Law of E-commerce Essay Example | Topics and Well Written Essays - 3000 words

Law of E-commerce - Essay Example With all arsenals pointed at streamlining electronic money institutions through legal, supervisory principles, the binding implementation provisions found quite a number of disparate legislative instruments that tended to hinder the functionality of the directives. The 2000 directives were the first attempts by the Union to harmonize EU e-money banking practices through legal frameworks (Vereecken, 2000). Unknown to the policy drafters was that the directives were headed for major legislative thrusts, which has since prompted the revision of e-Europe Action Plan on the same but with no tangible improvement as once anticipated. The provisions of the action plan of 2005 being the main EU e-money policy blueprint in this area was an updated version deliberated upon since 2000 (Penn, 2005). Indeed, the period of euphoria that characterized the adoption of the directive seemed to have died leaving the future of e-money regulatory legislations much less promising than never imagined. As a matter of fact, many new ideas never sprouted beyond their piloting stages. In essence, The EU e-Money directives were much more of wasted efforts than gainful strategies given that e-Money technology, to a grater extent, remains a figment of salesmen’s imaginations. Background of E-Money Regulations When e-money made a debut into the banking scene, almost all financial institutions in North America as well as the entire Europe took a noticeably stance well armed with different regulatory mechanisms. Rather than a ‘wait and see’ approach adopted by the United States, EU member states took immediate steps, to regulate e-money as soon as the technology appeared (European Commission, 2002). As early as 1994, EMI had recommended that only bank-issue e-money be legalized (EMI 1994; DeGeest 2001). The immediate established target as insinuated above comprised of standardizing measures with a wide spectrum of actions that included access to the Internet, as well as rais ing consumer confidence in IT-supported learning networks embodied in new electronic payment systems. Against a backdrop of concerns from different financial quarters, EU Commission pursued perspective was that proliferation of e-money without regulations could inhibit the proper functioning of the money market and stifle competition as well as innovation in the payment sector. What followed was a draft of directives on the same (EU Commission, 1998). Action Plans set out to achieve the objectives of the EU included numerous legislative measures. Among these were the Directive 2000/28/EC of the European Parliament in conjunction with the EU Council Directive 2000/12/EC touching on the conduct of business of credit institutions forming the first batch of e-Money Directives (EMI Directive, 2000a; 2000b). The second batch of e-Money Directives was the Directive 2000/46/EC from the same intuitions touching on prudential supervision of electronic money institutions (Long and Casanova, 20 02; 2003; EMI Directive, 200

Conflicting Clients Interest; Case Analysis

Conflicting Clients Interest; Case Analysis Table of Contents What is Ethics? Moral Issue in the Case Possible Solutions to the Case Key considerations and Judgements Conclusion References What is Ethics? Professional ethics includes the personal, corporate and the organizational standards of the behaviour which is expected of the professionals. Professionals, who are working in esteemed professions, are well versed in exercising specialist knowledge. Professional ethics involves the governance of this knowledge when a service is provided to the public. Generally, professionals are good in making decisions, judgements and applying the skills to justify the decisions made by them later when there arises any discrepancy. Business ethics, also called corporate ethics is a form of professional ethics which examines the ethical principles (moral principles) and the problems that happens in a business environment. Today’s organization defines their approach towards professionalism through a set of discrete components. Some of them are mentioned below: Informally, a profession is a vocation that requires a high level of education and some amount of practical experience. They also take actions for the welfare of their clients. Professional ethics encompasses relationships with and also responsibilities towards the following set of stakeholders of a company: customers, clients, co-workers, and employees, others who are directly or indirectly involved in using or creating the goods and services of the company. Professionals in today’s context mainly include software engineers, consultants, doctors, layers, programmers, developers and the like. Some of the common guidelines that underscore all of them are mentioned below: A professional accountant in general has a moral responsibility to enhance and protect the business goals of his or her clients. The professional code of ethics as per the CCAB bodies does not in any way allow a professional accountant to hinder from fulfilling the duties. An accountant would always want to act in the best interest of his or her clients. There might lots of instances in due course of time which will test the ethicality and the moral obligation of an accountant. But caution must be exercised in that such ethical dilemmas are carefully analysed and due decision is taken which will protect the interest of the client as well the professionalism as an accountant. This is very important given the fast paced and money minded nature of today’s business world. There are many professional bodies which protects the interest of such professionals and acts in the interest of the profession (Gendron et al., 2006). Let us analyse the ethical dilemmas that arises in the case of â€Å"Case Study 3 Conflicting Client’s interests†. The case analysis is presented as mentioned in the framework ‘A Strategy for Understanding, Developing and Presenting Moral Arguments’ (Icaew.com., 2015). Moral Issue in the Case The case deals with a sole practitioner providing accountancy services for a client who is in to the business of selling hardware products for electrical services. Some of the services that the accountant provides are: preparing annual account statements, tax compliance and also currently the client has asked to provide due diligence for the purpose of purchase of another small hardware business. The accountant is also a continuity provider for another accountant who is also a sole practitioner, as he is not able to carry out the work because of medical reasons. One of the clients of the accountant who is ill is also planning to purchase the same small hardware business that the client of the accountant is intending to purchase. The new client is well known of the fact there is also another bidder for the business but is unaware of the fact the accountant who is involved is also performing due diligence for the competitor. Here comes the ethical dilemma in the case. The accountant wa nts to help the new client and provide value service on behalf of the accountant whom he is providing service to the client. At the same time, the accountant also realises the fact that he is supposed to maintain the confidentiality of information as per the agreement with his regular client (Icaew.com., 2015). The moral issue in the case mainly focuses on three core principles of professional ethics as follows: The accountant should be straight forward and honest. But at the same time, how can he ensure that he does not use the confidential information of one company when he is performing due diligence for the other. By doing so, he should ensure that he protects his reputation as an accountant and at the same time safeguard the reputation of his profession (Icaew.com., 2015). It is common for corporates today to have their code of conduct. On similar lines, it is also imperative for professional organizations to possess professional code of conduct. It provides statements pertaining to ethical values and also reminds workers that behaviour which is ethical is a critical part of the job. There are many organizations for professionals in their respective professions to register with them and maintain their code of conduct in their disciplines. For example, for computer professionals, the main professional organizations are ACM, IEEE computer society. These organizations jointly evolved the S oftware Engineering Code of Ethics and Professional Ethics. They underline the basic values like honesty and fairness (Lee, 1995). Possible Solutions to the Case Here in the case, it is very vital to understand that the accountant has responsibility for the practitioner on account of whom he is providing continuity services. He cannot let him down for his own good. It may be assumed that Company A may perform well out of the synergy that the company gets by acquiring as they are in the same line of business. However, this information is to be kept confidential by the accountant and not to be disclosed to company B. Doing so will violate the confidentiality clause which the accountant has signed with Company A. The accountant also has to comply with the professional code of ethics as an accountant and must act true to his profession because accounting being very critical information for a company (Icaew.com., 2015). The main parties affected in this case are that of the accountant himself, Company A and its promoters, Company B and its promoters, the target business which both A and B intend to acquire. The practitioner for whom the accountant is providing the continuity services will also be affected in this process. In an attempt to arrive at the solution to the case, none of the affected parties should be involved because; an attempt to involve any of the above parties in itself will breach the clause of confidentiality. Hence, the accountant on his own discretion should come up with the possible course of action. It may be considered that the practitioner on behalf of whom the accountant is acting as a continuity service provider may be taken in to account if the accountant feels the need for such a moral obligation (Icaew.com., 2015). The accountant should not disclose any kind of confidential information gained during the due diligence process to the directors of the company B. Also, the information should not be used which will give an undue advantage to Company B. The complication results from the fact the accountant has to work on behalf of the practitioner for whom he is providing the continuity services. The conflict can be avoided by declaring openly to the director of Company B. Even in this case, caution must be exercised in that what information to be disclosed and what not to be shared with the client. Also, the threat if any to confidentiality principle should be evaluated between the two clients. It is highly vulnerable to go for a decision which will give the company B that the accountant will do justice to both the companies and hence such a situation should be avoided under any circumstances. Hence, care should be taken such that which will ensure that the conflict of interest between both the comp anies A and B should be declared and stated explicitly (Icaew.com., 2015). Key considerations and Judgements It should be clearly mentioned that it would be impossible to act on behalf of the company B for carrying out the due diligence. There is always a moral responsibility towards the previous client and hence any violation arising out by servicing to the company B should be stated well in advance to the director of Company B so that he may exercise caution in the process. Such a disclosure should be well documented and maintained in case of any future discrepancies that may arise. There may occur a condition when the accountant may be forced to disclose the name of the other bidder. In such a situation, the name of the bidder should not be disclosed to either of the parties. This will only ensure that the threat of confidentiality is safeguarded. This is one of the last options to resort to as this situation to as such a situation arising is very difficult (Anderson-Gough et al., 2000). This is very important, the accountant is still in a moral obligation to provide services to the comp any B as the accountant is acting on behalf of the practitioner who is ill and unable to provide services to the company B. The practitioner can also be kept informed if it is deemed possible (Icaew.com., 2015). Under any circumstances, it is advised that detailed steps are well documented which will ensure that any future discrepancies are well protected and no breach of confidentiality arises in any situation. Hence the accountant is expected to clearly maintain the records of all the due diligence documents which he can refer to at later point of time in case of any complaints from any of the concerned or intended parties (Anderson-Gough et al., 2000). Conclusion From the above case, it can be seen that the issue of ethics is highly critical and severely impact the lives of people. Hence, professionals are expected to be highly ethical in their roles and understand the implications that arise of their immoral behaviour. It is also important that the organizations also encourage this ethical behaviour in their employees and promote this professionalism as a culture in their company. There are many organizations for professionals in their respective professions to register with them and maintain their code of conduct in their disciplines. Organizations should provide training programs to their employees on the severity of this aspect and also create awareness to the potential risks arising out of this (Lee, 1995). There are several other cases which highlight the different aspects of ethical behaviour. Professionals face the ethical dilemma in their day-to-day jobs and it is very important that ethics is never compromised. This will benefit the m personally, the organization for which they work and also the society at large. References Anderson-Gough, F., Grey, C., Robson, K. (2000). In the name of the client: The service ethic in two professional services firms.Human Relations,53(9), 1151-1174. Gendron, Y., Suddaby, R., Lam, H. (2006). An examination of the ethical commitment of professional accountants to auditor independence.Journal of Business Ethics,64(2), 169-193. Icaew.com. (2015).Practice case studies about resolving ethical problems | Ethics | Technical | ICAEW. Retrieved 29 January 2015, from http://www.icaew.com/en/technical/ethics/ethics-in-practice/practice-case-studies Lee, T. (1995). The professionalization of accountancy: a history of protecting the public interest in a self-interested way.Accounting, Auditing Accountability Journal,8(4), 48-69.

Hamlet :: essays research papers

Shakespeare’s characterization of Hamlet changes through the course of the play. It is most evident in an examination of his soliloquies. The progression of Hamlet is from an innocent person to a murderous madman. In Act II, Hamlet is blaming himself for many problems. He is angry with himself because he has done nothing with his plan to kill Claudius. It also bothers Hamlet he is not as emotional as the actor on the stage, who is portraying him. â€Å"O, what a rogue and peasant slave am I!/Is it not monstrous that this player here,/But in fiction, in a dream of passion,/Could force his soul so to his own conceit/That from her working all his visage wann’d,/Tears in his eyes, distraction in’s aspect,/A broken voice, and his whole function suiting. With forms to his conceit?† In this soliloquy, he is questioning how other people become emotional. He asks what Hecuba means to the mere actor on stage, who cried because of her. He wonders what he would do, had the actor had the same reasons to cry as Hamlet had. He says:   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å"What’s Hecuba to him, or he to Hecuba, /that he should weep for her?/What would he do,/Had he the motive and the cue for passion that I have? â€Å" He answers his own questions. He says that the actor would â€Å"drown the stage with tears† and â€Å"cleave the general ear with horrid speech.† He does not talk about his mother at all in this soliloquy. He is, however, still disgusted by what has just happened. He hates Claudius and talks about him more in this soliloquy. He says:   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å"I should have fatted all the region kites/With this slave’s offal: bloody, bawdy villain!/Remorseless, treacherous, lecherous, kindless villain!† Towards the end of the play, he comes up with yet another plan to find out for sure if Claudius indeed murdered his father. He stops assaulting himself and starts to talk more declaratively about his new plan. Even at the very start of Hamlet’s soliloquy in Act III, it is evident that he is in a more thoughtful mood.   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å"To be, or not to be: that is the question:/Whether ‘tis nobler in the mind to suffer/The slings and arrows of outrageous fortune,/Or to take arms against a sea of troubles,/And by opposing end them? â€Å" These are Hamlet’s well-known lines. He is not attacking himself in this soliloquy; rather he is contemplating an issue. He is talking about mankind as a whole, as opposed to himself personally. Hamlet :: essays research papers Shakespeare’s characterization of Hamlet changes through the course of the play. It is most evident in an examination of his soliloquies. The progression of Hamlet is from an innocent person to a murderous madman. In Act II, Hamlet is blaming himself for many problems. He is angry with himself because he has done nothing with his plan to kill Claudius. It also bothers Hamlet he is not as emotional as the actor on the stage, who is portraying him. â€Å"O, what a rogue and peasant slave am I!/Is it not monstrous that this player here,/But in fiction, in a dream of passion,/Could force his soul so to his own conceit/That from her working all his visage wann’d,/Tears in his eyes, distraction in’s aspect,/A broken voice, and his whole function suiting. With forms to his conceit?† In this soliloquy, he is questioning how other people become emotional. He asks what Hecuba means to the mere actor on stage, who cried because of her. He wonders what he would do, had the actor had the same reasons to cry as Hamlet had. He says:   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å"What’s Hecuba to him, or he to Hecuba, /that he should weep for her?/What would he do,/Had he the motive and the cue for passion that I have? â€Å" He answers his own questions. He says that the actor would â€Å"drown the stage with tears† and â€Å"cleave the general ear with horrid speech.† He does not talk about his mother at all in this soliloquy. He is, however, still disgusted by what has just happened. He hates Claudius and talks about him more in this soliloquy. He says:   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å"I should have fatted all the region kites/With this slave’s offal: bloody, bawdy villain!/Remorseless, treacherous, lecherous, kindless villain!† Towards the end of the play, he comes up with yet another plan to find out for sure if Claudius indeed murdered his father. He stops assaulting himself and starts to talk more declaratively about his new plan. Even at the very start of Hamlet’s soliloquy in Act III, it is evident that he is in a more thoughtful mood.   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å"To be, or not to be: that is the question:/Whether ‘tis nobler in the mind to suffer/The slings and arrows of outrageous fortune,/Or to take arms against a sea of troubles,/And by opposing end them? â€Å" These are Hamlet’s well-known lines. He is not attacking himself in this soliloquy; rather he is contemplating an issue. He is talking about mankind as a whole, as opposed to himself personally.

Free Essays - Understanding The Things They Carried :: Things They Carried Essays

The Things They Carried – An Analysis  Ã‚      The Vietnam War was the most technologically advanced war of its time. The combat was more horrific and terrifying in the Vietnam War. There was no front line and no clear way of identifying the enemy because civilians would attack the soldiers as well as the North Vietnamese army. It was an every-man-for-himself, guerrilla war. Because of advances in medicine, more soldiers were able to recover from wounds caused by shrapnel grenades, land mines, concussion grenades, and other weapons. A person could step on a mine and suffer only an amputation of a limb instead of dying. Tim O'Brien survives two gunshot wounds and an infection, which was almost gangrene. In wars past, if gunshot wounds did not kill a person, the infection almost certainly would. The soldiers in The Things They Carried had the task of fighting two Vietnam wars, an internal war and an external war. Externally, the men were fighting the North Vietnamese and the Viet Cong. Internally, the men were fighting maturity and adulthood. They were desperately trying to remain young through a war that forced them to grow up. Each soldier carried various "weapons" with which to fight the wars. For example, Dave Jensen carried a rabbit's foot, while Jimmy Cross carried a pebble from Martha found "where things came together but also separated." (O'Brien, 9). Lee Strunk carried a slingshot. Henry Dobbins, however, carried two weapons in addition to the regulation army weapons. He carried the nursery rhyme, "A tisket, a tasket, a green and yellow basket, I wrote a letter to my love and on the way I dropped it†¦" which he would sing while sewing stripes on his uniform. He also carried a pair of his girlfriends' pantyhose, which he would wrap around his neck for protection . "He liked putting his nose into the nylon and breathing in the scent of his girlfriend's body; he liked the memories this inspired; he sometimes slept with the stockings up against his face, the way an infant sleeps with a flannel blanket, secure and peaceful." (O'Brien, 129). These weapons allowed these men to dodge Bouncing Betties and gunfire, while enabling them to crawl through dark tunnels and watch friends die everyday. They were able to combat the North Vietnamese, the Viet Cong, leeches, mosquitoes, ringworm, dysentery, gangrene, and wounds from land mines and guns only to wake up the next morning and fight the same enemies day after day. Free Essays - Understanding The Things They Carried :: Things They Carried Essays The Things They Carried – An Analysis  Ã‚      The Vietnam War was the most technologically advanced war of its time. The combat was more horrific and terrifying in the Vietnam War. There was no front line and no clear way of identifying the enemy because civilians would attack the soldiers as well as the North Vietnamese army. It was an every-man-for-himself, guerrilla war. Because of advances in medicine, more soldiers were able to recover from wounds caused by shrapnel grenades, land mines, concussion grenades, and other weapons. A person could step on a mine and suffer only an amputation of a limb instead of dying. Tim O'Brien survives two gunshot wounds and an infection, which was almost gangrene. In wars past, if gunshot wounds did not kill a person, the infection almost certainly would. The soldiers in The Things They Carried had the task of fighting two Vietnam wars, an internal war and an external war. Externally, the men were fighting the North Vietnamese and the Viet Cong. Internally, the men were fighting maturity and adulthood. They were desperately trying to remain young through a war that forced them to grow up. Each soldier carried various "weapons" with which to fight the wars. For example, Dave Jensen carried a rabbit's foot, while Jimmy Cross carried a pebble from Martha found "where things came together but also separated." (O'Brien, 9). Lee Strunk carried a slingshot. Henry Dobbins, however, carried two weapons in addition to the regulation army weapons. He carried the nursery rhyme, "A tisket, a tasket, a green and yellow basket, I wrote a letter to my love and on the way I dropped it†¦" which he would sing while sewing stripes on his uniform. He also carried a pair of his girlfriends' pantyhose, which he would wrap around his neck for protection . "He liked putting his nose into the nylon and breathing in the scent of his girlfriend's body; he liked the memories this inspired; he sometimes slept with the stockings up against his face, the way an infant sleeps with a flannel blanket, secure and peaceful." (O'Brien, 129). These weapons allowed these men to dodge Bouncing Betties and gunfire, while enabling them to crawl through dark tunnels and watch friends die everyday. They were able to combat the North Vietnamese, the Viet Cong, leeches, mosquitoes, ringworm, dysentery, gangrene, and wounds from land mines and guns only to wake up the next morning and fight the same enemies day after day.

Moving: High School and Friends Essay

Nobody really likes to move. Atleast, I know I don’t. We were living in Brooklyn, New York. We moved into our house in Brooklyn when I was two years old. Life was going great. I had lots of good friends that I had been around my entire life. I had lived my whole life in that house, and I did not want to leave what I had always known. So here I am sitting on my front porch watching the orange, red, and yellow leaves make their way to the ground. Then I get a phone call from my dad saying were moving to Staten Island. I was in total shock, but I was feeling excited at the same time. The word spread like leaves in a storm. I didn’t want to think about moving. I just kept telling myself that it was never going to happen. I stood on my porch thinking about my best friends, starting at a new school, and packing. All the memories began to play in my head. I didn’t know if I could take this chance. It was going to be extremely hard to leave everything behind, and move to a new place. All my childhood, middle school, and ninth grade friends were going to be missed, but I knew I would eventually see them again or visit. I thought that somehow the day would never come when we would have to leave, but it came faster than I had hoped. I thought to myself that â€Å"moving is a great time to break old habits and begin new ones†. I had so much on my mind, and couldn’t wait to relax. However, I was trying my best to stay positive no matter how hard it might get because it will be all worth it. The next day we all loaded our things onto a moving van, and I quickly said goodbye to all my neighbors and friends. I found myself tearing as the van drove off. It was the next morning in my new beautiful house in Staten Island. All my furniture and belongings were brought in. As I was trying to relax my mother came up to me, and told me that she is taking me to register in a public school. That’s when my heartbeat was racing faster and faster. I was going from an all girls private school to a public school. I didn’t know how to feel at this point. The day finally came when I started sophomore year in Tottenville High School. I seen things differently, but I found myself loving this new experience. I made a few friends from each class, and did all the work I was assigned to do. After a long day in school, I came home to a delicious dish made by my mother. Everyone was anxious to know how the first day in public school was for me. I let all my friends and family know it was something different but I loved it. Now I can say I am finally relieved at this point. I realized it was one of the best things that have happened to me. I still miss my old friends, and I was scared of change. I had grown up in the same surroundings and with the same people. The only reason I didn’t want to move was because I had so many memories with such amazing people. Now that I look back on it, that change was for the best. Change can be a good thing, even if we think we hate it at the time. If we had not moved here, I would have missed out on all of the experience and opportunities that I have had, and all of the friends that I have made. No matter where life takes you, positivity is a key that will keep you going no matter how hard the situation may be. This experience only made me stronger, and taught me to be positive when it comes to who you are. However, here I stand better than ever proud of who I am, and most importantly blessed.

Chapter 8 Mishkin Notes

An Economic Analysis of Financial Structure Why do Financial Institutions Exist? (Why is Indirect Finance so Important? ) Chapter 8 Chapter Preview W e take a closer look at why financial institutions exist and how they promote economic efficiency. Topics include: †¢ A Few Basic Facts About Financial Structure †¢ Transaction Costs †¢ Asymmetric Information: Adverse Selection and Moral Hazard Chapter Preview (cont. ) †¢ The Lemons Problem: How Adverse Selection Influences Financial Structure †¢ How Moral Hazard Affects the Choice Between Debt and Equity Contracts †¢ How Moral Hazard Influences Financial Structure in Debt Markets 1Basic Facts About Financial Structure Throughout the World †¢ The chart on the next slide shows how non-financial business get external funding in the U. S. , Germany, Japan, and Canada. †¢ Notice that, although many aspects of these countries are quite different, the sources of financing are somewhat consistent, with t he U. S. being different in its focus on debt. Sources of External Finance Copyright  © 2007 Pearson Addison-Wesley. All rights reserved. 8-5 Eight Basic Facts of Financial Structure 1. Stocks are not the most important source of external financing for businesses [Direct Finance] 2. Issuing marketable debt and equity ecurities is not the primary way in which businesses finance their operations [Direct Finance] 2 Eight Basic Facts of Financial Structure 3. Indirect finance, which involves the activities of financial intermediaries, is m any times more important than direct finance, in which businesses raise funds directly from lenders in financial markets. 4. Financial intermediaries, particularly banks, are the most important source of external funds used to finance businesses. Eight Basic Facts of Financial Structure 5. The financial system is among the most heavily regulated sectors of economy. 6. Only large, well -established corporations ave easy access to securities markets t o finance their activities. Eight Basic Facts of Financial Structure 7. Collateral is a prevalent feature of debt contracts for both households and businesses. 8. Debt contracts are typically extremely complicated legal documents that place substantial restrictions on the behavior of the borrowers. 3 W hy is Indirect Finance so Important? †¢ Transactions Cost †¢ Information Cost Transaction Costs †¢ Financial intermediaries to reduce transaction costs (and make profits) through – †¢ Economies of scale †¢ Expertise †¢ Read the municipal bond article. Transaction Costs †¢ Transactions costs ? ? ? E. g. a $5,000 investment only allows you to purchase 100 shares @ $50 / share (equity) No diversification Bonds even worse—most have a $1,000 size 4 Transaction Costs †¢ Financial intermediaries make profits by reducing transactions costs – Take advantage of economies of scale (example: mutual funds) – Develop expertise to l ower transactions costs – provide investors with liquidity and diversification Information Costs – Asymmetric Information †¢ symmetric information—the case where all parties to a transaction or contract have the same information. †¢ In many situations, this is not the case. We refer to this as asymmetric information.Asymmetric Information: Adverse Selection and Moral Hazard †¢ We will focus on two specific forms of asymmetric information: ? Adverse selection ? Moral hazard 5 Asymmetric Information: Adverse Selection and Moral Hazard †¢ Adverse Selection 1. Occurs when one party in a transaction has better information than the other party 2. Before transaction occurs 3. Potential borrowers most likely to produce adverse outcome are ones most likely to seek loan The Lemons Problem: How Adverse Selection Influences Financial Structure †¢ If quality cannot be assessed, the buyer is willing to pay at m ost a price that reflects the average qu ality Sellers of good quality items will not want to sell at the price for average quality †¢ The buyer will decide not to buy at all because all that is left in the market is poor quality items †¢ This result, when bad quality pushes good quality from the m arket because of an information gap, is known as â€Å"adverse selection† †¢ This problem explains fact 2 and partially explains fact 1 Asymmetric Information: Adverse Selection and Moral Hazard †¢ Moral Hazard 1. Occurs when one party has an incentive to behave differently once an agreement is made between parties 2. After transaction occurs 3. Hazard that borrower has incentives to ngage in undesirable (immoral) activities making it more likely that won't pay loan back 6 Health Insurance †¢ Symmetric Information: Suppose, if you get sick, drugs cost $10,000/year †¢ Everyone has a 1/10 chance of getting sick †¢ Solution – Insurance will be offered at $1,000 per year Health Insura nce – Symmetric Information continued †¢ Suppose 10% of the population (2 out of 20) is sickly and has a 50%(1/2) chance of getting sick – independent. †¢ Other 90% (18 people) only has 1/18 chance of getting sick. †¢ This information in known to everyone. †¢ How do you price the insurance? Health Insurance – Symmetric Information ontinued †¢ Sickly types pay? †¢ Healthy types pay? 7 Health Insurance – Asymmetric Information Adverse Selection †¢ Same as previous example, but one’s type (sick or healthy) is private information. Suppose insurance company offers policy at $1,000 per year? Suppose insurance company offers policy at $1,000 per year? †¢ Sickly type happy to save $4,000. †¢ Healthy drop out and go without insurance. †¢ Adverse selection: Bad quality pushes good quality from the market because of an information gap. 8 How about charging less say $555. 56 to everyone? How about charging less say $555. 56 to everyone? Break even on the healthy type, but lose on sickly type. †¢ Only way for insurance company in this case to break even is to charge $5,000 ? Healthy will go without insurance. Adverse Selection and Financial Structure Lemons Problem in Securities Markets †¢ Suppose investors cannot distinguish between good and bad securities, willing to pay only the average of the good and bad securities’ values. †¢ Result: Good securities undervalued and firms won’t issue them; bad securities overvalued, so too many issued. 9 Lemons Problem in Securities Markets †¢ Investors won’t want to buy bad securities, so m arket won’t function well. ?Explains Facts 1 and 2 ? Also explains Fact 6: only large well established firms have access to securities m arkets †¢ Bad quality pushes good quality from the m arket because of an information gap. Tools to Help Solve Adverse Selection Problems †¢ Private Production and Sale of Information ? Free-rider problem interferes with this solution †¢ Government Regulation to Increase Information (explains Fact # 5) Tools to Help Solve Adverse Selection Problems †¢ Financial Intermediation ? Analogy to solution to lemons problem provided by used car dealers ? Avoid free-rider problem by making private loans (explains Fact # 3 and # 4) ?Also explains fact #6—large firms are more likely to use direct instead of indirect financing 10 Tools to Help Solve Adverse Selection Problems †¢ Collateral and Net Worth ? Explains Fact # 7 How Moral Hazard Affects the Choice Between Debt and Equity Contracts †¢ Called the Principal -Agent Problem ? Principal: less information (stockholder) ? Agent: more information (manager) †¢ Separation of ownership and control of the firm ? Managers pursue personal benefits and power rather than the profitability of the firm Tools to help solve the Principal-Agent Problem: †¢ Monitoring ? Expensive †¢ G overnment regulation to increase information Fact 5 †¢ Financial Intermediation ? Venture capital firms provides the equity and place there own people in management †¢ Debt Contracts ? Reduces the need to monitor as long as borrower is performing. Explains Fact 1, why debt is used more than equity 11 How Moral Hazard Influences Financial Structure in Debt Markets †¢ Even with the advantages just described, debt is still subject to moral hazard. ? Debt may create an incentive to take on very risky projects. How Moral Hazard Influences Financial Structure in Debt Markets †¢ Most debt contracts require the borrower to pay a fixed amount (interest) and keep any ash flow above this amount. †¢ For example, suppose a firm owes $100 in interest, but only has $90? It is essentially bankrupt. The firm â€Å"has nothing to lose† by looking for â€Å"risky† projects to raise the needed cash. Tools to Help Solve Moral Hazard in Debt Contracts Lenders need t o find ways ensure that borrower’s do not take on too much risk. ? A good legal contract ? Bonds and loans often carry restrictive covenants †¢ Restrict how funds are used Require minimum net worth, collateral, bank balance, credit rating. †¢ Financial Intermediaries have special advantages in monitoring[Facts 3 and 4] ? 12 STOP HERE!! 13

Use Avogadros Number to Convert Molecules to Grams

Avogadros number is the number of items in one mole. The number is experimentally determined based on measuring the number of atoms in precisely 12 grams of the carbon-12 isotope, giving a value of approximately  6.022 x 1023. You can use Avogadros number in conjunction with atomic mass to convert a number of atoms or molecules into the number of grams. For molecules, you add together the atomic masses of all the atoms in the compound to get the number of grams per mole. Then you use Avogadros number to set up a relationship between the number of molecules and mass. Heres an example problem that shows the steps: Avogadros Number Example Problem Question: Calculate the mass in grams of 2.5 x 109 H2O molecules. Solution: Step 1 - Determine the mass of 1 mole of H2O To obtain the mass of 1 mole of water, look up the atomic masses for hydrogen and oxygen from the Periodic Table. There are two hydrogen atoms and one oxygen for every H2O molecule, so the mass of H2O is: mass of H2O 2 (mass of H) mass of Omass of H2O 2 ( 1.01 g ) 16.00 gmass of H2O 2.02 g 16.00 gmass of H2O 18.02 g Step 2 - Determine the mass of 2.5 x 109 H2O molecules One mole of H2O is 6.022 x 1023 molecules of H2O (Avogadros number). This relation is then used to convert a number of H2O molecules to grams by the ratio: mass of X molecules of H2O / X molecules mass of a mole of H2O molecules / 6.022 x 1023 molecules Solve for the mass of X molecules of H2O mass of X molecules of H2O ( mass of a mole H2O  · X molecules of H2O ) / 6.022 x 1023 H2O molecules mass of 2.5 x 109 molecules of H2O ( 18.02 g  · 2.5 x 109) / 6.022 x 1023 H2O moleculesmass of 2.5 x 109 molecules of H2O ( 4.5 x 1010) / 6.022 x 1023 H2O moleculesmass of 2.5 x 109 molecules of H2O 7.5 x 10-14 g. Answer The mass of 2.5 x 109 molecules of H2O is 7.5 x 10-14 g. Helpful Tips for Converting Molecules to Grams The key to success for this type of problem is paying attention to the subscripts in a chemical formula. For example, in this problem, there were two atoms of hydrogen and one atom of oxygen. If youre getting the incorrect answer for this type of problem, the usual cause is having the number of atoms wrong. Another common problem is not watching your significant figures, which can throw off your answer in the last decimal place.

An Introduction to French Register

Register refers to the level of formality of a given word, expression, grammatical structure, gesture, or means of pronunciation. In French, there are six registers, listed here from most to least formal. 1. Literary/Refined - Littà ©raire/Soutenu Literary French is an extremely formal and elegant language which is nearly always written. When spoken, it tends to be for effect and sounds snobbish or old-fashioned. Poetic French is a subcategory. 2. Formal - Formel Formal French is polite language, both written and spoken. It is used when the speaker doesnt know, wishes to show respect for, or wants to demonstrate distance/coldness toward another person. 3. Normal - Normal The normal register is the largest and most common category of language, what you might call everyday language. Normal French has no particular distinction (neither formal nor informal) and is the language used by and between just about everyone. It includes various subcategories of specialized and technical language, such as administrative, judicial, and scientific jargons. 4. Informal - Familier Informal French expresses closeness and is typically used between friends and family. Baby talk and most apocopes are informal. Although informal French is grammatically correct, it is at the bottom end of what the French call bon usage (correct usage). 5. Familiar - Populaire Familiar French is used between friends and expresses closeness verging on disrespect. Verlan and largonji are subcategories, though their individual words can range from a normal register to slang. 6. Slang (Vulgar)  - Argot (Vulgaire) Slang is vulgar, offensive, and usually insulting language, often related to sex, drugs, or violence. It may be used between friends or enemies. The familiar and vulgar registers are considered non-standard French.