How does the living wage relate to the labour movement and how does Essay

How does the living wage relate to the labour movement and how does the labour movement relate to the living wage (employment relationship) - Essay Example In addition to that, globalization has also led to a few number of state renounce the laws that govern the employees. Due to the mere ignorance and the globalization factor, majority of the states have cut of the wages of their employees to go down more than they deserve. This occurs mostly in the sector where skills are not needed and they are not counted as increasing the economy (McConnell & Brue, 1999). Due to all the reasons mentioned above, numerous organizations that claim to fight off low pay, or living wage or fair pay have been introduced in the last twenty years. This has happened in majority of the countries both the developed countries and the developing. They have acted a key part in the society since they gather, educate and air the views of unsatisfied employees to the government who for a very long time have been going on with a low pay, way down more than the standard one. The activities that these labor organizations do have yielded positive results for instance, one of the results they have yielded is that wage tribunals have been happening more than they used to. In addition to that, the labor work force has also been awarded for the good work they portray of campaigning for or fellow human rights. Some of the benefits that the employees have gained for is for instance having a weekend, which has two days, if they work on holidays they get paid and majority of the organizations that employ them have focused on the 8 hours of working each day and compensation for any extra minute spent working (Victor et al., 1998). In a lay mans’ dictionary if we try to look at the definition of the term labour movement, it is the movement of workers for enhanced management by employers, for the most part through the creation of labour unions. So how does it (the labour movement) relate to the living wage and how does the living wage relate to the labour movement? Living wage and the labour movements go hand in

Summary Essay Example | Topics and Well Written Essays - 250 words - 152

Summary - Essay Example Apart from these challenges, college founders remains to be the founders of the American higher education in the history, especially the missionaries such as Baptists and Methodists (Rudolph and John 57). The main reasons why magnet schools are being established are to promoted ethnic diversity, provide several programs to aid in satisfying individuals’ interests and talents, and improve education standards. This article aids at exploring racial diversity and magnet schools (alternative schools). The author affirms that magnet schools are highly established in urban districts because they have large students’ enrollment (Goldring and Claire 18). Under the topic â€Å"Magnet Schools and Desegregation†, the author states that magnet programs point to vast success. He affirms that magnet programs highly helps to mix students’ bodies ranging from approximately 44%black to 50% white in elementary schools. After carrying out case studies on four alternative schools, it was concluded that magnet schools effectively helps to come up with racially balanced schools. Although integrating magnet schools is too costly, the benefits of such integrations are worth the ex pense (25). Magnet schools can be used as a tool for racial balance. In this article, Clark Kerr provides university leaders with five key points of guidance on the kind of attitudes that modern universities should adopt. The author argues that the biggest problem that will affect higher learning institutions is challenged in accommodating the vast growing number of students. Some directions of responding in the short run that are provided in this article include, more privatization, more federalization, more public support cultivation, effective use of available resources, more pluralistic leadership, and more attention to long-term movement directions. One of the uncertainties that can be clearly recognized is what will take place in the economic productivity. The

Managing Foreign Exchange Risk in International Trade

Managing Foreign Exchange Risk in International Trade MANAGING FOREIGN EXCHANGE RISK IN INTERNATIONAL TRADE WITH A FOCUS ON EAST MIDLANDS COMPANIES Abstract The purpose of this research is to investigate how international trade companies in the East Midlands manage foreign exchange risk. This study utilises descriptive statistics in presenting and analysing data from the primary research. The findings of the research indicate that a majority of the firms used broad business strategies in managing their foreign exchange risk. The main problems the firms had with managing foreign exchange risks centred on customer retention and receiving payments on time. The results also indicate that there were a few firms which took an integrated approach to mitigating foreign exchange risk. This research is of value to firms involved in international trade and also business development agencies which seek to assist firms which are planning to enter or are already operating in foreign markets. Chapter 1 Introduction International trade involves exporting and importing of goods or services across foreign borders and, as soon as a firm engages in import and/or export it is exposed to numerous risks. As a result firms operating outside their home country, have to deal with the economic conditions of the foreign country in which it wishes to operate in. One of the key issues firms involved in import and/ or export are faced with is dealing with foreign currency as this is the only means by which the exchange of goods or services is facilitated. To this end it is import to study and understand the impact which foreign currency has on international trade. Following the demise of the Bretton Woods agreement (1971) whereby exchange rates were allowed to float freely, managing foreign exchange has become important (Heakel, 2009). Consequently the prices of currencies were determined by market forces that is, demand for and supply of money (Mastry and Salam, 2007). Due to the constant changes in demand and supply which are in turn influenced by other external factors, fluctuations arise (Czinkota et al, 2009). As a result of these fluctuations firms are exposed to foreign exchange risks also known as currency risks. Firms trading in different currencies are exposed to three types of foreign exchange risks; economic, transaction and translational risk (Czinkota et al, 2009). Firms which are involved in international trade are exposed to economic and transaction risks as they both pose potential threats to the firms cash flow over time (Czinkota et al, 2009). Studies have shown that foreign exchange fluctuations can affect the value of a fi rms cash flow over time (Aretz, Bartram and Dufey, 2007, Judge, 2004, Bradley and Moles 2002, Allayannis and Ofek 1998, Chowdhry, 1995, Damant, 2002 and Wong 2001). More so, domestic firms although not dealing with foreign currency are also affected by foreign exchange fluctuations as the price of the commodity they trade in are also affected (Abor, 2005). Most of the extant literatures have focused on corporate risk management for financial firms and as such financial hedging with derivatives has been the central theme of currency risk management. On the other hand there has been evidence to show alternative methods exist for firms involved in international trade, these methods of managing foreign exchange risks involve strategic and operational risk management. However most of these studies have been carried out in isolation; financial hedging techniques carried out in isolation of strategic and operational hedging methods and vice versa. Little has been done to provide an integrated perspective, on utilising both techniques of managing foreign exchange risks with regards to international trade firms. This is the area in which the present study intends to explore thereby contributing to the overall literature Purpose of the Research Due to the nature of international trade which expose the firm to foreign exchange movements, thus subjecting the firm to currency risks, the purpose of this research is to explore how international trade firms deal with foreign exchange risk. The research focuses how import and export firms in the East Midlands manage their foreign exchange risk. This study also aims to explore the problems involved in managing those risks. Research Questions Consequently the research hopes to answer the following questions: Do import and export firms in the East Midlands actually manage their foreign exchange rate risks? How import and export companies in the East Midlands manage their foreign exchange risks? What problems they encounter with managing these risks? Definition of Key Terms Hedge A hedge can be defined as â€Å"making an investment to reduce the risk of adverse price movements in an asset. Investors use this strategy when they are unsure of what the market will do† (Investopedia, 2010). Derivatives Derivatives are instruments whose performance is derived from an underlying asset (Arnold, 2002) Spot Rate The spot rate is defined as the rate of exchange quoted immediately if buying or selling currency (Watson and Head) International Trade This involves the flow of goods and services between nations; it involves import and/ export of goods and services (Harrison et al, 2000) The subsequent section provides a break down of how rest of the research is set out. Chapter 2: Literature Review; this chapter provides an overview of the research topic by mapping out the key areas; theories within the risk management and finance literature are identified, explored and analysed. The concept of risk and risk management is explored. A broad classification is made on the types of risks and this is then narrowed down to include foreign exchange risk. The chapter proceeds by exploring the concept of foreign exchange and foreign exchange risks; which include the types of foreign exchange exposures. The common techniques for managing foreign exchange risks are explored. This is followed by a review of relevant literature in the key areas of the research topic. Chapter 3: Research Methodology; in this chapter the research design and strategy are discussed. Chapter 4: Research Findings and Analysis; this chapter presents the findings of the research which were obtained from the questionnaire. The findings are presented using tables, graphs and charts, to enable the reader gain a clearer understanding. An analysis of the findings is carried out by cross-tabulating the responses of the respondent in order to observe for any commonalities and/or differences. Chapter 5: Conclusion and Recommendation; this chapter concludes the research and recommendations are made. Chapter 2: Literature Review 2.1 Risk Management- Risk is an intrinsic part of any business, due to unpredictability of the forces which govern business transactions such as political, economic and social conditions; risk is a factor which cannot be completely eliminated (Watson and Head, 2007). Arnold (2002) describes risk as a situation where there is more than just one possible outcome, but a range of potential returns. It can also be defined as the chance that the actual return from an investment will be different than expected (Lamb, 2008). From the above definitions, risk does not necessarily spell doom or does not necessarily have a negative connotation. Markowitz was one of the earliest academics to point this out, by establishing a link between risks and return (risk-return trade-off). Essentially the theory; Modern Portfolio Theory (MPT) involves expected return and the degree of accompanying risk for an investment (Yorke and Droussiotis, 1994). A central theme of this theory is that the greater risk an investor accepts th e higher the potential for increased returns (Yorke and Droussiotis, 1994). While MPT purports a positive correlation between risk and return, the fact that an investment can have a range of possible outcomes is an uncertainty which can be very costly. As a result risk management is also a part and parcel of business. Risk management can be defined as â€Å"the performance of activities designed to minimize the negative impact (cost) of uncertainty (risk) regarding possible losses† (Abor, p.307, 2005). The objectives of risk management are to minimize potential losses, reduce volatility of cash flow thereby protecting earnings (Abor, 2005). While the objective for risk management is to protect companies against financial loss thereby protecting the value of the firm, traditional finance theory such as that proposed by Modigliani and Miller suggests that the market value of a firm is determined by it earning power (Arnold, 2002). The basic assumption of Modigliani and Miller theorem is that in an efficient market; with the absence of taxation, bankrupt cy costs and information asymmetry, the value of the firm is unaffected by its capital structure (Arnold, 2002). However empirical research (list authors) has shown the existence of capital market imperfections, such as taxes, agency problems and financial distress exists thus justifying risk management (Chowdhry, 1995). Furthermore, MPT also suggests that the risk and volatility of an investment portfolio can be reduced, and the gains can be enhanced, all by diversifying the portfolio among several non-correlated assets (Pearce Financial, 2008). That is, investors can maximise their expected return for a given level of risk by diversifying their investments across a range of assets ((McClure, 2006). MPT involves risk management through diversification of investments. In a simplified expression, MPT is based on the idea of not ‘putting all of ones eggs into one basket. 2.2 Types of Risk There are two broad classification of risks; Unsystematic and Systematic (Rossi and Laham, 208) Systematic risks refers to risks which affect the entire market due to events such as; exchange rate movements, changes in the price of commodities, war, recession and interest rates, however Unsystematic risks are risks which are specific to individual companies (reference). These distinctions were made by Sharpe (1960) in addition to Markowitz Modern Portfolio theory (MPT), the rationale behind it was that despite risk management practise through diversification, there were still underlying factors which affected the return potential of an investment portfolio. Chesnay Jondeau (2001) clearly point out that the correlation of assets which Markowitz talks about depends on other underlying factors and that the relationships are dynamic. They further found that major events such as general adverse movements in markets can significantly change the correlations between assets (Chesnay Jondeau, 2001). Empirical studies show that in financial crisis, assets tends to act the same, that is they are more likely to more become positively correlated, moving down at the same time (Ardelean, Brandt and Malik, 2009). Essentially, severe market crises will have a spill over effect and cause investments in several different asset classes or markets to succumb to sudden liquidation (Vocke and Wilde, 2000, Pearce Financial, 2008). However findings from Xing and Howe (2003) are contradictory, their findings show that the failure of previous studies to find a positive risk-return relationship may be as a result of model misspecification. Essentially they found that there was no agreement on the risk-return relationship amongst previous studies which had used data from one market (Xing and Howe, 2003). Thus they argued that the world market should be taken into consideration in assessing risk return-relationship in a partially integrated market (Xing and Howe, 2003). But then it only stands to reason that if markets are integrated partially or wholly, a catastrophic economic cycle such as financial crises would have an adverse effect on the world market. Thus clearly it does not matter how much one diversifies unsystematic risk, the underlying systematic risk is a problematic factor which has to be dealt with. 2.3 Foreign Exchange rate as a Systematic Risk Background Foreign Exchange rate can be defined as the â€Å"price of one currency expressed in terms of another† (Arnold, p.973, 2002). For example, if the exchange rate exchange rate between the European Euro and the Pound is â‚ ¬1.3 =  £ 1.00, this means that  £1 is equivalent to â‚ ¬1.3. Foreign Exchange (Forex) is traded on the foreign exchange market, the purpose of which is to facilitate trade and the exchange of currencies between countries (Czinkota et al, 2009). The Forex market is an informal market which does not have a central trading place (Czinkota et al, 2009). Trade is carried out it is a 24 hour market as it involves financial institutions from around the globe, as trade moves from one financial centre to another (Arnold, 2002). Thus as one market closes in one region or continent another opens in a different place (Arnold, 2002). The major trading centres are in Tokyo, Singapore, London and New York (Waston and Head, 2007). The buyers and sellers of foreign c urrencies included exporters/importers; tourists; fund managers; governments; central banks; speculators and commercial banks (Arnold, 2002). However large commercial banks account for a larger percentage of Forex trading in the currency markets, as they deal currencies on behalf of customers (Arnold, 2002). They also undertake transactions of their own in an attempt to make a profit by speculating on future movements of exchange rates (Arnold, 2002). Foreign Exchange Risk After the demise of the Bretton woods conference (1973) exchange rates were allowed to float freely; exchange rates were no longer fixed and currencies were allowed to float freely in value to each other (Czinkota et al, 2009). However freely floating exchange rate poses problems for investors and firms alike who deal with different currencies as the uncertainty of exchange rate movements can have a positive or negative impact on an investment (Czinkota et al, 2009). Foreign exchange risk also known as currency risk is the â€Å"risk that an entity will be required to pay more (or less) than expected as a result of fluctuations in the exchange rate between its currency and the foreign currency in which payment must be made† (Abor, p.3, 2005). Thus considering the potential variability of Forex and the impact it can have on international investments and international business, irrespective of the business sector, it is clear that Foreign exchange risks can be classed as systematic risks. Forex risk is an un-diversifiable risk as it affects the entire market. Having established the relationship between Forex and systematic risk and understanding that it cannot be diversified the question which presents itself is, what can be done about it? Theory states that the only way out is to hedge this risk (Bartram, 2007), the decision to hedge will be examined in Section 2.7 2.4 Types of Foreign Exchange Exposure There are three types of foreign exchange risks or exposures; Economic exposure, Transaction exposure and Translational exposure (Maurer and Valiani, 2002). Transaction exposure is the risk that arises as a result of an existing contractual agreement involving a commitment in foreign currency, this sort of risk is primarily associated with import or exports (Arnold, 2002). For example a firm which exports goods from the UK to the US; will have an agreement (contract) that the US firm buying the goods will pay for the goods at a later date (could be 30, 60 or 90 days), however changes in the exchange rates to either currency (whether an appreciation or depreciation) will either positive or negative consequences for either firms. Transaction risks also come as a result of firms making foreign investments such as opening subsidiary branches (Arnold, 2002). These risks arise in the form of payment costs associated with constructing or establishing new branches (Arnold, 2002). In order to make the necessary payments, the home-based firm would exchange its home currency for foreign currency, thereby giving rise to potential transaction risk (A rnold, 2002) Translational exposure relates to a firms earnings; it involves a firms accounting practises (Waston and Head, 2007). This risk â€Å"arises from the legal requirement that all firms consolidate their financial statement (balance sheet and income statement) of all worldwide operations annually† (Czinkota et al, p. 334, 2009). This implies that, as firms translate and consolidate foreign assets, liabilities and profits into domestic currency, there is the possibility of the firm experiencing a loss or gain (Waston and Head, 2007). This is mainly an accounting risk and as such give a real indication of the impact of exchange rate fluctuations on the value of a firm (Watson and Head, 2007). Economic exposure impacts a firms long-term cash flow, positively or negatively (Czinkota et al, 2009). This kind of risk not only affects firms involved in international trade but also has an impact on domestic firms as it can also affect the price of commodities sold (Czinkota et al, 2009). Furthermore, this sort of risk also undermines the competitiveness of a firm (Arnold, 2002). It can affect the firms competitive position directly if the home currency appreciates and foreign competitors are able to offer a much cheaper price, compared to the firms products which have become expensive as a result of the currency appreciation (Arnold, 2002). Economic risk can also affect a firms competitive position indirectly even if a firms home currency does not experience adverse movements (Arnold, 2002). For example Arnold (2002) illustrate that a South African firm selling in Hong Kong with a New Zealand firm as its main competitor can lose competitive edge if the New Zealand dollar weakens against the Hong dollar. Thus the products or commodity on offer by the New Zealand firm would be cheaper than that of the South African firm assuming both currencies (South African Rand and New Zealand Dollar) had a similar exchange rate against Hong Kong Dollar. Economic and transaction risk are more related to businesses involved in international trade, translational exposure more to do with accounting practises (Waston and Head, 2007). Consequently these are the foreign exchange exposure that will be focused on. 2.5 Foreign Exchange Risk and Natural Hedging The idea of applying natural hedging strategies as tools to hedge foreign exchange exposure is one that has received a lot of attention in recent times, as the concept focuses on using non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The various natural hedging strategies are explained below. Netting This technique relates to multi-nationals which have foreign subsidiaries, it involves reducing funds transferred by netting off the transaction between the parent company and the subsidiary firm (Watson and Head, 2007). For example â€Å"if a UK parent owed a subsidiary in Canada and sold C$2.2m of goods to the subsidiary on credit while the Canadian subsidiary is owed C$1.5m by the UK company, instead of transferring a total of C$3.7m the intra-group transfer is the net amount of C$700,00† (Arnold, p. 982, 2002). This implies that rather than both the parent and subsidiary firm managing their exposure separately they opt for a centralised management system to reduce the size of the currency flows. Consequently transaction costs and the cost of purchasing foreign exchange are mitigated (Arnold, 2002). Leading and Lagging This technique involves either settling foreign accounts by either postponing payments (lagging) till the end of the credit period allowed or prepayment (leading) at the beginning of the transaction (Watson and Head, 2007). It functions based on the anticipation a firm has that future exchange rates will either appreciate or depreciate (Czinkota, 2009). Thus if a firm anticipated a depreciation in its home currency, it lead its payments conversely if the firm anticipated an appreciation in exchange rate it would lag its payments. Invoicing in the Domestic Currency This method involves invoicing foreign customers in the firms domestic currency rather than in the foreign currency (Arnold, 2002). What this does is that it shifts the burden of risk to the foreign firm (buyer). Operational and Strategic Methods There is no one singular acceptable definition of operational hedging as it varies according to the context it is been used. Boyabatli and Toktay (2004) in their work, review and discuss a diverse cross section of views on operational hedging, they delve into the similarities in application methods of operational hedging across different academic fields. They discovered that although there were some differences in meaning in various academic fields; operations management, finance, strategy and international business, there were basic characteristics which were similar across all fields. On this basis operational hedging can be described according to its functionality. Bradley and Moles describe it as the decisions firms take in regards to the â€Å"location of their production facilities, sourcing of inputs, the nature and scope of products, strategic financial decisions such as the currency denomination of debt, the firms choice of markets and market segments† (Bradley and Mo les p.29, 2002). It involves the use of non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The objective is geared towards reducing long-term economic exposures. Operational hedging can be said to be based on the principle of real options. Real options are â€Å"opportunities to delay and adjust investments and operating decisions over time in response to resolution of uncertainty† (Triantis 2000 cited in Boyabatli and Toktay p.6, 2004). 2.6 Hedging with Financial Derivatives The different types of financial derivatives are: Forwards and Futures, Foreign currency Options and Currency Swaps. Forward contract: This enables the business to protect itself from adverse movements in exchange rates by locking in an agreed exchange rate until the agreed date of payment (Brealey, Myers and Allen, 2006). The example given by Horcher and Karen (p.95, 2005) illustrate the concept further; â€Å"a company requires 100 million Japanese yen in three months to pay for imported products. The current spot exchange rate is 115.00 yen per U.S. dollar, and the forward rate is 114.50. The company books a forward contract to buy yen (sell U.S. dollars) in three months time at a price of 114.50 and orders its merchandise. In three months time, the company will use the contract to buy yen at 114.50. At that time, if yen is trading at 117.00 per U.S. dollar, the company will have locked in a price that, with the benefit of hindsight, is worse than current market prices. If three months later yen is at 112.00 per U.S. dollar, the company will have successfully protected itself against a more exp ensive yen. Regardless of price changes, the company has locked in its yen purchase price at the forward rate of 114.50, enabling it to budget its costs with certainty†. Futures Contract: A futures contract refers to an â€Å"agreement to buy or sell a standard quantity of specified financial instrument or foreign currency at a future date at a price agreed between two parties† (Watson and Head, 2007). Although it bears some similarities to the forward contract in that it also locks in the exchange rate, however one major difference is that a forward contract can be used in a wide range of currencies while the futures contract is applicable to a limited number of currencies (Brealey, Myers and Allen, 2006). Foreign currency Options: This gives holders the right to purchase or sell foreign currency under an agreement that allows for the right but not the obligation to undertake the transaction at the agreed future date (Brealey, Myers and Allen, 2006). One key advantage of this method of hedging is that it gives holders the opportunity to take advantage of favourable exchange rate movements (Watson and Head, 2007). However a non-refundable fee on the option known as an option premium is required (Watson and Head, 2007). Currency Swaps: A currency swap is â€Å"an agreement between two parties to exchange principal and interest payments in different currencies over a stated time period† (Watson and Hedge, p. 382, 2007). Basically what this implies is that a firm can gain the use of foreign currency but avoid exchange rate risk which may arise from servicing payments (Watson and Head, 2007). 2.7 A review of Literature on hedging This section critically examines the rationale for hedging foreign exchange risk. The rationale which has been put forward for hedging risk in the existing literature (Judge, 2004) is that it maximises shareholder value. The idea behind hedging any kind of risk in general is that once a firm takes on the responsibility of actively managing risk, shareholder value is increased, thereby increasing the overall value of the firm (Judge, 2004). However finance theory proposes that shareholders are diversified and thus are not willing to pay a premium to firms for adopting hedging policies (Rossi and Laham, 2008). So in that vein, theory proposes that what is actually being maximized is the managers private utility (Tekavcic, Sernic and Spricic, 2008). Essentially finance theory states that shareholders are diversified while managers of firms are not, so in a bid to protect their income and personal asset, which are linked to the firm, they hedge against uncertainty (Baranoff and Brockett, 2008). Within this theory shareholders are willing to take on risk in exchange for greater returns (risk-return trade off) and so they invest in companies which they believe can provide such high returns. Thus managers hedging risks can be said to lead to underinvestment, which then flaws the theory of risk-return trade off (Baranoff and Brockett, 2008). This theory is based on the premise that financial markets are efficient and as such hedging activities of firm would not add value to the firm (Rossi and Laham). In addition to the complexities of the above theory, when the concept of hedging is put into the context of foreign exchange movements; the Law of one price (LOP)/ purchasing power parity (PPP) suggests that identical goods are not affected by exchange rate variations (Hyrina and Serletis, 2008). The law of one price is the foundation of the theory of PPP which posits that similar goods should have identical prices across countries once expressed in a common currency (Hyrina and Serletis, 2008, Czinkota et al, 2009). Numerous studies have been carried out to test whether or not the theory holds, however there is no general consensus as to whether or not the theory is valid. Hyrina and Serletis (2009), Glen (1992), Choi, Laibson and Madrian (2006) found that there are some flaws within the theory as the real exchange rate is not stationary. Engel and Rogers (1996) examines the impact distance has on goods sold and whether the presence of national borders separating locations were these goods are sold, also have any impact on the law of one price. Empirical evidence from the research shows distance and border have significant role to play on the differences in price of goods (Engel and Rogers, 1996). More so, that market segmentation also leads to price differentiation (Engel and Rogers, 1996). This theory just like the first are both based on the principle that the market is efficient and as such inconsistencies such as movements in exchange rate even out in time (Zanna, 2009). Without attempting to disparage the above theories, in regards to the first theory, whether or not hedging is done to propagate the interests of managers, the fact is that, the basis of the theory (Efficient Market) is flawed as there are numerous empirical evidence (Nobile, 2007; Bartram, 2007, Allayannis and Ofek, 2003, Tekavcic et al 2008, Mastry, 2003) to suggest that there are imperfections in the financial market such as high interests rates, inflation, tax and of course foreign exchange movements which can affect a firm. Thus shareholders cannot afford not to be concerned about hedging as these imperfections in the market can affect the cash flow, profit and ultimately the overall value of the firm. Thus in the same vain PPP should not hold. In regards to PPP it is necessary to indicate that there are other factors which affect the price of goods sold across national borders. Bradley (2005) states that the prices of goods for each firm are influenced by numerous factors such as; Government policies, high inflation rates and corporate income tax and thus such prices of goods cannot be the same across different borders. So to state clearly the financial market is not efficient due to market imperfections. Thus movements in foreign exchange can affect the cash flow and overall value of the firm. Consequently it is necessary for firms to focus on how to manage this risk. 2.8 Review of literature on financial derivatives and operational Strategies The extant literatures on hedging exchange rate risks with financial derivatives have focused on corporate risk management. The main thrust of literatures from authors such as Mastry (2003), Bartram et al (2003) and Galum and Roth (1993) have carried out studies which are aimed at finding the optimal financial derivative. However there is no general consensus as to an optimal financial hedging position. The reason for this can related to basic financial theory which suggests that derivative instruments should be chosen based on the degree of exposure of the firm and the payoff that can be gotten from the instrument (Bartram, 2006). Essentially what this implies instruments with linear characteristics such as forwards, futures and swaps should be used for linear exposures, while instruments with nonlinear profiles such as currency options are suitable to hedging nonlinear exposure (Stulz, 2003). Put simply the theory suggests that after firms assess the nature of its exposure, all tha t needs to be done is choose a derivative which matches that exposure. However, contrary to financial theory Bartram (2006), Ianieri (2009) found that as a result of the flexible nature of options, options can be used to hedge various types of exposures and not just nonlinear exposures. Despite these findings, merely identifying the nature of exposure and matching it with a derivative is not enough. There are other factors which influence the decision on what derivatives to use besides the nature of exposure. For instance while an option is flexible and can be adapted to suit various types of exposures, it is also be a highly complex technical method to use. The problem with currency options is that they require highly skilled individuals who can understand and use it effectively. Ianieri (2009) states that even brokers who should know how to use this method have had bad experiences with it. In an alternative view, Masry and Salam (2007) in an attempt to understand the rationale for using financial derivatives found that the size of the firm impacts on a firms decision to use financial derivatives. A study conducted by Judge (2004) shows that there is a positive relationship between the size of the firm and the foreign currency hedging decision. The general idea is that large firms have numerous resources available to them; in terms of personnel and information, and as such they are more likely to hedge using financial derivatives (Judge, 2004). So in essence the transaction costs which accompany the use of derivatives would discourage small firms from opting to hedge with financial derivatives. On the other hand Kim and Sung (2005), Managing Foreign Exchange Risk in International Trade Managing Foreign Exchange Risk in International Trade MANAGING FOREIGN EXCHANGE RISK IN INTERNATIONAL TRADE WITH A FOCUS ON EAST MIDLANDS COMPANIES Abstract The purpose of this research is to investigate how international trade companies in the East Midlands manage foreign exchange risk. This study utilises descriptive statistics in presenting and analysing data from the primary research. The findings of the research indicate that a majority of the firms used broad business strategies in managing their foreign exchange risk. The main problems the firms had with managing foreign exchange risks centred on customer retention and receiving payments on time. The results also indicate that there were a few firms which took an integrated approach to mitigating foreign exchange risk. This research is of value to firms involved in international trade and also business development agencies which seek to assist firms which are planning to enter or are already operating in foreign markets. Chapter 1 Introduction International trade involves exporting and importing of goods or services across foreign borders and, as soon as a firm engages in import and/or export it is exposed to numerous risks. As a result firms operating outside their home country, have to deal with the economic conditions of the foreign country in which it wishes to operate in. One of the key issues firms involved in import and/ or export are faced with is dealing with foreign currency as this is the only means by which the exchange of goods or services is facilitated. To this end it is import to study and understand the impact which foreign currency has on international trade. Following the demise of the Bretton Woods agreement (1971) whereby exchange rates were allowed to float freely, managing foreign exchange has become important (Heakel, 2009). Consequently the prices of currencies were determined by market forces that is, demand for and supply of money (Mastry and Salam, 2007). Due to the constant changes in demand and supply which are in turn influenced by other external factors, fluctuations arise (Czinkota et al, 2009). As a result of these fluctuations firms are exposed to foreign exchange risks also known as currency risks. Firms trading in different currencies are exposed to three types of foreign exchange risks; economic, transaction and translational risk (Czinkota et al, 2009). Firms which are involved in international trade are exposed to economic and transaction risks as they both pose potential threats to the firms cash flow over time (Czinkota et al, 2009). Studies have shown that foreign exchange fluctuations can affect the value of a fi rms cash flow over time (Aretz, Bartram and Dufey, 2007, Judge, 2004, Bradley and Moles 2002, Allayannis and Ofek 1998, Chowdhry, 1995, Damant, 2002 and Wong 2001). More so, domestic firms although not dealing with foreign currency are also affected by foreign exchange fluctuations as the price of the commodity they trade in are also affected (Abor, 2005). Most of the extant literatures have focused on corporate risk management for financial firms and as such financial hedging with derivatives has been the central theme of currency risk management. On the other hand there has been evidence to show alternative methods exist for firms involved in international trade, these methods of managing foreign exchange risks involve strategic and operational risk management. However most of these studies have been carried out in isolation; financial hedging techniques carried out in isolation of strategic and operational hedging methods and vice versa. Little has been done to provide an integrated perspective, on utilising both techniques of managing foreign exchange risks with regards to international trade firms. This is the area in which the present study intends to explore thereby contributing to the overall literature Purpose of the Research Due to the nature of international trade which expose the firm to foreign exchange movements, thus subjecting the firm to currency risks, the purpose of this research is to explore how international trade firms deal with foreign exchange risk. The research focuses how import and export firms in the East Midlands manage their foreign exchange risk. This study also aims to explore the problems involved in managing those risks. Research Questions Consequently the research hopes to answer the following questions: Do import and export firms in the East Midlands actually manage their foreign exchange rate risks? How import and export companies in the East Midlands manage their foreign exchange risks? What problems they encounter with managing these risks? Definition of Key Terms Hedge A hedge can be defined as â€Å"making an investment to reduce the risk of adverse price movements in an asset. Investors use this strategy when they are unsure of what the market will do† (Investopedia, 2010). Derivatives Derivatives are instruments whose performance is derived from an underlying asset (Arnold, 2002) Spot Rate The spot rate is defined as the rate of exchange quoted immediately if buying or selling currency (Watson and Head) International Trade This involves the flow of goods and services between nations; it involves import and/ export of goods and services (Harrison et al, 2000) The subsequent section provides a break down of how rest of the research is set out. Chapter 2: Literature Review; this chapter provides an overview of the research topic by mapping out the key areas; theories within the risk management and finance literature are identified, explored and analysed. The concept of risk and risk management is explored. A broad classification is made on the types of risks and this is then narrowed down to include foreign exchange risk. The chapter proceeds by exploring the concept of foreign exchange and foreign exchange risks; which include the types of foreign exchange exposures. The common techniques for managing foreign exchange risks are explored. This is followed by a review of relevant literature in the key areas of the research topic. Chapter 3: Research Methodology; in this chapter the research design and strategy are discussed. Chapter 4: Research Findings and Analysis; this chapter presents the findings of the research which were obtained from the questionnaire. The findings are presented using tables, graphs and charts, to enable the reader gain a clearer understanding. An analysis of the findings is carried out by cross-tabulating the responses of the respondent in order to observe for any commonalities and/or differences. Chapter 5: Conclusion and Recommendation; this chapter concludes the research and recommendations are made. Chapter 2: Literature Review 2.1 Risk Management- Risk is an intrinsic part of any business, due to unpredictability of the forces which govern business transactions such as political, economic and social conditions; risk is a factor which cannot be completely eliminated (Watson and Head, 2007). Arnold (2002) describes risk as a situation where there is more than just one possible outcome, but a range of potential returns. It can also be defined as the chance that the actual return from an investment will be different than expected (Lamb, 2008). From the above definitions, risk does not necessarily spell doom or does not necessarily have a negative connotation. Markowitz was one of the earliest academics to point this out, by establishing a link between risks and return (risk-return trade-off). Essentially the theory; Modern Portfolio Theory (MPT) involves expected return and the degree of accompanying risk for an investment (Yorke and Droussiotis, 1994). A central theme of this theory is that the greater risk an investor accepts th e higher the potential for increased returns (Yorke and Droussiotis, 1994). While MPT purports a positive correlation between risk and return, the fact that an investment can have a range of possible outcomes is an uncertainty which can be very costly. As a result risk management is also a part and parcel of business. Risk management can be defined as â€Å"the performance of activities designed to minimize the negative impact (cost) of uncertainty (risk) regarding possible losses† (Abor, p.307, 2005). The objectives of risk management are to minimize potential losses, reduce volatility of cash flow thereby protecting earnings (Abor, 2005). While the objective for risk management is to protect companies against financial loss thereby protecting the value of the firm, traditional finance theory such as that proposed by Modigliani and Miller suggests that the market value of a firm is determined by it earning power (Arnold, 2002). The basic assumption of Modigliani and Miller theorem is that in an efficient market; with the absence of taxation, bankrupt cy costs and information asymmetry, the value of the firm is unaffected by its capital structure (Arnold, 2002). However empirical research (list authors) has shown the existence of capital market imperfections, such as taxes, agency problems and financial distress exists thus justifying risk management (Chowdhry, 1995). Furthermore, MPT also suggests that the risk and volatility of an investment portfolio can be reduced, and the gains can be enhanced, all by diversifying the portfolio among several non-correlated assets (Pearce Financial, 2008). That is, investors can maximise their expected return for a given level of risk by diversifying their investments across a range of assets ((McClure, 2006). MPT involves risk management through diversification of investments. In a simplified expression, MPT is based on the idea of not ‘putting all of ones eggs into one basket. 2.2 Types of Risk There are two broad classification of risks; Unsystematic and Systematic (Rossi and Laham, 208) Systematic risks refers to risks which affect the entire market due to events such as; exchange rate movements, changes in the price of commodities, war, recession and interest rates, however Unsystematic risks are risks which are specific to individual companies (reference). These distinctions were made by Sharpe (1960) in addition to Markowitz Modern Portfolio theory (MPT), the rationale behind it was that despite risk management practise through diversification, there were still underlying factors which affected the return potential of an investment portfolio. Chesnay Jondeau (2001) clearly point out that the correlation of assets which Markowitz talks about depends on other underlying factors and that the relationships are dynamic. They further found that major events such as general adverse movements in markets can significantly change the correlations between assets (Chesnay Jondeau, 2001). Empirical studies show that in financial crisis, assets tends to act the same, that is they are more likely to more become positively correlated, moving down at the same time (Ardelean, Brandt and Malik, 2009). Essentially, severe market crises will have a spill over effect and cause investments in several different asset classes or markets to succumb to sudden liquidation (Vocke and Wilde, 2000, Pearce Financial, 2008). However findings from Xing and Howe (2003) are contradictory, their findings show that the failure of previous studies to find a positive risk-return relationship may be as a result of model misspecification. Essentially they found that there was no agreement on the risk-return relationship amongst previous studies which had used data from one market (Xing and Howe, 2003). Thus they argued that the world market should be taken into consideration in assessing risk return-relationship in a partially integrated market (Xing and Howe, 2003). But then it only stands to reason that if markets are integrated partially or wholly, a catastrophic economic cycle such as financial crises would have an adverse effect on the world market. Thus clearly it does not matter how much one diversifies unsystematic risk, the underlying systematic risk is a problematic factor which has to be dealt with. 2.3 Foreign Exchange rate as a Systematic Risk Background Foreign Exchange rate can be defined as the â€Å"price of one currency expressed in terms of another† (Arnold, p.973, 2002). For example, if the exchange rate exchange rate between the European Euro and the Pound is â‚ ¬1.3 =  £ 1.00, this means that  £1 is equivalent to â‚ ¬1.3. Foreign Exchange (Forex) is traded on the foreign exchange market, the purpose of which is to facilitate trade and the exchange of currencies between countries (Czinkota et al, 2009). The Forex market is an informal market which does not have a central trading place (Czinkota et al, 2009). Trade is carried out it is a 24 hour market as it involves financial institutions from around the globe, as trade moves from one financial centre to another (Arnold, 2002). Thus as one market closes in one region or continent another opens in a different place (Arnold, 2002). The major trading centres are in Tokyo, Singapore, London and New York (Waston and Head, 2007). The buyers and sellers of foreign c urrencies included exporters/importers; tourists; fund managers; governments; central banks; speculators and commercial banks (Arnold, 2002). However large commercial banks account for a larger percentage of Forex trading in the currency markets, as they deal currencies on behalf of customers (Arnold, 2002). They also undertake transactions of their own in an attempt to make a profit by speculating on future movements of exchange rates (Arnold, 2002). Foreign Exchange Risk After the demise of the Bretton woods conference (1973) exchange rates were allowed to float freely; exchange rates were no longer fixed and currencies were allowed to float freely in value to each other (Czinkota et al, 2009). However freely floating exchange rate poses problems for investors and firms alike who deal with different currencies as the uncertainty of exchange rate movements can have a positive or negative impact on an investment (Czinkota et al, 2009). Foreign exchange risk also known as currency risk is the â€Å"risk that an entity will be required to pay more (or less) than expected as a result of fluctuations in the exchange rate between its currency and the foreign currency in which payment must be made† (Abor, p.3, 2005). Thus considering the potential variability of Forex and the impact it can have on international investments and international business, irrespective of the business sector, it is clear that Foreign exchange risks can be classed as systematic risks. Forex risk is an un-diversifiable risk as it affects the entire market. Having established the relationship between Forex and systematic risk and understanding that it cannot be diversified the question which presents itself is, what can be done about it? Theory states that the only way out is to hedge this risk (Bartram, 2007), the decision to hedge will be examined in Section 2.7 2.4 Types of Foreign Exchange Exposure There are three types of foreign exchange risks or exposures; Economic exposure, Transaction exposure and Translational exposure (Maurer and Valiani, 2002). Transaction exposure is the risk that arises as a result of an existing contractual agreement involving a commitment in foreign currency, this sort of risk is primarily associated with import or exports (Arnold, 2002). For example a firm which exports goods from the UK to the US; will have an agreement (contract) that the US firm buying the goods will pay for the goods at a later date (could be 30, 60 or 90 days), however changes in the exchange rates to either currency (whether an appreciation or depreciation) will either positive or negative consequences for either firms. Transaction risks also come as a result of firms making foreign investments such as opening subsidiary branches (Arnold, 2002). These risks arise in the form of payment costs associated with constructing or establishing new branches (Arnold, 2002). In order to make the necessary payments, the home-based firm would exchange its home currency for foreign currency, thereby giving rise to potential transaction risk (A rnold, 2002) Translational exposure relates to a firms earnings; it involves a firms accounting practises (Waston and Head, 2007). This risk â€Å"arises from the legal requirement that all firms consolidate their financial statement (balance sheet and income statement) of all worldwide operations annually† (Czinkota et al, p. 334, 2009). This implies that, as firms translate and consolidate foreign assets, liabilities and profits into domestic currency, there is the possibility of the firm experiencing a loss or gain (Waston and Head, 2007). This is mainly an accounting risk and as such give a real indication of the impact of exchange rate fluctuations on the value of a firm (Watson and Head, 2007). Economic exposure impacts a firms long-term cash flow, positively or negatively (Czinkota et al, 2009). This kind of risk not only affects firms involved in international trade but also has an impact on domestic firms as it can also affect the price of commodities sold (Czinkota et al, 2009). Furthermore, this sort of risk also undermines the competitiveness of a firm (Arnold, 2002). It can affect the firms competitive position directly if the home currency appreciates and foreign competitors are able to offer a much cheaper price, compared to the firms products which have become expensive as a result of the currency appreciation (Arnold, 2002). Economic risk can also affect a firms competitive position indirectly even if a firms home currency does not experience adverse movements (Arnold, 2002). For example Arnold (2002) illustrate that a South African firm selling in Hong Kong with a New Zealand firm as its main competitor can lose competitive edge if the New Zealand dollar weakens against the Hong dollar. Thus the products or commodity on offer by the New Zealand firm would be cheaper than that of the South African firm assuming both currencies (South African Rand and New Zealand Dollar) had a similar exchange rate against Hong Kong Dollar. Economic and transaction risk are more related to businesses involved in international trade, translational exposure more to do with accounting practises (Waston and Head, 2007). Consequently these are the foreign exchange exposure that will be focused on. 2.5 Foreign Exchange Risk and Natural Hedging The idea of applying natural hedging strategies as tools to hedge foreign exchange exposure is one that has received a lot of attention in recent times, as the concept focuses on using non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The various natural hedging strategies are explained below. Netting This technique relates to multi-nationals which have foreign subsidiaries, it involves reducing funds transferred by netting off the transaction between the parent company and the subsidiary firm (Watson and Head, 2007). For example â€Å"if a UK parent owed a subsidiary in Canada and sold C$2.2m of goods to the subsidiary on credit while the Canadian subsidiary is owed C$1.5m by the UK company, instead of transferring a total of C$3.7m the intra-group transfer is the net amount of C$700,00† (Arnold, p. 982, 2002). This implies that rather than both the parent and subsidiary firm managing their exposure separately they opt for a centralised management system to reduce the size of the currency flows. Consequently transaction costs and the cost of purchasing foreign exchange are mitigated (Arnold, 2002). Leading and Lagging This technique involves either settling foreign accounts by either postponing payments (lagging) till the end of the credit period allowed or prepayment (leading) at the beginning of the transaction (Watson and Head, 2007). It functions based on the anticipation a firm has that future exchange rates will either appreciate or depreciate (Czinkota, 2009). Thus if a firm anticipated a depreciation in its home currency, it lead its payments conversely if the firm anticipated an appreciation in exchange rate it would lag its payments. Invoicing in the Domestic Currency This method involves invoicing foreign customers in the firms domestic currency rather than in the foreign currency (Arnold, 2002). What this does is that it shifts the burden of risk to the foreign firm (buyer). Operational and Strategic Methods There is no one singular acceptable definition of operational hedging as it varies according to the context it is been used. Boyabatli and Toktay (2004) in their work, review and discuss a diverse cross section of views on operational hedging, they delve into the similarities in application methods of operational hedging across different academic fields. They discovered that although there were some differences in meaning in various academic fields; operations management, finance, strategy and international business, there were basic characteristics which were similar across all fields. On this basis operational hedging can be described according to its functionality. Bradley and Moles describe it as the decisions firms take in regards to the â€Å"location of their production facilities, sourcing of inputs, the nature and scope of products, strategic financial decisions such as the currency denomination of debt, the firms choice of markets and market segments† (Bradley and Mo les p.29, 2002). It involves the use of non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The objective is geared towards reducing long-term economic exposures. Operational hedging can be said to be based on the principle of real options. Real options are â€Å"opportunities to delay and adjust investments and operating decisions over time in response to resolution of uncertainty† (Triantis 2000 cited in Boyabatli and Toktay p.6, 2004). 2.6 Hedging with Financial Derivatives The different types of financial derivatives are: Forwards and Futures, Foreign currency Options and Currency Swaps. Forward contract: This enables the business to protect itself from adverse movements in exchange rates by locking in an agreed exchange rate until the agreed date of payment (Brealey, Myers and Allen, 2006). The example given by Horcher and Karen (p.95, 2005) illustrate the concept further; â€Å"a company requires 100 million Japanese yen in three months to pay for imported products. The current spot exchange rate is 115.00 yen per U.S. dollar, and the forward rate is 114.50. The company books a forward contract to buy yen (sell U.S. dollars) in three months time at a price of 114.50 and orders its merchandise. In three months time, the company will use the contract to buy yen at 114.50. At that time, if yen is trading at 117.00 per U.S. dollar, the company will have locked in a price that, with the benefit of hindsight, is worse than current market prices. If three months later yen is at 112.00 per U.S. dollar, the company will have successfully protected itself against a more exp ensive yen. Regardless of price changes, the company has locked in its yen purchase price at the forward rate of 114.50, enabling it to budget its costs with certainty†. Futures Contract: A futures contract refers to an â€Å"agreement to buy or sell a standard quantity of specified financial instrument or foreign currency at a future date at a price agreed between two parties† (Watson and Head, 2007). Although it bears some similarities to the forward contract in that it also locks in the exchange rate, however one major difference is that a forward contract can be used in a wide range of currencies while the futures contract is applicable to a limited number of currencies (Brealey, Myers and Allen, 2006). Foreign currency Options: This gives holders the right to purchase or sell foreign currency under an agreement that allows for the right but not the obligation to undertake the transaction at the agreed future date (Brealey, Myers and Allen, 2006). One key advantage of this method of hedging is that it gives holders the opportunity to take advantage of favourable exchange rate movements (Watson and Head, 2007). However a non-refundable fee on the option known as an option premium is required (Watson and Head, 2007). Currency Swaps: A currency swap is â€Å"an agreement between two parties to exchange principal and interest payments in different currencies over a stated time period† (Watson and Hedge, p. 382, 2007). Basically what this implies is that a firm can gain the use of foreign currency but avoid exchange rate risk which may arise from servicing payments (Watson and Head, 2007). 2.7 A review of Literature on hedging This section critically examines the rationale for hedging foreign exchange risk. The rationale which has been put forward for hedging risk in the existing literature (Judge, 2004) is that it maximises shareholder value. The idea behind hedging any kind of risk in general is that once a firm takes on the responsibility of actively managing risk, shareholder value is increased, thereby increasing the overall value of the firm (Judge, 2004). However finance theory proposes that shareholders are diversified and thus are not willing to pay a premium to firms for adopting hedging policies (Rossi and Laham, 2008). So in that vein, theory proposes that what is actually being maximized is the managers private utility (Tekavcic, Sernic and Spricic, 2008). Essentially finance theory states that shareholders are diversified while managers of firms are not, so in a bid to protect their income and personal asset, which are linked to the firm, they hedge against uncertainty (Baranoff and Brockett, 2008). Within this theory shareholders are willing to take on risk in exchange for greater returns (risk-return trade off) and so they invest in companies which they believe can provide such high returns. Thus managers hedging risks can be said to lead to underinvestment, which then flaws the theory of risk-return trade off (Baranoff and Brockett, 2008). This theory is based on the premise that financial markets are efficient and as such hedging activities of firm would not add value to the firm (Rossi and Laham). In addition to the complexities of the above theory, when the concept of hedging is put into the context of foreign exchange movements; the Law of one price (LOP)/ purchasing power parity (PPP) suggests that identical goods are not affected by exchange rate variations (Hyrina and Serletis, 2008). The law of one price is the foundation of the theory of PPP which posits that similar goods should have identical prices across countries once expressed in a common currency (Hyrina and Serletis, 2008, Czinkota et al, 2009). Numerous studies have been carried out to test whether or not the theory holds, however there is no general consensus as to whether or not the theory is valid. Hyrina and Serletis (2009), Glen (1992), Choi, Laibson and Madrian (2006) found that there are some flaws within the theory as the real exchange rate is not stationary. Engel and Rogers (1996) examines the impact distance has on goods sold and whether the presence of national borders separating locations were these goods are sold, also have any impact on the law of one price. Empirical evidence from the research shows distance and border have significant role to play on the differences in price of goods (Engel and Rogers, 1996). More so, that market segmentation also leads to price differentiation (Engel and Rogers, 1996). This theory just like the first are both based on the principle that the market is efficient and as such inconsistencies such as movements in exchange rate even out in time (Zanna, 2009). Without attempting to disparage the above theories, in regards to the first theory, whether or not hedging is done to propagate the interests of managers, the fact is that, the basis of the theory (Efficient Market) is flawed as there are numerous empirical evidence (Nobile, 2007; Bartram, 2007, Allayannis and Ofek, 2003, Tekavcic et al 2008, Mastry, 2003) to suggest that there are imperfections in the financial market such as high interests rates, inflation, tax and of course foreign exchange movements which can affect a firm. Thus shareholders cannot afford not to be concerned about hedging as these imperfections in the market can affect the cash flow, profit and ultimately the overall value of the firm. Thus in the same vain PPP should not hold. In regards to PPP it is necessary to indicate that there are other factors which affect the price of goods sold across national borders. Bradley (2005) states that the prices of goods for each firm are influenced by numerous factors such as; Government policies, high inflation rates and corporate income tax and thus such prices of goods cannot be the same across different borders. So to state clearly the financial market is not efficient due to market imperfections. Thus movements in foreign exchange can affect the cash flow and overall value of the firm. Consequently it is necessary for firms to focus on how to manage this risk. 2.8 Review of literature on financial derivatives and operational Strategies The extant literatures on hedging exchange rate risks with financial derivatives have focused on corporate risk management. The main thrust of literatures from authors such as Mastry (2003), Bartram et al (2003) and Galum and Roth (1993) have carried out studies which are aimed at finding the optimal financial derivative. However there is no general consensus as to an optimal financial hedging position. The reason for this can related to basic financial theory which suggests that derivative instruments should be chosen based on the degree of exposure of the firm and the payoff that can be gotten from the instrument (Bartram, 2006). Essentially what this implies instruments with linear characteristics such as forwards, futures and swaps should be used for linear exposures, while instruments with nonlinear profiles such as currency options are suitable to hedging nonlinear exposure (Stulz, 2003). Put simply the theory suggests that after firms assess the nature of its exposure, all tha t needs to be done is choose a derivative which matches that exposure. However, contrary to financial theory Bartram (2006), Ianieri (2009) found that as a result of the flexible nature of options, options can be used to hedge various types of exposures and not just nonlinear exposures. Despite these findings, merely identifying the nature of exposure and matching it with a derivative is not enough. There are other factors which influence the decision on what derivatives to use besides the nature of exposure. For instance while an option is flexible and can be adapted to suit various types of exposures, it is also be a highly complex technical method to use. The problem with currency options is that they require highly skilled individuals who can understand and use it effectively. Ianieri (2009) states that even brokers who should know how to use this method have had bad experiences with it. In an alternative view, Masry and Salam (2007) in an attempt to understand the rationale for using financial derivatives found that the size of the firm impacts on a firms decision to use financial derivatives. A study conducted by Judge (2004) shows that there is a positive relationship between the size of the firm and the foreign currency hedging decision. The general idea is that large firms have numerous resources available to them; in terms of personnel and information, and as such they are more likely to hedge using financial derivatives (Judge, 2004). So in essence the transaction costs which accompany the use of derivatives would discourage small firms from opting to hedge with financial derivatives. On the other hand Kim and Sung (2005),

Leave Your Disabilities on Shore! :: College Admissions Essays

Leave Your Disabilities on Shore! A 24-foot Rainbow glides across the sparkling waters of Lake George. As it gradually passes another boat, smiles are exchanged. The crew of the passed boat doesn't notice anything out of the ordinary about the other's crew, but something is different. The sailors are disabled. How can disabled people sail? Just how actively do they participate? Aren't they scared? The Y-Knot sailing program began as an informal group in 1996 and in 1997 grew into an organized program, running sailing clinics all summer long. Y-Knot, which has been run at Lake George's Camp Chingachgook, has given over 100 disabled individuals the chance to sail. The people who participate in the sailing clinics are for the most part physically disabled adults; however, those who do not fit this category are invited to participate, and friends and family are always welcome. The program is organized and run by a board of participants, who work hard to ensure safety and to expand what they believe to be a truly wonderful opportunity for disabled people. To begin with, the sailors are offered "Sailing 101," a course explaining how to operate the craft and the basic aerodynamic and hydrodynamic principles of the sport. Next, and most importantly, safety is ensured. Every sailor wears a life jacket, and adaptive pieces of equipment, such as seat straps and rudder extensions, provide the necessary accommodations. If a person needs help boarding the boat, assistants are available to lift people out of their wheelchairs or simply lend a helping hand. The boat the group is about to board has special safety features: a weighted keel so the boat won't tip, and an outboard motor with enough fuel to safely return to shore, should the unlikely need arise. In addition, ship-to-shore communication is expected to be added this year. These extra safety features help calm the frightened first-time sailor who had likely not expected to ever try the sport. Most importantly, the changes to the boat cannot be noticed by passers-by, so the Y-Knot sailors have fun and normal experiences. Once the sailors are informed and secure aboard, they head out to sea with an experienced instructor. The instructor encourages the sailors to do as they please. Some sailors choose to sit back, relax, and enjoy the refreshing lake breeze blowing against their faces.

Christmas Tradition Essay

All over the world people have their own traditions and customs. Some traditions and customs have been passed on to generation to generation, others are beginning to build their own whether they choose a holiday, a summer vacation, or a special event to celebrate each year. My family tradition did not come from generations past; however, ours began when my parents started their own family as husband and wife. My parents did not have any traditions in there generation. My mom and dad were always there for me we did everything together as a family; for instance, spending holidays together, vacations, birthdays, and Sunday night dinners. My parents have taught me the true meaning of family. I have built everlasting memories so that I can carry on my family’s tradition. Years later, I want to pull out that file of memories, think of my parents and smile. Thus when I think of Christmas time, what comes to my mind is a sense of togetherness, happiness, and laughter. Our family begins with getting a tree, decorating, baking cookies, opening our gifts we got from Santa Claus, and then finally have Christmas dinner. This marks the beginning of my family’s Christmas tradition. My family was not a big family, yet there were six of us: my mom and dad, my two sisters Danielle and Jennifer, my brother Christopher and me. We were living in Louisiana; it was my favorite out of all the other states we had lived in. It was in the country where all we saw were bamboo sticks which, were actually sugar cane fields; instead, I thought we lived next to a field of giant Pixie-Sticks. I ask my mom if we can get some of the giant canes for the Christmas tree. Of course my mom does not want to tell me they are too big for the tree; instead, she tells me to wait until we select a Christmas tree. The Christmas tree is a big part of my family’s tradition. Every year my Dad took my siblings and me to get the Christmas tree; meanwhile my mom got the decorations down from the attic. We did not have to travel to get our tree because we had our own private enchanted forest; of course, it was one of the advantages of living here. Our backyard was bigger than two football fields combined. I remember walking along with my brothers and sisters following my dad showing us where the wooden bridge was where we all had gone fishing, naming all the different names of the trees. We had oak, walnut, pecan, and pine all sizes ranging from very little bitty to the biggest tallest ones that seemed to touch the clouds high in the sky. It was time consuming picking out the one tree we all agreed on; eventually, we did when my dad would remind us that Santa Claus only brings gifts to good children. Once we get back and dad sets up the tree in the living room by the window our favorite spot, so you can see it from the outside. Since we had to wait until dad was ready for us; at the same time, our mother has made the popcorn for us to make popcorn garland strings. We put the tree up in the same order every year, the lights, ornaments, popcorn garland, candy canes, and tinsel. My favorite part of decorating the tree is when my mom and dad tell me stories about the ornaments that they got when they were married, when my brother and sisters and I were born. I knew Christmas was around the corner because my dad told us a story every night, my favorite is the â€Å"Twelve Days of Christmas† because my dad only told us what he gave my mother gift every day till the twelve day to win her heart. My dad was good at making up stories that had all of his kid’s names in them. My mom was always in the kitchen baking cookies and I was always willing to help. I could only mix the eggs or put sprinkles on the cookies. We always had cookies and milk for when Santa Claus. Christmas day was finally here and my siblings and I were up before dawn running over to the tree to see if Santa Claus came. We were so excited there were so many presents wrapped perfectly with each of our names on it. We never had to wake our parents up I guess four kids squealing happily would wake up everyone. After we opened our gifts we would play with all of new toys. My sister Danielle was older so she got clothes and jewelry and music she loved to listen to, Jennifer and I were younger we got Barbie dolls and a dollhouse that reached us up to our waist, my brother Christopher got Matchbox cars and a race track to race the cars on. We played all day and watched the Christmas parade on the television. Our Christmas dinner is not your traditional turkey dinner. My mom would make us Italian food. It was the one time she made all of our favorite dishes: baked ziti, lasagna, cheese ravioli, and eggplant parmesan. We all would have a little of each dish . When we were done with dinner we would all sit and watch Miracle on 34th. Street. In conclusion I would say that I would not change my family’s tradition, I would pass it on to my kids when I have a family of my own.

Brave New World: Correlation between the Dangers of a World State Society

Written in 1931 by English author Aldous Huxley, Brave New World is a novel still highly revered in today’s literary world. The novel sets itself in London, England, in the year 632 AF (After Ford). The world is a strikingly different place in Huxley’s futuristic World State than it is today – society’s technological advancements have come nowhere near the incredible developments in fertilization and population and control that the World State has. Yet despite this, the novel is still heavily referred to, both in instances within the literary world and outside.Thought written decades ago, Brave New World does not appear outdated in any way. The revelations and realizations of the characters within the novel could very well be the realizations of any 21st century man or woman. The novel Brave New World is still relevant in today’s modern world because its themes of government control, happiness conflicting with reality, and consumerism, are all prese nt in today’s society. Government control is a very large part of the society that Aldous Huxley has created in his novel. In the World State, not many people have the ability to achieve unbiased or preconditioned thought.The book starts at the Central London Hatchery and Conditioning Centre, where the Director of the Hatchery is giving a number of students a tour around. He is explaining their methods of population control and fertilization, known as the Bokanovskification Process (pg. 6, Huxley). The process in which a Bokanovskified egg will divide into 96 buds that grow into full embryos is the first step in the process of conditioning. The Bokanovskified eggs are conditioned with hormones and chemicals as needed to get them into the state that the Director wants them in.Huxley hints at the objective of this conditioning when a young worker at the Hatchery, Mr. Foster, says, â€Å" â€Å"We decant our babies as socialized human beings, as Alphas or Epsilons, as future s ewage workers or future†¦Ã¢â‚¬â„¢ He was going to say ‘future World Controllers,’ but correcting himself, said ‘future Directors of Hatcheries’ instead† (pg. 13, Huxley). This shows that government figures in the book are responsible for the achievements and successes of all the humans they hatch, because they are the ones who essentially craft their personalities and character traits.When they are conditioning the eggs by rejecting defects and enhancing positive features such as physical perfection, they inherently choose the path in life that the embryo will follow. This is much like the new ability that expecting parents have today to choose certain genetic aspects of their future child’s body. Parents have the ability to choose hair colour, eye colour, skin colour, and with our expanding technology, more child customization seems possible.Another method of government control is sleep conditioning, more formally known as hypnopaedic con ditioning. The sleeping newborns and fertilized embryos all go through a process in which workers at the Hatchery put bits of information through a loudspeaker on repeat while they sleep. This brainwashing of the fertilized eggs is similar to the programming and propaganda that many oppressive governments have tried to use on their people to prevent free thought, such as Hitler’s intense use of propaganda speeches and posters to fuel Anti-Semitic thought.Lastly, the advancements in World State technology have allowed for the drug soma to be created. Its self-induced feelings of happiness and contentment to distract from society’s flaws are in a way very similar to North America’s prescription drug addiction. Anti-depressant pills to distract from life’s hardships are used both within the novel and society today. The controlling government in Brave New World can be seen as a metaphor for modern society and the dangers that technology and too much governmen t create.Happiness and a grasp on reality are two ideals that do not coincide within the novel. John, the son of the Director and his wife Linda, is the Savage within the novel. He is an outcast amongst the members of his father’s society. John was an intelligent boy who was taught to read by his mother at an early age, demonstrated by a passage in the novel that says, â€Å"Soon he could read all the words quite well. Even the longest. But what did they mean? He asked Linda; but even when she could answer it didn’t seem to make it very clear† (pg. 130, Huxley).This is a reflection on the fact that his society is constantly trying to prevent him from learning – when John is taken back to the civilized world, he realizes that in order to be accepted into the World State and finally achieve happiness, he must give up learning and reading about the true nature of the world. He cannot make this sacrifice, which leads to his eventual suicide. This is similar t o free thinkers in the past and present that have gone against the norms of society, who have either stopped rebelling against society and decided to conform, or continue their research for truth at their own expense.Many early scientists were forced to conform to outdated forms of research due to religious or cultural beliefs within their society. Another example of how happiness and reality are incompatible is the use of the drug soma within society. The character of Lenina, a vaccination nurse at the Hatchery, is a heavy soma user. Every occasion that she finds strange or unusual is another opportunity for her friends and colleagues to encourage her use of soma, which makes her feel relaxed and without worry. An example of this is after she felt quite rejected by John after their date:Drying her eyes, Lenina walked across the roof to the lift. On her way down to the twenty seventh floor, she pulled out her soma bottle. One gram would not be enough, but two would make her late for work the next morning†¦She compromised and, into her cupped left palm, she took out three half-gram tablets. (pg. 171, Huxley) Her dependence on mind and mood altering drugs is similar to anti-depressants and their role in modern civilization. When somebody has a different mental process than the norm, they are encouraged to take medication even if their mental state is not harming anyone, thus repressing these thoughts from occurring.Lastly, Brave New World shows another representation of choosing between happiness and reality with society’s promiscuous nature. People are highly discouraged to develop feelings for a single human, and encouraged to take on multiple sexual partners. When Lenina starts to develop feelings for a man, her colleagues are quick to dissuade her from pursuing those feelings any further, all to conform to the harsh reality of the World State’s lack of personal relationships. This is an example of characters being forced to choose truth in stead of happiness.Drug dependence, persecution of creative minds, and oppression of the family are all ways that Brave New World demonstrates that happiness and truth cannot coincide. The theme of consumerism is very important to the understanding of how society works in the World State. Consumerism is a major aspect of their society because it is the driving force that allows the government to control the people of the World State without resorting to tyrannical or violent rule. During hypnopaedic conditioning sessions, the embryos will be taught that â€Å"Ending is better than mending† (pg. 23, Huxley).This is meant to show their society’s encouragement when it comes to buying new things. The quote is in reference to purchasing new clothes, and how it is favored to attempting to fix old clothes. They are taught at a young age that this is the best option, which reflects on the world’s current driven consumer society. All over the globe today, it can be seen that what truly makes a country successful is not its politics, but rather its economy. Commercials, politicians, and public messages of any kind are constantly trying to insert their message into society’s mind – purchasing new items will help society and the economy.Buying things will somehow add to personal happiness. Even fixing broken or lower class products by oneself is discouraged as there exist paid services that allow others to do the fixing instead. A second important point worth nothing in Brave New World is the attitude towards things as simple as children’s toys. When a product breaks (for example, a child’s toy), instead of the same toy being bought once more, increasingly complicated toys are created instead. This is similar to today’s consumerist society where advertisers and consumers are always searching for something â€Å"better†.Though the search for better products may improve technology, it also puts emphasis on unnec essary materialistic items. The last and most important aspect of consumerism is its religious like status. The founder of the World State, a man called Ford, is named in reference to Henry Ford, the famous automobile maker. When talking to one another, members of the World State often make a capital-T with their hands. This is a reference to Ford’s famous T-model car, as well as the Christian symbol of the cross.These gestures heavily imply that Ford, a famous capitalist, is seen as a Christ-like figure, and consumerism has replaces religious belief. The manipulation of World State Citizens into thinking that they must spend money at a constant rate, idea that something â€Å"better† must all exist, and the religious-type undertones of society all show how consumerism is a major aspect of the novel. Brave New World is a novel that directly reflects modern society through its depictions of government, truth’s incompatibility with happiness, and consumerism. Unli ke many dystopian novels that depict futuristic governments s oppressive and dictatorial beings, Brave New World is a story that does not portray the people in command as a repressive, brutish force. Just as in our society today, the community within the World State are each given choices – there are no sections of the government that require people to take soma, yet they do. There are no sections of the government that require people to partake in sexual activities, yet they do. Aldous Huxley’s depiction of the World State is relevant to ours because it is a direct reflection upon what humans today have done to society.People are given an endless amount of choices as to whether or not they want to conform, but as presented through the characters in the novel and people in the 21st century, the society that people live in will inevitably modify those choices. Brave New World is a story that masterfully shows the correlation between the dangers of a World State society and the dangers of the modern world. Works Cited Huxley, Aldous. Brave New World. New York HarperCollins Publishers, Inc. 1931

Life and Legend of Howard Hughes essays

Life and Legend of Howard Hughes essays The Life and Legend of Howard Hughes Throughout the 20th century, it has been the medias job to pinpoint what events and people would prove to be an effective story. This was certainly the case for Howard R. Hughes. Son to the wealthy Howard Hughes Sr., Howard became the interest of the American people and newspapers for most of his life. Being deemed one of the most famous men of the mid-20th century was greatly attributed to Hughess skills as an industrialist, aviator, and motion-picture producer combined with his enormous wealth, intellect, and achievement. The media thrived on Howards unusual and sometimes scandalous life, especially in his later years when newspapers would frequently front large amounts of money to get stories on Hughes. Howard was also associated with what has been called one of the greatest publishing hoaxes in history. Howard Hughes Sr., commonly known as Big Howard, was a graduate of the Harvard School of Law, yet never once appeared before a court of law. Big Howard spent the first 36 years of his life chasing money across the Texas plains, as a wildcatter and a speculator in oil leases, working hard enough and earning just enough to move on to another, hopefully more fortunate gamble. In the year of his marriage, Big Howard sold leases on land that proved to have $50,000 in oil beneath it. He promptly took his new wife to Europe for a honeymoon, and returned exactly $50,000 poorer. In 1908, Big Howard turned his ingenuity and his hobby to tinker into good fortune. Current drilling technology was unable to penetrate the thick rock of southwest Texas and oilmen could only extract the surface layers of oil, unable to tap the vast resources that lay far below. Big Howard came up with the idea for a rolling bit, with 166 cutting edges and invented a method to keep the bit lubricated as it to re away at the rock. Later that year, Big Howard produced a model and went into b...

Pauses in Speech and Writing

Pauses in Speech and Writing In phonetics, a pause is a break in speaking; a moment of silence. Adjective: pausal. Pauses and Phonetics In phonetic analysis, a double vertical bar (||) is used to represent a distinct pause. In direct speech (in both fiction and nonfiction), a pause is conventionally indicated in writing by ellipsis points (. . .) or a dash (- ). Pauses in Fiction Gwen raised her head and spoke haltingly, fighting back tears. He told me Tuesday there was too much damage . . . She wiped her wet face with her fingers. But he wants to send her to a specialist in Memphis. (John Grisham, A Time to Kill. Wynwood Press, 1989)Anyone who is guilty of such practices . . ., he paused for effect, leaning forward and staring at the congregation, . . . anyone in town . . ., he turned and looked behind him, at the monks and nuns in the choir, . . . or even in the priory . . . He turned back. I say, anyone guilty of such practices should be shunned.He paused for effect.And may God have mercy on their souls. (Ken Follett, World Without End. Dutton, 2007) Pauses in Drama Mick: You still got that leak.Aston: Yes.Pause.Its coming from the roof.Mick: From the roof, eh?Aston: Yes.Pause.Ill have to tar it over.Mick: Youre going to tar it over?Aston: Yes.Mick: What?Aston: The cracks.Pause.Mick: Youll be tarring over the cracks on the roof.Aston: Yes.Pause.Mick: Think thatll do it?Aston: Itll do it, for the time being.Mick: Uh.Pause.  (Harold Pinter,  The Caretaker. Grove Press, 1961) The pause is a pause because of what has just happened in the minds and guts of the characters. They spring out of the text. Theyre not formal conveniences or stresses but part of the body of the action. (Harold Pinter in Conversations With Pinter by Mel Gussow. Nick Hern Books, 1994) Pauses in Public Speaking If you prefer to read your speech, make sure to pause frequently, take a breath, look up, and scan the audience. . . .Besides allowing you to fill your lungs with air, pausing also allows the audience to absorb the spoken words and create pictures in their own minds. The habit of pausing eliminates the dreaded um and err and adds emphasis to your last point. (Peter L. Miller, Speaking Skills for Every Occasion. Pascal Press, 2003) Pauses in Conversation There are even rules about silence. It has been said that, in a conversation between two English speakers who are not close friends, a silence of longer than four seconds is not allowed (which means that people become embarrassed if nothing is said after that time- they feel obliged to say something, even if it is only a remark about the weather.) (Peter Trudgill, Sociolinguistics: An Introduction to Language and Society, 4th ed. Penguin, 2000) Types and Functions of Pauses A distinction has been drawn between silent pauses and filled pauses (e.g. ah, er), and several functions of pause have been established, e.g. for breathing, to mark grammatical boundaries, and to provide time for the planning of new material. Pauses which have a structural function (juncture pauses) are distinguished from those involved in hesitation (hesitation pauses). Investigations of pausal phenomena have been particularly relevant in relation to developing a theory of speech production. In grammar, the notion of potential pause is sometimes used as a technique for establishing word units in a language- pauses being more likely at word boundaries than within words. (David Crystal, Dictionary of Linguistics and Phonetics, 6th ed. Blackwell, 2008) Systematic pausing . . . performs several functions: marking syntactic boundaries;allowing the speaker time to forward plan;providing semantic focus (a pause after an important word);marking a word or phrase rhetorically (a pause before it);indicating the speakers willingness to hand over the speech turn to an interlocutor. The first two are closely connected. For the speaker, it is efficient to construct forward planning around syntactic or phonological units (the two may not always coincide). For the listener this carries the benefit that syntactic boundaries are often marked. (John Field, Psycholinguistics: The Key Concepts. Routledge, 2004) Lengths of Pauses Pausing also gives the speaker time to plan an upcoming utterance (Goldman-Eisler, 1968; Butcher, 1981; Levelt, 1989). Ferreira (1991) showed that speech planning-based pauses are longer before more complex syntactic material, whereas what she terms timing-based pauses (after already spoken material), tend to reflect prosodic structure. There is also a relationship between pause placement, prosodic structure, and syntactic disambiguation across a range of languages (e.g., Price et al., 1991; Jun, 2003). In general, tasks that require greater cognitive load on the speaker or that require them to perfom a more complex task other than reading from a prepared script result in longer pauses . . .. For example, Grosjean and Deschamps (1975) found that pauses are more than twice as long during description tasks (1,320 ms) than during interviews (520 ms) . . .. (Janet Fletcher, The Prosody of Speech: Timing and Rhythm. The Handbook of Phonetic Sciences, 2nd ed., edited by William J. Hardcast le, John Laver, and Fiona E. Gibbon. Blackwell, 2013) The Lighter Side of Pauses: Joke-Telling [A] critical feature in the style of all stand-up comedians is a pause after the delivery of the punch line, during which the audience laughs. The comic usually signals the onset of this critical pause with marked gestures, facial expressions, and altered voice intonation. Jack Benny was known for his minimalist gestures, but they were still discernible, and worked wonderfully. A joke will fail if the comic rushes to his next joke, providing no pause for audience laughter (premature ejokulation)- this is comedys recognition of the power of the punctuation effect. When the comic continues too soon after delivery of his punch line, he not only discourages, and crowds-out, but neurologically inhibits audience laughter (laftus interruptus). In show-biz jargon, you dont want to step on your punch line. (Robert R. Provine, Laughter: A Scientific Investigation. Viking, 2000)

Advantages Of Car Tuning

Advantages Of Car Tuning Youve got your brand-new car from the shop. I understand you are very much excited about it. As soon as you wake up in the morning you ran to the garage to find out if your car is around. Your buddies are coming to a location to have a sight of it. This makes you believe that youre on peak of the planet. As soon as you return from your workplace youre prepared for a very long drive along with your pals. These days youre so much busy with your own dream. But allow me tell you something that together with the passing of time the performance of your cars retards because of wear and tear of several pieces of your cars. So what would you do then? You may sell off and find a brand new one! Remember you have to work very difficult to make single buck. Itll be not a reasonable option to do so. However, you cannot also proceed with a very low performance car. Do not worry! Theres a way out too. Only get your car and that is about to delight in the joy of a brand-new car with an older one. Your money will also be saved. Is not a good idea! Car tuning has become a hobby for a lot of men and women. They love to change their cars according to their wish. In reality tuning your car is your perfect way to boost performance of your car. It entails some strategies to alter the car so as to raise its own potentialities. In reality car tuning can help you to customize your car. Its possible to alter these parts where you only desire to give your car a personal touch. Nowadays owners are researching endless procedures for pruning to make the most of the potentialities of the one. Boosting Power Throughout Car Tuning There are numerous innovative methods to upgrade your cars performance in both the small and larger parts of your car. Car pruning may take on the various characteristics of your car that may independently contribute to upgrading and improving your car, and of course the security and durability that it supplies. In the area of good engine tuning, car engines may be retrofitted with a performance processor to provide it a particular boost. It may be adaptable to motors in their own fuel injection or digital control apparatus systems. This performance chip may quickly bring about better performance of their typical engines by up to 10 percent and also to turbo engines by up to 30 horsepower. In car pruning, a performance camera might also be installed including an additional 12 horsepower to your engine boost. The gas pressure regulator may be substituted using a power boost valve at the return fuel line to similarly increase the ability of your car. With improvements in the driving capability, you can even introduce extra modifications to its stopping power via brake performance tuning. In fact, its advisable that you equip your car with an upgraded braking system before presenting car power modifications. Even though it isnt thought to be a performance update, the steering can help in the performance and security of the car. In car pruning, an immediate means to improve braking would be to match your car with high performance brake pads and split disks which could withstand intense heat during extreme braking requirements better than regular disks and pads. Air filter pruning is considered the easiest in car tuning tasks. Air filters and air filter components can be substituted with high performance air filters for an exceptional power boost on your motor performance. Theres also the cho ice of working with an induction kit to boost air flow within a fuel-injection system rather than working with the air box. This kit comes with a conical filter that can be installed right within the air flow estimate and also direct the air better in the motor, which effectively updates the search engines performance. Ford Racing Spare Parts For Peace of Mind Whether you ride in a Costly limo or drive a Decades old car that is not worth a whole lot, your vehicles reliability is dependent upon how well you keep it. All vehicles that travel the streets need servicing at regular intervals from accredited and/or trained mechanisms. Routine check-ups help ascertain if your car requires any parts replaced. A faulty portion can lead to damage to your motor vehicle. Ford racing spare parts is considered higher quality options for your motor vehicle. You dont need to bother about the durability of this Replaced component, if you opt to purchase ford racing spare parts. They include no-questions-asked replacement warranty within a predetermined interval. This time frame typically exceeds the life span of spares from some other brands. Therefore, when picking racing parts ford parts become popular desired. These spares are made readily available for many car types from Hatchbacks, sedans, and SUVs, to trucks, sports cars, and solar and hybrids and f uel cell powered vehicles. With such a wide selection of merchandise on the current market, its not surprising that ford performance parts racing are highly desired by car lovers and mechanics alike. The Reason for the immense popularity of ford racing Spare parts is your companys unmatched emphasis on quality at every phase of the production. Quality isnt assessed but assembled into the product in the production site of those spares. Rigorous quality tests are conducted for raw materials, supplies, the spare part in various phases of manufacturing, and the final spare part too. While the price of those spare parts is marginally greater than other similar components, its well spent. In the long term, you could save money by purchasing ford racing spares. You must factor in how long parts will operate and their warranty. Spending the first time will save money rather than purchasing new spares.