How Stock Prices React To Information - Free Essay Example

Sample details Pages: 17 Words: 5234 Downloads: 6 Date added: 2017/06/26 Category Statistics Essay Did you like this example? INTRODUCTION Case studies, introduced back in 1969, produced useful evidence on how stock prices react to information. Many studies focus on returns in the short window (several days) about clean of the event. The advantage of this approach is that, because expected daily returns are close to zero, the model for the expected return does not have a major impact on the findings of abnormal returns. Don’t waste time! Our writers will create an original "How Stock Prices React To Information" essay for you Create order The assumption in studies that focus on short return windows is that there were delays in price response event is short-lived. There is a developing literature that challenges this assumption, arguing instead that stock prices adjust slowly to information, so that one must examine returns over long horizons to show full-size market inefficiency. If someone said to accept its conclusions, many of the recent studies on long-term returns suggest market inefficiency, namely, long-term under reaction or overreaction to information. It is time, however, to ask whether this literature, viewed as a whole, suggests that the efficiency should be rejected. The answer should be a solid, no, for two reasons. First, the efficient market generates categories of events that individually suggest that prices are over-react to information. But in an efficient market, it is obvious: Under-reaction will be around as often as over-reaction. If the anomaly is divided between the accident under-reaction and overreaction, they are consistent with market efficiency. We will see that even clear about the division between overreaction and underreaction is a good description of the menu of existing anomalies. Second, and more importantly, if the long-term return anomalies are so large that it cannot be attributed to the case, then even split between over-and under-reaction is a Pyrrhic victory for market efficiency. We will find, however, that the long-term return anomalies are sensitive to the methodology. They tend to become marginal or disappear when exposed to different models for expected (normal) returns or when different statistical approaches are used to measure them. Thus, even viewed one by one, most long-term return anomalies can reasonably be attributed to chance. The problem in the development of the overall perspective of long-term return studies is that they rarely test specific alternative to market efficiency. Instead, the alternative hypothesis is unclear, the market inefficiency. This is unacceptable. Like all models, market efficiency (the hypothesis that prices fully reflect the available information) is a wrong description of the pricing. Following the standard scientific rule, however, market efficiency could be replaced by a better specific model of price formation, itself potentially rejectable by empirical tests. Each alternative model has a difficult task. Please specify the errors in information processing, which have the same investors under-react to certain types of events and over-reaction to others. The alternative must also clarify the observed results better than the simple story of market efficiency, ie the expected value of abnormal returns is zero, but chance generates deviations from zero (anomalies) in both directions. From the literature, the irregularity was not settled on a concrete alternative to market efficiency, to get the ball rolling I assume that reasonable alternatives must choose between over-reaction or response. Using this perspective, we review existing studies, without questioning their applications. Each mechanism of organized marketing assets or financial liabilities is determined on the financial market. It is a market in which financial assets and liabilities are traded (Richard and Bill, 2006). Financial assets in this area includes all forms of securities, ranging from ordinary derivatives. Performance, it is widely used can be seen as the ability to achieve the desired result of the action or not waste energy (Encarta Dictionary, 2009). In other words, it has to do with how resources are used efficiently, the extent to which something is good. Financial market efficiency can be said to include as financial assets and liabilities are exchanged efficiently and productively the funds invested in financial market instruments. However, the exchange of securities in respect of funds can not be made only at the price willingly accepted by both parties, while the price is determined mainly by the value and scope of information available on the market for investors. This document d iscusses the performance of financial markets, however, explore the theories and assumptions, and explaining in detail all the terminology (majorly prices and information) relating to the efficiency of the financial market. LITERATURE REVIEW There have been extensive results on the effectiveness of the financial market. This led to the development of various theories, such as determination of the value of securities, the impact of information on share prices, dividend policy, to name a few. DEFINITION OF FINANCIAL MARKET Financial markets, as per Olowe, 1997, are mechanisms in which the surplus and deficit units can be connected economy by buying and selling financial claims. Furthermore, he argues that the primary function of financial markets is to allow the funds effectively allocated from the surplus units in the economy, the deficit units for productive investments. Richard and Bill, 2006, view of the financial market, like any market mechanism for financial assets and securities. They further explain that there is often no physical market transactions are conducted via telephone or computer. Is any market in which financial assets and liabilities are traded and the mechanism through which corporate financial managers have access to various funding sources and instruments. Capital markets, however, operate in two ways: Primary market providing new capital for enterprises and other activities, usually in the form of issuing shares to new or existing shareholders or loans. It provides the focal points for lenders and borrowers to meet. First of all, new sources of funding is raised in this market. Secondary market trade existing securities, thereby allowing investors to supply the existing holdings at will. Active in the secondary market is a prerequisite for efficient primary market and, as no investor will want to stick with investments that cannot be implemented if desired. Institute of Chartered Accountants of London describes the financial market, with the means provided by the financial system for the creations, care and distribution of financial assets and liabilities. The market according to the institute, has two major segments, money and capital markets. Money market offers the opportunity to raise short-term investments and funds. Tenor, which from day to day varies from about a year or two years. Exchange financial instruments on the market include treasury bills, bills, treasury certificates, securities, etc., the capital market on the other hand are the mechanisms, institutions and structures in which the medium and long term funds are collected and made available for businesses, government and individuals . Capital markets is that the instruments which are already provided are outstanding. OVERREACTION AND UNDERREACTION One of the first papers on long-term return anomalies wrote by DeBondt and Thaler (1985). We find that when stocks are ranked on three to five years past returns, past winners are usually the future losers, and vice versa. Attributed to these long-term return reversals to investor overreaction. In forming expectations, investors give too much weight to past performance of companies and too little to performance instead of the mean return. DeBondt and Thaler seem to argue that the overreaction to past information about the general assessment of behavioral decision theory of Kahneman and Tversky (1982). So could be that the overreaction to the prediction of behavioural finance alternative to market efficiency. In most cases, however, the anomalies literature has not accepted the discipline of an alternative hypothesis. An exception is Lakonishok et al. (1994). They argue that the indicators of stock prices proxy for past performance. Companies in the high proportion of earnings in the financial market instruments. These are securities or financial instruments traded on financial markets and the already mentioned, the two major segments of financial markets money and capital markets, the instruments traded in the money market are as follows: Treasury securities those short-term obligations of the federal government to the holder a specified sum of money after a certain number of days in question. Treasury securities are of two types depending on the denomination and maturities. While Treasury yields are generally low fixed and matures about 91 days of issue of certificate treasury share similar features with it, but a longer duration and higher fixed rate. Certificate of deposit (CDS) these are the revenues of banks deposit liabilities of a specified interest rate for a specified period of time. CDS is an interbank asset and serve as a means of channeling cash surplus of commercial banks, commercial banks, who are the main issuers of these types of devices. When the bank promises to pay the principal and interest at maturity, usually 3-36 months, with the name of the negotiable certificate of deposits. However, if the CD features of the deposit receipt, and are generally held to maturity, while, they are called non-negotiable certificates of deposits. Non-negotiable certificates of deposits is also maturity of up to 3-36 months. Commercial paper this is an unsecured short-term bills issued by the company to interested investors for a cash discount for a specific term. Investors in commercial paper loans are usually worth individuals or institutional investors. This is usually for a duration ranging from 30-270 days. Commercial paper dealer, however, classified documents and the documents placed directly. Securities dealer commercial paper investors placed through the dealer, which can be placed directly under a bank notes, commercial papers directly to the investors of the company issuing the documents, which require the issuer to maintain dress trained personnel who have a good knowledge of financial markets and good relationships in the markets. In all cases, the commercial paper investment of the investors, who borrow in the credit market without security, or even negative pledge. Commercial paper traded only on the primary market. Bankers Acceptances also known as the draft bill adopted by the drawee bank determines that a certain amount to be paid after a certain period of time. Adopted by writing the word your means the whole face of the draft with authorized signature. If this is done, the invoice, you should be the beneficiary of a discount rate. This financing through international trade credits. It is also intended to finance trade in goods in bonded warehouses, and in particular the credit created by the bankers acceptance self-liquid short-term loans. The maturity range of 90-180 days, or sometimes 30 to 270 days. Bank deposits this place is the base of the investors / depositors of the bank agreed rate of interest. Bank deposits are divided into call deposits / savings account deposits and fixed deposits. Call made deposits with agreed maturity date, and should be terminated by both parties at any given notice to the other party to an agreement based on the period of notice, the deposit liabilities of deposit and the bank for a specified period a specified rate of interest, which can be fixed or variable. The maturity of deposits vary from a few days a number of years. The deposit must be certified or non-receipt or certificate of deposit. Derivatives they are using, or losing or speculation from hedge against movements in currencies and interest rates. These financial instruments whose value are derived from underlying securities, which allows an investor to gain exposure to the performance of the underlying securities without having to physically. If a profit, there may be a hidden risk in derivative markets. Financial experts term financial weapons of mass destruction, and describes as hell, which is easy, and almost impossible to quit. Examples of derivatives, forward contracts and contract options for the future. CAPITAL MARKET INSTRUMENTS Debt Securities long-term loans are raised by a company or the government, which interest is payable, and a fixed rate. The nominal value of debt instruments, the debt of the issuer of the instrument and the interest is paid at the nominal rate of interest on this amount. In most cases, debt can be exchanged. Preference Shares this is a major source of long-term financing for the company. The holders of traditional shareholders instead of dividends. Preference shares, if they are collectively entitled to the unpaid dividend for the previous periods, carried over from one period to another, until finally paid off, in which case the arrears must be paid before common stock dividends paid. As well as debt securities, preferred shares convertible. Ordinary Shares the holders of these shares owned by the company. These nominal values and the memorandum and articles of association of the companys authorized common shares of the company may issue. The ordinary shareholders of the companys remaining claims, ie, they paid dividends in other fixed obligations have been met. Convertible Securities shares of both of these hybrid securities, the functions of the fixed-income securities and equity. These securities (usually fixed-rate), which is convertible into ordinary shares in the companys choice of the right in the future. Having explained the concept of the financial market, and it is composed, it is necessary to examine whether effective or not. Before this can be done, efficiency, whereas a different connotation in different environments should be clarified in the light of the financial market. EFFICIENCY This word à ¢Ã¢â€š ¬Ã…“efficiencyà ¢Ã¢â€š ¬? is all part of the vocabulary of everyone. For most, this means that it can achieve the desired result, without or with minimal wasted energy or effort. The Encarta dictionary, 2009, is the ability to do something well or achieve the desired results will not be wasted energy and effort, that is, to what extent something is done well, or not wasted energy and effort. Overall, this is a situation where growing prosperity of the amount of productive resources and the current state of technical knowledge economy, eliminating wasted effort, and allows for additional output from the available resources to achieve this desired result, avoiding wastage and prevent losses to avoid harm. (David N.H, 2005). However, in order that the various professions that means different things, the economists are talking about allocation of efficiency the extent to which resources are allocated to the most productive use of this society with the greatest need. The engineers talk about the technical efficiency the extent to which a mechanism performs the maximum capacity. Sociologists and political scientists talk about the social efficiency the extent to which complies with the accepted mechanism for social and political values. (Richard and Bill, 2006). 6.1 Financial Market Efficiency The investment guru or financial expert, a slightly better efficiency, this also applies to the pricing and information on the effectiveness, efficiency, instead of sources of financial market instruments. It is necessary to do a quick and convenient tool to convert currency and vice versa, that the price of the securities is determined and how to manage the risks associated with the securities. This, however, with the roles of the financial market is expected to perform in the economy, according to which the Olowe, 2007, divided into three (3); 1) Allocational efficiency the role of financial markets to optimally allocate scarce savings in productive investments in such a way that benefits everyone. 2) The operating efficiency the server as an intermediary, who provide the funds from savers to investors at the least cost, which offered them a fair return for their services. 3) Pricing efficiency the role of the dominant values at which securities will be replaced if the market price of capital allocation signals. The prices of the forces of supply and demand. Fama, 1976 (the Olowe, 1997) considers the effectiveness of pricing efficiency in the processing of information. Based on what said before, we can conclude that the pricing information of the two major determinants of efficient financial markets. Thus, financial market efficiency can be defined as the market in which security prices quickly and fully reflects all available information. The market in which any device that outperforms the market to be unusable. Therefore, the efficient financial markets, the same yield for a given level of risk should be implemented for all investors. Price (E / P), cash flow to price (C / P), and the book-to-market equity (BE / ME) is generally poor past earnings growth, and firms with low E / P, C / P, and BE / ME are generally strong earnings growth in the past. Since the market is over-react to the recent growth, it is surprised when earnings growth mean returns. As a result, a high E / P, C / P, and BE / ME stocks (poor past performers) have high future returns, and low E / P, C / P, and BE / ME stocks (strong past performers) at low future returns. We also considered the poor long-term post-event returns in the stock market (IPO), and experienced their own offerings (SEO) is the overreaction camp. SEO is a strong stock returns in the three years prior to the issue. It seems safe to assume that these strong returns reflect strong earnings. It seems safe to assume that the IPO will have a strong past earnings to appear in public. If the market does not mean that the income growth increasingly means returns, stock prices at the time of the equity issue (IPO or SEO) is too high. If the market only gradually recognizes the mistake, the overreaction to past earnings adjusted for slow growth in the future. Finally, some argue that the long-term negative abnormal stock returns post-list of companies that the new list of the NYSE and Amex because of the overreaction. Companies list their stocks to take advantage of market overreaction to the recent strong performance. As it turns out, overreaction was the result of tests of long-term returns, market efficiency would be dead, replaced by the alternative behavioural DeBondt and Thaler. The fact that it was obvious during the reaction around frequently. My grandfather was in the bottom of the reaction to the events of the evidence that stock prices seem to respond to income of about one year after announced. Another impetus to the effect that the high returns of stocks over the past year, yields are typically high, as the next three to six months. Alternatively, if new tests also produce the long-term post-event abnormal returns, which suggest underreaction, indicating a positive post-event abnormal returns of divesting firms and the companies that will sell. Attributed to the result of market underreaction to the enhanced probability that after the spinoff, both the parent and the spinoff is likely to become merger targets, and the recipient of aid. Desai and Jain and Ikenberry et al. Determine that the companies shared experience in human resources, long-term positive abnormal returns before and after the split. Attributed to the post-split returns to the market underreaction to the information indicates a positive split. Lakonishok and Vermaelen find positive long-term post-event abnormal returns when companies apply for stock. Ikenberry et al. observed similar results in the open market share repurchases. The story in both cases is that while the market, responding to a positive sign for the future performance of the share repurchases. Finally, Michaely et al. finds that the basis of stock prices, appears to respond to negative information in dividend omissions, information and positive initiatives. A few of the long-term return anomalies it is not easy to classify. For example, Asquith and Agrawal et al. indicate negative long-term abnormal returns to acquiring firms following mergers. This is also attributable to underreaction of market to a bad investment decision, or overreaction to the typically strong pre-merger performance of acquiring firms, documented, and Mitchell Staford. Ikenberry and Lakonishok find a negative post-event abnormal returns of firms involved in proxy contests. A story, based on the stock exchange, responds to the poor performance of these businesses prior to the proxy of competition, but another is that the price is too responds to the proxy information that something is likely to change. Because of the ambiguities in classifying certain disorders, and given the fact that the above review is certainly not complete, I will not do a number against the overreaction underreaction studies. What is important is that the literature does not lean toward the clean up of behavioral alternative to market efficiency. This will not be lost in the behavioral finance researchers who acknowledge the issue: We hope that future research will help to understand why the market seems to overreact in certain circumstances and underreact in others. (Michaely et al.). The market efficiency hypothesis is a simple answer to this question is a chance. Specifically, the expected value of zero abnormal returns, but chance generates apparent anomalies that split randomly between underreaction and overreaction. The weight of evidence of long-term return anomalies are so overwhelming that market efficiency is not viable even in the absence of an alternative working model that explains both under-and overreaction? The answer to that question is no, for two reasons: First, it is doubtful that the literature is presented in a randomly selected sample of events. Splashy results get more attention, and it encourages you to find. That the dredging of the irregularities of a rewarding profession suggested by the fact that the anomalies literature shows so little sensitivity to the other hypothesis problem. The same authors, visual events are often satisfied with the overreaction or underreaction, and are prepared to conclude that both justify the rejection of market efficiency. Second, some disorders may be evident by means of a reasonable price. Fama and French find that the long-term return reversals and the DeBondt Thaler, and conversely, to return to the Lakonishok et al. captured by a multifactor asset pricing model. In a nutshell, covariation between the returns of long-term losers seems related to the risk premium, which explains why higher future average returns than long-term winners. Fama and French discuss the fights and the multifactorial model, but the results are sufficient to illustrate an important point: Conclusions on market efficiency can be sensitive to the assumed model of expected returns. Last, but most importantly, have more or less split between overreaction and underreaction is not much support for market efficiency in the long-term return anomalies are so great they can not be attributed to chance. But it will still be viewed individually, most of the anomalies are weak. They usually disappear when reasonable alternative approaches to measure them. 6.2 Pricing of Securities Pricing is a major determinant of financial market efficiency security is discussed in relation to pricing of risk and return. Risk, which is created by many factors, such as general economic conditions, economic factors specific to security, competition, technological development, investor preferences, and all other kinds of circumstances, as defined in Van Horne, 1986, the various possible return on investment. Olowe, in 1997, also sees risk to the likelihood of a deviation from the expected return from holding a security back to the actual holding of such securities. The introduction of the risk, the investor may be indifferent as to which to invest in safety, if there is available for investment, similar yields. A conceptual framework for examining the relationship between risk and return, as they affect the pricing of security, discussed the Capital Asset Pricing Model (CAPM) and the discretionary pricing model (APM). 6.3 Capital Asset Pricing Model (CAPM) This model was developed by Sharpe (1964), Linter (1965) and Mossin (1966). It shows the expected return on the relationship between security and the inevitable risks. Provides a framework for the evaluation of the securities and can be used to find the unit cost of equity capital. CAPM, however, was the following assumptions: A time CAPM model assumes that investors are risk averse. The rice adopters and investors in the securities in the uniform requirement. There is a risk-free security, so that investors may borrow or loan an unlimited amount of risk premium rates. The securities are sold, and perfectly divisible. Even more so, to the quantities. The information is freely available to all investors. Investment restrictions cannot be neglected and no investor is large enough to affect the market price of the stock. The above assumptions are briefly assumes that there is a perfect market, and that the financial market is efficient. Thus, as the assumptions, all asset prices fall, that the security market line, while the security market line equation: E(R1) = RF + [E(RM) RF]ÃŽÂ ²1 Where ÃŽÂ ²1 = COV(R1RM) à Ã†â€™2m E(R1) = expected return on security RF = risk à ¢Ã¢â€š ¬Ã¢â‚¬Å" free rate E(RM) = expected rate on market portfolio ÃŽÂ ²1 = beta of security i COV(R1RM)= covariance of return on security i with the returns on a market portfolio. à Ã†â€™2m = variance of returns on the market portfolio Example; if the expected return on security is 24% and its beta is 1.8. show whether the security is under or overvalued if the risk à ¢Ã¢â€š ¬Ã¢â‚¬Å" free rate is 13% and return on market portfolio is 18%. Solution; E(R1) = RF + [E(RM) RF]ÃŽÂ ²1 = 0.13 + [0.18 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 0.13]1.8 0.22 i.e. 22%. We conclude that it is undervalued as the expected return is 2% less than the predicted. i.e. 24% 22%. 6.4 Characteristics of CAPM The fact that not all risk-return safety concern that risk averse investors, asset should be priced to the risk-adjusted return is exactly the security market line. So the only risk is that investors pay a premium to avoid the risk of market share so that the total risk of each security in a systematic and systemic risk. A general and systematic risk affects the entire market, and irregular and the characteristic factors unique to a particular person. Effective diversification, however, reduces the overall risk of the portfolio to the point where only the regular risk remains. Measured by the weighted average portfolio beta of the beta of individual securities in the portfolio. Proportion of portfolio funds allocated to represent the weights of individual securities in the portfolio, and it represents mathematically: n ÃŽÂ ²P = à ¢Ã‹â€ Ã¢â‚¬Ëœ wi ÃŽÂ ²i i=1 where ÃŽÂ ²p = beta of portfolio p ÃŽÂ ²i = beta of security Wi = proportion of security in portfolio p Conclusion: CAPM has been derived under some simplifying assumptions, most of which do not correspond to reality. For this reason, it has been criticized on the grounds that it assumes the market portfolio of all assets stocks, bonds, property and human capital. The real-life situations, empirical tests of the CAPM tend to use proxies, such as stock market indices as the market portfolio. 6.5 The Arbitrage Pricing Model It has proposed by Rose (1976), because the dissatisfaction of the CAPM on the theoretical and empirical grounds. This is a multi-factor model (multiple-beta model), compared to the CAPM, a single factor model. The safety factor for the actual return for a state grant: n Ri = E(Ri) + à ¢Ã‹â€ Ã¢â‚¬Ëœ bijFj + ej J=1 This can be restated as Ri = E(Ri) + bi1F1+bi2F2 + à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦. + binFn + ei Ri = actual return on security E(Ri) = expected return on security i Fj = the (uncertain) value of factor j bij = sensitivity to factor j ei = the error term. It is also the security-specific return. Similar to the CAPM, we diversify the unsystematic risk, but in addition, we arrive at the market equilibrium, as individuals eliminate arbitrage profits across multiple factors. The model does not explicitly indicate what factors or economic factors or behavioral significance. However, the market return as in the case of CAPM can be one factor. The APM, therefore, suggests that the linear relationship between security returns and a few factors. The steady-state under this model, the expected return on security i E (Ri) issued by: E(Ri) = Rf +Ɔº1 bi1 + Ɔº2 bi2 + à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦..+ Ɔºn bn Where Rf = risk à ¢Ã¢â€š ¬Ã¢â‚¬Å" free rate Ɔºn = risk premium for the types of risk associated with particular factors. Its equation can be rewritten as: Ɔºn = En à ¢Ã¢â€š ¬Ã¢â‚¬Å" Rf where En is the expected return of a portfolio which has unit response to other factors. Example: The return of stock company is related to two factors as follows. E(Ri) = Rf +0.7Ɔº1 + 1.6 Ɔº2 + 1.3 Ɔº3 Where 0.7,1.6 and 1.3 are sensitivity coefficients associated with each factor. If the risk à ¢Ã¢â€š ¬Ã¢â‚¬Å" free rate is 12%, Ɔº1 is 7%, Ɔº2 is 4% and Ɔº3 is 6%. Calculate the expected return on the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s stock. Solution: E(Ri) = 0.12 + 0.7(0.07) + 1.6(0.04)+1.3(0.06) = 0.311 i.e. 31.1% In summary, it seems more than the CAPM, the APM allows the CAPM risk averse investors to focus more attention to the systematic risk of securities pricing and diversify the systematic risk. According to APM on the other hand, individuals across a number of factors arbitrage, arbitrage opportunities disappear when the market is in balance. However, there is consensus on these factors, the APM, and testable. Thus, CAPM can still be used in security prices. INFORMATION ON SECURITIES Information can be classified as historic, current, or expected. Only the current or previous information from some of its effect on prices. The more information is available, the better the situation means that an informed decision is more likely correct. Security prices are characterized by a random and unpredictable movements. The movement in security prices may be interpreted to mean that investors in the market, a quick note to all security-related information on prices and prices adjust quickly to such information. Thus, the effectiveness of the security prices depend on the speed of price adjustment to all available information. The more efficient than the speed of adjustment of prices. The market efficiency of the available information, however, the efficient market hypothesis reflects (EMW), the three basic forms: Weak form Semi a strong form; Strong form. 1) The weak form EMH states that current stock prices fully reflect all of the information included in the recent price movements, which makes it impossible for investors to predict future security prices and the analysis of historical prices, achieved better results than the stock market as well. Therefore, the market may be effective in this form, there is no significant correlation term average prices of securities. Even more so, if an investors trading strategy can not beat the market based on information available to him, we conclude that the market is weak form efficient. Olowe 1997, places that most of the worlds markets are weak form efficient. 2) Semi strong a form of efficiency, aims to fully reflect all publicly available information about securities. This means that the investor is unable to outperform the market by analyzing the existing company related or other relevant information. This form assumes that stock prices reflect an event or information very quickly, and therefore can not be an investor to beat the market using this information. 3) Strong form of efficiency, concerned by the fact that securities prices reflect all published and unpublished public and private information. This means that people in the private or insider information to be able to outperform the market in this form. Convincingly, Olowe, 2007 states that the following assumption is sufficient for an efficient market; Non-transaction cost of trading in securities. The information is freely available to all market participants. Each investors time horizon is the same Every single demand of investors, in particular, that the implication of the current information on the current price and selling price of each security in the future. The general assumption underlying the efficient market therefore means that the price of the securities market should be reflected in accordance with sufficient information to enable investors make informed investment decisions in these markets. CONCLUSIONS The recent finance literature seems to present a number of long-term return anomalies. Under control, but the evidence does not suggest that market efficiency should be removed. In line with the market efficiency hypothesis that the anomalies are chance results, apparent overreaction the share prices of the common information, such as underreaction. And post-event continuation of pre-event abnormal returns is about as frequent event after a reverse. The key to the long-term return anomalies are fragile. They will disappear after rather reasonable changes made in the way they are measured.

The Examination of the Residential School System in...

Education is an essential aspect in our ever-changing societies. It is used as a means of transmitting concepts, knowledge, and values, often to younger generations (Ravelli Webber, 2010). Education and schooling differ in all societies, varying based on the methods of teaching of different cultural groups. For instance, Canadian Aboriginal people were taught based on the needs of their individual families and class. This greatly differed from the European system of education, which stressed adequate involvement with all of society. Though the Aboriginal manner of education was efficient and effective, the Europeans wanted to bring a change to their previous practices. As seen in the film, Education As We See It, European missionaries†¦show more content†¦As many Aboriginals stood in the way of European economic expansion, Europeans forced the younger generation of Aboriginals to residential schools. This justified and assisted in their need to revolutionize former Aborigin al beliefs. More specifically, the correspondence principle identifies the changes Aboriginal children had to make in school in order to reflect that of the normal workplace. For instance, certain ideologies were enforced by residential schools. Aboriginal children were punished if they spoke in their native tongue, as this rule was reflected and followed in the workplace. With these regulations in place, the Aboriginal culture was on the verge of destruction, as it was nearly impossible for any future Aboriginal generations to receive proper knowledge on their native culture. More generally, conflict theory is based on social inequality, and it explains how the powerful promote their own interests at the expense of the weak (Ravelli Webber, 2010). Residential schools signify this notion, as the Aboriginals were mistreated and abused by the more powerful, prominent religious figures in the school. 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Hence the population health model is being explored, and if properly studied and executed; within it may lie some of the answers to the current healthcare system challenges in the US. This model involves the provision of preventive and screening services that help keep people from falling ill or helps to identify sickness early when they might be easier to treat. This involves medical practitioners and public

Solidarity Family and Emotional Closeness free essay sample

This view of family relations provides an important framework for understanding the roots of familism—the factors that contribute to the maintenance and/or development of loyalty within families. Emotional closeness between parents and children and its impact on the quality of the parent-child bond is explored in research into the intergenerational stake (Bengtson and Kuypers 1971; Bond and Harvey 1991) and intergenerational solidarity (Bengtson and Schrader 1982; Roberts and Bengtson 1990). For example, the intergenerational stake hypothesis explores the cross-generational nature of emotional closeness between parents and children. The hypothesis holds that: (1) parents descriptions of the relationship will be more positive than childrens; and (2) different levels of investment and development may account for these variances in relationship perceptions. The intergenerational solidarity model goes a step further, looking at emotional closeness or affect between parents and children as just one of six indicators of solidarity or integration between generations in a family. In a study examining the relationship between acculturation and family solidarity in Hispanic-American families, Julian Montoro-Rodriguez and Karl Kosloski (1998) find that for two dimensions of attitudinal familism (familial obligation and support from relatives), acculturation is positively related to familism. We will write a custom essay sample on Solidarity: Family and Emotional Closeness or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This means, contrary to assimilationist perspectives on family ties, that as Hispanic Americans become acculturated to the dominant Anglo culture, they continue to maintain and further develop loyalty to their families. That is, familism persists over time despite changes in, for example, language proficiency and preference, and ethnic origin of friends.

Lifeboar Ethics Essays - Population, Demographic Economics

Lifeboar Ethics Garrett Hardin's argument for the preservation of well-to-do societies is embodied by his extended metaphor of each society as a lifeboat with its members the lifeboat's occupants. His presentation of this metaphor is key in his assertions that the creation of an international food bank, efforts to improve agriculture in foreign nations (the Green Revolution), and lax immigration laws will all result in universal tragedy. Hardin's initial complaint is against humanitarian efforts to establish an international food bank, to which rich nations will contribute and from which poor nations will draw. Theoretically, accidents (famine, crop failure, etc.) should teach nations to plan ahead and budget for future tragedies; the existence of an international food bank would inhibit this process from occurring by spoiling the benefiting nations. In addition, a food bank would allow population to constantly balloon regardless of immediate food availability. For example, a famine should reduce a society's population back to its carrying capacity, but an international food bank would prevent this regression. A popularly proposed alternative is the Green Revolution, where agriculture is improved within a nation rather than food delivered directly to it. Despite the superior logic inherent in this idea as compared to that of a food bank, both have the exact same result: overpopulation. Hardin proceeds to point out that immigration itself represents a significant portion of this problem. Ethnic groups maintain paranoia of the label ethnocentricity, and Hardin insists that this prevents wealthy nations from creating more selective immigration laws. The consequence is the same as that of the food bank: a drain on the wealthy nations. Essentially Hardin asserts that food banks would prevent poor countries from learning their lesson and ultimately destroy the benefiting nation due to uncontrolled population growth. Likewise, the Green Revolution also spurs on this disastrous uncontrolled population growth. Finally, uncontrolled immigration allows foreigners to go to the food rather than vice-versa, thus destroying the wealthy nations in the same manner that food banks would destroy the poor. Quite simply, I disagree with Garrett Hardin's theories regarding the self-preservation of wealthy nations in his paper Lifeboat Ethics. His assertions regarding the nations' limited carrying capacities adheres the idea of self-preservation idea to firm logic, but logic cannot overpower the humanitarian impulse of mankind. World food banks and the Green Revolution are used to demonstrate the ratchet effect; a firm yet ineffectual point asserting that the efforts of wealthy nations to aid the poor are inhibiting to the welfare of the environment. Obviously this effect makes an excellent graphic for a thesis page and is alarming in many respects, but essentially it is encouragement for the wealthy populace to abandon the poor to the consequences of famine. Hardin's initial analysis maintains that each nation can be viewed as a lifeboat in an ocean, each with a limited amount of space. As symptoms of overpopulation develop within a nation, members of that nation begin to fall overboard and seek refuge on other lifeboats. Similarly, overcrowded or poor nations who cannot support their population turn to the wealthier nations for food, money, and immigration opportunities; very similar to those adrift seeking passage on another lifeboat. This abstract view is actually well thought-out and consistent with parallels in the real world today, but simultaneously uncomfortable for most people. For example, this analogy may be extended to say that people aren't willing to watch others die in the ocean while they are safe in a lifeboat, nor will they willingly watch others die on the planet while they possess the capability of saving them. This logical yet flawed model continues as Hardin reflects on the effects of taking on additional passengers, just as modern nations help those in need. According to Hardin, several problems arise when deciding to help those less fortunate: too many people will swamp the lifeboat (a.k.a.- the nation), no method exists to fairly choose which people to save, and if no saving actions are made, modern ethics will result in the guilt of the survivors. Again, this analysis is very consistent with the real world, as every day we (as individuals and as a nation) are confronted with opportunities to help those less fortunate. It is inconsistent, however, in that these daily confrontations do not

Title The Greatest Generation Essays - Margaret Ringenberg

Title: The Greatest Generation Author: Tom Brokaw Summary: This book tells the stories of 50 young people who grew up during the depression and fought in World War II then came home to build America into a super power that could win the cold war. In one of the first lines of the book Tom Brokaw states, ?I think this is the greatest generation that society has ever produced.? I can't even imagine all the obstacles that they had to overcome. These men and women were born in the roaring twenties when our economy was booming and prohibition was in force. They went from boom to the greatest bust in American history, the great depression. They watched their parents lose their farms and business and then were called upon to fight the two greatest war machines of the twentieth century. After defeating these aggressors the young men and women came home and got married producing the baby-boomers. The GI bill allowed more of them to get a college education than any other generation. Instead of resting on their laurels they turned the industrial machine that won the war into one of greatest peacetime economies in history. The infrastructure of highways, bridges and dams that we use today was built by these enterprising men. There were also mistakes made, McCarthyism was allowed to flourish and racism went unchallenged for much to long. This book wasn't just about history but about people stories and experiences. Tom Brokaw presents a very balanced view telling not just stories about young white men storming the beaches on D-Day but also about women in the service and those who stayed home. He also tells the stories of Japanese and African American men who were fighting to defend a country that was persecuting them. Major Characters: There are 50 major characters in this book and it would impossible for me to even mention something meaningful about everyone of them so I will pick three that I thought exemplified the spirit of the book. Ordinary People, Charles O. Van Gorder, MD: Charles was a thirty-one year old captain when he was asked to drop behind enemy line with the paratroopers during the D-Day invasion. His glider crash landed at 4:00 am on June 6. He was lucky unlike so many others no one was hurt in his glider. That changed very quickly, by 9:00 am he and his fellow doctors had set up their MASH unit. Van Gorder and the other surgeons worked for 36 hours straight operating on hundreds of wounded paratroopers while wearing their combat helmets the whole time. When Charles finally went back to his tent to get some sleep he found that a German shell had hit and destroyed it just a few minutes earlier. Van Gorder stayed with the 101st Airborne division throughout 1944 until he was captured by German soldiers during the Battle of Bastone. Van Gorder had suffered shrapnel wounds in his so he had to be supported by his friend Dr. Rodda. Charles and the other POWs were packed into a box car headed east into Germany when their train came under attack from A merican fighters so Dr. Van Gorder organized the prisoners into a giant human sign saying: USA POWS. Not long after Charles and Dr. Rodda escaped and made their way back west to American lines. After serving for 5 years and 30 straight months overseas he finally returned home to his wife Helen. Helen had given birth to Rod while Charles was in North Africa but Rod died of SIDS with out ever having met his father. Van Gorder turn down a high paying, prestigious New York fellowship to set up a practice in his hometown of Andrews, Tennessee. Dr. Van Gorder spent the rest of his life caring for the loggers of that Smoky Mountain hamlet. Women in Uniform and Out: Margaret Ray Ringenberg When Margaret Ringenberg took her first flight at the age of 7 she fell in love with flying. So after she graduated from high school she started taking lessons at the local airfield and she got her pilots license when she was only 21, just in time to apply for WASP. WASP stood for Women's Air Force Service Pilots and

The current policies of land use in Australia

The current policies of land use in Australia Land is a very important asset that must be planned for effectively in order to ensure that it gives maximum output while remaining sustainable. According to Koomen and Beurden (2011, p. 73), land is an asset which is scarce and very fragile, making it necessary to develop mechanisms of using it in a wise manner.Advertising We will write a custom essay sample on The current policies of land use in Australia specifically for you for only $16.05 $11/page Learn More However, it is of great concern that the society has not come to appreciate the importance of land as a scarce and a fragile asset that needs protection in order to ensure that there is sustainability. National planners in various countries have perfected the art of developing policies on how various resources can be used sustainably in order to ensure that they can still be used in future. However, they have failed to come up with measures that would ensure that land is protected from any possible destruction that may make it unproductive in future (Gaffikin Morrissey 2011, p. 70). Strategic changes being experienced in the modern society are presenting new practical dilemmas that hinder successful achievement of spatial land use planning outcomes. This research will focus on the current policies of land use in Australia and the prevailing conflict between public input, community interests, and effective outcomes. Australia is one of the leading economies in the world. It has one of the largest per capita income in this region, with its Human Development Index considered the second best in the world. The government of Australia has been keen to develop land policies that would protect the interest all the stakeholders. There has been need to reconcile the conflict between public input and community interests through proper strategic spatial land use planning. It is important that the interest of the investors, public, and the national government in land use be protected in o rder to ensure that the three sectors work in harmony to promote development of the country’s economy (Chapin 2007, p. 40). The government has made an effort to ensure that there is a clear plan on how land in this country should be used, and how different stakeholders should relate on issues concerning land.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The economy of Australia has been expanding very rapidly over the past years. Urban centers are developing at a very high rate. This is caused by the preference of people to stay in urban centers than in the rural settings. The City of Melbourne has experienced a massive increase in population over the past two decades. The Victorian State Government has been concerned of the best way land can be used to benefit all the stakeholders within the city (Jha Singh 2008, p. 67). The Australian Collaborative Land Use Mapping Pr ogram was developed by the national government to help in land planning, especially in cities that are experiencing huge growth over the past few years. The East-West Link Project is part of the vision by Melbourne City planners to help manage the limited land within the city. According to Scholl (2012, p. 67), spatial planning goes beyond land planning. It entails protection of the welfare of the members of the society by ensuring that they have access to land and all its resources that can make them lead decent lives. According to Kawakami (2013, p. 45) the government of Australia has made efforts to ensure that land, especially in the major cities such as Melbourne, is not only used to give maximum output, but also remain sustainable for the future generation. The planned construction of the East West Link road is intended to link Western Ring Road and Eastern Freeway. This government project is intending to decongest the city by creating an alternative route that can be used by motorists connecting between the two highways. However, such massive government contracts always come with conflicts on how stakeholders should be involved, and how such projects may affect other players (Albrechts 2006, p. 1150). The outcome of this project is intended to help all the stakeholders within this city by reducing its population. However, this raised some conflict between public input and community interests. According to Barker (2006, p. 67), land as an asset is scarce and very fragile. Land cannot be replaced once destroyed. For this reason, the current generation has a responsibility to the future generation by ensuring that land is used sustainably. However, the current strategic spatial land use planning approach taken by the government over this project has been criticized as not being sustainable. For instance, the local community has complained of the consequences associated with building this road. One of the main complains that have been raised by the local co uncil politicians is the possible loss of large parts of the Royal Park.Advertising We will write a custom essay sample on The current policies of land use in Australia specifically for you for only $16.05 $11/page Learn More This park has been considered as one of the most important recreational facility within this community. This road will have to go through this park, and this will affect its sustainability. Some of these politicians have argued that the Victorian State Government should have considered construction of metro railway lines instead, because the possibility of this project destroying the park is very high. The local community feels that the benefit of the new road is far much less as compared to the negative consequences it shall have on their livelihood (Potschin Haines-Young 2011, p. 91). This means that all the stakeholders must be involved to ensure that this public input does not have adverse effect on the interest of the community. This project has to continue because the need to implement it has been identified, and funds needed have already been set aside. However, the stakeholders must find a way of addressing the issues raised in order to ensure that the interest of the local community is protected. According to Scholl (2012, p. 80), it is important to involve the local community in any project that involves land use in order to eliminate any form of resistance. Some of the members of this community will have to shelve part of their land to be used in this project. The Royal Park is also under threat when this road is constructed through it. This public input must take into consideration the interest of the local community. The issues raised about the park must be considered because strategic spatial land use planning involves ensuring that there is sustainability in land use. This means that the outcome of this project must be based on sustainability of land for the current and future generation. The Vict orian State Government must ensure that when this project commences, all the issues raised by the local community about sustainability is adequately addressed. List of References Albrechts, L 2006, ‘Shifts in strategic spatial planning? Some evidence from Europe and Australia’ Environment and Planning A’, vol. 38. no. 1, pp. 1149 -1170.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Barker, K 2006, Barker review of land use planning: Final report – recommendations, TSO, London. Chapin, T 2007, Growth management in Florida: Planning for paradise, Ashgate, Aldershot. Gaffikin, F Morrissey, M 2011, Planning in divided cities: Collaborative shaping of contested space, Wiley-Blackwell, West Sussex. Jha, M Singh, R 2008, Land use: Reflection on spatial informatics, agriculture and development, Concept Publishers, New Delhi. Kawakami, M 2013, Spatial planning and sustainable development: Approaches for achieving sustainable urban form in Asian cities, Springer, Dordrecht. Koomen, E Beurden, J 2011, Land-use modelling in planning practice, Springer, Dordrecht. Potschin, M Haines-Young, R 2011, ‘Landscapes, sustainability and the place-based analysis of ecosystem services’, Landscape Ecol, vol. 1. no. 9, pp. 1-13. Scholl, B 2012, HESP: Higher education in spatial planning : positions and reflections, VDF, Zürich.

The Truth about the U.S. Involvement in the Vietnam War Research Paper

The Truth about the U.S. Involvement in the Vietnam War - Research Paper Example The ideologies of Marxism-Leninism provided Mao Zedong, Brezhnev, Khrushchev, Stalin, Ho a shared goal in pursuing revolutionary changes all over the world. Hence, the Cold War was â€Å"a world war†¦ in which the future governance of the international system was at stake, and in which the great powers opposing the United States and its allies were the moral equivalent of Nazi Germany† (Moore & Turner 2002, 440). The war in Vietnam actually started because the USSR did not attempt to provoke the United States. Yet, in the less developed countries (LDCs), Moscow could hide its operations and still carry out its plans. The fame of Ho as a fervent supporter of independence, alongside Mao’s eagerness to support him, established Vietnam as an especially advantageous chance (Moore & Turner 2002). Therefore, this was a conflict that the Americans could barely have prevented, that is, to have stayed detached would have created a major pro-USSR repositioning in global polit ics. It is the argument of this paper that the Vietnam War is justified, yet it was dealt with in wrongly. Lyndon Johnson relied greatly on military commanders whose tactic of finding out and annihilating adversaries, rather than guaranteeing the safety of civilians, generated more fatalities than outcomes. As an obvious result, support from the Congress and the general public has weakened. Broadening the disagreement would simply have made everything more unpleasant, as, current Chinese documents reveal, Mao planned to get involved (Capps 1991). The sole possible option was for the Americans to give up the war, as stated by Jennings (2010), so as to sustain the American national political agreement in support of the Cold War. Triumph was not the issue. What was required was an attempt to prove that the Americans would protect and support its allies in the developing world, to guarantee prospective targets of the expansionist mission of Moscow that the U.S. would not leave them. However by persisting with the conflict until a total disintegration of national determination and a mortifying departure, the governments of Nixon and Ford promoted Soviet antagonism throughout the latter part of the 1970s (Neu 2005), a development repealed when Reagan reinstated the nation to a policy of rendering its dedications trustworthy once more. It is a well-known fact today that Ho, Mao, and Stalin rendezvous in 1950 in Moscow to formulate the line of attack for an ultimate occupation of Indochina (Jennings 2010). It is known that North Vietnam has better or larger support from China and USSR than assumed beforehand: the anti-aircraft squads of Russia in fact attacked American soldiers in Vietnam, and it was documented that there were roughly 170,000 combatants of China on its area (Moore & Turner 2002). It is known that the North Vietnamese were not at all actually solemn about an agreed resolution, and that their allegedly independent Viet Cong friends were actually their dummie s. It has been recounted that South Vietnamese and Americans had no control over the exercise of bloodshed (Jennings 2010): The North Vietnamese were simply as awful, and the Khmer Rouge were obviously much more dreadful. Nevertheless, some historians failed to explain why the integrity of the United States

The Thomas Jefferson Presidency Essay Example | Topics and Well Written Essays - 750 words

The Thomas Jefferson Presidency - Essay Example The first way is to assess the presidency of Thomas Jefferson based on how writers during or close to the period viewed the presidency. The other way is to assess it on the basis of two key indicators: 1) economic growth and economic management data during the period; and 2) political institutional data associated with his rule. Of the former, a good indicator can be provided by the inaugural statements of President Thomas Jefferson himself. ... land, traversing all the seas with the rich productions of their industry, engaged in commerce with nations.† 7 Perhaps, the best indicator of what eight years of the presidency of Thomas Jefferson have brought to America is the presidential inaugural address of James Madison in 1809. Speaking on 4 March 1809, after 8 years of the rule of Thomas Jefferson, Madison said that the US national prosperity was â€Å"at a height not before attained.†8 Madison also pointed out that under the Jefferson administration â€Å"†¦the fruits of a just policy were enjoyed in an unrivalled growth† of United States faculties and resources.9 According to Madison, the proof of the unrivalled growth can be seen â€Å"in the improvements of agriculture, in the successful enterprises of commerce, in the progress of manufacturers and useful arts, in the increase of the public revenue and the use made of it in reducing the public debt, and in the valuable works and establishment eve rywhere multiplying over the face of our land.† 10 It is clear, therefore, that we have a good and a reliable basis to say that President Thomas Jefferson has been successful as a president of the US and his achievements can be considered as extraordinary during his time as he was credited to have expanded the United States territory through the Louisiana Purchase. The success of Thomas Jefferson is also supported by solid data. One piece of such data is growth in gross domestic product in real 2005 terms. This is documented by MeasuringWorth, a data collection institution in the internet. Figure 1 from the website is illustrative. Figure 1. US GDP in real terms, 1795 to 1820 Source: http://www.measuringworth.com/datasets/usgdp/graph.php It is clear from the MeasuringWorth data that the US real GDP data was on the

Humanistic School of Psychology Essay Example | Topics and Well Written Essays - 1250 words

Humanistic School of Psychology - Essay Example Humanistic psychology emerged in the 1950s, the time marked by profound social changes, the onset of global movements, emergence of new scholarly paradigms questioning the traditional empiricist and positivist conceptions of the world and human being, the change in physics which "discarded the requirement of total objectivity and the complete separation of external world from observer", etc (Schultz and Schultz, 2004: 483). In psychology, these transformations took shape of the rise of cognitive and humanistic perspectives that actively criticized psychoanalytic theory for portraying people as being directed only by their unconscious wishes and irrational forces. They also did not support the behaviorist school because the latter viewed people as biological robots "who are mechanically programmed by the conditioning force of external stimuli" (Vander Zanden, 1993: 45). These principles rely almost exclusively on the research and findings of two American psychologists Abraham Maslow and Carl Rogers, the brightest and most proliferate representatives of humanistic psychology. The essence of Maslow's theory is the hierarchy of needs and "self-actualization" - development and self-improvement of personality. Human have a complex hierarchy of needs that emerge at the moment of birth (food, drink, shelter) and continue throughout life (social security, status attainment, etc). Visually, these needs are organized in the form of the famous 'pyramid of need' with physiological needs being at the bottom and self-actualization being at the top. Maslow believes that the lower layers of needs must be fulfilled first before passing over to the upper layers. However, it does not mean that each person must follow the same template: fulfilling the non-basic needs depends entirely upon the individual. Musicians must make music, artists must paint, and poets must write if they want to be ultimately at peace with themselves. What humans can be, they must be: they must be true to their own nature and if they are it is called "self-actualization". This category is less a nee d than a final development stage for the person (Maslow, 1987). Poor amenability to being quantified and lack of predictive power is perhaps the most often mentioned drawback of Maslow's model: it is a general idea or shape that is descriptive and represents a great analytic interest. Maslow's theory is also weak on the exact points of transition. Thus, for illustrative purposes one may speak of someone's needs being 85% satisfied, but there is absolutely no possibility available to quantify the

Impact of Congestion Growth in Muscat

Impact of Congestion Growth in Muscat CHAPTER 1: INTRODUCTION LITERATURE REVIEW Statement of the problem Most of the countries experienced significant increases in car ownership over the past two decades, resulting in rapid increases in total travel on the roads, and declining absolute market shares for public transport. Bonsall (2000) notes that, in the UK, car ownership rose from 30% of households in 1960 to 70% in 1995. In the US, by 2000, car ownership had exceeded an average of one car per licensed driver in many urban areas. Similar patterns are evident in many other countries around the world. With this burgeoning of car ownership has come the obvious consequence-escalating road congestion. As a result, policy makers have become increasingly focused on the idea of reducing congestion (Stradling, 2000). The mechanisms for reducing congestion are several. Included among these are increasing ride sharing (a mainstay of Transportation Demand Management policies in the US, for example), increasing the use of public transport, providing high occupancy vehicle lanes on various roadways, etc. Initially, Singapore, and then several cities in Norway experimented with introducing congestion charges for central cities. Most recently, London has introduced congestion charging for the central area, in an effort to reduce central Londons congestion levels. Following on the heels of that, many other cities around the world are now seriously considering similar congestion. Therefore, Muscat as the capital of Sultanate of Oman, the increasing of car ownership is one of the higher growths per household. In 1999 the passenger cars estimated 174 per 1000 people by comparing Muscat with wealthy Asian cities car ownership 123 per 1000 people (Nicholas Low and Brendan Gleeson,2003). 42 percent more than Asian wealthy cities, in the same time the population of Muscat is much lower than any of Asian cities. Therefore, Muscat is one of the cities, which suffering from congestion in this world. Current traffic situation Past trends Many factors influence the travel behaviour and cause disturbances through unexpected external effects, such as oil prices, economic recession etc. (Known as explanatory variables). Thus if one understands these factors, one can forecast future behaviour on the basis of projections of these variables. However, it is conventional to base travel forecasts on past trends described by time series data over a period of years. In Muscat, the principal weakness is a lack of reliable traffic flow data to identify trends in past growth. It is reasonable to assume therefore, that increases in population and economic activity will result in increased road traffic and land use development. Land use development relates to the need to house population increases and to new employment opportunities created by economic growth. Analysis of available data from 1980 to the present showed that: The population of Oman has increased at an average rate of about 10 per cent per annum. The national economy has grown at rates varying between -3 and + 17 per cent per annum. The national vehicle stock has increased at an average rate of 12 per cent per annum (the national car stock has grown even faster, at an average rate of 15 per cent per annum). Current conditions and characteristics Local conditions need to be thoroughly examined before any remedial measures can be taken. The study has observed and identified many problems and characteristics concerning the traffic and road network conditions. It has been estimated that the total AM peak. hour flow over the whole of the network is about 35000 vehicles, out of which 8000 vehicles on Sultan Qaboos street alone (two way flow) which constitute 23% of the total network flow. Comparing this with the car ownership (estimated to be 11 0 per 1000 population) implies that there is significant travel. demand on the network. The Stage I identified the following characteristics and problems, all of which will be exacerbated by future traffic growth: The road network in Muscat modern but depends, to a great extend, on the satisfactory operation of a single main road: Sultan Qaboos Street. The demonstrably high (but unqualified) traffic growth rates of recent years mean that this spine route is reaching its operational limits at times of peak demand. Peak period delays are occurring at important junctions (Such as Al Khuwair, Al Ghubra Roundabout etc..) and on the highway. There are no alternative routes at present, until express way open, which be expecting in the end of 2010. Traffic signal equipment in the important commercial centre of Ruwi is not exploiting the full potential of the existing road system. All parking is free of charge and demand in the CBD is reaching levels that are creating supply problems. The operation of the road system is adversely affected by on-street (verge) parking in a number of locations. Public transport services (buses) are provided by the Oman National Transport Company. It is understood that the scheduled ONTC services are subsidised by profitable charter services. The overall financial performance of ONTC, which is a state owned company, is just profitable. This performance is forcing modernisation of the bus fleet not to take place hence, reducing its appeal to potential customers. The average age of the bus fleet is increasing thus reducing the attraction of public transport. Bus services are supplemented by minibus and taxi services. Public transport is rarely used in preference to a private car. This applies particularly to scheduled bus services. The future role, ownership and organisation of ONTC were supposed to be the subject of a separate study. Coordination between the development of land use and transport policies at a local level is limited and could be improved. Operational road safety and traffic control are the responsibility of ROP. Traffic control is to an acceptable standard although the manual control of some important signalised junctions in Ruwi should be reviewed. As in all countries, there is scope for improved standards of road safety through established driver education programmes. The economic cost to the community of road accidents is not systematically quantified in Oman. In countries where such costs are quantified, they are found to be large and are used to justify traffic and safety management investment programmes often concerned with junction improvements to reduce accident risk. Purpose of the study In scientific research the purpose statement indicates why you want to do the study and what you intend to accomplish (Locke, Spirduso, and Silverman, 2000). According to this; The purpose of this sequential, mixed methods study is to first explore the impact of congestion growth in Muscat city as well as determining the percentage growth over the last ten year. Then based on the experiences and needs defined, the second phase will be to develop a solution that suits and match the requirement of transport provision needs based on the previous information as well as information collected in this phase; namely observation of both modern and professional ways of improving traffic demand management Potential significance This research study are important to different sectors. Because, the congestion is not only effecting the road users, but also society, economic, environment, and human. However, its important to consider externalities from congestion by implementing traffic demand management and improve public transport as one of the holistic solution in Muscat city. Statements and rationale for mixing methods This research is intended to follow a mixed methods research design. According to this, the aim of this section is to define and give a rationale for using this specific research design for this specific study. Mixed methods research design is defined as the collection or analysis of both quantitative and qualitative data in a single study in which the data are collected concurrently or sequentially, are given a priority, and involve integration of the data at one or more stages in the process of the research (Creswell, 2003). Historically mixed research method is relatively not a new idea. It probably originated in 1959, when Campbell and Fiske used multiple methods to study validity of psychological traits. Their encouragement to others to use their multimethod matrix prompted others to examine using mixed methods in their enquiry (Creswell, 2003). Recognizing that all research methods have limitations, researchers felt that biases inherent in any single method could neutralizes or cancel the biases of other methods another advantage of using mixed research methods design is that it allows researchers to simultaneously generalize results from a sample to a population and to gain deeper understanding of the phenomenon of interest (Hanson, Creswell, Creswell, Plano Clark, Petska 2005). In this respect, this study will mix different research methods, for the purpose of being able to generalize research results that will be obtained, from a representative sample, but at the same time give insights and understanding of issues tackled through quantitative techniques. This will ultimately be achieved through the use and integration of data in the various research stages namely; data collection, data analysis and discussion and reporting of findings. One rationale is that, in order to generalize weather road congestion in Muscat city have implications to the road users and public transport, a quantitative tool need to be used and applied. At the same time, the in depth of such suffering needs to be qualitatively addressed. As well as describing the processes of managing congestion by local authority. Another rationale for using mixed methods research is to convey the needs of supportive bus services and thus this research is intending to explore their issues, which are related to road congestion Although there are many challenges in using mixed methods research design, such as; the researcher should be familiar with both quantitative and qualitative research methods, also the need for extensive data collection (Creswell, 2003). But the growth and the developments of using this method proved the successful and the advantages of using this specific design, as stated earlier. In conclusion, for the purpose of this study a mixed methods research design will be used in order to achieve its stated purpose. Research questions This research will attempt to answer the following questions: What are the challenges faced by road authority in Muscat? What coping strategies for congestion growth? Is there any improvement in public transport in regard to coping congestion? What type of traffic demand management and technique used in Muscat? Is there a clear vision of improving public transport? Literature review Sustainable transport systems A sustainable transport system is one in which fuel consumption, vehicle emissions, safety, congestion and local and economics access are of such levels that they can be sustained into the indefinite future without causing great or irreparable harm to future generation of people around the world Richardson(1999). To achieve sustainable transport system, it should balance socio-economic and environmental consideration in recognition of the following: Economic: A sustainable transport system is one that is affordable, operates fairly and efficiently, offers a choice of transport mode, supports a competitive economy, as well as balanced regional development; Environmental: A sustainable transport system limits emissions and waste within the planets ability to absorb them, uses renewable resources at or below the rates of generation, and uses non-renewable resources at or below the of development of renewable substitutes, while minimizing the impact on the use of land and the generation of noise; and Social: A sustainable transport system allows the basic access and development needs of individuals, companies, and society to be met safety and in a manner consistent with human and ecosystem health, promotes equity within between successive generations. Transportation facilities and activities can have significant Environmental issues Surface transport accounts for approximately 25% of all C02 emissions globally, and transport is the only sector where emissions are increasing. While there are significant advances being made in reducing C02 emissions from other sectors such as industry and construction, technology has so far failed to find a solution for transport. Any technological advances in reducing C02 emissions have been more or less cancelled out by the increasing number of trips we are making. There is a fairly simple correlation between increasing GDP and higher trip levels. At the same time, developing countries are fast adopting the private car as their preferred mode of choice, and this is impacting on global C02 levels. This is set to increase with the introduction of the ultra low cost cars, such as the Nano car from Tata Motors in India, which has a price of about $3800. In addition to C02 issues, there are also issues related to noise and air pollution. Increasing traffic levels lead to increased visual intrusion, noise, and polluted air. Monitoring stations are already set up in many world cities to measure the impact of traffic on noise and air. However, these issues are not solely related to the private car. There are also significant environmental issues related to freight, whether this is by road or by sea. Traffic alone is responsible for breaching air quality standards in Muscat City The hot climate is very important influence of travel behaviour Key sensitive environmental areas are in close proximity to Muscat City (wetlands) Globally, there have been several important decision making meetings set to resolve global warming, which have included discussions on the role of-transport. The Kyoto Protocol was agreed in December 1997, and was in operation by February 2005. The Protocol requires industrialised countries to reduce their total emissions of greenhouse gases by about five per cent compared to 1990 levels by 2012. Each country that signed the protocol agreed to their own specific target. Developing countries were not required to meet quantitative emission goals. The world is now working towards a successor agreement to the Kyoto Protocol, but one that can be agreed by all countries. Economic issues In Europe time wasted while delayed on traffic congested roads costs close to 1 % of the European Unions GDP. This high cost explains the desire to improve European transport networks, and reduce reliance on road based vehicles. The Middle East is increasingly experiencing similar. issues to Europe in terms of traffic congestion, and this is expected to result in a similar impact on GDP. With the rapidly growing economies of the Middle East, China, India, and Russia, there is an ever increasing demand for transport, and much of this is being planned for by road. However, for these counties and regions to realise their full potential, there is a need for fast and reliable transport links that are not subject to congestion or delay. These links are required between their raw material suppliers and manufacturers, and ultimately to their customers, i.e. a national, regional, and worldwide network. An efficient transport system will be vital to achieving Plan 2020 economic goals Need to effectively involve private and public sector provision Governments and developers understand the importance of transport as a catalyst for regeneration, improving productivity, and creating profit, but are reluctant to invest the high infrastructure costs, particularly when delivery of this is likely to be in the long term. Roads are often seen as a lower cost solution, but this is only related to construction and maintenance. The cost to the environment and to the social well being of the people is rarely included. New economic solutions to investing in new schemes are also being devised, particularly for high cost infrastructure schemes such as new rail lines. These are developed to maximise the success of implementing a new scheme. One solution gaining favour is a property transport levy, whereby affected businesses, residents, and developers pay a lump sum for new transport infrastructure on the basis that property values and rents will increase as a result of the new transport scheme. An example of this is the Crossrail scheme in London, which is partly funded by contributions from private businesses in the financial districts. Social Issues We have already noted that on a global scale, car use is increasing, while public transport, walking, and cycling are in decline. It is becoming common place for children to be driven to school rather than walk, cycle or use public transport. Workers are increasingly using the private car for their commuting trip, and short leisure and shopping trips are driven rather than walked. For example, in suburban London it has been recorded that 32% of car trips are less than one mile. There is also strong evidence of worsening global health in the form of increasing levels of obesity, childhood diabetes, and heart disease. If healthier options for travelling were introduced globally, and people were encouraged out of their cars, this could provide a strong boost to health worldwide. Walking 20 minutes a day is one way to incorporate exercise into a daily routine to maintain a minimum level of fitness, but if there is no infrastructure to allow this, then car use will be preferred, even for the shortest trips. Road traffic accident rates in Muscat amongst the highest in the world Pedestrian accidents (at 40% of total) are a particular concern Muscats city road network leads to major severance issues Road network is very pedestrian and cycle unfriendly Unique social mix makes provision of public transport more challenging For a country to maximise its economic performance, it is important that its citizens have access to jobs, services, and goods. For a fully functioning global world class economy, this access should not be restricted to only those who are able to afford access to a car. Access for all is promoted in many countries around the world, with the provision of public transport. infrastructure, and walking and cycling routes. Countries without this level of access tend to find they have disconnected communities, with reduced opportunities to break the cycle of poverty. The other movement issue related to transport is the severance effect of building new transport corridors, whether these are road or rail based. Given their longitudinal nature, they tend to split and divide communities, where only selected crossing points are provided for pedestrians and cyclists. Linked to the risk of overcoming transport barriers is the connection between vehicular movements and road traffic accidents. These are either vehicle vehicle accidents or vehicle  ­pedestrian I cyclist accidents. One of the reasons for road traffic accidents is the provision of corridors which encourage speeding, through the creation of what is known as a canyon effect. This is when drivers feel separated from their environment, through the incorporation of pedestrian barriers and banning of the other users. This lead driver to have little regard for other more vulnerable users. In contrast, the safest streets tend to be those which either have limited or no access to private car. Effects of congestion The current literature is very limited especially with respect to Arab countries. Therefore, I will use literature from Europe and state as well as some of the experience of development countries. The first problem with congested traffic conditions is that these conditions are inherently unstable. That is, vehicles may flow quite well at speeds that are only modestly reduced from free-flow speeds, but flow may also easily break down, with the formation of queues, stop-and-go conditions, and average speeds that are very low. This instability produces one of the negatives of congestion- travel time unreliability. A second negative of congestion, is that extra time is required under these conditions, time that may be considered to be non-productive time. For those who are caught in congested conditions and who are driving outside normal working hours, it is questionable as to whether the time losses from congested conditions have an economic impact. Redmond and Mokhtarian, (2001) show that many commuters do not perceive congestion as necessarily an evil of their daily commute. Based on their study, Nasser (2002) notes that, in these modern times, many people can find complete pri vacy in only two places-the car or the toilet. For many, there is actually peace and relaxation commuting alone. For many, its the only time they have to read (by listening to books on tape), enjoy music they like, catch up on the news, smoke without being chastised or make personal phone calls in total privacy (Nasser, 2002). Such attitudes do not bode well for carpooling, which is often seen as one of the alternatives to reduce congestion. New road to reduce congestion Anthony Downs (1992), argues that building our way out of existing traffic congestion problems doesnt work because of triple convergence.; When a road is widened to reduce traffic congestion, three responses occur over time to reduce the benefit of increased capacity. First, drivers who previously used alternate routes will switch to the newly expanded facility. Second, drivers who previously traveled on the congested facility during off-peak hours will switch to the peak period. Third, many people who car pooled or used public transit to avoid the hassle of stop-and-go traffic during the peak period will choose the convenience of driving alone on the newly uncongested link in the transportation system. The cumulative effect of the three types of individual behavioral responses to increased capacity ends up forcing equilibrium traffic flow on the expanded facility back toward its initial congested state. This scenario exactly happening in Muscat, government continuously focusing to improve road infrastructure to solve a congestion problem, but within certain of time traffic volume build up by moving road users from congested routes to the new road and encouraging people to use their own private transport. Recent studies show that building or widening highways induces more traffic, called induced travel. Shortly after the lanes or road is opened traffic will increase to 10 to 50% of the new roadway capacity as public transit or carpool riders switch to driving, or motorists decide to take more or longer trips or switch routes. This is short-term induced travel. In the longer term (three years or more), as the new roadway capacity stimulates more sprawl and motorists move farther from work and shopping, the total induced travel rises to 50 to 100% of the roadway ¹s new capacity. This extra traffic clogs local streets at both ends of the highway travel. The following table summarizes these studies. Accessibility and mobility Accessibility can be defined as the ease of reaching destinations (Levine and Garb, 2002), whereas mobility may be defined as the ease of movement. While these two concepts are clearly related, they are not the same thing. If a person lives in an area where there are many possible destinations close by, accessibility may be very high, even though mobility might be constrained, as in a CBD. On the other hand, if a person lives in a relatively remote area, accessibility may be poor because considerable travel time and cost is required to reach any destination, although mobility may be high. In 1960, world inhabitants travelled an average of 1820 km by car, bus, railway or aircraft. Three decades later, the annual distance travelled had increased to 4390 km. In light of a 75% world population growth, absolute motorised mobility rose by a factor greater than four( Schafer, 1998). As Levine and Garb (2002) point out, mobility and accessibility are measured in different ways. Mobility is measured as a generalised cost of travel (time plus money) per kilometre; accessibility is measured as the generalized cost of travel per destination. Generally, mobility is closely related to the level of service provided on the transport system. Higher levels of service represent lower costs per kilometre of travel. Thus, increases in capacity of the system will almost always lead to an increase in mobility, at least in the short term. Accessibility, however, is related to destinations, and therefore, requires attention both to land use patterns and to the quality of destinations. Miller, (1999). Increasing congestion is likely to produce decreases in both mobility and accessibility. Longer travel times and increased monetary costs of travel, as a result of congestion, obviously increase the travel cost per kilometre. At the same time, these increased travel times may also result in reduced accessibility, by making potential destinations more expensive to reach. However, different methods for tackling congestion will be likely to have quite different effects on each of mobility and accessibility, as is discussed subsequently in this paper Increasing public transport use Public transport has an important role to play within most urban areas. There still remain significant groups of the population who either cannot afford to own and operate a car, or who make a conscious choice to avoid the car. There are also specific movements within the urban area to which public transport is better suited than the car, under virtually any circumstances. This is particularly the case for work trips going to the central business districts of many cities. It is also an important means of travel for the elderly who can no longer drive or no longer wish to, and for young people who are not yet old enough to hold a drivers license, or who cannot yet afford a car. In modern history, and perhaps in all of transport history, there has never been success in shifting people into public transport at the rate that is called for in many contemporaneous policy statements. This alone, however, does not mean to say that such shifts into public transport are not possible. It may just be that no one has come up with the appropriate policy mix (carrots and sticks) to produce these sorts of market shifts. It is also possible that there has not existed previously the political courage to implement what must be done if such large shifts in public transport markets are to occur. It is, however, important to look at the magnitude of what is required. Demand Management Toolbox Demand management is playing important factor to solve traffic growth. There is a broad range of TDM measures, including: Transportation Management Associations: leverage public and private funds to increase the use of ridesharing and other commuting options that reduce traffic congestion and improve air quality Including or improving pedestrian-oriented design elements, such as short pedestrian crossings, wide sidewalks and street trees. Requiring users of parking to pay the costs directly, as opposed to sharing the costs indirectly with others through increased rents and tax subsidies. Including and improving public transportation infrastructure, such as subway entrances, bus stops and routes. Subsidizing transit costs for employees or residents. Bicycle-friendly facilities and environments, including secure bike storage areas and showers. See Bicycle transportation engineering Providing active transportation (AT) facilities including bike lanes and multi-use trails. Flex-time work schedules with employers to reduce congestion at peak times Congestion pricing tolls during peak hours. Road space rationing by restricting travel based on license plate number, at certain times and places. Workplace travel plans Road space reallocation, aiming to re-balance provision between private cars which often predominate due to high spatial allocations for roadside parking, and for sustainable modes. Time, Distance and Place (TDP) Road Pricing, where road users are charged based on when, where and how much they drive. Some transportation experts believe TDP pricing is an integral part of the next generation in transportation demand management Sustainable Mobility The common strategy of sustainable mobility should contain the impact on the environment, while allowing transport to continue to fulfill its economic and social function, particularly in the context of the single market, and thus ensure the long term development of transport in the community. It should also contribute to social and economic cohesion in the community and to the new opportunities for the peripheral regions (Banister,2000) Our sustainable strategy in Muscat focusing on economic issues only. However, we will end up by heavily a congestion road, and we cant be coping with the economic growth. Unless we prepare green transport strategy, which provide better integration of land use and transport, and taking serious consideration of social and environment as well as economic concern. The Intuitional Issues Urban Policies and Development The institutional issue refers to how the country, society and private agencies define and implement transport -related public policies. Several public policies influence socio-spatial organization, including urban development, land use, housing, transport and traffic. For my research topic three main areas are relevant: Urban planning; Transport planning; and Traffic management These are associated with three objectives: land, circulation of structure and means, and circulation patterns. The urban planning and transport planning are considered to be most important public action. Traffic management is often considered to be secondary importance, related more technical, simple objectives that should be dealt with engineers. While urban planning is mainly concerned with land use provision of public services, transport planning involves of definition of circulation infrastructure and means. Urban planning The Higher Committee for Town Planning government body responsible for implementing plans of economic and social development in the Sultanate in the fields of physical and spatial, and through the preparation of detailed plans at the regional and urban areas. Has been formally established by Royal Decree No. 27/85, dated the twenty-fourth of February 1985, was rebuilt more than once on the requirements of the public interest. The main tasks of the Commission: policy-making of urban planning at all levels of in accordance with economic considerations, social and environmental development strategy of urban development so as to achieve overall development goals and sustainable development in all provinces and regions of the Sultanate approvals planning the allocation of land for various purposes in establishing controls and propose the necessary legislation to regulate and direct the work of the establishment of the Urban Planning an integrated system for geographic information includes databases and maps for