Investment Culture In Mauritius And Around The Globe Finance Essay - Free Essay Example

Sample details Pages: 7 Words: 2202 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Case study Did you like this example? This study seeks to understand the Concept of investment culture around the globe and the attitude of Mauritians to investment. It aims to gain knowledge about key factors that influence investment behavior and thus trying to bring an insight and educate the population on the factors that need to be considered when selecting an investment portfolio. The focus will be based mostly on the Study of the Mauritian Population as a whole consisting of at minimum one income-earning member. Don’t waste time! Our writers will create an original "Investment Culture In Mauritius And Around The Globe Finance Essay" essay for you Create order It is by using different age groups along with Gender and demographic factors that synergism between investors can be reached. On the basis of segmentation we will carry out surveys. We planned for a minimum sample of around 2000 individuals would be selected for the study. Questionnaires would be distributed amongst various groups of people, depending on their Age, Gender and social status (targeting factors), dwelling in both rural and urban regions. The data collected would be assess and analyze using percentage, statistical methods and correlation to test the hypothesis. Thus keeping this in mind, that our aim is to explore the concept of investment culture, the study should have a degree of variation enough to avoid bias in our outcomes. Along with surveys and questionnaires, tools to collect data can include documentation review, observation, and even the collection of physical artifacts. Talking about outcomes, what we expecting from this analysis is to conclude wheth er: Mauritians are well aware of investment decisions and factors affecting these decisions; the level of investment undertaken by Mauritian is directly influenced by their Income level, Gender, Demographic factors as such; they are conscious of the importance of investment and there is enough incentives to prone Mauritians towards investment, compared to the Investment culture around the Globe? The point is how will these outcomes help and to whom would it be beneficial? We believe that this groundwork would help the Government and Investment Institutions in particular. Lets assume that the results show that Mauritians, if their income rises will tend to interest more in investment thus the government can establish necessary incentives in a view to encourage investment by minimizing savings. Eventually, Investment bodies can also develop investment schemes that would attract investors. Introduction InvestmentÂÂ  is putting money into something with the expectation of profit. We often consider investment as deferred consumption meaning income earned but not consumed and kept for future consumption. Globally we can note that for the last decade people had been more open to investing their money in financial institutions compared to earlier whereby they use to go more towards consumption. Global economic growth has increased and thus standard of living which all together can be attributed to the fact that investment level has risen. Economist however, has argued that it is not possible to set out for investment without first considering savings. It should be acknowledged that without savings there can not be investment. This is because when an entrepreneur starts business, he is actually using other peoples savings. Therefore, savings is essential for investment. While saving is viewed as forgone consumption, investment is limited to real investments that give rise to th e national output in future. Investment has two major attributes: Risk and Time. As such, we have investment Financial investment and Real Investment. The latter, is money invested in tangible and productive assets such as machineries, land or factories. Real asset what constitutes of real investment that determines the productive capacity of any economy. Financial investment is the investment of funds/capital into financial instruments, such as bonds, equities and securities. These financial assets are purchased with a view for future cash flows and may increase or fall in value in regards to capital gains or losses to investors. Mauritians do to some extent carry out financial investment, just to mention suppose an individual buys stocks of the State Bank of Mauritius or the Barclays Bank PLC which is a sort of financial investment in those particular companies, and hence, with the return expected the individual can invest in real assets like buying lands or buildings. So we can d educe that individuals have choice of consuming today or investing their wealth today for future consumption. Talking about investment decisions, Behavioral finance is an integral part as it lays emphasis on irrational behaviour of investors. Behavioural finance depicts individual investors as unrational investors who are faced to cognitive psychological biases, who often portrayed risk seeking behaviour and their expectations are biased. Different investors have different investment objectives as such the selection of investment alternative for the investor should be considered first to know what are the objectives of investors. Objectives of investors ( vary across individuals) could be: Risks, Return and safety Current income v/s capital appreciation Capital preservation Ease of management Liquidity consideration Tax factors On a global perspective, it has been notice that investment by individuals much rely on trust which is one side of culture. The d egrees of trust vary from one country to another; China, Norway, Finland, Sweden as such tend to have a high level of trust in doing business and investment. Conversely, we note rather low levels of trusts in France and Italy and much lower in Mexico and West Indies. This throws up questions like does cultural background affects financial attitudes? In Japan for instance one need billions to enter the financial market, one reason why it is the last option for investors. Zimbabwe has a relatively high inflation rate thus the government encourage its people to invest in market securities rather than saving their money. They are being prone to start up their own business by being provided with resources. Taking the example of China and the United States, the difference in their investment cultures lies in the collectivism of Chinese culture as opposed to the self-centred behaviour of American culture. In China indifferent to the highly risky assets and the high probability of low re turn, there is still a guarantee of family or friends support even in case of bankruptcy. The Americans on the contrary they do not benefit from the same support. This is the cultural safety net that we trying to pictured and how it differs across countries and cultures. Facts from the Central Bank of Mauritius, the Ministry of Finance and other Financial Institution made a report stating that in Mauritius investment is regarded in a different angle, where the desirable investment is 95.9% towards banking savings and deposits while 7.14% have invested in SIT and the stock market. 10 % expressed hesitation to invest in risky sectors and the rest were reluctant and showed confidence in the banking system for safety reasons. The main reason why there is little investment by Mauritian is: the lack of adequate information, no proper financial education, income tax reasons, unprepared for downturns and the saving rate and the agreement (too bulky to read that discourages investment ). Mauritians are a bit reluctant to invest in the stock exchange, they are risk averse. They rather seek for secure returns. In Mauritius much investment are made my foreigners (FDI). The belief is that in Mauritius the incentives to invest is here but the people are well unaware of the available investment opportunities. Recently, the Mauritian Government has decrease the Repo Rate aiming at discouraging people to save and hence divert their money towards investment. The Research Problem Statement Poor level of investment on behalf of Mauritians may translate to low national productivity and also to a slackening in the standard of living of local people unlike in European Countries and China. The Government should be focusing how to reassure its population to accept the culture of investing along with saving. That is creating an investment environment that provides both for a variety of saving and investment opportunities. As noted, recently the Government has increase the Repo rate to 5.25% in a view to encourage people to invest more and save less. It is a major problem as Mauritians are not aware of investment prospects and how to start out investing. Disregarding of the level of income of any individual, it should be able to save and invest a portion of its income for future consumption. This reluctant behaviour of people might be responsible for the lack of development and goals achievement for both local people and the society. The research is based mainly on findin g out the investment culture of Mauritians with a view to find out the factors casting doubt on the right attitude to investment. The problem is also that people do not have a clear idea about factors that need to be considered when taking up an investment decision. They are confuse like to invest in which asset, which one would bring more returns, which one is riskier or which one have the higher yield to maturity? So the mandate is to how to bring to the population the right information and tactics of wise investment. It would be of no harm if along with Foreign Investors ( FDI) local people would participate in the investment portfolio for a better development. Indeed, there is a misconception towards investment amongst Mauritians but its time that things need to be changed and people are made more prone to investment. We need to study their investment behavior. Aims and Objectives of the study: Investigating on the actual perception of the people to investment and the future outcomes of investing part of their income would bring light to areas such as: determine if people believe in investment, is there an investment culture, if so to what extent; find out what percentage of the income is allocated to investment; if they invest, what do they aim at, reasons for investment; what type of market or investment instruments attracts Mauritians and why; investigating on the fundamental basis of the reliability of the decisions taken by the people. Methodology In order to reach the goal of our study two types of empirical researches would need to be conducted: Quantitative Questionnaires and Face-to-face interviews (see in appendix). Interviewers would be employed to carry out the Interviews and analysts to interpret and examine the data and information collected. The population targeted for this study consisted of all Mauritians made up of a minimum one income earning member indifferent of their income. A random sample of 2000 people would be selected for the study. Its surely does not represent the whole population but at least it would define to some extent our aim as the selection would be from a broad range of people from all around the island. The questionnaire would be anonymous and confidential with minimal personal questions for reliability reasons. Prominent questions would be income level, age, education level to mention a few. Using questionnaire as data collection instrument primary data would be collected. It would be di vided into 4 categories: background information; employment and income; investment culture/ attitude to investment and awareness of government incentives and investment prospects. One should be aware that the results from the questionnaires are not 100% reliable but they do project to some extent the trends that the study is aim at. To complement the questionnaire and make the research more accurate deep interviews would be carried out. That is a random of 300-500 people would be interviewed face-to-face. The people would be selected as far as possible from different background and age groups spread over different regions both rural and urban. Then combining all the results and responses they would be analysed using percentages and weighted mean while statistics would be employed to validate the hypotheses. Benefits of the research study The research will give much better understanding of consumer behaviour regarding investment decisions, overview of the steps consumers go through before making the actual investment, and to what extent they have adopted investment culture. The research will show the main motive to investment and the factors that restrain investment also. The study will show whether adequate information are available to investors before they deciding upon investment decisions. The analysis would be equally beneficial to the Government as well as the investors. The Research will justify whether or not the main issues why Mauritians decides not to invest is hardly attainable or understandable information. Budget Analysis A budget analysis is a detailed financial plan for the future whereby all the expected expenditures are allocated a certain amount. It is always favorable to carry out your research work in the minimal possible costs. Budget analysis will allow a good planning of how to use our available resources in carrying out the research study. Plans cannot be ignored once in place. There is a need to check regularly that the objectives are still within reach. As far as possible the expenses should be within the budgeted amount to avoid significant deviation in budgeted and actual expenditure costs. Below are the budgeted expenses, estimated on a monthly basis that would be encountered during the research and surveys: Expenditures Equivalent Costs Operating costs: Travelling Variable costs: Materials/ stationeries Printing Purchase research Papers Telephone Bills Fixed cost: Rent / Electricity Salaries: 4 interviewers 2 Analysts Miscellaneous costs TOTAL: Rs 500.00 1,000.00 2,000.00 1,500.00 2,500.00 7,500.00 20,000.00 25,000.00 500.00 60,500.00 Note: These expenses are approximate and can be less or more subject to changes as we proceed with the survey. But they should be within the range as forecasted and budgeted.

Arizonas Debt Status Example

Essays on Arizona's Debt Status Essay Does the of Arizona issue debt The of Arizona issues debts to the people through meticulous ities. Theseauthorities provide funds for community bond issues. This helps provide leverage, in terms of payment of Arizona’s debt to the state. By the Arizona state-giving loans to the communities for infrastructure construction and improvements, the community assumes the debt service payments (MacClory 2010). The Arizona state does not give out money to its members as unadorned loans that are going to be paid with interest. The state mostly gives out money in the form of bonds; this is a way of transferring the accountability of bond payment to the community. With the issue of loan, the pressure could have fallen mainly on the state of Arizona, but with the bond idea, the community takes all the culpability if the community as agreed does not pay the money. It is therefore, essential to note that the state of Arizona does give loans to its members although it gives loans in a differe nt indirect way. The state of Arizona owes so much to the government, and to other states to the point that state houses had to be leased to help with payment of the state’s debt. It has been noted that states and local governments in Arizona owe a total of $66.5 billion and more in terms of outstanding debt and unfunded commitments. To cut down the debt to every individual in Arizona, it is disturbing to know that every citizen owes the state a total of $10,258 in terms of outstanding debt and unfunded obligations. When it comes to the national debt owed by Arizona to other states and countries, the debt shoots up to $15.6 billion. The government’s debt in Arizona sums up to a total of $44 billion. This is in bonds that Arizona issues to communities like for instance, the bond on construction and the bond on students loan. The legal authorities calculate all these bonds. It does not help that the authorities giving out the bonds to individuals are also in debts, Industrial Development Authorities that are required to give out tax-free bonds have an outstanding debt of more than $5 billion. There are other debts that Arizona owes other states that are not tallied in the government debt reports; these are like the civil litigation claims. The debt Arizona owes other states and countries is not decreasing; on the contrary, it is increasing with every passing day. It beats the logic of how such debts are going to be paid. Every income tax profit made by the state is used to pay its debts (Po rter 2011). There is no room for development in Arizona, or even a chance of developing because of the about of debts it has incurred. Arizona offers individuals and other states financial assistance in the form of bonds through authorities, when it comes to housing finance Arizona has The Arizona Housing Finance Authority. This authority offers bond programs and a mortgage for prospective homebuyers in Arizona. There is the Water Infrastructure Finance Authority, which is in charge of financing construction, rehabilitation and improving anything that deals with water, from wastewater to drinking water (Zajac 1996). The authorities provide the needed funds by the members of the state and the fund be distributed in the form of bonds, from the funds needed for school activities to funds needed for development of the state. References MacClory, T. (2010). Understanding the Arizona Constitution. Tucson, Ariz: University of Arizona Press. Porter, G. A. Norton, C. L. (2011). Using financial accounting information: The alternative to debits and credits. Mason, OH: South-Western/Centgage Learning. Zajac, T. M. Myler, C. E. (1996). Arizona real estate: Practice law. Chicago, IL: Real Estate Education Co.

The Economics of Financial Markets Managerial Accounting

Question: Describe about The Economics of Financial Markets for Managerial Accounting? Answer: Introduction Capital asset pricing model (CAPM) explains the relationship between the risk and expected return in a rational equilibrium market. CAPM method is based on several assumptions related to risk, return and equilibrium market. The main assumption is that market returns are properly modeled by a normal distribution and beta (systematic risk) is the sole sources of risk for an asset. Another assumption is that all investors are traded in the market and available to everyone. But generally, the assets are infinitely divisible and can be bought or sold at higher than observed market prices. Another assumption is that there are no expenses associated with trading. It assumes that transaction cost and taxes could not impact on the return on investment, but in the case of huge investment, this assumption becomes unreasonable and impact on the return on investment (Pratt Grabowski, 2010). Management fees, transaction costs, profit fees, exit penalties, liquidity restriction, etc. are frictiona l costs of high-volume trading that can make a difference between profit and cost. CAPM method is useful for financial managers and economics as a method of valuation of securities, stocks and assets through identifying the market risk and expected return on investment. Finance manager uses this technique to evaluate the price of risky security and for defining opportunity costs of investment according to level of risks. Through CAPM, corporations analyze the changes in return, according to time or market, so this method is used for business decisions (Bailey, 2005). On the other hand, weakness of the model comes from assumptions, such as it does not consider taxes and transaction costs that impact on the actual return on investment. CAPM method is based on unrealistic assumption, for example, it is difficult to find a risk free security. Government security is considered as risk free security, but the government default and inflation causes, impact about the real rate of return (Schneider, DiMeo Benoit, 2005). Betas do not remain stable over time because it is ba sed on historical data that is effective to measure a security future risk. This paper explains the different types of methods used to evaluate risk management techniques in investment appraisal Accounting Rate of Return Basically, the Accounting rate of return method is also well-known as the name Average rate of return, or ARR is a financial ratio used in capital budgeting. In addition to this, this ratio does not focus on using the concept of time value of money. Moreover, ARR calculates the return of a company that is generated from net income of the proposed capital investment. Apart from this, it is also analyzed that, the ARR is a percentage return. Say, if ARR = 7%, then it means that the plan is predictable to make seven percents out of each dollar invested (yearly). For case, if the ARR would be equal to or greater than the required rate of return, the project is acceptable. If it is less than the desired rate, it should be rejected. In the same way, In comparing of investments, the higher the ARR, the more attractive the investment. Over one-half of large firms calculate ARR when appraising projects. In the same way, it can be said that, ARR is known as a straight-line method of colleting quantitative data and information in an effective and proper manner. The accounting rate of return (ARR) method may have some merits: Simplicity: The method of (ARR) method is considered one of the effective and simple to understand and use. In the same way provides simplicity to the users. Accounting date: In the current time, the accounting rate of return (ARR) can be used to calculate the information to gain the accounting data. For case unlike in the net present value (NPV) and internal rate of return (IRR) methods, no adjustments are required to arrive at cash flows of the project. Accounting profitability: In addition to this, the rules of ARR methods integrate the entire stream of income in calculating the projects profitability. The accounting rate of return (ARR) can be defined as most significant and commonly used methods of accounting used by the accounting personnel in order to measure the performance in an effective and more significant manner. As a decision criterion, however, it has serious shortcomings. Cash flows ignored: Generally, this method of accounting (ARR) focus on using accounting profits, not cash flows, in appraising the projects. This is one of the most significant limitations of using this method because the profits are based on arbitrary assumptions and choices and also include non-cash items. Time value ignored: This value do not focus on the concept of time value of money. For example, the averaging of income ignores the time value of money. In fact, this procedure gives more weight age to the distant receipts. Alternative Methods of Investment Appraisal The effectiveness of asset for the business was measured by using the NPV method. In this method, the returns from the investment are compared to the cost of investment. NPV is the most popular and widely accepted method of evaluating investment proposals. NPV considers the time value of money that enhances the accuracy in the project evaluation. NPV evaluates differences between the present value of cash inflows and present values of cash outflows of a project. If the present value of future cash flow is greater than the initial cost of the project then the project will be acceptable. NPV should accept when it is zero or positive (Moyer, McGuigan Kretlow, 2008). If it is negative, it represents the investor would lose money, so it should not accept. The NPV of a project can be calculated as follows: NPV= Present values of cash inflows- Present value of cash outflows/Investment NPV is important for financial appraisal of long term projects. It measures the shortage or surplus of cash flows in future time period. If the organization has other choice of project for the same purpose then the project with highest positive NPV is selected. Advantages of Net Present Value Methods: It considers all the cash flows and determines the value of future money in today term that indicates true profit potential from any investment. It also measures the risk of future cash flows. It is also effective to evaluate the project in terms of shareholders interest by considering their wealth maximization (Lee, Lee Lee, 2009). Disadvantages of Net Present Value Methods: Disadvantage of this method is that the size of the project is not measured. It is expressed in terms of dollar or currency not for the percentage that reduces effectiveness of the project evaluation. It requires forecasting of future cash flow of the investment proposal that is complex job. It is calculated on the basis of estimated cost of capital which could be affected by future environment changes. The critical point of this method is deciding the discount rate to use in the calculation. Longer life of a project is generally related with higher risk, so it should be discounted at higher rate as discount rate is related to project life and risk associated (Groppelli Nikbakht, 2006). Internal Rate of Return Method (IRR): Organizations used internal rate of return (IRR) method to measure its significance for the business. IRR is the rate of return that an investor will expect to earn on the new investment. IRR is compared with the companys discounted rate of return. If IRR is higher in comparison to discounted rate of return then the investment is useful for the company and vice versa. Discounted rate of return is determined by considering several factors. The most common factor is risk; if the investor evaluates the high risky investment then they want to higher rate of return (Mowen, Hansen Heitger, 2011). This method measures how quickly the investors earn their returns. The project should be acceptable, when IRR is greater than the required rate of return. If IRR is less than the required rate of return then the project should be rejected. It is the rate at which the net present value of investment is zero. It is the most popular methods of capital budgeting to evaluate investments. IRR of a project can be calculated as follows: IRR= LDR+ (P1-Q)/(P1-P2) (HDR-LDR) (Davis Davis, 2011) Where: LDR= Lower Discount Rate HDR= Higher Discount Rate P1= Present value at lower rate of interest P2= Present value at higher rate of interest Q= Net cash outlay Advantages of IRR Method: IRR considers all the cash flows during life of the project or machine. The IRR method considers time value of money, so it determines the value of future money. IRR method easily compares risk and uncertainty by recognizing the time value of money. IRR method does not require cost of capital before evaluating the project. It is a profit oriented concept, so it helps in achieving the objective of maximization of investors welfare (Ryan, 2007). Disadvantages of Internal Rate of Return Method: IRR is complicated in calculation, so it is difficult to understand and use. It requires forecasting of future cash inflow of the investment proposal that is difficult to determine. It gives confusing results in uneven cash inflows. IRR is not good for comparing two investments or projects. The estimates of cash inflows generated by project are based on sales and costs that are uncertain for project and not evaluate actual result or return of investment (Shim Siegel, 2006). Conclusion On the basis of the above discussion, it can be concluded that the ARR, NPV and IRR all three methods used to evaluate the risk and return of an investment and each have some advantages and disadvantages. References Bailey, R.E. (2005) The Economics Of Financial Markets. UK: Cambridge University Press. Davis, C.E. Davis, E.B. (2011) Managerial Accounting. USA: John Wiley and Sons. Groppelli, A.A. Nikbakht, E. (2006) Finance. 5th ed. USA: Barron's Educational Series. Lee, A. C., Lee, J.C. Lee, C.F. (2009) Financial analysis, planning forecasting: theory and application. 2nd ed. Singapore: World Scientific. Mowen, M.M., Hansen, D.R. Heitger, D.L. (2011) Cornerstones of Managerial Accounting. 4th ed. Canada: Cengage Learning. Moyer, R.C., McGuigan, J.R. Kretlow, W.J. (2008) Contemporary Financial Management. 11th ed. USA: Cengage Learning. Pratt, S.P. Grabowski, R.J. (2010) Cost of Capital: Applications and Examples. 4th ed. USA: John Wiley Sons. Ryan, B. (2007) Corporate finance and valuation. USA: Cengage Learning EMEA. Schneider, W.A., DiMeo, R.A. Benoit, M.S. (2005) The Practical Guide to Managing Nonprofit Assets. USA: John Wiley Sons. Shim, J.K. Siegel, J.G. (2006) Handbook of Financial Analysis, Forecasting and Modeling. 3rd ed. USA: CCH.

Steven King Essays - Short Stories By Stephen King, Stephen King

Steven King ?If you have an imagination, let it run free.? - Steven King, 1963 The King of Terror Stephen Edwin King is one of today's most popular and best selling writers. King combines the elements of psychological thrillers, science fiction, the paranormal, and detective themes into his stories. In addition to these themes, King sticks to using great and vivid detail that is set in a realistic everyday place. Stephen King who is mainly known for his novels, has broadened his horizons to different types of writings such as movie scripts, nonfiction, autobiographies, children's books, and short stories. While Stephen King might be best known for his novels The Stand and It, some of his best work that has been published are his short stories such as ?The Body? and ?Quitters Inc?. King's works are so powerful because he uses his experience and observations from his everyday life and places them into his unique stories. Stephen Edwin King was born in Portland, Maine, on September 21, 1947, at the Maine General Hospital. Stephen, his mother Nellie, and his adopted brother David were left to fend for themselves when Stephen's father Donald, a Merchant Marine captain, left one day, to go the store to buy a pack of cigarettes, and never returned. His fathers leaving had a big indirect impact on King's life. In the autobiographical work Danse Macabre, Stephen King recalls how his family life was altered: ?After my father took off, my mother, struggled, and then landed on her feet.? My brother and I didn't see a great deal of her over the next nine years. She worked a succession of continuous low paying jobs.? Stephen's first outlooks on life were influenced by his older brother and what he figured out on his own. While young Stephen and his family moved around the North Eastern and Central United States. When he was seven years old, they moved to Stratford, Connecticut. Here is where King got his first exposure to horror. One evening he listened to the radio adaptation of Ray Bradbury's story ?Mars Is Heaven!? That night King recalls he ?slept in the doorway, where the real and rational light of the bathroom bulb could shine on my face? (Beaham 16). Stephen King's exposure to oral storytelling on the radio had a large impact on his later writings. King tells his stories in visual terms so that the reader would be able to ?see? what was happening in their own mind, somewhat in the same fashion the way it was done on the radio (Beaham 17). King's fascination with horror early on continued and was pushed along only a couple weeks after Bradbury's story. One day little Stephen was looking through his mother's books and came across one named ?The Strange Case of Dr. Jekyll and Mr. Hyde.? After his mother finished reading the book to him, Stephen was hooked. He immediately asked her to read it again. King recalls ?that summer when I was seven, [my mother] must have read it to me half a dozen times?(Beaham 17). Ironically that same year, while Stephen was still seven years old, he went to go see his first horror movie, The Creature from the Black Lagoon. This is important because Stephen says, ? Since [the movie], I still see things cinematically. I write down everything I see. What I see, it seems like a movie to me?(Beaham 17). During this year the biggest event that probably had the biggest impact on Stephen King's writing style was the discovery of the author H. P. Lovecraft. King would later write of Lovecraft, ?He struck with the most force, and I still think, for all his shortcomings, he is the best writer of horror fiction that America has yet produced?(Beaham 22). In many of Lovecraft's writings he always used his present surroundings as the back drop of his stories. King has followed in his footsteps with the fictional town of Castle Rock, Maine. Castle Rock is a combination of several towns that King moved to and from with his family in his childhood. The main town that it resembles is that of Durham, Maine. It was after the exposure to H. P. Lovecraft's stories that King first began to write. While growing up and moving around the way his family did, Stephen had never been able to feel comfortable and settle down in one place and make friends they way other kids his age did (Underwood 77). Around the age of twelve the King family finally settled in the town