Vintage cloth trade Research Proposal Example | Topics and Well Written Essays - 2000 words

Vintage cloth trade - Research Proposal Example Yet the proliferation of online music and change in the customer attitude towards purchase of music has weakened the position of HMV. This paper has conducted a secondary research on HMV to find the loopholes in the current management system and suggest ways in which HMV can improve its future prospects. It has been found that lack of investment in online music business has led to the quick fall of HMV and there are considerable deficiencies in the management system which have further weakened HMV’s share. An analysis of the change noted in the customers’ taste had pointed out the reason behind decline of HMV. Consumers in the digital era have been found to engage in practices such as, piracy and free download, with the support of technology. Improved product differentiation and enhancing customer experience are the possible ways in which HMV can improve its prospects for future. As the last presence of high street music store, HMV, which stands for His Master’s Voice, has a long history of 93 years. HMV is typical enough to represent the whole music entertainment industry as the matter of fact that it is the last remaining music retailer. Their first store was born in 1921 and started to sell gramophones, radios and popular music hall recordings (BBC, 2013). The following new era of CDs (Compact Discs) turned HMV into a hugely profitable music record company successfully during 1980s (BBC, 2013). However, around 2000s, the invention of MP3 has reshaped the traditional pattern that consumers used to listening music. Due to the contribution of digital revolution, which was generated around 2010s, HMV’s retailing experience is no longer as attractive as it was (BBC, 2013). As the HMV’s annual report in 2012 (Figure) proves that the music giant has started suffer from financial losses and sales decline. Nevertheless, since the music retaile r did not react as early enough as it can to embrace the digital trend, HMV formally went into administration in

The Glass Castle Essay Example for Free

The Glass Castle Essay The Glass Castle by Jeannette Walls is an extremely shocking novel in that even it weren’t true the events in the story would still be shocking, but the fact that it is true makes it that much more disturbing. In the book Jeannette is on more than one occasion, a victim of sexual abuse. Although there is one event in particular that I found exceptionally troubling. And that is when Jeannette and her family are in their upper class house in Phoenix and innocently leave their doors and windows open. One night, random perverts sneak into their home and sexually assault the children. And it wouldn’t be so bad if Jeannette didn’t play it off as though it were nothing. She almost makes it seem like barely mentioning when she says that â€Å" I was awakened by someone running his hands over my private parts†(103). And the man who assaulted her had a book â€Å"with pictures of boys and girls wearing only underpants†(103). From the eyes of someone like I, who can make no connection with perverts other than the horrific news stories of rape and murder I occasionally hear about, this event is tremendously disturbing. When I read this part of the book I thought she was in mortal danger. I’ve never actually heard of someone sexually assaulting a child without it involving some sort of murder or kidnapping. It really goes to show she is familiar with perverts and wrongfully – or rightfully I’m not really sure – does not feel an extreme panic type of danger when dealing with pedophiles. This event teaches Jeannette what is really worth worrying about. After Rex and Jeannette go out she realizes this is like hunting Demon, â€Å" except the enemy was real and dangerous instead being the product of a kid’s overactive imagination. (103)† And it goes to show that a big reason why Jeannette is so mature and matures so quickly is due to the fact of her constant experience of traumatizing events and moments of extreme danger.

Tort, Negligence and Nuisance Claims :: Tort Law

A number of aspects of liability rise from this case study and each one will be discussed. With regards to the headaches suffered by Karl, it is necessary to look at private nuisance. Negligence is disregarded as it is assumed from the details in the case study that the headaches suffered are not so serious as to cause personal injury, it is just described as ‘mere discomfort’. Such a claim under the law of nuisance requires three factors to be fulfilled. The first being a continuous interference. This is shown in De Keyser’s Royal Hotel v Spicer Bros Ltd (1914) 30 TLR 257. From the case study one can assume that it is a continuing interfering act and not a one off. Secondly, the interference must be unlawful or unreasonable. This is up to the claimant to prove. The rule for this is sic utere tuo ut alienum non laedas (So use your own property as not to injure your neighbour's). The locality in this instance reflects the unreasonableness of Jane’s actions. It occurred in a residential area and therefore such Gases were not to be expected. The duration of the act will also be taken into account. Because Jane is a young inventor it is assumed her work is an ongoing process and not a one off as explained above. The seriousness is also considered. In Walter v Selfe (1851), Knight-Bruce V C said â€Å"an inconvenience materially interfering with the ordinary comfort physically of human existence, not merely according to elegant or dainty modes and habits of living, but according too the plain sober and simple notions among the English people.† This shows Jane’s actions would be deemed unreasonable, heightened by the fact that the incident occurred in a housing area, not an industrial estate. The sensitivity of the defendant, the utility of his conduct and a malicious aspect may be also discussed but this is not relevant in this case. Thus the second aspect of unlawful or unreasonable interference is established.

The Remarkable Ayn Rand :: Biography Biographies Essays

The Remarkable Ayn Rand      Ã‚  "If a life can have a 'theme song' - and I believe that every worthwhile one has - mine is [best] expressed in one word: Individualism." (qtd. in ARI)   This quote from Ayn Rand can be applied to everything she did or thought during her life.   Born in St. Petersburg, Russia on February 2, 1905, Rand felt out of place in her native country.   She didn't agree with the prevailing ideas of mysticism and collectivism that formed the Russian government and society.   So at age 21, in 1926, she sailed to the United States.   It was in the US that Ayn Rand made a name for herself, and began a new philosophy that would affect people around the world.    Rand knew at age nine that she wanted to become a fiction writer.   What she didn't know was that her name would soon be known across the United States, as well as Europe, for her controversial novels.   Her first novel, We the Living, was published in 1936.   But it wasn't until 1945, with the arrival of The Fountainhead, that she won international fame.   Rand had established a reputation as a talented novelist and philosopher by the time Atlas Shrugged was first printed in 1957.   This work is considered by some to be her greatest achievement: an intellectual mystery story integrating ethics, metaphysics, epistemology, politics, economics, and sex.   It also formulated "a philosophy for living on earth" (qtd. in ARI), sometimes referred to as objectivism.   When she died on March 6, 1982 in her New York City apartment, she had sold over 20 million books.    Although Ayn Rand is known mostly for her writing, her career in the United States began in the film industry.   She left her relatives' home in Chicago to pursue a career as a screenwriter in Hollywood.   On her second day in the city, she was standing on a corner and was offered a ride by Cecil B. DeMille, a director.   He brought her to the set of his current film, The King of Kings, and gave her a job as an extra.   It was here, a week later, that she met actor Frank O'Connor, whom she married in 1929.   And although they were married for 50 years, Rand also had an 18 year relationship with Nathaniel Branden.

Represents human nature Essay

The conscious decisions of people to act upon negative emotions, damages and ultimately destroys our relationships with fellow human beings. Gray explores this idea through ‘Poem to my Father’, a personal and confessional letter directed towards the persona’s father, whom is believed to be Gray’s father; a man who neglected Gray as a child as a result of his drinking, indifference and gambling. The persona believes that his father destroyed the paternal relationship and represents this through emotive language and words with negative connotations evoking emptiness and disconnection within ‘Poem to my Father’. ‘In you, now signifying nothing;†¦ That’s all there is to say. ’ The word ‘nothing’ displays the completeness of the disconnection while ‘all’ connotes an all-consuming idea. Thus when used together create the idea of all-consuming disconnection between the persona and his father. (Can talk about the use of punctuation. Full stop creates finality. )Gray contrasts the elements of nature with human nature in order to show humanity’s intrinsic destructive nature. This juxtaposition reveals the idea of nature destructing for replenishment, whereas humanity destructs subconsciously for satisfaction and self-fulfillment. Consequently the issue highlighted is that of human nature not allowing for complete satisfaction, resulting in a cycle of destruction for both the individual and the environment. Gray’s poem ‘Flames and Dangling Wire’ vividly explores the destruction of the natural environment due to humanity’s actions. ‘It is a man, wiping his eyes. Someone who worked here would have to weep†¦ Knowing all that he does about us, how can he avoid a hatred of men? ’ The imperative and emotive language tugs upon the reader’s heartstrings as the guilt of this man is placed upon the reader. The harsh imagery used earlier in the poem cumulates until this point of the poem, when responsibility is seen through the man’s pain. As a responder to the text, I believe that Gray recognizes this man’s innocence individually, as he tries to help through his work. Yet this man is still seen to be feeling the pain caused by the destruction of the environment, reflecting humanity’s responsibility as a whole and not simply a portion of the population. Gray therefore uses the didactic nature of his work to impart his value placed on the respect and protection of the environment. The selfishness of man is seen in the tenth stanza. ‘This is how it shall be after men have gone. It will be made of things that worked. ’ The future tense of this stanza assists in creating textual integrity and understanding within the poem. No matter the context of the reader, the future tense causes them to reflect upon their actions, furthering Gray’s didacticism within the text. The one phrase reflecting on the past within the stanza however, is ‘made of things that worked’. The idea portrayed by Gray is one of comparison. He compares the things ‘that worked’ – human’s creations which they have dumped – to nature’s creations and processes – things that will continue to work. Thus the comparison used by Gray is effective in exemplifying humanity’s short-term view and ultimately the intrinsic and often subconscious nature of destruction.

Leadership styles in book Into Thin Air essays

Leadership styles in book Into Thin Air essays The account of the disaster on Mount Everest in 1996, as presented by Jon Krakauer in his novel Into Thin Air, is a perfect example of the different types of leadership and how even when least expected things can go wrong. This novel discusses the essentials of leadership, the process that was involved in getting clients to the summit, the goals of the leaders (in this case the guides), as well as the role that the external environment plays in trying to summit Everest. What did go wrong on the quest to reach the summit of Mount Everest in 1996, and why did it happen? What happened was that none of the climbers believed that anything bad could happen since nothing of huge significance had gone wrong on the mountain in the recent past. The guides also believed that they had climbing Everest down to a formula and that if they stuck to it, nothing could possibly go wrong. If the guides had kept to their standards of turning around at 2 p.m. no matter how close one was to the summit , much of the disaster could have been avoided. However, many factors play into the desire to continue the quest for the summit after 2 that afternoon. The business goals of the guides, the personal triumph of the clients, and the outside factors of the environment above 25,000 feet all led them to continue with the climb, and inevitably led to disaster and deaths. The elements of leadership play a significant part in what happened on Everest that year. The leaders on the mountain, including Rob Hall, Andy Harris, and Scott Fischer, were the guides of the various expeditions. They were all well prepared to climb Mount Everest and their clients had faith that the guides would get them to the summit also. The guides all shared the common goals of safety on the mountain and making a personal profit while gaining publicity for their guiding companies. The guides all exhibited qualities that Locke and Kirkpatrick found as important leadership traits i...

Free Essays on Love In Oceania

to express emotion, technically, the human mind can not comprehend feelings they are having. If humans ca... Free Essays on Love In Oceania Free Essays on Love In Oceania Although Winston and Julia claim to have been in love since the moment they met, can anyone living in Oceania ever really be in love? In Chapter five of Book One, Winston speaks with his comrade, Syme, about how newspeak is making the actual thought of love impossible: In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it†¦ In fact there will be no thought, as we understand it now. Orthodoxy means not thinking- not needing to think. Orthodoxy is unconsciousness. (Orwell 46-47) Syme believes that thoughtcrime in the end will be completely unheard of, because it will be impossible to think of views that oppose the party. Using Newspeak phrases such as â€Å"doubleplusungood† limits the train of thought to only what is necessary. There are no Newspeak adverbs or adjectives that are unnecessary to describe the essential thought process. Syme also mentions how Newspeak is the only language in which the word count decreases every year. Words such as â€Å"love† are removed from the dictionary, and Party members are made to believe that because the words are not in the dictionary, they do not exist. The â€Å"love† between the main characters in 1984 is only a mere physical attraction, for in Oceania, love cannot exist; there are no words to describe love, and the characters have either forgotten or had never known what love was. With the introduction and inclusion of Newspeak in Oceania’s society, Orwell makes the reader understand that in a short time people will not be able to have emotions, because there will be no words in which they can express it. Winston’s comrade, Syme, describes Newspeak as being the only language in which the amount of words decreases as time progresses. This concept is all in direct relation to reality control. If there are no words to express emotion, technically, the human mind can not comprehend feelings they are having. If humans ca...

Essay on Respect

Essay on Respect Nearly anything will earn you respect in the eyes of someone. But only certain things will earn you respect in the eyes of those who are respected. Its that simple. So, true respect is not earned of injuring oneself or breaking the law. The respect earned by that is not true and lasting, because it must be reaffirmed. It is so important for some to be respected that they would to that and more. However, the way to earn respect is to be respectful. Make it an attitude, not a thing given to a person after they have proven themselves. This way, it can not be demolished by anything bu Respect is something that many people would do many things for. Some would die for it, some would endure endless pain and suffering if they thought others would respect them for it. This is seen in the many rituals of gangs and the like, which include cutting, burning, or otherwise injuring oneself, simply to earn respect from other gang members. To me, this is ridiculous. If someone cannot respect you for who you are, than they are not worth the time and effort of earning their respect. A lot of people try to find respect from others because they feel that it is in th eir religion to respect and be respected. Unfortunately, at least for Christians, this is untrue. The bible simply says to love, and bring others to Christ. This does not mean to earn others respect, but just to love them even if they dont respect you. In the case of other people, there is a mix of importance placed on respect. Some people, like myself, depend only on freely given respect that is acquired through normal acts within your general range of behavior, rather than going out of ones way to impress or earn the respect of someone. Sometimes this is misunderstood as not caring what others think of you to the point where you might behave in a manner that is immoral, illegal, and/or distasteful. For instance, I have a friend who only cares what many people would call the â€Å"lower† class of society thinks of her. Therefore, she is drawn into distasteful, immoral and often illegal acts that include violence, allowing others to contribute to her delinquency as a minor, and other various forms of immorality and illegality. These acts are often self-destructive and painful to those who love her, i.e., her parents. By lowering herself to the standard of those she feels she needs respect from, she is carrying that want for respect to a point of hell. The world she is living in is a hell to most people, but due to those who give her a version of respect, it cannot be seen as such. I say version of respect because I have seen the â€Å"respect† that she is given by her â€Å"friends.† These people have no problem betraying her for drugs, or sex, or hurting her parents because they think they have the right. I have no right to truly judge, only He who sits on high can do that, however, from my mortal view, it seems that these people do not know the meaning of respect. I do not see that they respect my friend, or each other, or anyone else. To me, respect means that you listen to someones ideas, follow rules that have been established (i.e. The Ten Commandments, or the law), as well as know when to help someone, or ask them if they need help. To respect someone, is not to assume that they are invincible, because that is idol worship, but to be their friend if they need it, to be able to put petty disagreements in the past, to follow their wishes if you have prayed and know it is in their best interest, due to knowledge gained from God. That kind of respect is what is important to me. Respect given for injuring oneself or breaking a rule is fake, faulty, and will not stand the test of time. True respect, is like true love. It is unconditional. It is timeless. Just as true love can never be taken away, respect for a person is always there once established. Trust can be demolished, so can hate, and anger and envy and all other bad or good things in this world, except for love and respect. Love is God, and He will never be gone; Respect is of love, and once you truly respect someone or something, it cannot be taken away. That may be hard to grasp, because usually respect and trust go hand in hand, and Ive already said that trust can be demolished. However Respect is different than trust. Respect is not just to a person, it can be just something in general. Once it is to or for a person, than yes, it can be destroyed of that person. Real Respect is an attitude. It supercedes the person, and gives way to the total. Real Respect is a state in which you do not defile anyone or anything for your sake. True Respect, real Respect is selfless, because you must give of yourself to respect. This, in turn t yourself if you choose to do so. That is the kind of respect that is important to me, without it, I will never truly feel right, or like myself, as I do now, because I know I have that kind of respect. I earn it by being as respectful as I can, and anyone who will not respect me for that is not someone whos r espect I want, because I will only be respectful to earn respect, as that is all I should have to do. You can order a custom essay, term paper, research paper, thesis or dissertation on respect from our professional custom essay writing service which provides high-quality custom written papers on any topics.

Development Is Impossible Without Industrialisation Essay

Development Is Impossible Without Industrialisation - Essay Example This paper will critically examine the statement that development is impossible without industrialization. Development has been defined as the process of acquiring and securing the freedoms that we have reasons to value. They make our life richer and allow us to be fuller social persons (Amartya Sen cited by Oden 2001). Development is a complex multidimensional process which cannot be addressed by economic growth alone. It must be approached with a dynamic perspective and the process of development is not the province of one nation. Nations have to cooperate and coordinate with one another. In Africa a large number of people fall below the extreme poverty line, which affects income, education and health. Unless the problem of poverty is resolved, no development can take place. This requires effective sustainable development which translates into jobs creation, education and health amenities. Sustainable development requires efficient, established and regular institutions and processes but most importantly it requires efficient industrial sectors. History provides sufficient evidence that industrial civilization brought about sustained prosperity. The Industrial Revolution brought all the development goals set forth at the UN Conference - clean water and sanitation, the elimination of disease, plentiful food (Tracinski, 2002). Industrial capitalism could make man’s physical environment healthier. Nations with large populations demonstrate a marked transformation and higher income growth. Development may vary across nations and may also vary over time, but development is impossible without industrialization. Nations benefit when they step into industrialization. Virtually every country that has experienced rapid growth in productivity and changes in life style over the last two hundred years has done so by industrializing (Murphy, Shleifer, & Vishny, 1998). Countries like

Edit lesson Plan 2 and 5 Assignment Example | Topics and Well Written Essays - 250 words

Edit lesson Plan 2 and 5 - Assignment Example After the story, the children will engage in a game of treasure hunt - just like in the story - but this time wearing a leprechaun mask as if they were a leprechaun; and be the first to shout â€Å"We found it!† once they find all 5 treasures. The students will be motivated to participate in the game of treasure hunt as their curiosity will be aroused on what treasure they will discover. 9:03 – Teacher will say that in order to find the leprechaun, they have to read the story of St. Patrick’s Day (holding the book in her hand). The teacher will read the story, showing the lift-the-flap pages. As the teacher reads the story, the teacher will identify 3 important figures/objects in the story and say its name out loud (as the teacher encounters it through the pages of the story) and have the class repeat the word. 9:10 – Teacher is done reading the story, and begins to distribute the leprechaun masks. As the teacher distributes the masks, she will tell the students that they are now leprechauns who will go treasure hunting. 9:12 – Teacher will divide them into Group Coins & Group Shamrocks. Group Coins will get coin map. Group Shamrock will get shamrock map. The teacher will now lay down the instructions for the activity to the students. certain the students do not forget the phrase, the teacher will ask â€Å"What will you shout after finding all 5 treasures?† this way, the children would have to shout back the phrase â€Å"We found it!† The teacher will then ask the class what they think of the treasure that they found in the map, whether or not the treasure was easy to find; were they able to find all 5 treasures before the rainbow disappeared; ask whose group shouted â€Å"We found it!† after finding all the treasures; do the student’s like the story of St. Patrick’s Day, do they like the masks, and other questions that will draw responses from the students in relation to the activity or the

Down the Hatch Essay Example | Topics and Well Written Essays - 1500 words

Down the Hatch - Essay Example All this made her to remember what happened on the previous day. She and Ingrid her friend was in deep sleep; it was a quirk of fate because nothing can be asleep when the alarms are sounding off. However, it did wake them up because the alarms were a signal that a tornado is in close proximity and not a signal for anything mundane. A possible disaster brings with it a list of things people have to do to save their lives and number one on that list is the flight to a shelter. Hence, acting fast and evacuating all the breathing mortals will save as many lives as possible. That is why both of them ran to the barn but there was no one there, not even the horses although they usually prefer to stay where they are when a disaster strikes them. Only Katrina's dog, Amber, was there; perhaps waiting for her to show up. She didn't want any animal to feel disowned under such circumstances, for she was a caring human being above anything else. Now, she reflected, she had to shelter herself and the other two from the grueling tornado. Katrina let out a peaceful sigh and looks out the window in the living room. She sees no one. Letting her gaze wander towards the sky, she notices that they turn in vivid shades of orange and green just as her eyes fixes on it and the air comes to a standstill. The sheer action seemed like a premonition of some sort. The sinister atmosphere, that resulted, alone was trying to disturb her peaceful and tranquil soul again. An adventure had occurred with Katrina and her girlfriend yesterday; it was surely an intimidating day for her but she had acted in a cool, calm and collective way and had defied all the scariness out of her. The clouds formed a thundering sound and the rain then poured with a renewed energy, Katrina didn't know it was capable of producing. Remembering what to do, Katrina, her girlfriend Ingrid and her dog Amber, took refuge in a strapping shelter situated below that barn's floor. Sited in the barn was a hatch that opened to a safe haven. Katrina and Ingrid were conversing about the vice that tornados seem to bring in the lives. The vice that make a man wonder how God can allow such things to happen to ordinary people out of the blue as they, in their sight, weren't able to do anything extremely dire to evoke the anger in God this bad. They disagreed because Katrina held a firm belief in God and thought of Him as a God and nothing else. It may stir up guilt in her later to think of God in a negative manner. The disparity between their views was mainly due to their different religions. Katrina felt disturbed as she had always tried not to bring up any talk of religions, her or any other's, between them. It only created resentments in such a beautiful relationship. "Once we were late in evacuating all the animals and so lost a couple of horses and since then, Mother tells me we never found their bodies even." Katrina said trying to steer the conversation in a new direction. Thus, they started talking about their favorite animals; Ingrid loved birds but Katrina liked the four-legged creatures better. It was startling just then to observe the discrepancy between the two friends because of the way each of them were responding to the present circumstances. For the reason that where Katrina was a simple Midwestern Christian farm girl; Ingrid was a skittish East Asian Buddhist free willed girl. Tall, lean and wary with a

Compare and Contrast the Fundamental Differences Between the Research Paper

Compare and Contrast the Fundamental Differences Between the Ideologies of Liberalism and Conservatism - Research Paper Example â€Å"congress shall make law†¦Ã¢â‚¬  The concept of classic liberalism has gone through several changes overtime in the past century. These changes are known as revolution of 1930s and the revolution of the 1960s. In the revolution of 1930s, which is also termed as FDR revolution, the main idea of liberalism was shown by assuming that the true meaning of right cannot be seen until and unless the rights were exercised. It was discussed by Franklin Roosevelt as individuals with no accessibility to the necessities of life are not considered as free souls. He was of the belief that in order to provide the individuals of the state liberty in true sense, the state should work for them to eliminate deprivation, lack of job opportunities, uncertain sickness and poverty of old people. So, the 1930s revolution of liberalism created a new horizon of freedom by making the government responsible for the role to play rather than the others as considered by the founders of America. During the period of 1960s, the second revolution of liberalism began and made several changes to the society. The main concept of this revolution was liberation and it was developed by Jean Jacques Rousseau. Prior to the sixties, many Americans were of the view for a universal moral order, which was external for individuals and that made demand for them. The role of the individual was to adjust according to those moral orders. The generation of previous time up till the generation of world war two took all these moral order and its commands for granted that included to work hard in order to make your future better, be good to your better half, fight for your country and many others. Since the starting of the 1960s, there were many movements took place such as antiwar movement, feminist movement, gay activist movement and others that encounters those moral orders badly by reporting them as oppressive and restricted (Myers 127). These movements started working for some other set of

The history of lynchings in the united states between 1882 and 1930 Research Paper

The history of lynchings in the united states between 1882 and 1930 - Research Paper Example This traditional narrative, for all its tragedy, excluded the White males, White females, and black females who were also lynching victims and took for granted the dynamic part of White women in supporting or opposing mob violence. Moreover, Black women were completely absent in the mainstream lynching narrative (Logan, 1999). However, as this paper argues, Black women belonging to the middle class, headed by Ida B. Wells, became the most expressive and bold detractors of lynching. The work of Ida Wells against lynching provokes a re-evaluation of the extraordinary influence of Black women on structured campaign against lynching. Ida’s revolutionary analysis of the politics of race and gender and her worldwide exposure crusade signified a radical deviation to the public role of Black women. It initiated the presence of feminization within American reform that oriented its critical tendencies into a more cultivated type of women’s position (Logan, 1999). The campaign of Black women against lynching by the 1920s, even though remained public, was influenced more powerfully by sexuality and gendered practices of women’s society, evangelicalism, charity, and the expression of motherhood and womanhood (Loewenberg & Bogin, 1976), all uniquely dissimilar from the prior campaign of Ida. The lynchings of Will Stewart, Calvin McDowell, and Thomas Moss in 1892 were not an issue for their uncommonness: in 1892, hundreds of Blacks were murdered by furious mobs for suspected crimes against White people (Brundage, 1997, 295). The site of the lynchings in Tennessee was not noteworthy; seventeen Black people from Tennessee were lynched in 1892 and forty-six Blacks had died in a race disturbance in Memphis in 1866 (Brundage, 1997, 295). The three casualties took particular relevance mainly due to their influence on Ida Wells as a young writer. She was well acquainted with the three men. Infuriated by the death of her comrades, Ida mustered her great gifts and efforts to

Compare and Contrast the Fundamental Differences Between the Research Paper

Compare and Contrast the Fundamental Differences Between the Ideologies of Liberalism and Conservatism - Research Paper Example â€Å"congress shall make law†¦Ã¢â‚¬  The concept of classic liberalism has gone through several changes overtime in the past century. These changes are known as revolution of 1930s and the revolution of the 1960s. In the revolution of 1930s, which is also termed as FDR revolution, the main idea of liberalism was shown by assuming that the true meaning of right cannot be seen until and unless the rights were exercised. It was discussed by Franklin Roosevelt as individuals with no accessibility to the necessities of life are not considered as free souls. He was of the belief that in order to provide the individuals of the state liberty in true sense, the state should work for them to eliminate deprivation, lack of job opportunities, uncertain sickness and poverty of old people. So, the 1930s revolution of liberalism created a new horizon of freedom by making the government responsible for the role to play rather than the others as considered by the founders of America. During the period of 1960s, the second revolution of liberalism began and made several changes to the society. The main concept of this revolution was liberation and it was developed by Jean Jacques Rousseau. Prior to the sixties, many Americans were of the view for a universal moral order, which was external for individuals and that made demand for them. The role of the individual was to adjust according to those moral orders. The generation of previous time up till the generation of world war two took all these moral order and its commands for granted that included to work hard in order to make your future better, be good to your better half, fight for your country and many others. Since the starting of the 1960s, there were many movements took place such as antiwar movement, feminist movement, gay activist movement and others that encounters those moral orders badly by reporting them as oppressive and restricted (Myers 127). These movements started working for some other set of

Ethical Issues in Research Essay Example | Topics and Well Written Essays - 1500 words

Ethical Issues in Research - Essay Example It studies the principles about how we should do things right. We study ethics in order to improve our lives, and therefore its principal concern is the nature of human well-being. (Aristotles Ethics, 2007) Despite all these supposed advantages, there are still numerous ethical issues. This is because people interpret ethics differently. I might think of something as ethical while it may be totally unethical for another person. This is what leads to ethical problems and concerns. In the context of research, let's say, that a scientist feels that it is perfectly moral to test medicine on animals. He thinks so because his priority is benefit of science. An environmentalist, on the other hand, may feel apprehended at the thought of animals being made test subjects because his utmost priority is to protect the environment. What can we say about ethics here Both parties, in their places, are entirely reasonable. However, an ethical issue arises because both have different conventions for distinguishing between right and wrong. These issues are faced everyone everyday. Everybody comes to a point where they have to decide between what's right and what's not. This dilemma becomes especially apparent when carrying out research. There are specific norms for everything; in case of ethics of research, they are the aims or goals to be applied to people who conduct research in a systematic and scientific manner or other scholarly or creative activities, and there is a specific discipline, research ethics, on which these norms are based (Resnik, 2007). Ethical Issues Like mentioned above, these norms serve the goals of research. What are these goals The most important goal of research clearly is to find out whatever is possible about what is being studied. How does sticking to these ethical norms achieve this aim The answer is in the following section. While we get to that, we will study about the conflict of research and ethics.The biggest problem with carrying out ethical research is that it doesn't give perfectly naturalistic results. Either you can have an absolutely ecologically valid study or you can be absolutely moralistic and adhere to every ethical norm. Ecological validity is when the study is true to life. One may think, what has that got to do with ethics To carry out an ecologically valid research, it is important that subjects don't know about a lot of things that could cause demand bias characteristics or results that are affected by preconceived notions. And if subjects don't know a lot of things, this means that they haven't bee n told by the researchers and this is unethical. Researchers, on the other hand, may say that it was ethical as they kept things private for the benefit of science. Nevertheless, for an average person, it is unethical to keep things from the subjects of the study. This ethical issue is an honesty issue. Apart from honesty, another concern is confidentiality. When researchers carry out research and find amazing results, they feel obliged to share it with the rest if the world even if it means breaching of the initial agreement. Information about participants is leaked out and this too for them is for the good of science. Sharing results is one thing, while breaking a contact is another. The

Good to a Fault by Marina Endicott Essay Example for Free

Good to a Fault by Marina Endicott Essay Take a moment and imagine a family of six traveling from city to city in order to survive, their only home, a car. Suddenly as their driving along a women speeds into them crashing, and wrecking their home. They are all then taken to a hospital, where the family discovers that the mother has progressive cancer in her lymph nodes. After this discovery, the father decides to skip town leaving his wife, three young children and elderly mother homeless. Good to a Fault by Marina Endicott is an exceptional novel. Endicott won the Commonwealth Writers Prize for Best book in Canada and the Caribbean for Good to a Fault. Why might you ask? Each character is so extraordinarily developed and so well described it feels as if you know them yourself. Their emotions, thoughts and actions are so personal that at the end of the novel Endicott has created a wonderful and realistic person. Their conflicts are so profound, that they are crippling to the characters that suffer under them. And a theme that so important that the book is named after it. Like most novels Good To A Fault has a variety characters with an array of personalities, thoughts and behaviors. What sets it aside from others, is the vivid characterization of not only the fundamental characters of the story, but even the characters that are only introduced once. The rotation of perspectives gives the novel a whole new view on each characters true personality and on the conflicts they face. As Mary Jo Murphy from the New York Times said, â€Å"it’s the quieter introspective dramas, provided by Endicott’s skillful rotation among the characters’ points of view, that hold your attention.† Each characters thoughts are described by the author in exact correspondence with their personalities. For example; Paul, who is a pastor, often indirectly makes allusions to faith. Like when he and Darwin are fixing up Claras basement Paul says, Today is a time for rejuvenation pg.153 or when he is speaking to Clara about her generosity towards the Gages he says You sacrificed yourself for others pg.329 Through this, Endicott solidifies Pauls personality, tying him to his religion. Making Paul a symbol of Christianity which brings into question the faith of many characters. Allowing the reader to experience the many sides of faith. Apart from that , appearance and reputation help to build complete characters. Take the protagonist Clara , Paul describes her as single, childless of course, took care with her appearance, fortyish, Christian, and not in good spirits for some time since her mothers death. pg.26. This information helps develop a rounded character. It isnt enough just to say that Clara is a nice person, so that is why she takes care of the Gage family. The author uses her faith, age and relationship status to give reason for her generous actions. It helps the reader gain a better understanding of Claras personality, and accordingly builds a relationship between the reader and the protagonist. Above all things what sets this book aside from any other is the conflicts. Unlike most books the conflict of this story introduces itself in the very first paragraph, â€Å"The other car came from nowhere, speeding through on the yellow, going so fast it was almost safely past when Claras car caught it.†pg. 7. Because of this you would think that there would be no rising action, no excitement and no great lesson for the protagonist to learn, but you would be wrong. This conflict originally appears as if it will have the most impact, but it does not. In fact it stems off into several other conflicts that characters struggle with individually, and as a group. For instance, Lorraines diagnosis with cancer. This leads to her husband, Clayton, struggling to find his family a safe home, which he fails to do on his own. This leaves him bitter because instead of him finding a solution through hard work, he is left to stay with the very women who put them in the situation, Clara. As he says when confronting Clara at the hospital, â€Å"Hard on you? Hard to sit and watch the results of what you did?†pg23. He decides to deal with this by leaving the family. His actions burden Clara with the care of the family he left behind. Leading to Claras guilt of driving the childrens father away and leaving the mother all alone. Ultimately she struggles with the idea that she cares for the Gage family either out of guilt or to fill the empty spaces not only in her spare rooms, but in her life. It only took Endicott one simple incident to create a million other problems throughout the novel. Each conflict faced, allows the reader to understand more about each characters role in the story. Finally molding the novel into the theme. The theme I took from this novel was ; personal satisfaction of goodwill is the only payment for charity,for if its not, the deeds bring no true meaning. However when I contacted Marina Endicott on twitter she described the theme as follows; How the debt of charity is redeemed; Love your neighbour as yourself. After Clara divorces her husband, she is left wounded by their short, detached marriage. Her parents then become ill and she must care for them. But soon they both die leaving Clara alone with all their possessions and burdens. When Clara opens up her home to the Gage family and a friends daughter, she must decide whether her actions are truly pure and for others benefit, or greedy and only being used to fill the void left by her parents and husband. So she questions herself, â€Å"I see what they need, but I am unwilling to help.†pg 25 When Clara takes in the Gage family she originally believes she is doing it to make up for the car accident she caused. As the visit becomes longer Clara grows more and more attached to the family as she brings them into her life. Caring for them soon becomes less of an obligation, and more of a desire as she grows to truly love the Gages like they were her own. She becomes so attached that she does not wish that they leave her home, and when they do she is deeply angered. â€Å"She did not want anything, except Pearce back, and Dolly, and Trevor; except the life she had left this afternoon, to run over and help Lorraine- to help her again!†pg.327 .This theme is a great topic that adds depth the novel. The whole story Clara is faced with deciding whether what she does is out of loneliness or out of good will. It is a topic that we should all consider when we decide to do something charitable. And yet another reason why I believe this is a wonderful piece of litterature. Ultimately this book incorporates everything that makes a good, memorable novel . Its realistic, likeable and relatable characters keep the reader the attached to the story. These characters face conflicts that challenge them physically and emotional but lead them to fulfilling rewards. Finally these elements are all summed up to create a concrete theme of charity versus selfishness, a topic rarely touched on in our society. These elements of the novel piece the story together as a whole and make it strong enough to last the test of time. This is a great novel.

Demand of Derivatives Investment in Malaysia

Demand of Derivatives Investment in Malaysia ABSTRACT This research investigates the demand of derivatives investment by Malaysia. On the whole the main purpose of this dissertation is to study, analyse and discuss about the usage of derivatives by Malaysian company or individual resident. The research paper is divided into five chapters. Chapter 1 introduces derivatives and identification of the research problems. Research objectives and questions are given briefly. Chapter 2 provides an overview of the literature reviewed throughout the research. A detailed description by past researchers is presented. The further detail of each derivative contract are summarised. Chapter 3 deals with the work flow of this study. The research methodologies includes research design and procedure, data collection method, and statistical data analyses method. Data collection from secondary data is analysed to form a theoretical framework. Chapter 4 present the analysis and result of research topic. Tables, diagrams, charts are use to illustrates the findings. Finally, Chapter 5 concludes the dissertation with summary all of the chapters. CHAPTER 1 INTRODUCTION Introduction A derivative is a financial instrument that is derived from assets, indexes, events, value or condition (known as the underlying asset). Rather than trading or exchanging the underlying asset itself, derivative traders enter into an agreement to exchange cash or assets over time based on the underlying asset. (David, 2003) From definition taken from International Accounting Standards 39 (IAS39) Financial Instruments Recognition and Measurement, a derivative is a financial instrument whose value changes in response to the change in a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rate, a credit rating or credit index or similar variable. (IAS, 2009) Forward contracts, futures contracts, options and swaps are the most common types of derivatives. Derivatives are often leveraged, such that a small movement in the underlying value can cause a large difference in the value of the derivative. (Khanna, 2010) Research Problem The research problem of this study is to uncover the derivative investment as a financial instrument for business and gaining capital. The usage of derivatives is getting larger nowadays. However, there is some criticism regarding the derivative in negative aspect as well. Research Objectives The following are the specific objective to achieve under this research To study the factor influence Malaysian to invest in the derivatives investment. To identify the method of reduction in risk under the usage of derivatives. Research Questions Questions that are bound to be answered throughout the research are: Why do investors select derivative investment? How can derivatives instrument be use? What is the types of derivative that are highly demanded in Malaysia? How does reduction in risk achieve by using derivatives instrument? How do traders speculate in order to make profit via derivatives? Scope of Study The scope of study for this research focuses on the derivative instruments. Significance of Study The significance of this study is to give the investors an idea as how the derivative instruments work in the business world. It also a study that helps businessman to reduce their risk and speculator to gain short-term money through derivatives. CHAPTER 2 LITERATURE REVIEW Introduction of Derivatives The first derivatives contract was listed in the year 1865 by the Chicago Board of Trade (CBOT) in USA. Those exchange traded derivatives contracts were called futures contracts. In April 1973, the Chicago Board of Options Exchange (CBOE) was set up for the purpose of options trading. The Standard Poors 500 Index in USA currently is the most popular stock index futures contract in the world. (HSBC Invest Direct, 2010) There are two distinct groups of derivative contracts, which tell apart the way they traded in the market. Over-the-counter (OTC) derivative is a type of financial derivative that negotiated directly between two parties rather than through an exchange centre. The OTC derivative market is the largest market for derivatives, and is unregulated with respect to disclosure of information between the parties. (Essaddam, et al., 2008) Exchange-traded derivative (ETD) is a type of financial derivative that has its transaction traded via specialised derivatives exchanges or other exchanges, such as Bursa, CBOE, Eurex etc. Derivatives exchange act as an intermediary to all related transactions, ETD is usually traded in standardised derivative contracts. (ISDA, 2009) There are few major derivative contracts which consist of forward, future, option and swap contract. Forward Contract A forward contract is a contract negotiated at present that gives the contract holder both the right and full legal obligation to conduct a certain asset transaction at a specific future time, amount, price and other terms. (Schweser, 2002) The party to the forward contract that agrees to buy the financial or physical asset has a long forward position and is called the long. The party to the forward contract that agrees to sell or deliver the asset has a short forward position and is called the short. (David, 2003) For instance, Lam Soon Company signed a contract under which they agree to buy a tonne of crude palm oil (CPO) from their supplier 30 days from now at a price of RM2,500. Lam Soon Company is the long and the supplier is the short. Both parties have removed uncertainty about the price they will pay or receive for the CPO in the future date. If 30 days from now CPO are trading at RM2,580 per tonne, the short (supplier) must deliver the CPO to the long (Lam Soon) in exchange for a RM2,500 payment. If CPO are trading at RM2,420 on the future date, the long must purchase the CPO from the short for RM2,500, the contract price. Forward contract is usually negotiated directly between the two parties, therefore it is an OTC market forward contract. The forward contracts have the advantage of being flexible (the parties design the contract to meet their specific needs). However, Stalla (2000) had concluded that forward contracts have three major disadvantages: They are illiquid. Because the terms of a forward contract are usually designed to meet the specific needs of the contracting parties, it is difficult for either one of them to close out its side of the contract, either by selling it to a third party or by getting the counterparty to cancel the agreement without demanding an excessive buyout price. They have credit risk. Forward contracts usually require neither party to the agreement to post collateral, make any mark-to-market transfers of funds over the life of the contract, or make any margin deposits to give assurance that it will be able fulfil its obligations under the terms of the agreement (although such clauses could be inserted into a forward contract by mutual consent of the parties). Consequently, a typical forward agreement is based on trust, each party to the agreement must trust that its counterparty will perform in the agreed-upon manner. This exposes both contracting parties to the risk that the counterparty might default on its obligation. They are unregulated. No formal body has the responsibility of setting down rules and procedures designed to protect market participants. Generally, the only protection given to parties involved in the OTC forward market is that of contract law. Future Contract A futures contract is a forward contract that has been highly standardised and closely specified. As with a forward contract, a futures contract calls for the exchange of some goods at a future date for cash, with the payment for the goods to occur at the future delivery date. The purchaser of the contract is to receive delivery of the good and pay for it, while the seller of the contract promises to deliver the goods and receive payment. The payment price is determined at the initial time of the contract. (Adhar, 2006) Futures contracts are usually traded on futures exchanges (ETD), rather than in an OTC environment. Hence, futures contracts are unique forms of forward contracts that designed to reduce the disadvantages of forward contracts. The future contracts terms have been standardised so that can be traded in a public marketplace. Due to standardisation, futures contracts are lesser flexible than forward agreements, hut it also makes them more liquid. (Copeland, et al., 2004) According to Schweser (2006) points, in order to safeguard the clearinghouse, which act as the buyer to every seller and the seller to every buyer, the exchange requires traders to post margin and settle their accounts on a daily basis. Before trading, the trader must deposit funds, called margin with their broker (who, in return, will post margin with the clearinghouse). The purpose of margin is to ensure that traders will perform their contractual obligations. There are three types of margin. The first deposit is called the initial margin which had been explained above. Any losses for the day are removed from the traders account and any gains are added to the traders account. If the margin balance in the traders account falls below a certain level (called the maintenance margin), the trader will get a margin call and have to deposit more money (called the variation margin) into the account to bring the account back up to the initial margin level. (Stalla, 2000) For instance, Lam Soon buys a 30 days future contract of CPO at RM2,500 per tonne. The initial margin was RM2,500. The next day the price of CPO plummetsRM50. Therefore Lam Soon has just lost RM50. At the end of the day, the daily settlement process marks Lam Soons margin account to market by taking RM50 out of the account leaving a balance of RM2,450. Now, assume the maintenance margin level is at 70%. If Lam Soons margin balance falls to or below RM1,750, Lam Soon gets a margin call and has to bring their account back up to the initial RM2,500 level. There are several advantages to using forward or futures contracts as a substitute for trading in the spot markets of commodities: (Sorid, n.d) Transaction costs are much lower and liquidity is better in the futures markets than in the spot markets. There is no need to store or insure physical assets if forward or futures contracts are used. Forward and futures contracts may be sold short, as well as bought long. This may not always be possible if one were trading the actual underlying assets themselves. There is a great deal of leverage in forward and futures contracts. A trader can control on a large position with only a small initial deposit. If the futures contract with a value of RM100,000 has an initial margin of RM10,000 then one percent change in the futures price which is RM1,000, would result in a 10 percent change relative to the traders initial costs. Since there is no margin is required with a forward contract, control can be obtained with no money down. There is flexibility, especially with forward contracts, that can be used to create specialized risk/return patterns. Price risk can be accepted or eliminated by using forward or futures contracts without compromising any holdings of an underlying asset. Thus, a jeweller can sell the price risk associated with holding an inventory of gold without actually disturbing the physical inventory itself. This makes it easy to adjust ones financial exposure to commodity markets, even if ones physical exposure must be maintained for business purposes. The primary disadvantage of using futures contracts for speculative trading would involve a great deal of leverage, so that large losses can occur. In effect, holding a futures position with only the margin requirement on deposit in a brokerage account is the same thing as having purchased the underlying asset on margin. Another closely related disadvantage is that futures (but not forward) contracts subject the trader to margin calls to meet daily settlement obligations. This requires participants to have a cash reserve that can be drawn upon to meet these demands for additional cash. (Sorid, n.d) Option Contract According to the Chicago Board Options Exchange (CBOE) 2008, an option is a contract gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. The owner of a call option has the right, but not the obligation to purchase the underlying good at a specific price for a specified time period. While the owner of a put option has the right, but not the obligation to sell the underlying good at a specific price for a specified time period. To qualify these rights, the options owner has to pay a premium to the seller of the option for buying the option. (CBOE, 2008) The seller of the option is called an option writer. Options have four possible positions: (CBOE, 2008) Call option buyer Call option writer or seller Put option buyer Put option writer or seller In these contracts, the rights are with the owner of the option. The buyer that pays the premium receives the right to buy or sell the underlying asset on specific time and price. The writer or seller of the option receives payment and obligates to sell or purchase the underlying asset as agreed in the contract of the option owner. (Akmeemana, n.d.) For instance, BAT share is selling at RM50 while its call option is at RM10. The call option can be exercised for RM45 with a life span of 5 months. The exercise price of RM45 is called the options strike price. The RM10 price of the option is called the option s premium. If the option is purchased for RM10, the buyer can purchase the stock from the option seller over the next 5 months for RM45. The seller, or writer of the option gets to keep the RM10 premium no matter what the stock does during this time period. If the option buyer exercises the option, the seller will receive the RM45 strike price and must deliver to the buyer a share of BAT stock. If the price of BAT stock falls to RM45 or below, the buyer are not obliged to exercise the option. Note that the option holders can only exercise their right to act if it is profitable to do so. The option writer, however, has an obligation to act at the request of the option holder. A put option is the same as a call option except the buyer of the put has the right to sell the put writer a share of BAT at any time during the next five months in return for RM45. The owner of the option is the one who decides whether to exercise the option or not. If the option has value, the buyer may either exercise the Option or sell the option to another buyer in the secondary options market. (Tatum, 2010) For short-term investment horizons, options trading can produce lower transaction costs than the outright purchase and sale of the underlying assets themselves. Besides, options can he used to execute some tax strategies. (Skousen, 2006) Swap Contract A swap is an agreement between two or more parties to exchange sets of cash flows over a period in the future. The parties that agree to the swap are known as counterparties. The cash flows that the counterparties make are generally tied to the value of debt instruments or the value of foreign currencies. Therefore, the two basic kinds of swaps are interest rate swaps and currency swaps. (Schweser, 2006) Unlike the highly structured futures and options contracts, swaps are custom tailored to fit the specific needs of the counterparties. The counterparties may select the specific currency amounts that they wish to swap, whereas exchange traded instruments have set values. Similarly, the swap counterparties choose the exact maturity that they need, rather than maturity dates set by the exchange. This flexibility is very important in the swap market, because it allows the counterparties to deal with much longer horizons than can be addressed through exchange-traded instruments. Also, since swaps are not exchange traded, it gives the participants greater privacy, and they escape a great deal of regulation. (Hodgson, 2006) According to Hodgson (2996), the advantages of swap agreements over conventional traded derivatives can be summarised as below: Swaps are highly flexible and can be custom made to fit the requirements of the parties entering into them. The swap market is virtually unregulated, in contrast to the highly regulated futures market. This could change, however, since regulators usually abhor a regulation vacuum and probably will, eventually, seek to bring the market under their protection. The cost of transacting in the swap market is low. Swaps are private transactions between two parties. Often, swaps are off-balance sheet transactions that can be used, for example, to enable a firm to reposition its balance sheet quickly without alerting competitors. The disadvantages of swaps include: Because swaps are agreements, a party who wants to enter into a particular swap must find a counterparty that is willing to take the other side of the swap. Swaps can be illiquid; once entered into, a swap cannot easily be terminated without the consent of the counterparty. Because there are no margin deposits or a clearinghouse that help ensure, or will guarantee, that the agreements will be honoured, the integrity of swaps depends solely upon the financial and moral integrity of the parties that have entered into them. In other words, the swaps have more credit risk than futures contracts. The Demand of Derivatives Based on the statistics of the Bursa Malaysia Derivatives Berhad, the total exchange of derivatives during the year 2009 was up to 6,137,827 contracts. The crude palm oil futures (ETD) is the most liquid future in Malaysia, total of 4,008,882 contracts with average of 334,074 contracts traded monthly during year 2009. (Bursa Malaysia, 2010) Figure 2.1 shows the monthly price traded and the monthly volume of crude palm oil futures (FCPO) traded in Bursa Malaysia from year 1985 until March 2010. The green colour bar represents the price close on the month end was above the open price open on the beginning of the month, while red colour bar indicates the closing price is below the open price. Figure 2.1 indicates that there was less transaction traded during the eighth decade of the 20th century until 2002. The number of FCPO contract traded keep on increasing especially start from year 2002, and is quite popular in recent year, the volume of transaction exceeded 150,000 contracts each month. FCPO is extremely high volume in 2008 because the global oil price is at its peak at USD145 per barrel. FCPO traded at its pinnacle in November 2006 which recorded 360,650 contracts in a month. This showing that the FCPO is high in demand in Malaysia as compare to previous years. Figure 2.2 shows the history chart of FTSE Bursa Malaysia Kuala Lumpur Composite Index Futures (FKLI) traded in Bursa Malaysia from December 1995 until March 2010. There was a high trading volume during the 1997 Asian Financial Crisis due to the high fluctuate of the Kuala Lumpur Composite Index (KLCI). 148,318 future contracts were traded in September 1998. There were at least 40,000 future contracts traded in the following years of 1998. The volume traded increasing rapidly in 2007 as Malaysian economy recovers. KLCI went as high as 1400 points during the last 3 years. 302,321 future contracts were trade in August 2007, which is the highest volume recorded in history. Based on Figure 2.2 trading volume trend, it can be concluded that speculators were heavily involve in trading FKLI in 1997, where the Asian Financial Crisis tragedy occurred and in its peak in 2007 . KLCI fluctuation was elevated during these two event (circled in the chart). For the global market, the market for options developed rapidly in early 80s. The number of option contract sold each day exceeded the daily volume of shares traded on the New York Stock Exchange. According to the Bank for International Settlements, the total OTC derivative outstanding notional amounted to USD605 trillion as of June 2009. Factors That Influence Derivatives Trading Mike Singh (2010) said that trading derivatives will have lesser risk than other trades because investor are not buying into the company or buying the underlying product. Instead, the risk is placed on performance. Due to its low risk factor, investment and commercial banks, end users such as floor traders, corporations, and mutual and hedge funds, are major types of firms that utilize derivatives. A much lower initial investment start up in derivatives trading, derivatives give an edge to those who decline or do not want to invest as much as is required to purchase stock. Derivatives can be a good way to balance ones total portfolio by spreading the risk throughout a variety of investments, rather than putting all eggs into a basket. Besides that, trading derivatives can be a good short term investment. Compared to some stocks and bond, derivatives is an financial instrument that can pay off in a shorter time frame such as days, weeks, or a few months. Stock and bonds are long-term investments and may over the course of many years. As the shorter turnaround time, derivatives can be a good way break into the market and mix short and long-term investments. (Siems, 1997) Numerous resources are available for learning about derivatives trading and many options are available. Hence derivatives are variety and flexibility, this point of view was supported by Mike Singh, 2010. Derivatives can derive profit from changes in equity markets, currency exchange rate, interest rates around the world. It also include the commodities changes in global supply and demand such as precious and industrial metals, agricultural products, and energy products such as petroleum and natural gas. This show that derivatives trading are available on a global scale. Getting involved in the global economy opens international options that may not be available through the traditional stock market. From the points given above, he concluded that there are three reasons for derivatives trading. First, trading derivatives are lesser risk than other trades. Second, trading derivatives are a good short term investment. Third, trading derivatives are variety and flexibility. Hence, derivatives trading may be a good trading option if someone are looking outside of trading traditional stocks and bonds. The International Swaps and Derivatives Association, Inc. (ISDA) announced the results of a survey done on the derivatives usage by the worlds 500 largest companies. According to the survey, 94% of these companies use derivative instruments to hedge and manage their financial risks in business. The foreign exchange derivatives are the most widely used instruments with total 88% of the sample, followed by interest rate derivatives which is 83% and commodity derivatives. There are two benefits which are most widely recognised attributed to derivative instruments, risk management and price discovery. Risk management could be the most vital purpose of the derivatives market. Derivatives also used to mitigate the risk of economic loss arising from changes in the value of the underlying. This activity is known as hedging. Alternatively, derivatives can be used by investors to increase the profit arising if the value of the underlying moves in the direction they expect, bearing extra risk by speculations. (Kuhlman, 2009) Price discovery is the prediction of information about future cash market prices through the futures market. There is a relationship between an assets current (spot) price, its futures contract price, and the price that people expect to prevail on the delivery date. By using the information contained in futures prices today, market observers can form estimates of what the price of a given commodity will be at a certain time in the future. Futures markets serve a social purpose by helping people make better estimates of future prices, so that they can make consumption and investment decisions more wisely. (Sorid, n.d) The derivatives market are broadly classified into three uses: Hedging Speculation Arbitrage Hedging Hedging is a way to enter into transactions that expose the entity to risk and uncertainty that fully or partially offsets one or more of the entitys other risks and uncertainties. (Elliot Elliot, 2005) One reason why companies attempt to hedge these price changes is because they are risks that are peripheral to the central business in which they operate. Hedging also refers to managing risk to an extent that makes it bearable. (Kameel, 2008) Equity Hedging Traders can use derivatives to hedge or mitigate risk in the stock market. Entering into a derivative contract can cover part or all of the losses if the value of their underlying position moves in the opposite direction. For equity forward contracts, where the underlying asset is a single stock, a portfolio of stocks, or a stock index, work in much the same manner as other forward contracts. An investor who wishes to sell 100 shares of BAT stock 90 days from now and wishes to avoid the uncertainty about the stock price on that date, could do so by caking a short position in a forward contract covering 100 BAT shares. A dealer might quote a price of RM48 per share, agreeing to pay RM4,800 for the 100 shares 90 days from now. The contract may be deliverable or settled in cash as described above. The stock seller has locked in the selling price of the shares and will get no more if the price (in 90 days) is actually higher, and will get no less it the price actually lower. (Sharma, 2009) For equity future example, an individual stock trader can minimise the stock trading risk by hedging using futures market (Exchange-traded derivatives). A stock trader is extremely aware of economy downturn. If the trader expected an economy downturn is coming which will cause the share price to drop, the trader can protect against down fall of stocks equity by opening a short position of the FTSE Bursa Malaysia KLCI Futures (FKLI) to hedge against his stock portfolio. So if the economy downturn does happen, the trader will gain profit from the FKLI. However, there will be a loss if the trader close the position of the stock during the economy downturn, but the gain from the FKLI will cover some or over the losses from the stock market. Thus, this can reduce the risk by FKLI futures hedging. (Copeland, et al., 2004) For stock option contracts, one call priced at RM6 with a strike price of RM30 gives the holder the right to purchase 100 shares of the stock at RM30 per share until the exercise date. The contract has a money value of RM600 (RM6 x 100 shares). For put options. the concepts are the same, except that the option gives the holder the right to sell 100 shares of the stated stock at RM30 per share through the exercise date. Commodity Hedging Commodity is a physical substance which there is demand, such as basic resources and agricultural. The most popular commodities in Malaysia include CPO, gold, tin, rubber and latex. (Amadeo, 2003) For instance, an airline company which the fuel is the biggest cost item for an airline taken care of, might want to get protection against the fuel price crisis. The airline company might enter into a future contract to hedge the fuel price. They will sign up a future contract with the fuel supplier (OTC derivative), promising that they will buy a certain amount of fuel at a certain price for the next certain months. The contract will definite the price that the airline company to pay for buying the fuel in future. In case the fuel price go higher than the contract price, then the fuel will have a cheaper price. If the fuel price gone down without the airline company expectation, which mean the contract price is higher than the market price, in that incident, the airline company might not want to exercise the contract price. In return, the airline company need to pay certain of fund to the fuel supplier as the contract fee. (Larry, 2005) Malaysian Airline System Berhad (MAS) announced a RM1.34 billion fuel hedge gain in the second quarter ended 30 June 2009. (Francis, 2009) Idris Jala (2009), the Managing Director and Chief Executive Officer of Malaysia Airlines said that he had decided not to unwind the fuel hedges so that the company can remain protected against the volatile fuel prices. MAS had hedged 47% of its fuel requirement at USD103/ bbl WTI for the year ended 2009 from 31 March 2009. Further highlighting the volatility of fuel prices, the fuel price increased 47% since April 2009, those airlines that did not hedge will be affected by the fuel price increasing, said Idris Jala, 2009. While MAS fuel bill increasing in tandem with the fuel price, MAS total fuel bill will be lower as the gains from the fuel hedges will partly offset the higher fuel cost. Foreign exchange (Forex) Hedging In international trading, dealings with forex play a significant role. There will be a significant impact on business decisions and outcomes if got any fluctuations in the forex rate. Many international trade and business dealings are shelved or become unworthy due to significant exchange rate risk embedded in them. Therefore, companies will use forex hedging with forwards, future, option. (Joseph Nathan, 1999) Forex hedging with forwards Forex forward rate is an agreement between two parties (OTC derivatives) to fix the exchange rate for a future transaction. In Malaysia, there are some banks do provide Forward Rate Agreements (FRA) service such as Bank Islam Malaysia, Maybank, EON Bank Group, CIMB Bank Group, HSBC Bank Malaysia, etc. A company simply transfer the risk to the bank when they entering into a FRA with a bank. Of course the bank internally will do some kind of arrangement to manage the risk. (Currencies Direct, 2010) For instance, a Malaysian construction company, Ban Lee Hin Engineering Construction Sdn Bhd just won a contract to build a bridge road in Philippines. The contract is signed for 10,000,000 Peso and would be paid for after the completion of the work. This amount is consistent with Ban Lee Hin minimum revenue of RM750,000 at the exchange rate of RM7.50 per 100 Peso. However, since the exchange rate could fluctuate and end with a possible depreciation of Peso, Ban Lee Hin enters into a forward agreement with Philtrust Bank in Philippines to fix the exchange rate at RM7.50 per 100 Peso. The forward contract is a legal agreement, and therefore constitutes an obligation on both parties. The Philtrust Bank may have to find a counter party for such transaction, either a party who wants to hedge against the appreciation of 10,000,000 Peso expiring at the same time, or a party that wishes to speculate on an increasing the value of Peso. If the Philtrust Bank itself plays the counter party, t hen the risk would be borne by the bank itself. By entering into a forward contract, Ban Lee Hin is guaranteed of an e Demand of Derivatives Investment in Malaysia Demand of Derivatives Investment in Malaysia ABSTRACT This research investigates the demand of derivatives investment by Malaysia. On the whole the main purpose of this dissertation is to study, analyse and discuss about the usage of derivatives by Malaysian company or individual resident. The research paper is divided into five chapters. Chapter 1 introduces derivatives and identification of the research problems. Research objectives and questions are given briefly. Chapter 2 provides an overview of the literature reviewed throughout the research. A detailed description by past researchers is presented. The further detail of each derivative contract are summarised. Chapter 3 deals with the work flow of this study. The research methodologies includes research design and procedure, data collection method, and statistical data analyses method. Data collection from secondary data is analysed to form a theoretical framework. Chapter 4 present the analysis and result of research topic. Tables, diagrams, charts are use to illustrates the findings. Finally, Chapter 5 concludes the dissertation with summary all of the chapters. CHAPTER 1 INTRODUCTION Introduction A derivative is a financial instrument that is derived from assets, indexes, events, value or condition (known as the underlying asset). Rather than trading or exchanging the underlying asset itself, derivative traders enter into an agreement to exchange cash or assets over time based on the underlying asset. (David, 2003) From definition taken from International Accounting Standards 39 (IAS39) Financial Instruments Recognition and Measurement, a derivative is a financial instrument whose value changes in response to the change in a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rate, a credit rating or credit index or similar variable. (IAS, 2009) Forward contracts, futures contracts, options and swaps are the most common types of derivatives. Derivatives are often leveraged, such that a small movement in the underlying value can cause a large difference in the value of the derivative. (Khanna, 2010) Research Problem The research problem of this study is to uncover the derivative investment as a financial instrument for business and gaining capital. The usage of derivatives is getting larger nowadays. However, there is some criticism regarding the derivative in negative aspect as well. Research Objectives The following are the specific objective to achieve under this research To study the factor influence Malaysian to invest in the derivatives investment. To identify the method of reduction in risk under the usage of derivatives. Research Questions Questions that are bound to be answered throughout the research are: Why do investors select derivative investment? How can derivatives instrument be use? What is the types of derivative that are highly demanded in Malaysia? How does reduction in risk achieve by using derivatives instrument? How do traders speculate in order to make profit via derivatives? Scope of Study The scope of study for this research focuses on the derivative instruments. Significance of Study The significance of this study is to give the investors an idea as how the derivative instruments work in the business world. It also a study that helps businessman to reduce their risk and speculator to gain short-term money through derivatives. CHAPTER 2 LITERATURE REVIEW Introduction of Derivatives The first derivatives contract was listed in the year 1865 by the Chicago Board of Trade (CBOT) in USA. Those exchange traded derivatives contracts were called futures contracts. In April 1973, the Chicago Board of Options Exchange (CBOE) was set up for the purpose of options trading. The Standard Poors 500 Index in USA currently is the most popular stock index futures contract in the world. (HSBC Invest Direct, 2010) There are two distinct groups of derivative contracts, which tell apart the way they traded in the market. Over-the-counter (OTC) derivative is a type of financial derivative that negotiated directly between two parties rather than through an exchange centre. The OTC derivative market is the largest market for derivatives, and is unregulated with respect to disclosure of information between the parties. (Essaddam, et al., 2008) Exchange-traded derivative (ETD) is a type of financial derivative that has its transaction traded via specialised derivatives exchanges or other exchanges, such as Bursa, CBOE, Eurex etc. Derivatives exchange act as an intermediary to all related transactions, ETD is usually traded in standardised derivative contracts. (ISDA, 2009) There are few major derivative contracts which consist of forward, future, option and swap contract. Forward Contract A forward contract is a contract negotiated at present that gives the contract holder both the right and full legal obligation to conduct a certain asset transaction at a specific future time, amount, price and other terms. (Schweser, 2002) The party to the forward contract that agrees to buy the financial or physical asset has a long forward position and is called the long. The party to the forward contract that agrees to sell or deliver the asset has a short forward position and is called the short. (David, 2003) For instance, Lam Soon Company signed a contract under which they agree to buy a tonne of crude palm oil (CPO) from their supplier 30 days from now at a price of RM2,500. Lam Soon Company is the long and the supplier is the short. Both parties have removed uncertainty about the price they will pay or receive for the CPO in the future date. If 30 days from now CPO are trading at RM2,580 per tonne, the short (supplier) must deliver the CPO to the long (Lam Soon) in exchange for a RM2,500 payment. If CPO are trading at RM2,420 on the future date, the long must purchase the CPO from the short for RM2,500, the contract price. Forward contract is usually negotiated directly between the two parties, therefore it is an OTC market forward contract. The forward contracts have the advantage of being flexible (the parties design the contract to meet their specific needs). However, Stalla (2000) had concluded that forward contracts have three major disadvantages: They are illiquid. Because the terms of a forward contract are usually designed to meet the specific needs of the contracting parties, it is difficult for either one of them to close out its side of the contract, either by selling it to a third party or by getting the counterparty to cancel the agreement without demanding an excessive buyout price. They have credit risk. Forward contracts usually require neither party to the agreement to post collateral, make any mark-to-market transfers of funds over the life of the contract, or make any margin deposits to give assurance that it will be able fulfil its obligations under the terms of the agreement (although such clauses could be inserted into a forward contract by mutual consent of the parties). Consequently, a typical forward agreement is based on trust, each party to the agreement must trust that its counterparty will perform in the agreed-upon manner. This exposes both contracting parties to the risk that the counterparty might default on its obligation. They are unregulated. No formal body has the responsibility of setting down rules and procedures designed to protect market participants. Generally, the only protection given to parties involved in the OTC forward market is that of contract law. Future Contract A futures contract is a forward contract that has been highly standardised and closely specified. As with a forward contract, a futures contract calls for the exchange of some goods at a future date for cash, with the payment for the goods to occur at the future delivery date. The purchaser of the contract is to receive delivery of the good and pay for it, while the seller of the contract promises to deliver the goods and receive payment. The payment price is determined at the initial time of the contract. (Adhar, 2006) Futures contracts are usually traded on futures exchanges (ETD), rather than in an OTC environment. Hence, futures contracts are unique forms of forward contracts that designed to reduce the disadvantages of forward contracts. The future contracts terms have been standardised so that can be traded in a public marketplace. Due to standardisation, futures contracts are lesser flexible than forward agreements, hut it also makes them more liquid. (Copeland, et al., 2004) According to Schweser (2006) points, in order to safeguard the clearinghouse, which act as the buyer to every seller and the seller to every buyer, the exchange requires traders to post margin and settle their accounts on a daily basis. Before trading, the trader must deposit funds, called margin with their broker (who, in return, will post margin with the clearinghouse). The purpose of margin is to ensure that traders will perform their contractual obligations. There are three types of margin. The first deposit is called the initial margin which had been explained above. Any losses for the day are removed from the traders account and any gains are added to the traders account. If the margin balance in the traders account falls below a certain level (called the maintenance margin), the trader will get a margin call and have to deposit more money (called the variation margin) into the account to bring the account back up to the initial margin level. (Stalla, 2000) For instance, Lam Soon buys a 30 days future contract of CPO at RM2,500 per tonne. The initial margin was RM2,500. The next day the price of CPO plummetsRM50. Therefore Lam Soon has just lost RM50. At the end of the day, the daily settlement process marks Lam Soons margin account to market by taking RM50 out of the account leaving a balance of RM2,450. Now, assume the maintenance margin level is at 70%. If Lam Soons margin balance falls to or below RM1,750, Lam Soon gets a margin call and has to bring their account back up to the initial RM2,500 level. There are several advantages to using forward or futures contracts as a substitute for trading in the spot markets of commodities: (Sorid, n.d) Transaction costs are much lower and liquidity is better in the futures markets than in the spot markets. There is no need to store or insure physical assets if forward or futures contracts are used. Forward and futures contracts may be sold short, as well as bought long. This may not always be possible if one were trading the actual underlying assets themselves. There is a great deal of leverage in forward and futures contracts. A trader can control on a large position with only a small initial deposit. If the futures contract with a value of RM100,000 has an initial margin of RM10,000 then one percent change in the futures price which is RM1,000, would result in a 10 percent change relative to the traders initial costs. Since there is no margin is required with a forward contract, control can be obtained with no money down. There is flexibility, especially with forward contracts, that can be used to create specialized risk/return patterns. Price risk can be accepted or eliminated by using forward or futures contracts without compromising any holdings of an underlying asset. Thus, a jeweller can sell the price risk associated with holding an inventory of gold without actually disturbing the physical inventory itself. This makes it easy to adjust ones financial exposure to commodity markets, even if ones physical exposure must be maintained for business purposes. The primary disadvantage of using futures contracts for speculative trading would involve a great deal of leverage, so that large losses can occur. In effect, holding a futures position with only the margin requirement on deposit in a brokerage account is the same thing as having purchased the underlying asset on margin. Another closely related disadvantage is that futures (but not forward) contracts subject the trader to margin calls to meet daily settlement obligations. This requires participants to have a cash reserve that can be drawn upon to meet these demands for additional cash. (Sorid, n.d) Option Contract According to the Chicago Board Options Exchange (CBOE) 2008, an option is a contract gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. The owner of a call option has the right, but not the obligation to purchase the underlying good at a specific price for a specified time period. While the owner of a put option has the right, but not the obligation to sell the underlying good at a specific price for a specified time period. To qualify these rights, the options owner has to pay a premium to the seller of the option for buying the option. (CBOE, 2008) The seller of the option is called an option writer. Options have four possible positions: (CBOE, 2008) Call option buyer Call option writer or seller Put option buyer Put option writer or seller In these contracts, the rights are with the owner of the option. The buyer that pays the premium receives the right to buy or sell the underlying asset on specific time and price. The writer or seller of the option receives payment and obligates to sell or purchase the underlying asset as agreed in the contract of the option owner. (Akmeemana, n.d.) For instance, BAT share is selling at RM50 while its call option is at RM10. The call option can be exercised for RM45 with a life span of 5 months. The exercise price of RM45 is called the options strike price. The RM10 price of the option is called the option s premium. If the option is purchased for RM10, the buyer can purchase the stock from the option seller over the next 5 months for RM45. The seller, or writer of the option gets to keep the RM10 premium no matter what the stock does during this time period. If the option buyer exercises the option, the seller will receive the RM45 strike price and must deliver to the buyer a share of BAT stock. If the price of BAT stock falls to RM45 or below, the buyer are not obliged to exercise the option. Note that the option holders can only exercise their right to act if it is profitable to do so. The option writer, however, has an obligation to act at the request of the option holder. A put option is the same as a call option except the buyer of the put has the right to sell the put writer a share of BAT at any time during the next five months in return for RM45. The owner of the option is the one who decides whether to exercise the option or not. If the option has value, the buyer may either exercise the Option or sell the option to another buyer in the secondary options market. (Tatum, 2010) For short-term investment horizons, options trading can produce lower transaction costs than the outright purchase and sale of the underlying assets themselves. Besides, options can he used to execute some tax strategies. (Skousen, 2006) Swap Contract A swap is an agreement between two or more parties to exchange sets of cash flows over a period in the future. The parties that agree to the swap are known as counterparties. The cash flows that the counterparties make are generally tied to the value of debt instruments or the value of foreign currencies. Therefore, the two basic kinds of swaps are interest rate swaps and currency swaps. (Schweser, 2006) Unlike the highly structured futures and options contracts, swaps are custom tailored to fit the specific needs of the counterparties. The counterparties may select the specific currency amounts that they wish to swap, whereas exchange traded instruments have set values. Similarly, the swap counterparties choose the exact maturity that they need, rather than maturity dates set by the exchange. This flexibility is very important in the swap market, because it allows the counterparties to deal with much longer horizons than can be addressed through exchange-traded instruments. Also, since swaps are not exchange traded, it gives the participants greater privacy, and they escape a great deal of regulation. (Hodgson, 2006) According to Hodgson (2996), the advantages of swap agreements over conventional traded derivatives can be summarised as below: Swaps are highly flexible and can be custom made to fit the requirements of the parties entering into them. The swap market is virtually unregulated, in contrast to the highly regulated futures market. This could change, however, since regulators usually abhor a regulation vacuum and probably will, eventually, seek to bring the market under their protection. The cost of transacting in the swap market is low. Swaps are private transactions between two parties. Often, swaps are off-balance sheet transactions that can be used, for example, to enable a firm to reposition its balance sheet quickly without alerting competitors. The disadvantages of swaps include: Because swaps are agreements, a party who wants to enter into a particular swap must find a counterparty that is willing to take the other side of the swap. Swaps can be illiquid; once entered into, a swap cannot easily be terminated without the consent of the counterparty. Because there are no margin deposits or a clearinghouse that help ensure, or will guarantee, that the agreements will be honoured, the integrity of swaps depends solely upon the financial and moral integrity of the parties that have entered into them. In other words, the swaps have more credit risk than futures contracts. The Demand of Derivatives Based on the statistics of the Bursa Malaysia Derivatives Berhad, the total exchange of derivatives during the year 2009 was up to 6,137,827 contracts. The crude palm oil futures (ETD) is the most liquid future in Malaysia, total of 4,008,882 contracts with average of 334,074 contracts traded monthly during year 2009. (Bursa Malaysia, 2010) Figure 2.1 shows the monthly price traded and the monthly volume of crude palm oil futures (FCPO) traded in Bursa Malaysia from year 1985 until March 2010. The green colour bar represents the price close on the month end was above the open price open on the beginning of the month, while red colour bar indicates the closing price is below the open price. Figure 2.1 indicates that there was less transaction traded during the eighth decade of the 20th century until 2002. The number of FCPO contract traded keep on increasing especially start from year 2002, and is quite popular in recent year, the volume of transaction exceeded 150,000 contracts each month. FCPO is extremely high volume in 2008 because the global oil price is at its peak at USD145 per barrel. FCPO traded at its pinnacle in November 2006 which recorded 360,650 contracts in a month. This showing that the FCPO is high in demand in Malaysia as compare to previous years. Figure 2.2 shows the history chart of FTSE Bursa Malaysia Kuala Lumpur Composite Index Futures (FKLI) traded in Bursa Malaysia from December 1995 until March 2010. There was a high trading volume during the 1997 Asian Financial Crisis due to the high fluctuate of the Kuala Lumpur Composite Index (KLCI). 148,318 future contracts were traded in September 1998. There were at least 40,000 future contracts traded in the following years of 1998. The volume traded increasing rapidly in 2007 as Malaysian economy recovers. KLCI went as high as 1400 points during the last 3 years. 302,321 future contracts were trade in August 2007, which is the highest volume recorded in history. Based on Figure 2.2 trading volume trend, it can be concluded that speculators were heavily involve in trading FKLI in 1997, where the Asian Financial Crisis tragedy occurred and in its peak in 2007 . KLCI fluctuation was elevated during these two event (circled in the chart). For the global market, the market for options developed rapidly in early 80s. The number of option contract sold each day exceeded the daily volume of shares traded on the New York Stock Exchange. According to the Bank for International Settlements, the total OTC derivative outstanding notional amounted to USD605 trillion as of June 2009. Factors That Influence Derivatives Trading Mike Singh (2010) said that trading derivatives will have lesser risk than other trades because investor are not buying into the company or buying the underlying product. Instead, the risk is placed on performance. Due to its low risk factor, investment and commercial banks, end users such as floor traders, corporations, and mutual and hedge funds, are major types of firms that utilize derivatives. A much lower initial investment start up in derivatives trading, derivatives give an edge to those who decline or do not want to invest as much as is required to purchase stock. Derivatives can be a good way to balance ones total portfolio by spreading the risk throughout a variety of investments, rather than putting all eggs into a basket. Besides that, trading derivatives can be a good short term investment. Compared to some stocks and bond, derivatives is an financial instrument that can pay off in a shorter time frame such as days, weeks, or a few months. Stock and bonds are long-term investments and may over the course of many years. As the shorter turnaround time, derivatives can be a good way break into the market and mix short and long-term investments. (Siems, 1997) Numerous resources are available for learning about derivatives trading and many options are available. Hence derivatives are variety and flexibility, this point of view was supported by Mike Singh, 2010. Derivatives can derive profit from changes in equity markets, currency exchange rate, interest rates around the world. It also include the commodities changes in global supply and demand such as precious and industrial metals, agricultural products, and energy products such as petroleum and natural gas. This show that derivatives trading are available on a global scale. Getting involved in the global economy opens international options that may not be available through the traditional stock market. From the points given above, he concluded that there are three reasons for derivatives trading. First, trading derivatives are lesser risk than other trades. Second, trading derivatives are a good short term investment. Third, trading derivatives are variety and flexibility. Hence, derivatives trading may be a good trading option if someone are looking outside of trading traditional stocks and bonds. The International Swaps and Derivatives Association, Inc. (ISDA) announced the results of a survey done on the derivatives usage by the worlds 500 largest companies. According to the survey, 94% of these companies use derivative instruments to hedge and manage their financial risks in business. The foreign exchange derivatives are the most widely used instruments with total 88% of the sample, followed by interest rate derivatives which is 83% and commodity derivatives. There are two benefits which are most widely recognised attributed to derivative instruments, risk management and price discovery. Risk management could be the most vital purpose of the derivatives market. Derivatives also used to mitigate the risk of economic loss arising from changes in the value of the underlying. This activity is known as hedging. Alternatively, derivatives can be used by investors to increase the profit arising if the value of the underlying moves in the direction they expect, bearing extra risk by speculations. (Kuhlman, 2009) Price discovery is the prediction of information about future cash market prices through the futures market. There is a relationship between an assets current (spot) price, its futures contract price, and the price that people expect to prevail on the delivery date. By using the information contained in futures prices today, market observers can form estimates of what the price of a given commodity will be at a certain time in the future. Futures markets serve a social purpose by helping people make better estimates of future prices, so that they can make consumption and investment decisions more wisely. (Sorid, n.d) The derivatives market are broadly classified into three uses: Hedging Speculation Arbitrage Hedging Hedging is a way to enter into transactions that expose the entity to risk and uncertainty that fully or partially offsets one or more of the entitys other risks and uncertainties. (Elliot Elliot, 2005) One reason why companies attempt to hedge these price changes is because they are risks that are peripheral to the central business in which they operate. Hedging also refers to managing risk to an extent that makes it bearable. (Kameel, 2008) Equity Hedging Traders can use derivatives to hedge or mitigate risk in the stock market. Entering into a derivative contract can cover part or all of the losses if the value of their underlying position moves in the opposite direction. For equity forward contracts, where the underlying asset is a single stock, a portfolio of stocks, or a stock index, work in much the same manner as other forward contracts. An investor who wishes to sell 100 shares of BAT stock 90 days from now and wishes to avoid the uncertainty about the stock price on that date, could do so by caking a short position in a forward contract covering 100 BAT shares. A dealer might quote a price of RM48 per share, agreeing to pay RM4,800 for the 100 shares 90 days from now. The contract may be deliverable or settled in cash as described above. The stock seller has locked in the selling price of the shares and will get no more if the price (in 90 days) is actually higher, and will get no less it the price actually lower. (Sharma, 2009) For equity future example, an individual stock trader can minimise the stock trading risk by hedging using futures market (Exchange-traded derivatives). A stock trader is extremely aware of economy downturn. If the trader expected an economy downturn is coming which will cause the share price to drop, the trader can protect against down fall of stocks equity by opening a short position of the FTSE Bursa Malaysia KLCI Futures (FKLI) to hedge against his stock portfolio. So if the economy downturn does happen, the trader will gain profit from the FKLI. However, there will be a loss if the trader close the position of the stock during the economy downturn, but the gain from the FKLI will cover some or over the losses from the stock market. Thus, this can reduce the risk by FKLI futures hedging. (Copeland, et al., 2004) For stock option contracts, one call priced at RM6 with a strike price of RM30 gives the holder the right to purchase 100 shares of the stock at RM30 per share until the exercise date. The contract has a money value of RM600 (RM6 x 100 shares). For put options. the concepts are the same, except that the option gives the holder the right to sell 100 shares of the stated stock at RM30 per share through the exercise date. Commodity Hedging Commodity is a physical substance which there is demand, such as basic resources and agricultural. The most popular commodities in Malaysia include CPO, gold, tin, rubber and latex. (Amadeo, 2003) For instance, an airline company which the fuel is the biggest cost item for an airline taken care of, might want to get protection against the fuel price crisis. The airline company might enter into a future contract to hedge the fuel price. They will sign up a future contract with the fuel supplier (OTC derivative), promising that they will buy a certain amount of fuel at a certain price for the next certain months. The contract will definite the price that the airline company to pay for buying the fuel in future. In case the fuel price go higher than the contract price, then the fuel will have a cheaper price. If the fuel price gone down without the airline company expectation, which mean the contract price is higher than the market price, in that incident, the airline company might not want to exercise the contract price. In return, the airline company need to pay certain of fund to the fuel supplier as the contract fee. (Larry, 2005) Malaysian Airline System Berhad (MAS) announced a RM1.34 billion fuel hedge gain in the second quarter ended 30 June 2009. (Francis, 2009) Idris Jala (2009), the Managing Director and Chief Executive Officer of Malaysia Airlines said that he had decided not to unwind the fuel hedges so that the company can remain protected against the volatile fuel prices. MAS had hedged 47% of its fuel requirement at USD103/ bbl WTI for the year ended 2009 from 31 March 2009. Further highlighting the volatility of fuel prices, the fuel price increased 47% since April 2009, those airlines that did not hedge will be affected by the fuel price increasing, said Idris Jala, 2009. While MAS fuel bill increasing in tandem with the fuel price, MAS total fuel bill will be lower as the gains from the fuel hedges will partly offset the higher fuel cost. Foreign exchange (Forex) Hedging In international trading, dealings with forex play a significant role. There will be a significant impact on business decisions and outcomes if got any fluctuations in the forex rate. Many international trade and business dealings are shelved or become unworthy due to significant exchange rate risk embedded in them. Therefore, companies will use forex hedging with forwards, future, option. (Joseph Nathan, 1999) Forex hedging with forwards Forex forward rate is an agreement between two parties (OTC derivatives) to fix the exchange rate for a future transaction. In Malaysia, there are some banks do provide Forward Rate Agreements (FRA) service such as Bank Islam Malaysia, Maybank, EON Bank Group, CIMB Bank Group, HSBC Bank Malaysia, etc. A company simply transfer the risk to the bank when they entering into a FRA with a bank. Of course the bank internally will do some kind of arrangement to manage the risk. (Currencies Direct, 2010) For instance, a Malaysian construction company, Ban Lee Hin Engineering Construction Sdn Bhd just won a contract to build a bridge road in Philippines. The contract is signed for 10,000,000 Peso and would be paid for after the completion of the work. This amount is consistent with Ban Lee Hin minimum revenue of RM750,000 at the exchange rate of RM7.50 per 100 Peso. However, since the exchange rate could fluctuate and end with a possible depreciation of Peso, Ban Lee Hin enters into a forward agreement with Philtrust Bank in Philippines to fix the exchange rate at RM7.50 per 100 Peso. The forward contract is a legal agreement, and therefore constitutes an obligation on both parties. The Philtrust Bank may have to find a counter party for such transaction, either a party who wants to hedge against the appreciation of 10,000,000 Peso expiring at the same time, or a party that wishes to speculate on an increasing the value of Peso. If the Philtrust Bank itself plays the counter party, t hen the risk would be borne by the bank itself. By entering into a forward contract, Ban Lee Hin is guaranteed of an e