Analysis of the TV Shows Friends and How I Met Your Mother Essay

Analysis of the TV Shows Friends and How I Met Your Mother - Essay Example As far as friendships go this group has it very tightly knit. They live the life in New York City and never seem to want for money even though they are rarely seen working. They seem to spend most of their time just hanging out together and sipping coffee, having the heart to heart talks or just getting into one sort of hijinks after another. Just as in the real world, these group of friends somehow end up dating one another and eventually, one or two they have highly successful hookups. However, that is not to say that the show takes relationships lightly because it is, after all, a comedy show. It was the way that they handled the seriousness of these relationships in a light manner that set this show apart from the others in their time slot. That is the characteristic that made the show and its characters special. Friends was a ground breaking show during its era. It had all the common characters from everyday life that the viewers could identify with. The men were comprised of the â€Å"looking for love† kind, the career women, the players, and the spaced out friends who are always good to hang out with when you need a good laugh. Everybody knew somebody who was exactly like Monica, Chandler, Rachel, or Joey. The show helped the term â€Å"extended family† and take it a whole new level. Friends showed everyone that family need not be confined solely to the relations based upon blood and direct DNA. They are the people that we connect with on a level that we would not even normally connect on with our own family.

International Logistics Essay Example | Topics and Well Written Essays - 250 words

International Logistics - Essay Example When companies become substantially involved in international dealings, logistics become an essential ingredient in the strategic planning process. In an increasingly world economy, logistics is a very critical matter in the success of a company. It is a fundamental part of supply chain management that entails operations management considerations, production engineering, and matters pertaining to the region. The main aims of International Logistics are to connect parts of global supply chains, prevail over international trade hurdles, and reduce transaction expenditures. It can also offer considerable cost savings and help businesses enter new overseas markets (Branch, 2009). The channel of international logistics can be split into three: transaction channel, distribution channel, and communication channel (Behar et al., 2013). The transaction channel deals with the buying, selling and collection of payment; the distribution channel involves the physical movement of goods while communication involves the contact between various players in international business. With the help of a professionally managed international logistics department, organizations can gain economies of scale. International Logistics can lead to increased production, technological advancement, and market expansion (Behar et al.,

Is cloning the way of the future Essay Example for Free

Is cloning the way of the future Essay Dolly was born on 5 July 1996 at the Roslin Institute in Edinburgh. She was cloned by scientists replaced the nucleus of the egg cell with the nucleus from the parent cell in Dollys case, an udder cell. Somehow, the egg cell reprogrammed the donated DNA contained within its new nucleus, and Dolly was the result. The different types of cloning: There are many different types of cloning but the two main types are reproductive and therapeutic cloning. Reproductive cloning is the process of making natural humans being for example, twins as it is done for the purpose of making human beings. Reproductive cloning has a great effect on future cloning as, demonstrates ways of how we can adapt ideas of easier methods of cloning plus it also helps us analyse and research on the key accepts Therapeutic cloning is when; a clone is created for a particular need or purpose. Therapeutic cloning is again a great adaptation create to help future medicine and understanding, helping us to reduce the risk of diseases caused by faulty genes. These two are also examples of natural and unnatural cloning as, reproductive clones produce twins, and therapeutic cloning is when scientist use it for medicine and to improve human living quality. How is cloning used? Cloning has many various uses, as it can benefit us in many ways, with our ever expanding medical. Some examples of the numerous uses are:   Using it to create identical clones, and then obtaining the stems cells and using them to correct faulty genes, with out the fear of the cells being rejected.   Using it for selective breeding- for example plants that produce the nice and juicy strawberries can be cloned to produce more nice and juicy strawberries.   For drug reduction as creating cloned you can get identical cells   Medical research. Reviving the extinct animals- like leopard, which are near extinction   To replace, children that were very much loved but passed away   For twins As these there are many more which enable us to use this creation for many different uses, specified to our needs. Theses are all the ways in which cloning can and may be used in the future. How are clones used today? Clones have now been recognised by the public and has constantly, become the one of the main topics in the news as in ;The Times -Embryo with two mothers created. This is a topic related to that of cloning as in the article; A human embryo with two mothers and a father has been created for the first time by British scientists (Jack Malvern writes). The three- parents embryo, created by a team at Newcastle university, opens up the possibility of the short-circuiting genetic diseases by replacing faulty genes from one mother with healthy ones from another mother. It has been hailed as the first realistic hope of an effective treatment for 50 genetic conditions passed on through mitochondrial DNA-DNA clustered outside the nucleus in a cell. The diseases include forms of the muscular dystrophy, diabetes and epilepsy. Professor Doug Turnbull, who led the team, described the technique as a mitochondria transplant. Couples would use IVF treatment to create a fertilised egg, from which the nucleus would be removed after a few hours and implanted into a donor egg. The parents DNA remains in the nucleus but the DNA outside the nucleus would be from the donor mother. The childs appearance is affected only by nuclear DNA. (this has been taken from The Times feb 5th) This article is an example of cloning used for a particular purpose; it tells us about a mother who replaces most of her faulty genes with healthy ones. This is one example of how cloning has been used recently. Stem Cells: Stem cells have the remarkable potential to change to any cell or organism that is needed, this is because stem cells are unspecialised cells. Stem cells have become important to us, as they are great factors that enable us to improve our health and correct faulty genes, by using them replace some genes, as well as this there are many other important uses in cell based therapies, to repair other damaged cells with in the body, and loads more. Cloning can also be produced for the stem cells with in it allowing us to replaces faulty genes with eases. Is cloning ethnically right? Well as I have mentioned in above pages there are many different view on weather or not cloning is ethnically right, some saying it is good other say its not. There is not a exact answer to weather or not they are ethically right it actually depends upon the persons opinion. Conclusion Overall cloning is a huge leap forward for man kind as it has many benefits that can be acquire by the one process furthering our medical knowledge allowing us to produce more efficient and effective medicines for our patients.I do believe that one day cloning will become the thing of the future our future medicine! Bibliography: Some of the information was takes from:   Newspaper The Times   BBC News   http://stemcells. nih. gov/info/basics/   scientific books (school text books)   Picture   Science museum (website)   Kiran Toor 10S Science coursework Show preview only The above preview is unformatted text This student written piece of work is one of many that can be found in our GCSE Variation and Inheritance section.

The Importance of Chapter Six in The Turn of the Screw Essay -- Henry

The Importance of Chapter Six in The Turn of the Screw Chapter Six is an important section of The Turn of the Screw, as it involves many of the themes of the story, as well as reflecting its general narrative structure. James' novel is phenomenally complex; it has an incredible ambiguity to it, which allows for some very outlandish and far-fetched ideas to be formulated. A 'theme' can almost be drawn from almost every other sentence, if one so desires. It is deciding which issues have a little more to them than there may seem at first and which are what they appear, nothing more, which is difficult. As with many books of its ilk, over-analysing is a serious essay writing hazard. To take things one aspect at a time, and to begin with the narrative structure. Whilst not exactly a key issue' of the story, the narrative structure can often inŸuence how those issues are revealed and detailed to readers, so still holds some relevance to the essay title. Chapter Six' overall structure is very similar to that of the story as a whole. It begins quietly, after the climax at the end of the previous chapter (as with the main part of The Turn of the Screw after the prologue, which creates a great deal of anticipation) and begins to increase in tension slowly throughout, with a slight lull in the middle, where the narrative becomes very reŸective and introspective, with the Governess writing her thoughts seemingly as they enter her head, creating a somewhat rambling, dense prose. Finally, when readers are least expecting it, the plot suddenly leaps into view once again, creating an exciting žnale ("Then I again shifted my eyes - I faced what I had to face.†¢) which leaves many plot threads open to inter... ... - a Gothic story. This is most evident when Miss Jessel appears across the lake. This is a particularly Gothic image, made all the more vivid in the following chapter, when she is described as "a žgure of quite as unmistakable horror and evil: a woman in black, pale and dreadful.†¢ In retrospect, this makes the end of Chapter Six seem even more Gothic. Chapter Six reŸects many of the key issues of the story, more so than most chapters. However, The Turn of the Screw is a very intense book, and every sentence seems to have hints of some deeper, darker deliberation on the part of James' writing. It is not unusual in this story to have a single chapter that contains a great deal of important information and relevance to the rest of the book - Chapter Six does tend to explore more issues in such a short space than other sections of the story, however.

Effects of Constantly Moving

â€Å"Move to a new country and you quickly see that visiting a place as a tourist, and actually moving there for good, are two very different things,† said Tahir Shah. Moving can always be tough event for children to cope with. Change can be difficult part of a person’s life, oftentimes quite harrowing. Some may find change to be a good thing but often times not a consistent transition. I, on the other hand, find it to be more of a regular transition. Moving has many consequences on an individual psychologically, economically, and physically. Moving frequently can have its plethora of disadvantages.People move for many reasons: such as a new job, to live in a better place, or to start a new life. Just as in anything else in life, there is a good side and bad side to moving. To have a place to call home is essential in the life of a person. People often take pride in the city that they are from. Human’s work off of routine and a sense of normalcy, which is drasti cally impacted through the constant occurrence of relocating. Moving frequently can affect a person’s lifestyle and way of life, such as changing friendships, affecting careers, and lowering happiness.There are many children in life who have to move to a new town during their childhood. While there may be those few children that get the privilege of not moving, most others have to move at least once in their child hood. Some children even have to move two, three, and sometimes more. When a child has to move from the town that they have grown up in, it has many effects on his or her life. These effects can greatly change a child and it can make a child feel like he doesn’t fit in. It can also make one have a hard time making new friends, especially at a younger age.Although, many times parents do not have much of a choice in the matter, they should really think about these effects on a child before they make the decision to move when their children are still, well, chil dren. The first disadvantage to moving frequently is that it is difficult to find friends or maintain friendships. It is natural for human beings to develop bonds and relationships with other people, such as friendships. Experiences such as family camping trips to the mountains form these bonds. When human beings are surrounded with other people they develop a sense of closeness. Through the lessons of life, people grow together.Children and adults alike find connecting bonds together. When someone moves it’s almost impossible to keep the sense of closeness that was once there. When relocating to a new city or neighborhood, people feel out of place and commonly don’t like their new surroundings. Finding new friends and replacing the bonds shared with a best friend seem almost impossible. A yearly event that many military families have to prepare for, is finding out where their next move will be. In the article, â€Å"Military children and PCS,† they claim  "Moving is a necessary and inevitable part of military life.It is also a very large emotional and physical challenge not only for you but for your entire family. †(Crooks) Growing up having a military father, staying in one state was hardly ever an option. Ever since I could remember, we consistently moved around the continent and to different countries. This effected my inner emotions and feelings. I can only remember a few childhood friends that I had, but my relationships with them would end when I had to move to the next city. Being an only child also adds stress; I was typical by myself a lot, and mildly shy.First coming to North Carolina was hard for our family; I was a freshman in High School. At that point in many high school students life, they had their cliques, already involved in extracurricular activities, and I was still trying to adjust to the different lifestyle. I often time spent my weekends staying home, and going out with my parents. I didn’t go to t he Friday Night Football games because I didn’t want to go by myself and I didn’t want to sit with my parents. Having to transition to different schools was hard. Coming into a new school, in the middle of the year, many of the children already have their own cliques.Teenagers are not always as friendly as we picture them to be but once I started to get involved in Cheerleading, and clubs I soon became friends with many of the girls from my team and the clubs. Life in high school was becoming more fun, interesting, and my grades were outstanding. When having to relocate, finances take in an enormous part. Moving is an expensive and time-consuming experience. You need to be prepared and organized, in order to make your move as cost-effective and stress-free as possible.From my many experiences of having to move, my parents always  tried to down size our amount of items in our house. We didn’t always know if we would move into a house or have to transition into an apartment. To make sure we had enough money, we would have yard sells. The money we would make would go to our expenses for driving from state to state. When we would get the privilege of knowing where we going to move months in advance, my mom would always see what kind of job she would be qualified for. My father, of course would have a job since we were moving due to his job, but for my mother on the other hand would often times be unemployed.Our first year of being in North Carolina, my mother was unemployed, which was very hard for her since she came from a manger position at a Texas bank. She would constantly go on websites to look for jobs that were hiring. She had a few interviews but sometimes she wasn’t qualified since she didn’t have a college degree. When she would have a job offer, she always made sure that they had benefits and wouldn’t settle for less than what she was use to. When she finally had a good offer from a daycare center, she made su re that she would eventually be able to become a full time working and have good hours.She had previous experience with the child care centers from different military bases, so she knew that would help her keep the job, achieve bonuses, and have a good standing with them. Before you transition to new environment, focus on setting a budget, to make your move a successful one. No matter how often families change residence, moving brings with it a variety of emotions and situations. It is often times very easy to get caught up in the moving checklist of boxes, cleaning, packing and moving and overlooks the emotions that are tied to the transition to a new location.When it comes to your children it is very important that you take the time to allow them to share their thoughts, feelings, and experiences related to the impending move and once you have arrived at your new location. Depression is common when child or families have to move away. â€Å"Even when the reasons for a move are go od (such as a promotion or better job for a parent) and you're excited about it, it's still a good idea to be prepared for unexpected changes. † Adolescents who frequently have to move experience anxiety: from having to move to an unfamiliar place.You regularly feel disoriented, like you do not have anybody to communicate with. When I was in elementary school, I would have to sit in the back because all of the other children already had their assigned seats. Being in the back wasn’t fun at all; the other children would often gawk back at you. When we were allowed to partner with other students, the other children already knew whom they wanted to be with and I would be alone. This played an enormous influence to me being timid, always having to make new friends, starting over, and having to be accepted by other children.Children may also feel anxious and sometimes even angry about a move. This may have a direct impression on a child’s emotional development. As a r esult, your child may develop insecure attachments with others and later have issues with trust. To help with the transition, Dr. D’Arcy Lyness recommends that parents encourage their children to talk about their feelings. Join and participate in volunteer missions, local organizations or family church activities. A child’s sense of security, endurance and confidence, all necessary ingredients for building solid self-esteem: is often affected by frequent moves.During this period, reassure your adolescent to frankly express all-powerful feelings to you, including sadness, excitement, fear and anger. Encourage friendships with children who will treat your son or daughter kindly. Any transition or change in a child’s life can cause estrangement anxiety. Common symptoms of separation anxiety include sleep disruption, changes in eating patterns, increased clinginess, and accelerated apprehensions about being alone and isolated. Education will always be important to p arents who have to move their adolescents.Moving can impact an adolescent's cognitive improvement. Studies done by the Center for Research on Child Wellbeing show that children in households that move frequently have lower grades and higher school dropout rates, on average . Moves undermine constructing academic skills during the formative elementary-level grades, when students absorb basic writing, reading and math skills. Frequent moves may also have an undesirable impression on communication skills for children of all ages forced to familiarize to new classroom environments and education styles.Educational programs can vary significantly between schools, so moving to a new school every few years can have a profound effect on a military child’s educational progress. For example, a student moving from a school that instills geography in ninth grade to a school that instills it in eighth grade might completely miss the subject if he moves between those years. Emotional and ph ysical struggles might also make it more difficult for him to fit in at school or focus on his education.However, schools in some areas with large military populations receive funding from the Department of Defense to design programs to help military kids with their challenges. On the other hand, a child may find that he is premature of the curriculum at a new school, resulting in dullness during teachings. An appointment to the new school proceeding to the move may also help tranquil your adolescent's angsts. My parents would constantly look up the finest academic schools in our new town, and try to find housing around that exact zone due to zonings. Before I moved to North Carolina, my parents gave me the choice between three high schools.In the end I choose Jack Britt High School, because they had abundant academics, athletics, and we had a four-class schedule instead of seven classes. Physically, a military move alters an adolescent's atmospheres, perhaps forcing him to leave pe ts, friends and family, and disconnecting them from accustomed locations. Children might experience headaches, stomachaches or other indications of the anxiety they are feeling. Some children even acquire depression or alteration disorders because of frequent moves, and these struggles might produce physical symptoms. Teens who move are most likely to exhibit symptoms of depression.Adolescents who move to a new location may also get into fights with other children or may experience harassment since they are the newest children in school or in a particular neighborhood. Military moves can positively affect children as well. It exposes them to many abodes, individuals and releases numerous experiences. It educates them to simplify because of the frequency of moves. It also lures the military family stronger as you realize to rely on each other. Military children acquire empathy, independence, strength of charisma and so many other constructive qualities as well.The most important enti ty to recollect is communication. Make sure you are talking and listening and understanding the feelings, apprehensions and joys and the military moving expedition can be a positive one. Moving is an opportunity for your adolescent to live in and discover a new city, perhaps even a new country, and its people. They may be exposed to new cultural traditions and interesting and different ways of life. It also is a chance to meet new natives and make new friends. Explain how the family will benefit from the move. When we moved to North Carolina it was a bit of a culture shock.I was now experiencing the more southern lifestyle. Until I moved to Fayetteville, North Carolina I hadn’t really seen a lot of dirt roads, or streets without streetlights. They do have streets here and there that do have streetlights but in California I’m used to streets having plethora of streetlights, usually ten to twenty on one street alone. A huge difference between California and North Carolin a is that North Carolina doesn’t have as many big highways; there are more of back roads. Moving may seem very detrimental when you initially envision of having to leave, but countless worthy effects can occur when you leave.You have the opportunity to start over and reinvent yourself, and optimistically revolutionize for the better. Many people who work regular day-to-day jobs usually stay in the same city for their whole life and don’t have much of an adjustment. Change when done the right way can be beneficial; it doesn’t always have to be a traumatic occasion. In the end moving isn’t always bad there are many great experiences that come out of it. You can always learn from frequently having to move and make the best of out it. For me I’ve had the privilege of being able to travel to many states and country.I wouldn’t trade the experience for nothing. I’ve had the pleasure of meeting many great people who have affected my life for the good and bad, but most importantly have taught me life lessons. If it wasn’t for my father being in the military I wouldn’t be as blessed as I am today. His sacrifices have given me many great opportunities. I’ve been able to travel to places that many young colleges student have yet to experience. For one I can say without traveling around the world I wouldn’t be the same person I am today, and I’m proud of what that those changes have taught me.

Battle Of The American Revolution - 1451 Words

The Battle of Yorktown was one of the most significant battles of the American Revolution. Not only was it a major battle that helped end the war but also showed the power of the Continental Army’s field artillery. The battle was a major turning point in establishing the freedom of the United States of America and was the last major battle of the war. The Continental and French forces moved to Yorktown on 28 September 1781, however the first shot was not fired until 9 October of 1781. It was roughly ten days of continuous artillery fire that helped demoralize the British forces, leading to their surrender on 19 October 1781. The lead up to the Battle of Yorktown started when Lieutenant General Lord William Cornwallis led his army to Yorktown to try and establish a deep sea port for British use. His two year campaign through the south fighting against the likes of General Nathanael Greene and General George Washington took its toll on his forces. He marched his army of 7,000 troops to the harbor town of Yorktown located next to the York River in Virginia. His original mission was to receive reinforcements and supplies, however upon his arrival, General Sir Henry Clinton, the commander-in-chief for the British forces, ordered General Cornwallis to secure the harbor and prepare for extraction by the Royal Navy. General George Washington of the American Forces, who was encamped at Dobbs Ferry, heard about Cornwallis heading to Yorktown while he was assaulting the townShow MoreRelatedThe Battle Of The American Revolution1535 Words   |  7 Pages 1775, tension between the American colonies and Great Bri tain had reached its breaking point as fighting erupted at Lexington and Concord, Massachusetts. These battles marked the beginning of the American Revolution, where the colonists sought freedom from King George III of England and Parliament. After fighting for years to gain their independence, the American colonies won the war. Even though the colonists faced several disadvantages during the American Revolution against the British, the determinationRead MoreThe Battle Of The American Revolution1377 Words   |  6 Pages The American Revolution begins with the taxation of the American colonies to pay for French and Indian War or sometimes called the Seven-Year War. The British fought the French and the Indian nations in the colonies. After the British victory, Britain had a large debt to pay. The debt was approximately 140 million pounds. It was Prime Minister George Grenville, secretary of Treasury in England, came up with an idea to pay this debt; however, the colonist s would not be very happy. To payRead MoreThe Battle Of The American Revolution1788 Words   |  8 PagesThe Battle of Yorktown was the last important battle of the American Revolution, which was fought from 28 September 1781 to 19 October 1781, in Yorktown Virginia, near the York River. 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Finance Financial Management And Price Earnings Ratios Finance Essay - Free Essay Example

Sample details Pages: 18 Words: 5543 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earnings per share. Earnings per share is calculated by dividing the net profit after taxes and preference dividend by the total number of equity shares. Earnings per share (EPS) is the portion of a companys profit allocated to each outstanding share of common stock. Don’t waste time! Our writers will create an original "Finance Financial Management And Price Earnings Ratios Finance Essay" essay for you Create order Note that EPS can be from the last four quarters (trailing P/E) or the sum of the last two actual quarters and the estimates of the next two quarters, but it is important to note that the P/E ratio is a measure of investors expectations as to future earnings and not for current earnings. In many cases, the ratio of a stock price to earnings per share or the price which must be paid for each pound of the firms earnings is used as basis for comparing the investment characteristics of different shares. A share price on its own tells us little or nothing about its investment value. Two companies with identical prospects, assets and aggregate equity value may have different share prices quite simply because one firm has fewer shares outstanding than the other. This may be the result of a company having fewer shares issued at a higher price than the other or it may mean that a company paid out fewer dividends in order to finance its past growth through retentions, while the other company p aid out higher dividends and raised capital by issuing more shares to fund its investment programmes. In other words, two identical companies can have different prices as a result of the number of shares outstanding. Since EPS and share prices can be affected by the number of shares outstanding P/E will neutralize the impact of these differences. By dividing the stock price by earnings per share a simple way has been found of standardizing share prices that otherwise cannot be meaningfully compared. For example, the Barclays PLC which is a major global financial services provider is currently trading (Po) at 315p a share and the Earnings per share expected in the next four quarters (E1) are 34.99p per share. The P/E ratio for the stock of Barclays PLC will be equal to 9 times (315p/34.99p). In our case, which Barclays PLC is currently trading at a multiple (P/E) of 9 times, the interpretation is that an investor is willing to pay 9 pounds for each pound of current earnings. ) a) ii) In order to identify and briefly discuss the theoretical determinants of P/E ratio the Gordon growth model will be utilized. The Gordon growth model, named after its inventor Myron Gordon, makes the dividend valuation model easier to use by combining it with additional assumptions, which will be given later in our discussion. Shares are valued on the basis of the payoffs which they are expected to generate for investors. In principle the value of the payoff expected from holding a share is simply the present value of the cash flows anticipated by investors. What investors expect to get out of any share they hold are dividends (Dt) and the proceeds (PN) from the sale of the share at the end of the planned holding period (N). The present value of the expected cash flows (the dividends expected and the proceeds from the sale) is determined by using a discount rate which is equivalent to the rate of return which investors can earn on investments in other shares of similar risk (r). The v alue of the share (Po) may be determined by using a model of the following nature: A simple valuation equation can also be developed for the shares of a firm that retains some of its earnings to finance investment as long as its assets, earnings and dividends can be expected to grow at a constant rate (g). This produces the following model, referred as the Gordon Model (see Gordon, 1959).- where D1 = D0 (1+g) This model suggests that the price of share is a function of the dividend expected in the next period (D1), the rate of growth of dividends (g) and the discount rate (r). By specifying the dividend, in terms of earnings per share (E1), the retention ratio (b) and the payout ratio (1-b) the above model can be demonstrated as below: Some insights into why price-earnings ratios can be expected to vary from firm to firm can be derived form a consideration of the previous model. This particular model suggests that the prospective P/E ratio will be higher the lower the discount rate (r), the greater the expected rate of growth (g), and the lower the retention ratio (b). In the case that the expected growth rate (g) is the same as the historical growth the prospective P/E ratio can be adjusted to obtain a ratio based on the last reported earnings: At first sight it is evident that there is an inverse relationship between the P/E ratio and the retention ratio (b), but this cannot be true since firms can not influence their P/E ratios by manipulating their retention ratios. Stockholders will pay more per pound of earnings the greater the proportion of earnings paid out in dividends all else being equal, but any reduction in retention will lead to a fall in investment, which will lead to a decrease in the expected rate of growth of dividends. The constant growth model has become the most widely employed theoretical model because of its simplicity. The simplicity of the constant growth model is a reflection of the assumptions on which the model is based, and the awareness of these assumptions is essential for the recognition of its weaknesses and strengths. It is assumed that: all investment is financed from retentions and a constant proportion of earnings is retained in each time period; the rate of return on the firms investments is constant over time, as the rate of return on existing assets; and the cash flow produced from investments is constant in perpetuity. QUESTION 2 a) iii) The differences in P/E ratios reported in the financial press cannot all be explained by the determinants of the P/E ratios identified by the valuation models. For example, one of the reasons for those differences can be the differences in the accounting methods employed by firms. The valuation models are based on an idealised notion of expected earnings per share; the firms expected cash flows minus an allowance for depreciation, calculated on an economic basis, while observed P/E ratios, reflect more pragmatic definitions of earnings. It is well known that differences in accounting methods have a significant impact on earnings per share but do not have any impact on share prices (the market sees through the effect of accounting differences). Generally, differences in earnings per share arise from differences in accounting methods which lead in differences in reported P/E ratios. Those firms employing depreciation policies with high charges have lower reported earnings per share (si nce depreciation is charged against revenues as an operating expense) and higher price earnings ratios than firms using straight line depreciation. Another factor that might influence the value of the companys reported P/E ratio is transitory changes in earnings. Beaver and Morse (1978) at a later study realised that the observed spread of P/E can be explained by the difference between equilibrium and actual earnings. Changes in earnings which are of temporary nature will not lead to proportionate change in the share price but to higher P/E ratio if negative transitory earnings occur and lower P/E ratio if positive transitory earnings occur. As a result, firms with low earnings will have high P/E ratios, without being growth firms at all. QUESTION 2 b) The sample of shares chosen to discuss and explain the possible reasons for the differences in the reported price-earnings ratio belong to the banks operating in the United Kingdom. It is important to choose companies that are in the same industry since this is the only way that P/E ratio analysis can have any significant comparable meaning. The data gathered are presented in the table below: BANK SHARE PRICE EPS P/E HSBC 662.7p 63.43p 10.4 times Royal Bank of Scotland Group 44.66p 3.4p 13.1 times Lloyds Banking Group 62.88p 6.10p 10.3 times Barclays 315p 34.99p 9 times Price earnings ratios were calculated based on the companies current share price and the estimated earnings per share for year 2011. P/E ratios calculated this way are known as forward price earnings ratios. Forward P/E ratios can give investors a more meaningful result than do trailing P/E ratios that are calculated by dividing the current share price by the trailing earnings per share for the last 12 months. Trailing P/E ratio is a historic measure while forward P/E is more useful and informative. After all, it is the future that counts; you are paying what the company will do in the future rather than what the company did in the past. Another reason that forward P/E ratios are used in this case is that the P/E for Lloyds could not be calculated by using EPS of the past 12 months because the firm had a bad year. Lloyds suffered a loss of 0.5p per share and calculation of P/E based on this figure would give a meaningless result. The figures presented at the table above suggest that the market has more confidence in the ability of RBS to continue increasing its earnings, but at the other side it believes the outlook for Barclays is unpromising. A high P/E ratio indicates that investors are paying more for each unit of earnings, so the stock is more expensive compared to those stock with low P/E ratios. The P/E ratio is commonly used to assess the level of confidence investors have in a company. It represents the markets view of the companys growth potential. A high price-earnings ratio indicates that investors have a high level of confidence in a companys future prospects. As we can see from the table presented, RBS has the highest price-earnings ratio, indicating that investors of the Banking sector have a high level of confidence in the companys growth potential prospects, it might equally be considered to be overvalued depending on prevailing market circumstances. RBS has a P/E ratio of about 13, implying that investors are currently willing to pay 13 for every pound of earnings RBS generates. Similarly, Barclays P/E ratio of around 9 implies that investors are currently willing to pay 9 pounds for each pound Barclay makes. For a different perspective, try flipping the P/E ratio to an E/P ratio, commonly referred to as the earning yield. Like a yield on a bond, this number shows a companys annual earnings as a proportion of its market value. Buying one share of RBS at 44.66p, with EPS 3.4p equates to an earnings yield of 7.6% (3.4p divided by 44.66p). For Barclays, the earning yield is 11.1%, because each share, currently trading at 315p is expected to generate a 34.99p in earnings per share. In long run, Barclays investors theoretically should earn a better rate of return than RBS investors for each pound invested. Yet the true outcomes could be different. The question that arises is whether the difference in P/E ratios alone makes one company a better investment than the other. Fundamental problems exist with the P/E ratio. First, the share price (P) doesnt consider debt since it is the equity price of a business. That is fine with companies without debt, like Google or Microsoft but not for the companies chosen. For instance, business with a market cap of 5 billion, with 1 million of net debt on the balance sheet, has an enterprise value of 6 billion. If this company earns 500 million in profit in a given year, the P/E ratio will be 10; but in reality, investors should see 12. The logic embodied in the conventional wisdom that high P/E ratios are good and low P/E ratios bad, is given by the dividend growth rate equation at which dividends (D) is expressed in terms of EPS (E) and retention ratio (b). The firms required rate of return r, can be given as follows: where i is the firms expected rate of return on future investments. From this equation is obvious that for any given r and b, the smaller the fraction [E1/P0] is, the larger i must be. Since [E1/P0] is the inverse of the P/E ratio, a small [E1/P0] corresponds to a high P/E ratio. Therefore, all else being equal, the higher the P/E ratio, the higher must be the expected rate of return on future investments; or, more simply, a high P/E ratio such as RBSs corresponds to good future investment opportunities, while Barclays with the lowest P/E ratio doesnt correspond to good future investment opportunities. Remember the P/E ratios are calculated based on estimated (average) earnings per share. But actual values almost never equal the average. A firm can have a very high P/E ratio during a bad year and a very low during a good year, yet in both cases, the firm may not have changed fundamentally. A high P/E ratio of 13.1 times for RBS is the result of low earnings (3.4p) rather than high expected rate of return on future investment. Note that RBS with the s mallest share value (44.66), has a P/E ratio that is the highest due to very low EPS, the smallest of all companies. The conventional wisdom about P/E ratio can be altered also by the possibility that earnings are not reflecting the actual outcome. For example, a land sold would create large profits due to the large difference between its historic cost listed on its balance sheet and the current market value. Or, the firm recognizing a bad debt that has existed for several years. Another possibility that can alter the conclusions about P/E ratios is changes in the firms accounting procedures. For example, a change of how the firm estimates its inventory, from the First-in-First-out basis (FIFO) to the Last-in-First-out basis (LIFO), lead to a decrease of the firms reported earnings in times of inflation. A change in the measure of earnings can cause a change in the P/E ratio that really indicates nothing new about the value of the firm. It can also be suggested that risk will influence the P/E ratio to the direction of influence needs careful consideration. Responsible for differences between the reported P/E ratios is also the expected growth and the way it depends in part on the level of investment and in part on the profitab ility of the investment. Specifically, one can conclude that a lot more information is needed than just the P/E ratio to estimate the value of a share of stock. QUESTION 3: Rights Issues QUESTION 3) a) i) Almost all quoted companies in UK that wish to raise money do so by means of a right issue. A right issue offers existing stockholders the right to buy new shares in proportion to their existing holdings. Rights issues allow stockholders to maintain their interest or proportionate share, in the ownership of the company, by ensuring that new shareholders are not brought in the company to the disadvantage of existing shareholders. Existing shareholders can exercise or sell their rights to other investors who would like to subscribe to the issue. Specifically, RBS wish to raise 12 billion of new equity capital and will do so by means of a rights issue. RBS shareholders are invited to subscribe to the right issue with an entitlement of 11 new shares for every existing 18 shares they hold at an issue price (PS) of 200p. The subscription price the price of the new shares is pitched below the current market price of 372.5p (P0). The discount offered as an inducement to shareholders to subscribe to the new issue is equal to approximate 46.31% (d). The 200p subscription price is calculated as given below: Once RBS decided on the level of funds (F) to be raised and the subscription price (PS), the number of new shares (ÃÆ'Ã… ½Ãƒ ¢Ã¢â€š ¬Ã‚ N) to be issued can be calculated quite easily: 12 bil / 2 = 6 billion of shares And once the number of new shares to be issued is known, the number of shares [N(R)] which an investor must hold to be granted one right can be calculated: The number of shares outstanding prior to the right issue (N0) must also be calculated in order to determine the ex-rights price. The determination is given below: The ex-rights price will be a weighted average of the pre-issue price and the subscription price: the weights being given by the ratios of the number of pre-issue shares to the total number shares outstanding following the issue: So, 3.07 The market value of a right [V(R)] depends on the difference between the subscription price (PS) and the expected price of the share following the new issue (PX). 1.07 QUESTION 3 a) ii) Rights issues are made at a discount, partly to make them look attractive and plus encourage stakeholders to subscribe, and partly against the risk of a fall in the market price during the offer period. Whether to invest in the rights or to sell them is the best choice for an investor will be analyzed furthermore. Assuming that a shareholder owns 900 shares of RBS, through the rights issue he can buy 550 shares at 200p (11 new shares for every 18 existing). Wealth Effects: the initial wealth with 900 shares at value P0 = 3.72 is: Initial Wealth = 900 * 3.725 Invest in the rights: This will happen only if the shareholder has the resources to acquire the additional shares and believes this is the best way to invest his money. Moreover a shareholder may invest in the rights because there are bi stamp or duty brokers commissions payable, and the desire to maintain ones existing share of voting power. Value of new investment = 3,352.5 + 1,100 = 4,452.5 The value of investment at the ex-rights price will be: Value of investment at PX = (900+550 shares) * 3.07 = 4,452.5 Thus, the impact on the shareholders wealth will be 0. Sell the rights This will happen if the shareholder wants to maintain his existing investment in the company in value terms. In the beginning the shareholder will lose from the fall of the share but he will cover from the loss through selling the rights. If the shareholder sells the rights, the value of his share at the ex-rights price will be: Value of shares at PX = 900 shares * 3.07 = 2,763 The declines in the shareholders wealth will be: Decline in shareholders wealth = 3,352.5 -2,763 = 589.5 The amount that the shareholder will acquire from the sale of the right at VR = 1.07 will be: Value from sale of the right = 550 shares * 1.07 = 589.5 Thus, the impact on the shareholders wealth will be 0 From the above analysis it is obvious that the shareholder wealth remains unchanged after the rights issue ether if e invests in the rights or sells the rights. The wealth of the shareholder will change only when the new issue leads to the re-appraisal of the firms value. This happens because issue of new shares at a discount leads to the fall in the value of existing shares thereby offsetting the value of the right. QUESTION 3) c) The Royal Bank of Scotland (RBS) announced a rights issue in order to raise 12 billion, which is considered the largest UK equity issue at that time. Under the terms of the rights issue, 11 new shares will be offered to existing shareholders for every 18 shares they hold. The subscription price is pitched well below the current market price of 372.5p. The discount offered as and inducement to shareholders to subscribe to the new issue is equal to 46.13%, well above the conventional level o f 15 to 20 per cent. The discount is pitched at this level in order to assure that the subscription price of 200p [372.5 (1-1.46310)] will remain below the market price over the offered period. The size of the typical discount drifted upward since the stock market at that time became more volatile and because of the size of funds needed to be raised. At first sight it might appear that the rights issue mentioned above is an attractive proposition for shareholders. The right issue allows the shareholders to increase their holdings of shares in the company at a discounted price, but a closer look at the mechanics of a rights issue reveals that it leaves the wealth of the shareholder unchanged, because the value of the existing shares falls, and this fall offsets the gains provided by the subscription. If the market price of the shares of RBS remains sufficiently above the subscription price of 200p the issue is likely to be successful, otherwise underwriters guarantee to take up any shares which the shareholders decline to acquire. Specifically, in the case of RBS, the bank agreed with its lead banks that fees would be 1.75 per cent of the proceeds of the average issue. These investment banks that lead the issue will only absorb some of the risk since most of it is passed onto the sub-underwriters of other merchant banks and institutional investors such as insurance companies for a fee of 1%. The question that arises is whether the company will be obtaining value for money for the underwriters fee of 1.75 per cent of the proceeds of the issue. In later study, Marsh (1980) found out that underwriting is highly profitable on an ex post basis. In 671 rights issues, only 35 led to losses with an average loss of 4.2%. In the case of RBS, the underwriters were left with unsold shares of less than 5 per cent since 95.11 percent of the shares offered had been taken by the investors. The remaining 299.4m shares were sold at profit by the underwriters, at a price of 230p a share, raising an additional 688.6m (299.4 m sha res times 2.3p) As Merret, Howe and Newbould (1967) comment in one of their first studies, the underwriting charges in the case of rights issues seems somewhat excessive for the minimal risks actually borne bye the underwriters. To incorporate the effects of risk mentioned above the underwriting contract should be viewed as a put option (Marsh 1980). RBS, the issuing firm is in the same position as an investor holding a put option, while the underwriter of the right issue is considered as the writer of a put option. The potential losses or gains of the underwriter are equal to the potential gains and losses of the issuing firm. Marsh found that the cost of underwriting produced an average excess return to the underwriters of 0.7 percent and only in 14% out of 539 underwritten issues the value of the put option element of the underwriting agreement appears to be greater than the fees charged. It seems logical to conclude that underwriting fees are used to compensate for other services provided by the merchant banks, for which explicit charge is not being made. Underwriting cannot be considered too expensive if this is the case. The profit and loss associated with an underwriting agreement as a function of the share price are illustrated in the figures below: (a) PROFIT LOSS FOR RBS UNDERWRITING FEE (+) profit Market share price (-) loss 0 (b) PROFIT LOSS FOR UNDERWRITERS UNDERWRITING FEE (+) profit (-) loss 0 QUESTION 3) d) Alex Porter of Collins Stewart views that investors should take up the rights offered by RBS because buying shares at 200p is incredibly cheap since the 2009 estimated earnings per share of 37p and a price-earnings of 9 indicate that the price of share will be raised to 333p (374p x 9). RBS rights issue seems as an attractive proposition for shareholders since they are given the right to subscribe to additional shares at a discount above the conventional level of 15% to 20%. On the other hand, RBS has employed a large price discount (46.31%) and faces the risk of the dilution of earnings, dividends and assets. The lower the subscription price the larger the number of shares that must be sold in order to raise the fund required by the company. In the case of RBS, 6 billion shares must be issued in order to raise 12 bil of equity capital. There is a fear that the increased claims of the firms earnings, dividends and assets will lead the stock market to react adversely to this dilution. An adverse reaction implies that the investors are unable to differentiate between nominal and real changes and that the stock market is inefficient. The fall in earnings per share, as more shares have to be issued to raise the funds required, will be matched by the fall in share price. The fall in share price will be compensated by the increase in the number of shares, leaving the earnings yield of the stockholders overall stake in the company unchanged. As a conclusion I believe that Porters statement is misleading and creates a misunderstanding, since it implies a share price of 333p which is far greater than the expected ex-rights price of 307p calculated. The belief that the price of share will have a future value of 333p is very optimistic since the financial crisis of 2007 is considered by most economists the worst financial crisis since the great Depression to the 1930s. There is a fear that the European banking system may collapse as did large financial institutions in the United States. Specifically, S P no longer considers the UK banking sector to be one of the lowest risk and secure banking systems because of the countrys weak economic environment, the reputational damage experienced by the banking industry, and high dependence on state support programs. The risk profile of UK banks is affected by anticipated system-wide, domestic non-performing and impaired loans that will remain high throughout 2009 and 2010, linked to high levels of household and corporate debt. The uncertainty surrounding the banking industry must be taken into consideration in analyzing the statement of Porter which is in my opinion very optimistic. One, b efore deciding buying RBS shares offered at 200p, should consider whether RBS will remain in the following years, structurally strong, and a business that will continue making profits under the conditions discussed above. QUESTION 4: Options QUESTION 4) a) An option gives the holder the right to buy or sell on asset by a certain date for a certain price. The option that gives the holder the right to buy is called call option and the one that gives the holder the right to sell is called put option. The price in the contract is known as the exercise or strike price (x), and the date in the contract is known as the expiration, expiry or maturity date. The fact that distinguishes options from other contracts (futures of forwards) is that the holder does not have to exercise the right that the option gives him. For an option contract an investor must pay an up-front price, known as the option premium (c). In the specific question we are asked to explain why call option traded on Marks Spencer shares are trading in November than those trading in September. There are many factors that influence stock option prices, and the most important are given below: The current stock price (S0) The strike price (x) The time to expiration (T) The volatility of the stock price (ÃÆ' Ãƒâ€ Ã¢â‚¬â„¢) The risk-free rate (r) The dividends expected during the life of the option Specifically in order to give an adequate answer to the question involved, we will discuss what happens to the call option prices of Marks Spencer when one of these factors changes (the time to expiration) while the others remain fixed. Options are referred to as in the money, at the money or out of the money. A call option is in the money when sk, at the money when s=k, and out of the money when sk. Clearly the option will be exercised when it is in the money and the payoff will be the amount by which the stock price exceeds the strike price (s-x0), which is called the intrinsic value of an option. As the stock price increases, than call option becomes more valuable. Therefore the longer the time that a call has to run to maturity, the greater the scope for the price to rise above the exercise price. The probability to notice big variation between the share price at expiration and the strike price is higher, the longer the maturity period of the option. Another important element is that in call options there is a limit to what can be lost which is the call premium while the gains are unlimited. In other words, gains and losses are not symmetrically distributed for a call option. Although European call options usu ally become more valuable as the time to expiration increases, this is not always the case. Consider two European call options on a stock: one with an expiration date in one month, the other with expiration date in two months. If a very large dividend is expected in six weeks, this expected dividend will cause the stock price to decline, so that the short-life option could be worth more than the long-life option. QUESTION 4) b) A straddle is an option strategy that involves taking a position in both calls and puts on the same stock. Specifically, in a straddle, an investor buys a call and a put option which have the same exercise price and expiration date. When the share price at the time of expiration (ST) is greater than the strike price (x), the call option is exercised. The put option is exercised when the strike price (x) is greater than the stock price (ST). The exercise price of 210p has a call premium in November equal to 24.5 (C0) and a put premium equal to 22 (P0). The amount paid from the investor for this specific combination called straddle will be equal to: C0 + P0 = 24.5 + 22 = 46.5 The profit pattern is shown in the following table: Action ST CFT from Call CFT from Pull P/L CF0+CFT Exercise Put 130 0 (210-130)-46.5 33.5 Exercise Put 163.5 0 (210-163.5)-46.5 0 Exercise Neither 210 0 0 (46.5) Exercise Call 256.5 (256.5-210)-46.5 0 0 Exercise Call 290 (290-210)-46.5 0 33.5 Long Straddle -24.5 -46.5 -22 Profit or loss Put only Call only 163.5 210 256.5 Straddle ST This specific long straddle strategy will yield a profit if ST is above the upper breakeven point of 256.5 and below the lower breakeven point of 163.5. Between the two breakeven points (16.5, 256.5) the specific strategy will yield loss with a maximum value of 46.5. An investor might consider worthwhile to invest in a straddle if he believes that there are likely to be big movements in the stock price, and these beliefs must be different from most of the other investors. A straddle seems a natural trading strategy in the case that a big move is expected in the companys stock price because there is a takeover bid for the company or the outcome of a major lawsuit involving the company is about to be announced. In other words, someone may take a long straddle position if he thinks the market is highly volatile, but does not know in which direction it is going to move. This position is a limited risk a purchaser of a straddle may lose the cost of both options but there is an unlimited profit potential. In contrast, a short straddle position is highly risky because the potential loss is unlimited, while profitability is limited to the premium gained by the initial sale of the options since short straddle is a strategy that involves a simultaneously sell of a put and call option. QUESTION 4) c) A zero sum game is one where for every winner you must also have a loser. In other words for every person who turns a profit someone else must suffer a corresponding loss. Financial markets offer many examples of zero sum games. For example the writer of an option can only gain what the holder loses and vise-versa. Specifically, the profit of the writer is a mirror image of the holders loss. This situation is given in the following diagram: Profit graph for a call writer and investor Investor Buyer Long position Seller Writer Short position Profit Loss -c +c ST X When the share price at expiration (ST) is lower than the exercise price (x), the call option will not be exercised by the investor. The investor of the particular option will suffer a loss equal to the call premium (-c). This particular loss will be the profit to the writer of the call option (+c). On the other hand, if the exercise price (x) is not above the share price at expiration the profit of the investor [ST (x+c)] will be the loss of the writer [(x+c)-ST]. All the above are summarized below: Share price Investor Writer Both PL STX -C0 +C0 Æ’Ã ¢Ã¢â€š ¬Ã‚   STX ST-(X+C) [-ST+(X+C)] Æ’Ã ¢Ã¢â€š ¬