Stamp Duty: Policy Evaluation

Stamp Duty: Policy Evaluation EXAMINING STAMP DUTY: AN IDEAL GOVERNMENT REVENUE MACHINE AND A BURDEN TO BRITISH CITIZENS Stamp duty can be a costly part of any number of common transactions in Britain – from buying a home to investing in a U.K. company. In order to truly understand the degree to which this tax impacts a transaction’s bottom line, it is important to understand all the scenarios in which stamp duty is payable as well as determine what type of relief and exemptions are available. Before determining if stamp duty is an ideal tax, it is also vital to gather expert opinions on the various types of stamp duty, the reasons these taxes were created, and how recent changes are affecting British citizens and businesses. While the government may find stamp duty a perfect fulfilment of taxation principles due to its simplicity and the considerable revenue generated, stamp duty seems to be burdensome and impedes the financial success of many residents who dream of homeownership and to those companies who want to increase their market value through the stock exchange system. There are three types of stamp duty: stamp duty, stamp duty land tax, and stamp duty reserve tax. Stamp duty is â€Å"a charge on instruments† (Thomas 2003). Stamp duty is a general term for a tax that is levied on the purchase of shares and on property. While there is a flat rate for the purchase of shares, the rate for property has a range tied to different home purchase price thresholds. Considered a new tax in its own right rather than an offshoot of stamp duty, the stamp duty land tax went into effect on 1 December 2003 (Thomas 2003). This tax is charged to all land transactions whether or not it is actually stamped, or recorded, in a document (Thomas 2003). Included in these transactions are all types of property, including houses, flats, other buildings and land. What it really is considered is a land transaction but it retains the reference to stamp duty to link its activities to the original taxation system (Thomas 2003). The tax must be paid by the person buying the land and it is calculated as a percentage of the total purchase price. No stamp duty land tax is paid on any transaction under  £125,000. One per cent is paid on anything valued between  £125,000 and  £250,000. From  £250,001 to  £500,000, the tax is three per cent and anything valued at  £500,001 is taxed at four per cent (DirectGov 2006). The stamp duty land tax has been â€Å"founded on an entirely new set of concepts† and is â€Å"directly enforceable against the purchaser under a strict new self-assessment regime† (Thomas 2003). While some of the same relief provisions have been carried through from the stamp duty tax, other changes have been made to discourage certain types of transactions. For example, if the purchase price of a property is  £150,000 and the government has designated that area as disadvantaged, no stamp duty land tax is required (DirectGov 2006). Relief provisions that are retained from stamp duty include all the major provisions except that â€Å"group relief, reconstruction and acquisition reliefs, and charities relief† are now designed in a manner that prevents exploitation for â€Å"tax planning purposes† (Thomas 2003). Relief is now available for builders who make purchases in part-exchange as well as for â€Å"transactions not made for chargeable consideration † (Thomas 2003). The stamp land duty tax was designed to achieve a number of purposes. As with any tax, it was created as a way to raise more revenue for the government. The tax does this by stopping the loopholes in the stamp duty that were â€Å"exploited for planning purposes† (Thomas 2003); requiring the purchaser to file a tax return and pay the tax within thirty days of the close of the land transaction (Thomas 2003), and introducing a new upfront levy on the value of the rental stream over the â€Å"full term of the lease instead of on the average annual rent (Thomas 2003). The last of the three types of stamp duty is the stamp duty reserve tax. This tax is paid on any U.K share transactions when a person buys shares in a company that is incorporated in the UK or in a foreign company that maintains a share register in the UK (DirectGov 2006). These shares can be bought through a stockbroker and completed on paper forms or electronically through CREST, the electronic settlement and registration system (DirectGov 2006). The tax is a flat rate of 0.5 per cent based on what is paid for the shares, not what they are worth (DirectGov 2006). A higher rate of 1.5 per cent is paid when shares are transferred into a depository receipt scheme or a clearance service (DirectGov 2006). The fees are paid through the CREST system if a person uses a brokerage but are paid directly if this system is not used (DirectGov 2006). Even if a person does not pay cash but provides something else of value in exchange for the shares, the stamp duty reserve tax is based on the value of what the person gives for those shares (DirectGov 2006). Other situations that require payment of stamp duty reserve tax is when a person buys an option to buy shares, rights arising from shares and an interest in shares (DirectGov 2006).The only time the stamp duty reserve tax does not have to be paid is when shares are given to a person for nothing or a person buys foreign shares. One area where stamp duty revenue tax has been causing some dilemmas is with unit trusts, open-ended investment companies, and the structure of stakeholder pension products. The best example of this is with companies that provide CAT-marked investments: Stamp duty reserve tax arises when investors buy or sell units in the fund, and is generally paid for by the fund. It cannot be forecast accurately in advance, for the ultimate liability will depend on factors beyond the fund managers’ control. Yet this tax must be included in calculating whether charges to investors meet the CAT standard of 1 per cent a year, despite the fact that it is not a charge made by the ISA provider, but a government tax. This has led providers to question the commercial liability implied by offering a CAT-market product (Warland 2000). The net result of the stamp duty reserve tax is that it is â€Å"complex to administer, very difficult for fund investors to understand,† and did raise significant revenue (Warland 2000). It has been argued by the figures within the City of London, including the London Stock Exchange, that stamp duty reserve tax should be scrapped because â€Å"it undermines the competitiveness compared with other financial centres and distorts securities trading† (Wighton 2006). The National Association of Pension Funds says that stamp duty increases transaction costs, which are then passed onto employers (Brown-Humes 2006). Stamp duty reserve tax is also considered controversial because â€Å"it accounts for a greater proportion of overall share transaction costs†¦because broker commissions and other costs have fallen† (Brown-Humes 2006). In looking at the complete stamp duty tax scheme, the changes in the Finance Act of 2003 were intended to bring reform that was considered long overdue as well as infuse the government with much-needed revenue. Prior to that, legislation had been considered outdated and inadequate especially considering the real value that revenue from such a tax could yield (Thomas 2006). Prior to the Finance Act of 2003, the HM Revenue Customs (HMRC)did not have the power to enforce the stamp duty on any transaction that was not properly stamped (Thomas 2006). To the HMRC, â€Å"clamping down on perceived avoidance was the dominant motive for change† (Thomas 2006). To them, it was â€Å"unfair for well-advised taxpayers to avoid paying tax through good planning, as this puts an unfair share of the tax burden onto everyone else† (Thomas 2006). From this philosophy was born the most recent stamp duty requirements. In looking at the principles of taxation, stamp duty is ideal in that it is â€Å"easy to administer and collect† (Brown-Humes 2006). To everyone else outside of the government, the tax is considered less than ideal. As one of the most hotly debated government schemes and deemed a tax on the masses (Barrow 2006), it has been acknowledged by the chancellor that stamp duty land tax does place a burden on the average British citizen. According to figures released in May 2006, stamp duty is raking in revenues of  £1 billion per month (Barrow 2006) between residential and commercial transactions as well as share investment. These figures far surpass any tax amount ever demanded from citizens in Britain’s history (Barrow 2006). . In fact, one writer went as far as to say that the stamp duty has been one of the most lucrative stealth taxes developed by New Labour (O’Kelly 2006). As one economist noted, â€Å"We have now got to the level where it is hitting mainstream home-owners. It’s only going to get worse† (Barrow 2006). According to Halifax, Britain’s biggest mortgage lender, 2.6 million homeowners had to pay stamp duty land tax (Barrow 2006). That equates to fiv e out of six homeowners feeling this burden (Barrow 2006). Another way to slice and dice the figure comes from the Council of Mortgage Lenders. They found that 55 per cent of first-time buyers and 86 per cent of home-movers paid the tax in September. The government has retorted that there are a number of relief provisions in place. It was recently announced that new – no pre-existing dwellings – that are considered â€Å"zero-carbon† homes sill be completely exempt from stamp duty (Goff and Harvey 2006). While attractive to new homeowners, this is not very realistic as many first-time buyers are not prepared to inhabit in such a revolutionary dwelling or they live in an area where there is not enough renewable energy to power these homes (Goff and Harvey 2006). Another move intended to decrease the burden was the announcement last year to increase the threshold at which stamp duty is triggered (Batchelor 2006). As one finance expert noted, â€Å"If stamp duty had kept pace with rising house prices since 1993 the threshold would have been set at  £190,000† instead of  £125,000 (Batchelor 2006). It seems as if the rising house prices are making the new threshold rate seem ineffective as a relief. As Matthew Wyles of the Portman Building Society said, â€Å"Stamp duty continues to be a deeply unfair tax to all who pay it. The burden of this tax will continue to increase unless the government undertakes a radical alteration to its policy in this area and abandons its current strategy of making the occasional cosmetic tweak to the threshold to keep criticism at bay† (Houlder 2006). The chancellor decided to end â€Å"seeding relief,† which was intended to help on â€Å"transfers of property into a unit trust with immediate effect† (Batchelor 2006). Revenue from taking away this relief is expected to raise  £50 million annually (Batchelor 2006). Recent changes also involved not making partnerships that are involved in a trade or profession responsible for stamp duty for land transactions owned by that partnership (Batchelor 2006). It seems as though the government could still use this lucrative tax to levy sellers instead of buyers since it is usually the sellers who are involved in investment schemes. It might even make sense to still gain this revenue from non-residents who tend to speculate in the property market, making home ownership less feasible for the first-time resident buyer (O’Kelly 2006). While it may seem like an ideal tax in the minds of the government and a solution to stopping investors from exploiting the system, it certainly does nothing to help citizens who are already struggling to buy a home let alone pay the stamp duty required on the transaction. Recent announcements to raise interest rates alongside the intense housing price inflation only exacerbate a domestic problem that has been brewing for as long as the stamp duty policies have existed. Homeownership and investment should not create a financial burden for citizens in Britain because the government wants to resort to an overuse of its taxation powers. The concern, however, is that if stamp duty was ever scrapped and the government continued to overspend, whatever tax scheme replaced stamp duty might be a jump from the frying pan into the fire. REFERENCES Barrow, Becky 23 May 2006, Stamp Duty Rakes in  £1bn a Month, Daily Mail. Batchelor, Charles 23 March 2006, Stamp Duty, Financial Times. Brown-Humes, Christopher 21 October 2006, Stamp Duty’s Hidden Benefit: It’s the Devil-you-know Tax, Financial Times. DIRECTGOV 2006, Tax on Buying Shares, Available at: http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/TaxOnSavingsAndInvestmentsArticles/fs/en?CONTENT_ID=10013514chk=Tac6CP. Goff, Sharlene and Harvey, Fiona 9 December 2006, Exemption from Stamp Duty Seen as Token Gesture, Financial Times. Houlder, Vanessa 7 September 2006, Amount Paid in Stamp Duty Up 30%, Financial Times. O’Kelly, Sebastian 12 March 2006, How Brown is Still Coining It with His Unfair Stamp Duty; the Chancellor is Milking Homebuyers. But Shouldn’t His Stealth Tax Target Sellers Instead? The Mail on Sunday, p. 13. Thomas, Michael 2003, Introduction to Stamp Duty Land Tax, Cambridge University Press. Thomas, Michael March 2006, Stamp Duty Land Tax, 2nd Edition, London: Cambridge University Press. Warland, Phillip 17 February 2000, How Stamp Duty Reserve Tax Threatens Low-Cost Savings, Financial Times. Wighton, David 27 July 2006, Balls Faces Calls to Scrap Stamp Duty, Financial Times. Clinical Psychology: History, Influences and Applications Clinical Psychology: History, Influences and Applications Myrto Giannakopoulou â€Å"Each student is expected to select info and produce an information pack targeted at a field/career of his/her interest in Psychology (e.g. Clinical Psychology, Educational Psychology, Cognitive Psychology – for example, you can select information via observing or/and interviewing a professional [preferable] or secondary reading). The above package will be accompanied by an academic, reflective essay supporting the choice above (e.g. explain your interest on this scientific area of Psychology, describe the basic issues of the professional’s interest in this field, refer to the basic taught psychological terms and concepts that you noticed to this scientific area, etc.)†. Nowadays, applied psychology has four main sub-categories which are clinical, educational, occupational/industrial and criminological/legal. Clinical psychology refers to treating emotional and behavioral disorders. Educational psychologists work with children and adolescents and their families and they give more importance in the efficacy of teaching and learning methods. Occupational psychology is applied into workplaces in order to improve the productivity of the employees and to increase the levels of job satisfaction. Criminological psychology is involved in the criminal and legal system and facilities such as prisons and courts or the police force. It has two branches, forensic and investigative psychology. In this project we are going to analyze the field of Clinical psychology. Clinical Psychology is a part of applied Psychology and it focuses on the treatment and understanding of behavioral and psychological problems. Clinical psychology is often confused with psychiatry because clinical psychologists also work with people with mental disorders and they use the same methods of therapies. Their difference is that psychiatrists can give medicine, thus clinical psychologists are forbidden to do so. Clinical psychology was developed in 1896, when Lightner Witmer, who is regarded as the father of Clinical psychology, established the first psychological clinic in the University of Pennsylvania. The clients of Witmers clinic were children with learning difficulties and with behavioural disorders. Next, in 1904 Alfred Binet and Theodore Simon created the Binet-Simon scale which is a test that can identify children with mental disablement and children with normal mentality and it influenced the development of clinical psychology in USA. Witmer denied the helpfulness of this scale and this is why he disappeared from the scene of clinical psychology. Later, in the early 20s, the psychiatrist William Healy established the Juvenile Psychopathic Institute, the worlds first child guidance clinic. Additionally, Healy in his clinic used the Binet-Simon scale for the children and adapted Freuds theory for the unconventional behaviour. Clinical psychology has been influenced from human physiology. For example, the term psychopathology includes the words pathology (disease) and psyche, which means that mental disorders have a biological basis. In other words, a mental disorder is considered as a dysfunction in the physiology of a person that appears in his behaviour. According to the medicine, the causes of a mental disorder are separated in three general categories: the infectious diseases (e.g. encephalitis which is an inflammation of the brain and its symptoms are familiar with those of dementia, such as memory loss), diseases that are related with the dysfunction of a human organ (e.g. diabetes) and traumatic diseases that arise from external or environmental causes (e.g. a hit in the head can cause cerebral hemorrhage and can also provoke problems in behavior such as coma, memory loss, and personality disorder). Clinical psychologists do more than talk to people who are distressed about personal matter. They often do different types of activities from teaching to psychotherapy to laboratory research and this is why they need to have a special training program in clinical psychology. After obtaining their degree, they can apply for a master course in clinical psychology, which usually lasts three years and at the same time do their apprenticeship, in order to gain experience in their field. Furthermore, research is the basis of all clinical psychology activities. Research programs, help to understand which approach could be more effective for a clinical problem such as depression, anxiety, eating, or panic disorders, personality disorders, phobias, etc. They can also focus on various populations like families, couples, ethnic minority groups such as gay, lesbians, etc. Although not all of the clinical psychologists are involved with research, they should be informed about other researches, in order to improve their own clinical work. Most of them use various tests or questionnaires to help them to their work or to their research. These tests have many measures, such as cognitive, behavioral, neuropsychological etc. On the other hand, in research there are certain problems. The most important is the fact that the researchers and the participants are human and the results are not solid, because the participants behave in a different way than their ordinary life, for example they are too defensive because they try to hide their thoughts from the researchers or they behave too normal, because they know how the experiment works. This happens because the participants are part of the society and n this way they try to be socially accepted and it is known as the Hawthorn effect. Despite all that, psychologists try to use multiple ways of reducing such effects, for example by using double-blind questionnaires. Another important practice that is used in the fields of Psychology is the Evidence-based practice (EBP). It is a process that involves â€Å"the conscientious, explicit, judicious use of current best evidence in making decisions about the care of individual patients† (Sackett, Rosenberg, Gray, Haynes, Richardson, 1996). Specifically, this practice gives to therapists a general guidance for addressing any given disorder in the best possible manner, based on research that they can use, but even if they don’t follow it to the letter is not wrong as long as they act in accordance to their professional experience. Although, it must be pointed out that these guidelines are general and do not take into account each person’s individuality and uniqueness. Another approach to EBP is the Ideograpdic one that takes into account each individual person and its singularity and is used by most health professions. Furthermore, there are three circles of Evidence Based Clinical practice, also known as the† three -legged stool†. The first circle represents the best available research proof, the second circle represents clinical expertness and finally the third circle includes the patient values, the preferences, the characteristics and the circumstances. Those three have to be combine in order to achieve the best clinical practice. Overall, Clinical Psychology is a complex field that parallels the complexity of human behavior and emotion and it combines and links human behaviour to stimulus created by people external environment such as everyday human relationships and interactions, health etc, and it explains the way it affects us. References: Barker M. (2003). Introductory Psychology: History, Themes and Perpectives, Crucial Kendall D., C., Norton Ford J., D. (1982). Clinical Psychology: Scientific and professional dimensions. New York: J. Wiley. Plante T., G., (2005). Contemporary Clinical Psychology, New Jersey: J. Wiley Sons, Inc. Sackett, D. L., Wennberg, J. E. (1997). Choosing the best research design for each question. British Medical Journal, 315, 1636. Wiley Periodicals, Inc. J Clin Psychol (2007). Evidence-Based Practice in Clinical Psychology: What It Is, Why It Matters; What You Need to Know. Journal of Clinical Psychology, 611-631

Mythology: Edith Hamilton Archetypes Essay

In the myth of Dionysus there isn’t exactly a conflict between two sides of people battling for good or evil, its more as a battle between the two sides of Dionysus’ inner self. Unlike most examples of good versus evil, there isn’t a triumphant side. Just the personality switches between Dionysus being the joy-god or the heartless, savage, brutal-god. The reason for this change is due to the fact that he is the vine god; Wine is bad as well as good. He’d bring up peoples hopes and make them believe that they were capable of anything, but once they were sober again or they became drunk, you could see his dark side begin to arise. The hopefulness would fade and then you could see the people transition into darkness. Symbolic Archetype: Water versus Desert In the story of Dionysus, there’s a part where he comes across a crew from a pirate ship in Greece by the sea. The sailors tried to capture him and saw him as a mortal, rather than the son of a god. In the end, Dionysus turned into a lion and turned all but one of the sailors into dolphins and sent them into the ocean. At this point in the story it shows the first glimpse at Dionysus’ ruthless side, almost as if they’re using this scene in the book at the birth of his â€Å"second side†, setting up the second view point of Dionysus’ personality for future conflicts. Character Archetype: The Outcast In the myth, Dionysus was born in Thebes, he was the son of Zeus and Theban princess Semele- he was the only god whose parents were not both immortal. Before Dionysus’ birth he was snatched from his mother and hidden by Zeus’ side, almost as if he was ashamed by Dionysus. Dionysus was passed from person to person, his mother, Zeus, Hermes, and then to the nymphs of Nysa to be raised. As he became a man, Dionysus became a wanderer, wandering far to weird and strange places. Throughout his life he was often shunned  because many didn’t see him to be as he was- a god. They treated him as a lesser being and in the majority of the myth he is set on proving that he is mighty and punishing those who face him with disbelief. Part Two: Stories of Love and Adventure Chosen Myth: Cupid and Psyche Situational Archetype: The Task Psyche was repeatedly put through seemingly impossible tests by Venus, such as sorting seeds, fetching golden wool, and going to the underworld to ask Proserpine for a box of her beauty. Venus put her through these unruly tasks in hopes to keep Psyche away from her son. But on the other hand, Psyche only completed these tasks due to the fact that she thought it would bring her to her love, Cupid. In the end, Cupid and Psyches love prevailed and Psyches ultimate goal of being with her husband was completed. Symbolic Archetype: Light versus Darkness The battle between light versus darkness can be seen when Psyche and Cupid are together in the cave with each other. Although to Cupid the darkness represented trust and faithfulness in his and Psyches relationship, to Psyche the darkness represented the unknown and fear of her husband being a serpent rather than the son of Venus. When Psyche was about to attack Cupid in the cave, she brought the factor of light into their relationship with the use of the candle. To Psyche, this use of light â€Å"confirmed her love† in the relationship, but also brought along the realization that she had upset Cupid with her lack of trust in the relationship. So all in all the battle of light versus darkness was really a battle of trust. Character Archetype: The Star-Crossed Lovers Unlike the play, Romeo and Juliet, Psyche and Cupid’s love affair didn’t end in tragedy, like the beginning of the myth would lead you to believe. In the myth, Venus’ followers began to shrink and more of the attention from her followers were focused upon Psyche because she was more beautiful than Venus. Venus ordered her son Cupid to make Psyche fall in love with pretty much a scumbag, but instead Cupid fell in love it Psyche. When they were  together Cupid hid himself from Psyche because he knew the repercussions that their love could have. They were two people destined to not be together with every obstacle in their way, but in the end they made it work. Part Three: The Great Heroes before the Trojan War Chosen Myth: Perseus Situational Archetype: Supernatural Intervention On Perseus’ journey for Medusa’s head it was very much expected that he would fail and die, which was Polydectes goal. But in the end he prevailed and completed the mission, due to the fact that he had the luck and support of the Gods on his side. Throughout his voyage he was aided by the support of Hermes and Athena. This can be seen in Perseus’ use of Athena’s shield and Hermes’ sword that he used to attack Medusa. Also, without the help of Hermes, Perseus wouldn’t have been able to find the nymphs of the North, whose gifts (winged sandals, magic wallet, and an invisible cap) also aided him in the defeat of Medusa. Symbolic Archetype: The Whirlpool In the beginning of the myth, Perseus’ grandfather, King Acrisius, was told by a priestess that his daughter would have a son and that her son would kill him. So Acrisius goes out of his way to rid himself of his daughter. He locks her in a castle in hopes that she won’t come across other people and become pregnant. Once he finds out that his daughter does have a son, Perseus, he locks them both into a chest and throws them into the sea. And even though King Acrisius goes through all of this to avoid his death, he learns that fate is unavoidable. In the end Perseus still kills him but rather on accident, not like Acrisius had imagined. So no matter what you do to avoid fate, it’ll happen. Character Archetype: The hero/heroine Throughout Perseus’ journey for Medusa’s head he experienced fluctuations in his motives for the head. He didn’t set himself onto the path of killing Medusa to be a hero, he did it in hopes of making Polydectes happy and giving his mother a nice engagement gift. But when he came back to the  island after the mission and realized that it was in shambles, he used the gifts he got from the gods and Medusa’s head to bring happiness to the island. By turning Polydectes and his followers into stone he freed the people and rid them of their tyrant leader. Thus becoming the hero to the islanders. Part Four: The Heroes of the Trojan War Chosen Myth: The Trojan war Situational Archetype: The Unhealable Wound In the Trojan War the unhelable wound represents both physical and psychological wounds. The first was the start of all of the rest, the kidnapping of Helen from Menelaus, her father, by Aphrodite and Paris. The loss of his daughter brought an unbelievable amount of pain onto the King, driving him to drastic measures, such as war. Also, this archetype can be seen in the sacrificing of Iphigenia, the eldest daughter of the Commander in Chief, Agamemnon. By having to kill his own beloved daughter it brought grief upon him that would linger throughout the war. When the Greek ships reached the rivers of Troy there was a man named Protesilaus, he was the first man to leap ashore, and also the first man to die. His wife, Laodamia, was so sickened with sadness at the loss of her husband that she killed herself just so she could go to the underworld with him; Showing that she felt that she could never be happy without her husband. Another example is when the quarrel between Achilles and Agamemnon sparked over Agamemnon’s prize of honor, Chryseis. Agamemnon’s prize of honor had to be returned and then he ordered his men to steal Briseis, Achilles’ prize of honor. Achilles became so upset over the turning of his own men that he spent his days in his tent wrapped in sorrow. Throughout this myth there were countless of other examples of unhelable wounds like the loss of Hector, the relationships between the gods, the loss of Patroclus, and the abuse of Hectors dead body. Symbolic Archetype: Haven versus Wilderness This archetype can be seen in the comparison of the war versus taking refuge in the tents. You’d think after Achilles’ prize of honor taken away from him and he stayed back at camp rather than fighting in the war that his  haven would be the tents and the wilderness would be the war. But it was just the opposite of that. When Achilles was in the tents he was consumed with despair. When he finally got vengeance for Patroclus death, he was himself once again. Bringing him back into battle made him whole again and brought balance back to the war. Character Archetype: The Damsel in Distress The Trojan War was centered around two sides, the Greeks and the Trojans, fighting over one person- Helen. Helen was the fairest woman in the world, and Paris was promised her as his wife by Aphrodite. The problem with that being that the role of Helen’s husband was already being championed off by her father, Menelaus, to powerful families in the area. Paris was then responsible for kidnapping Helen, thus causing Menelaus to call the Greeks together and start a war with the Trojans to save the damsel in distress, his daughter. In the view of Menelaus, the heroes were the Greeks fighting to save his daughter and the villains were the Trojans. Part Five: The Great Families of Mythology Chosen Myth: The Royal House of Thebes Situational Archetype: The Fall In the start of the city of Thebes, it was blessed with prosperity and wisdom by the gods, but by its â€Å"end† it had experienced some of the worst hardships known to man. When Cadmus and Harmonia, the founders of Thebes, fled from the city to Illyria, the couple was turned into serpents by the gods. They were turned due to their fate, not because of punishment. Their fate was proof of that the innocent suffered as much as the guilty. They turned from the rulers of a great city into serpents. This archetype is also seen in the sub story of Oedipus. In the beginning Oedipus kills the Sphinx and is then made the King of Thebes. In the end, after the truth is revealed about his life, he begins a transition from light to darkness. He becomes blind and then his uncle/brother in law and his sons expel him from the city and he lives the rest of his life in penalty for crimes he wasn’t aware he was committing. Symbolic Archetype: Numbers In the House of Thebes you repeatedly see the use of numbers in the work, such as the numbers five and seven. The number seven is seen in the amount of champions that attack the gates and the seven champions that protect it. The number seven represents the completion of the cycle, and throughout the myth the importance of the seven is burying the seven dead warrior’s bodies. By burying their bodies it brings peace to the community and restores the balance. Character Archetype: Young person from the provinces The hero, Oedipus, was separated from his family as an infant because an oracle had told his father that someday his son would kill him. He was raised away from Thebes, by King Polybus in Corinth. As an adult Oedipus returned to Thebes and overnight became their hero. In Thebes there was an issue with a Sphinx, and for the Sphinx to surrender and kill herself a riddle had to be solved. Seeing the riddle in a new light, Oedipus solved the riddle and freed the people of Thebes from the Sphinx. They made Oedipus their king and for quite some time he ruled the area peacefully. Part Six: The Less Important Myths Chosen Myth: Midas- And Others Situational Archetype: The Initiation In the myth about Pomona, all she cares about are her fruits and orchids. Rather than her coming to a realization about her problems, she came to a realization about love. No matter the man, she was never interested in them because she felt that her plants were enough. She encountered the epiphany when Vertumnus finally revealed his true identity after kissing her and telling her how much he loved her. Once she saw him in the light of who he really was she saw her calling, to be with him and garden together. Symbolic Archetype: The Crossroads The Danaids were the daughters of Danaus, and in the myth his fifty daughters were being forced to marry their 50 cousins, Danaus’ brother, Aegyptus’, fifty sons. Throughout the myth they sisters were trying to avoid  marrying their cousins, but at some point the wedding between them arrived. The crossroads, symbolizes their fathers decision to tell the girls to kill their husbands after they got married. Because of this decision all but one of his daughters were sentenced to life in hell. And Danaus punished the one daughter who didn’t follow his orders. Because of this one choice the daughters fate was changed forever. Character Archetype: The Temptress Usually when you think of a temptress you imagine a hero falling for a girl, and then the girl is the source of his wrong doings, almost as if she urged him to do it. But in this case, it was a little different. Glaucus was a fisherman who was then turned intoa sea-god. Glaucus was in love with a nymph, Scylla. He did everything in his power to try and make her love him. But one day, he went to Circe for a love potion in hopes that it’d make the wonderful Scylla fall for him. But instead, Circe fell in love with him and used a vile of potion to turn Scylla into a monster. So because of Scylla’s beauty and Glaucus’ love for her, his downfall was the jealousy of others centered around love. It’s almost as if you combined Circe and Scylla’s characters into one and it’d form the perfect temptress. Part Seven: The Mythology of Norsemen Chosen Myth: The Stories of Signy and Sigurd Situational Archetype: The Quest Brynhild was a Valkyrie that was punished and put to sleep until some man shall crawl through the flaming fire and awake her. Brynhild wanted a man that was brave to rescue her and the man responsible for that was Sigurd, the son of Sigmund. He completes the journey of having to make his way through the flames with his horse. Once he reaches his end goal, awakening Brynhild, she gives herself to him because he had proved his worthiness and bravery through awakening her. Symbolic Archetype: Fire versus ice In the myth, fire is a reoccurring element. It first shows up when Signy’s children and husband are being burned and she allows herself to burn to  death. It pops up again Brinhild’s couch is surrounded with fire, a task for Sigurd to save her from. And again when Gudrun kills herself and prays to be laid on her husbands funeral pyre. So as you can see, fire is very much linked to life, rebirth, and death. Rebirth and death in the first scenario, birth of opportunities and love in the second, and death in the third. Character Archetype: Hunting Group of Companions Signy made such an effort to make sure she remained close to her family†¦.extremely close. She had a child with her brother, Sinfiotli. The three of them were most often very close together, a close knit family. Through their plans of revenge to avenge the dead they completed the deeds with one another. They were very support of one another and loving.

Mengchao Essay

Arley Merchandise Corporation Objectives and Synopsis Teaching Plan This teaching plan organizes the class as follows: Valuation of the Arley â€Å"right† †¢ Why include the ten-year note alternative? †¢ American- vs. European-style exercise? †¢ Similarities to a convertible subordinated debenture †¢ The choice made and the aftermath †¢ Valuation of the Arley â€Å"Right† Consider first the case where the right is exercisable into $8 of cash. The unit proposed for sale in the Arley financing then can be characterized as the sale of a share of common stock plus a two-year European put option with a strike price of $8 or, alternatively, through put-call parity, as the sale of a two-year zero-coupon note with face value $8 plus a two-year European call option on common stock with an exercise price of $8. Thus, the value of the unit can be broken down in two ways: Market value of the unit = Market value of stock + market value of put option = Market value of zero-coupon bond + market value of call option Applying the Black-Scholes model with a two-year riskless rate of 11% per  annum, an initial stock price of $6.50, and a volatility of 40% (as indicated in the assignment question), yields values of the put and call options of $1.44 and $1.45, respectively.1 Exhibit 4 shows historical volatility data for comparable firms. The instructor can engage the students in a discussion of how to use this information in the analysis. The Appendix to this teaching note contains a discussion of these comparables and sensitivity analysis. However, Black-Scholes is not necessarily applicable because of default risk associated with this particular put option. That is, put option holders will wish to exercise their right to receive cash at precisely the time that Arley’s stock is low, which is also when the firm will least be able to fund the $8 payment. Thus, the standard Black-Scholes formula, which assumes no default risk in the option, will overestimate the value of the right. To correct ly value the put option requires a model of default risk in addition to the underlying equity risk.2 Luckily, in this instance, the above put-call parity relation provides a simple and indirect way of valuing the right, since it separates stock price risk from default risk. There is little, if any, default risk associated with the call option, as holders will wish to exercise their right at a time when the firm 1 The put and call values are almost equal since the strike price of $8 is very close to the beginning stock price of $6.50 plus  riskless interest. 2 See, for example, H. Johnson and R. Stultz (1987), â€Å"The pricing of options with default risk,† Journal of Finance, 42, 267-280. What remains is to value the zero-coupon note. This is a question purely of credit risk, the price of which can be approximated using Exhibit 5, which contains yields on straight debt of lowrated issuers comparable to Arley. The issues in the Exhibit are priced at spreads as high as 3.5% over Treasurys. Arley’s subordinated debt would probably carry a Ba or B rating, and would thus require a yield at the high end of the range. Assuming a flat term structure for the credit spread, the required spread on two-year Arley debt is about 3.5%, or a yield-to-maturity of 14.5%. Discounting $8 at 14.5% per annum for two years gives a value for the two-year zero-coupon note of $6.10. Adding the value of the two-year note ($6.10) to the value of the call option ($1.45) yields an estimate of $7.55 for the value of the total package. The implied value of the put option is therefore $7.55 – $6.50 = $1.05. The implied value of the put option is therefore $7.55 – $6.50 = $1.05. This can be summarized as: Note + Call $6.10 + $1.45 = Unit = Stock + Put = $7.55 = $6.50 + $1.05 The difference of $0.39 between this value of the put option and the Black-Scholes value of the put option ($ 1.44) is the diminution in value of the option due to issuer default risk. The analysis so far has assumed that the put option is exercisable into cash. In general, and ceteris paribas, the issuer’s option to substitute debt for cash upon exercise of the option reduces the value of the right even further. However, this assumes the stock price of $6.50 is unaffected by the nature of this contract. For example, the flexibility to substitute debt for cash may significantly reduce the likelihood of financial distress and enhance overall firm value. Here, the value of the right is likely to be significantly diminished by the flexibility to substitute debt since the debt is unlikely to be worth as much as $8.00/ unit when issued. In late 1982 and early 1983, the lowest class of investment grade debt (Baa) sold at a yield of about 125% of the ten-year Treasury debt yield. Baa debt was trading at a yield which was only 116% of ten-year Treasury yields. As surmised earlier, Arley’s subordinated debt would probably carry a Ba or B rating, and would thus require a yield substantially higher than Baa-rated debt. In addition, the maximum issue size of subordinated debt issued in exchange for Arley units would amount to only about $6 million (750,000 x $8.00). Trading would be extremely thin and the issue would be highly illiquid. It would trade at a still higher yield for this reason. In all, it appears that the Arley package was somewhat overvalued by the underwriters (assuming a value of $6.50 for the common stock). Why Include the Ten-Year Note Alternative? The information asymmetry issue raised earlier in this note is important in understanding the significance of the inclusion of the ten-year note  alternative. The strength of management’s conviction regarding the certainty of future forecasts can be reflected in the form in which it chooses options for honoring the guarantee obligation. Management’s stock ownership position will also play an important role in this choice. A management with little stock ownership will convey the strongest position of certainty if it restricted its options in honoring the guarantee to only cash. The weakest conviction will be conveyed 3 if the options included the exchange of the right for additional common shares to bring the value of each Arley unit up to $8.00. This outcome would simply reallocate the equity value among Arley’s shareholders without exposing the management to any default risk and potential loss of employment. In companies where management owns little stock, as the options available for meeting the guarantee expand along the spectrum of cash, senior debt, subordinated debt, preferred stock, and common stock, the strength of management’s conviction about the future should decrease in the minds of investors. A management with significant stock ownership would convey the strongest  position of certainty if shareholders could collect their value guarantee in either cash or market value of common stock at the option of the owner of the right. This arrangement would expose management to both default risk (and possible loss of jobs) as well as disastrous dilution of their accumulated wealth position if the stock price declined but the company was not in danger of default on the put. The underwriters have suggested a prudent and practical position with regard to the form of the options the company will have available for honoring the guarantee, but (given the fact that Arley’s management owned over 50% of the company’s stock) this is also one of the weakest positions possible in terms of the persuasive power of its information content to investors. Information content is obviously only one factor for Arley to consider in making its decision. The need to preserve financial flexi bility under adverse circumstances is probably the most critical factor, and Arley’s management would retain this flexibility, in the form of the option, to issue a subordinated debt to honor the guarantee. American- vs. European-Style Exercise? A design question was whether holders of the security should be able to exercise their right at a specific point in time (European-style), or at any time until the expiration date (American-style). Arley favored a European-style exercise option. This made it possible to plan for and finance a mass redemption, rather than confronting one at an unexpected and inconvenient time. Similarities to a Convertible Subordinated Debenture The proposed Arley security can be viewed as a convertible subordinated debenture with somewhat unusual terms. The principal variations are: The conversion period expires in two years instead of spanning the life of the debenture (or until the debenture was called); In exchange for a two-year grace period on interest payments, Arley unit owners will receive what is intended to be a â€Å"market rate† of interest on the security for the balance of its life. Normally, convertible subordinated debentures carry a below-market rate of interest (Exhibit 5); The life of the issue is twelve years rather than the more typical twenty to twenty-five years for a convertible subordinated debenture (Exhibit 5). Since the Arley issue is conceptually and economically similar to a convertible subordinated debenture, why didn’t Arley simply issue a convertible subordinated debenture with terms  equivalent to the proposed Arley units? There were two good reasons favoring the proposed Arley issue: Since Arley had no publicly traded common stock, buyers of any Arley convertible subordinated debenture would have no traded equity security against which to price the debenture. A liquidity problem (only 6,000 debentures would be available for trading) would exacerbate the pricing difficulty. †¢ The â€Å"retail optics† of the Arley issue are better than the equivalent convertible subordinated debenture. The proposed Arley unit can be marketed as an issue with a two-year money-back guarantee. The unit would almost certainly be sold to retail investors and might trade at a higher price than the equivalent convertible subordinated debenture. The Choice Made and the Aftermath The proposed Arley unit was sold in the form described in the case on November 14, 1984. Management had hoped that the units could be described as equity, but Arley’s accountants had argued that the securities would have to be accounted for on a line entitled â€Å"Common stock subject to repurchase under Rights,† which fell between the debt and equity accounts on the Arley balance sheet. The operating performance of the company and the performance of its stock price following the offering were both disappointing. Earnings per share fell (versus the similar quarter in the prior year) for five successive quarters immediately following the offering (Exhibit TN-1). The  price of the Arley units fell after the offering, and did not recover to $8.00/unit for fifteen months (Exhibit TN-2). The right traded well below the anticipated level of $1.50. Trading volume in the units and common shares combined averaged only about 50,000 per month, or about 1,500 per trading day. Vo lume in the rights averaged only 1,000 per trading day. In July, 1986, Arley management announced that they had agreed to accept a leveraged buyout offer at $10.00/share for all of the company’s common stock from a group of middle-level managers at the company. In May, 1985, a similar offering was made by Gearhart Industries which raised $85 million at a premium of 23% above its then common stock price of $10.75/share. This offering featured five put dates at one-year intervals from one to six years following the offering date. The company also had the option to honor the put (at a price which escalated above the $13.25/unit issue price at the rate of 10%/ year) in common stock or preferred stock as well as subordinated debt. The option to satisfy the guarantee with an equity security removed the need to characterize the security as anything other than equity for accounting purposes. Gearhart’s stock price collapsed after the offering. The right was designed to put a floor under the value of the Gearhart unit at the $13.25 offering price but this obviously was not the case as shown in Exhibit TN-3. The Arley and Gearhart cases are good examples of situations where the risk of default can enter significantly into the value of a put option. Here, it is when the put is to the company itself rather than to a third party of high credit quality. Exhibit TN-1 Arley Merchandise Corporation Earnings Per Share by Calendar Quarter, 1983-1986 1983 1984 1st Quarter .20 2nd Quarter .33 .20 .25 4th Quarter .30 *.28 1986 .16 .20 .08 .22 .20 op yo 3rd Quarter 1985 * First Earnings Report following Initial Public Offering. November 1984 Share + Right 5 1/2 1/2 January 1985 6 1/2 1/2 February 6 1/8 N.A. March 6 7/8 1/8 7 April 6 1/2 1/8 6 5/8 May 6 3/4 1/8 6 7/8 June 6 3/8 1/8 6 1/2 July 6 1/8 3/8 6 1/2 August 5 7/8 5/8 6 1/2 September 5 3/4 3/4 6 1/2 October 5 3/4 1 1/8 6 7/8 tC op yo December 6 7 N.A. November 6 7/8 6 7/8 December 5 7/8 3/4 6 5/8 January 1986 5 7/8 1 1/4 7 1/8 February 6 7/8 N.A. N.A. 7 7/8 1/8 8 7 7/8 1/8 8 March April November 1985 7 1/4 4 1/8 December 7 5/8 3 3/8 January 1986 5 1/4 4 7/8 February 4 3/8 6 March 3 3/4 6 April 2 5/8 3 3/4 6 3/8 May 3 1/4 4 1/4 7 1/2 Share + Right 11 3/8 11 10 1/8 10 3/8 9 3/4 Appendix Comparables and sensitivity analysis Normally, students encountering options are given either historical or implied volatility data. In this instance, as Arley does not yet have publicly traded stock, neither of these standard sources of data is available. However, the case does give data on a set of comparable firms; none had traded options, so all of the data given is historical volatilities. The instructor can engage students on the issue of how to use this volatility data. The average volatility ranges from 18% to 39%, and averages 28% for the most recent volatility and 29% for the average volatility over the prior five years. Yet the assignment question asks the student to use a 40% volatility. Why would Arley probably have a higher volatility than the average home furnishing manufacturer; more generally, what would drive volatility? Students may recognize that volatility should be related to fundamental business risk, which in turn would be related to the instability of supply  and demand, as well as variable competition. More narrowly, one might expect that firms with higher fixed costs might experience higher volatility as well as firms with greater debt, as operating or financial leverage would amplify movements in firm value for shocks in the underlying business. They might also expect that smaller firms might have greater volatility, in part due to lower scale economies. An especially diligent student might calculate the relationships between the volatilities in Exhibit 4 with firm size (market value of equity plus firm value of debt), firm leverage (debt divided by market size), or profitability. Using average volatility as a measure, she would find the coefficients on these relationships to be directionally correct (higher volatilities on smaller firms, more levered firms and less profitable firms), but in an OLS framework, none are close to conventional significance levels. Given the uncertainty in volatilities, students might calculate the sensitivity of option values to various levels of volatility. The table below shows this sensitivity for various volatilities as well as for various maturities. Note: this table uses the two-year risk free rate from Exhibit 7 (11.14%) which is quoted on a bond-equivalent yield basis, so the numbers will vary slightly from those in the text. VOLATILITY RANGE 25% 30% 35% 1.07 $ 1.20 $ 1.33  $ 0.88 $ 1.06 $ 1.24  $ 0.73 $ 0.93 $ 1.13   $ 0.61 $ 0.81 $ 1.02  $ 0.51 $ 0.71 $ 0.92  $ 25% 0.39 $ 0.94  $ 1.45  $ 1.92  $ 2.36  $ 30% 0.52  $ 1.12  $ 1.65  $ 2.13  $ 2.56  $ 35% 0.65  $ 1.29  $ 1.85  $ 2.34  $ 2.76  $ 40% 0.78  $ 1.47  $ 2.05  $ 2.54  $ 2.97  $ 45% 1.59  $ 1.59  $ 1.52  $ 1.43  $ 1.33  $ 50% 1.72  $ 1.76  $ 1.71  $ 1.63  $ 1.53  $ 45% 0.91  $ 1.65  $ 2.24  $ 2.75  $ 3.18  $ 50% 1.04 1.82 2.43 2.95 3.38 40%  $ 1.46  $ 1.41  $ 1.33  $ 1.23  $ 1.12  $ Do No tC PUTS $1.41 20% 1 $ 0.95 2 $ 0.70 3 $ 0.53 4 $ 0.41 5 $ 0.32 ^Time to maturity CALLS $1.47 20% 1 $ 0.27 2 $ 0.76 3 $ 1.25 4 $ 1.72 5 $ 2.17 rP os t

Mbembas Psychological Tactics Essay - 1316 Words

Portuguese missionaries and trading partners were among the first to meet Africans along the coast of the Atlantic. It was one of these kings, the king of the West African state of Congo, Nzinga Mbembas father, that provided a coastal settlement for the Portuguese. Adopting Christianity for the nation, including the baptizing of both himself and his son, there seemed to be an alliance between the two nations, as seen in the introduction of Nzinga Mbembas, â€Å"Appeal to the King of Portugal, 1526†. However, after Nzinga Mbemba took the throne, trouble began to arise in Congo due to the Portuguese pushing boundaries that threatened to devastate the nation. This is when the king of Congo wrote a letter to the king of Portugal, which used a†¦show more content†¦The pushing of boundaries ends in in the action of thieving the natives of the land, regardless of who they are. The Portuguese took anyone that they wished to, including both freemen and non-freemen, regardless of if they were â€Å"sons of the land† or â€Å"the sons of noblemen and vassals...† (Mbemba 635). The king of Congo, in an effort to quell this sequence of actions regarding the theft of ones in his nation, sets place a law that limits who may be taken and who may not (Mbemba 636). However, this does little good for the nation. In fact, its brought to light that the Portuguese merchants complain to be offended by such a measure (Mbemba 636). It begins to become obvious that the king of Congo is losing control of the Portuguese merchants in his own country, and also his power of the nation as a whole. By presenting the cause of distress, as well as what has been done to avoid an unsavory situation, the king of Congo presents himself as virtually blameless in the fall of the loss of his own power and for the disintegration of his own country, while positioning the king of Portugal in such a way as to lay blame. The letter was written up in such a way as the king of Po rtugal would feel guilty about what is happening in Congo and would take responsibility for what was happening in the country. The king of Congo makes it clear that the people from