Case For Legalizing Marijuana Essays - Herbalism, Medicinal Plants

Case for Legalizing Marijuana What Is Marijuana? Marijuana, a drug obtained from dried and crumpled parts of the ubiquitous hemp plant Canabis sativa (or Cannabis indica). Smoked by rolling in tobacco paper or placing in a pipe. It is also otherwise consumed worldwide by an estimated 200,000,000 persons for pleasure, an escape from reality, or relaxation. Marijuana is known by a variety of names such as kif (Morocco), dagga (South Africa), and bhang (India). Common in the United States, marijuana is called pot, grass, weed, Mary Jane, bones, etc. The main active principle of cannabis is tetrahydrocannabinol. The potency of its various forms ranges from a weak drink consumed in India to the highly potent hashish. The following consists of pure cannabis resin. Marijuana is not a narcotic and is not mentally or physically addicting drug. One can use mild cannabis preparations such as marijuana in small amounts for years without physical or mental deterioration. Marijuana serves to diminish inhibitions and acts as an euphoriant. Only once in a while will it produce actual hallucinations. More potent preparations of cannabis such as hashish can induce psychedelic experiences identical to those observed after ingestion of potent hallucinogens such as LSD. Some who smoke marijuana feel no effects; others feel relaxed and sociable, tend to laugh a great deal, and have a profound loss of the sense of time. Characteristically, those under the influence of marijuana show incoordination and impaired ability to perform skilled acts. Still others experience a wide range of emotions including feelings of perception, fear, insanity, happiness, love and anger. Although marijuana is not addicting, it may be habituating. The individual may become psychologically rather than physically dependent on the drug. Legalization Of Marijuana Those who urge the legalization of marijuana maintain the drug is entirely safe. The available data suggested, this is not so, Marijuana occasionally produces acute panic reactions or even transient psychoses. Furthermore, a person driving under the influence of marijuana is a danger to themselves and others. If smoked heavily and a great deal of consistency, its use has been clearly associated with mental breakdown. In many persons who smoke chronically, the drug reinforces passivity and reduces goal-directed, constructive activity. The chronic use of pure resin (hashish) has been associated both with mental deterioration and criminality. One of the major complications of marijuana use is the tendency on the part of some users to progress to more dangerous drugs. Users in economically deprived areas usually go on to heroin, whereas more affluent individuals tend to move from marijuana to more potent hallucinogens such as LSD. There is no established medical use for marijuana or any other cannabis preparation. In the United States, its use is a crime and the laws governing marijuana are similar to those regulating heroin. Many authorities now urge that the laws be modified to mitigate the penalties relating to conviction on marijuana possession charges. The Case For Legalizing Marijuana Use The United States stands apart from many nations in its deep respect for the individual. The strong belief in personal freedom appears early in the nation's history. The Declaration of Independence speaks of every citizen's right to "life, liberty, and the pursuit of happiness." The Constitution and Bill of Rights go further, making specific guarantees. They forbid the government to make unwarranted entry into dwelling places. They forbid seizure of personal property, except when very clear reasons are approved by the courts. They allow every citizen to remain silent in court when accused of a crime. Legal decisions have extended these rights, so that every citizen may feel safe, secure, and sheltered from public view in the privacy of his or her home. The Right To Privacy In recent years, Americans have referred to privacy as one of the basic human rights, something to be claimed by anyone, anywhere. United States citizens feel strongly about this and often tell other countries that they must honor their people's claims to privacy and personal freedom. Foreign leaders often disagree. They resent what they deem arrogant meddling by the United States. Leaders of the Soviet Union, for example, regard individual privacy as trivial when compared to the needs of the state. If the United States is

The Great Gatsby Dreams Essays - The Great Gatsby, Daisy Buchanan

The Great Gatsby Dreams Essays - The Great Gatsby, Daisy Buchanan The Great Gatsby Dreams The Great Gatsby Dreams The Great Gatsby by F. Scott Fitzgerald, is a novel about the American Dream. In the Great Gatsby, the dream is that one can acquire happiness through wealth and power. To get his happiness Jay attempts to reacquire the love of his lost sweet heart, Daisy. The main problem with Jays dream is that Daisy is all ready married. Gatsby's personal dream symbolizes the larger American Dream The pursuit of happiness. Jay Gatsby longs for the past. Surprisingly he devotes his adult life trying to recapture it and dies in its pursuit. In the past, Jay had a love affair with a young rich girl, Daisy. Daisy and Jay had fallen in love with each other in spite of knowing that they could not marry because of the difference in their social status. For the first time in Jays life he was truly happy. During their courtship, Jay was sent off to war. Upon returning from the war, Jay found out that Daisy had married a wealthy man by the name of Tom Buchannon. Jay then spends his life acquiring wealth to reach her economic standards, in hope that he can marry her and rekindle the happiness that he once had. His love for Daisy was impossible in society because he was at present a penniless young man without a pasthe had no comfortable family standing behind him (156). Gatsby encounters his dream of love at this point of his life. He knew that at that time a relationship of love was impossible with Daisy due to his low social standing. Gatsby became determined to breach that gap between them in order to have a loving relationship with Daisy. He did reach the physical circumstances necessary to love her, but he had focused too much on money and power the previous five years of his life. He wanted his love with Daisy to flourish. Unfortunately, he had lost the ability to love. He no longer possessed moral integrity or the ability to handle a relationship. Society is often broken up into different social groups by their economic status. Those of lower classes believe that their problems will go away if they can gain enough wealth to reach the upper class. Many people believe that the American Dream is this joining of the upper class, and once reaching that point, not having to be concerned about money at all. The logic behind this is that being poor keeps people from being happy, and once you become rich, you do not have to struggle with the problems of life, and can therefore be happy. The Great Gatsby takes this belief, and shows its flaws through the lives of Jay, Tom and Daisy. In fact, all of the characters in the story are affected in some way by the lives of these three characters. Gatsby makes becoming an upper class citizen his priority. The life of the upper class in turn, makes the acquisition of wealth their priority. Wealth becomes Jays vehicle in his quest for his primary goal, Daisy. In Gatsby's rise to power morality is sacrificed in order to attain wealth. While the story does not go into great detail as to how Gatsbys wealth was accumulated, it can easily be seen that his business ventures were shady at best. Gatsby's dream was doomed to failure because of his lack of principles. This shows a major flaw of the American Dream philosophy, just like the get rich quick schemes of today, Jay is trying to buy Daisys love, not earn it. Nick attempts to tell Jay that his dream is pointless by saying that the past cannot be relived. Jay quickly told Nick, Yes you can, old sport. This shows the confidence that Jay has in fulfilling his American Dream, and his commitment to it. Tom Buchanan, Daisys husband, was a man from an enormously wealthy family. Nick, described Tom's physical attributes as having a hard mouth and a supercilious mannerarrogant eyes had established dominance over his facealways leaning aggressively forwarda cruel bodyhis speaking voiceadded to the impression of fractiousness he conveyed (11). The wealth Tom has inherited causes him to become arrogant and condescending to others. Tom believed that

2.Critically evaluate the suggestion that individuals can use leisure Essay

2.Critically evaluate the suggestion that individuals can use leisure and tourism to form and express their identity - Essay Example â€Å"The issue of identity is omnipresent in discourses on tourism - not only in academically informed discourses on tourism, but also in discourses from inside the tourism system, i.e. the local participants - as the contributions by Bras, Schlehe, Senft, and Venbrux exemplify.† (Dahles H, Meijl T, 1999) Everyone has the right to rest on a daily, weekly and yearly basis, and the right to the leisure time that enables them to develop every aspect of their personality and their social integration. Clearly, everyone is entitled to exercise this right to personal development. The right to tourism is a concrete expression of this general right, and social tourism is underpinned by the desire to ensure that it is universally accessible in practice. Studies of leisure and tourism can be located within the social sciences – we can understand tourism and leisure from psychological and sociological approaches. Psychology seeks to understand the individual – in tourism most studies surround the issue of motivation. Sociology seeks to understand societal influences on individual behaviour. Two main strands of sociology - structuralism (consensus and conflict theories) and social action theory (interactionism, phenomenology). Rise of consumption society - leisure and tourism as forms of consumption. An emic primacy given to lifestyle in participant accounts: Some would look at me as a bum; I would feel a bit sorry for them if they look at me like that. What’s really developed in my real lifestyle. (Max, English, 40, 17 years lifestyle travel [LT]) Travelling was so much introduced to me as a baby that it became much more of an option as a way of life. There’s no year in my life that hasn’t involved travel. This type of movement and constant change is very much a part of me and my lifestyle. (Tamara, Canadian/Indian, 34, 17 years LT) â€Å"Young people’s increased leisure opportunities can actually keep them in their parents’ house because they spend

Knowledge management Essay Example | Topics and Well Written Essays - 500 words - 4

Knowledge management - Essay Example Conversely, knowledge management views knowledge as a tacit concept that is resident in individuals and organizations. Information management seeks to enhance internal processes and ensure the quality of business operations whilst knowledge management seeks to facilitate knowledge-rich relations and support ongoing innovation and development. Most Information Management Systems are based on business processes that are clearly defined, relatively stable and involve similar objects such as applications, invoices, and orders. Examples of such business processes include production processes, logistics, and administration. On the other hand, knowledge management systems are dynamic and difficult to predict because different times and situations need different knowledge. The people involved in knowledge management do not need information. Rather, they look for background information, argumentations, conclusions, methods, opinions, analyses and best practices. Knowledge management strategy is primarily the domain of human resource director and its significance to the director explains this. The strategy helps formalize, store, share, distribute, and coordinate an organization’s knowledge assets all of which are functions that touch on the work of the human resource director. The director is able to modify the culture of an organization in such a way that the organization’s values and norms seamlessly connect with the knowledge management strategy. Human resource director is able to promote a climate of trust and commitment in an organization in order to make it easy to manage knowledge. This director has the capacity to organize an organization’s employees in to networks, teams, and communities of practice in order to enhance sharing of knowledge. The strategy also helps human resource director to influence an organization to adopt policies that encourage the hiring and

Cultural Issues: Forced Marriage

Cultural Issues: Forced Marriage Marriage; â€Å"The legal status, condition, or relationship that results from a contract by which one man and one woman, who have the capacity to enter into such an agreement, mutually promise to live together in the relationship of Husband and wife in law for life, or until the legal termination of the relationship.† (Bouvier J, nd) In British culture, marriage is considered a union of two individuals who wish to commit to one another for the rest of their lives and take their relationship to the next level. Forced marriage is a controversial type of matrimony, which exists in the United Kingdom today, the United Kingdom, has an extremely multicultural society where modern and traditional beliefs often collide, especially between different generations that have different ideas and ideals. Forced marriage is conducted without the full consent of one or both parties and is common in the Middle East and in some parts of Asia and Africa (Smith, 2006). In order to understand why forced marriages take place, it is important to be aware of what values drive people to force their child into a marriage. Many young men and women suffer in silence and it may seem outlandish to some that this custom, which is considered inhumane by most people in the United Kingdom, is allowed to continue within modern British society today. This piece will describe forced marriage and the reasons why it takes place, it will also discuss some of the laws and protection offered to people affected by forced marriage. Forced marriages occur in a number of minority communities within the United Kingdom (UK) and often involve the forced spouse being sent abroad to get married or being forced to marry within the UK. Although this form of marriage is accepted and popular within some cultures, the concept of forced marriage is not favoured in the United Kingdom (Smith 2006). In 2009 the Forced Marriage Unit gave advice or support to 1682 cases of forced marriage, 86 percent involved females and 14 percent involved males. There were also many more cases that went unreported (Foreign and Commonwealth Office, 2009). One particular reason why the majority of people disagree with the act of forced marriage is because it is recognized as an abuse of human rights and also a form of domestic violence. The victims of forced marriages, who are often young women, may experience abduction, imprisonment, sexual abuse, physical and mental abuse and sometimes even murder. Forced marriages are not supported by any of the major religions within the United Kingdom. Whilst opinions on the nature of marriage may differ between the different religions, they all agree that some level of consent is necessary. Families may put pressure on a victim, or even use emotional blackmail, to make the victim believe that if they do not agree to the forced marriage then they are going against their religion, this is untrue. It is important to make clear that forced marriages are different than arranged marriages. Although arranged marriage involves parents choosing a partner they deem suitable for their child, the marriage is only organised by parents or family members once both of the marrying parties have consented. Arranged marriage is a tradition that has worked effectively within many communities for a very long time. However, forced marriages may sometimes be mistaken for arranged marriage as one or both of the parties may feel as though they have no choice but to consent due to the pressure put onto them from their family. Emotional blackmail is very common within the lead up to a forced marriage and families may tell the victim that they will bring shame to the family if they do not go ahead with the arrangements. The victims family may threaten to disown and reject the victim and leave them homeless if they go against their familys wishes. If a victim decides not to go ahead with the forced marriage they may be taken prisoner in their own home and those who are still in school may be taken out and miss vital education as their family fears they may tell somebody who can help them to escape the situation and run away from the marriage. Forced marriage may be a parents way of sustaining a cultural tradition. Culture and tradition are important aspects in peoples lives, as they are a strong foundation of ones faith and beliefs. Some cultures believe their family can only be respected if their children marry within certain families. Arrangements are made for their child to marry the person of the parents or elders choice and the child has no say. Parents may find themselves under pressure from extended family to marry off their children and in some cases the decision of who their child will marry is made in infancy. Much of the time a victim of a forced marriage will never have met or even spoken to their husband before they are married. In some cultures, marriage is considered a fusion of two families, not merely the joining of two individuals, that is why bloodlines and reputations matter. Love is expected to come after the marriage in the case of a forced marriage, and it is believed by some that the mystery of ones partner keeps the relationship interesting and long lasting. In a forced marriage, the pressure from the society in which the couple live and from the two families involved often keeps the marriage together whether or not it is a successful union. Divorce is very often not an option when there is so much pressure for a person to stay in a marriage (Sabreen, 2005). Violence is often used against the victim of a forced marriage and in the very worst cases victims are murdered in what are sometimes referred to as ‘honour killings. ‘Honour killings are murders by families of those who are believed to have brought shame upon the family name. This ‘shame could be down to a person refusing to enter into a forced marriage or having a relationship with somebody that the family do not approve of. A recent example of an ‘honour crime committed in the United Kingdom was the murder of Banaz Mahmod who was just twenty years old at the time of her murder. Her body was discovered inside of a suitcase buried in a Birmingham garden in April 2006. Banaz was one of five daughters from a strict Kurdish family and after entering into an arranged marriage at the age of sixteen, she was expected to fulfil the role of doting wife and mother. Aged nineteen, Banaz fell in love with another man and it is this that led her father, uncle and other family friends to kill her. These were the people she should have been able to turn to and trust in times of need. Banazs crime was dishonouring her father by leaving her unhappy marriage and falling in love with another man from a different Kurdish clan. The police had already been warned by Banaz that her life was in danger on four separate occasions before she vanished, and she had included in a letter, the names of some of those involved in h er death (BBC News, 2007). It is often believed in the UK that marriages made from love offer more independence and freedom when compared to forced marriages. Those involved in a forced marriage experience pressure to meet the expectations of their parents. One of the main arguments against a forced marriage is how can a person be expected to marry somebody that they do not know. Two people knowing each other before marriage allows partners to have respect and an understanding for each others needs and wants. In a traditional British marriage, those getting wed are the primary decision makers and parents and other family members are there merely to support the couple. It is down to the people getting married whether the marriage will be successful or not. Parents and other family members opinions may still be important but it is the individuals getting married that are the ones who should be taken into consideration. Forced marriages are extremely likely to have severe psychological, emotional, medical, legal and financial consequences. Victims are often isolated from friends and peers and rarely have access to the services that could assist them; this makes it increasingly difficult to escape the marriage. Forced marriages may become violent as the relationship is often based on the power of one spouse. Rape occurs frequently within forced marriage and apart from the obvious psychological problems this causes it also may have other severe consequences including the transition of Sexually Transmitted Diseases, as the victim, especially if young, may enter into a marriage with someone of sexual experience. As forced marriages often take place when the victim is still very young, they could be deprived from their right to education and the possibility of economic independence from their spouse is extremely limited, again making it difficult for them to escape their situation. It is increasingly common for an immigrants family to send a victim back to their country of origin to marry or to force a victim to marry a spouse sent from the country of origin. In some cases, victims of forced marriages may also be considered trafficking victims. Due to the unofficial nature of many forced marriages, often a victim is left with no legal protection in the case of a separation. Many families circumvent the law by entering into traditional Muslim marriages, which are not registered or recognised by the state. In the event of a separation, the couples assets would not be divided equally as would be the case if you were to become divorced under UK law. The victim may be left homeless and with no pos sessions, especially if the victim is a female. Law on marriage in England and Wales is governed by The Marriage Act 1949 and the Matrimonial Causes Act 1973. The minimum age a person in the UK can consent to marriage is 16, although a person under 18 also needs their parents to consent to the marriage. Those marriages that take place abroad in accordance with the correct formalities required by that countrys laws are usually recognised within England and Wales, providing both people involved have the capacity to marry. The Matrimonial Causes Act 1973 says that a marriage is deemed invalid if either of the couple did not consent to it, whether it is the consequence of pressure, unsoundness of mind, a mistake or otherwise. Unfortunately, victims of forced marriages are rarely aware of these provisions or are too afraid to use them. As forced marriages often happen when the victim is young, they can lack the confidence to challenge their situation. (Home Office Communications Directorate, 2000) â€Å"No marriage shall be legally entered into without the full and free consent of both parties, such consent to be expressed by them in person after due publicity and in the presence of the authority competent to solemnize the marriage and of witnesses, as prescribed by law.† (Office of the High Commissioner for Human Rights, 2007) Every individual in the United Kingdom has the right to choose the person that they marry. Whatever religion you follow, age and sexuality you are and whether or not your family approve of your choice, you have this fundamental right. Although at present there is no legislation in the United Kingdom clearly banning forced marriage, and it is not recognised as a specific criminal offense, there are several actions that may happen in the process of forcing someone to marry that are criminal offences, these include assault, abduction, rape and imprisonment to name just a few. A person who commits one of these crimes, regardless of whether they are a relative is likely to be prosecuted. In 2004, the Government extended its definition of domestic violence to include acts committed by intimate partners as well as family members. As a consequence of this, forced marriage and other ‘honour crimes, are now considered as a form of domestic violence. An Act of Parliament called The Forced Marriage (Civil Protection) Act 2007, provided courts with the power to make Forced Marriage Protection Orders which are put into place to stop a person forcing another into marriage. British law also allows the courts to protect those victims who have already been forced into marriage and help them to escape their situation (forcedmarriage.net, 2009). A marriage in the UK requires the consent of both parties involved, if this is not given, the marriage is invalid. Although most forced marriages take place outside the jurisdiction of the UK, if a marriage does take place abroad and one part wishes to end it, divorce is legal. Alternatively, a couple can stay married but live apart with no legal sanction against them. There are only a few countries that have criminalized forced marriage itself, for example Croatia expressly penalizes forced marriage, including criminal acts directed against sexual freedom and sexual morality. Criminalization is not universally accepted as being the best way to eradicate forced marriage and the United Kingdom decided against making it a criminal offence due to concerns that victims would not wish for their families to be punished (Office of the High Commissioner for Human Rights, 2007). Forced marriages are widespread but many local efforts to prevent these marriages have been successful. Crisis lines, womens shelters, schools, groups and even monetary incentives have all been effective in postponing marriages for girls and helping to stop forced marriages (Office of the High Commissioner for Human Rights, 2007). There are a number of organisations that have been set up in the UK to help and support victims of forced marriage. Southall Black Sisters was created to provide information and support to women and children experiencing domestic violence, including forced marriage and honour crimes. The aim of their service is to help people to escape violence and abuse and help them to deal with a range of problems such as rape, suspicious deaths and matrimonial issues. Their work consists of making recommendations to the Home Office, Social Services, Police, Schools, Health Authorities and the Foreign and Consular Service on how to deal with those who face the possibility of forced marriage and the problems surrounding it. The Southall Black Sisters have concerns that there is reluctance from the statuary agencies to intervene in cases of forced marriage as it is viewed by some as a cultural practice and they do not want to appear racist by intervening in such cases. They campaign for widespread acceptance that it is not racist to intervene and that it is the human right of all women no matter what their religion or culture to be afforded state protection against any kind of violence (Southall Black Sisters, nd). Conclusion: In the United Kingdom we ban all sorts of cultural practices, for example, Female Genital Mutilation. When the harm caused to an individual is so huge, the ‘rights of a group must be sacrificed and it is important for the law to step in and intervene. The rights of an individual should not be put behind those of a particular culture. Some may argue that banning forced marriage would victimise and disassociate groups of people with wider culture but how much more victimised can a person be than being forced into a marriage against their will? It is important that the authorities are sensitive to cultural differences but the softly, softly approach taken towards communities where the practice of forced marriage takes place has already led to thousands of people being kept under house arrest, many being physically abused and there have been some cases of ‘honour killings within this country. Banaz Mahmod had sought help from the police four times before she met her death and unfortunately the only time the police responded was when her lifeless body was found. Perhaps if there was more awareness and stronger laws surrounding the issue of forced marriage, Miss Mahmod could have married the man who she had loved and would still be living today. It can be understandably difficult to detect forced marriages as physical and mental coercion is not usually involved with the wedding itself and even if evidence of physical or mental abuse is found, it is hard to link this with any alleged forced marriage as the victims are often scared to of the consequences of talking to authorities, however, If forced marriages were banned, police investigators would be able to look at DNA samples and conduct interviews with those involved in the wedding and could put together a case to prove that a marriage was not made in true consent of one or both of the spouses. The arrest of suspected initiators of forced marriage would also give the victim time to flee to safety and plan their future. Although legislation is in place against the crimes that often come hand in hand with forced marriage, a ban would also send out a clear message to society that forced marriage is not a custom that is tolerated in the United Kingdom. It would also show those that are being forced into marriages that the UK law is on their side, which may well increase the number of people that come forward to the authorities as they may feel less isolated. Marriage should not be something performed to satisfy cultural traditions; instead, it should be looked upon as a sacred union of two individuals engaged in a relationship built on love and maturity. A persons future cannot be dictated by cultural traditions and ideas, the success of a marriage can only be shaped by human judgement and maturity. Therefore traditions and other concerns are unacceptable reasons for an individual to be forced into marriage. References: â€Å"A womans right to choose a spouse and enter freely into marriage is central to her life and her dignity and equality as a human being† Norfolk, A. (2006). Despair as forced stay legal. Retrieved November 24, 2006 Smith, J. (2006). Forced Marriage. Retrieved March 4th, 2010 â€Å"Marriage should be entered into only with the free will and full consent of the intending spouses† (Universal declaration of human rights, Article 16) http://www.forcedmarriage.net/media/images/FMU-FM-Guidance-SocialWorkers_73.pdf http://www.fco.gov.uk/resources/en/pdf/2855621/what-is-forced-marriage http://www.youtube.com/watch?v=AoGwwlFw20s http://www.mcb.org.uk/uploads/wrongnotright.pdf http://www.bbc.co.uk/insideout/eastmidlands/series6/forced_marriages.shtml http://www.fco.gov.uk/en/travel-and-living-abroad/when-things-go-wrong/forced-marriage http://www.dcsf.gov.uk/everychildmatters/safeguardingandsocialcare/safeguardingchildren/forcedmarriage/forcedmarriage/ http://www.forcedmarriage.net/ http://www.dailymail.co.uk/news/article-461378/The-tragic-story-Banaz-Mahmodfell-love-19-family-killed-her.html http://news.bbc.co.uk/1/hi/england/london/6766207.stm http://www.southallblacksisters.org.uk/songs.html Bouvier J, (nd),available at: http://legal-dictionary.thefreedictionary.com/marriage accessed on 5th March 2010 Home Office Dictorate (2000), available at: http://www.fco.gov.uk/resources/en/pdf/pdf14/fco_choicebyright2000 accessed on 2nd March 2010. (Article One: Convention on Consent to Marriage, Minimum Age for Marriage and Registration of Marriages. Office of the High Commissioner for Human Rights, available at: http://www.stopvaw.org/Forced_and_Early_Marriage.html 2007 (forced and early marriage (2007)

Synthesis Paper on Cell Phones Usage in School

Robert Pohlman ENG-215 Miss Sreenan June 2, 2009 My Fifteen Minutes of Fame I arrived at the Tepala Shrine Temple to play my first gig in front of a live audience with my new band â€Å"Ben Joehoff and the Cards†. I'm Robert, the lead guitarist in our four member band. I walk into the building with my shoulders back trying to exude confidence as I carry in my two guitars, a laguna and a fender Stratocaster. As soon as I'm through the door I start looking for my friends without trying to be too obvious about it. At the same time I walk slowly toward the room where all the loud band and people noises are escaping. I stop at the doorway. Glancing around the room, I see the judges at their table, the audience, and all the other band member â€Å"want-to-be's† hanging around. My eyes shift to the front of the room, to the huge stage. The stage appears as promised by the RAMI's. It is set up with everything necessary for a rock band to play professionally. I see the huge black speakers and the shiny microphones which will make us sound professional. There are lights all over, of different sizes, colors and shapes. There are lighting people, and sound people. The setup looks great and the rest is up to us. I swallow down a dry throat, trying to keep my nerves from showing. Again, I look for my friends. Suddenly, I see Mark, or â€Å"Joker†, that is his band nickname, and, then, I see the rest of my band. I give a little sigh of relief, to myself, and, I think, â€Å"They are here, this is really happening! â€Å". I grin at them, and hurry over to join them. Everyone is excited, nervous, but excited. We can't wait till it's our turn! There are several bands before us, but they play their songs way too fast. Suddenly, we're up! This is my first time. I can feel the butterflies exploding in my stomach. I take a deep breath and walk out into the lights on stage. The lights are so bright that it is hard to see anything off stage. I strum a cord on my guitar to make sure my volume is alright. Suddenly, I hear the sound of sticks! One, two, three, four! My turn, I hit the first cord and feel the rich sound. The crowd seems to like us. Some of my crazy friends are dancing to the music. Mark busts out with his crazy drum solo. The beat calms me somehow. Oh, no! My solo is coming up! I hope I don't mess up! Here, goes. I just need to concentrate on the notes. Suddenly it is over! I nailed it!!! That has to be one of the best fifteen minutes of my life!

Financial Markets and Return Essay

Problem 1 (BKM, Q3 of Chapter 7) (10 points1) What must be the beta of a portfolio with E( rP ) = 20.0%, if the risk free rate is 5.0% and the expected return of the market is E( rM ) = 15.0%? Answer: We use E( rP ) = ÃŽ ² P *(E( rM ) – r f ) + r f . We then have: 0.20 = ÃŽ ² P *(0.15-0.05) + 0.05. Solving for the beta we get: ÃŽ ² P =1.5. Problem 2 (BKM, Q4 of Chapter 7) (20 points) The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume that the stock is expected to pay a constant dividend in perpetuity. Hint: Use zero-growth Dividend Discount Model to calculate the intrinsic value, which is the market price. Answer: First, we need to calculate the original beta before it doubles from the CAPM. Note that: ÃŽ ² = (the security’s risk premium)/(the market’s risk premium) = 6/8 = 0.75. Second, when its beta doubles to 2*0.75 = 1.5, then its expected return becomes: 7% + 1.5*8% = 19%. (Alternatively, we can find the expected return after the beta doubles in the following way. If the beta of the security doubles, then so will its risk premium. The current risk premium for the stock is: (13% – 7%) = 6%, so the new risk premium would be 12%, and the new discount rate for the security would be: 12% + 7% = 19%.) Third, we find out the implied constant dividend payment from its current market price of $40. If the stock pays a constant dividend in perpetuity, then we know from the original data that the dividend (D) must satisfy the equation for a perpetuity: Price = Dividend/Discount rate 40 = D/0.13 ⇒ D = 40 * 0.13 = $5.20 Last, at the new discount rate of 19%, the stock would be worth: $5.20/0.19 = $27.37. The increase in stock risk has lowered the value of the stock by 31.58%. Problem 3 (BKM, Q16 of Chapter 7) (10 points) A share of stock is now selling for $100. It will pay a dividend of $9 per share at the end of the year. Its beta is 1.0. What do investors expect the stock to sell for at the end of the year if the market expected return is18% and the risk free rate for the year is 8%? Answer: Since the stock’s beta is equal to 1, its expected rate of return should be equal to that of D + P1 − P0 , therefore, we can solve for P1 as the market, that is, 18%. Note that: E(r) = P0 9 + P1 − 100 the following: 0.18 = ⇒ P1 = $109. 100 Problem 4 (15 points) Assume two stocks, A and B. One has that E( rA ) = 12% and E( rB ) = 15.%. The beta for stock A is 0.8 and the beta for B is 1.2. If the expected returns of both stocks lie in the SML line, what is the expected return of the market and what is the risk-free rate? What is the beta of a portfolio made of these two assets with equal weights? Answer: Since both stocks lie in the SML line, we can immediately find its slope or the risk premium of the market. Slope = (E(rM) – rF) = ( E(r2) – E(r1))/( ÃŽ ²2- ÃŽ ²1) = (0.15-0.12)/(1.2-0.8) = 0.03/0.4= 0.075. Putting these values in E(r2) = ÃŽ ²2*(E(rM) – rF) + rF one gets: 0.15 = 1.2*0.075 + rF or rF =0.06=6.0%. The Expected return of the market is then given by (E(rM) – 0.06) = 0.075 giving: E(rM) = 13.5%. If you create a portfolio with these two assets putting equals amounts of money in them (equally weighted), the beta will be ÃŽ ²P = w1*ÃŽ ²1+w2*ÃŽ ²2= 0.5*1.2+0.5*0.8 = 1.0. Problem 5 (15 points) You have an asset A with annual expected return, beta, and volatility given by: E( rA ) = 20%, ÃŽ ² A =1.2, ÏÆ' A =25%, respectively. If the annual risk-free rate is r f =2.5% and the expected annual return and volatility of the market are E( rM )=10%, ÏÆ' A =15%, what is the alpha of asset A? Answer: In order to find the alpha, ÃŽ ± A , of asset A we need to find out the difference between the expected return of the asset E( rA ) and the expected return implied by the CAPM which is r f + ÃŽ ² A (E(rM) – r f ). That is, express its expected return as: ÃŽ ± A = E( rA ) – r f + ÃŽ ² A (E( rM ) – r f )). Since we know the expected return of the market, the beta of the asset with respect to the market, and the risk-free rate, alpha is given by: ÃŽ ± A = E( rA ) – ÃŽ ² A (E( rM ) – r f ) – r f = 0.20 – 1.2(0.1 – 0.025) – 0.025 = 0.085 = 8.5%. 2 Problem 6 (BKM, Q23 of Chapter 7) (20 points) Consider the following data for a one-factor economy. All portfolios are well diversified. _______________________________________ Portfolio E(r) Beta ———————————————————-A 10% 1.0 F 4% 0 ———————————————————-Suppose another portfolio E is well diversified with a beta of 2/3 and expected return of 9%. Would an arbitrage opportunity exist? If so, what would the arbitrage strategy be? Answer: You can create a Portfolio G with beta equal to 1.0 (the same as the beta for Portfolio A) by taking a long position in Portfolio E and a short position in Portfolio F (that is, borrowing at the risk-free rate and investing the proceeds in Portfolio E). For the beta of G to equal 1.0, the pr oportion (w) of funds invested in E must be: 3/2 = 1.5 The expected return of G is then: E(rG) = [(−0.50) Ãâ€" 4%] + (1.5 Ãâ€" 9%) = 11.5% ÃŽ ²G = 1.5 Ãâ€" (2/3) = 1.0 Comparing Portfolio G to Portfolio A, G has the same beta and a higher expected return. This implies that an arbitrage opportunity exists. Now, consider Portfolio H, which is a short position in Portfolio A with the proceeds invested in Portfolio G: ÃŽ ²H = 1ÃŽ ²G + (−1)ÃŽ ²A = (1 Ãâ€" 1) + [(−1) Ãâ€" 1] = 0 E(rH) = (1 Ãâ€" rG) + [(−1) Ãâ€" rA] = (1 Ãâ€" 11.5%) + [(− 1) Ãâ€" 10%] = 1.5% The result is a zero investment portfolio (all proceeds from the short sale of Portfolio A are invested in Portfolio G) with zero risk (because ÃŽ ² = 0 and the portfolios are well diversified), and a positive return of 1.5%. Portfolio H is an arbitrage portfolio. Problem 7 (10 points) Compare the CAPM theory with the APT theory, explain the difference between these two theories? Answer: APT applies to well-diversified portfolios and not necessarily to individual stocks. It is possible for some individual stocks not to be on the SML. CAPM assumes rational behavior for all investors; APT only requires some rational investors: APT is more general in that its factor does not have to be the market portfolio. Both models give the expected return-beta relationship. 3