Moral Hazard Adverse Selection And Asymmetric Information Finance Essay

Moral Hazard Adverse Selection And Asymmetric Information Finance Essay There are many people who have an extra money and want to credit this money to make gains by investing this money, at the other side, there are many people need money to use it in many aspects of life e.g. students need money to pay for their education, home buyer need money, business financial investors also need money and so on, for all of these needed financial intermediary to play an important rule to link between investors and borrowers. There are many risk may happens if there is no intermediate between lender and borrower, information asymmetry one of these risk and in this case information between seller and buyer are different, so it leads to two issues adverse selection and moral hazard. Adverse selection is happened when the one of parties know information more than the other parties, or if the one of parties know information that the other parties not have. Moral hazard is the situation which if the two parties make an agreement about something and one of these parties no t obligate with the agreement terms. All these issues help to explain why banking institutions and other financial intermediaries exist. So, lets go to talk about financial intermediaries and how it can help individuals to deposits and loans by using the easiest way without high level of risk. Also, in we will talk in the following about the terms Information asymmetry, Adverse Selection and Moral Hazard. Financial Intermediaries: Financial intermediary is institutions that take money from investor and depositors and give this money to the borrowers as loans, the main aim from these institutions to link between the depositors whom are seeking for credit and borrowers whom are seeking loans from financial institutions. There are many forms of financial institutions like investing banks, life insurance companies, saving loans associations, building and loan associations, commercial banks, credit unions and investment companies. (Investor Directory) Using financial intermediaries in investing give the investors many advantages, let us to talk about the two main advantages, first, making investing through financial intermediaries could reduce the risk of these investments, because directly the investor not have a large base to give his loans, so in this case there is bad diversify, therefore the investor will face a high risk, but by using financial institutions as middleman to invest money we find that the diversify is good, because these institutions have a big base from lenders and borrowers and it invest in a different business which dont have a relation between it. In this case we have a good diversify, so the risk will decreased more than if we investing directly. Second, also financial intermediaries help to give savers the liquidity, liquidity is the ability to convert assets into money (cash) quickly. For example if an individual saver lent someone (borrower) money to but house or asset, and in an argent case he needs hi s money, in this case there is a house now not money, so it is very difficult to convert this asset to cash quickly, it takes a lot of time to do that. But with financial intermediaries could help the saver by giving him the money that he need by provide him the liquidity very quickly than individual, if the financial intermediary doesnt have liquidity at that moment, it can obtain help from the government or another financial institution. (Ingrimayne) The economic business is depend on that all individuals whom owned an economic relationships have a perfect knowledge, also may have similar predictions about the future prospects. But in real, the both parties of each relationship suffer from incomplete information, sometimes they suffer from information asymmetry situation which means the probability of happening the future actions is randomly. the situation that have a different information between the both parties leads to conflict in interests of both parties who have the relationship, therefore this leads to uncertainty which represents in moral hazard and adverse selection. (M. A. Al-Garny) Asymmetric Information Information asymmetry means the situation where there is information which knows to some parties but not to all parties. Asymmetric information can lead to different in the cost between internal and external finance, e.g. seller is know an information on the subject of the quality of assets will be disinclined to agree the conditions offered by buyer who has less information about that asset, this may cause market break down, or may be also cause buying the asset in low price, but if all buyers and sellers have complete information, the situation here will be different. (WSU) Also information asymmetry makes market turn into inefficient, because information is not available to the entire market participant, thus they cant make a good decisions for their businesses. (Investor Words) There are two issues that caused by Information asymmetry, adverse selection and moral hazard. We will talk about these two Issues at the following: First: Adverse Selection Adverse Selection, negative selection or anti-selection is a term which simply means a situation where the buyer and seller have different information about the some aspects of product quality. (Wikipedia) For example in the firms managers and other insides may know more information (about the current position of the firm and the future prospects of the firm) than the outsider investors, in this case the outer information may differ than the inside information, therefore the solution for this problem in this situation is by issuing financial reports to insure the information transferred perfectly from inside firm to the outside investors to help them to make good decisions. (Money Instructor) George Akerlofs in his paper The Market for Lemons located two answers for adverse selection problem, signaling and screening. Michael Spence proposed the suggestion of signaling to solve the information asymmetry problem. In this situation, it is potential for people to indicate their style, therefore credibly transferring information to the other party. Joseph E. Stieglitz the first one who put the screening theory. In this way the under informed party can make the other party to know their information. Sometimes the sellers may know information better than the buyers, like peoples who sale used car, life insurance transactions, real estate agents, realtors, mortgage brokers and loan originators, and stockbrokers. And sometimes the buyers may know information better than the sellers, like the man who sale old art pieces with no previous expert evaluation or health insurance customers of a range of risk levels. (Wikipedia) Second: Moral Hazard The concept of moral hazard comes from insurance industry. Moral hazard is an idea saying that the person will take risk if he has an incentive to do that, therefore the person will ignore some morality aspects of his selection. Instead, he will do what will increase his profits. Anyone knows the tradeoff between return and risk, if he takes risk there may be consequences. The indifference comes when the risk comes without consequences. Also we can define moral hazard as if someone or party that has insurance cover may be further ready to take risks than the other who does not, e.g. if there is a person who has a car and his car is insured against stealing may be more not careful about dropping the probability of stealing than other would has been without such insurance. This point exactly tells us why insurance companies need to overtake (the amount of an appeal driven by the insurer person) majority claims, and decrease premiums rapidly as overtaking growing. It is also why insurer is extremely cautious about the assessment of what he insures and why he is not lawfully necessary to give more than the actual cost of what he cover. Moral hazard also is able to occur at the outer of insurance. Banks and financial institutions over and over again include embedded state guarantees (not official or lawfully obligatory guarantees, other than a common prospect which they are too significant to be unsuccessful). This creates a motivation used for the administration to take larger risks as they will profit from gambles that work, other than the state will give for individuals so as to do not. (Money Terms) Conclusion: I conclude that the financial intermediaries are able to change the risk of assets for cause that they know how to locate an answer for a market breakdown and defeat an information asymmetry problem that come up in credit markets for the reason that borrowers be acquainted with superior concerning their plan than lenders do. Also the financial intermediaries exist to help in solving many issues as we said in this paper. It plays the middleman rule in linked between the borrower who need to finance in his business and lender who want to investing and gain profits taking into account the important rule of this institutions by save the lender from asymmetric information, adverse selection and moral hazard. Because the main issue from its foundation is to collect information about borrowers and this job not easy. This issue is very costly for individuals (small lenders) but when there is financial intermediaries can help the lender to insure where he can invest his money without risks if he gives his money to wrong person, by providing him full information about good borrowers, at the same time this job here doesnt cost a lot because the big size of consumers that they connected with market. On the other hand, there are also still some risks when we deal with financial intermediaries. But with some regulation and other instruction it will be decreased to minimum limit.

PESTEL Analysis of K-Mart Essay

Understanding the general environment of a certain business requires knowledge regarding the key factors and trends in broader society. PESTEL Analysis gives a business the ability to break down the general environment into six different categories: Political, Economic, Social, Technological, Environmental, and Legal. By analyzing and studying each area, a company can create a strategy that most benefits them. Sears and K-Mart are two retail businesses that can gain from understanding the general environment through PESTEL Analysis. They could use it bad. One way to take a step forward is by creating new innovative strategies and conducting a PESTEL analysis is a good place to start. The first step of PESTEL is to try to understand the political environment. Sears and K-Mart focus on what political factors might affect the way they conduct business and create strategies based on this information. Sears and K-Mart are a part of many companies owned by Sears Holdings Corporation. Sears Holdings Corporation engages in government and political affairs that will benefit them. They openly express interest in politics on their website, stating â€Å"In some jurisdictions, Sears Holdings is engaged in the political campaign process to help elect candidates of both major political parties who support the retail industry and believe in the free enterprise system.1† Engaging in the political arena helps a business like K-Mart understand political trends. Political factors that may be lobbied on by Sears and K-Mart are ones that involve tax policies, labor laws and tariffs. Sears Holdings Company would most likely back the candidate that most benefited them. In 2008 former CEO of Sears, Alan J. Lacy, was one of many retail executives who supported John McCain for President.2 Being open about political affiliations can possibly affect customer opinions. This may not have affected the customer base of Sears, but Sears believes that the Republican Party best helps them. Economic and Social conditions are two major areas that any retail company must focus on in order to create effective strategies. These two areas have can have tremendous affects on the success of retail companies. If the Economy is down then people don’t usually like to spend a lot of money, and this takes a toll on sales of retail businesses. In 2011 Sears and K-Mart closed over 100 stores in an effort to raise cash. According to an article in the Huffington Post, the â€Å"problem is the weak economy that is hurting virtually  all retailers that cater to low- and middle-income shoppers, who are being forced to cut back on spending.3† Today, Sears and K-Mart are being affected by the changing retail landscape, where shoppers are going online for convenience and finding better prices. In order to be successful Sears Holdings must try to get on top of this changing landscape before it passes them by. Social factors go hand in hand with economic factors. If the economy is doing well that does not immediately translate into a major boost in sales. Social factors, like perception, play a gigantic role in the success of today’s businesses because of the affects of social media and the internet. Social perception is an area Sears and K-Mart have been lacking in. Preschool teacher Sara Kriz expresses a view that captures the perception of K-Mart beautifully by saying, â€Å"It seems easier to go to Target and Wal-Mart to get the same thing at the same price,† adding â€Å"the stores are cleaner, and they’re better stocked.4† If Sears and K-Mart want to become more profitable and generate more sales then they must direct their attention to trying to change this negative view associated with their stores. Social media and internet give customers a platform to share their opinions and experiences with the whole world. If most experiences are negative, then the general consensus will be to shop at other places. Technology like the internet has brought about a lot of change and it is another area of the external environment that businesses must try to understand in order to gain a competitive edge. Technology is everywhere we look and its getting better and better. Technology has affected the way Sears and K-Mart strategized in the past. In an attempt to bridge digital and in-store shopping, Sears and K-Mart rolled out iPads and iPod touch devices to almost 450 stores around the country in October 2011.5 Kimberly Freely, spokeswoman for Sears, Chicago, explained the move: â€Å"We wanted to enhance the relationship between customers and associates and improve the overall shopping experience,† adding that, â€Å"it is part of our strategy to become more of an integrated retailer a nd combining the digital and retail formats within the company.† This goes to show the impact that technology is having on the retail market. Today Sears and K-Mart are still striving to incorporate advanced technology in order to improve. Environmental and Legal factors are the last two pieces of PESTEL analysis. Sears and Kmart have aligned their environmental goals with that of the general public.  Sears and Kmart realize promoting a clean environment can benefit both themselves and society as a whole. Many of the appliances Sears sells tout the label of being energy efficient. This reflects Sears and Kmarts efforts to educate customers about a variety of environmental issues, including carbon and energy management, waste reduction and recycling, and water and transportation management. On Sears Holdings Company’s webpage you can learn about all the steps it is taking to promote a clean and sustainable environment. By continuing to engage in this type of activity, Sears and Kmart demonstrate responsibility and a genuine care for protecting the environment. This can go a long way in terms of changing social perception of Sears and Kmart. The Legal aspect of the external environment plays an everyday role in the way Sears and Kmart do business. Sears and Kmart must follow strict legal guidelines covering accounting and reporting practices, antitrust laws, and bribery and corruption among others. Failing to stay within the boundaries of the law can be detrimental to any business. Sears addresses its willingness to comply with laws in the Corporate Governance section of its main website. It states that â€Å"Sears Holdings Corporation values honesty, integrity, and adherence to the highest ethical standards. As part of this commitment, SHC has instituted a series of policies and procedures to reaffirm its dedication to the highest ethical standards.6† Keeping a keen eye on the legal aspect of the external environment will allow Sears and Kmart to focus on its corporate strategy without unnecessary distractions. Understanding the general environment of a certain business requires knowledge regarding the key factors and trends in broader society. It is essential for a business to know the aspects of the external environment so that it can create and enforce an effective strategy. Performing a PESTEL Analysis is the first step in understanding the external environment. Sears and Kmart can greatly benefit from knowing what external factors impact business operations. SWOT Analysis is the next step in collecting information to help understand what capabilities Sears and Kmart should focus on. Works Cited 1 â€Å"Government Affairs.† Sears Holdings. N.p., n.d. Web. 17 Apr. 2014. . 2 Farfan, Barbara. â€Å"Democratic and Republican Parties Both Get Strong Support from Retailers.† About.com Retail Industry. N.p., n.d. Web. 17 Apr. 2014. . 3 Berman, Jillian. â€Å"Sears Kmart Stores Closing: At Least 100 Stores To Shut Down Retailer Says.† The Huffington Post. TheHuffingtonPost.com, 27 Dec. 2011. Web. 17 Apr. 2014. 4 Berman, Jillian. â€Å"Sears Kmart Stores Closing: At Least 100 Stores To Shut Down Retailer Says.† The Huffington Post. TheHuffingtonPost.com, 27 Dec. 2011. Web. 17 Apr. 2014. 5 Tode, Chantal. â€Å"Sears Puts IPads in Shopper Hands to Enhance In-store Shopping.Napean LLC, 17 Oct. 2011. Web. 17 Apr. 2014. 6 â€Å"Corporate Governance.† Sears Holdings Code of Conduct. N.p., n.d. Web. 17 Apr. 2014. .

Chessington History Essay

Chessington Zoo was opened in July 1931 as a private venture by Reginald Goddard who invited the public to view his private animal collection. After the War Chessington soon became known for the different types of entertainment it could offer:- a circus, a funfair and a miniature railway as well as the zoo. Despite this in the early 1970’s the attendance figures of over 800,000 began to decline. The Zoo was in need of further investment. In 1978 the Pearson Group bought Chessington and when they later bought Madame Tussauds, they put all their leisure interests together to form the Tussauds Group. 1981 saw the beginning of the planning for the transformation of Chessington. Six years and i 12m later the Park was ready. It was opened in July 1987 by H. R. H. Prince Edward. The opening coincided with the opening of the M25 which gives easy access to the Park from various parts of the country. Approximately 18m people live within a 2 hour drive of the Park. On 19th October 1998 it was announced that Pearson had sold the Tussauds Group to Charterhouse Development Capital for i 352m. The Tussaud’s Group Vision and Mission Vision: â€Å"Entertaining People†. Mission: To deliver real growth in profits to take Europe’s leading entertainment world-wide†. The Marketing Department are a small team who work across both Chessington World of Adventures and Thorpe Park. It is the overall responsibility of the Marketing department to ensure that the brand identities of the two Parks are maintained in all communication both on and off the Parks. They do this through first identifying the brand identity, target market, and visual representation of the brand, i. e. the logo. For Chessington the target market is families with children under 12. Each year the marketing department will put together a marketing plan that covers the following areas: Product. Although almost without exception a new attraction is launched each year, and the main launch communication will focus on that, general communication about the rest of the Park is required. Theme Parks provide a whole day out for the family and it’s not just about the rides. The other attractions, places to eat, games, photography, the atmosphere, all play an important part in delivering a great day out. Pricing. There is a complex pricing structure for the Park which looks to maximise the revenue the Park can achieve with it’s targeted number of visitors. Marketing will review the pricing each year and along with the finance department look at how the budgeted targets can be achieved through the pricing matrix. Advanced sales are important to the business and for this reason tickets booked in advance are discounted, also those booked via the Internet are further discounted as this is a more efficient way for us to produce the tickets. Advanced tickets reduce the queues at admissions as visitors already have their tickets and can go straight in to the Park. Promotion. Promotion of the Park happens via a number of different communication channels. Advertising. This is generally broken down into two areas, the creative production of the advert and then the choice of where to place that advert, TV, Radio, Press etc. For the year 2002 communication for Chessington will focus on the new attraction, Hocus Pocus Hall. The main creative idea is all based around ‘The New Adventure Starts Here’. This new creative idea will be adapted for use on TV, Radio, Press and in Children’s comics, ie The Beano. Promotions. Promotions are very import in incentivising visitors to come to the Park. The incentive is generally either a Buy One get One Free mechanic or a discount off the full adult or child price. Chessington ran promotions on it’s own or in conjunction with the Tussauds Group, ie Tesco. Promotions can be run with a wide variety of partners, Esso, News of the World, KP Skips or solus via a direct mail campaign to surrounding homes. Public Relations. This area is all about getting positive exposure in the media, TV, Radio and Press. This is generally achieved through issuing Press Releases and conducting interviews with journalists. Measuring the Success. Throughout the year, how the Park is doing against its financial targets is constantly reviewed, but in addition Marketing conducts ongoing research into how the Park is performing on a daily basis. Questionnaires are handed out to visitors as they leave asking them to rank the rides’ experiences, eating places, how friendly and helpful the staff were, etc. This provides information on where things may be going wrong and how to put them right. New Media is a crucial area for involvement now and in the future. In addition to maintaining it’s own site: www. chessington. com, the Marketing department looks to exploit other opportunities for advertising, promotions and PR on other sites. Use of agencies. Chessington uses a wide variety of agencies as they bring different areas of expertise and experiences to the department. We use an advertising agency to create the TV, Radio adverts etc. and also for all the design work for the Gate Map. The space for the TV, Radio slots etc  is purchased by a Media Buying agency. We also use a Sales Promotion agency, PR agency and Internet design agencies. Corporate Hospitality makes it possible for businesses to entertain their guests at Chessington World of Adventures. Up to 3 000 corporate guests can be catered for at any one time. Education. An establishment like Chessington World of Adventures offers the opportunity for students studying the leisure industry, business or animals to visit the Park and find out more about their subject. For this reason, it is possible for groups to incorporate an educational talk into their visit. The Zoo enables guests to learn about the wildlife at Chessington World of Adventures. The Marketing Department ensure that the signage for the animals and around the Park are of a high quality and accessible by all the guests. Most often asked marketing questions Q Is the price of a new attraction affected by the viability of the ride? A Careful research is undertaken before a new attraction is bought. The attraction may be put in place to address a gap in guest numbers for a particular age range. The new attraction will encourage that element to visit the Park and therefore increase guest satisfaction.

Saint Josephs University Admissions - What It Takes

Saint Josephs University in Philadelphia admits over 78  percent of the applicants. Students with good grades and a strong application are likely to be admitted. To learn about the school, including application requirements and deadlines, be sure to visit the schools website, or get in touch with the admissions office at Saint Josephs. SJU is test-optional, so applicants are not required to submit SAT or ACT scores. They will need to send in an application and high school transcripts, however. Calculate your chances of getting in with this free tool from Cappex. Admissions Data (2016) Saint Josephs University Acceptance Rate: 78  percentTest Scores -- 25th / 75th PercentileSAT Critical Reading: 520 / 610SAT Math: 530 / 620What these SAT numbers meanACT Composite: 23  / 28ACT English: 23  / 29ACT Math: 23  / 27What these ACT numbers meanGPA, SAT and ACT Graph for Saint Josephs: SJU is test-optional, but you can see data from Cappex on test scores. International students from non-English speaking countries must submit either a TOEFL or SAT/ACT language to show English proficiency.SAT comparison for Catholic collegesACT comparison for Catholic collegesAtlantic 10 Conference SAT score comparisonAtlantic 10 Conference ACT score comparison Saint Josephs University Description Located on a 103-acre campus in western Philadelphia and Montgomery Country, Saint Josephs University is a highly-regarded private Catholic University with a history dating back to 1851. The colleges strengths in the liberal arts and science earned it a chapter of  Phi Beta Kappa. Many of Saint Josephs most popular and distinguished programs, however, are in business fields. Undergraduates can choose from 75 academic programs. In athletics, the Saint Josephs Hawks compete in the NCAA Division I  Atlantic 10 Conference  as well as the Philadelphia Big 5 conference. Lacrosse competes in the  Metro Atlantic Athletic Conference. Enrollment (2016) Total Enrollment: 8,415  (5,377  undergraduates)Gender Breakdown: 45 percent male / 55 percent female87  percent full-time Costs (2016-17) Tuition and Fees: $43,020Books: $825 (why so much?)Room and Board: $14,524Other Expenses: $1,205Total Cost: $59,574 Saint Josephs University Financial Aid (2015 -16) Percentage of Students Receiving Aid: 97  percentPercentage of Students Receiving Types of AidGrants: 97 percentLoans: 60 percentAverage Amount of AidGrants: $22,407Loans: $10,017 Academic Programs Most Popular Majors:  Accounting, Business Administration, English, Finance, Health Services, Marketing, Psychology,  Special Education Graduation and Retention Rates First Year Student Retention (full-time students): 91  percent4-Year Graduation Rate: 72 percent6-Year Graduation Rate: 80  percent Intercollegiate Athletic Programs Mens Sports:  Lacrosse, Rowing, Cross Country, Track and Field, Basketball, Baseball, Golf, SoccerWomens Sports:  Field Hockey, Lacrosse, Soccer, Rowing, Basketball, Tennis, Track and Field, Cross Country If You Like Saint Josephs, You May Also Like These Schools Fordham University: Profile | GPA-SAT-ACT GraphDrexel University: Profile | GPA-SAT-ACT GraphTemple University: Profile | GPA-SAT-ACT GraphUniversity of Pittsburgh: Profile | GPA-SAT-ACT GraphArcadia University: Profile | GPA-SAT-ACT GraphBoston College: Profile | GPA-SAT-ACT GraphJames Madison University: Profile | GPA-SAT-ACT GraphPennsylvania State University: Profile | GPA-SAT-ACT GraphSyracuse University: Profile | GPA-SAT-ACT GraphFairfield University: Profile | GPA-SAT-ACT GraphUniversity of Delaware: Profile | GPA-SAT-ACT Graph Data Source: National Center for Educational Statistics