Rights of Management Essay Example | Topics and Well Written Essays - 500 words

Rights of Management - Essay Example own as The Labor Management Relation Act Of 1947 is law that marked a radical change in the federal regulation of industrial relations (Carper et al, 2008). This change was created after a vast number of large scale strikes were held to an extent of nearly disabling the steel, automobile and packing industries among others in the United States. These work mayhems severely affected the economy leading to panic from public. This act, which was an adjustment to the Wagner Act of 1935, was made to benefit all the parties that were involved in the labor agreement as the employees, employers and the labor union (Beik, 2005). Its passage of 1947 added new necessities to the former ‘which meant that its actual meaning would now depend upon the interpretation by the National Labor Relations Board, as well as, the courts’. Taft –Hartley Act placed restrictions on unions that were already imposed on the employer which dictated that it was unlawful to contain workers who wanted to exercise their rights for self organization. (Dubinsky, 1994). Moreover, secondary strikes, boycotts and sympathy strikes especially those that were intended to influence employers, as opposed to those that the Union had contract with. Its first amendment entailed right to free speech that had been severely limited by the former laws, giving chances to employers to air their ideas on unionization only if the ideas are not incisive with threats or promises to employees. It also restricted the liability of employers based on managers’ actions to those who would be considered as a section of supervisors’ official duty. Additionally, the Act allowed states to enact right to work laws which illegalized the setting of union membership as employment condition although some states chose it while others bargained f or changes to avoid conflict of interest. According to Carper, et al. 2008, the Act made recommendation for the contract of labor to on either sides to bargain in good faith on the

Sales force automation Essay Example for Free

Sales force automation Essay Introduction. Sales Force Automation is a technique of using software to automate the business tasks of sales, including order processing, contact management, information sharing, inventory monitoring and control, order tracking, customer management, sales forecast analysis and employee performance evaluation(Thomas, M.S Michael, S.M 1996). This revolution that is sweeping through society is changing the nature of selling. For last 150 years, traditional selling process bases on the two ways communications, that is salespeople to customers, customers to salespeople. Such face-to-face selling or in-person selling can require a lot of time, energy, and expense, but the payoff can be tremendous. Despite all of the new high-tech alternatives, an in-person sales presentation is the single most powerful marketing tool in use today. National television advertising, telemarketing, e-mail, or print advertising have nowhere near the ability to motivate a particular customer to actually place an order as does face-to-face selling (David, G. H Mckee, D 1999). Discussion. Face to face communication in sales force. Social trends point to the increasing need for face-to-face communication in efforts to change peoples attitudes and behaviors. That communication is simply a method of sending a message from one person or group of persons to another, which the communication process is the most natural and the most familiar. It is direct, immediate and responsive. We can perceive reactions at once and can modify our own behavior to clarify the message. It is vital importance to salespeople whom use this communication tool with their potential buyers of a product with the intention of making a sale; also they can focus initially on developing a relationship with the potential customers with an attempt to close the sale'(Pyle, J. 2004). Does face to face is the best way to communicate? In the small business, Personal selling involves face-to-face interaction between buyer and seller, which is a very important part of a stores effect to communicate with its customers. Sellers are able to have exclusive contact with the buyer and clearly articulate the benefits of the product or service. And buyers are able to get personal attention and have their questions answered fully (Personal selling, 2005). It creates a mutually beneficial situation in which both buyer and seller feel they are meeting their objectives. During face to face communication, one essential part of effective communication is feedback. Only in personal selling does the potential for a clear feedback channel exist. Even cashiers are salespeople in the sense that they convey a message to the customer. As salespeople interact with customers, they not only hear verbal responses, but also see smiles, frowns, and nods. The verbal responses and the nonverbal reactions provide feedback. These responses help salespeople modify the sales message to the specific needs of the customer (Personal selling, 2005). A successful selling can be made via face to face communication because it is an effective strategy that both salespeople and customer can see each others characteristics, body language, gestures, facial expression, intonation, or words to make a sufficient judgment, and it is also a powerful selling method for building a stronger relationship with the potential customer. Unquestionably, the face-to-face communication that takes place in the personal selling situation that can (1) clearly identify and translate product features into benefits and satisfactions that solve customers problems and fill their needs; (2) pinpoint the customers uncertainties about purchasing and provide knowledge and information to reduce these uncertainties; (3) provide specific rational psychological reasons that help the customer make a purchasing decision; and (4) build trust between organizations and its potential customer (The Importance of face to face selling, 2003). One research point out that most managers think that Face-to-face sales method can carefully explain the new process or product to their customers (Martin, C .2005). However, the major disadvantage of personal selling through face to face communication is the cost of employing a sales force. Sales people are expensive. In addition to the basic pay package, a business needs to provide incentives to achieve sales, such as commission, bonus arrangements, and the equipment , such as car, travel and mobile phone, to make sales calls (Personal selling, 2005). Moreover, there is not a cost-effective way of  reaching a large audience in now faster society. A sales person can only call on one customer at a time. In other words, salespeople need to go to the prospective customer in order to demonstrate or illustrate the particulars about the product or service. For reaching a large customer; salespeople will be taking a lot of time to achieve the goal (The Importance of Good Communication, 2005). Sales force automation- SFA. Following by the rapid and continuous drop in the price of computing and the businesses are increasingly global that joined with advances in communications technology; the structure and process of selling have altered the competitive environment (David, G. H Mckee, D 1999) . Technology makes salespeople more effective and productive because it allows them to provide accurate and current information to customers during sales presentations. Sales force automation (SFA) implies that technology can be used to speed up previously inefficient operations of a company, which the Internet and related technology have affected the personal selling process (Thomas, M.S Michael, S.M 1996 Yudkowsky, C, 1998). Product information on Web sites is available to customers and prospects. In the past, salespeople delivered this information to the customer by face to face. The Internet releases salespeople to focus on the most important aspects of their job, such as building long-term relationships wit h customers and focusing on new accounts. Information is shared among users in every department that contact with the customer. Also, information sharing promotes more effective channel partnership. In fact, salespeople use computers to connect them (through the Internet) to their own companys databases when they are out on sales calls. This gives them the ability to provide the customer with extensive, relevant information almost immediately (Sapru, P, 2005). It reduces administrative tasks for salespeople and makes them better prepared for every sales call. A successfully implemented SFA solution can improve the productivity and efficiency of the sales team, which can result in higher customer satisfaction and higher revenue per customer of a company (Thomas, M.S Michael, S.M 1996). Salespeople become intelligence agents in the field when they feed that information directly into the data resources shared by the  rest of the sales force and the company at large. SFA is becoming vital selling tools that can be used to communicate through a global basis; also, it is a most cost- effective way that the business can reach its large customer globally. According to the estimated, the advantages of using sales automated technology can increase at a rate of 40% annually include the ability to generate sophisticated multimedia presentations, to create internal communication systems, to monitor sales rep progress, and to keep databases of customer histories (Yudkowsky, C, 1998). In the book Virtual Selling, the author indicated that SFA is rapidly rising to the forefront salespeople of the business computing market (Thomas, M.S Michael, S.M, 1996) Conclusion. Marketing communication tools definitely has been changed. Sales force automation provides a cost-effective way of a companys salespeople expenditures, innovations in opportunity, immediately contact, activity, and account management as well as automatic quoting, product configuration, research, and reach a large customer (Yudkowsky, C, 1998). However, face to face selling can be more successful to reach peoples heart and build a stronger relationship in accomplish a selling objective. The problem is not which mode of communication is used; it is the quantity and quality of the produce/service content need to be considered. There is no one way to communicate well; each method has strengths and weaknesses. It is the balance of the methods, using their strengths and avoiding the weaknesses that will make good communications. As selling a car, house and insurance, face to face communication is a crucial requirement that salespeople need to build the trust, product value and satisfy customer needs in the entire selling process (Selling a car, 2004 Business Family Champion, 2005). Although SFA has changed the way of both selling and purchasing process, customers have more choice than ever before, as their can choice any thing by the click of a mouse. Yet face to face communication is the only way that salespeople can build a real trust, and interpersonal relationship in humans life.

Bond Pricing and Interest Rates

Bond Pricing and Interest Rates Bond Pricing And The Term Structure Of Interest Rates: A New Methodology For Contingent Claims Valuation We read the paper Bond pricing and the term structure of interest rates by Heath, Jarrow, and Morton. Their paper presents a theory for valuing contingent claims under a stochastic term structure of interest rates. The methodology takes as given an initial forward rate curve and a family of potential stochastic processes for its subsequent movements. A no arbitrage condition restricts this family of processes yielding valuation formulae for interest rate sensitive contingent claims which do not explicitly depend on the market prices of risk. In relation to the term structure of interest rates, arbitrage pricing theory has two purposes. The first is to price all zero coupon (default free) bonds of varying maturities from a finite number of economic fundamentals, called state variables. The second, is to price all interest rate sensitive contingent claims, taking as given the prices of the zero coupon bonds. The primary contribution of this paper, however, is a new methodology for solving the second problem, i.e., the pricing of interest rate sensitive contingent claims given the prices of all zero coupon bonds. The methodology is new because (i) it imposes its stochastic structure directly on the evolution of the forward rate curve, (ii) it does not require an inversion of the term structure to eliminate the market prices of risk from contingent claim values, and (iii) it has a stochastic spot rate process with multiple stochastic factors influencing the term structure. The model can be used to consistently price (and hedge) all contingent claims (American or European) on the term structure, and it is derived from necessary and (more importantly) sufficient conditions for the absence of arbitrage. The Difference Between Duration And Maturity In Bonds Based on the article: Bond Price Volatility and Term to Maturity: A generalized Re-specification Most investors and especially we who are taking the course Fixed Income Securities are familiar with the bonds maturity. The article wants to illustrate why we cant just rely on the length of maturity when estimating how volatile the price for a certain bond is. As we have read before during the course, there is a common and accepted thumb rule that tells us that for a given change in yields, the price change for the bond will be greater the longer the term to maturity is. Therefore I first of all want to highlight the difference between the duration and maturity. Firstly I will have a short explanation of these two terms and further I will continue this paper by explain some important parts from the article. When it comes to maturity, we all know the maturity is the point in time when the investor receives back the principal. We also know that a bond will increase in value, that is, the price of the bond will increase, if the interest on the market decrease and vice versa. From this statement above, it may be clear that the longer maturity, the more changes in the interest rates can be waited and the more volatile the bond price will be. The duration of a bond will show how sensitive a bonds price is to changes in the interest rate. Its a measurement for how much the bond price will change due to a one percentage change in the interest rate on the market. Duration of 7 means for instance that if the interest rate raises by one percentage means that the price of the bond will fall 7 percentages. The duration is simply the weighted average amount of time that it takes for the investor to be repaid all cash that is both the coupon payments and the end, principal payment. Therefore the duration will always be less than the maturity, except for zero-coupon bonds where they will be equal. These two properties are important when it comes to duration: The first one is that the longer the maturity, the higher the duration. The second one is that the lower the coupon payment the higher the duration. With these facts above, I want to highlight the important aspect of this what the article goes through. Indeed, the price volatility is connected to the time structure of the bond, but its not direct mathematically related to the maturity in a pure simple way. Since there are evidence that duration is more accurate, the authors for the article wants to generalize the following: For a given basis point change in market yield, percentage changes in bond prices vary proportionally with the duration and are greater, the greater the duration of the bond. There is also true that there is an inverse relationship between duration and coupon. This means that a higher coupon bond will automatically be seen as a shorter-term bond than a bond that has a lower coupon payment, even if they in fact have the same maturity period. Furthermore, this means that a comparison of these bonds with equal maturity will underestimate the default risk premium in periods of upward sloping yield curves and also overestimate the premium in periods of downward sloping yield curves. For instance, referred to the above information, there is evidence that the duration varies inversely with coupon rates. A 50 year 8 percent coupon bond, yielding 6 percent, have approximately the same duration as a 20 year 2 percent coupon bond yielding the same amount of 6 percent. To sum up the article and this paper, I want to highlight the complexity of the relationship between the bond price volatility and the maturity, as well as the relation between then bond value and the duration, even if I believe that duration is a more accurate measurement of price volatility. Expectations, Bond Prices, And The Term Structure Of Interest Rates The term structure of interest rates is of great importance when dealing with bonds, since the interest rate significantly affects the bond price. Burton G. Malkiel examines the relationship between market interest rates and bond prices in his article Expectations, Bond Prices, and the Term Structure of Interest Rates, where he takes the position that Lutz theory of Basic Behavioural postulate is correct and important in understanding the behaviour of market interest rates of securities with different term to maturity. Lutz says that investors decide whether to invest in bond based on their expectation of future short rates, since they are not able to predict long term rates. Malkiel furthermore aims to ease the principle hypothesis by Hicks and Keynes, that future prises are biased expectations of future spot prices. A bonds market price or value is determined by four factors: the face value of the bond; the coupon or interest paid periodically to the bondholder; the effective interest rate per period; and the number of years to maturity. The lower interest rate, the higher the bond price hence the significant relationship between the two factors. The term structure in this sense is important since the investor wants to choose the term and bond that is most beneficial. According to Malkiel, the term structure is based on investors expectations, which is influenced by the normal range of interest rates. If interest rates appear to be very high relative to the normal range, investors may expect that interests will fall and vice versa. The term structure problem is furthermore analysed with a combination of spot and forward trading, resulting in longer term rates as combinations of relevant forward short rates: (1 + R2)2 = (1+r1)(1+r2). When long-term average rates are below the current short rate future short-term rates are expected to fall, and conversely, long rates will exceed the current short rate if future short rates are expected to rise. Additionally, when interest rates are believed to be high in relation to historical averages, investors will prefer long-term bonds while issuers prefer to sell short-term securities, whilst low interest rates will encourage investors to buy shorts and issuers to sell longs. Supporting Lutzs theory, Malkiel makes the conclusion that short and intermediate areas of the yield curve exhibit more dramatic responses to changes in expectations. This is due to the fact that investors cannot predict the long term rates; they only interpret the near past and current market conditions. What is also worth mentioning is that the term structure fluctuates more between e.g. one to two years, and three to six years, compared to a very long period of time, e.g. thirty-four and sixty-eight years. This is also due to the fact that it is difficult to predict changes in interest rates for such a far away future. This furthermore explains that the yield curve tends to flatten out the longer term to maturity. To conclude, investors will choose to purchase bonds depending on their expectations of how interest rates will change in the near and long-term future, the term-structure, and that presumably would be most beneficial in terms of bond price and returns. Does Duration Extension Enhance Long-Term Expected Returns? The articles main purpose is to give investors important information regarding duration and if you can gain a profit or not in the long-term. The author is using empirical evidence mainly from the U.S. Treasury bond market over the past 25 years. All the results of the past returns depend on the interest rate trend in the period the authors are looking at. The focus in the article lies on the long-run expected return differentials across bonds with different maturities. The risk premium is defined as the long-term return exceeding short-term risk-less rate. The writer means that the one-year bill earns on average 150 basis points higher return than one-month bill and after two years the yield curve will remain a constant line. In other words the return of the bill will stay reasonably the same at two years but recall that long-term bonds are riskier than short-term bonds because it is difficult to predict the future. In other words it is uncertain how much the bonds are worth in the long-term because there are many different causes that affect the value in the future. The article discusses the bond risk premium using six theories. There are three classic term structure hypotheses. The first is called pure expectations which means assuming that there is no risk premium. The second is the liquidity/risk hypothesis explaining the compensation for return volatility. The third explains the increase and decrease with duration depending on time horizon called the preferred habitat theory. Ilmanen presents two modern asset pricing theories. One that explains the risk premium proportional to return volatility and the other one that clarifies CAPM. The latter explains that the risk of assets depends on the sensitivity to aggregate wealth as in stock market sensitivity (ÃŽ ² correlation) and risk premium (ÃŽ ² Market risk premium) which in turn depends on market volatility and risk aversion level. Equilibrium model means assets performing poorly in bad times should earn positive risk premium while assets performing well are accepted for low yields but other non-risk related factors are also mentioned. To sum up the article long-term bonds are riskier than short-term bonds and investors earn positive risk premium for bearing this risk. Various models specify that expected returns are linear in duration and return volatility but other factors may contribute. References Longstaff, F. A., and E. S. Schwarz (1992), Interest Rate Volatility and Term Structure: A Two-Factor General Equilibrium Model, Journal of Finance, Vol. 47(4), pp. 1259-1282. Heath, D., R. Jarrow, and A. Morton (1992), Bond Pricing and Term Structure of Interest Rates: A New Methodology for Contingent Claims Valuation, Econometrica, Vol. 60(1), pp. 77-105. Hopewell, M. H., and G. G. Kaufman (1973), Bond Price Volatility and Term to Maturity: A Generalized Re-specification, The American Economic Review, Vol. 63(4), pp. 749-753. Malkiel, B. G. (1962), Expectations, Bond Prices, and Term Structure of Interest rates, The Quarterly Journal of Economics, Vol. 76(2), pp. 197-218. Ilmanen, A., (1996), Does Duration Extension Enhance Long-term Expected Returns? Journal of Fixed Income, September, pp. 23-36.

The Federal Reserve :: Essays Papers

The Federal Reserve President Clinton appointed Alan Greenspan, a well-known chairman of the Federal Reserve Board, to his fourth term as the chairman of the nation's central bank. Alan Greenspan accepted the chance to lead the Federal Reserve Board for another four-year term beginning June of 2000. President Clinton praised Greenspan for starting a "New Era", an era with high technologies and productivity to advance. He is expected to push the level of prosperity to a higher stage. Alan Greenspan is known as a man of his profession to realize the power and impact of new technologies for the 21st century. The Fed's job of stabilizing output in the short run and promoting price stability in the long run is made more difficut by two main factors: the long and variable lags in policy, and the uncertain influences of factors other than monetary policy on the economy. This raised an important question, what problems are caused by other influences on the economy? Output, employment, and inflation are influenced not only by monetary policy, but also by such factors as our government's taxing and spending policies, and the introduction of new technologies etc. As we step into the 21st century, the wide spreads of computer industries and advance technologies have enhanced the productivity. When workers and capitals are more productive, the economy can expand more rapidly without creating inflationary pressure. U.S. today has experienced a capability surge brought on by the utilization of computer and hi-tech developments. The issue of monetary policy maker is how much faster productivity is increasing and whether those increase are temporary or permanent. With all these uncertainties, the board has to know how and when Fed.'s policies will affect the economy? Fed looks at a wide range of indicators of the future course of employment, output and inflation. Indicators induces the measure of money supply, unemployment rate, real interest rate, nominal and real GDP growth, etc†¦ With so much variation of possibilities, policymakers basically have to rely on their own judgement about the directionality of these indictors. They based on these foreshadowing to formulate strategies to maintain the economy at its top condition. In order to have a desire effect on the economy, the Fed must take into account of the influence of these indication, either offset them or reinforce them as needed.

Studying Abroad Persuasive Speech Outline Essay

Introduction Attention Getter: If you want to learn about someone walk a mile in their shoes. What greater way is there to understand another culture’s point of view than studying abroad? Studying abroad is a life changing opportunity that benefits not only you but our nation and the world. Central Idea: I am going to tell you how you can during college by studying abroad. Establish Credibility: for the past couple of weeks I have been researching this topic, and because of what I have learned from this research I have decided to study abroad at some point during my college years. Preview Statement: First I will define what studying abroad is. Secondly I will discuss the benefits that studying abroad gives you. Thirdly I will talk about how affordable studying abroad is and the scholarships that are possible. Lastly I will give you a visualization. Body A. What study abroad is, well the education board for abroad defines studying abroad simply as a program in which students attend school in a country outside the United States and receive academic credit toward their major. Which here at USI, there are over 50 different countries that you could choose to study abroad in, according to the USI international website. B. Think of what studying abroad can do for your career. Studying abroad is so much fun you will forget that you are gaining academic credit while visiting another country. Not to mention the knowledge and experience that can help you succeed in future career options. The studying abroad experience is a great addition to any resume and can help you snag the job of your choice. By studying aboard it gives you that extra edge that employers might be looking for according to CNN.com. Employer’s desks are covered with stacks of applications but your experience from studying abroad will set you apart from other well quali fied applicants. C. A common myth most people think is that studying abroad is expensive, but it actually is affordable. Most students don’t believe that they can get scholarships for study abroad. In 2007, the House of Representatives passed a bill that would add more than $80 million every year to study abroad scholarships according to Hose of Representative members Salisbury, Umbach, and Pauslen. Most students look  for financial scholarships, when they should be looking for ability based scholarships. Lots of money goes untouched and there are a lot of scholarships for everyone going abroad, even professionals, according to Kruempelmann . Here are some tips that you can follow on slide 6 here. D. Try to picture a world where people are not allowed to leave the country that they are born in. Imagine the consequences we would face if we ignored the world around us. Lack of knowledge and understanding of other cultures could lead to disaster. Every culture benefits from the values, beliefs, traditions, and experiences of other cultures. The world is a better place when there is understanding among different cultures. Therefore, if you study abroad you can be an essential part of keeping the world together. Conclusion A. The rising benefits of studying abroad are undeniable and affordable! Going to a different country can be scary, but it can also be fun! You learn a different culture, language, and view on the world. There will be so many stories that you will never forget about from your time abroad. You will not regret it. B. I leave you with this quote from Henry Miller â€Å"One’s destination is never a place, but a new way of seeing things.

An Unquiet Mind essays

An Unquiet Mind essays Everywhere you turn the prevalence of mood disorders is staggering. It is not uncommon to come into contact with one or several people in your lifetime, which suffer from or have suffered from, some type of mood disorder. Personally, I have come to know several people who have manic-depressive illness. It is for this reason that I have taken a particular interest in Kay Jamisons An Unquiet Mind. Although I have had contact with several manic-depressive individuals, during both manic and depressed states, many aspects of the disorder still remained unclear. The knowledge I have gained through Jamisons first hand experiences is invaluable and has helped me attain a clearer understanding of this illness. She allowed her readers to understand how her mind worked and to get a true feel of the disorder itself. Most of the manic-depressive individuals that I know are married with children and living normal lives. However, like Jamison, it took them many expansive highs followed by detrimental lows before medical help was sought. As in Jamisons case (her father and other relatives on his side of the family), there appears that a predisposition to this disorder is genetically transmitted. One would think that this would only help an individual seek medical attention sooner. However, this is not the case, which Jamison illustrated quite clearly. Most manic-depressive individuals, like her, are intelligent and strong willed. It is usually not until they have practically destroyed their lives, hurt those around them or attempted suicide that one seeks help. As Jamison candidly stated, I had no idea what was going on, and I felt totally unable to ask anyone for help. It never occurred to me that I was ill; my brain just didnt put it in those terms (p. 45). Jamisons depiction of her mood swings provides her readers with a perspective of her illness that no textbook or ...

Robert Louis Stevenson essays

Robert Louis Stevenson essays Robert Louis Stevenson is the versatile imaginative author of several classic works in several genres. Stevenson also wrote stories and short novels which display his personal charm, optimism during much serious illness, romantic tastes, vigorous manner, and powerful narrative. Through his tales of adventure, Stevenson has been a favorite of both children and adults. Stevenson was an intensive prose stylists that came from a Scottish family. He was born in Edinburgh on November 13, 1850 (Discovering Authors 1). He was a sickly fragile child and suffered from severe respiratory ailments (1). Stevensons relationship with parents became increasingly difficult as he reached adolescence. His father, a civil engineer, expected him to train for the family profession of light house building, which Stevenson refused (1). Although Stevenson wanted to be a writer, his father insisted that Stevenson be trained in a more secure profession, and he took a law degree in 1875, which he rarely practiced (Seagal 261). A restless nature and poor health ensured that Stevenson spent much of his life in search of adventure and on appropriate climate for his health. While traveling he met and married Mrs. Fanny Osbourne in 1880 and had two stepchildren by the names of Lloyd Osbourne and Isobel Strong (Discovering Authors 2). Stevenson traveled a lot, but his journeys to France provided much material for his travel books (2). Stevenson had his first story published under his name, A Lodging For The Night was published in 1877 (Seagal 1). Stevenson announced he was agnostic when twenty-two years old. He wrote prayers for family and attended church of Scotland, Presbyterian, by upbringing (Discovering Authors 3). At age forty-four, Stevenson died due to a cerebral hemorrhage. Stevenson always wrote his stories with creativity and excitement. Stevensons story distances so unmistakably..., that its o ...

Iodine essays

Iodine essays Iodine is an essential macromineral. Almost half the iodine is found in the thyroid gland which is located in the throat. Iodine is an important component of thyroid hormones, which control energy, metabolism in the body as well as the bodys temperature, reproduction, and growth. It is not found in the body so it is very important that you get about .15 mg. daily. Some foods such as vegetables, grains, table salt, dairy products, and especially seafood are the best sources of iodine. Breathing in sea air everyday will give you a sufficient amount of iodine to prevent a disease called goiter. There are two types of goiter: toxic and simple. Toxic goiter is caused by excess of thyroxin secretion. Symptoms may include rapid heart beat, tremor, increased sweating, increased appetite, weight loss, weakness, and fatigue. Other symptoms may include eye problems such as staring or protrusion. Goiter affects over 200 million people throughout the world. 96% is caused by iodine deficiency. Goiters are rare in the U.S. and other industrialized countries because iodine is now added to table salt. Iodine affects body functions too. Hair and nail growth are affected by iodine. The brain, skin, speech, teeth, energy production, metabolism, and physical thyroid gland. Deficiency symptoms include dry hair, goiter, intellectual disability, paused growth, irritability, nervousness, and obesity. If a pregnant woman takes iodine during pregnancy, the development of goiter will be decreased for both the mother and the child. Iodine is the most efficient treatment for children who have goiter. Iodine does have a down side to it, too. It is not toxic up to 2,000 mcg daily, but it may cause acne. Too much iodine is can link to thyroid cancer. Some people are sensitive to iodine and may break out in a rash if their iodi... 1015 Natural Sources of Iodine-Where does iodine come from? If you said seaweed and burnt sponges you're not totally wrong. Natural sources of iodine include seafoods, vegetables, and in much lesser degrees, cereal. Iodine is present in T3 and T4 (thyroxine) hormones that are the active pr ...

Hurricane Wind Driven Ventilator in Saudi Arabia Essay

Hurricane Wind Driven Ventilator in Saudi Arabia - Essay Example Wind power Wind power is the process of converting wind energy into any other form of energy that may be beneficial to human consumption or usage (Wind power, 2012). This can be done by using wind turbines for producing electricity (Fig 1) windmills to produce mechanical power, using wind pumps for pumping out water or in drainage and in the sails for propelling the seas in the oceans. A large winding farm can contain thousands of individual wind turbines (Mother Nature Takes a Part: Wind Energy, 1999) that are connected with the network of electric power transmission. The wind farms that are located in offshore locations usually harness powerful winds which are more frequent in the areas. In Saudi Arabia or the Gulf countries the wind pattern is more regular in nature (Hays, 2009). The power of the earth's wind along with the solar radiation that reaches earth can play a major role in increasing the energy supply in the kingdom. The project discussed in the paper is the Hurricane: W ind Driven Ventilator that was undertaken by the Green Energy Solutions company in Saudi Arabia. These exhaust ventilators were used to cool the temperatures during the hottest summers. An Introduction to the Project The kingdom of Saudi Arabia has a dry, arid climate with continuous general flow of the wind (Dry Climates - B Climate Type, 2011). The Hurricane: Wind Driven Ventilator project was developed by Green Energy Solution. The company specializes in their knowledge about wind, solar energy and how to use these renewable sources of energy to produce an eco-friendly solution. There are many projects that have been completed by the company successfully in UAE. One such project was the Hurricane: Wind Driven Ventilator that was completed by the company known as International Paints...A large winding farm can contain thousands of individual wind turbines (Mother Nature Takes a Part: Wind Energy, 1999) that are connected with the network of electric power transmission. The wind fa rms that are located in offshore locations usually harness powerful winds which are more frequent in the areas. In Saudi Arabia or the Gulf countries the wind pattern is more regular in nature (Hays, 2009). The power of the earth's wind along with the solar radiation that reaches earth can play a major role in increasing the energy supply in the kingdom. The project discussed in the paper is the Hurricane: Wind Driven Ventilator that was undertaken by the Green Energy Solutions company in Saudi Arabia. These exhaust ventilators were used to cool the temperatures during the hottest summers.The kingdom of Saudi Arabia has a dry, arid climate with continuous general flow of the wind (Dry Climates - B Climate Type, 2011). The Hurricane: Wind Driven Ventilator project was developed by Green Energy Solution. The company specializes in their knowledge about wind, solar energy and how to use these renewable sources of energy to produce an eco-friendly solution. There are many projects that have been completed by the company successfully in UAE. One such project was the Hurricane: Wind Driven Ventilator that was completed by the company known as International Paints (International Paints, n.d).

Amores Perros Movie Review Example | Topics and Well Written Essays - 250 words

Amores Perros - Movie Review Example Right from the starting sequence till the eventual climax the movie held my attention. Not only was the story suspense filled and gripping, but it was also fast paced. But in spite of these exciting aspects, the movie’s probing of ethical question regarding humans and animals is its standout feature. As much as the directorial excellence the performance rendered by the lead characters is also that will stay in my memory for a long time to come. In each of the three sub-plots, the characters give a superb performance – one that is realistic while also aesthetically pleasing. The movie has so many merits, but it is not devoid of flaws. I earlier mentioned how innovative the narrative technique was, but during the movie’s climactic phase, when the connection between the three sub-plots was revealed, there is room for improvement. To give a specific example, I got the impression that the movie drifted away from the story of Octavia before its proper completion. I also felt that there is an excess of violent imagery in the film. But, considering the fact that it was a debut film for the director, it is indeed a stand out work. I will carry with me many memorable moments from the movie, starting from the breathtaking opening car chase to the somewhat less aesthetic dog fights to the internal turmoil of the model toward the

TQM Strategy & Toolkit Essay Example | Topics and Well Written Essays - 2500 words

TQM Strategy & Toolkit - Essay Example rts as it can be used for identifying organizational procedures, ideas, cause and effect matters and business statistics that are related to the business organization. This piece of research work is an attempt to examine the relevance and organizational significance of Total Quality Management with relation to the case of Financial Collection Solutions and Services (FCSS). This paper identifies most appropriate TQM tools that can help the company develop its software based business of credit cards and other payment solutions. The concept of Total Quality Management and its importance in the business and economy have dramatically increased in recent years because it has been considered to be an effective strategy that can help managers to become accustomed to the changes in both technology and changing customer attitudes as well customer demands. When the business contexts continue changing and are challenged by innovative and technological advances, the business must be able to adjust with changes and to provide goods and services according to the changing business contexts. Customers, competitors, employees and stakeholders all are putting maximum pressure on managers to quickly innovate and change the business route. Total Quality Management is one approach that has emerged to meet these changing forces. This approach also has been termed as Continuous Quality Improvement (CQI) and Leadership Through Quality (LTQ) (Brown and Harvey). One of the very basic tasks and objectives of the management is to achieve quality in the business. According to Peter F Drucker, a business must be able to create a customer in a way that it can satisfy him by providing some product or services that he wants (Burril and Ledolter, 1999). A business can be said to have achieved the required ‘quality’ when it provides excellent products or services with required attractiveness, with no defects, and with reliability and long term dependability. Customers demand high value and

Singapore and Its Legal System Essay Example | Topics and Well Written Essays - 750 words

Singapore and Its Legal System - Essay Example Some of their beliefs have influenced the way the country handles issues to do with discipline and the respect for nature, and has differentiated Singapore’s laws and rules from those of other countries like Australia. People say that Singapore has fine cities because of their fines, but it is really more of common sense and good etiquette. Tan (2007), highlights that â€Å"the most powerful judicial institutions in Singapore is made up of Supreme and subordinate courts†. The president does appointment of judges in Singapore, and the prime minister recommends other judges after consultations with the chief justice. Specialist judges were appointed to the bench in the year 2006, drawn from legal practitioners and academia with an aim of supplementing expertise to the subordinate courts (Tan & Chan, 2007). However, since 1992, capital offences trials have been heard and addressed by a single judge after amendment of the constitution. Capital punishment is still legally in force in Singapore, and offenders are executed according to the laws of the land. The United Nations terms the executions in Singapore to have the highest rates in the world, which are executed by hanging at down on Friday. The practice of capital punishment in Singapore was borrowed from Britain since Singapore was a British colony, and this is different from what other countries in Europe, America and Australia do(Tan & Chan, 2007). The legal system in Singapore includes the common law and higher courts decisions are binding to other less status courts. The judiciary system is made up of â€Å"the court of appeal, the high court, the constitutional tribunal, the subordinate courts, the district and magistrates’ courts, the small claims tribunals and the family courts† (Tan & Chan, 2007). â€Å"The court of appeal is the highest court,† and is mandated to hear civil and criminal appeals, which come from the high court and other subordinate courts (SamSim, 2007 ). The high court in Singapore comprises of judges who have security of tenure and contracted judicial commissioners. The high court in Singapore has powers to hear civil and criminal cases and their appeals. In addition, the high court has specialist roles of specializing in arbitration cases. The constitutional tribunal was founded in the Supreme Court with jurisdiction of hearing cases and issues that the president refers on the effect of provisions of the constitution (SamSim, 2007). All other courts and small claims tribunals in the country make up the subordinate courts. In addition, there are criminal and commercial civil courts that were established under the subordinate courts and they deal with business transactions and complex cases (SamSim, 2007). The district and magistrates’ courts both have equal powers over jurisdictions such as claims on debts, damages, and monies recovery actions. Their difference is on the monetary limits jurisdiction of each, and the power s on criminal sentences. The small claims tribunals are courts that have jurisdiction on small claims cases with $ 20,000 limits, and they offer faster and cheaper administration of justice (Tan & Chan, 2007). Finally, there are family courts which have jurisdiction on divorce, maintenance child and property custody and adoption cases. There are various laws and rules observed in Singapore in order to avoid legal actions and penalties. However, some of these laws and rules are

Case for servise marketing Research Paper Example | Topics and Well Written Essays - 1500 words

Case for servise marketing - Research Paper Example As discussed in the case study that APM grew due to its franchising strategy which not only involved direct franchising but also through Master Franchising. Thus the overall expansion strategy for the business has remained focused on the development of regional franchisees who can deliver the services according to the demand from a particular geographical area in which they can deliver them effectively. APM tend to advertise the franchising opportunities in the local newspapers and other media to attract the potential franchisee. This was achieved through advertisements as well as the word of mouth also. One of the key criteria used by APM to recruit new franchisee was to observe the behavior and attitude of the person willing to apply for the franchise. One of the tasks involved was to assess the willingness of the person to show closer association with dogs. Since APM was mobile services provider for dog washing therefore it was considered as essential that the persons must have so me degree of association with pets and specially dogs. This was also important because the PEOPLE element is considered as one of the key variables in the overall integrated services marketing mix. While recruiting the new franchisee, APM therefore gave a lot of weightage to the people element besides ensuring that processes are performed in accordance with the laid down criteria. This was also duly supported by the subsequent training and development of the franchisees in order to ensure that those who are hired have the requisite degree of knowledge and expertise in delivering the services. Having a relative degree of education, up to 10th grade, was another task involved in ensuring that the franchisee actually can handle the business aspects of delivering the services too. This task again can be considered as a focused approach to offer the franchise only to those individuals who can successfully carry out the task of business management also. One of the key similarities between recruiting new franchisee as well as attracting new customers was the use of advertisement. As discussed above that APM used word of mouth as well as the advertisement to attract the new franchisee therefore relatively same procedure was also applied to attract new customers. The use of colorful mobile vans served as strong advertisement vehicles also attracting the attention of the potential customers. This therefore not only provided APM and its franchisee a cost effective way to reach to new customers but also improve its overall image in the areas where they work. Another important similarity between the two is the use of word of mouth and incentives for attracting the new customers. The use of discounted services as well as the additional care tips provided to the customers ensured that the service providers develop a long term relationship with their customers. As discussed in the case that one of the strategies applied by the franchisees were to advise the dog owners to incr ease the frequency of dog washing so that they can save costs on other issues such health related issues with the dogs. The use of recommendations by the satisfied customers was another important task involved in retaining and attracting customers. This was however, not the case for recruiting the franchisee as they had to meet strict criteria before their applications can be accepted. One of the key contradictions between the two however,

Education in African Americans Community Essay Example | Topics and Well Written Essays - 1750 words

Education in African Americans Community - Essay Example The issue of education in African American communities has often found its way into public and scholarly debates in equal measure. This has come as a result of the agreeable lower quality and less appreciation of education in these communities as compared to areas occupied by the whites. The situation is one largely resulting from historical factors as well as continued neglect. All the same, continued interest can only boost the current situation. Hopefully, in the next decade the situation will be much better and quality as well as appreciation will have reached peak levels. To help in the inquiry and analysis of the current situation of education in the African American communities this study utilizes the Burke’s Dramastic Pentadic Criticism. This is a five stage approach which examines five aspect of a narration or situation these five are agent, act, agency, scene and purpose.African Americans are one of the most academically disadvantaged people marked by low literacy ac hievement. This is irrespective of the fact that African Americans are the subject of continuous focus in literacy based studies in United States. The current state of African Americans education is mainly due to historical factors which enforced segregation. This meant that discrimination against these individuals was officially recognized and enforced by the state government. This hindered equality in the social circles and this permeated through to the education sector (Belgrave, 2009). The greatest challenge for the African Americans was that they were historically considered slaves. This meant they had very few rights and education was not obviously one of the rights. In the absence of education, some few religious set ups realized that this was largely promoting inequality and sought to act. This was by availing education opportunities, at the forefront was the French Catholics in Louisiana in 1600s and Quakers in the 1700s, these were largely based in Pennsylvania. Such local ized approaches meant that education opportunities could not be holistically provided to all African Americans especially those living in other states (Taylor & Philips, 2005). The situation would be worsened by state governments which refused to grant equal education opportunities to their black population irrespective of whether they were free or not. The injustices directed to the African Americans in terms of education would later remain unaddressed for so long that they were generally accepted by the policymakers. A slight change came after the Civil War where most Blacks achieved some form of freedom and continually became aware of their entitlement to education amongst other rights (Murrell, 2002). However, marked improvement would only be registered in the 20th Century following political activism and civil activism led by such distinguished leaders as Martin Luther King Jr. Such activism brought to the limelight the great injustices and the continued segregation of the blac k community. However, it was still impossible to address the historical injustices (Morris & Morris, 1999). Besides, most African Americans had already formed a notion that education was not for them and they were resigned to disadvantaged positions and hard and dangerous street lives. Literature review The above discussion offers a brief synopsis of the historical factors that have contributed to the current dire situation of education among African Americans. This is irrespective of the marked improvement that has taken place in the past half a century or so. This study seeks to provide a rhetorical criticism of education in the African American Community as represented by the discussed factors amongst other emerging issues characterizing the same. The rationale for this criticism is as presented by Kenneth Burke under, Burke’s Dramastic Pentadic Criticism

Singapore and Its Legal System Essay Example | Topics and Well Written Essays - 750 words

Singapore and Its Legal System - Essay Example Some of their beliefs have influenced the way the country handles issues to do with discipline and the respect for nature, and has differentiated Singapore’s laws and rules from those of other countries like Australia. People say that Singapore has fine cities because of their fines, but it is really more of common sense and good etiquette. Tan (2007), highlights that â€Å"the most powerful judicial institutions in Singapore is made up of Supreme and subordinate courts†. The president does appointment of judges in Singapore, and the prime minister recommends other judges after consultations with the chief justice. Specialist judges were appointed to the bench in the year 2006, drawn from legal practitioners and academia with an aim of supplementing expertise to the subordinate courts (Tan & Chan, 2007). However, since 1992, capital offences trials have been heard and addressed by a single judge after amendment of the constitution. Capital punishment is still legally in force in Singapore, and offenders are executed according to the laws of the land. The United Nations terms the executions in Singapore to have the highest rates in the world, which are executed by hanging at down on Friday. The practice of capital punishment in Singapore was borrowed from Britain since Singapore was a British colony, and this is different from what other countries in Europe, America and Australia do(Tan & Chan, 2007). The legal system in Singapore includes the common law and higher courts decisions are binding to other less status courts. The judiciary system is made up of â€Å"the court of appeal, the high court, the constitutional tribunal, the subordinate courts, the district and magistrates’ courts, the small claims tribunals and the family courts† (Tan & Chan, 2007). â€Å"The court of appeal is the highest court,† and is mandated to hear civil and criminal appeals, which come from the high court and other subordinate courts (SamSim, 2007 ). The high court in Singapore comprises of judges who have security of tenure and contracted judicial commissioners. The high court in Singapore has powers to hear civil and criminal cases and their appeals. In addition, the high court has specialist roles of specializing in arbitration cases. The constitutional tribunal was founded in the Supreme Court with jurisdiction of hearing cases and issues that the president refers on the effect of provisions of the constitution (SamSim, 2007). All other courts and small claims tribunals in the country make up the subordinate courts. In addition, there are criminal and commercial civil courts that were established under the subordinate courts and they deal with business transactions and complex cases (SamSim, 2007). The district and magistrates’ courts both have equal powers over jurisdictions such as claims on debts, damages, and monies recovery actions. Their difference is on the monetary limits jurisdiction of each, and the power s on criminal sentences. The small claims tribunals are courts that have jurisdiction on small claims cases with $ 20,000 limits, and they offer faster and cheaper administration of justice (Tan & Chan, 2007). Finally, there are family courts which have jurisdiction on divorce, maintenance child and property custody and adoption cases. There are various laws and rules observed in Singapore in order to avoid legal actions and penalties. However, some of these laws and rules are

Education in African Americans Community Essay Example | Topics and Well Written Essays - 1750 words

Education in African Americans Community - Essay Example The issue of education in African American communities has often found its way into public and scholarly debates in equal measure. This has come as a result of the agreeable lower quality and less appreciation of education in these communities as compared to areas occupied by the whites. The situation is one largely resulting from historical factors as well as continued neglect. All the same, continued interest can only boost the current situation. Hopefully, in the next decade the situation will be much better and quality as well as appreciation will have reached peak levels. To help in the inquiry and analysis of the current situation of education in the African American communities this study utilizes the Burke’s Dramastic Pentadic Criticism. This is a five stage approach which examines five aspect of a narration or situation these five are agent, act, agency, scene and purpose.African Americans are one of the most academically disadvantaged people marked by low literacy ac hievement. This is irrespective of the fact that African Americans are the subject of continuous focus in literacy based studies in United States. The current state of African Americans education is mainly due to historical factors which enforced segregation. This meant that discrimination against these individuals was officially recognized and enforced by the state government. This hindered equality in the social circles and this permeated through to the education sector (Belgrave, 2009). The greatest challenge for the African Americans was that they were historically considered slaves. This meant they had very few rights and education was not obviously one of the rights. In the absence of education, some few religious set ups realized that this was largely promoting inequality and sought to act. This was by availing education opportunities, at the forefront was the French Catholics in Louisiana in 1600s and Quakers in the 1700s, these were largely based in Pennsylvania. Such local ized approaches meant that education opportunities could not be holistically provided to all African Americans especially those living in other states (Taylor & Philips, 2005). The situation would be worsened by state governments which refused to grant equal education opportunities to their black population irrespective of whether they were free or not. The injustices directed to the African Americans in terms of education would later remain unaddressed for so long that they were generally accepted by the policymakers. A slight change came after the Civil War where most Blacks achieved some form of freedom and continually became aware of their entitlement to education amongst other rights (Murrell, 2002). However, marked improvement would only be registered in the 20th Century following political activism and civil activism led by such distinguished leaders as Martin Luther King Jr. Such activism brought to the limelight the great injustices and the continued segregation of the blac k community. However, it was still impossible to address the historical injustices (Morris & Morris, 1999). Besides, most African Americans had already formed a notion that education was not for them and they were resigned to disadvantaged positions and hard and dangerous street lives. Literature review The above discussion offers a brief synopsis of the historical factors that have contributed to the current dire situation of education among African Americans. This is irrespective of the marked improvement that has taken place in the past half a century or so. This study seeks to provide a rhetorical criticism of education in the African American Community as represented by the discussed factors amongst other emerging issues characterizing the same. The rationale for this criticism is as presented by Kenneth Burke under, Burke’s Dramastic Pentadic Criticism

Confidence and Arrogance Essay Example for Free

Confidence and Arrogance Essay â€Å"Life for both sexes — and I looked at them, shouldering their way along the pavement — is arduous, difficult, a perpetual struggle. It calls for gigantic courage and strength. More than anything, perhaps, creatures of illusion as we are, it calls for confidence in oneself. Without self-confidence we are as babes in the cradle. â€Å" - Virginia Wolf, A room of one’s own, chapter 2 (1929). I was going through the writing of Virginia wolf last night and I realized how practically relevant these phrases are. I engrossed myself into my abilities and the struggle I do everyday to push myself towards the invisible boundaries. This is something make me explore more on my own way. I am determined not to look through books or dictionaries which can only define these words but I am feeling an urge to define from my surrounding. Within my experiences what are those mental-images and facts that I can link to confidence and arrogance. From corporate world to academics, we encountered various situations and people around them responded to these in a variety of different ways. I believe we would be able to develop a marathon debate on this topic. It would be better to cut the long story into short. One of those controversial misunderstanding, I would love to introduce here. The famous astronomer and philosopher Galileo was often considered as arrogant while he was opposing Pope and geocentric ideas. The arrogant ideas of him put him into the daylight and the truth came out of superstitions that already had been embedded on people’s minds. If we look around we would be able to spot so many examples of how arrogance and confidence are often misunderstood. Someone said earlier that confidence is arrogance under control. But distinct characteristics can be differentiated within these two separate categories of people. Confident persons dwell within a sea of tranquility. They are aware of their limitations and strengths. They deal with the situation seizing an immense positivity and work hard enough to produce result. These types of people can be easy to cooperate with. Confident guys would not be baffled by criticisms and what other people think about them. Arrogant are those who are having overbearing pride and belief in him. They treat others as inferiors and often people get annoyed by these activities. They can only value themselves by putting others down. I think confessing truth or mistake is a significant sign of confidence. But arrogance people most likely to hide their own mistake and they will accuse others for any blunders. We as a human being more civilized than any other life forms. Our superior intelligence is not only giving us freedom to make a comfortable world for us but also to become more responsible than before. Confidence and arrogance of human civilization can be used as a positive and fruitful way for a more harmonized world.

Asset Returns in African Stock Market Indexes

Asset Returns in African Stock Market Indexes 1.0 INTRODUCTION Financial markets are important in an economy in that they involve lots of monetary funds in the capital markets. These funds enable firms to raise finance in the form of equities and debts as means to finance expansion or expenses. Hence they serve the intermediation process and also provide a means for investors to diversify their portfolio of assets. African stock markets have been subject to economic restructuration as well as stock exchange modernisation these recent years. They now face regional and global integration and so the need to investigate their returns characteristics. Efficiency is an integral part of investment valuation. When markets are efficient, security prices are properly valued as they absorb all information at each point of time. This leads to optimal allocation of private and social resources. Moreover, investors may not beat the market and make abnormally higher returns than others, based on information asymmetry. Conversely, inefficiency leads to market prices deviating from actual value. Hence, those having reasonable level of expertise in the field of valuation will be able to spot and exploit above and under-valued stocks. Efficiency in equity markets is of significance to investors and policymakers in African markets. The concept has been widely applied to developed countries but less attention has been devoted to less developed ones. These researches indicate the importance of developing stock markets for countries which are at appropriate stage of economic growth. Indeed, it is more convenient to test for weak form efficiency of market rather than testing for semi-strong or strong forms of efficiency due to lack of data and supervision pertaining to those markets. 1.1 Organisation of the paper The objective of this study is to examine the possibility of both short- and long-term memory in asset returns in selected African markets stock indexes. Besides South Africa, all the other markets are still in developing state so that efficiency can be gauged on basis of market development and size. The paper is organised as follows: * Section 2 describes informational efficiency with emphasis on weak-form efficiency and random walk. Critics relating to the latter are then raised to emphasise on non-linearity and long-term dimensions. * Section 3 provides a brief description of the characteristics of the selected African stock markets as well as their respective indices. * A methodological discussion based on the different random walks and long-term analysis is then presented in the fourth section. * Tests, results and discussions are provided in section 5. The possible explanations for efficiency or inefficiency pertaining to the respective markets are also made. * Finally, we conclude in section 6 and make policy recommendations as well as future scope for research. 1.2 Limitations of the Study This paper in centered on market efficiency. However, given the excessive literature that exists in this field, it is beyond the scope this study to review all the previous works related to the study. We therefore provide only a short discussion on the main findings associated to the weak-form efficiency or random walk hypothesis to provide a general overview of the paper. Besides, the main limitation of this paper is that we restrict to the weak-form efficiency using time series analysis. Consequently, the statistical tests are only used to test for market efficiency excluding any transaction costs adjustment such as the bid-ask spread. Finally, we use daily data for the analysis though it may lead to possible biasness in the observations. We believe that using a longer time period would help to reduce this problem. LITERATURE REVIEW 2.0 Introduction Efficient market hypothesis is one of the most researched topics in the realm of the stock market. While most of the early studies have previously been centered on developed stock markets like USA, Japan and Europe, developing and emerging stock markets have been brushed aside. Before proceeding with a systematic and ordered approach, it might be useful to present a general review of the theory under study, which in turn aims at defining the main concepts and demonstrating familiarity with previous relevant findings concerning the same field of research. 2.1 Theoretical review In this section, we develop a formal view of the weak-form efficiency as well as the random walk hypothesis. Starting with the martingale model, necessary assumptions are made to develop a model consistent with Lo and McKinley (1997) model specification. Making the necessary assumptions about the model, a formal presentation of the different random walks is made and criticised. 2.1.1 Market efficiency Efficiency has various different contextual meanings but analysis of financial markets assumes an informational dimension. The attribute of those markets by virtue of which they respond to new information, is called informational efficiency. This implies that current market price reacts instantaneously to new information so that it incorporates all relevant information. Since, by definition, new information is unpredictable, it follows that change in stock price cannot be anticipated and thus move in a random manner. Informational efficiency can be related to the hypothesis of random walk which assumes that prices do not exhibit predictive patterns over time and follow a random walk. Hence, prediction of future prices in absolute terms, based singly on information about historical price, will be unsuccessful. The theory had its roots from the early works of Bachelier (1900). In his own words, Bachelier argued that â€Å"past, present and even discounted future events are reflected in market price, but often show no apparent relation to price changes†. This emphasises the informational content of stock prices. In his paper on the behaviour of stock and commodity prices, Maurice Kendall (1953) further supported the random walk theory. The findings, unexpectedly, showed that prices follow a random walk and not regular cycles. His conclusion was that the series appeared ‘wandering, ‘Almost as if once a week the Demon of Chance drew a random number from a symmetrical population of fixed dispersion and added it to the current price to determine the next weeks price In his thesis, Behaviour of stock market prices, Fama supported the random walk theory where he reviewed previous works on stock price movements. He concluded that â€Å"it seems safe to say that this paper has presented strong and voluminous evidence in favour of the random walk hypothesis.† Indeed in a market where prices are determined rationally, only new information will cause them to change. Hence prices follow a random walk to reflect all current knowledge. If price prediction were possible, this would have caused market inefficiency as prices dont incorporate all information. Fama (1965) was the first one who coined the term efficient market. He held that such a market is one constituting of a large number of competing rational and active profit-maximisers who try to predict individual values of securities. Information in those markets tends to be almost free. He argued that the essence of ‘instantaneous adjustment in actual prices to new information is competition leading to efficiency in the market. Later, the random walk theory was broadened into a concept called the efficient market theory. Based on the works of Samuelson (1965) and Roberts (1967), Fama (1970) developed a second paper: Efficient capital markets: A review of theory and empirical work. He distinguished between three levels of efficiency, as earlier initiated by Roberts (1967), based on three sets of information reflected in the price. He posited that a market is efficient in the weak-form if any information which might be contained in past price movements is already reflected in the security prices. It is semi-strong efficient when all relevant publicly available information is impounded in security prices while strong form efficiency suggests that security prices already reflect all available information, even private information. In this stream of literature, Malkiel (1992) contribution is elaborated in his essay Efficient market hypothesis in the New Palgrave Dictionary of Money and Finance. He defines a capital market as efficient when it fully and correctly reflects all relevant information in security price determination. Hence, for some information set, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, the market is efficient if security prices are unaffected by unveiling that information to market participants. Then it becomes impossible to make economic profits by exploiting the information set. Hence, both the random walk theory and the EMH are related to informational efficiency. Then the form of efficiency under consideration will depend upon the information set, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, which determines the level of efficiency. 2.1.2 Weak Form Efficiency: Random walk and its critics Weak-form efficiency focuses on the informational content of the previous sequence of stock price movements. An informational efficient market postulates that excess return cannot be realised from information contained in past prices. The rationale behind weak-form efficiency is that stock prices are the most publicly available information so that an investor may not be able to use information, which is already available to others, to beat the market. A long considered necessary condition for an efficient asset market is the martingale process. Under market efficiency, the conditional expectation of future price changes, conditional on the price history, cannot be either positive or negative and therefore must be zero. In fact the martingale originated from gambling and the concept of fair game. Samuelson (1965) and Mandelbrot (1966) independently demonstrated that a sequence of prices of an asset is a martingale (or a fair game) if it has unbiased price changes. Danthine (1977), LeRoy (1976, 1989), Huang (1985) and Neftci (2000) held that if a security market can be equilibrium and for sure be a fair game, then the following equations must hold: Ept+1ÃŽ ©t=pt (1) Ept+1-ptÃŽ ©t=0 (1.1) Where t denotes the price of an asset at date t, à ¢Ã¢â‚¬Å¾Ã‚ ¦t is a set of all past and current information regarding prices pt,pt-1,pt-2†¦.. and pt+1-pt=rt. Hence, the directions of the future movements in martingales are impossible to forecast. If pt is a martingale in equation (1), the best forecast of pt+1 that could be derived on basis of current information ÃŽ ©t, equals pt. For equation (1.1), rt is a fair game if the forecast is zero for any possible value of ÃŽ ©t. Then pt is a martingale only if rt is a fair game. In this case, asset price evolves in a random process so that the correlation coefficient between the successive price changes will be zero given information about current and past prices. However, most assets are expected to yield a non-zero and positive returns. The martingale hypothesis does not take into account the trade-off between risk and return as pointed out in financial economics. The model implicitly assumes risk neutrality while investors are generally risk averse. In fact, an investor is likely to hold more risky assets provided they are compensated in terms of higher expected returns. In this case, knowledge of the riskiness of current information set implies some awareness about the expected returns. Hence the equilibrium model shall predict a positive price change in the assets price though the actual return is still unforecastable under market efficiency. Then an asset model, considering positive returns, may be formulated as Fama (1970). He suggested the sub-martingale process: Ept+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t≠¥pt or alternatively Ert+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t≠¥0 (1.2) This states that the expected value of next periods price based on the information available at time t, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, is equal to or greater than the current price. Equivalently, it stipulates that the expected returns and price changes are greater or equal to zero. Market efficiency plus an equilibrium model for asset pricing normally produces a random character to asset prices or returns or excess returns. The equilibrium model generally shows how the assets expected return varies with its risk and this can be closely related to Famas sub-martingale model. However, the representative model for the asset uses log prices and the expected continuously compounded return, rt+1. Ert+1ÃŽ ©t=pt+1-pt (1.3) Under the efficient market hypothesis, investors cannot earn abnormal profits on the available information set other than by chance. This is in line with Jensen (1978) who defines a market as efficient with respect to the information set, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, if it not possible to make economic profits on the basis of this set of information. Hence, defining excess returns as zt+1: zt+1=rt+1-Ert+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t (1.4) Since market efficiency implies that all information is already impounded in stock prices, the following applies: Ezt+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t=0 (1.5) Under the assumption that the equilibrium model determining asset prices in (1.3) is assumed to be constant over time, the deduction is that expected return does not depend on the information available at time t such that: pt+1-pt=Ert+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t=Ert+1=r (1.6) Therefore market efficiency produces a result that implies that the changes in asset prices follow a random walk. The appropriate model would then be a random walk with drift where the arbitrary drift parameter, reflects how prices change on average to provide returns to holding the asset over time. The following equation sets the random walk model similar to the one defined by Lo and MacKinlay (1997): pt+1= ÃŽ ¼+pt+ ÃŽ µt+1 (1.7) rt= ÃŽ ¼+ÃŽ ±rt-1+ ÃŽ µt (1.8) If the stock price index follows a random walk, then, ÃŽ ± = 0. Generally, if stock prices and returns are unpredictable then time series have the property of random walk and white noise implying the validity of EMH. Thus, given an equilibrium model for asset pricing, the test for weak-form efficiency is that of random walk tests of market efficiency. Ko and lee (1991) maintained that â€Å"If the random walk hypothesis holds, the weak form of the efficient market hypothesis must hold, but not vice versa. Thus, evidence supporting the random walk model is the evidence of market efficiency. But violation of the random walk model need not be evidence of market inefficiency in the weak form†. Depending on the restrictions put on the increments,ÃŽ µt+1, different forms of the random walk are tested. Within the random walk hypothesis, three successively more restrictive sub-hypotheses with sequentially stronger tests for random walks exists (Campbell et al. 1997). These are range from the most restrictive form of Random Walk 1 (RW1) to the least restrictive one which is the Random Walk 3 (RW3). Based on their extensive research, the orthogonality condition for the random walk is: covfrtgrt+k=0 (1.8) Where frt and grt+k are two arbitrary functions and rt and rt+k refers to the returns for period t and t+k respectively. If (1.9) holds for all functions frt,grt+k this corresponds to RW1 and RW2. The former is the most restrictive version of random walk model implying it is not possible to predict either future price movements or volatility based on past prices. It states that returns are serially uncorrelated with independently and identically distributed increments with mean, zero and variance, ÏÆ'2. Under RW2, the returns are serially uncorrelated, corresponding with a random walk hypothesis with increments that are independent but not identically distributed. In case frt,grt+k are arbitrary linear functions, the RW3 applies so that it is not possible to use information on the basis of past prices to predict future prices. Hence, returns in a market conforming to this standard of random walk are serially uncorrelated, corresponding to a random walk hypothesis with dependent but uncorrelated increments. The foundation of traditional tests of random walk rests on the assumption of IID. The most famous tests remain the sequences and reversals test proposed by Cowles and Jones (1937) and the runs test. Tests of RW2 and RW3 encompass the variance ratio tests and unit root tests which are more recent tools. Developed by Lo and MacKinlay (1988), hereby LM, the variance ratio tests out that the variance of the innovations pertaining to a random walk model is linear functions of time. This popular test does not restrict only to the RW1 but also to the RW2 and RW3. However, exclusion of non-linear analysis in financial series could lead to inappropriate deductions as regards weak-form efficiency. Indeed, the application of non-linear dynamics and chaos theory to financial series has shown that they evidence non-linear structure. In practice, returns distributions exhibit leptokurtic behaviours as opposed to normal distribution. They often reflect volatility clustering thereby the level of volatility in the next period tends to be positively correlated with its current level. Then it may be possible for information on the variance of past prices to predict the future volatility of the market. Indeed, share price movements could be unpredictable when using linear models but forecastable under non-linear models in the ‘short-run. This contradicts the use of linear models for testing the efficient market hypothesis. Further departures from the random walk hypothesis exist in the long-range dependence. This is analogous to high autocorrelation structure in a series so that there is persistent dependence between distant observations. In this case covfrtgrt+k does not tend to zero at higher lags. As regards market efficiency, persistence implies that past data contain useful information for prediction so that long memory violates the concept. Several tests have been developed for this purpose including the rescaled statistic to test for long-term ‘randomness of the market series and the ARFIMA-FIGARCH which categorises the long- and short-term memory based on the estimated value of the fractional difference. 2.2 Empirical Review Following the work of Fama (1965) â€Å"Random walk in stock prices† arguing for random walk hypothesis, a multitude of research has been performed throughout the world. While most of the well developed markets were found to be efficient, research findings of developing and less developed markets are mixed and controversial too. Most of the less developed market encounters the problem of thin trading. Besides, it is easier for large traders to manipulate small markets. Though emerging markets are generally assumed to be less efficient, empirical evidence does not always support the idea. Some previous research aiming at testing the weak-form efficiency of a particular group of stock markets are presented below. A research that aims at testing weak-form market efficiency in the equity markets of the three main Central European transition economies (the Czech Republic, Hungary, and Poland) is that of Gilmore and McManus (2001). Using different approaches comprising of univariate, multivariate tests as well as the model-comparison approach for the period July 1995 to September 2000 different conclusion were drawn. While the serial correlation-based tests largely support a conclusion that these markets are weak-form efficient, the results of comparing forecasts of alternative models are consistent in rejecting the random walk hypothesis. Examining the existence of weak-form efficiency in European stock market, Worthington and Higgs (2003) used daily returns for sixteen developed markets (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom) and four emerging markets (Czech Republic, Hungary, Poland and Russia) to perform a number of testing procedures of random walk. They started with the serial correlation coefficient test and the runs test, and found that Netherlands and Germany do follow a random walk while the United Kingdom, Ireland and Portugal were efficient under one test or the other. All remaining markets were weak form inefficient. Beside unit root tests (ADF, PP statistics and KPSS), the multiple variance ratio tests rejected the presence of random walk in most of the markets. While in the developed markets only the United Kingdom, Portugal, Ireland, Sweden and Germany satisfied the most stringent rand om walk criteria, in emerging markets only Hungary did so. Weak-form efficiency for emerging equity markets were also tested by Chang, Lima and Tabak (2003). They deduced that random walk hypothesis is not consistent with Asian equity markets while left apart Chile, Latin American indices resemble a random walk. Using daily prices from January 1992 to December 2002, multivariate variance ratios using heteroscedastic robust bootstrap procedures and test trading rules using trading range break (TRB) levels were employed. Taking the US and Japan as yardsticks, they were not able to reject the random walk hypothesis. Another study considering a group of selected Asian markets; Kim and Shamsuddin (2008) argues that market efficiency varies with the level of stock market development. Using new multiple variance ratio tests based on the wild bootstrap and signs as well as the conventional Chow-Denning test, they found that the Hong Kong, Japanese, Korean and Taiwanese markets adhere to the martingale property while Indonesia, Malaysia, Philippines markets are inefficient. Besides, the results revealed evidence that the Singaporean and Thai markets followed a random walk after the Asian crisis. As regards the Gulf Co-operation Council (GCC) stock markets, Elango and Hussein (2008) tested whether daily returns series are an approximation of normal distribution or not. Dubai, AbuDhabi, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain stock market indices were examined using the Kolmogorov-Smirnov test, Runs test, Autocorrelation Function and Partial Autocorrelation Functions. The results revealed that the distribution of daily returns on these markets deviated from the normal distribution during the study period. Also, the runs test rejected the hypothesis of random walk for all seven markets. In his paper investigating the random walk hypothesis, Urrutia (1995), used monthly data from December 1975 to March 1991 for four Latin American equity markets: Argentina, Brazil, Chile, and Mexico to observe whether they are weak-form efficient. He made use of the Variance-ratio tests and the runs tests. While results of the variance ratio estimatespixel rejects the random walk hypothesis, runs tests specify that Latin American equity markets are weak-form efficient. These empirical findings suggest that domestic investors might not be able to develop trading strategies that would allow them to earn excess returns. Using Lo-MacKinlay Variance ratio, Wrights rank and sign VR and the standard runs tests; Al-Khazali, Ding and Pyun (2007) revisited the validity of random walk hypothesis in eight emerging markets in the Middle East and North Africa (MENA): Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Saudi Arabia, and Tunisia. When assessed by Wrights (2000) rank and sign VR test, all the markets rejected the hypothesis of random walk. However, once data are reconciled for distortions from thinly and infrequently traded stocks, all eight stock markets do follow a random walk. African countries were investigated in the paper ‘How Efficient are Africas Emerging Stock Markets by Magnusson and Wydick (2002). Testing procedures considered monthly data for eight African markets in comparison with nine other developing countries in Latin America and Asia. Distinguishing among the three types of random walk models, they started by testing the RW 3, by investigating the Partial Auto-Correlation Function(PACF) of the historical series and examining whether they are statistically different from zero. Markets in Botswana, Cote dIvoire, Kenya, Mauritius and South Africa did conform to the RW3 while those of Ghana, Nigeria and Zimbabwe were rejected. Proceeding with the RW2, excluding Botswana, results did not change. However none of the African Markets were conform to the RW1 White test for heteroscedasticity. They conclude that African countries do conform quite favourably to some regions of the developing world. Another research which focuses on African markets was that of Jefferis and Smith (2005). It covers seven African stock markets: South Africa, Egypt, Morocco, Nigeria, Zimbabwe, Mauritius and Kenya and use a GARCH approach with time-varying parameters to detect changes in weak-form efficiency through time. They emphasised on RW 3 model with volatilities changing over time and found that Johannesburg stock market was weak-form efficient with no tendency to change like many other developed markets. On the other hand, the stock markets of Egypt, Morocco and Nigeria showed changing levels of inefficiencies to become weak-form efficient towards the end of the period. The results for Kenya, Zimbabwe and Mauritius, however, showed tendency towards efficiency and rejected the hypothesis of weak-form efficiency. Recently, McMillan and Thupayagale (2009) in their paper â€Å"The efficiency of African equity markets† examined long memory effects of both equity returns and volatility for eleven African countries, taking the UK and US as reference. They made use of unit roots test and the GARCH(1,1) models before proceeding with ARFIMA-FIGARCH and ARFIMA-HYGARCH models. They ended up with mixed results. The ARFIMA-FIGARCH models provide evidence for long term memory in African equity markets with the exception of Mauritius, Morocco, Botswana and Nigeria where the results were unpredictable. Also, the US stock return volatility was marked by long memory process while the UK was non-stationary. These results were further supported by the ARFIMA-HYGARCH models. 2.3 Conclusion During the course of the literature review, limited evidence on weak form efficiency of African markets was found. These countries have attracted significant investment these last years and are of much importance to portfolio managers. Univariate time series analysis might be important tool for technical analysts in trying to outperform these markets. Indeed, the battery of econometrics software now paves the way for investigation of the random walk hypothesis based on different sets of assumption. A preliminary analysis of the African markets shall provide us with an insight to efficiency based on their attributes and consultation of previous works. GENERAL OVERVIEW OF THE AFRICAN STOCK MARKETS 3.0 Introduction African stock markets, following in the wake of the surge in the world stock markets over the few decades, are starting to take off. Recognizing the importance of stock markets in economic development, several African countries launched stock exchanges during the past two decades. The African Stock Exchange Association (ASEA) was, hence, set up in 1993 so as to promote the development of stock markets. Prior to 1989, there were just five stock markets in Sub-Saharan Africa and three in North Africa. Today, Africa has about 20 active stock markets, with some exchanges more established than others, depending on when they were established. Alongside the rapid expansion of stock markets in the continent, there has also been a significant growth in market capitalization and the number of listed companies. However, with the exception of the well established markets, stock markets in Africa remain thin and illiquid. This study covers four African stock markets namely South Africa, Mauritius , Morocco and Egypt over periods for which data is available. Mauritius Stock Exchange Since its start of trading on the 5th July 1989 under the Stock Exchange Act of 1988, the Mauritius Stock Exchange (SEM) has come a long way. From a pre-emerging market with trading taking place only once a week, the SEM has emerged as one of the leading exchanges in Africa. It operates two markets namely the Official and the Development and Enterprise market (DEM), established in August 2006 to replace the over-the-counter market. The exchange is regulated by the Financial Services Commission. As the second sub-Saharan stock exchange member of the World Federation of Exchanges, SEM operates in line with international standards. In addition, its developing institutional and retail investor base make it an attractive investment destination for foreign investors. The SEM offers quite a limited range of products to its investors and the aim for the next few years would be to increase the range of products offered. The three main indices of the official market are namely the SEMDEX, SEM- 7 and the SEMTRI. As at 30 June 2009, some 40 companies, with a market capitalisation of Rs 130.77 bn, are listed on the Official market and 52 companies, with a market capitalisation of Rs 45.41 bn, are listed on the Development and Enterprise Market (DEM). The SEM maintained an upward momentum, amidst typical market fluctuations, until the end of February 2008. The total market capitalization of the Official Market and the DEM was Rs 173.1 bn at end 2007. This is in line with the levels observed in well-established emerging stock markets. However, like other exchanges, the SEM experienced market volatility since the start of the financial crisis in September 2008. The main pillars of the Mauritian economy were adversely affected and this reflected on hotels and banks stocks listed on the SEM. The market then picked-up by mid-March 2009 on the back of interest rate cuts and stimulus packages put forward by the Government of Mauritius. Johannesburg Stock Exchange The Johannesburg Stock Exchange (JSE), regulated by the Financial Services Board under the Securities Services Act 2004, is the largest exchange in Africa and among the top twenty largest in the world in terms of market capitalisation. JSE Securities Exchange existed since November 1887 and was incorporated as a public limited company on 1st July 2005, pursuant to its demutualization. Since then, the JSE has evolved from a traditional floor based equities trading market to a modern securities exchange providing fully electronic trading, clearing and settlement in equities, financial and agricultural derivatives and other associated instruments and has extensive surveillance capabilities. Technical agreement with the London Stock Exchange (LSE) enables dual primary listings on both exchanges since 2001. Between the listed entity and its trusted trading platforms the South African economy becomes an active hub of activity where expansion is encouraged, businesses are enhanced, performa nce is driven and shareholder value is created. The JSE currently operates four boards for the equities market and the South African bond market is a leader among emerging-market economies. The main market indices are Top 40, Industrial 25, All Share, Oil and Gas Index. As the gateway to Africas economy, the JSE provides the link between international markets and the continent. In 2008, a daily average of 334 million shares was traded on the JSE. At year-end, there were 992 listed securities on the JSE with a total market capitalisation of R4,514 billion compared to R5,696 billion in 2007. Casablanca Stock Exchange Founded in 1929, the Casablanca Stock Exchange (CSE) in Morocco is relatively modern, having experienced reform in 1993. The exchange is well regulated by the Conseil Deontologique des Valeurs Mobilieres (CDVM). Originally, CSE had the Index de la Bourse des Valeurs de Casablanca (IGB) but this was replaced on January 2002 by two indexes: MASI (Moroccan All Shares Index) which comprises all listed shares, allows to follow up all listed values and to have a long-term visibility and MADEX (Moroccan Most Active Shares Index), comprisi Asset Returns in African Stock Market Indexes Asset Returns in African Stock Market Indexes 1.0 INTRODUCTION Financial markets are important in an economy in that they involve lots of monetary funds in the capital markets. These funds enable firms to raise finance in the form of equities and debts as means to finance expansion or expenses. Hence they serve the intermediation process and also provide a means for investors to diversify their portfolio of assets. African stock markets have been subject to economic restructuration as well as stock exchange modernisation these recent years. They now face regional and global integration and so the need to investigate their returns characteristics. Efficiency is an integral part of investment valuation. When markets are efficient, security prices are properly valued as they absorb all information at each point of time. This leads to optimal allocation of private and social resources. Moreover, investors may not beat the market and make abnormally higher returns than others, based on information asymmetry. Conversely, inefficiency leads to market prices deviating from actual value. Hence, those having reasonable level of expertise in the field of valuation will be able to spot and exploit above and under-valued stocks. Efficiency in equity markets is of significance to investors and policymakers in African markets. The concept has been widely applied to developed countries but less attention has been devoted to less developed ones. These researches indicate the importance of developing stock markets for countries which are at appropriate stage of economic growth. Indeed, it is more convenient to test for weak form efficiency of market rather than testing for semi-strong or strong forms of efficiency due to lack of data and supervision pertaining to those markets. 1.1 Organisation of the paper The objective of this study is to examine the possibility of both short- and long-term memory in asset returns in selected African markets stock indexes. Besides South Africa, all the other markets are still in developing state so that efficiency can be gauged on basis of market development and size. The paper is organised as follows: * Section 2 describes informational efficiency with emphasis on weak-form efficiency and random walk. Critics relating to the latter are then raised to emphasise on non-linearity and long-term dimensions. * Section 3 provides a brief description of the characteristics of the selected African stock markets as well as their respective indices. * A methodological discussion based on the different random walks and long-term analysis is then presented in the fourth section. * Tests, results and discussions are provided in section 5. The possible explanations for efficiency or inefficiency pertaining to the respective markets are also made. * Finally, we conclude in section 6 and make policy recommendations as well as future scope for research. 1.2 Limitations of the Study This paper in centered on market efficiency. However, given the excessive literature that exists in this field, it is beyond the scope this study to review all the previous works related to the study. We therefore provide only a short discussion on the main findings associated to the weak-form efficiency or random walk hypothesis to provide a general overview of the paper. Besides, the main limitation of this paper is that we restrict to the weak-form efficiency using time series analysis. Consequently, the statistical tests are only used to test for market efficiency excluding any transaction costs adjustment such as the bid-ask spread. Finally, we use daily data for the analysis though it may lead to possible biasness in the observations. We believe that using a longer time period would help to reduce this problem. LITERATURE REVIEW 2.0 Introduction Efficient market hypothesis is one of the most researched topics in the realm of the stock market. While most of the early studies have previously been centered on developed stock markets like USA, Japan and Europe, developing and emerging stock markets have been brushed aside. Before proceeding with a systematic and ordered approach, it might be useful to present a general review of the theory under study, which in turn aims at defining the main concepts and demonstrating familiarity with previous relevant findings concerning the same field of research. 2.1 Theoretical review In this section, we develop a formal view of the weak-form efficiency as well as the random walk hypothesis. Starting with the martingale model, necessary assumptions are made to develop a model consistent with Lo and McKinley (1997) model specification. Making the necessary assumptions about the model, a formal presentation of the different random walks is made and criticised. 2.1.1 Market efficiency Efficiency has various different contextual meanings but analysis of financial markets assumes an informational dimension. The attribute of those markets by virtue of which they respond to new information, is called informational efficiency. This implies that current market price reacts instantaneously to new information so that it incorporates all relevant information. Since, by definition, new information is unpredictable, it follows that change in stock price cannot be anticipated and thus move in a random manner. Informational efficiency can be related to the hypothesis of random walk which assumes that prices do not exhibit predictive patterns over time and follow a random walk. Hence, prediction of future prices in absolute terms, based singly on information about historical price, will be unsuccessful. The theory had its roots from the early works of Bachelier (1900). In his own words, Bachelier argued that â€Å"past, present and even discounted future events are reflected in market price, but often show no apparent relation to price changes†. This emphasises the informational content of stock prices. In his paper on the behaviour of stock and commodity prices, Maurice Kendall (1953) further supported the random walk theory. The findings, unexpectedly, showed that prices follow a random walk and not regular cycles. His conclusion was that the series appeared ‘wandering, ‘Almost as if once a week the Demon of Chance drew a random number from a symmetrical population of fixed dispersion and added it to the current price to determine the next weeks price In his thesis, Behaviour of stock market prices, Fama supported the random walk theory where he reviewed previous works on stock price movements. He concluded that â€Å"it seems safe to say that this paper has presented strong and voluminous evidence in favour of the random walk hypothesis.† Indeed in a market where prices are determined rationally, only new information will cause them to change. Hence prices follow a random walk to reflect all current knowledge. If price prediction were possible, this would have caused market inefficiency as prices dont incorporate all information. Fama (1965) was the first one who coined the term efficient market. He held that such a market is one constituting of a large number of competing rational and active profit-maximisers who try to predict individual values of securities. Information in those markets tends to be almost free. He argued that the essence of ‘instantaneous adjustment in actual prices to new information is competition leading to efficiency in the market. Later, the random walk theory was broadened into a concept called the efficient market theory. Based on the works of Samuelson (1965) and Roberts (1967), Fama (1970) developed a second paper: Efficient capital markets: A review of theory and empirical work. He distinguished between three levels of efficiency, as earlier initiated by Roberts (1967), based on three sets of information reflected in the price. He posited that a market is efficient in the weak-form if any information which might be contained in past price movements is already reflected in the security prices. It is semi-strong efficient when all relevant publicly available information is impounded in security prices while strong form efficiency suggests that security prices already reflect all available information, even private information. In this stream of literature, Malkiel (1992) contribution is elaborated in his essay Efficient market hypothesis in the New Palgrave Dictionary of Money and Finance. He defines a capital market as efficient when it fully and correctly reflects all relevant information in security price determination. Hence, for some information set, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, the market is efficient if security prices are unaffected by unveiling that information to market participants. Then it becomes impossible to make economic profits by exploiting the information set. Hence, both the random walk theory and the EMH are related to informational efficiency. Then the form of efficiency under consideration will depend upon the information set, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, which determines the level of efficiency. 2.1.2 Weak Form Efficiency: Random walk and its critics Weak-form efficiency focuses on the informational content of the previous sequence of stock price movements. An informational efficient market postulates that excess return cannot be realised from information contained in past prices. The rationale behind weak-form efficiency is that stock prices are the most publicly available information so that an investor may not be able to use information, which is already available to others, to beat the market. A long considered necessary condition for an efficient asset market is the martingale process. Under market efficiency, the conditional expectation of future price changes, conditional on the price history, cannot be either positive or negative and therefore must be zero. In fact the martingale originated from gambling and the concept of fair game. Samuelson (1965) and Mandelbrot (1966) independently demonstrated that a sequence of prices of an asset is a martingale (or a fair game) if it has unbiased price changes. Danthine (1977), LeRoy (1976, 1989), Huang (1985) and Neftci (2000) held that if a security market can be equilibrium and for sure be a fair game, then the following equations must hold: Ept+1ÃŽ ©t=pt (1) Ept+1-ptÃŽ ©t=0 (1.1) Where t denotes the price of an asset at date t, à ¢Ã¢â‚¬Å¾Ã‚ ¦t is a set of all past and current information regarding prices pt,pt-1,pt-2†¦.. and pt+1-pt=rt. Hence, the directions of the future movements in martingales are impossible to forecast. If pt is a martingale in equation (1), the best forecast of pt+1 that could be derived on basis of current information ÃŽ ©t, equals pt. For equation (1.1), rt is a fair game if the forecast is zero for any possible value of ÃŽ ©t. Then pt is a martingale only if rt is a fair game. In this case, asset price evolves in a random process so that the correlation coefficient between the successive price changes will be zero given information about current and past prices. However, most assets are expected to yield a non-zero and positive returns. The martingale hypothesis does not take into account the trade-off between risk and return as pointed out in financial economics. The model implicitly assumes risk neutrality while investors are generally risk averse. In fact, an investor is likely to hold more risky assets provided they are compensated in terms of higher expected returns. In this case, knowledge of the riskiness of current information set implies some awareness about the expected returns. Hence the equilibrium model shall predict a positive price change in the assets price though the actual return is still unforecastable under market efficiency. Then an asset model, considering positive returns, may be formulated as Fama (1970). He suggested the sub-martingale process: Ept+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t≠¥pt or alternatively Ert+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t≠¥0 (1.2) This states that the expected value of next periods price based on the information available at time t, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, is equal to or greater than the current price. Equivalently, it stipulates that the expected returns and price changes are greater or equal to zero. Market efficiency plus an equilibrium model for asset pricing normally produces a random character to asset prices or returns or excess returns. The equilibrium model generally shows how the assets expected return varies with its risk and this can be closely related to Famas sub-martingale model. However, the representative model for the asset uses log prices and the expected continuously compounded return, rt+1. Ert+1ÃŽ ©t=pt+1-pt (1.3) Under the efficient market hypothesis, investors cannot earn abnormal profits on the available information set other than by chance. This is in line with Jensen (1978) who defines a market as efficient with respect to the information set, à ¢Ã¢â‚¬Å¾Ã‚ ¦t, if it not possible to make economic profits on the basis of this set of information. Hence, defining excess returns as zt+1: zt+1=rt+1-Ert+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t (1.4) Since market efficiency implies that all information is already impounded in stock prices, the following applies: Ezt+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t=0 (1.5) Under the assumption that the equilibrium model determining asset prices in (1.3) is assumed to be constant over time, the deduction is that expected return does not depend on the information available at time t such that: pt+1-pt=Ert+1à ¢Ã†â€™Ã¢â‚¬Å"à ¢Ã¢â‚¬Å¾Ã‚ ¦t=Ert+1=r (1.6) Therefore market efficiency produces a result that implies that the changes in asset prices follow a random walk. The appropriate model would then be a random walk with drift where the arbitrary drift parameter, reflects how prices change on average to provide returns to holding the asset over time. The following equation sets the random walk model similar to the one defined by Lo and MacKinlay (1997): pt+1= ÃŽ ¼+pt+ ÃŽ µt+1 (1.7) rt= ÃŽ ¼+ÃŽ ±rt-1+ ÃŽ µt (1.8) If the stock price index follows a random walk, then, ÃŽ ± = 0. Generally, if stock prices and returns are unpredictable then time series have the property of random walk and white noise implying the validity of EMH. Thus, given an equilibrium model for asset pricing, the test for weak-form efficiency is that of random walk tests of market efficiency. Ko and lee (1991) maintained that â€Å"If the random walk hypothesis holds, the weak form of the efficient market hypothesis must hold, but not vice versa. Thus, evidence supporting the random walk model is the evidence of market efficiency. But violation of the random walk model need not be evidence of market inefficiency in the weak form†. Depending on the restrictions put on the increments,ÃŽ µt+1, different forms of the random walk are tested. Within the random walk hypothesis, three successively more restrictive sub-hypotheses with sequentially stronger tests for random walks exists (Campbell et al. 1997). These are range from the most restrictive form of Random Walk 1 (RW1) to the least restrictive one which is the Random Walk 3 (RW3). Based on their extensive research, the orthogonality condition for the random walk is: covfrtgrt+k=0 (1.8) Where frt and grt+k are two arbitrary functions and rt and rt+k refers to the returns for period t and t+k respectively. If (1.9) holds for all functions frt,grt+k this corresponds to RW1 and RW2. The former is the most restrictive version of random walk model implying it is not possible to predict either future price movements or volatility based on past prices. It states that returns are serially uncorrelated with independently and identically distributed increments with mean, zero and variance, ÏÆ'2. Under RW2, the returns are serially uncorrelated, corresponding with a random walk hypothesis with increments that are independent but not identically distributed. In case frt,grt+k are arbitrary linear functions, the RW3 applies so that it is not possible to use information on the basis of past prices to predict future prices. Hence, returns in a market conforming to this standard of random walk are serially uncorrelated, corresponding to a random walk hypothesis with dependent but uncorrelated increments. The foundation of traditional tests of random walk rests on the assumption of IID. The most famous tests remain the sequences and reversals test proposed by Cowles and Jones (1937) and the runs test. Tests of RW2 and RW3 encompass the variance ratio tests and unit root tests which are more recent tools. Developed by Lo and MacKinlay (1988), hereby LM, the variance ratio tests out that the variance of the innovations pertaining to a random walk model is linear functions of time. This popular test does not restrict only to the RW1 but also to the RW2 and RW3. However, exclusion of non-linear analysis in financial series could lead to inappropriate deductions as regards weak-form efficiency. Indeed, the application of non-linear dynamics and chaos theory to financial series has shown that they evidence non-linear structure. In practice, returns distributions exhibit leptokurtic behaviours as opposed to normal distribution. They often reflect volatility clustering thereby the level of volatility in the next period tends to be positively correlated with its current level. Then it may be possible for information on the variance of past prices to predict the future volatility of the market. Indeed, share price movements could be unpredictable when using linear models but forecastable under non-linear models in the ‘short-run. This contradicts the use of linear models for testing the efficient market hypothesis. Further departures from the random walk hypothesis exist in the long-range dependence. This is analogous to high autocorrelation structure in a series so that there is persistent dependence between distant observations. In this case covfrtgrt+k does not tend to zero at higher lags. As regards market efficiency, persistence implies that past data contain useful information for prediction so that long memory violates the concept. Several tests have been developed for this purpose including the rescaled statistic to test for long-term ‘randomness of the market series and the ARFIMA-FIGARCH which categorises the long- and short-term memory based on the estimated value of the fractional difference. 2.2 Empirical Review Following the work of Fama (1965) â€Å"Random walk in stock prices† arguing for random walk hypothesis, a multitude of research has been performed throughout the world. While most of the well developed markets were found to be efficient, research findings of developing and less developed markets are mixed and controversial too. Most of the less developed market encounters the problem of thin trading. Besides, it is easier for large traders to manipulate small markets. Though emerging markets are generally assumed to be less efficient, empirical evidence does not always support the idea. Some previous research aiming at testing the weak-form efficiency of a particular group of stock markets are presented below. A research that aims at testing weak-form market efficiency in the equity markets of the three main Central European transition economies (the Czech Republic, Hungary, and Poland) is that of Gilmore and McManus (2001). Using different approaches comprising of univariate, multivariate tests as well as the model-comparison approach for the period July 1995 to September 2000 different conclusion were drawn. While the serial correlation-based tests largely support a conclusion that these markets are weak-form efficient, the results of comparing forecasts of alternative models are consistent in rejecting the random walk hypothesis. Examining the existence of weak-form efficiency in European stock market, Worthington and Higgs (2003) used daily returns for sixteen developed markets (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom) and four emerging markets (Czech Republic, Hungary, Poland and Russia) to perform a number of testing procedures of random walk. They started with the serial correlation coefficient test and the runs test, and found that Netherlands and Germany do follow a random walk while the United Kingdom, Ireland and Portugal were efficient under one test or the other. All remaining markets were weak form inefficient. Beside unit root tests (ADF, PP statistics and KPSS), the multiple variance ratio tests rejected the presence of random walk in most of the markets. While in the developed markets only the United Kingdom, Portugal, Ireland, Sweden and Germany satisfied the most stringent rand om walk criteria, in emerging markets only Hungary did so. Weak-form efficiency for emerging equity markets were also tested by Chang, Lima and Tabak (2003). They deduced that random walk hypothesis is not consistent with Asian equity markets while left apart Chile, Latin American indices resemble a random walk. Using daily prices from January 1992 to December 2002, multivariate variance ratios using heteroscedastic robust bootstrap procedures and test trading rules using trading range break (TRB) levels were employed. Taking the US and Japan as yardsticks, they were not able to reject the random walk hypothesis. Another study considering a group of selected Asian markets; Kim and Shamsuddin (2008) argues that market efficiency varies with the level of stock market development. Using new multiple variance ratio tests based on the wild bootstrap and signs as well as the conventional Chow-Denning test, they found that the Hong Kong, Japanese, Korean and Taiwanese markets adhere to the martingale property while Indonesia, Malaysia, Philippines markets are inefficient. Besides, the results revealed evidence that the Singaporean and Thai markets followed a random walk after the Asian crisis. As regards the Gulf Co-operation Council (GCC) stock markets, Elango and Hussein (2008) tested whether daily returns series are an approximation of normal distribution or not. Dubai, AbuDhabi, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain stock market indices were examined using the Kolmogorov-Smirnov test, Runs test, Autocorrelation Function and Partial Autocorrelation Functions. The results revealed that the distribution of daily returns on these markets deviated from the normal distribution during the study period. Also, the runs test rejected the hypothesis of random walk for all seven markets. In his paper investigating the random walk hypothesis, Urrutia (1995), used monthly data from December 1975 to March 1991 for four Latin American equity markets: Argentina, Brazil, Chile, and Mexico to observe whether they are weak-form efficient. He made use of the Variance-ratio tests and the runs tests. While results of the variance ratio estimatespixel rejects the random walk hypothesis, runs tests specify that Latin American equity markets are weak-form efficient. These empirical findings suggest that domestic investors might not be able to develop trading strategies that would allow them to earn excess returns. Using Lo-MacKinlay Variance ratio, Wrights rank and sign VR and the standard runs tests; Al-Khazali, Ding and Pyun (2007) revisited the validity of random walk hypothesis in eight emerging markets in the Middle East and North Africa (MENA): Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Saudi Arabia, and Tunisia. When assessed by Wrights (2000) rank and sign VR test, all the markets rejected the hypothesis of random walk. However, once data are reconciled for distortions from thinly and infrequently traded stocks, all eight stock markets do follow a random walk. African countries were investigated in the paper ‘How Efficient are Africas Emerging Stock Markets by Magnusson and Wydick (2002). Testing procedures considered monthly data for eight African markets in comparison with nine other developing countries in Latin America and Asia. Distinguishing among the three types of random walk models, they started by testing the RW 3, by investigating the Partial Auto-Correlation Function(PACF) of the historical series and examining whether they are statistically different from zero. Markets in Botswana, Cote dIvoire, Kenya, Mauritius and South Africa did conform to the RW3 while those of Ghana, Nigeria and Zimbabwe were rejected. Proceeding with the RW2, excluding Botswana, results did not change. However none of the African Markets were conform to the RW1 White test for heteroscedasticity. They conclude that African countries do conform quite favourably to some regions of the developing world. Another research which focuses on African markets was that of Jefferis and Smith (2005). It covers seven African stock markets: South Africa, Egypt, Morocco, Nigeria, Zimbabwe, Mauritius and Kenya and use a GARCH approach with time-varying parameters to detect changes in weak-form efficiency through time. They emphasised on RW 3 model with volatilities changing over time and found that Johannesburg stock market was weak-form efficient with no tendency to change like many other developed markets. On the other hand, the stock markets of Egypt, Morocco and Nigeria showed changing levels of inefficiencies to become weak-form efficient towards the end of the period. The results for Kenya, Zimbabwe and Mauritius, however, showed tendency towards efficiency and rejected the hypothesis of weak-form efficiency. Recently, McMillan and Thupayagale (2009) in their paper â€Å"The efficiency of African equity markets† examined long memory effects of both equity returns and volatility for eleven African countries, taking the UK and US as reference. They made use of unit roots test and the GARCH(1,1) models before proceeding with ARFIMA-FIGARCH and ARFIMA-HYGARCH models. They ended up with mixed results. The ARFIMA-FIGARCH models provide evidence for long term memory in African equity markets with the exception of Mauritius, Morocco, Botswana and Nigeria where the results were unpredictable. Also, the US stock return volatility was marked by long memory process while the UK was non-stationary. These results were further supported by the ARFIMA-HYGARCH models. 2.3 Conclusion During the course of the literature review, limited evidence on weak form efficiency of African markets was found. These countries have attracted significant investment these last years and are of much importance to portfolio managers. Univariate time series analysis might be important tool for technical analysts in trying to outperform these markets. Indeed, the battery of econometrics software now paves the way for investigation of the random walk hypothesis based on different sets of assumption. A preliminary analysis of the African markets shall provide us with an insight to efficiency based on their attributes and consultation of previous works. GENERAL OVERVIEW OF THE AFRICAN STOCK MARKETS 3.0 Introduction African stock markets, following in the wake of the surge in the world stock markets over the few decades, are starting to take off. Recognizing the importance of stock markets in economic development, several African countries launched stock exchanges during the past two decades. The African Stock Exchange Association (ASEA) was, hence, set up in 1993 so as to promote the development of stock markets. Prior to 1989, there were just five stock markets in Sub-Saharan Africa and three in North Africa. Today, Africa has about 20 active stock markets, with some exchanges more established than others, depending on when they were established. Alongside the rapid expansion of stock markets in the continent, there has also been a significant growth in market capitalization and the number of listed companies. However, with the exception of the well established markets, stock markets in Africa remain thin and illiquid. This study covers four African stock markets namely South Africa, Mauritius , Morocco and Egypt over periods for which data is available. Mauritius Stock Exchange Since its start of trading on the 5th July 1989 under the Stock Exchange Act of 1988, the Mauritius Stock Exchange (SEM) has come a long way. From a pre-emerging market with trading taking place only once a week, the SEM has emerged as one of the leading exchanges in Africa. It operates two markets namely the Official and the Development and Enterprise market (DEM), established in August 2006 to replace the over-the-counter market. The exchange is regulated by the Financial Services Commission. As the second sub-Saharan stock exchange member of the World Federation of Exchanges, SEM operates in line with international standards. In addition, its developing institutional and retail investor base make it an attractive investment destination for foreign investors. The SEM offers quite a limited range of products to its investors and the aim for the next few years would be to increase the range of products offered. The three main indices of the official market are namely the SEMDEX, SEM- 7 and the SEMTRI. As at 30 June 2009, some 40 companies, with a market capitalisation of Rs 130.77 bn, are listed on the Official market and 52 companies, with a market capitalisation of Rs 45.41 bn, are listed on the Development and Enterprise Market (DEM). The SEM maintained an upward momentum, amidst typical market fluctuations, until the end of February 2008. The total market capitalization of the Official Market and the DEM was Rs 173.1 bn at end 2007. This is in line with the levels observed in well-established emerging stock markets. However, like other exchanges, the SEM experienced market volatility since the start of the financial crisis in September 2008. The main pillars of the Mauritian economy were adversely affected and this reflected on hotels and banks stocks listed on the SEM. The market then picked-up by mid-March 2009 on the back of interest rate cuts and stimulus packages put forward by the Government of Mauritius. Johannesburg Stock Exchange The Johannesburg Stock Exchange (JSE), regulated by the Financial Services Board under the Securities Services Act 2004, is the largest exchange in Africa and among the top twenty largest in the world in terms of market capitalisation. JSE Securities Exchange existed since November 1887 and was incorporated as a public limited company on 1st July 2005, pursuant to its demutualization. Since then, the JSE has evolved from a traditional floor based equities trading market to a modern securities exchange providing fully electronic trading, clearing and settlement in equities, financial and agricultural derivatives and other associated instruments and has extensive surveillance capabilities. Technical agreement with the London Stock Exchange (LSE) enables dual primary listings on both exchanges since 2001. Between the listed entity and its trusted trading platforms the South African economy becomes an active hub of activity where expansion is encouraged, businesses are enhanced, performa nce is driven and shareholder value is created. The JSE currently operates four boards for the equities market and the South African bond market is a leader among emerging-market economies. The main market indices are Top 40, Industrial 25, All Share, Oil and Gas Index. As the gateway to Africas economy, the JSE provides the link between international markets and the continent. In 2008, a daily average of 334 million shares was traded on the JSE. At year-end, there were 992 listed securities on the JSE with a total market capitalisation of R4,514 billion compared to R5,696 billion in 2007. Casablanca Stock Exchange Founded in 1929, the Casablanca Stock Exchange (CSE) in Morocco is relatively modern, having experienced reform in 1993. The exchange is well regulated by the Conseil Deontologique des Valeurs Mobilieres (CDVM). Originally, CSE had the Index de la Bourse des Valeurs de Casablanca (IGB) but this was replaced on January 2002 by two indexes: MASI (Moroccan All Shares Index) which comprises all listed shares, allows to follow up all listed values and to have a long-term visibility and MADEX (Moroccan Most Active Shares Index), comprisi