"The United States despite everything has the world's most grounded military. (Walt p. 6). Having a solid military sets up the United States incomparable force as well as it implements to different nations that they can keep that power. With power comes a responsibilty. The United States military powers are frequently called upon to intercede in overall issues, showing its predominance in worldwide undertakings. Beside military mediation the United States assumes a key job in worldwide undertakings through financial venture (Ferguson p. 23). Interest in a far reaching of zones keeps the economy diverse.We see the impacts of a various economy day by day through items being attractive all around the globe (Brzezinski p. 291). The United States has the accessible assets to accommodate the world market. These variables go into making life simpler in the United States, in this manner creating a general public that is living longer and going through more cash (Brzezinski p. 292-294). Eventually these reasons secure the United States position as prevailing force to be reckoned with. Dependent on these different reasons I feel unequivocally that the United States has the ability to stay as a world superpower, not being outperformed by China.It is genuine that numerous variables go into deciding a politically influential nation however these three stand apart to me: financial steady, military force, and at the highest point of social and social finish of the range. While China may have the financial way to contend, they don't have the predominant military power the United States has. â€Å"United States is the main nation with the way to attack numerous medium-size nations in different landmasses and still support not many setbacks. No other nation as of now is even close being able to extend military force with such power and range† (Internet Source).The mix of financial secu rity and military force has prompted the United States huge effect in the worldwide framework. Authoritative obligations are constantly put on the world’s prevailing force. The United States has managed these obligations regarding numerous decades and has demonstrated its capacity to lead the world in an amicable manner. Anna Applebaum from the dWashington Post composes: â€Å"The United States is a superpower without a partner,† implying that the United States has taken care of the world as a predominant force for this long and isn't losing handle of that. BibliographyAcademic Journals 1. Bar, Shmuel. â€Å"America's blurring Middle East impact. † Policy Review 166 (2011): 41+. Scholarly OneFile. Web. 22 Mar. 2012. 2. Cook, Andrew. Developing a post-war request: the ascent of US authority and the beginnings of the Cold War. † CHOICE: Current Reviews for Academic Libraries Feb. 2012: 1129. Scholarly OneFile. Web. 22 Mar. 2012 3. Ferguson, Yale H. â€Å"Ap proaches to Defining ‘Empire' and Characterizing United States Influence in the Contemporary World. † International Studies Perspectives 9. 3 (2008): 272+. Scholarly OneFile. Web. 21 Mar. 012. 4. Gilley, Bruce. â€Å"Middle powers during extraordinary force changes: China's ascent and the eventual fate of Canada-US relations. † International Journal 66. 2 (2011): 245+. Scholarly OneFile. Web. 4 May 2012 5. Unz, Ron. â€Å"China's ascent, America's fall: which superpower is increasingly compromised by its ‘extractive elites'? † The American Conservative 11. 5 (2012): 12+. Scholastic OneFile. Web. 4 May 2012. 6. Walt, Stephen M. â€Å"The end of the American period. † The National Interest 116 (2011): 6+. Scholarly OneFile. Web. 4 May 2012. Books 7. Brzezinski, Zbigniew, and Brent Scowcroft.American and the World: discussions on the eventual fate of American international strategy. New York: Basic Books, c2008, 291 p. 8. Mandelbaum, Michael. The thrifty superpower: America’s worldwide administration in a destitute period. first ed. New York: Public Affairs, c 2010, 213 p. Paper 9. ANNE APPLEBAUM. â€Å"Superpower without a Partner. ,† The Washington Post, November 24, 2009 Tuesday, Editorial Copy, Pg. A19 782 words Internet 10. Futurist, The. â€Å"Why The US Will Still be the Only Superpower in 2030. † typepad. N. p. , n. d. Web. 4 May 2012. http://futurist. typepad. com/my_weblog/2006/05/why_the_us_will. html

Whats a Retainage Fee (And How Its Used)

Whats a Retainage Fee (And How Its Used) Retainage fee is an amount withheld from a contractor by the client or project owner. It is usually negotiated and agreed upon before the start of a project.The purpose of a retainage fee is to give the client a guarantee that the work will be completed on time and as per his needs.Although the successful completion of a project is expected, contractual details have to be put in writing.Although the concept of a retainage fee can be implemented in any business setting, it is most common in the construction industry.This has been necessitated by the complexity of construction projects.These projects often get delayed as changes are introduced in the course of the work.If you are a contractor, it is important that you actively participate in the negotiations of the retainage fee.In case you are not available, then an attorney can help. Just remember that it will cost you.Attorney costs aside, a construction attorney might be the best option for you especially if you are not experienced enough.If you are getting your first project with a big client, hiring an experienced attorney for the negotiations can be very helpful.As a project owner, a retainage fee will protect you from liens, claims and contractor defaults.The fee is only a small percentage of the full project cost (usually 10%).Still, you are assured of saving some money to offset any loss and inconvenience brought about by any incomplete work.History of Retainage FeeRetainage fees started in the UK during the construction of the UK railway system in the 1840s. The project was obviously a big one and the amount of work was more than the workers could complete.This created a demand for new contractors to join the project.Some of them were not only inexperienced, but also lacked the qualification to successfully complete their assigned portions of the work.This was a problem for the railway companies and they had to come up with a way of mitigating the risks and losses resulting from this.It became common f or them to withhold up to 20% of the total cost of the work. This was however designed to target the contractors’ profits only.The purpose of this was two-fold, and is still the same today. It is to provide the client with some protection from liens and defaults while giving the contractor an incentive to finish the work accordingly.There may be cases of contracts not implementing a retainage fee.This is not common and may not be good practice for big projects. All the same, it happens depending on the relationship between the client and contractor.The biggest reason a client can decide to ignore this provision is a record of successful work from a contractor.This will work on a project by project basis and cannot be expected to be the norm with a particular client.If you have consistently provided great services to a client for some time, he may decide to forego the retainage fee.This is definitely to your delight as a constructor and can improve your cash flow but comes with ext ra pressure.RETAINAGE FEE ACCOUNTSThe retainage fee is part of your business.As such, it has to be reported in your books. As a transaction by two parties, the amount involved is reported differently by the client and contractor.Retainage Fee PayablesIn accounting terms, money either leaves the company or comes into the company. When money leaves the company, it is termed “payable”. This will be the case for the party making the payment.In the case of a project you have assigned to a contractor, you are the one paying the money to him. He is the service provider while you are the recipient of the service. As such, your obligations are different.The full cost of the project will be recorded in your books using a suitable account description. This will be reflective of the kind of work being done. It may be “Boardroom Repairs,” “Ohio Branch Construction” or anything else.However, the retainage fee slightly differs from this overall cost. Since this is not paid until the en d of the project, you will record it as a liability. This is a payment you are expected to make at a later date.Retainage Fee ReceivablesAs the contractor, you also have to record the details of the retainage fee in your books.Because you are to receive payment, this will be recorded as a “receivable”.Although the payment is a liability to the client, to you it is an asset. You will be like a creditor to the client who now owes you money.When preparing your financial reports, e.g. your balance sheet, you will record this as a current asset.When you finally get paid, this can be used for operational purposes as it becomes part of your cash flow.You can also invest it depending on your business preferences.STEPS FOR COLLECTING RETAINAGE FEEThe retainage fee is an amount which should be collected.And for your benefit, you should collect it as soon as possible.The earlier you receive the full amount payable to you after the completion of the project, the better.As with other financi al obligations, your client is also aware of the need to pay the retainage fee.All the same, that will only happen after you have done all that needs to be done according to the contract you signed.Here are the steps you should take to collect your retainage fee soonest and with minimum challenges.Complete the Punch ListOne of the biggest obstacles to receiving the withheld payment is the punch list.Though closely associated to a checklist, the two are very different from each other.A checklist is a list of the things which should be done as part of the general project work. This is essentially a breakdown of the major tasks you are to work on.A punch list is different in that it is generated almost at the end of the project.Normally, you will have checked all the items on the project’s checklist.The client will then do a visual inspection of the project and list down what needs to be worked on in order to give approval for the payment.Depending on the construction work you were d oing, the punch list could include things like fixing leaking taps, unfinished paint jobs, faulty wiring detected in some rooms etc.All in all, the punch list is the project owner’s list of the small details you need to check on. This is the work which will make the client approve of the project’s completion. Provide Close-out DocumentsAfter successfully dealing with the punch list, there is one more thing to do. You have to provide the close-out documents.The close-out documents are those detailing the usage of the property and anything that is a core part of it.This will include copies of the legal documents indicating the agreements between you and the client.You will also need to provide warranty documents showing the relevant guarantees you are providing to the client.If the construction has used materials from your subcontractors, those materials should have a warranty.In many cases, these will include HVAC systems and other electrical systems.Whether the client knows your subcontractors or not, the retainage fee is based on his agreement with you.It is therefore upon you to ensure that all these are provided.If you sourced for material from other sources, you can give the client a copy of the documents while maintaining the original.These documents give the client an assurance of a good job done and availability of support.Submit the Retainage InvoiceAfter all these, the last thing to do is provide the client with an invoice for the retainage fee payment.The invoice is the legal document indicating your claim of the payment initially withheld.Without an official submission of the invoice, you will not be deemed to have requested for the payment.At the same time, you will be mistaken to think that the client will go ahead and make the payment without you requesting for it.Although he is obligated to pay, he will most likely wait for your invoice.For accounting purposes, no payment can be done without the supporting documents.You therefore have to pro vide this in a timely manner to prevent further delays.CHALLENGES WITH RETAINAGE FEEThe retainage fee, as good as it is for project owners, it is a serious challenge for contractors.Where subcontractors are involved, they tend to be the most affected.This is because the general contractor will often withhold some amount from them, just as the client has done.Withholding money from subcontractors has been proven to cause practical issues, especially with regards to cash flow.Since the subcontractor is meant to perform well yet needs the money to work, business relations can become strained.In 2004, the American Subcontractors Association published a report on the practices of retainage fee.It showed that a majority of the main contractors abuse the retainage principle. Here are some of the findings.After a successful completion of the project, subcontractors waited between 30 to 900 days before getting the retainage paid. The average wait time was reported to be 167 days (almost 6 mo nths).The worst wait times were reported to be an average of 529 days (almost 1.5 years) with the longest time being 2,500 days (almost 7 years)In more than 10% of their jobs, subcontractors have received less than the full amount withheld from them.There was reported a widely-held belief that retainage was not being used to ensure work completion. Instead, it was being used by the main contractor and project owner as leverage to push the smaller players into weaker positions.SPEEDING UP COLLECTION OF RETAINAGE FEEThe process of getting paid the retainage fee may take a short or long time.This is dependent on many factors and some of them may be beyond your control.For example, the client may not have the money to pay at the time you make the request.This can be due to cash flow problems. The client may also have planned for other expenses which according to him, are more urgent.This can be very unfortunate but it happens all the same. Money is never in constant supply and budgeting has to be done. This calls for prioritizing payments as a means of handling financial obligations.This is why debtors are usually given notification for payment so they can plan accordingly. Many business payments are done within 30 days after the request is made.This can change depending on the specific agreement between the parties.For a smoother flow, use these tips to speed things up.Stay Aware of the Retainage ReceivablesIf you have several projects you are working on, you can easily forget about the retainage fee. You can work to meet the needs of the other clients and lose memory of the pending payment.When this happens, it will definitely be long before you get paid. Remember that it in many cases, your client may not be in a hurry to pay you as he prioritizes other payments.Keeping in mind that there is some money owed to you is the first step towards working on receiving the money.This will remind you of whatever needs to be finished.There are two lists which will guide y ou in completing the work.1. The project’s checklist â€" the main items on the project’s checklist have to be completed. If you had envisioned finishing the whole project in two years, then try to complete the checklist in a year and a half. This gives you time to work on the punch list.For example, you may be constructing a new office block. The checklist for this may include a 10-story main building, a food court, parking lot and installing security systems. Once these are done, the client carries out an inspection.2. The project’s punch list â€" the client’s inspection will provide a report indicating whether everything is according to his requirements. This process may take some days depending on the size of the project.Anything outlined by the client as needing your attention has to be worked on. From fixing plumbing problems to making slight adjustments, anything can be required. It is only thereafter that you can proceed with your retainage request.Focus on Closing Ou t ProjectsClosing out projects may sound easy but often involves many activities. As such, the process can easily get derailed if you don’t focus on it.In working on closing out the current project, document everything that has been done in the course of the project. Ensure you have the relevant documents for whatever installations have been done.There will be a need for you to provide user manuals to facilitate quick troubleshooting in case of any problems. Some of the installations requiring user manuals are elevators and security systems.There may also be need to train the people who will be operating these systems.Technical training will be necessary to avoid unnecessary calls to your support center.This also empowers the client and gives them control over their property.You can easily get overwhelmed by all the work involved in closing out projects. To avoid this, have a dedicated team to handle it.You can have project managers who follow up with the workers and stay updated to any changes which occur to the project.This is also the person who will follow up with the client on the payment in case you don’t have a dedicated debt collector.Here is a video on some tips on what to do after closing out the project. Stay in Contact with the ClientHaving done all that you were expected to do and probably even exceeded your client’s expectations, do not cut off communication.Do not leave the task of getting paid to the project manager or debt collector.You can stay in contact with the client and find out his experience of the new facility.In the communication, remind him of the pending payment and work on sustaining good business relations.If you are the owner of a construction company, calling the project owner can go a long way in pushing for the retainage fee to be released.Just make sure that all the documentation has been done and there is nothing pending from your side.RETAINAGE FEE ALTERNATIVESRetainage has been in existence for a long time.Over the years, there have been complaints and calls to abolish it.There have been attempts at implementing different strategies of ensuring the involved parties still achieve the same goals. Source: Kegler Brown Hill + RitterThe reasons for calls for change have mainly been revolving around cash flow challenges.Three of the suggested alternatives are mentioned below.Propose to your client the one you think might work best for you. Maybe you will form part of the change.Trust AccountsA trust account can be implemented in various ways. Whichever way is agreed upon, these remain to be one of the contractors’ most relished options available.When a contract agreement includes the clause that the retainage fee will be held in a trust account, the contractor is most happy.In this arrangement, the retainage is deposited in a trust account and a trustee assigned to maintain it. The trustee must be impartial in his dealings with both you and the client.That said, the trustee has the opportunity to invest the money deposited to the contractor’s benefit.This gives you the peace of knowing that your money is sure to come, but it’s also growing.The client on the other hand has n othing to lose.In the even that there are any disputes, you will follow the stipulated process as outlined in the trust account’s terms and conditions.Performance BondsA performance bond is a promise given to a client to insure him against the risks of a contractor failing to successfully complete a project.The bond provides compensation which is similar in amount to the retainage fee.Performance bonds are usually given as a guarantee that a contractor will finish the job. In the event that he doesn’t, then the issuing institution compensates for the loss which has been experienced as a result.Collateral DepositsAnother option which can be attractive to project owners is the deposit of collateral.If you deposit collateral with the bank or directly with the client, you put that asset on the line for possession in case you fail to hold to the terms of the contract.Collateral can be anything of value ranging from land, a house or a car.This gives you the opportunity to receive the full payment of the project so you can comfortably work.Upon completion of the project, you get your deposited security back.CONCLUSIONRetainage fee has been used in the construction industry for a long time.The concept seeks to ensure the contractor finishes the job according to plan.Normally at 10% of the total project cost, it can hinder smooth flow of work especially for the subcontractors down the line.As more options are considered, there might be an end to this practice.The underlying intentions will however remain: the contractor must prove that he will deliver the work he promises to do.

Whats a Retainage Fee (And How Its Used)

Whats a Retainage Fee (And How Its Used) Retainage fee is an amount withheld from a contractor by the client or project owner. It is usually negotiated and agreed upon before the start of a project.The purpose of a retainage fee is to give the client a guarantee that the work will be completed on time and as per his needs.Although the successful completion of a project is expected, contractual details have to be put in writing.Although the concept of a retainage fee can be implemented in any business setting, it is most common in the construction industry.This has been necessitated by the complexity of construction projects.These projects often get delayed as changes are introduced in the course of the work.If you are a contractor, it is important that you actively participate in the negotiations of the retainage fee.In case you are not available, then an attorney can help. Just remember that it will cost you.Attorney costs aside, a construction attorney might be the best option for you especially if you are not experienced enough.If you are getting your first project with a big client, hiring an experienced attorney for the negotiations can be very helpful.As a project owner, a retainage fee will protect you from liens, claims and contractor defaults.The fee is only a small percentage of the full project cost (usually 10%).Still, you are assured of saving some money to offset any loss and inconvenience brought about by any incomplete work.History of Retainage FeeRetainage fees started in the UK during the construction of the UK railway system in the 1840s. The project was obviously a big one and the amount of work was more than the workers could complete.This created a demand for new contractors to join the project.Some of them were not only inexperienced, but also lacked the qualification to successfully complete their assigned portions of the work.This was a problem for the railway companies and they had to come up with a way of mitigating the risks and losses resulting from this.It became common f or them to withhold up to 20% of the total cost of the work. This was however designed to target the contractors’ profits only.The purpose of this was two-fold, and is still the same today. It is to provide the client with some protection from liens and defaults while giving the contractor an incentive to finish the work accordingly.There may be cases of contracts not implementing a retainage fee.This is not common and may not be good practice for big projects. All the same, it happens depending on the relationship between the client and contractor.The biggest reason a client can decide to ignore this provision is a record of successful work from a contractor.This will work on a project by project basis and cannot be expected to be the norm with a particular client.If you have consistently provided great services to a client for some time, he may decide to forego the retainage fee.This is definitely to your delight as a constructor and can improve your cash flow but comes with ext ra pressure.RETAINAGE FEE ACCOUNTSThe retainage fee is part of your business.As such, it has to be reported in your books. As a transaction by two parties, the amount involved is reported differently by the client and contractor.Retainage Fee PayablesIn accounting terms, money either leaves the company or comes into the company. When money leaves the company, it is termed “payable”. This will be the case for the party making the payment.In the case of a project you have assigned to a contractor, you are the one paying the money to him. He is the service provider while you are the recipient of the service. As such, your obligations are different.The full cost of the project will be recorded in your books using a suitable account description. This will be reflective of the kind of work being done. It may be “Boardroom Repairs,” “Ohio Branch Construction” or anything else.However, the retainage fee slightly differs from this overall cost. Since this is not paid until the en d of the project, you will record it as a liability. This is a payment you are expected to make at a later date.Retainage Fee ReceivablesAs the contractor, you also have to record the details of the retainage fee in your books.Because you are to receive payment, this will be recorded as a “receivable”.Although the payment is a liability to the client, to you it is an asset. You will be like a creditor to the client who now owes you money.When preparing your financial reports, e.g. your balance sheet, you will record this as a current asset.When you finally get paid, this can be used for operational purposes as it becomes part of your cash flow.You can also invest it depending on your business preferences.STEPS FOR COLLECTING RETAINAGE FEEThe retainage fee is an amount which should be collected.And for your benefit, you should collect it as soon as possible.The earlier you receive the full amount payable to you after the completion of the project, the better.As with other financi al obligations, your client is also aware of the need to pay the retainage fee.All the same, that will only happen after you have done all that needs to be done according to the contract you signed.Here are the steps you should take to collect your retainage fee soonest and with minimum challenges.Complete the Punch ListOne of the biggest obstacles to receiving the withheld payment is the punch list.Though closely associated to a checklist, the two are very different from each other.A checklist is a list of the things which should be done as part of the general project work. This is essentially a breakdown of the major tasks you are to work on.A punch list is different in that it is generated almost at the end of the project.Normally, you will have checked all the items on the project’s checklist.The client will then do a visual inspection of the project and list down what needs to be worked on in order to give approval for the payment.Depending on the construction work you were d oing, the punch list could include things like fixing leaking taps, unfinished paint jobs, faulty wiring detected in some rooms etc.All in all, the punch list is the project owner’s list of the small details you need to check on. This is the work which will make the client approve of the project’s completion. Provide Close-out DocumentsAfter successfully dealing with the punch list, there is one more thing to do. You have to provide the close-out documents.The close-out documents are those detailing the usage of the property and anything that is a core part of it.This will include copies of the legal documents indicating the agreements between you and the client.You will also need to provide warranty documents showing the relevant guarantees you are providing to the client.If the construction has used materials from your subcontractors, those materials should have a warranty.In many cases, these will include HVAC systems and other electrical systems.Whether the client knows your subcontractors or not, the retainage fee is based on his agreement with you.It is therefore upon you to ensure that all these are provided.If you sourced for material from other sources, you can give the client a copy of the documents while maintaining the original.These documents give the client an assurance of a good job done and availability of support.Submit the Retainage InvoiceAfter all these, the last thing to do is provide the client with an invoice for the retainage fee payment.The invoice is the legal document indicating your claim of the payment initially withheld.Without an official submission of the invoice, you will not be deemed to have requested for the payment.At the same time, you will be mistaken to think that the client will go ahead and make the payment without you requesting for it.Although he is obligated to pay, he will most likely wait for your invoice.For accounting purposes, no payment can be done without the supporting documents.You therefore have to pro vide this in a timely manner to prevent further delays.CHALLENGES WITH RETAINAGE FEEThe retainage fee, as good as it is for project owners, it is a serious challenge for contractors.Where subcontractors are involved, they tend to be the most affected.This is because the general contractor will often withhold some amount from them, just as the client has done.Withholding money from subcontractors has been proven to cause practical issues, especially with regards to cash flow.Since the subcontractor is meant to perform well yet needs the money to work, business relations can become strained.In 2004, the American Subcontractors Association published a report on the practices of retainage fee.It showed that a majority of the main contractors abuse the retainage principle. Here are some of the findings.After a successful completion of the project, subcontractors waited between 30 to 900 days before getting the retainage paid. The average wait time was reported to be 167 days (almost 6 mo nths).The worst wait times were reported to be an average of 529 days (almost 1.5 years) with the longest time being 2,500 days (almost 7 years)In more than 10% of their jobs, subcontractors have received less than the full amount withheld from them.There was reported a widely-held belief that retainage was not being used to ensure work completion. Instead, it was being used by the main contractor and project owner as leverage to push the smaller players into weaker positions.SPEEDING UP COLLECTION OF RETAINAGE FEEThe process of getting paid the retainage fee may take a short or long time.This is dependent on many factors and some of them may be beyond your control.For example, the client may not have the money to pay at the time you make the request.This can be due to cash flow problems. The client may also have planned for other expenses which according to him, are more urgent.This can be very unfortunate but it happens all the same. Money is never in constant supply and budgeting has to be done. This calls for prioritizing payments as a means of handling financial obligations.This is why debtors are usually given notification for payment so they can plan accordingly. Many business payments are done within 30 days after the request is made.This can change depending on the specific agreement between the parties.For a smoother flow, use these tips to speed things up.Stay Aware of the Retainage ReceivablesIf you have several projects you are working on, you can easily forget about the retainage fee. You can work to meet the needs of the other clients and lose memory of the pending payment.When this happens, it will definitely be long before you get paid. Remember that it in many cases, your client may not be in a hurry to pay you as he prioritizes other payments.Keeping in mind that there is some money owed to you is the first step towards working on receiving the money.This will remind you of whatever needs to be finished.There are two lists which will guide y ou in completing the work.1. The project’s checklist â€" the main items on the project’s checklist have to be completed. If you had envisioned finishing the whole project in two years, then try to complete the checklist in a year and a half. This gives you time to work on the punch list.For example, you may be constructing a new office block. The checklist for this may include a 10-story main building, a food court, parking lot and installing security systems. Once these are done, the client carries out an inspection.2. The project’s punch list â€" the client’s inspection will provide a report indicating whether everything is according to his requirements. This process may take some days depending on the size of the project.Anything outlined by the client as needing your attention has to be worked on. From fixing plumbing problems to making slight adjustments, anything can be required. It is only thereafter that you can proceed with your retainage request.Focus on Closing Ou t ProjectsClosing out projects may sound easy but often involves many activities. As such, the process can easily get derailed if you don’t focus on it.In working on closing out the current project, document everything that has been done in the course of the project. Ensure you have the relevant documents for whatever installations have been done.There will be a need for you to provide user manuals to facilitate quick troubleshooting in case of any problems. Some of the installations requiring user manuals are elevators and security systems.There may also be need to train the people who will be operating these systems.Technical training will be necessary to avoid unnecessary calls to your support center.This also empowers the client and gives them control over their property.You can easily get overwhelmed by all the work involved in closing out projects. To avoid this, have a dedicated team to handle it.You can have project managers who follow up with the workers and stay updated to any changes which occur to the project.This is also the person who will follow up with the client on the payment in case you don’t have a dedicated debt collector.Here is a video on some tips on what to do after closing out the project. Stay in Contact with the ClientHaving done all that you were expected to do and probably even exceeded your client’s expectations, do not cut off communication.Do not leave the task of getting paid to the project manager or debt collector.You can stay in contact with the client and find out his experience of the new facility.In the communication, remind him of the pending payment and work on sustaining good business relations.If you are the owner of a construction company, calling the project owner can go a long way in pushing for the retainage fee to be released.Just make sure that all the documentation has been done and there is nothing pending from your side.RETAINAGE FEE ALTERNATIVESRetainage has been in existence for a long time.Over the years, there have been complaints and calls to abolish it.There have been attempts at implementing different strategies of ensuring the involved parties still achieve the same goals. Source: Kegler Brown Hill + RitterThe reasons for calls for change have mainly been revolving around cash flow challenges.Three of the suggested alternatives are mentioned below.Propose to your client the one you think might work best for you. Maybe you will form part of the change.Trust AccountsA trust account can be implemented in various ways. Whichever way is agreed upon, these remain to be one of the contractors’ most relished options available.When a contract agreement includes the clause that the retainage fee will be held in a trust account, the contractor is most happy.In this arrangement, the retainage is deposited in a trust account and a trustee assigned to maintain it. The trustee must be impartial in his dealings with both you and the client.That said, the trustee has the opportunity to invest the money deposited to the contractor’s benefit.This gives you the peace of knowing that your money is sure to come, but it’s also growing.The client on the other hand has n othing to lose.In the even that there are any disputes, you will follow the stipulated process as outlined in the trust account’s terms and conditions.Performance BondsA performance bond is a promise given to a client to insure him against the risks of a contractor failing to successfully complete a project.The bond provides compensation which is similar in amount to the retainage fee.Performance bonds are usually given as a guarantee that a contractor will finish the job. In the event that he doesn’t, then the issuing institution compensates for the loss which has been experienced as a result.Collateral DepositsAnother option which can be attractive to project owners is the deposit of collateral.If you deposit collateral with the bank or directly with the client, you put that asset on the line for possession in case you fail to hold to the terms of the contract.Collateral can be anything of value ranging from land, a house or a car.This gives you the opportunity to receive the full payment of the project so you can comfortably work.Upon completion of the project, you get your deposited security back.CONCLUSIONRetainage fee has been used in the construction industry for a long time.The concept seeks to ensure the contractor finishes the job according to plan.Normally at 10% of the total project cost, it can hinder smooth flow of work especially for the subcontractors down the line.As more options are considered, there might be an end to this practice.The underlying intentions will however remain: the contractor must prove that he will deliver the work he promises to do.

The Three Topics I Chose For My Final Project Were Those

The three topics I chose for my final project were those of Safe Sex, STI’s, and Pregnancy. These three topics interested me the most and what’s really cool is that they can all be linked and come hand in hand with each other. Pregnancy has a lot of positive and negative sides to it, not to mention a lot of cool facts behind it as far as child bearing choices. Safe sex was particularly interesting with all the statistics and prevention methods of pregnancy (condoms and birth control) and STI’s. Also, the number of different infections that can occur from unprotected sex was astounding. The way I think of it is if safe sex is not happening and being taught, then the products of sexually transmitted infections and pregnancy can occur. The†¦show more content†¦I guess to me and probably many other women it depends on the situation we are in and possibly even how the baby was conceived, would be another deciding factor. The SEX ED GAME has a particular scena rio that states that a pregnancy test came up positive, you are having a baby, time to go get checked out and discuss choices of child bearing. However, it does make you lose a turn, I did this entirely because society looks at pregnancy in many different ways. Most commonly negative, mostly depending on age. In this case the game is teen based, which in society’s perspective, teen pregnancy is negative. Sex is enjoyable. I think almost everyone can agree to that. However, it is the matter of being safe while being pleasured is the issue here. Having sex safely can reduce the chances of pregnancy and sexually transmitted diseases. There are a number of ways to practice safe sex. Using the prevention methods is key. Whether it is condoms, birth control, female condoms etc.†¦ Condoms are the most effective method of safe sex that can prevent both issues. They are 98% effective in preventing pregnancy and STI’s when used properly. â€Å"There is no definitive study about condom effectiveness for all STDs. But several studies have demonstrated Final Project Narrative PSYX 235D Sec 1:40 Hannah Moncur that condoms, when used consistently and correctly, can protect against the transmission of bacterial infections.† (Dawson) Birth control is typically for the female.Show MoreRelatedWriting Assignments For College And High School Essay1288 Words   |  6 Pagesthere is much more expected from me as a writer. In high school, we were given a topic to write about whereas in college, we are given the opportunity to write about what we want to. When I am able to choose what I want to write about, it makes the writing process easier. When being able to pick your own topic for a paper, you can relate to the paper more, rather than having to write about something you know nothing about or a topic that isn’t interesting to you. 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Introduction To The Main Derivative Contracts Finance Essay - Free Essay Example

Sample details Pages: 16 Words: 4740 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? According to the Bank of International Settlements (1995), a derivative is defined as a contract whose value depends on the price of underlying asset, but which does not require any investment of principal in those assets. As a contract between two counterparties to exchange payments based on underlying prices or yields, any transfer of ownership of the underlying asset and cash flows becomes unnecessary. Derivatives play a large and increasingly important role in financial markets. Derivatives markets for financial variables were developed back in 1970, and are still dominated by all financial institutions which actively market their products and services to corporate, institutional and government clients. Don’t waste time! Our writers will create an original "Introduction To The Main Derivative Contracts Finance Essay" essay for you Create order Bodie (2009, pg 671) explains that the value of derivatives is said to be derived from other securities. They are also called contingent claims due to the fact that their payoffs are contingent on the prices of other securities. Financial institutions use derivatives in order to hedge and speculate assets which are subject to price fluctuations. Forwards, swaps and options are regularly traded outside exchanges by financial institutions and their corporate clients in what are termed the over-the-counter (OTC) market. At the same time futures are actively traded on many exchanges. The derivatives highlighted in this dissertation will fall under four main headings, namely: Forwards, Futures, Options and Swaps. 2.2 Forwards Forwards are binding contracts between two financial institutions or between a financial institution and one of its clients. Hull (1997, pg.2) explains that when entering into forwards contracts, one of the parties assumes a long position in the contract. This means that the party agrees to buy the underlying asset at an agreed price today at some specific date in the future. At the same time, the other party in question takes a short position as one agrees to sell the same asset at the negotiated price for the same specific date. The forward contract is worth zero when initiated due to the fact that it costs nothing to take either a long or a short position. The party who is in a short position transfers the agreed asset to the party who is in the long position in return for the delivery price. Foreign exchange forward contracts are very popular with banks. This is because they hedge exchange rates to offset any fluctuations in prices of currency. In fact most banks have a forward desk, within a foreign exchange trading room, to carry out these contracts. 2.2.1 Example of a Forward Contract Consider a farmer who grows wheat. The entire planting seasons revenue depends critically on the highly volatile crop price. The miller who must purchase wheat for processing, faces the same portfolio problem as the farmer. The latter is subject to profit uncertainty because of the unpredictable future cost of the wheat. Both parties can reduce this source of risk by entering into a forward contract binding the former to deliver the wheat at a pre-agreed price, say $100, on a specified date, and say 1st January 2010, regardless of the market price. In other words we can say that the miller has a long forward contract in wheat whilst the farmer has a short forward contract in wheat. 2.2.2 Payoffs from Forward Contracts Since both parties agree on a fixed price, when the contract is signed, one of the parties involved will gain whilst the other will lose when the latter is compared to the market price on maturity. Keeping the above example in mind, if the market price on 1st January 2010 is $110, the miller is still allowed to buy the wheat at $100, thus increasing the millers value by $10. In general, the payoff from a long position in a forward contract on one unit of an asset is St K Equation : Payoff from a Long Position Where K, is the delivery price and St is the spot price of the asset at maturity of the contract. This equation can also be explained in figure 1, where it clearly shows that as the spot price of the asset increases the payoff for the buyer increases thus, making the value of the buyer even greater. +10 Payoff K=$100 $110 0 St Figure : Long Position Conversely, if let us say the price on the market is $90 per bushel of wheat, the miller is obliged to purchase the bushel at $100 due to the forward contract. The payoff from the short position in a forward contract on one of an asset is K St Equation : Payoff from a Short Position Payoff Figure 2 graphically illustrates that if on maturity the spot price is less than the pre-determined price the payoff for the seller increases resulting to an even higher value. +10 $90 K=$100 St Figure : Short Position 2.3 Futures A futures contract is also a binding contract between two parties who agree to exchange an asset at a pre-agreed price, called the futures price, which is to be paid on maturity. Again, the trader who commits to purchase the asset on the delivery date takes a long position whilst a short position is taken by the trader who delivers the asset in question. One of the main differences between forwards and futures, noted by Hull (1997, pg 3), is that futures are not traded over-the-counter but through an exchange. Thus, standardised features must be included in order to make trading possible. Another difference, also explained by Hull (1997, pg 3,) is that the two parties do not necessarily know each other due to having an exchange mechanism in between. This exchange provides a guarantee that the contract will be honoured on maturity date. 2.3.1 Specification of the Futures Market Since future contracts mostly deal with commodities, the exchange must specify in some detail the exact nature of agreement between the two parties. Specifications are mainly found in the following alternatives which are also shown in Appendix 1: Asset: as we are dealing with commodities, variations in quality may be found. Therefore, the exchange stipulates a benchmark grade in order to classify the quality of the product. Product size: the exchange denotes the exact amount of the commodity that needs to be delivered. Delivery arrangements: these arrangements are very important and are clearly explained by the Chicago Mercantile Exchange Group (CME). The clearing house defines the exact procedure of settlement between the parties. The timeline, obligations for the buyer and seller, delivery costs, payment instructions, etc are all explained in detail to eliminate any misunderstandings. Price quotes: the futures price is quoted in a way that makes it easy to understand for any user. For example on the New York Mercantile Exchange (NYMEX), Natural Gas is quoted in dollars per 10,000 million British Thermal Units (mmBtu). Daily price movement limits: keeping Natural Gas as an example, the minimum and maximum price fluctuations are also given by the NYMEX. In fact this commodity has a $0.001 per mmBtu as a minimum price fluctuation whilst a $3.00 per mmBtu for all months as the maximum price fluctuation. Position limits: an investor can only hold a specified amount of contracts. The CME positions the limit at 1000 contracts per speculator, who cannot receive more than 300 contracts within one month. 2.3.2 Characteristics of the Futures Market One of the main features of a futures market is that the contract takes place through a broker or an exchange. The latter will require a deposit by both the buyer and the seller. This is a risk-reducing mechanism as the deposit amount serves as an element that bounds both parties not to default. Futures contracts are also valued on a daily basis, thus marking the market. For example: Day 0 1 2 3 4 5 Total Price $100 $101 $102 $101 $100 $99 Buyer +1 +1 -1 -1 -1 -$1 Seller -1 -1 +1 +1 +1 +$1 Table : Marking the Market On day 1 the buyer makes $1 profit; another $1 on day 2; makes a loss of $1 on day 3; loses $1 on day 4 and finally loses another $1 on day 5. Over the 5 days the buyer lost a $1 from the beginning till the end of the contract whilst the seller gained $1 from the contract. During this period, the accounts of the parties in question were being charged and credited in accord ance with the fluctuation in the contract. This is why a futures contract is normally said to be a string of one day forward contracts. Futures contracts must be standardised. They cannot be tailor-made according to the buyer as in the case of forward contracts. Also when entering into futures, the buyer knows that if one wants to purchase corn, the trader would know the common characteristics for each and every commodity. Futures contracts are also very liquid due to the fact that buyers may decide to terminate the contract earlier than maturity by simply selling back the contract to the broker, where the latter will find another trader. 2.3.3 Payoffs from a Future Contract When the broker provides a full detailed description as to when, where and what will be delivered, the party with the short position, according to Hull (1997, pg 29), sends a notice of intention to deliver to the exchange. The price paid is normally the settlement price. The exchange will then select a party with an outstanding long position to accept delivery. 2.3.4 Types of Future Markets Future markets can be either in Contango or else in Backwardation as shown in figure 4. Future Prices Bodie (2009, pg 781) says that a futures market is said to be in Contango when the futures price is above the expected future spot price. Conversely, Backwardation is when the futures price is below the expected spot prices. Contango +10 E(Pt) Normal Backwardation Delivery Date Figure : Types of Futures Markets 2.4 Options According to Aristotle (1952, pg.453), an option can be described as a financial derivative which involves a principle of universal application. These contracts have initiated since 1973 when the Chicago Board Options Exchange (CBOE) began listing companies on the national exchange. Bodie (2009, pg 671) states that when these contracts were introduced on the markets they were a huge success, crowding out the previously existing OTC trading in stock options. An option is a different contract to forwards and futures. The differences are summarised by J.P Morgan and Arthur Andersens as stated in Reynolds (1995) who said the advantage of options over swaps and forwards is that options give the buyer the desired protection while allowing him to benefit from a favourable movement in the underlying price. Thus options give the right and not the obligation to buy or sell an underlying asset, for a pre-determined price and by a certain date in the future. Since this derivative is based o n rights, the holder will not exercise the contract if it is not profitable. In exchange for this right, the holder is bound to pay a premium which would be lost if the contract is not exercised. Nowadays, options are traded on many exchanges all over the world, starting from OTC by banks and also by many other financial institutions. The underlying assets can vary from stocks, stock indices, commodities, currencies, securities in warrants, etc. One major distinction between American and European options is that the former options can be exercised at any time up to the expiry date, whilst the latter options can only be exercised on the date of maturity. There are two types of options which will be explained in the following sub-headings. 2.4.1 Call Options Willmott (1998, pg 22) defines a call option as the right to buy a particular asset for an agreed amount at a specified time in the future. A call option can also be divided into a Buy or a Sell call. A buy call is the right to buy the underlying asset at an agreed price today at some agreed day in the future. When considering a sell call, the holder has the obligation to sell the asset, at a fixed price and date, when the buy call holder decides to exercise the call option. If the buy call holder decides that it is better to purchase the asset from the market, the seller of the call will gain the premium paid by the buy call holder. 2.4.2 Example of a Call Option Consider a call option on IBM stock which gives the holder the right to buy a share of IBM at a strike price of $105 in six months time. The buy call holder also paid a premium of $5. If on the expiration date the price of 1 IBM share is less than $105, say $103, the buy call holder would not exercise the option but buy the share directly from the stock exchange, thus, only losing the $5 premium. This is clearly explained in figure 5: Profit ($) $110 +$5 Stock Price ($) 0 $103 -$5 $105 Figure : Buy Call Profit ($) +$5 $110 $103 $105 Stock Price ($) 0 -$5 Figure : Sell Call Conversely, if IBM stocks are selling above $105, say $ 110, the call holder will find it optimal to exercise the option as one would make $5 profit. (Tough in reality, the proceeds from the exercise will just cover the original cost of the call.) 2.4.3 Put Options Willmott (1998, pg 22) also defines put options as the right to sell a particular asset for an agreed amount at a specified time in the future. A put option is also divided into a Buy or a Sell put. A buy put gives the holder the right to sell an underlying asset at a fixed price and date. In these types of options the buyer is also bound to pay a premium which will be lost if the latter does not exercise the option. A sell put option guarantees the buyer, that the holder will purchase the asset at the same fixed price and date. Similarly to call options, the buy put holder decides whether to exercise the option or not. If the option is not exercised the only thing gained by the sell put holder is the premium. 2.4.4 Example of a Put Option Profit ($) Consider that two parties agree to exchange an IBM share at an exercise price of $105 in six months time. The buy put holder also pays a premium of $5. If an IBM stock is being bought on the market at $110, the buyer is better-off to sell on the market, though still losing the $5 premium. +$5 Stock Price ($) $110 $105 0 $100 -$5 Figure : Buy Put Profit ($) +$5 $100 Stock Price ($) $110 $105 0 -$5 Figure : Sell Put Contrary, if prices on the market are less than $105, say $103, the holder is better-off to sell the share to the put writer as one would be gaining $2. 2.5 Swaps Coyle (2000, pg2) states that swaps were developed in 1979 by major commercial and investment banks to serve as an instrument for debt management and interest rate management. Willmott (1998, pg 419) defines a swap as an agreement between two parties to exchange, or swap, future cash flows. The exchange is made up of a stream of payments which are pre-negotiated over an agreed period of years. Therefore, the study of swaps, as mentioned by Bodie (2009, pg 804), is a multi-period extension of forward contracts. Thanks to swaps, Oldani (pg 2) explains that new investment opportunities were invented to hedge against any risk and also to speculate. 2.5.1 Types of Swaps Swaps can be sub-divided into three categories. These are: Equity Swap The two counterparties agree to exchange an amount of payments based on the performance on an equity index. The total return on the index measures this equity component. Commodity Swap In this type of swap both parties exchange cash flows based on commodity prices. One party agrees to pay a floating price based on the commoditys average price over a period whilst the other party pays a fixed price on an underlying quantity of the commodity. Credit swaps Credit swaps are sub-divided into: Currency swaps According to Willmott (1998, pg 424) these swaps are exchanges of interest payments in one currency for payment in another currency. The interest payments swapped can be either fixed, floating or one of each. It is important to note that there may be an exchange of the principal at the beginning and the end of the contract. Consider that two companies, A and B one in US and the other in UK respectively, enter into a currency swap for a principal amount of $50 million. The exchange rate at the date of the currency swap is: $ 1.25 = ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 1.00 $ 1.00 = ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 0.80 Principal = ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬40mPPP Principal = $50m A B As mentioned earlier, the firms exchange the principal amounts at both the beginning and end of the year, thus as shown in the following figure, A pays B $ 50 million whilst B pays A ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬40 million. Figure : Currency Swap (a) During the period both parties are assumed to pay interest on the loan to each other. The intervals of when interest payments are specified in the swap agreement, and let us consider that both parties agreed to pay fixed interest rates annually based on the following rates. Dollar-dominated interest rate is 8.25% Euro-dominated interest rate is 3.50% Company A is receiving a euro loan and thus is bound to pay ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 40 million x 3.50% = ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 1400000 in interest. Company B is receiving a dollar loan and thus is bound to pay A $ 50 million x 8.25% = $ 4125000 in interest. Due to hedging oneself from future fluctuations in exchange rates, at the termination of the contract, both parties would simply pay back the original principal amounts as shown in figure 10. B A Principal = ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬40m Principal = $50m Figure : Currency Swap (b) Interest rate swap According to McCaffrey (2009), the most common and simplest swap is the plain vanilla interest rate swap. These types of swaps call for one party to pay interest at a fixed rate to a second party, whilst the latter pays the former a floating interest rate. In the types of swaps, the two cash flows are paid in the same currency. Muscat (2009, pg 34) explains that the cash flows being exchanged are not exchanged between the two parties, thus there is no need to borrow money. Consider that company A and B enter into a five year swap where A agrees to pay B a fixed rate of 5% on a notional principal of $ 10 million. On the other hand B agrees to pay A floating interest rate of LIBOR = 2 % to A on the notional principal of $ 10 million. Fixed 5% B A Floating LIBOR+2% Figure : Interest Rate Swap Both parties agreed to pay interest annually and thus at the end of the year A has to pay B $ 10,000,000 x 5% = $ 500,000 as interest. At the same date the one-year LIBOR rate was 5.7%, thus B has to pay A (5.7% + 2 %) x 10,000,000 = $ 770,000 as interest. In this case in order to eliminate unnecessary transactions, the amounts are off-set resulting B paying $ 22,000 to A only. 2.6 The Black-Scholes Model Pricing a derivative is relatively hard and complex. In fact many financial economists searched for years for a workable option-pricing model. In 1997, Scholes and Merton shared a Nobel Prize in Economics as they managed to come up with the Black-Scholes pricing formula. With the CAPM as a background, Black (1987, pg 637) said that I started working on a formula for the value of a warrant. The equation I wrote simply that the expected return on a warrant should depend on the risk of the warrant in the same way that it does for a common stock. The final formula for a call option is: C0 = S0 N(d1) X e-rT N(d2) Equation : Black-Scholes Pricing Formula Where d1= d2 = d1 and C0 = current call option value. S0 = current stock price. N(d) = the probability that the random draw from a standard normal distribution will be less than d. X = exercised price. r = risk-free interest rate. T = time of expiration of option. = standard deviation of the annualized continuously compounded rate of return of the stock. 2.6.1 Assumptions of the Black-Scholes Model The assumptions of the Black-Scholes Model are: Constant volatility: the stock chosen should be stable in constant terms in the short run. Efficient markets: this model suggests that people cannot consistently predict the direction of the market or an individual stock. Sholes and Merton assume that the markets, prices have equal probability of going up or down. This is called Random Walk. No dividends: during the options life no coupons will be paid out. Interest Rates are known: like volatility, this model also assumes that the interest rate are constant throughout. Such an example can include the risk-free rates such as the rate on a government treasury bill. Log normally distributed returns: the returns are assumed to be normally distributed. European-style options: the model is only based on the European stocks which can only be exercised on the pre-determined date. No commissions and transaction costs: it is assumed there are no fees paid for buying and se lling options and stocks and no barriers to trading. Liquidity: markets are assumed to be perfectly liquid. Chapter 3 Prior Literature about the Use of Derivatives Derivatives generate reported earnings that are often wildly overstated and based on estimates whose inaccuracy may not be exposed for many years. Warren Buffet BBC News Buffett warns on investment time bomb https://news.bbc.co.uk/2/hi/business/2817995.stm 4 March, 2003 3.1 Regulatory Regime Concerning Credit Derivative Markets The market of derivatives has undergone rapid growth in the last decade. According to figures issued by the Bank of International Settlements (BIS) report (2009), Over-the-Counter contracts stand at a national amount of $605 trillion up to the end of June 2009, which is 10% more than the previous six month period. Notional contracts are defined as the amount of contractual deals which has not yet been settled up to the reporting date. The question of an adequate regulatory regime which supports for derivative markets comes to mind. Miller (1991) states that regulatory arbitrage enhanced the early activity in derivative markets. In 1992, the United States adopted the Futures Trading Practice Act which triggered growth in the global derivatives markets. This act enabled the derivative markets to be fostered with legal certainty and also allowed the Commodity Futures Trading Commission to issue OTC contracts from the Commodity Exchange Act. The existing regulatory regime is main ly based on self-regulatory initiatives as Ayadi and Behr (2009) explain that the latter could also be seen as market discipline as it seeks the standardisation of derivative transactions while at the same time accommodating the instruments inherent complexity. This was precisely recommended by the Basel Committee in the BIS report on Credit Risk Transfer (2005) where it is stated that All market participants need to continue paying careful attention to the legal documentation relating to credit derivatives, such as the range of credit events covered by the instruments and the clear and unambiguous identification of the underlying reference. Standardisation should also continue in a market where innovative financial instruments are mushrooming. Moreover, there is a need for market participants to encourage due diligence necessary to clearly identify their legal responsibilities to the counter party or customer. It is crucial to foster further transparency when marketing structure d and complex CRT products. Organisers and dealers should foster a complete understanding of the nature and material terms, conditions and risks involved and should not solely rely on external ratings as a measure of risk associated with the transaction. Before entering in a CRT transaction, investors should ensure their capacity both on the outset and on an on-going basis to obtain the necessary information to properly evaluate and manage the risks associated with their investment. Information on the risk profile of the investment should be accessible to them on a continuous basis. However, it is quite easy to write factors which are aimed at a hybrid regulatory regime but the recent financial crises has led to market disturbances which led to reduced liquidity and ultimately forcing central banks to act as lenders of last resort. This was proven by Elsinger (2008) who stated that JP Morgans invention of credit derivatives brought about a $58 trillion elephant in the room which she believes was the main cause of the autumn wreckage on Wall Street. Derivatives are still essential in the financial system as long as there is the implementation of effective self-regulatory regimes together with strict supervision in order to prevent harmful misusing which would ultimately destruct not only the liquid position of the institution but the universal financial system. 3.2 Use of Derivatives in Foreign Countries The use of derivatives can vary from either speculative purposes which aim for profit maximisation or else for hedging. The aim for the use of derivatives differs according to the nature of the firm as well as the size of the country. 3.2.1 Use of Derivatives by Foreign Non-Financial Companies The usage of derivatives plays an important role for non-financial firms. In a study conducted by Guay (2002), it is reported that non-financial firms also make use of derivatives due to the fact that firms also face currency, interest rate and commodity price fluctuations. Though, Guay (2002) also reported that the derivative position held by these firms is relatively small when compared to their overall risk exposure. Guay (2002) also argues that non-financial entities use derivatives only when the benefits exceed the costs, and thus are not used for the primary cause of hedging. Studies such as Judge (2002) investigated various aspects surrounding the use of derivatives by non-financial companies in United Kingdom. The information for this study was collected from the FT UK500, whic includes the largest 500 companies in the United Kingdom. The latter reported that 67% of non-financial businesses have derivative contracts listed on their annual reports whilst 78% responded a y es to the use of derivatives. When comparing these results to United States firms, many studies such as Phillips (1995), Gay and Nam (1998) and Howton and Perfect (1998) all report that more than 60% of non-financial firms in the United States use derivatives. An important point stated by Kedia and Mozumdar (2002), is that hedging practices by United States companies are mainly associated with foreign currency debt. This puts forward the idea that firms make use of strategies to manage risk which can include both on-balance sheet financial and operational policies as well as hedging based on derivatives. Thus as Judge (2002), explains if a company is stating that it does not make any use of derivative contracts it can imply that the firm has managed its exposure through an on-balance sheet method and thus the effect is netted. A paper issued by Brunzell et al (2009), reports that Nordic countries, mainly Denmark, Finland, Iceland and Sweden, potentially have smaller reasons to hedge interest rate risk and exchange rate risk due to their size. Though, the paper reported a 61.6%, which represents the use of derivatives of these Nordic countries, which is ultimately stands in equilibrium to the usage by the larger countries mentioned earlier. 3.2.2 Use of Derivatives by Foreign Financial Companies Commercial banks are said to enter into derivative contracts in order to hedge thier position. The extent of speculation is more difficult to determine becuase specualtive-type risks may arise from certain dealer activities which may not be reported. Financial companies make up the foundation of the OTC derivative market. This is becuase their derivative desk caters to customers, trading between one another to elimiante risks as well as to be innovative by developing new instruments. As mentioned earlier, the introduction of credit derivatives in the late 1990s brought about a new dimensions in portfolio credit assessment. The principle use of credit derivatives, as noted by Minton et al (2006), is that it enables banks to manage efficiently the credit risk portfolio. This is because they can use these contracts to transfer a part or all of the credit risk to another party. During a speech, Greenspan (2004) stated that The new instruments of risk dispersion have enabled th e largest and most sophisticated banks in their credit-granting role to divest themselves of much credit risk by passing it to institutions with far less leverage. The figures issued by the BIS, mentioned earlier, show that the market of derivatives has experienced a dramatic growth over the past years. This is also in line with what the Comptroller of the Currency Administrator of National Banks report which states that large countries such as the United States hold $203.5 trillion notional amount of derivatives in the second quarter of 2009. This report also proclaims that the largest sector of credit derivatives is in the credit default swap which represents 98%. Wharmby (2005) reports that the United Kingdom has an average daily turnover of $580 billion in OTC derivatives whilst Mallin et al (2001) reports that the United Kingdom is exposed to approximately 60%. 3.3 Conclusion Derivatives are the widest financial innovation of the last thirty years. As seen forwards, futures, options and also swaps can be used by anyone who is interested to hedge risk. With the help of the Black-Scholes Pricing Model investors can price options easily. Though they seem easy to conduct; they are actually complex to maintain. This is why in the following chapters we will be comparing the results obtained from local banks and non-financial companies with what the literature has provided about the amount and the main reasons behind the use of derivatives.

Essay about Should Marijuana be Legalized - 968 Words

Should marijuana be legalized for recreational or medical use? This is a debate that has been happening for quite some time and this is not just a debate that is happening among people. There are many that have taken sides including medical personal and government officials. Currently in the United States there are two states in which recreational use of marijuana is legal; Colorado and Washington. There are three states currently that have pending legislation to legalize recreational use; California, Maine, and Oregon. On the other hand there are 21 states in which medical use of marijuana is legal; Alaska, Arizona, California, Colorado, Connecticut, DC, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New†¦show more content†¦Let’s also assume that marijuana costs $15 a gram and of those 75,000,000 people smoking they smoke 5 grams a week. After calculations of 5 grams a week at $15 a gram times the 75,000,000 people that use, the t otal revenue would be $5,625,000,000, most of which if regulated by the government would be profit. Would it be more beneficial to society for this substantial amount of money to continue to be made by the illegal drug trade or the economy? Legalizing marijuana would also create jobs. The government would need to employ many Americans to produce and regulate the sales and distribution of the product. Facilities to grow and sell the product would be required and therefore people to run the facilities would be required. Another bonus is the fact that law enforcement can focus on other more serious crime issues within the community, instead of utilizing time and resources on marijuana. The number of people arrested yearly for marijuana offenses outweighs the total number arrested for violent crimes including murder, manslaughter, rape, robbery, and aggravated assault. This also puts a strain on the prison systems that house these offenders which are mostly hard working Americans who simply smoke to relax. While these are all good points those who oppose the legalization state that marijuana is still a drug that alters perception, it is addictive, and long term useShow MoreRelatedShould Marijuana Be Legalized?849 Words   |  4 Pageswhether marijuana should be legalized. Around 23 states have legalized marijuana for medical and recreational use. In the state of Illinois, medicinal use of marijuana has been passed on April 17, 2013. Since January 2014, patients are able to obtain marijuana with a doctor s recommendation. The new debate is whether marijuana should be legalized for the general public as a recreational drug. Although some believe that marijuana is harmless, and that it has beneficial medicinal uses, marijuana shouldRead MoreShould Marijuana Be Legalized?1715 Words   |  7 PagesMarijuana in Society Cannabis, formally known as marijuana is a drug obtained from the tops, stems and leaves of the hemp plant cannabis. The drug is one of the most commonly used drugs in the world. Only substances like caffeine, nicotine and alcohol are used more (â€Å"Marijuana† 1). In the U. S. where some use it to feel â€Å"high† or get an escape from reality. The drug is referred to in many ways; weed, grass, pot, and or reefer are some common names used to describe the drug (â€Å"Marijuana† 1). Like mostRead MoreShould Marijuana Be Legalized?1489 Words   |  6 Pagescannabis plant or marijuana is intended for use of a psychoactive drug or medicine. It is used for recreational or medical uses. In some religions, marijuana is predominantly used for spiritual purposes. Cannabis is indigenous to central and south Asia. Cannabis has been scientifically proven that you can not die from smoking marijuana. Marijuana should be legalized to help people with medical benefits, econo mic benefits, and criminal benefits. In eight states, marijuana was legalized for recreationalRead MoreShould Marijuana Be Legalized?1245 Words   |  5 PagesMarijuana is a highly debatable topic that is rapidly gaining attention in society today.   Legalizing marijuana can benefit the economy of this nation through the creation of jobs, increased tax revenue, and a decrease in taxpayer money spent on law enforcement.   Ã‚  Many people would outlaw alcohol, cigarettes, fast food, gambling, and tanning beds because of the harmful effects they have on members of a society, but this is the United States of America; the land of the free and we should give peopleRead MoreShould Marijuana Be Legalized?1010 Words   |  5 PagesThe legalization of marijuana became a heated political subject in the last few years. Twenty-one states in America have legalized medical marijuana. Colorado and Washington are the only states where marijuana can be purchased recreationally. Marijuana is the high THC level part of the cannabis plant, which gives users the â€Å"high† feeling. There is ample evidence that supports the argument that marijuana is beneficial. The government should legalize marijuana recreationally for three main reasonsRead MoreShould Marijuana Be Legalized?1231 Words   |  5 Pagesshows the positive benefits of marijuana, it remains illegal under federal law. In recent years, numerous states have defied federal law and legalized marijuana for both recreational and medicinal use. Arizona has legalized marijuana for medical use, but it still remains illegal to use recreationally. This is absurd, as the evidence gathered over the last few decades strongly supports the notion that it is safer than alcohol, a widely available substance. Marijuana being listed as a Schedule I drugRead MoreShould Marijuana Be Legalized?1350 Words   |  6 Pagespolitics in the past decade would have to be the legalization of marijuana. The sale and production of marijuana have been legalized for medicinal uses in over twenty states and has been legalized for recreational uses in seven states. Despite the ongoing support for marijuana, it has yet to be fully legalized in the federal level due to cultural bias against â€Å"pot† smoking and the focus over its negative effects. However, legalizing marijuana has been proven to decrease the rate of incrimination in AmericaRead MoreShould Marijuana Be Legalized? Essay1457 Words   |  6 PagesSHOULD MARIJUANA BE LEGALIZED? Marijuana is a drug that has sparked much controversy over the past decade as to whether or not it should be legalized. People once thought of marijuana as a bad, mind-altering drug which changes a person’s personality which can lead to crime and violence through selling and buying it. In the past, the majority of citizens believed that marijuana is a harmful drug that should be kept off the market and out of the hands of the public. However, a recent study conductedRead MoreShould Marijuana Be Legalized?1145 Words   |  5 PagesLegalizing Marijuana Marijuana is a drug that has been actively used for centuries. This drug can be traced back to 2737 BC by the Chinese emperor Shen Nung. He spoke about the euphoric effects of Cannabis and even referred to it as the â€Å"Liberator of Sin.† Since early on, marijuana was seen as a medicinal plant that was recommended for medical uses. Marijuana is currently in schedule I, which means that physicians are not allowed to prescribe it in the United States (Hart, Ksir 2013). This drugRead MoreShould Marijuana Be Legalized?1596 Words   |  7 Pages But what needs to be known before a user can safely and completely make the decision if trying Marijuana is a good idea? Many do not want the drug to be legalized because they claim that Cannabis is a â€Å"gateway drug†, meaning it will cause people to try harder drugs once their body builds up a resistance to Marijuana, because a stronger drug will be needed to reach a high state. This argument is often falsely related to the m edical side of the debate over legalization. It is claimed that this would