Work Of Ludwig Mies Van Der Rohe Architecture Essay

Ludwig Mies van der Rohe ( 1886-1969 ) , a German-born designer is widely regarded as one of the pioneering Masterss of Modern architecture, responsible for set uping and popularising a new architectural manner in the U.S. Mies left Germany in 1938 to head the Armour Institute, which subsequently became the Illinois Institute of Technology. His design of the Main Campus and of other of import edifices, such as the flat towers at 860 and 880 North Lake Shore Drive in Chicago and the Seagram Building in New York, helped put a new aesthetic criterion for modern architecture. ( Blake, 1960 ) .Mies created an animating twentieth century architectural manner, stated with high lucidity and simpleness. He carried the ideals of rationalism and minimal art to new degrees. His work in US made usage of modern stuffs such as steel and glass to specify interior infinites. ( Kostof, 1995 ) . He called his edifices â€Å" skin and castanetss † architecture. He wanted to accomplish an architec ture with a minimum model of structural order balanced against the implied freedom of free fluxing infinite. Mies ‘ Buildings in US radiate the assurance, reason and elegance of their Godhead, free of ornamentation surplus. ( Blake, 1960 ) His doctrine that â€Å" less is more † became a guideline for designers in the twentieth century. ( SearchQuotes ) With the constitution of a new campus for the Illinois Institute of Technology ( IIT ) , Mies van der Rohe had the chance to be after the campus every bit good as several other of edifice. The Minerals and Metallic elements edifice ( 1942- 1943 ) was Mies ‘ really first building on the campus. This edifice marked the first measure toward the realisation of Mies ‘ maestro program for the IIT campus which was one of his most celebrated plants in America. This undertaking is â€Å" non something made by the God of Crown hall † stated by Kevin Harrington but instead Mies urges us to understand the edifice as portion of the development of his ain architectural language.This is where we foremost see his passage from signifiers that has been â€Å" beloved to his bosom † , seen in his work in Europe, to new signifiers that were â€Å" possible, necessary and important † . It is in the Minerals and Metallic elements edifice we foremost see Mies usage of invol ute -steel- I beam as portion of his structural grammar. Mies ‘ unconventional usage of steel was a map to the interior of the edifice, and it inaugurated a technique he used once more in his undertakings in America. Giedion,1982 ) . Crown Hall ( 1950-1956 ) . This edifice situated on the IIT campus is a modern chef-d'oeuvre. The National Historic landmark described Crown hall as â€Å" A consecutive forward look of building and materiality, which allows the construction to transcent into art † . Crown hall is an tremendous room, 120 ten 220 ft. in program, 18 ft. high without interior columns, used for the architectural school. The edifice is raised several pess above the land to let visible radiation for the below grade school of Design. The most interesting point is the structural solution of open structural beams above the roof, doing dear the method of accomplishing the clear-span inside. The immense graduated table of the edifice and the column-free unfastened program of the chief floor of Crown hall demonstrates Mies ‘ advanced construct of making cosmopolitan infinite. Mies van der Rohe ended his relationship with the school in 1958. ( Blake,1960 ) Exterior, entry facade Open program of Crown hall, making cosmopolitan infinite. Switching off from Mies work on IIT campus, another of his well celebrated work is Farnsworth House ( 1946-1951 ) .A little weekend retreat outside Chicago. The ‘Farnsworth house ‘ is one of the most radically minimalist houses of all time designed. It ‘s interior, a individual room, subdivided by dividers and wholly enclosed in glass. â€Å" The mutism speaks to us through the gentle and contlingent scene of the house on its site † Hartoonian ( 1984, pp.48 ) .The edifice is held together by merely eight steel columns. Mies van de Rohe was able to recognize spacial and structural thoughts. For illustration the I beams are both structural and expressive. â€Å" The usage of glass negates the dialectics of enclosure and openness † Hartoonian ( 1984, pp.48 ) . Farnsworth House which may look as an iconic glass box to be viewed from afar is instead a infinite through which life unfolds both independently and interdependently with nature. ( Blake, 1960 ) . Sketch of Mies Farnsworth ‘s House. Floor program of Farnsworth House. The Seagram Building on Park Avenue was Mie ‘s first effort at tall office edifice construction.Mies creates a arresting memorial to the International Styles religion in simpleness and lucidity. The 38-story tower rapidly began the state ‘s most influential and copied office edifice, an instant classic. The edifice ‘s external faces are given their character by the quality of the stuffs used – the tinted glass and the bronzy ‘I-beams ‘ applied all the manner up the edifice. In the image below you can see the edifice is pulled back from street line to let the edifice to besiege the reverse commissariats of the metropolis codification â€Å" every bit good as make its ain external respiration infinite † ( Kostof,1995 ) The Seagram Building is the first bronze-coloured skyscraper. The metal bronze tegument that is seen in the frontage is non-structural but is used to show the thought of the structural frame that is underneath. Extra perpendicu lar elements were besides welded to the window panels, non merely to stiffen the tegument for installing and air current burden, but to aesthetically farther heighten the perpendicular articulation of the edifice. ( Blake,1960 ) . Exterior position from the northwest Structural program of one corner, demoing the chief. wharf and projecting I- beams. 860-880 Lake Shore Drive Apartments in Chicago is another of Mies ‘ high rise edifice where he implied the same manner of modern architecture carried in his undertakings in the US. The 26-story towers surrounding Lake Michigan give a beautiful waterfront position. The ground for this creative activity involved his construct that architecture should be independent of the site. The edifices are renowned for their structural lucidity and composing on the site. The same common stuffs are used in this undertaking: steel, aluminum and glass. The most impressive characteristic of the edifice is the tegument and bone look of the steel and glass towers.The steel I-beams effortlessly define the construction while the glass suspends and encloses infinite. It is obvious that he relies on lucidity of signifier achieved through elegant proportions. Prior to this point, construction was hidden within architecture, but here we see a change.Mies merged the two by exposing the steel, recognizing his ain words: â€Å" When engineering reaches it true fulfillment, it transcends into architecture † This is non merely seen in this undertaking but many of his other undertakings in the US. ( Blase,1999 ) Two flat edifices at cross axis towards one another on the triangular site presenting position of environing country. Another of Mies really dramatic undertakings is Federal Center.Here one time once more we see the minimalist glass and steel design which is really simple yet really dramatic. Harmonizing to the AIA usher of Chicago: â€Å" Mies ‘s sturdy devotedness to principle, together with his vaunted sensitiveness to proportion and structural item, and, in this instance, the organisational graduated table, combine to give the composite a monumental urban presence. Both towers are curtain-wall constructions, feature of the high-rise design of Mies ‘s American period. Their steel frames, suppressed behind unvarying walls of glass and steel, are marked off by projecting steel I-beam mullions. The Post Office, a unitary infinite with a cardinal nucleus, is likewise typical of Mies ‘s reductivist construct of the single-storey marquee. Externally thin yet powerful structural columns of steel brace tremendous window glasss of tinted glass. † The place at the federal centre is cold, uninviting which minimum seating and with this the one narrative station office, everything feels really useful. But this does non intend Mies lacked an oculus for detail.His oculus for inside informations is seen through all glass design, which was really calculated every bit good as the granite tiles of place to the granite walls in the anteroom. Black I-beams expression really industrial running up the side of the edifice and are wholly cosmetic. The Alexander Caldwell ‘s flamingo construction in the centre is marked contrast to the field edifice behind it. ( Blaser,2004 ) The place of the Mies new wave der rohe designed Federal centre in Chicago, The Klucynski builidng is to the left, one narrative station office to the right and Alezander Caldwells flamingo construction in the centre. Mies van der Rohe without a uncertainty created an influential twentieth century architectural manner in the US, stated with high lucidity and simplicity.He helped specify modern architecture in the US by stressing unfastened infinite, uncovering the industrial stuffs used and reinventing the signifier of edifices. He carried the ideals of rationalism and minimal art to new degrees. This is clearly apparent in Minerals and Metallic elements, Crown hall, Farnsworth house, Seagram edifice and the Federal Center.His usage of modern stuffs such as glass and steel can besides be seen in these edifices. Mie ‘s ‘ Buildings in the US radiate the assurance, reason and elegance of their Godhead, free of extra ornamentation. He follows his doctrine that â€Å" less is more † and this attack of Mies is pertinent as of all time in his undertakings. ( Blake,1960 ) .

A Synopsis of the Movie Twilight: New Moon

Twilight: New Moon *Mise*-en-scene Title: Twilight: New Moon Year: 2009 Director: Chris Weitz Writers: Stephanie Meyer (novelist) and Melissa Rosenburg (screenplay) Actors/Actresses: Robert Pattinson-Edward Cullen, Kristen Stewart-Bella Swan, Taylor Lautner-Jacob Black, Ashley Greene-Alice Cullen Synopsis This movie is the sequel to Twilight, which was a major hit in 2008. In the first movie Bella Swan falls in love with a vampire. The vampire, Edward Cullen, is very protective of Bella and tries to keep her safe. In New Moon Edward feels that the only way to protect Bella is to break her heart so she won’t follow him. However after Edward leaves Bella comes face to face with danger and the only protection she has is her long-time friend Jacob who she realizes is a werewolf. By the end of the movie Bella is torn between her love for the werewolf and the vampire. Analysis My focus is on scene nine where Bella is confronted by the Cullen’s vampire rival, LaRon. LaRon’s intent is to kill Bella now that Edward has left her defenseless. The scene is set in the meadow where Edward first appeared to Bella in his true form. When the sunlight shined on Edward his skin glistened like diamonds. At that time the meadow was beautiful, the grass was green, the flowers were in vibrant full bloom, and the sunlight shined down so bright. Now that Edward has left the meadow is dead, the grass has turned brown, all the flowers are gone, and the lighting is low and gloomy. I like to think of this as a metaphor to Bella’s spirit how it was alive and vibrant with Edward’s presence and is now dull and a part of her has died. Also you see her in a dangerous position being face to face with LaRon without Edward being there to protect her like before. Then Jacob appears in the scene in his werewolf form to protect Bella. However at this moment she does not realize it is Jacob. Here we are seeing Jacob in his true form appear to Bella just as Edward did for the first time and in the same location. It almost seems as though Jacob has taken on Edward’s role in Bella’s world. There is one shot where the rest of the wolf pack proceeds on to kill LaRon and Jacob stops and turns his focus to Bella for one moment and then moves on. At this moment Bella is mere feet away from this massive wolf but she stands there and looks back at the creature. The up-close shot of the wolf’s eye as he is gazing at Bella shows her reflection and you can feel his harmless nature. This is where it all came together for me and I thought Bella had pieced together the clues but I wasn’t until two scenes later that she realized it had been Jacob that rescued her. In one still frame the full shot conveyed danger, protection, love, and loss. This was a very well-organized scene and I think it worked well in the movie and added drama and thrill for the audience.

Effective Advertisement English Paper Essay Example | Topics and Well Written Essays - 1250 words

Effective Advertisement English Paper - Essay Example However, not every good or service is able to reach its target audience and after all be sold out. Nowadays it is not enough just to get a right idea and implement it in production process. For making your plan work there has to be a promotion, main principles of which will manage to bring your product to customer’s awareness, position it on the market and stimulate sales. Only with a help of precisely elaborated market strategy new product is able to achieve its consumers. Carefully planned advertising campaign may ensure more than fifty percent of success. Otherwise, even a first-class product with high quality and low price can be left unnoticeable by customers. That is why today companies try to advertise their goods and services as frequently and intensively as possible, influencing people’s awareness and behavior. It is fair to mention that advertising has great power, because a lot of things depend on it. Sometimes it happens that according to bad ad, product may be left unaccepted by customers. That is why it is very essential to take into careful consideration every word of slogan, every possible image, color, font, sound or character during advertising campaign. As experience shows, not all advertisements are equally effective and successful. Sometimes producing and advertising the same goods, companies achieve different outcomes. This occurs because various companies choose various marketing strategies. Some of them manage to create the right ad, which is appropriate for customers and able to attract their attention, some do not. Creation of ads requires deep analysis of advertising product and its potential consumers. Sometimes the wrong color of written slogan may make ad unprintable and unattractive, pushing the whole idea to the failure. In this respect, it is urgent to take into account all details of ad’s design, implementing main principles of marketing. For having a clear presentation about different types of ads and also for understanding how exactly flaws of advertising can spoil attitude to the product, several ads of different companies have been chosen for further research. All companies are famous retailers of furniture. The potential audience is multi-faced, mostly family people and businessmen, who can be interested in the furniture for home and office. Advertising analysis Despite advertising’s positive return, many sociologists continue to criticize it, stating that advertisements compel consumers to buy products that they do not need. In the reality advertising is everywhere and it is quit hard to avoid it. We can see it in magazines, newspapers, brochures, booklets, billboards, placards, posters. It is broadcasted on different TV channels and radio waves. It is fair to admit that advertising is so popular due to its effectiveness. Belch stated that good ad requires serious elaboration due to significant financial losses, hence â€Å"the cost of producing a TV commercial can excee d $1 million† (237). Medium expenditure of USA for advertising in newspapers equals to 20 billions of dollars and in magazines 11.7 billions of dollars. That sources of advertising yield only broadcasting television, according to the research of Percy (87). There are several purposes of advertising. First of all, with its help companies make consumers be aware of the new products or possible novelties in design or functions of the

Business Law Essay Example | Topics and Well Written Essays - 250 words - 32

Business Law - Essay Example This, therefore, disqualifies any agreements or promises made through the emails. This statement renders all the other negotiations and agreements made in other communication platforms null and void. Going back to the basic definition of a contract; precise terms are part of a contract (Edwin 146). In the second scenario, the contract between Standard Storage Company and Tri-Country Investment Corporation includes a provision that covers the sale of the furniture as part of the transaction. This provision states that the furniture is included. Therefore, it can be argued that the cost of the furniture is included in the total cost of the warehouse. By this virtue, furniture is part of the sale. The fact that the contract failed to specify the furniture’s price clearly indicates that the furniture’s price is included in the total sale of the warehouse. If the two companies are unable to resolve their dispute, the court through an independent property valuer can assist them to come up with a

Women in the work place Research Paper Example | Topics and Well Written Essays - 2000 words

Women in the work place - Research Paper Example The unjust power dynamics between men and women has evidently and significantly affected women in our society in general. This is for the reason that the situation of women is at a disadvantageous point as compared to that of men. Women are considered as second class citizens who are regarded as powerless and in need to depend on men. The normative standard expects men to dominate over women. In addition to that, such system of patriarchy is supported and intensified by our society through the unceasing reinforcement of the male domination via a wide array of institutions such as religion, government, family, education, and often than not, the institution of workplace as well. In the institution of workplace in particular, women’s participation in the labor force has been massive in every region of the world. Though the condition of women has considerably improved nowadays, it is the case that discrimination against them in the workplace still exists. Based on the report by th e International Labour Organization (ILO), the old ways of discrimination still exist together with the new ones (39). As a matter of fact, the gender – based discrimination does manifest itself in so many ways and in terms of employment, it occurs in all the stages of the process (ILO 39). That is to say, men are more preferred than women (ILO 39). It is also the case that women are given more workload in both paid and unpaid labor than men (ILO 39). Despite the more workload given to women, Kelan suggested that there exists a payment gap. As suggested by the U.S. Bureau of Labor Statistics, women are financially discriminated since they work 41 to 44 hours per week but earn just 84.6 per cent of what men are paid for these hours while those women who work more than 60 hours per week receive just 78.3 per cent of that of men (Kelan). This underpayment is only one of the discriminations of different sorts that women do experience. Even though women have the potentials that en able them to receive higher level of status in various companies, gender stereotyping affects how women think about themselves (Snowdon). Apart from that, the women’s role in economic growth is crucial but the thing is, still women face so many obstacles to get hired and be promoted in the workplace (â€Å"The importance of sex†). Given this background, the focus of this paper is to primarily critically analyze the position of women in the workplace. Specifically, it aims at identifying the forms of discrimination that women do suffer in employment. Also, it targets to know the barriers of why women do have such unequal top management positions with that of men in the labor force. Basically, this paper argues that women, although have what it takes to reach the top – management positions that men play in the workplace, still are at a disadvantageous position of being discriminated due to the unfair consideration because of one’s gender. Women in the Workp lace Women’s participation in the labor force has significantly improved as compared before. As a matter of fact, their participation in the workplace is massive which can be seen in every region in the world. In fact, as of today, there are great numbers of women can be found participating in public service since women are encouraged to join in the labor market (ILO iii). According to Kaylan, the rate and extent of advancement that women have created in the American work force are not realized by many of us (14). There are more women than men participating in the labor force of professional occupations which includes professional, financial, management and business professions. As a matter of fact, women have already reached the top of the corporate ladder. In the Fortune 500 companies,

Sexual Assault on College Campuses Essay Example | Topics and Well Written Essays - 750 words

Sexual Assault on College Campuses - Essay Example This case forms part of the controversy that lies behind such cases where individuals mainly female students are sexually assaulted but they never live to get justice either because the school administration or the disciplinary panel frustrates their efforts and/or the police officers who are supposed to follow on the same become a source of ridicule to the already frustrated individuals. This essay will, therefore, look at the issue of sexual assault in colleges and the role of the administration in handling the social vice. In addressing the problem, the campuses take the first responsibility in curbing the vice. Advocates for civil liberty hold that the campuses need to put in place stringent measures that will stop individuals from engaging in the act. Seeking for justice is a two-way traffic issue where as much as the school may want to establish the facts and make the culprits carry their responsibility, it is also possible that some students may try to implicate others for offences they never committed. It has already been established that there are students who ended up being expelled for offences they never committed. Some of the measures put by the campuses to address the issue are not practically such as advocating for an affirmative consent between partners at any stage of sex. Most campuses are also not equipped to handle such cases. In a situation where a lady has been raped, the immediate action will involve a visit to a medical practitioner for vaginal swabs to be taken that will probably aid in a forensic investigation. If the initial personnel that the case is reported to fails in adjudicating for such an action, it is likely that the evidence will be spoilt and following the case will be futile. The students need to be informed on the process of reporting such an occurrence. Most students are not only ignorant of their rights but also ignorant of the measures that they should take if they fell victim in such a case.  Ã‚  

Reflection on Eco-Catastrophe Essay Example | Topics and Well Written Essays - 500 words

Reflection on Eco-Catastrophe - Essay Example Reality is of course that forty years later the world is still here, ecological, population and hunger problems still exist but there is more awareness and more measures are being taken to combat the issues in all areas of environmental and global health care. The article is one that requires multiple readings in order to fully determine and appreciate the cynicism and at times wit of the writer, for although fatalistic in his beliefs he shows a degree of humor, albeit satirical in his denotation of the large powers of the western world. It is his depictions of catastrophic global events however, that cause readers to stop, take stock and reflect on what he purports because, although far in exaggeration, there are some elements of his prophecies that are apparent, real, and need of intervention if global health is to be improved. Although there is not the mass starvation predicted by Ehrlich there are many people in the world who are starving and in need of basic health care, particularly in developing countries, but most of this is caused by war and poverty rather than lack of food. Although there has been a drive, whether for corporate or government gain, to increase crop yields and other food by use of biotechnology the debate on the risks and benefits of such food is stifling its purpose of feeding the hungry and giving help where it is most needed. Although the oceans are not depleted, the air is not killing millions of people, and population control is by choice, and being undertaken, in most situations, in a humanitarian manner, not as envisioned by Ehrlich, the problems do exist. Ecological factors that are negative are a threat to human health and therefore need to be controlled; conditions that promote invasive bacteria, viruses or diseases, for example, need to be monitored; air pollution can lead to diseases of the respiratory system or cancer; water quality in terms of contaminants, carriage, and treatment and  industrial outflows, all require environmental management that can assist in maintaining and reinstating health.  

The Real Future of Recycling Essay Example | Topics and Well Written Essays - 1000 words

The Real Future of Recycling - Essay Example recycling it is meant that the products which are being used once and thrown away are being manufactured in such a way that their raw materials can be used again to form the new products of the same generation. (Mitchell 2007) The logo ‘Reduce, reuse and recycle’ has been derived to lower down the waste products in the world and reuse these waste products to produce new efficient ones. Specific materials are present in this world which can be recycled which are glass, plastics, cans, metals, papers etc. Recycling has grown to be a global issue because of the alarming condition of the resources in this world and it has almost become obligatory on every household and businesses in the developed countries. (Yeoman & McKee 2000). This paper would revolve around the issue of Recycling and would provide both the viewpoints regarding the success or failure of Recycling in this world. The logo ‘Reduce Reuse and Recycle’ is specifically used to depict the process of recycling in this world. In developed countries it is seen that many of the households and businesses have taken special measures which help in recycling products which are being used. Authorities in these developed countries are taking measures which would ensure that recycling rate is increasing. As quoted by Sandy Irvine â€Å"the European Commission is making moves in the same direction.† (1998) Businesses such as shopping markets and business centers have special sites for the dumping of articles which can be recycled. Similarly the citizens in the developed countries are obliged to dump all the products that are used in recycle bins so that they can be used again. Government is intervening in recycling programs by investing in roadside recycling bins and other plants which would help to recycle waste products. The waste products of households are usually taken by waste collect ion vehicles which then take the waste materials to specific plants (Mitchell 2007). As the waste products are a mixture of

Ethics Assignment Example | Topics and Well Written Essays - 750 words

Ethics - Assignment Example Inevitably, these factors embrace life-sustaining therapies. (Helm, 1984: 755) The same is applied in the cases under study: Assignment 1: The contemporary world has witnessed the attack of new and fatal diseases, which has forced the medical scientists to devise medicines in order to combat with such diseases. These include HPV, HIV, hepatitis and others. HPV (human papillomavirus) is, like HIV, a contagious disease and is common all over the world. However, its treatment is extremely expensive. Since the infection spreads due to extra marital sexual relationships and sexual intercourse, the deontological ethical code condemns it and lays stress upon the observing of moral values for the prevention of sexual diseases. Hence, it views high price of the remedy and treatment for sexually contagious diseases. It is therefore it does not look for the decrease in the price of such medicines. However, utilitarian school of thought vehemently supports such acts and behavior that provide gra tification to individuals provided it does not harm or hurt the others. Hence, utilitarians are of the opinion that the remedy for sexually transmitted diseases must also be economical and easily available. Hence, there are two schools of thoughts that lay influence upon the promotion of government interventions in social, cultural and health conditions. These are Evangelicals (or deontological) and the Utilitarians. Utilitarianism is sociological school of thought where works and ideas of renowned political scientist and lawyer Jeremy Bentham maintain lion’s share. The idea looks for the concept of the greatest happiness of the greatest number of people. Renowned English theorist J.S. Mill also serves as the arch-supporter of utilitarian school of thought and is of the opinion that every man’s act must provide maximum pleasures for the others. And if an act is not damaging the interests of others, the society should not create impediments on the way to seeking pleasur e. He stands for the qualitative separation of happiness and considers moral and intellectual pleasure superior to physical pleasures. â€Å"The greatest happiness principle has had a large share in forming the moral doctrines even of those who even more scornfully reject its authority.† (Mill, 1863:8) Hence, utilitarian approach looks for reducing the cost for the treatment of HPV, to make it affordable as the medicines for HIV treatment are economical and affordable. Since society must be healthy and fit, it should be allowed to get into pleasure seeking activities provided they are not harming the other members of society. On the contrary, deontological school of thought is of the view that the infectious diseases including HPV, HIV and others are transmitting the fatal disease to others; they are putting the life of others in grave jeopardy. Hence, if people are aware of the high price of the medicine, they would start avoiding the sexual activity without using contracept ion including condoms, loops and others. Assignment 2: Since Howard has arrived at the clinic for treatment, he must be provided with the adequate medical advice. Consequently, the nurse should certainly

Should the UK remain in the E.U Essay Example | Topics and Well Written Essays - 2000 words

Should the UK remain in the E.U - Essay Example The UK joined European Union in 1973, and has remained skeptical of the common currency that has now threatened the competitiveness of EU economy due to the high sovereign debts of the member states (Pilkington, 2001). UK has sought to exert more influence within the EU with not avail and citizens have mixed reactions of whether the UK should leave the EU or continue with its memberships even after British Prime Minister rejected the fiscal compact designed to save the future of EU (Pilkington, 2001). On the other hand, those in favor for continued membership in EU assert that countries like Norway and Switzerland still abide by the EU rules without any influence on their formation. David Cameron is of the opinion that UK has participated in EU trade rules formation and thus leaving the EU will allow other countries to dictate the trade rules on UK without capacity to participate in writing the rules. Thesis statement: the costs of UK’s membership in EU far outweighs the benef its and it is time to leave the EU. Those in favor of UK leaving the EU assert that 90 percent of UK trade does not depend on EU yet the country is bound by EU rules on trade. In this case, UK depends on small and medium enterprises for its job creation and economic growth and this sector should be freed from EU regulations (Newman, Sather & Woolgar, 2013). Bilateral trade agreements with emerging economies such as India, Brazil and China is possible through the World Trade Organisation and thus UK will be capable of enjoying cheaper imports due to favorable and low tariffs associated with the bilateral trade arrangements especially in the food sector (Pilkington, 2001). The current eurozone crisis are expected to continue for the next decade and European Central Bank will be called upon to bail out some of the member states from the sovereign debt crisis. The UK is excluded from the euro meaning that it is less vulnerable

Porter Five Analysis of the European Airline Industry Essay Example for Free

Porter Five Analysis of the European Airline Industry Essay While the business model existed for some time (first such in 1973 US), the appearance of these in the European market needed the liberalization brought forth by the EU, implementing the „Freedoms of the air† in three stages. In 1997 the first LCC (Low Cost Carrier), the Ryanair began its operation, and in a few years a few more followed, which gave the national and network airlines a new problem to the existing economic problem, shrinking market and others such as 9/11. By today the changes in the past two decades have shifted and diversified the industry, which was once a mature and to some level declining in structure. The new regulations, companies, investors and consumers have brought new life, the industry once again mature with fragmented characteristics. The ideal tool for the assessment of the airlines industry is Michael Porter’s five force model. It aims to find and demonstrate the forces in the microenvironment which influence the industry, internal and external as well. Threat of new entrants (barriers to entry) †¢High capital investment ? †¢Capital intensive ? †¢Airport slot availability ? †¢Predatory pricing ? †¢Brand loyalty/frequent flyer ? †¢Economies of scale ? Limited number of routes ^ The threat of new entrants, due to the barriers mostly set by the nature of the industry and by the existing companies, are very low. Yet sometimes when the possibility arises, new companies start: in the past few years many national companies went bankrupt leaving a market to take by the existing companies or new upstarts. Bargaining power of suppliers †¢Ai rcraft manufacturers †¢Relatively low number of suppliers ^ †¢Suppliers are concentrated ^ †¢Airlines are valued customers ? †¢Airports †¢Slot availability ^ †¢Alternatives to the primary airports ? The bargaining power of suppliers is mostly two-legged, and both have a medium threat. For both parties it is best to find a mutually working solution on a long term, because it is a industry with relatively small number of players loosing even one can have an impact on both sides. Threat of substitutes †¢Alternative transport (bus, car, train) ^ †¢Videoconferencing ^ †¢Global environmental awareness ^ The threat of substitutes includes a broad variety for the different needs. All-in-all it still only gives a medium threat, since the quick transport to a distance has no alternative. Bargaining power of customers †¢Price ? †¢Internet/social media ^ †¢Customer orientation ? †¢Choice ^ With the first LCCs the customers had no bargaining power: if you choose to go with this low price, accept the services as it is. However, nowadays with more alternatives and the ever-reaching internet and social media a bad customer satisfaction can be a disaster. This can however be mitigated with customer orientation, but still customer had the choice, it is a medium high level. Rivalry within the industry †¢Between LCC and national/network airlines ^ †¢Between LCCs ^ The rivalry within the industry is high due to the high number of big and medium sized companies. The airlines industry is highly competitive, with very high barriers and medium to high threats within. While there is a relatively low threat from a new market entree, the existing international competition is fighting over all the resources: more and better airports possibly with mutually excluding contracts, picking up the customers fed up with their previous carrier or starting a price war on a selected destination, binding the newly aquired flyers with brand loyalty programmes. Unless there is an opportunity, it is not an attractive industry to enter due to the high number of barriers. However, once established a foot, it is a very interesting and very intensive industry with good possibilities. The major LCCs depending on how low cost they are making good profit and there is still room for growth. The key factors for success should include: †¢Efficiently utilizing the resources (financial, time, human resources) †¢Utilizing a network of business partners (complementary) †¢Timely expansion (trying new destinations, increasing frequency) †¢Customer orientation (with following trends eg. ocial media) These above should be observed by both LCCs and traditional airlines. The industry standards are given, those companies will become successful which can effectively utilize them.

The Neurobiological Basis of Major Depressive Disorder (MDD)

The Neurobiological Basis of Major Depressive Disorder (MDD) Family name:  Batty Personal Name:  Therese Major depressive disorder (MDD) which is also known as either unipolar depression or major depression is a common yet disabling mental disorder affecting over 400 million people worldwide with a higher incidence in women than men (World Health Organisation, 2012). Depression may be endogenous where there is no discernible cause or reactive whereby the depression is a result of an incidence such as the loss of a parent, loved one or stress. Some of the emotions that individuals may experience with depression are, feelings of sadness, anger, bitterness and resentment, emotions which can last a few days or in some cases, months and have a huge impact on the individuals life. Some individuals suffering from MDD are also more likely to have a substance abuse problem, other mental and physical problems, and are likely to have a greater suicide risk. MDD is a widely researched topic with a sense of urgency to find the exact aetiology and pathophysiology behind the disease so that a more tho rough understanding can be reached and treatment can be uniquely designed for each individual. Researches surmise that various factors are involved such as the chemical changes in the brain, genetic predispositions and environmental factors. The aim of this essay, although not comprehensive enough, is to try and bring together research material from various sources and highlight some key areas around MDD such as a synopsis of the aetiology, pathophysiology, risk factors, treatments and test available today. Aetiology The underlying aetiology (causes) of MDD is so complex with many gaps that it appears that no-one is quite sure what causes depression, however much research done to date into this condition suggests that a combination of factors are involved, such as genetics, an individual’s biochemical environment, personal experiences and psychological factors. According to Dr Michael Miller, a Professor of Psychiatry at Harvard University (2013), several forces interact to bring on depression including faulty mood regulation by the brain, medications, medical problems, genetic vulnerability and stress. In as much as age related brain changes, disease related changes , for example, cerebrovascular disease, Parkinson’s disease, and epilepsy, lead to disruptions in the circuitry of emotion regulation and can cause the onset of depression (Wryobeck, Haines, Wynkoop and Swanson, 2013). Areas of the brain underpinned by major depressive disorders such as the thalamus, the hippocampus and the amygdala (Limbic circuitry) (Figure 1. Miller, 2013 ) include several groups of neurons and white matter. Cell connections, nerve cell growth, and the functioning of nerve circuits in the brain have a major impact on how the brain functions, particularly in the way they communicate with each other. Several different chemicals and hormones working within and outside these nerve cells play a key role, with reduced levels of serotonin and noradrenaline posit to be a huge factor associated with the disease (Miller, 2013). Similarly, Villanueva (2013) through the construct of a survey used to assess the neurobiology of MDD, found that brain-derived neurotrophic factor (BDFN) along with expressions of miRNA’s (involved in neural plasticity), abnormal gastrointestinal signalling peptides and proinflammatory cytokines are all causative factors of major depressive disorder. What proinflammatory cytokines do, is stimulate the hypothalamic-pituitary-adrenal axis, activate secretion of growth hormone and inhibits the thyroid stimulating hormone secretion, all of which are associated with depression. Whereas gut microbiota (flora), specifically leptin, ghrelin and cholecystokinin (signalling peptides), influence the central nervous system including modulation of neurogenesis which can influence brain chemistry and consequently an individual’s behaviour. According to Lopresti, Hood and Drummond (2013), as seen in figure 2 below, a bi-directional relationship is likely to exist between depression and lifestyle factors with key symptoms including changes in appetite, general energy levels, motivation levels and sleep, which in turn affect diet, exercise and sleep thereby creating a cycle of influence. A vicious cycle, all of which point to the necessity of promoting lifestyle changes Figure 2. Potential mechanism of diet, sleep and exercise on major depression. In Lopresti et al. (2013). Another avenue suggested by Dr Miller (2013), is that research has identified that genetics play a role, in that not only do certain genes make individuals more vulnerable to low moods, but it can influence how individuals respond to drug therapy. Likewise, Stanford school of medicine surmise that through its research on the study of identical (100% genetically identical) and non-identical twins (50% genetically identical) and major depression as a heritability factor, heritability shows to be a huge contributor in the development of this disease. Each individual inheriting a unique combination of genes, with a predisposition to certain illnesses (Levinson and Nichols, n.d.). Genes controlling either the production or utilization of serotonin plays and important role in the pathogenesis of depression and in particular with serotonin reuptake due to the fact that depressed individuals have a lower rate of serotonin uptake. In depression of the elderly or late onset depression, genetic s is less common or does not appear to play a role as genetic markers are not present (Halverson, Bhalla, Bhalla and Andrew (2014). In so saying then, non-genetic factors, many of which are not known, also need to be taken into account, as Levinson and Nichols (n.d) suggest, these factors also increase the risk and progression of depression. Pathophysiology Progression of the illness as indicated by Treadway et al.(2014), is linked to biological changes. Due to over-stimulation of steroidal and inflammatory signalling molecules by stress, structural abnormalities within the prefrontal cortex and hippocampus, known for regulating behaviour and endocrine responses to stress, can be damaged. Moreover diet, sleep and exercise not only play a significant role in the development and progression of the illness, it also impacts on the treatment. One research analysis undertaken by Maletic, Robinson, Oakes, Lyengar, Ball and Russell (2001), summarised that MDD involved structural, functional and molecular alterations within the brain. Similarly research conducted by Halverson et al. (2014), speculates that although the underlying pathophysiology of MDD has not been clearly defined, studies show a strong interaction between the neurotransmitter availability and receptor regulation, with emphasis again on serotonin activity disturbances in the cen tral nervous system. Other neurotransmitters such as epinephrine, dopamine, glutamate and brain derived neurotrophic factor (BDNF) are also implicated in depression. Cells within the hypothalamus are responsible for an individual’s emotional state which in turn link to the stress responses. Several studies , in particular Lopresti et al. (2013), show that during stressful times, the hypothalamic – pituitary-adrenal axis (HPA), the neuroendocrine circuit that manages stress in the body, becomes activated. This then leads to the release of epinephrine and glucocorticoids (cortisol) to assist the body in its adaptive response to stress. However, if the body remains under a constant state of stress, excitotoxicity of neurons, particularly in the hippocampus can occur leading to dendrite atrophy and apoptosis of neurons (Wryobeck et al. 2013). Research shows that while cortisol helps the brain to cope with stressful situations, it also damages and kills cells in the hippoca mpus. So it can almost be said that stress excites brain cells to death. Furthermore research shows that individuals experiencing depressive disorders have a smaller hippocampal volume than individuals who do not from depression and that positron emission tomographic (PET) showed a diminished activity in the area of the prefrontal cortex in individuals with depressive disorders. Thereby underlying the functional and structural abnormalities in the brain regions of individuals suffering from depression (Halverson et al. 2014). Most individuals with MDD present with normal appearance however, individuals with more severe symptoms may present with more significant signs such as, poor hygiene, poor grooming and changes in weight. Individuals with MDD have a distorted view of their life whereby negative attitudes make it more difficult to see a positive outcome from a difficult situation. Other symptoms such as psychomotor retardation, agitation or restlessness, suicidal thoughts or atte mpts, social withdrawal and in the elderly somatic complaints may also be evident. These however are only some of the underlying signs and symptoms as individuals vary from one to the next. Risk factors / causal agents It is a widely held view that there is an unambiguous relationship between physical, psychological, environmental, genetic and social factors as well as a dysregulated response to chronic stress as risk factors for depression. Halverson et al. (2014) infer that stress plays a dominant role in depression due to the chemicals involved throughout the body such as adrenaline and cortisol which in abundance, leads to other health complications. With the various types of onset of stress being for example, the loss of a parent prior to the age of 10 years, parent-child relationships, due to poor interaction between the two and child stressors, which can contribute to depression or thought to be associated with both early and late abuse and neglect. In addition, stressful changes in life patterns such as a serious loss, difficult relationships, trauma or financial problems can trigger a depressive episode. Women with a previous history of depression are at higher risk of menopausal depressio n while low testosterone levels in older men also aid in onset of depression (Halverson et al. 2014). Likewise Martin (2014) highlights that women may experience more episodes of depression than men due to hormonal changes such as during premenstrual phases, pregnancy, postpartum and menopause. Coupled with this is the additional stress of work-life balance where women take on the added responsibility of tending to children and or aging parents whilst still trying to forge a career for themselves. Individuals with a family history of depression tend to be at higher risk of developing depressive disorders. Psychosocial risk factors according to Halverson et al. (2014) can include impaired social supports, caregiver burden, loneliness, bereavement and negative life events. Abused substances and pharmacological agents can increase depression risks due to altering brain chemicals. These include pain relievers, sedatives, sleeping pills, cortisone drugs and seizure drugs, to name but a few. Whilst in the elderly, neurodegenerative diseases particularly Alzheimer’s and Parkinson’s, stroke, macular degeneration (vision) and chronic pain can all contribute to higher rates of depression (Martin, 2014). Treatment strategies First and foremost, education plays an important role in the treatment of MDD as individuals may become aware of the signs of relapse thereby allowing them to seek early treatment. Family and support members also need to be educated about the nature of depression and the treatment involved so as to be able to give the support needed, ensure medication compliance and encourage a change in lifestyle such as keeping active (Halverson et al. 2014). Wryobeck et al. (2013), posit that with depression being a multi-factored illness, treatment should encompass a combination of therapies such as psychotherapy, electroconvulsive therapy, lifestyle management, psychosocial therapy and pharmacotherapy. Pharmacotherapy such as anti-depressants being one method affects the neurotransmitters. Selective serotonin re-uptake inhibitors (SSRIs), a new class of antidepressants, which allow for the increase of serotonin by blocking the re-uptake of serotonin into the presynaptic neuron, is according to Clarke and Gordon (2011), used as the first line of treatment. SSRIs allow for autoreceptors to be desensitised or down-regulated, nerve transmission and serotonin levels are normalised and mood is elevated. Figure 3 below, illustrates how the amount of neurotransmitters in individuals with depression are reduced and postsynaptic receptors are increased as a response to these lower levels. The re-uptake of serotonin adding to the decreased amount of neurotransmitters. When treatment of SSRIs take place, serotonin levels increase due to the blocking of the re-uptake and down-regulation of postsynaptic receptors occur (Clarke Gordon, 2011). Figure 3 Action of selective serotonin re-uptake inhibitor drug. In neurobiology of mental illness Clarke Gordon (2011). Psychotherapy can include behaviour therapy, cognitive-behaviour therapy, family therapy, interpersonal therapy, psychodynamic psychotherapy and supportive psychotherapy. Psychosocial therapies according to Halverson et al. (2014) and supported by The American Psychiatric Association (APA) is often a first-line of treatment for mild cases of depression however, in more severe cases this should be combined with antidepressant medication. Other approaches according to Wryobeck et al. (2014) and Halverson et al. (2014), can include electroconvulsive therapy (ECT) which is thought to increase neurogenesis, reversing degeneration and decreased proliferation of nerve cells, regulate neurotransmitters and correct dysregulation of neuropeptides. Stimulation techniques such as vagus nerve stimulation which involves the nerve to be stimulated with electrodes resulting in the assumption that it may alter norepinephrine release and elevating levels of inhibitory GABA. Transcranial magnetic stimulation concentrates magnetic energy over parts of the brain allowing for either an increase or decrease in cortical excitability depending on the frequency. Stimulation over the right frontal lobe apparently reduces the symptoms of depression. Talk therapy as well as exercise are more non-invasive forms for dealing with MDD allowing the individual to develop problem solving skills, coping mechanisms and in some instances to form a suppor t group. Relevant tests To date there are no physical findings that are specific to MDD, instead diagnosis is dependent on the individual’s history and mental state exam. As depression may be linked to an underlying physical problem, both a physical exam as well as thyroid function blood tests can be done. A psychological evaluation is also of benefit to gather information around an individual’s feelings and behaviour pattern. In New Zealand a wide range of tools are available such as the Kessler 10 (K10) for assessing depression, anxiety and general mental health, the patient health questionnaire (PHQ-9) for depression and the GAD-7 for anxiety assessment. According to the Best Practice Advocacy of New Zealand [bpac z](2009) these tools also allow for monitoring the response to an individual’s treatment regime to ensure that optimal health is being met. In conclusion, to date the specific causes of major depressive disorders (MDD) is still unknown, however a substantial amount of research has gone into and still continues in this area with a consensus that depression appears to be a multifactorial and diverse group of disorders involving the chemical reactions and nerve communication in the limbic circuitry of the brain and both genetic and environmental factors. Progression of MDD is linked to biological changes, diet, sleep and exercise. Treatment strategies appear to be multi-factored with underlying assumptions based on individual research results. Education is still an important element focusing on the individual and support structures while more up to date pharmacopeia such as serotonin re-uptake inhibitors, lead the market as the go to drug for antidepressants. Most literature to date however, underlines the need for more research to take place, in particular, within the area of the aetiology / pathophysiology of the disease and likewise specifically structured individual treatment strategies. References Clarke, G. Gordon, C. (2011). Neurobiology of mental illness. In J. Craft, C. Gordon A. Tiziani (Eds.), Understanding pathophysiology (pp. 1177-1180). Chatswood, NSW: Elsevier. Halverson, J. L., Bhalla, R. N., Bhalla, P. M. Andrew, L. B. (2014). Depression. Retrieved from http://emedicine.medscape.com/article/286759. Levinson, D.F. Nichols, W.E. (n.d.). Major depression and genetics. Retrieved from http://depressiongenetics.stanford.edu/mddandgenes.html. Lopresti, A. L., Hood, S. D. Drummond, P. D. (2013). A review of lifestyle factors that contribute to important pathways associated with major depression: Diet, sleep and exercise. Journal of Affective Disorders 148 (2013), 12-27. Maletic, V., Robinson, M., Oakes, T., Lyengar, S., Ball, S. G. Russell, J. (2007). Neurobiology of depression: an integrated view of key findings. International journal of Clinical practice, 61 (12), 2030 – 2040. doi: 10.1111/j.1742-1241 Martin, B. (2014). What are the risk factors for depression? Retrieved from http://psychcentral.com/lib/what-are-the-risk-factors-for-depression. Miller, C. M. (2013). What causes depression. Retrieved from http://www.health.harvard.edu/newsweek/what-causes-depression.htm. The Best Practice Advocacy centre of New Zealand. Assessment of depression in adults in primary care. (2009). Retrieved from www.bpac.org.nz/BPJ/2009/adultdep/assessment.aspx. The world health organisation. (2012). Depression fact sheet. Retrieved from www.who.int/mediacentre/factsheets. Treadway, T. M., Waskom, M. L., Dillon, D. G., Holmes, A. J., Park, M. M., Charavarty, M. M., ‘†¦Ã¢â‚¬â„¢, Pizzagalli, D. A. (2014). Illness progression, recent stress and morphometry of hippocampal subfields and medial prefrontal cortex in major depression. Society of Biological Psychiatry. Retrieved from http://dx.doi.org/10.1016/j.biospych.2014.06.018 Villanueva, R. (2013). Neurobiology of major depressive disorder. Neural Plasticity, volume 2013. doi: 10.1155/2013/873278 Wryobeck, J. M., Haines, M. E., Wynkoop, T. F. Swanson, M. M. (2013). Depressive disorders. In C. Noggle S. Dean (Eds.). The Neuropsychology of psychopathology (pp 201-220). New York, NY: Springer Publishing. List of illustrations Figure 1. Miller, C. M. (2013). What causes depression. Retrieved from http://www.health.harvard.edu/newsweek/what-causes-depression.htm. Figure 2. Lopresti, A. L., Hood, S. D. Drummond, P. D. (2013). A review of lifestyle factors that contribute to important pathways associated with major depression: Diet, sleep and exercise. Journal of Affective Disorders 148 (2013), 12-27. Figure 3. Clarke, G. Gordon, C. (2011). Neurobiology of mental illness. In J. Craft, C. Gordon A. Tiziani (Eds.), Understanding pathophysiology (pp. 1177-1180). Chatswood, NSW: Elsevier.

CROSS-CULTURAL PSYCHOLOGY

CROSS-CULTURAL PSYCHOLOGY Damen in his Culture Learning defined Culture as the shared patterns of behavior and interactions and affective understanding learned through the process of socialization (Damen, 1987). Psychology is simply a field of study that concerns itself with behavior. Cross cultural psychology is therefore the scientific study of human behavior and mental behavior and process, including both variability and invariance, under diverse cultural conditions, (Ho, Wu, 2001). It is a branch of psychology that studies the relationship between culture and human behavior (Matsumoto, 2000). This type of psychology delves in investigative studies to recognize cultural variation in behavior and such other variables as language and meanings. According to Walter J Loner while writing in the Journal: Eye on Psi Chi Cross, Cultural psychology is not an independent field within the entire sphere of psychology that revolves around in-depth examination of emotions, language acquisition, personality, social behavior, family and social relationship Eye on Psi SChi 4(3). 22-26.Cross cultural psychology not only encompasses studies in both the similarities and the differences in psychological functioning in various cultural and ethnic set ups but also the relationships between such key variables as psychological, socio-cultural, ecological and biological. It considers culture as necessary for functioning, development and behavior in a cultural context. Diverse forms of comparative research are the major actions/exercises in understanding cross cultural psychology focused at making any distinctions in cultural factors directly related to development and behavior. According to Berry et al 1997, these researches seek evidence of how culture can be taken as a set of variables, contextual or independent that affects various aspects of individual behavior. Cross cultural psychology need not to be confused with cultural. Though related to some extent, some distinctions separate the two. The relationship between cultural and cross-cultural psychology like any other comparative studies, the relationship between cultural and cross-cultural psychology entail differences and similarities. These comparisons are discussed below. Differences While cross cultural psychology studies strive to determine any possible shared behavior and mental processes in cultures, cultural psychology is a field within psychology that hold the view that human behavior is dependent on individuals unique culture. Differences in interpretation of culture account for the differences between cross-cultural psychology and cultural psychology. They differ in two ways, although they sometimes overlap and are taken as synonymous by some psychologists (Lonner, 2000). Cultural psychology focuses on various ethnic groups such as African-Americans. Cross-cultural psychology, in contrast, emphasizes differences between two or more cultures. Besides, cultural or ethnic psychology rooted in the United States has a briefer history than cross cultural psychology does. Similarities Despite the afore-mentioned evident differences in cultural psychology and cross culture, the two cannot be divorced from each other since they both share certain commonalities. Both studies are rooted from cultural studies of psychology which as discussed earlier, entail behavioral and mental analysis in context of varied cultural environment. While cultural psychology seeks to explore certain behavioral characteristics within a specific culture, cross cultural psychology compare these characteristic from one culture to another. These both studies focus on similar elements of culture. Also both studies employ similar techniques: quantitative and qualitative. For this reason most often the research approaches are almost similar. The role of critical thinking in cross-cultural psychology According to Shiraew Levy, critical thinking in cross cultural psychology is the most vital and indispensable component of learning. To describe a phenomena in a cultural contexts, social phenomena such as a peoples language reflects their personal values, biases, likes, prejudices etc. This results in their language coded in such a way that the language will reveals much about the cultures events, individuals or whatever group they are trying to describe (Shiraew Levy 2010). Through intuition, people automatically compare their own mental representation to identify or judge a given phenomena, i.e. they set their cultural values and believe systems as the standards to judge a given phenomena. This biased perspective results in lack of objectivity in assessing behavior and specific phenomena in other cultures. Psychologists claim that all cultures suffer from this problem. This explains intercultural conflicts in the society. Critical thinking in cross cultural psychology is not only a subject of study in examining cultures, but also a tool in analyzing and evaluating the way people think critically and behave in a given culture. The methodology associated with cross-cultural research Being a behavioral study, cross cultural psychology lacks a clear and scientific research technique which poses the study with a serious problem (Escotet, March 25-27 1973). While scientific approaches depict modern trends, the evaluation of cultures has become complicated and highly subjective. Matsumoto Vijver, (2010) argue that regardless of the method of measurement and approach, one of the basic issues researchers may become aware of is the relationship among cultural distance and the probability of generating differences Depending on the nature of the study, contextual factors such as education, age or socio-economic status of the participants affects the validity research approach and findings. Including such factors in a study will not only enhance the validity, but also help in eliminating any biases. Matsumoto Vijver (2010). Shiraev Levy advises purport there are two major divisions of research in these fields: qualitative and quantitative. While qualitative approaches uses median, mode, variance and standard deviation etc to describe human behavior, qualitative technique uses unobservable human behavior such as dreams. Shiraew Levy (2010). Conclusion In conclusion, to understand the heart of human behavior and cognitions across cultures, cross cultural psychology is perfect tool of evaluation. Differentiating cross cultural psychology from cultural is the stepping stone to evaluating cultures. While cultural psychology seeks to find out how culture causes variation in psychology, cross cultural seeks to justify or explain objective description and subjective evaluations of cultures.

Central Conflict, Climax and Resolution in Hawthornes Young Goodman Br

The Central Conflict, Climax and Resolution in â€Å"Young Goodman Brown†   Ã‚  Ã‚   This essay will analyze Nathaniel Hawthorne’s â€Å"Young Goodman Brown† to determine the central conflict in the tale, its climax and partial resolution, using the essays of literary critics to help in this interpretation. In my opinion, the central conflict in the tale is an internal one - the conflict in Goodman Brown between joining the ranks of the devil and remaining good, and the extension of this conflict to the world at large represented by the villagers of Salem.      It is a difficult personal journey for Young Goodman Brown, a young Puritan resident of Salem, Massachusetts, in the 1600’s to say goodbye to Faith on that fateful night and to keep a prior commitment made with an evil character (the devil) in the woods.   As he travels through the forest to fulfill his personal desire: to experience evil, to indulge in devil-worship, to become a witch - whatever this strange nocturnal affair might involve, all the while he is repeatedly thinking about the â€Å"good† things he is leaving behind at church, at home (his wife Faith), and at Salem village. This internal conflict ultimately destroys the Young Goodman Brown who existed prior to the visit to the woods, and creates a new, cynical, faith-less man of gloomy, distrustful disposition.    This interpretation of the central conflict differs from that offered by Terence Martin in Nathaniel Hawthorne:    His journey into the forest is best defined as a kind of general, indeterminate [my italics] allegory, representing man’s irrational drive to leave faith, home, and security temporarily behind, for whatever individual reason, and to take a chance with one more errand onto the wilder s... ...sts to Faith and to Salem to the extent that he is able to live with both, he nevertheless has lost the inner peace and innocence he possessed prior to the intrusion of evil into his life.    WORKS CITED â€Å"Hawthorne and His Mosses.† The Norton Anthology: American Literature, edited by Baym et al.   New York: W.W. Norton and Co., 1995. Hawthorne, Nathaniel. The Complete Short Stories of Nathaniel Hawthorne. New York: Doubleday and Co., Inc.,1959. 247-56. James, Henry. Hawthorne. Ithaca, NY: Cornell University Press, 1997. Martin, Terence. Nathaniel Hawthorne. New York: Twayne Publishers Inc., 1965. â€Å"Nathaniel Hawthorne.† The Norton Anthology: American Literature, edited by Baym et al.   New York: W.W. Norton and Co., 1995. Wagenknecht, Edward. Nathaniel Hawthorne – The Man, His Tales and Romances. New York: Continuum Publishing Co., 1989.

Soviet Union :: essays research papers

There are many events worthy of our recognition but some will be remembered for many years to come. Fifty years from now, every person in the world should remember the year in which the Soviet Empire collapsed. The Soviet Union was one of the most dangerous and most feared of all the countries in the world during the time it existed. The Soviet Union was the largest country in the world because of all the republics it had within it. The collapse of the Soviet Union will always be remembered because it was a country that was very dangerous. It was like that because just about all of the men that ruled and controlled the Soviet Union were heavy drinkers and they would not be at their best judgment when doing things and because of that they could cause a lot of damage, conflict, and war to many other countries. The end of the Soviet Union will be remembered also because it had such a great impact on all its republics. The Soviet Union was not a horrible place though as it helped all the poor countries stay strong since they were united as one union. Instead of being a whole bunch of third world countries, their unity in communism did work at keeping the people safe. For example Yugoslavia was around as on nation back then because of communism but once the collapse of communism Yugoslavia broke apart. Why many people feared the USSR, the Union of Soviet Socialists Republic, or CCCP, USSR spelled in Russian, was because the fact that a lot of missiles would frequently disappear from the missile silos that belonged to the Soviet Union, and because of this it shows that the Soviet Union wasn't to safe of a country to live in and that the people there weren't easily trusted so other countries near the borders of the Union could be in great danger. I think that the Soviet Union was a great republic and that if it did still exist now it would or at least

Mericans :: World Literature Sandra Cisneros

In the short story "Mericans" by Sandra Cisneros, we appear to be reading about a small place in Mexico. The author uses many details in the story for us to visualize the cultural environment. The mix of Spanish words in the story such as, La Virgen de Guadalupe and la ofrenda give the sense of a different culture. The use of the awful grandmother kneeling at mass makes you visualize a specific heritage and cultural behavior. The word "barbarian" that the grandmother uses to describe the birthplace of the children, also points out cultural differences. It seems the author is trying to make us sense a native culture, and not to make assumptions based on physical characters. The "awful grandmother" (Cisneros p.30) is an example of a person in the story living in two cultural worlds, while she clings to her cultural heritage, she still doesn't want to accept the American culture of the children. The children, in the story, may look like Native Americans or Mexicans, but their main language is English. The children also use examples of American culture with the comic characters, "Flash Gordon" and "Ming the Merciless." The children in the story embrace more of the American culture than a native culture with the use of the comic characters. The little girl tends to struggle understanding her grandmothers cultural heritage, and it seems to take her quite a bit of effort doing it. The children seem to be content playing and carrying on without the bother of what the grandmother is doing, and they have no references to heroes of their native culture. The story tends to have a familiar setting to me, one that I am around, especially with the children running around and playing carefree. My grandmother is quite religious and she also does many of the things that the grandmother in the story does.

Anomalies in Option Pricing

Anomalies in option pricing: the Black-Scholes model revisited New England Economic Review, March-April, 1996 by Peter Fortune This study is the third in a series of Federal Reserve Bank of Boston studies contributing to a broader understanding of derivative securities. The first (Fortune 1995) presented the rudiments of option pricing theory and addressed the equivalence between exchange-traded options and portfolios of underlying securities, making the point that plain vanilla options – and many other derivative securities – are really repackages of old instruments, not novel in themselves. That paper used the concept of portfolio insurance as an example of this equivalence. The second (Minehan and Simons 1995) summarized the presentations at â€Å"Managing Risk in the '90s: What Should You Be Asking about Derivatives? â€Å", an educational forum sponsored by the Boston Fed. Related Results Trust, E-innovation and Leadership in Change Foreign Banks in United States Since World War II: A Useful Fringe Building Your Brand With Brand Line Extensions The Impact of the Structure of Debt on Target Gains Project Management Standard Program. The present paper addresses the question of how well the best-known option pricing model – the Black-Scholes model – works. A full evaluation of the many option pricing models developed since their seminal paper in 1973 is beyond the scope of this paper. Rather, the goal is to acquaint a general audience with the key characteristics of a model that is still widely used, and to indicate the opportunities for improvement which might emerge from current research and which are undoubtedly the basis for the considerable current research on derivative securities. The hope is that this study will be useful to students of financial markets as well as to financial market practitioners, and that it will stimulate them to look into the more recent literature on the subject. The paper is organized as follows. The next section briefly reviews the key features of the Black-Scholes model, identifying some of its most prominent assumptions and laying a foundation for the remainder of the paper. The second section employs recent data on almost one-half million options transactions to evaluate the Black-Scholes model. The third section discusses some of the reasons why the Black-Scholes odel falls short and assesses some recent research designed to improve our ability to explain option prices. The paper ends with a brief summary. Those readers unfamiliar with the basics of stock options might refer to Fortune (1995). Box 1 reviews briefly the fundamental language of options and explains the notation used in the paper. I. The Black-Scholes Model In 1973, Myron Scholes and the late Fischer Black published their seminal paper on option pricing (Black and Scholes 1973). The Black-Scholes model revolutionized financial economics in several ways. First, it contributed to our understanding of a wide range of contracts with option-like features. For example, the call feature in corporate and municipal bonds is clearly an option, as is the refinancing privilege in mortgages. Second, it allowed us to revise our understanding of traditional financial instruments. For example, because shareholders can turn the company over to creditors if it has negative net worth, corporate debt can be viewed as a put option bought by the shareholders from creditors. The Black-Scholes model explains the prices on European options, which cannot be exercised before the expiration date. Box 2 summarizes the Black-Scholes model for pricing a European call option on which dividends are paid continuously at a constant rate. A crucial feature of the model is that the call option is equivalent to a portfolio constructed from the underlying stock and bonds. The â€Å"option-replicating portfolio† consists of a fractional share of the stock combined with borrowing a specific amount at the riskless rate of interest. This equivalence, developed more fully in Fortune (1995), creates price relationships which are maintained by the arbitrage of informed traders. The Black-Scholes option pricing model is derived by identifying an option-replicating portfolio, then equating the option's premium with the value of that portfolio. An essential assumption of this pricing model is that investors arbitrage away any profits created by gaps in asset pricing. For example, if the call is trading â€Å"rich,† investors will write calls and buy the replicating portfolio, thereby forcing the prices back into line. If the option is trading low, traders will buy the option and short the option-replicating portfolio (that is, sell stocks and buy bonds in the correct proportions). By doing so, traders take advantage of riskless opportunities to make profits, and in so doing they force option, stock, and bond prices to conform to an equilibrium relationship. Arbitrage allows European puts to be priced using put-call parity. Consider purchasing one call that expires at time T and lending the present value of the strike price at the riskless rate of interest. The cost is [C. sub. t] + X[e. sup. -r(T-t)]. (See Box 1 for notation: C is the call premium, X is the call's strike price, r is the riskless interest rate, T is the call's expiration date, and t is the current date. At the option's expiration the position is worth the highest of the stock price ([S. sub. T]) or the strike price, a value denoted as max([S. sub. T], X). Now consider another investment, purchasing one put with the same strike price as the call, plus buying the fraction [e. sup. -q(T-t)] of one share of the stock. Denoting the put premium by P and the stock price by S, then the cost of this is [P. sub. t] + [e. sup. -q(T-t)][S. sub. t], and, at time T, the value at this position is also max([S. sub. T], X). (1) Because both positions have the same terminal value, arbitrage will force them to have the same initial value. Suppose that [C. sub. t] + X[e. sup. -r(T-t)] [greater than] [P. sub. t] + [e. sup. -q(T-t)][S. sub. t], for example. In this case, the cost of the first position exceeds the cost of the second, but both must be worth the same at the option's expiration. The first position is overpriced relative to the second, and shrewd investors will go short the first and long the second; that is, they will write calls and sell bonds (borrow), while simultaneously buying both puts and the underlying stock. The result will be that, in equilibrium, equality will prevail and [C. sub. t] + X[e. sup. r(T-t)] = [P. sub. t] + [e. sup. -q(T-t)][S. sub. t]. Thus, arbitrage will force a parity between premiums of put and call options. Using this put-call parity, it can be shown that the premium for a European put option paying a continuous dividend at q percent of the stock price is: [P. sub. t] = -[e. sup. -q(T-t)][S. sub. t]N(-[d. sub. 1]) + X[e. sup. -r(T-t)]N(-[d. sub. 2]) where [d. sub. 1] and [d. sub. 2] are defined as in Box 2. The importance of arbitrage in the pricing of options is clear. However, many option pricing models can be derived from the assumption of complete arbitrage. Each would differ according to the probability distribution of the price of the underlying asset. What makes the Black-Scholes model unique is that it assumes that stock prices are log-normally distributed, that is, that the logarithm of the stock price is normally distributed. This is often expressed in a â€Å"diffusion model† (see Box 2) in which the (instantaneous) rate of change in the stock price is the sum of two parts, a â€Å"drift,† defined as the difference between the expected rate of change in the stock price and the dividend yield, and â€Å"noise,† defined as a random variable with zero mean and constant variance. The variance of the noise is called the â€Å"volatility† of the stock's rate of price change. Thus, the rate of change in a stock price vibrates randomly around its expected value in a fashion sometimes called â€Å"white noise. † The Black-Scholes models of put and call option pricing apply directly to European options as long as a continuous dividend is paid at a constant rate. If no dividends are paid, the models also apply to American call options, which can be exercised at any time. In this case, it can be shown that there is no incentive for early exercise, hence the American call option must trade like its European counterpart. However, the Black-Scholes model does not hold for American put options, because these might be exercised early, nor does it apply to any American option (put or call) when a dividend is paid. (2) Our empirical analysis will sidestep those problems by focusing on European-style options, which cannot be exercised early. A call option's intrinsic value is defined as max(S – X,0), that is, the largest of S – X or zero; a put option's intrinsic value is max(X – S,0). When the stock price (S) exceeds a call option's strike price (X), or falls short of a put option's strike price, the option has a positive intrinsic value because if it could be immediately exercised, the holder would receive a gain of S – X for a call, or X – S for a put. However, if S [less than] X, the holder of a call will not exercise the option and it has no intrinsic value; if X [greater than] S this will be true for a put. The intrinsic value of a call is the kinked line in Figure 1 (a put's intrinsic value, not shown, would have the opposite kink). When the stock price exceeds the strike price, the call option is said to be in-the-money. It is out-of-the-money when the stock price is below the strike price. Thus, the kinked line, or intrinsic value, is the income from immediately exercising the option: When the option is out-of-the-money, its intrinsic value is zero, and when it is in the money, the intrinsic value is the amount by which S exceeds X. Convexity, the Call Premium, and the Greek Chorus The premium, or price paid for the option, is shown by the curved line in Figure 1. This curvature, or â€Å"convexity,† is a key characteristic of the premium on a call option. Figure 1 shows the relationship between a call option's premium and the underlying stock price for a hypothetical option having a 60-day term, a strike price of $50, and a volatility of 20 percent. A 5 percent riskless interest rate is assumed. The call premium has an upward-sloping relationship with the stock price, and the slope rises as the stock p rice rises. This means that the sensitivity of the call premium to changes in the stock price is not constant and that the option-replicating portfolio changes with the stock price. The convexity of option premiums gives rise to a number of technical concepts which describe the response of the premium to changes in the variables and parameters of the model. For example, the relationship between the premium and the stock price is captured by the option's Delta ([Delta]) and its Gamma ([Gamma]). Defined as the slope of the premium at each stock price, the Delta tells the trader how sensitive the option price is to a change in the stock price. (3) It also tells the trader the value of the hedging ratio. (4) For each share of stock held, a perfect hedge requires writing 1/[[Delta]. ub. c] call options or buying 1/[[Delta]. sub. p] puts. Figure 2 shows the Delta for our hypothetical call option as a function of the stock price. As S increases, the value of Delta rises until it reaches its maximum at a stock price of about $60, or $10 in-the-money. After that point, the option premium and the stock price have a 1:1 relationship. The increasing Delta also means that th e hedging ratio falls as the stock price rises. At higher stock prices, fewer call options need to be written to insulate the investor from changes in the stock price. The Gamma is the change in the Delta when the stock price changes. (5) Gamma is positive for calls and negative for puts. The Gamma tells the trader how much the hedging ratio changes if the stock price changes. If Gamma is zero, Delta would be independent of S and changes in S would not require adjustment of the number of calls required to hedge against further changes in S. The greater is Gamma, the more â€Å"out-of-line† a hedge becomes when the stock price changes, and the more frequently the trader must adjust the hedge. Figure 2 shows the value of Gamma as a function of the amount by which our hypothetical call option is in-the-money. (6) Gamma is almost zero for deep-in-the-money and deep-out-of-the-money options, but it reaches a peak for near-the-money options. In short, traders holding near-the-money options will have to adjust their hedges frequently and sizably as the stock price vibrates. If traders want to go on long vacations without changing their hedges, they should focus on far-away-from-the-money options, which have near-zero Gammas. A third member of the Greek chorus is the option's Lambda, denoted by [Lambda], also called Vega. (7) Vega measures the sensitivity of the call premium to changes in volatility. The Vega is the same for calls and puts having the same strike price and expiration date. As Figure 2 shows, a call option's Vega conforms closely to the pattern of its Gamma, peaking for near-the-money options and falling to zero for deep-out or deep-in options. Thus, near-the-money options appear to be most sensitive to changes in volatility. Because an option's premium is directly related to its volatility – the higher the volatility, the greater the chance of it being deep-in-the-money at expiration – any propositions about an option's price can be translated into statements about the option's volatility, and vice versa. For example, other things equal, a high volatility is synonymous with a high option premium for both puts and calls. Thus, in many contexts we can use volatility and premium interchangeably. We will use this result below when we address an option's implied volatility. Other Greeks are present in the Black-Scholes pantheon, though they are lesser gods. The option's Rho ([Rho]) is the sensitivity of the call premium to changes in the riskless interest rate. (8) Rho is always positive for a call (negative for a put) because a rise in the interest rate reduces the present value of the strike price paid (or received) at expiration if the option is exercised. The option's Theta ([Theta]) measures the change in the premium as the term shortens by one time unit. (9) Theta is always negative because an option is less valuable the shorter the time remaining. The Black-Scholes Assumptions The assumptions underlying the Black-Scholes model are few, but strong. They are: * Arbitrage: Traders can, and will, eliminate any arbitrage profits by simultaneously buying (or writing) options and writing (or buying) the option-replicating portfolio whenever profitable opportunities appear. * Continuous Trading: Trading in both the option and the underlying security is continuous in time, that is, transactions can occur simultaneously in related markets at any instant. * Leverage: Traders can borrow or lend in unlimited amounts at the riskless rate of interest. Homogeneity: Traders agree on the values of the relevant parameters, for example, on the riskless rate of interest and on the volatility of the returns on the underlying security. * Distribution: The price of the underlying security is log-normally distributed with statistically independent price changes, and with constant mean and constant variance. * Continuous Prices: No discontinuous jumps occur in the price of the underlying security. * Transactions Costs: The cost of engaging in arbitrage is negligibly small. The arbitrage assumption, a fundamental proposition in economics, has been discussed above. The continuous trading assumption ensures that at all times traders can establish hedges by simultaneously trading in options and in the underlying portfolio. This is important because the Black-Scholes model derives its power from the assumption that at any instant, arbitrage will force an option's premium to be equal to the value of the replicating portfolio. This cannot be done if trading occurs in one market while trading in related markets is barred or delayed. For example, during a halt in trading of the underlying security one would not expect option premiums to conform to the Black-Scholes model. This would also be true if the underlying security were inactively traded, so that the trader had â€Å"stale† information on its price when contemplating an options transaction. The leverage assumption allows the riskless interest rate to be used in options pricing without reference to a trader's financial position, that is, to whether and how much he is borrowing or lending. Clearly this is an assumption adopted for convenience and is not strictly true. However, it is not clear how one would proceed if the rate on loans was related to traders' financial choices. This assumption is common to finance theory: For example, it is one of the assumptions of the Capital Asset Pricing Model. Furthermore, while private traders have credit risk, important players in the option markets, such as nonfinancial corporations and major financial institutions, have very low credit risk over the lifetime of most options (a year or less), suggesting that departures from this assumption might not be very important. The homogeneity assumption, that traders share the same probability beliefs and opportunities, flies in the face of common sense. Clearly, traders differ in their judgments of such important things as the volatility of an asset's future returns, and they also differ in their time horizons, some thinking in hours, others in days, and still others in weeks, months, or years. Indeed, much of the actual trading that occurs must be due to differences in these judgments, for otherwise there would be no disagreements with â€Å"the market† and financial markets would be pretty dull and uninteresting. The distribution assumption is that stock prices are generated by a specific statistical process, called a diffusion process, which leads to a normal distribution of the logarithm of the stock's price. Furthermore, the continuous price assumption means that any changes in prices that are observed reflect only different draws from the same underlying log-normal distribution, not a change in the underlying probability distribution itself. II. Tests of the Black-Scholes Model. Assessments of a model's validity can be done in two ways. First, the model's predictions can be confronted with historical data to determine whether the predictions are accurate, at least within some statistical standard of confidence. Second, the assumptions made in developing the model can be assessed to determine if they are consistent with observed behavior or historical data. A long tradition in economics focuses on the first type of tests, arguing that â€Å"the proof is in the pudding. It is argued that any theory requires assumptions that might be judged â€Å"unrealistic,† and that if we focus on the assumptions, we can end up with no foundations for deriving the generalizations that make theories useful. The only proper test of a theory lies in its predictive ability: The theory that consistently predicts best is the best theory, regardless of the assumptions required to generate the theory. Tests based on assumptions are justified by the principle of â€Å"garbag e in-garbage out. † This approach argues that no theory derived from invalid assumptions can be valid. Even if it appears to have predictive abilities, those can slip away quickly when changes in the eThe Data The data used in this study are from the Chicago Board Options Exchange's Market Data Retrieval System. The MDR reports the number of contracts traded, the time of the transaction, the premium paid, the characteristics of the option (put or call, expiration date, strike price), and the price of the underlying stock at its last trade. This information is available for each option listed on the CBOE, providing as close to a real-time record of transactions as can be found. While our analysis uses only records of actual transactions, the MDR also reports the same information for every request of a quote. Quote records differ from the transaction records only in that they show both the bid and asked premiums and have a zero number of contracts traded. nvironment make the invalid assumptions more pivotal. The data used are for the 1992-94 period. We selected the MDR data for the S&P 500-stock index (SPX) for several reasons. First, the SPX options contract is the only European-style stock index option traded on the CBOE. All options on individual stocks and on other indices (for example, the S&P 100 index, the Major Market Index, the NASDAQ 100 index) are American options for which the Black-Scholes model would not apply. The ability to focus on a European-style option has several advantages. By allowing us to ignore the potential influence of early exercise, a possibility that significantly affects the premiums on American options on dividend-paying stocks as well as the premiums on deep-in-the-money American put options, we can focus on options for which the Black-Scholes model was designed. In addition, our interest is not in individual stocks and their options, but in the predictive power of the Black-Scholes option pricing model. Thus, an index option allows us to make broader generalizations about model performance than would a select set of equity options. Finally, the S&P 500 index options trade in a very active market, while options on many individual stocks and on some other indices are thinly traded. The full MDR data set for the SPX over the roughly 758 trading days in the 1992-94 period consisted of more than 100 million records. In order to bring this down to a manageable size, we eliminated all records that were requests for quotes, selecting only records reflecting actual transactions. Some of these transaction records were cancellations of previous trades, for example, trades made in error. If a trade was canceled, we included the records of the original transaction because they represented market conditions at the time of the trade, and because there is no way to determine precisely which transaction was being canceled. We eliminated cancellations because they record the S&P 500 at the time of the cancellation, not the time of the original trade. Thus, cancellation records will contain stale prices. This screening created a data set with over 726,000 records. In order to complete the data required for each transaction, the bond-equivalent yield (average of bid and asked prices) on the Treasury bill with maturity closest to the expiration date of the option was used as a riskless interest rate. These data were available for 180-day terms or less, so we excluded options with a term longer than 180 days, leaving over 486,000 usable records having both CBOE and Treasury bill data. For each of these, we assigned a dividend yield based on the S&P 500 dividend yield in the month of the option trade. Because each record shows the actual S&P 500 at almost the same time as the option transaction, the MDR provides an excellent basis for estimating the theoretically correct option premium and evaluating its relationship to actual option premiums. There are, however, some minor problems with interpreting the MDR data as providing a trader's-eye view of option pricing. The transaction data are not entered into the CBOE computer at the exact moment of the trade. Instead, a ticket is filled out and then entered into the computer, and it is only at that time that the actual level of the S&P 500 is recorded. In short, the S&P 500 entries necessarily lag behind the option premium entries, so if the S&P 500 is rising (falling) rapidly, the reported value of the SPX will be above (below) the true value known to traders at the time of the transaction Test 1: An Implied Volatility Test A key variable in the Black-Scholes model is the volatility of returns on the underlying asset, the SPX in our case. Investors are assumed to know the true standard deviation of the rate of return over the term of the option, and this information is embedded in the option premium. While the true volatility is an unobservable variable, the market's estimate of it can be inferred from option premiums. The Black-Scholes model assumes that this â€Å"implied volatility† is an optimal forecast of the volatility in SPX returns observed over the term of the option. The calculation of an option's implied volatility is reasonably straightforward. Six variables are needed to compute the predicted premium on a call or put option using the Black-Scholes model. Five of these can be objectively measured within reasonable tolerance levels: the stock price (S), the strike price (X), the remaining life of the option (T – t), the riskless rate of interest over the remaining life of the option (r), typically measured by the rate of interest on U. S. Treasury securities that mature on the option's expiration date, and the dividend yield (q). The sixth variable, the â€Å"volatility† of the return on the stock price, denoted by [Sigma], is unobservable and must be estimated using numerical methods. Using reasonable values of all the known variables, the implied volatility of an option can be computed as the value of [Sigma] that makes the predicted Black-Scholes premium exactly equal to the actual premium. An example of the computation of the implied volatility on an option is shown in Box 3. The Black-Scholes model assumes that investors know the volatility of the rate of return on the underlying asset, and that this volatility is measured by the (population) standard deviation. If so, an option's implied volatility should differ from the true volatility only because of random events. While these discrepancies might occur, they should be very short-lived and random: Informed investors will observe the discrepancy and engage in arbitrage, which quickly returns things to their normal relationships. Figure 3 reports two measures of the volatility in the rate of return on the S&P 500 index for each trading day in the 1992-94 period. (10) The â€Å"actual† volatility is the ex post standard deviation of the daily change in the logarithm of the S&P 500 over a 60-day horizon, converted to a percentage at an annual rate. For example, for January 5, 1993 the standard deviation of the daily change in lnS&P500 was computed for the next 60 calendar days; this became the actual volatility for that day. Note that the actual volatility is the realization of one outcome from the entire probability distribution of the standard deviation of the rate of return. While no single realization will be equal to the â€Å"true† volatility, the actual volatility should equal the true volatility, â€Å"on average. † The second measure of volatility is the implied volatility. This was constructed as follows, using the data described above. For each trading day, the implied volatility on call options meeting two criteria was computed. The criteria were that the option had 45 to 75 calendar days to expiration (the average was 61 days) and that it be near the money (defined as a spread between S&P 500 and strike price no more than 2. 5 percent of the S&P 500). The first criterion was adopted to match the term of the implied volatility with the 60-day term of the actual volatility. The second criterion was chosen because, as we shall see later, near-the-money options are most likely to conform to Black-Scholes predictions. The Black-Scholes model assumes that an option's implied volatility is an optimal forecast of the volatility in SPX returns observed over the term of the option. Figure 3 does not provide visual support for the idea that implied volatilities deviate randomly from actual volatility, a characteristic of optimal forecasting. While the two volatility measures appear to have roughly the same average, extended periods of significant differences are seen. For example, in the last half of 1992 the implied volatility remained well above the actual volatility, and after the two came together in the first half of 1993, they once again diverged for an extended period. It is clear from this visual record that implied volatility does not track actual volatility well. However, this does not mean that implied volatility provides an inferior forecast of actual volatility: It could be that implied volatility satisfies all the scientific requirements of a good forecast in the sense that no other forecasts of actual volatility are better. In order to pursue the question of the informational content of implied volatility, several simple tests of the hypothesis that implied volatility is an optimal forecast of actual volatility can be applied. One characteristic of an optimal forecast is that the forecast should be unbiased, that is, the forecast error (actual volatility less implied volatility) should have a zero mean. The average forecast error for the data shown in Figure 3 is -0. 7283, with a t-statistic of -8. 22. This indicates that implied volatility is a biased forecast of actual volatility. A second characteristic of an optimal forecast is that the forecast error should not depend on any information available at the time the forecast is made. If information were available that would improve the forecast, the forecaster should have already included it in making his forecast. Any remaining forecasting errors should be random and uncorrelated with information available before the day of the forecast. To implement this â€Å"residual information test,† the forecast error was regressed on the lagged values of the S&P 500 in the three days prior to the forecast. 11) The F-statistic for the significance of the regression coefficients was 4. 20, with a significance level of 0. 2 percent. This is strong evidence of a statistically significant violation of the residual information test. The conclusion that implied volatility is a poor forecast of actual volatility has been reached in several other studies using different methods and data. For example, Canina and Figlewski (1993), using data for the S&P 100 in the years 1983 to 1987, found that implied volatility had almost no informational content as a prediction of actual volatility. However, a recent review of the literature on implied volatility (Mayhew 1995) mentions a number of papers that give more support for the forecasting ability of implied volatility. Test 2: The Smile Test One of the predictions of the Black-Scholes model is that at any moment all SPX options that differ only in the strike price (having the same term to expiration) should have the same implied volatility. For example, suppose that at 10:15 a. m. on November 3, transactions occur in several SPX call options that differ only in the strike price. Because each of the options is for the same interval of time, the value of volatility embedded in the option premiums should be the same. This is a natural consequence of the fact that the variability in the S&P 500's return over any future period is independent of the strike price of an SPX option. One approach to testing this is to calculate the implied volatilities on a set of options identical in all respects except the strike price. If the Black-Scholes model is valid, the implied volatilities should all be the same (with some slippage for sampling errors). Thus, if a group of options all have a â€Å"true† volatility of, say, 12 percent, we should find that the implied volatilities differ from the true level only because of random errors. Possible reasons for these errors are temporary deviations of premiums from equilibrium levels, or a lag in the reporting of the trade so that the value of the SPX at the time stamp is not the value at the time of the trade, or that two options might have the same time stamp but one was delayed more than the other in getting into the computer. This means that a graph of the implied volatilities against any economic variable should show a flat line. In particular, no relationship should exist between the implied volatilities and the strike price or, equivalently, the amount by which each option is â€Å"in-the-money. † However, it is widely believed that a â€Å"smile† is present in option prices, that is, options far out of the money or far in the money have higher implied volatilities than near-the-money options. Stated differently, deep-out and far-in options trade â€Å"rich† (overpriced) relative to near-the-money options. If true, this would make a graph of the implied volatilities against the value by which the option is in-the-money look like a smile: high implied volatilities at the extremes and lower volatilities in the middle. In order to test this hypothesis, our MDR data were screened for each day to identify any options that have the same characteristics but different strike [TABULAR DATA FOR TABLE 1 OMITTED] prices. If 10 or more of these â€Å"identical† options were found, the average implied volatility for the group was computed and the deviation of each option's implied volatility from its group average, the Volatility Spread, was computed. For each of these options, the amount by which it is in-the-money was computed, creating a variable called ITM (an acronym for in-the-money). ITM is the amount by which an option is in-the-money. It is negative when the option is out-of-the-money. ITM is measured relative to the S&P 500 index level, so it is expressed as a percentage of the S&P 500. The Volatility Spread was then regressed against a fifth-order polynomial equation in ITM. This allows for a variety of shapes of the relationship between the two variables, ranging from a flat line if Black-Scholes is valid (that is, if all coefficients are zero), through a wavy line with four peaks and troughs. The Black-Scholes prediction that each coefficient in the polynomial regression is zero, leading to a flat line, can be tested by the F-statistic for the regression. The results are reported in Table 1, which shows the F-statistic for the hypothesis that all coefficients of the fifth-degree polynomial are jointly zero. Also reported is the proportion of the variation in the Volatility Spreads, which is explained by variations in ITM ([R. sup. 2]). The results strongly reject the Black-Scholes model. The F-statistics are extremely high, indicating virtually no chance that the value of ITM is irrelevant to the explanation of implied volatilities. The values of [R. sup. 2] are also high, indicating that ITM explains about 40 to 60 percent of the variation in the Volatility Spread. Figure 4 shows, for call options only, the pattern of the relationship between the Volatility Spread and the amount by which an option is in-the-money. The vertical axis, labeled Volatility Spread, is the deviation of the implied volatility predicted by the polynomial regression from the group mean of implied volatilities for all options trading on the same day with the same expiration date. For each year the pattern is shown throughout that year's range of values for ITM. While the pattern for each year looks more like Charlie Brown's smile than the standard smile, it is clear that there is a smile in the implied volatilities: Options that are further in or out of the money appear to carry higher volatilities than slightly out-of-the-money options. The pattern for extreme values of ITM is more mixed. Test 3: A Put-Call Parity Test Another prediction of the Black-Scholes model is that put options and call options identical in all other respects should have the same implied volatilities and should trade at the same premium. This is a consequence of the arbitrage that enforces put-call parity. Recall that put-call parity implies [P. sub. t] + [e. sup. -q(T – t)][S. sub. t] = [C. sub. t] + [Xe. sup. -r(T – t)]. A put and a call, having identical strike prices and terms, should have equal premiums if they are just at-the-money in a present value sense. If, as this paper does, we interpret at-the-money in current dollars rather than present value (that is, as S = X rather than S = [Xe. sup. -r(t – q)(T – t)]), at-the-money puts should have a premium slightly below calls. Because an option's premium is a direct function of its volatility, the requirement that put premiums be no greater than call premiums for equivalent at-the-money options implies that implied volatilities for puts be no greater than for calls. For each trading day in the 1992-94 period, the difference between implied volatilities for at-the-money puts and calls having the same expiration dates was computed, using the [+ or -]2. 5 percent criterion used above. (12) Figure 5 shows this difference. While puts sometimes have implied volatility less than calls, the norm is for higher implied volatilities for puts. Thus, puts tend to trade â€Å"richer† than equivalent calls, and the Black-Scholes model does not pass this put-call parity test.