Socio-Economic Factors Influence Health and Well-Being Essay Example for Free

Socio-Economic Factors Influence Health and Well-Being Essay Introduction The social determinants of wellbeing are in charge of health disparities. For decreasing wellbeing disparities and enhancing wellbeing status of individuals, it is essential to perceive principle elements which are influencing wellbeing, that is, determinants of heath. Economic components have significant part in helping better wellbeing. Individuals with low salary are more defenceless against infections and incapacities. Health social determinants comprises of different variables that focus wellbeing and health, for example, socio-economic factors, sexual orientations, societies and instruction (Dolan, et al, 2008). A few gatherings of individuals are healthier than others. There is a connection in the middle of pay and wellbeing, and also they are solid indicators of wellbeing. Individuals with low monetary status have poor training, unemployment, work shakiness awful living up to expectations conditions and lower class occupations (Pappa, et al, 2009). Discussion Socioeconomic factors are regularly measured as a mix of instruction, salary, and occupation. At the point when seen through a social class lens, benefit, power, and control are accentuated. Besides, an examination of socioeconomic as an inclination or consistent variable uncovers disparities in access to and dissemination of assets. Socioeconomic factors are significant to all domains of behavioural and sociology, including exploration, practice, training, and promotion (Dolan, et al, 2008). Low Socioeconomic status and it relates, for example, lower instruction, neediness, and weakness, eventually influence our general public all in all. Imbalances in riches dissemination, asset circulation, and personal satisfaction are expanding in the United Kingdom and all inclusive. Society advantages from an expanded concentrate on the establishments of financial disparities and endeavours to  decrease the profound crevices in financial status in the United Kingdom. Behavioural and other sociology experts have the apparatuses important to study and distinguish methodologies that could allay these incongruities at mutually individual as well as communal levels (Pappa, et al, 2009). Equality Act 2010 is a demonstration of the Parliament of United Kingdom which producing results from October 2010 recommends an equivalent treatment in access to business and additionally private and open administrations. The demonstration list a set of ensured attributes which are recognized as take after: age, inability, sexual orientation reassignment, marriage and common association, pregnancy and maternity, race, religion or conviction, sex and sexual introduction (Daniels, 2010). With respect to these attributes the Act give a unique security every each one encircling the all procurements with general evidences about regular qualities of separation. The reason of such part and distinctive security among the secured trademark is clarified on the premise of a prior hostile to separation law which was accordingly consolidated by the Equality Act including further component of insurance. Actually, the Act is shaped by various bits of other enactment which controlled the segregation law field. Thusly, were authoritatively actives the Sex Discrimination Act 1975, the Race Relations Act 1976 and the Disability Discrimination Act 1995? The demonstration supplants additionally various Regulations, in which the one pertinent in age separation field was the Employment Equality (Age) Regulations, which produce results beginning from 2006 until the reception of Equality act (Daniels, 2010). Poverty can be characterized in an unexpected way; those of conflicting conclusions on poverty will presumably additionally have unique suppositions on the reasons for neediness and the estimation of poverty. For instance Marxists and Feminists have philosophies focused around clash. Marxists accept that there is a class battle, and that the abuse made by private enterprise makes neediness. Womens activists accept that Patriarchy fabricates in social disparities and their belief systems are exhibited by the imbalances in pay in the middle of ladies and men. There is likewise research demonstrating that there are a larger number of ladies than men in neediness, and 93% of solitary folks in destitution are ladies. However clashing contentions are held by the New Right. Their supporters incorporate  Margaret Thatcher, Charles Murray and David Marshland and their philosophy is focused around the individual, and not society overall. The New Right accepts that it is through the peoples lethargy that destitution is brought on (Conley Page, 2010). Feminist accept that society is organized by Patriarchy, the thought that men are the most critical individuals in the public arena, and everything in the public eye is composed to accommodate the needs of men. This perspective is upheld by the conveyance of compensations; cases of this are managerial positions in extensive organizations where ladies get paid less for the same employment (McNay, 2013). Feminist will likewise contend that the profit framework has accepted that ladies are reliant upon men and this implies the welfare state capacities to keep up patriarchy. The cycle of neediness backings the view that destitution is brought on by the social imbalances that are incorporated with the structure o f society. This perspective is that when an individual is naturally introduced to a poor family, their chances in life of assisting themselves in the public arena are fundamentally decreased. This is the methodology in which destitution is transmitted starting with one era then onto the next. Cornwall, Harrison, Whitehead, 2007 recognize that a percentage of the hindrances that are connected with the poor like underachievement at school are connected with offspring of low salary families being marked as an issue. The social just approach acknowledges this cycle of destitution and the relative meaning of neediness. Their philosophy is that those at the base of the social classes are in burdened gatherings whose destitution bringing about social avoidance. Exploration completed by Dean, 2009 found that there are fundamental gatherings in the underclass, including the elderly, resigned, solitary folks and the long haul unemployed who are compelled to depend on deficient state advantages, which are excessively low. Women in poverty additionally have lessened access to healthcare administrations and assets. Somewhat because of the toll of childbearing, ladies are excessively beset with poor health results. Poor health ladies capacities to win pay, and, in this manner, is a key variable expanding and propagating family unit neediness (McNay, 2013). Expanding wellbeing administrations to ladies could, subsequently, relieve the feminization of destitution. The education of ladies and kids, particularly young ladies, can make more prominent open doors for ladies to  lift themselves out of neediness and expand their social position. Nations with solid sexual orientation separation and social chains of importance breaking point ladies right to gain entrance to essential instruction. Indeed inside the family unit, young ladies instruction is frequently yielded to permit male kin to go to class. Ethnic group For some ethnic minority bunches, viewpoints, for example, unemployment, living norms and welfare are significant issues. Ethnic gatherings depend on social incorporation to be included in, for instance, instruction and job, and for a few, this is hard in the event that you cant talk or talk little of the local dialect or are ignorant, as it will be harder to end up included and accepted in the public eye (Goldthorpe, 2009). It was likewise observed that 8% of the white populace and 27% of the Pakistani and Bangladeshi populace were unemployed. Adolescent Afro-Caribbean men matured 16 to 24 were discovered to be three times more inclined to be unemployed then those the same age and white. Under half of ladies from ethnic minorities are utilized contrasted with in excess of 65% of white ladies. Issues in deficient lodging among ethnic minorities are high. With a correlation of 2% of the white populace, 30% of Pakistanis and 47% of Bangladeshis living in packed lodging as per the 1991 accord, it is plain to see why those in ethnic minorities are more inclined to experience neediness then others. In a later investigation of families in Bradford, a stunning 65% of Bangladeshis and 45% of Pakistanis existed in packed lodging (Goldthorpe, 2009). The working class In the 1980s, amid the Thatcher time, the common labourers endured tremendously. They encountered serious cut in occupations, with mines, industrial facilities, boat building manufacturing plants and steel works being shut down. This created demolition and an increment in destitution inside the class. It particularly influenced the men because of sudden vulnerability in work and perplexity (Goldthorpe, 2009). On the other hand, this monstrous cut in employments for the working people implied that such places as Sheffield were supplanted with the administration and retail segment. Anyway these men had no aptitudes to have the capacity to take part in this industry and men thought that it was tricky to manage the truth they  were sometimes being supplanted by ladies as the fundamental providers. This prompted a substantial increment in unemployment and neediness. Men were hesitant to learn new aptitudes keeping in mind the end goal to take an interest in the public eye and in this way turned to addictions, for example, drink and medications, calculates that can prompt neediness. Similarly as with the ethnic minorities, the average workers receive sub societies, for example, the opposition to class subculture found by Paul Willis. Working people young men in their last year at a thorough school were mulled over in a longitudinal study that tailed them into their first years in occupation. He observed that they received the same state of mind at function as they did at school, thinking that it more essential to have a snicker and disregard the establishment’s standards and values then doing work and picking up capabilities. This lead to a circle in the regular workers as they emulated the same way as their guardians had formerly (Goldthorpe, 2009). This absence of satisfactory lodging, unemployment, higher wrongdoing and absence of healthcare and abilities leads now and again to pertinent destitution in the regular workers group. The reliance on the welfare state gives no energy or consolation to go out and look for vocation. The selection of the caretaker state should avert neediness and brings individuals up over the destitution line. Anyway it can be seen to really compound the situation. Conclusion Poverty is a long way from being nullified if anything it is expanding quickly and the retreat has pushed numerous families and people into destitution. Poverty is predominantly dictated by three elements â€Å"access to work, and the disappointment of government strategies to manage them. Access to work is dictated by class, sexual orientation and race. On the off chance that unemployed, individuals landing a position is not so much the solution for their issues in the event that they are going to be getting a low wage i.e. solitary folks and low salary families with youngsters. Standardized savings have neglected to haul individuals out of destitution, regularly abandoning them to adapt on least salaries. References Conley, H., Page, M. (2010). The gender equality duty in local government: The prospects for integration. Industrial Law Journal, 39(3), 321-325. Cornwall, A., Harrison, E., Whitehead, A. (2007). Gender myths and feminist fables: the struggle for interpretive power in gender and development.Development and Change, 38(1), 1-20. Daniels, K. (2012). Equality Act 2010. Dean, H. (2009). Critiquing capabilities: the distractions of a beguiling concept.Critical Social Policy, 29(2), 261-278. Dolan, P., Peasgood, T., White, M. (2008). Do we really know what makes us happy? A review of the economic literature on the factors associated with subjective well-being. Journal of economic psychology, 29(1), 94-122. Goldthorpe, J. H. (2009). Analysing social inequality: a critique of two recent contributions from economics and epidemiology. European Sociological Review, jcp046. McNay, L. (2013). Gender and agency: Reconfiguring the subject in feminist and social theory. John Wiley Sons. Pappa, E., Kontodimopoulos, N., Papadopoulos, A. A., Niakas, D. (2009). Assessing the socio-economic and demographic impact on health-related quality of life: evidence from Greece. International journal of public health,54(4), 241-249.

Effective Satire in God Bless You, Mr. Rosewater :: God Bless You Mr. Rosewater

Effective Satire in God Bless You, Mr. Rosewater Satire is a technique used in literature to criticize the faults of society. An excellent examle of contemporary satire is Kurt Vonnegut's novel God Bless You, Mr. Rosewater. The author tells the life of Eliot Rosewater, a young and affluent man troubled by the plights of the poor. Eliot is the President of the Rosewater Foundation, a sum of money worth approximately $87 million. Using this position, he does everything he can to help the poor. This charity giving is socially unacceptable to the wealthy, particularly Eliot's father Senator Lister Ames Rosewater. Vonnegut uses caricature, irony, and tone to satirize the lack of care the rich have for those socially "beneath them." Vonnegut satirized the rich by exaggerating prominent features to portraying Senator Rosewater as a snob. He is characterized as heartless, shallow, and mean; seems to care only about his family name and public image. Senator Rosewater has no pity for the poor in his heart, "I have spent my life demanding that people blame themselves for their misfortunes." (62) The most evident flaw of Eliot's father is how he worries what people will think of him. When Eliot first opens the Rosewater Foundation and gives out money to those in need, Senator leaves him alone - to do as he chooses. However, when the young and unlearned lawyer Norman Mushari begins trying to prove Eliot insane and to shift the money to Fred Rosewater, a distant relative in Rhode Island, Senator crusades to prove the opposite. Everyone is asked, even Eliot's ex-wife Sylvia DuVrais Zetterling, for proof. Senator Lister Rosewater simply brushes aside Sylvia's pain to question her. "'What did he seem like there in Paris?' the Senator wanted to know. 'Did he seem sane enough to you then?'" (64) Senator goes to the small town of Rosewater, Indiana, where Eliot is living and meets with him. Worried by what he sees, Senator plots with attorney Thurmond McAllister to make the jury believe Eliot is fit and able. Senator only cares about Eliot when the family name is endangered. Another hideous aspect of the Senator's personality is his cruelty towards his son. He disapproves of Effective Satire in God Bless You, Mr. Rosewater :: God Bless You Mr. Rosewater Effective Satire in God Bless You, Mr. Rosewater Satire is a technique used in literature to criticize the faults of society. An excellent examle of contemporary satire is Kurt Vonnegut's novel God Bless You, Mr. Rosewater. The author tells the life of Eliot Rosewater, a young and affluent man troubled by the plights of the poor. Eliot is the President of the Rosewater Foundation, a sum of money worth approximately $87 million. Using this position, he does everything he can to help the poor. This charity giving is socially unacceptable to the wealthy, particularly Eliot's father Senator Lister Ames Rosewater. Vonnegut uses caricature, irony, and tone to satirize the lack of care the rich have for those socially "beneath them." Vonnegut satirized the rich by exaggerating prominent features to portraying Senator Rosewater as a snob. He is characterized as heartless, shallow, and mean; seems to care only about his family name and public image. Senator Rosewater has no pity for the poor in his heart, "I have spent my life demanding that people blame themselves for their misfortunes." (62) The most evident flaw of Eliot's father is how he worries what people will think of him. When Eliot first opens the Rosewater Foundation and gives out money to those in need, Senator leaves him alone - to do as he chooses. However, when the young and unlearned lawyer Norman Mushari begins trying to prove Eliot insane and to shift the money to Fred Rosewater, a distant relative in Rhode Island, Senator crusades to prove the opposite. Everyone is asked, even Eliot's ex-wife Sylvia DuVrais Zetterling, for proof. Senator Lister Rosewater simply brushes aside Sylvia's pain to question her. "'What did he seem like there in Paris?' the Senator wanted to know. 'Did he seem sane enough to you then?'" (64) Senator goes to the small town of Rosewater, Indiana, where Eliot is living and meets with him. Worried by what he sees, Senator plots with attorney Thurmond McAllister to make the jury believe Eliot is fit and able. Senator only cares about Eliot when the family name is endangered. Another hideous aspect of the Senator's personality is his cruelty towards his son. He disapproves of

Referring to at Least Two Sources of Data, Critically Discuss How Crime Is Measured in Britain and Explain Why the Statistics Do Not Provide Us with a Full Picture of How Much Crime There Actually Is.

SCS1007 ESSAY Referring to at least two sources of data, critically discuss how crime is measured in Britain and explain why the statistics do not provide us with a full picture of how much crime there actually is. If one were to ask how much crime there is in Britain, the judgement could differ depending on whom you were asking or their judgement on what they actually class as criminal behaviour. Society is ambivalent towards crime, which skews the analysis over the level of criminal activity in Britain.Maguire describes the area of crime numbers or trends as one of ‘shifting sands’ (Maguire 2002, p,322) in terms of the developments and creations in criminological process and thought which happens day to day. He also argues that finding the true level of crime bears very little significance in the study of criminology, but what bears greater significance is the critical approach by which the data is analysed.Nevertheless, there are official police-generated crime statis tics in Britain, made up of reported and recorded crimes, which still, to this day impact on how politicians and journalists view the government’s effectiveness in dealing with crime. The Official Crime Statistics in England are published annually and allow various sectors of society such as the media, politicians and the general public to assess the extent and the trends in criminal activity.These published tables of national crime statistics named ‘Criminal Statistics, England and Wales’ were first compiled in 1857 and were based on annual returns from the courts and the police which were then aggregated by government statisticians (Maguire 2002). Crimes recorded in police statistics are defined by the ‘Notifiable Offence List’ (ONS: Data sources – further information). This follows technological advances in recent times, which have grown the net number of police-recorded crimes, such as ‘common assaults’. Many minor crimes have been upgraded and are now regarded as ‘notifiable offences’ (Maguire 2002).However, there are significant shortcomings with the police-generated crime statistics, such as the fact that certain crimes are not included in this list, referred to by the ONS as ‘non-notifiable’ crimes. These crimes often include anti-social behaviour or minor crimes such as drunkenness, littering or begging. Whilst there is criminal activity occurring in Britain which does not come to police notice, and therefore is not recorded (discussed in detail later in this paper), there are crimes which the police are aware of, but use a great deal of discretion as to whether or not these crimes are recorded (Maguire 2002).The public are responsible for notifying around eighty per cent of recorded crimes to the police (McCabe and Sutcliffe 1978), however, the latter have the responsibility for deciding which crimes to deal with and which to ignore. Often they can regard some crimes as to o trivial or they dispute the legitimacy of others, which can lead to unreliable data. Moore, Aiken and Chapman (2000) see the police as filters, only recording some of the crimes reported to them. Furthermore, there are certain types of crime that are excluded totally from these statistics, seriously altering the extent to which the data can be classed as comprehensive.The term ‘notifiable’ offence essentially refers to one, which can be tried by the Crown Court. This leaves ‘summary offences’ (those which can only be tried in a Magistrate’s Court) excluded from the data (Maguire 2002). In addition to this, crimes which are not regarded as the responsibility of the Home Office, such as those recorded by the British Transport Police, Ministry of Defence Police, and UK Atomic Energy Authority Police (who between them record some 80,000 notifiable offences annually) (Kershaw et al . 2001, p91) are also excluded from ‘official crime figures. †™A further limitation with police recorded crime data is caused by the unpredictable fluctuations with the remaining 20 per cent of crimes which the police themselves discover, either through observation, patrols or through confessions by those arrested. This could be due to increased arrests from planned operations targeted against a certain type of crime. For example, following the London riots in 2011, many people were arrested due to the police focusing their resource and effort on finding the offenders. Similarly, at pop festivals many drug users have been found and arrested.On the other hand, numbers of recorded crimes may fall if police interest in a particular type of crime is withdrawn. This could be for a number of reasons such as in the late 1950’s and early 1960’s when the legalisation of homosexuality was imminent. At this time the police regularly ignored ‘indecency between males’ which resulted in a fall of recorded offences to half the le vel previously regarded as normal (Walker 1971). In criminology, the term ‘the dark figure of crime’ is often used to refer to the crimes that are not reported and therefore not recorded in official statistics.In theory, the ‘dark figure’ consists of offences brought to the justice system but not registered in judicial sources (perhaps because they were settled outside of the court), undiscovered offences or offences where the victim has chosen not to reveal details (Johnson and Monkkonen 1996). This loophole seriously alters the accuracy of the criminal justice disciplinary system. The underlying reasoning for certain crimes not being reported are based on people’s own judgement of the seriousness of the crime, police power, police diplomacy or simply because people see it as an inconvenience.It could be argued that if people don’t believe the reporting of their crime to be serious enough, then the justice system is not as accessible and tran sparent as it should be. This argument widens the issue of the dark figure of crime from a statistical one to an underlying and historical error creating much scope for debate. The police system is in place for the safety of citizens, but if citizens don’t feel the use of the justice system is necessary in certain instances, then what is the point in the justice system being in place for certain crimes?Furthermore, this hinders the reliability of criminologists’ theories where a legalistic stance is taken in the definition of crime. A secondary measure of crime in Britain, regarded by Maguire as a â€Å"directly comparable rival to the police-generated crime statistics† (Maguire 2002) is the British Crime Survey (BCS), now named the Crime Survey for England and Wales (CSEW) to reflect its geographical coverage. This measure attempts to combat the inaccuracy of the ‘dark figure of crime’ referred to above.The CSEW was first conducted in 1892 and is a n annual survey rather than a list of statistics. When the survey was first conducted, there were 11 million crimes reported; however, official statistics recorded by the police only counted less than three million (Hough and Mayhew 1983)– this gap is first hand evidence of the ‘dark figure of crime. ’ Forty six thousand households (ONS: Data sources – further information) were questioned in the year ending June 2012, with the CSEW focusing more on qualitative data rather than the quantitative data used in official statistics.The CSEW picks up on crime that doesn’t surface in official statistics, with households asked about their own personal experiences of crime in the past twelve months as well as taking into account any non-response bias. The measure has a consistent methodology and the results are not skewed by a percentage of the population failing to report their crime. The measure suggests the true level of crime to be twice the official crim e rate due to the proportion of people who admit to being victims or offenders of crime in a face-to-face interview, but do not report this to the police.Although the CSEW does now include a section on domestic violence, an area previously missed off the national figures, (particularly when victims are scared of their offenders) the real rate of crime is still substantially under-estimated. Corporate or workplace crime, homicide, drug possession or crimes against people under the age of 16 are still not included in the CSEW figures. In today’s society, this is a major drawback to the CSEW as corporate crime is growing in our increasingly globalised economy whilst crimes against children appear to be remaining constant with no breakthrough on prevention.In 2011, of the police recorded crime statistics on sexual abuse against children, it was found that 1 in 10 children (9. 4%) aged between eleven and seventeen years old had experienced sexual abuse (NSPCC 31/12/12). Some progr ess appears to have been made in the area of corporate crime following a recommendation contained in the National Statisticians’ Review of Crime Statistics (National Statistician, 2011 18/12/12) – there is now a survey of commercial victimisation which aims to provide statistics on corporate crime in the economy over the next three years and is planned to be incorporated into future quarterly releases in 2013.However, other drawbacks associated with the CSEW include the time lag on information collection – the survey records data from people’s experience 12 months prior. This is in comparison to police recorded crime in which the data is clearly more immediate. Furthermore, the CSEW is vulnerable to sampling errors and variation in results. One person may feel comfortable enough to admit criminal activity to one interviewer, but not to another. Therefore the reliability of the data can be challenged.When comparing both the CSEW and police recorded crime i n official statistics the most recent data from the Office of National Statistics can be analysed. The CSEW, based on interviews in the year ending June 2012, reveals a â€Å"statistically significant decrease of 6 per cent in the overall level of CSEW crime compared with the previous year’s survey (ONS: Overall level of crime 18/12/12). † Similarly, â€Å"the overall level of notifiable crime recorded by the police decreased by 6 per cent in the year ending June 2012, compared with the previous year (ONS: Overall level of crime 18/12/12). Nevertheless, whilst the CSEW estimates just over 9. 1 million incidents of crime for the year ending June 2012, the official figures only record 3. 9 million offences. This is heavily based on the ‘dark figure of crime’ – that proportion of crime in Britain which goes unnoticed by the police. In 2002, the CSEW (then named BCS) calculated that â€Å"40 per cent of crimes known to victims and reported to the poli ce do not end up in official statistics (Kershaw et al 2001, p992). It is evident that, whilst the CSEW does reveal a higher level of criminal activity in Britain, a majority of the crimes can regarded as not serious enough to be included in official statistics, and therefore should not alarm the population. Although the legalistic position attempts to simplify the scale of debate surrounding what crime actually is, stating ‘the most precise and least ambiguous definition of crime is that which defines it as behaviour which is prohibited by the criminal code’ Coleman (2000), this however creates a question on what is actually being regarded as illegal behaviour and ‘prohibited by the criminal code’.Analysing the methods used in Britain to measure crime establishes the fact that criminal statistics are a social construction, based not on a set of legal definitions and laws, which can be transferred between social groups and times, but on a product of social processes. The process of attrition between an act, regarded as criminal, to the same act being punished contains a number of stages that blur the answer to the question ‘How much crime is there in Britain? It appears that the term ‘official crime figures’ is somewhat paradoxical in the fact that if society is basing its justified opinion on these ‘official’ figures, then it must take into account several exclusions in order to get a more comprehensive perspective on what the data is actually showing. Although the figures summarise the most serious crimes in Britain they do not show the total picture.In this day and age more emphasis needs to be placed on the responsibility of the criminal justice system and the link back to the definition of criminals in the first place. In particular, if crime is viewed from a labelling perspective, then the role that the legal system plays in the creation of crime is of great significance when measuring the true le vel of criminal activity in Britain.In addition, consideration needs to be given to future prevention of crime and the measurement of how effective society is at removing or reducing certain categories of crime. In closing, I would argue that when answering the question ‘how much crime is there in Britain? ’ it would be naive to base any argument upon these official crime figures as they are simply ‘indices of organisational processes’ Kitsuse and Cicourel (1963).

What Are Interest Rates Finance Essay - Free Essay Example

Sample details Pages: 12 Words: 3491 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. Interests rates are fundamental to a capitalist society. Interest rates are normally expressed as a percentage rate over the period of one year. Interest rates are also a tool of monetary policy and are taken into account when dealing with variables like investment, inflation, and unemployment. In traditional actuarial investigations, the interest rate is assumed to be deterministic and hence there is only one source of uncertainty, the mortality uncertainty, to be considered. Concerns about the effects of including a stochastic interest rate in the model have been growing during the last decade. The literature has tended to focus on annuities and the model adopted to describe the interest rate uncertainty, in a continuous framework, has usually involved the use of a Brownian motion (Beekman and Fuelling,1990- 1991), (Dufresne, 1990), (De Schep per et al, 1992), (Parker, 1994), (Perry and Stadje, 2001), (Perry et al, 2003). When the market rates are high, volatility is expected to be high or when interest rates are low, volatility will be low. (Brennan Schwartz, 1980; Chan et al., 1992; Cox et al., 1985; Nowman, 1997; NowmanStaikouras, 1998) A derivative which has as an underlie the ability to pay or receive a given amount of money at a given interest rate. Interest rate derivatives are the most popular kind of derivative, and include interest rate swaps and forex swaps. Features of interest rate swaps and forex swaps are swap of fixed-for-floating interest rate, a master agreement for fixed rate interest, a floating or variable rate which is reset periodically, a set-off exercise at every reset time to swap a fixed-for-floating interest rate and floating interest rate is to based on a certain benchmark (Dr. Mohd Daud Bakar, 1971) Interest rate swaps is an exchange of interest payments on a specific principal amount . This is a counterparty agreement, and so can be standardized to the requirements of the parties involved. An interest rate swap usually involves just two parties, but occasionally involves more. Often, an interest rate swap involves exchanging a fixed amount per payment period for a payment that is not fixed (the floating side of the swap would usually be linked to another interest rate, often the LIBOR) an interest rate swap, the principal amount is never exchanged; it is just a notional principal amount (D. K. MalhotraIn, 1998). Background research Richard J. Rendleman, Jr. (1949) is a composer whose works have been performed by The North Carolina Symphony, The South Carolina Philharmonic Orchestra, The United States Navy Band and a number of other orchestras, chamber groups and choral ensembles. His compositions have been recorded by the Seattle Symphony, The Warsaw National Philharmonic, The Czech National Symphony, The Slovak Radio Orchestra and the St. Stephens Chamber Orchestra. Rendleman is also Professor of Finance at the Kenan-Flagler Business School of the University of North Carolina at Chapel Hill. Rendleman married Nancy Sherwin in 1974, received his Ph.D. from UNC in 1976, and taught at Northwestern University before moving back to his home state to take a teaching position at Dukes Fuqua School of Business. Although his academic career was moving along Rendleman still couldnt shake his desire to make something happen with his music. (Melinda S. Stubbee, 1996) Rendleman began composition studies with Robert Ward, and for the first few years thereafter composed mainly for piano in 1981. Later, his compositions expanded into chamber, vocal and orchestral works. Prior to studying with Ward, Rendlemans music training consisted of five years of piano lessons as a young child followed by four years of junior high and high school band. Some of Rendlemans earliest compositions were instrumental pieces written in 1966-1967 for Rhythm and Bl ues band, Soul Inc., known by many in the Salisbury, North Carolina area as Carolinas Finest Show and Dance Ensemble. Rendleman is also Professor of Finance at the Kenan-Flagler Business School of the University of North Carolina at Chapel Hill. He is best known for his work in derivative securities markets, particularly implied volatility and two-state (or binomial) option pricing and for his work on the relationship between stock returns and quarterly earnings surprises. For better or worse, his work on earnings surprises in the early to mid 1980s has contributed significantly to Wall Streets sensitivity to quarterly earnings during the 1990s ( Richard Rendleman, 2009) Literature Review The literature review is based on a Rendleman Bartter model developed by Yeliz Yolcu [2005]. Rendleman bartter models are the first short rate models being proposed in the financial literature. As they said before, drift and diffusion terms contain constant parameters. Moreover, they produce an endogenous term structure (current term structure of rates is an output rather than an input of the model) of interest rates in that initial term structure of rates need not to match the observed market data no matter how the parameters are chosen. Rendleman-Bartter model (1980) formulate as drt = rtdt + rtdWt; where; are nonnegative constants.When they look at roughly, we think that Dothan and Rendleman-Bartter have the same formulation. However, in the original paper of Dothan he aimed to present a valuation formula for default free bonds for a certain class of tastes when the rate follows a geometric Wiener process and so he started with his work by the above formulation (3.1.10) under the objective probability. Since, they are dealing with the risk neutral valuation, they change directly this formulation to risk neutral framework. Moreover, without doubt the analytic expression of this model is the same as that Dothan Model. Indeed, they will give the intuition of constructin g this kind of model. Rendleman and Bartter assume that the short-term interest rate behaves like a stock price less than ideal. One important difference between the stock price and and interest rate is interest rate appeared to be pulled back to some long run average level over time (mean reversion) due to economic facts. (Rogers, 1995) Unlike Vasicek, they do not corporate with the mean reversion. Michael D. Goldberg [2000] The simplest models of the short-term interest rate are those in which the interest rate follows arithmetic or geometric Brownian motion. For example, they could write dr = adt + ÃÆ' Ãƒâ€ Ã¢â‚¬â„¢dZ (24.23).In this specification, the short-rate is normally distributed with mean r0 + at and variance ÃÆ' Ãƒâ€ Ã¢â‚¬â„¢2t. There are several objections to this model. First, the short-rate can be negative. It is not reasonable to think the nominal short rate can be negative, since if it were, investors would prefer holding cash under a mattress to holding bonds. Second, the drift in the short-rate is constant. If a 0, for example, the short-rate will drift up over time forever. In practice if the short-rate rises, they expect it to fall; example, it is mean-reverting. Thirdly, the volatility of the short-rate is the same whether the rate is high or low. In practice, they expect the short-rate to be more volatile if rates are high. Rendleman and Bartter model, by contrast assumes that the short-rate follows geometric Brownian motion: dr = ardt + ÃÆ' Ãƒâ€ Ã¢â‚¬â„¢rdz (24.24) While interest rates can never be negative in this model, one objection to equation (24.24) is that interest rates can be arbitrarily high. In practice they would expect rates to exhibit mean reversion; if rates are high, they expect them on average to decrease. The Rendleman-Bartter model, on the other hand, says that the probability of rates going up or down is the same whether rates are 100% or 1%. In the Rendleman-Bartter model, interest rates could no t be negative because both the mean and variance in that model are proportional to the level of the interest rate. Thus, as the short-rate approaches zero, both the mean and variance also approach zero and it is never possible for the rate to fall below zero (Richard J. Rendleman, Jr., 1980). In the Vasicek model, by contrast, rates can become negative because the variance does not vanish as r approaches zero (Oldrich Vasicek, 1977). Professor Landsman reviews research on both the relevance and reliability of reporting fair values for loans and other financial instruments (Landsman, 2005). Accounting standard setters define fair value as the amount that would be paid or received for the item being valued in an arms length transaction between knowledgeable parties (FASB, 2004a). This is a market value definition and the standard setters have indicated that, if available, a current market price for the item is said to be the best estimate of its fair value. Relevance means that the fair value is capable of making a difference to financial statement users decisions. Reliability means that the reported fair value represents what it is purported to represent (Barth et al, 2001). Professor Landsman concludes that the evidence on fair value reporting supports its relevance. On reliability, he suggests there is some uncertainty, using evidence from Barth, Landsman, and Rendleman (1998) based on testing a pricing model for corporate bonds. He further discusses banks use of their private information in determining loan fair values and consequences of model valuation errors on earnings volatility. Short Title: Rendleman-Bartter Model In the context of finance the The Rendleman-Bartter model is a very important theory. The Rendleman-Bartter Model could be called a short rate model. This model deals with rates of interest. The Rendleman-Bartter Model tries to explain the growth of rates of interest and is among the earliest models that dealt with rates of interest for a shorter period of time. It applied the random process that had been used to explain the movements of the basic prices of stock options. According to the model, the instantaneous rate of interest changes in accordance with the geometric Brownian motion, which is also called the exponential Brownian motion. The geometric Brownian motion is an uninterrupted random process. In the Rendleman-Bartter Model, market risk is the sole factor that is responsible for the changes in the rates of interest. This is why the Rendleman-Bartter Model could also be called a kind of one factor model In this model Wt is nothing but a Wiener process. It models the risk factor involved in random markets. ÃÆ' Ãƒâ€ Ã¢â‚¬â„¢ is the drift parameter of the Rendleman-Bartter model. ÃÆ'Ã… ½Ãƒâ€šÃ‚ ¸ is the standard deviation parameter of the Rendleman-Bartter model. The drift parameter of the Rendleman-Bartter model stands for the extent of fluctuation in the rate of interest. This rate is normally fixed, anticipated and instantaneous. The standard deviation parameter of the Rendleman-Bartter model ascertains the unpredictability of rates of interest. (Richard  J Rendleman and Brit  J Bartter,1979) Market risk is the risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors. The four standard market risk factors are stock prices, interest rates, foreign exchange rates, and commodity prices. The associated market risk are equity risk, interest rate risk, currency risk and commodity risk (Y Amihud, 1992). Equity risk is the risk that ones investments will depreciate because of stock market dynamics causing one to lose money. The measuring of risk used in the equity markets is typically the standard deviation of a securitys price over a number of periods. The standard deviation will delineate the normal fluctuations one can expect in that particular security a bove and below the mean, or average. However, since most investors would not consider fluctuations above the average return as risk, some economists prefer other means of measuring it (E Dimson, 2002). Interest rate risk is the risk borne by an interest-bearing asset, such as a loan or a bond, due to variability of interest rates. In general, as rates rise, the price of a fixed rate bond will fall, and vice versa. Interest rate risk is commonly measured by the bonds duration. Asset liability management is a common name for the complete set of techniques used to manage risk within a general enterprise risk management framework (George J. Hall, Thomas J. Sargent, 2010). Currency risk is a kind of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. Transaction risk is the risk that exchange rates will change unfavorably over time. It can be hedged against using forward currency contracts. Translation risk is an accounting risk, proportional to the amount of assets held in foreign currencies. Changes in the exchange rate over time will render a report inaccurate, and so assets are usually balanced by borrowings in that currency. The exchange risk associated with a foreign denominated instrument is a key element in foreign investment. This risk flows from differential monetary policy and growth in real productivity, which results in differential inflation rates (Gunther Schnabl, 2006). Commodity risk refers to the uncertainties of future market values and of the size of the future income, caused by the fluctuation in the prices of commodities. These commodities may be grains, metals, gas, electricity etc. A commodity enterprise needs to deal with price risk, quantity risk, cost risk, political risk (DF Larson, 1998). The Wiener process in mathematics a continuous-time stochastic pro cess named in honor of Norbert Wiener. It is often called Brownian motion, after Robert Brown. It is one of the best known Levy processes (cadlag stochastic processes with stationary independent increments) and occurs frequently in pure and applied mathematics, economics and physics. The Wiener process plays an important role both in pure and applied mathematics. In pure mathematics, the Wiener process gave rise to the study of continuous time martingales. It is a key process in terms of which more complicated stochastic processes can be described. As such, it plays a vital role in stochastic calculus, diffusion processes and even potential theory. It is the driving process of Schramm-Loewner evolution. In applied mathematics, the Wiener process is used to represent the integral of a Gaussian white noise process, and so is useful as a model of noise in electronics engineering, instrument errors in filtering theory and unknown forces in control theory (N Dohi, 1993). The Wiener process has applications throughout the mathematical sciences. In physics it is used to study Brownian motion, the diffusion of minute particles suspended in fluid, and other types of diffusion via the Fokker-Planck and Langevin equations. It also forms the basis for the rigorous path integral formulation of quantum mechanics (by the Feynman-Kac formula, a solution to the Schrodinger equation can be represented in terms of the Wiener process) and the study of eternal inflation in physical cosmology. It is also prominent in the mathematical theory of finance, in particular the Black-Scholes option pricing model (MJ Hinich, 2010). The limitation of Rendleman-Bartter Model The assumption that the short-term interest rate behaves like a stock price is a natural starting point but it is less than ideal. One important difference between interest rates and stock price is that interest rates appear to be pulled back to some long-run level over time. This phenomenon is known as mean r eversion. When r is high, mean reversion tends to cause it to have a positive drift. The Rendleman and Bartter model does not incorporate mean reversion. There are compelling economic arguments in favour of mean reversion. Hen rates are high, the economy tends to slow down and there is low demand for funds from borrowers. As a result, rates decline. When rates are low, there tends to be a high demands for funds on the part for borrowers and rates tend to rise (Y YOLCU, 2005). Other examples of short-rate model 1. Particular short-rate models Vasicek model Vasicek model is a mathematical model describing the evolution of interest rates. It is a one type of one-factor model as it describes interest rate movements as driven by only one source of market risk. The model can be used in the valuation of interest rate derivatives, and has also been adapted for credit markets, although its use in the credit market is in principle wrong, implying negative probabilities (Oldrich Va sicek, 1977). Ho-Lee model Ho-Lee model is a short rate model to predict future interest rates. It is the simplest model that can be calibrated to market data, by implying the form of ÃÆ'Ã… ½Ãƒâ€šÃ‚ ¸t from market prices. Ho and Lee does not allow for mean reversion (T.S.Y. Ho, S.B. Lee, 1986). Hull-White model In financial mathematics, Hull-White model,which also called the extended Vasicek model is a model of future interest rates. In its most generic formulation, it belongs to the class of no-arbitrage models that are able to fit todays term structure of interest rates. It is relatively straight-forward to translate the mathematical description of the evolution of future interest rates onto a tree or lattice and so interest rate derivatives such as bermudan swaptions can be valued in the model. The model is still popular in the market today (John C. Hull, Alan White, 1990). Cox-Ingersoll-Ross model In mathematical finance, the Cox-Ingersoll-Ross model (or CIR m odel) describes the evolution of interest rates. It is a kind of one factor model and short rate model as it describes interest rate movements as driven by only one source of market risk. The model can be used in the valuation of interest rate derivatives. It was as an extension of the Vasicek model (John C. Cox, Jonathan E. Ingersoll, Stephen A. Ross, 1985). Black-Karasinski model In financial mathematics, the Black-Karasinski model is a mathematical model of the term structure of interest rates. It is a one-factor model as it describes interest rate movements as driven by a single source of randomness. It belongs to the class of no-arbitrage models, i.e. it can fit todays zero coupon bond prices, and in its most general form, todays prices for a set of caps, floors or European swaptions ( Fischer Black, Piotr Karasinski, 1991). Black-Derman-Toy model Black-Derman-Toy model (BDT) is a popular short rate model. It is a one-factor model, that is, a single stochastic facto r the short rate determines the future evolution of all interest rates. It was the first model to combine the mean-reverting behaviour of the short rate with the lognormal distribution, and is still widely used. It was first developed for in-house use by Goldman Sachs in the 1980s and was published in the Financial Analysts Journal in 1990. A personal account of the development of the model is provided in one of the chapters in Emanuel Dermans memoir My Life as a Quant. Under BDT, using a binomial lattice one calibrates the model parameters to fit both the current term structure of interest rates (yield curve), and the volatility structure for interest rate caps (usually as implied by the Black-76-prices for each component caplet). Using the calibrated lattice one can then value a variety of more complex interest-rate sensitive securities and IRDs ( Fischer Black, Emanuel Derman, Bill Toy, 1980). 2. Multi-factor short-rate models Longstaff-Schwartz model Longstaff-Schwart z model is a two-factor model of the term structure of interest rates. It produces a closed-form solution for the price of zero coupon bonds and a quasi-closed-form solution for options on zero coupon bonds. The model is developed in a Cox-Ingersoll-Ross framework with short interest rates and their volatility as the two sources of uncertainty in the equation (Longstaff, Francis and Eduardo Schwartz , 1992). Chen model The Chen model is a mathematical model describing the evolution of interest rates. It is a type of three-factor model of short rate model as it describes interest rate movements as driven by three sources of market risk. It was the first stochastic mean and stochastic volatility. In an authoritative review of modern finance, Chen model is listed as a major term structure model. Different variants of Chen model are still being used in financial institutions worldwide. James and Webber devote a section to discuss Chen model in their book; Gibson et al. devote a se ction to cover Chen model in their review article. Andersen et al. devote a paper to study and extend Chen model. Gallant et al. devote a paper to test Chen model and other models; Cai devotes her PhD dissertation to test Chen model and other competing models (Lin Chen, 1994). Conclusion The Rendleman-Bartter model for pricing interest rate options makes the assumption that the probability distribution of an interest rate, a bond price, or some other variable at a future point in time is lognormal. They are widely used for valuing instruments such as caps, European bond option, and European swap option. The Rendleman-Bartter Model is analytically tractable and relatively simple to implement, however this model has limitation as it does not provide a description of how interest rates evolve through time. Consequently, it cannot be used for valuing interest rate derivatives such as American-style swap option, callable bonds, and structured notes. To overcome the limitation of th is model, alternative approaches are build ,such as building of what is known as term structure model. This model describing the evolution of all zero-coupon interest rates. In conclusion, each interest rate modeling approach has its own advantages and disadvantages, selecting the suitable model to be used in each interest rate derivatives in very important as it will bring out different outcome. Don’t waste time! Our writers will create an original "What Are Interest Rates Finance Essay" essay for you Create order