Essay 3 Carl Jung Essay Example for Free

Essay 3 Carl Jung Essay This essay will investigate and outline Carl Jung’s theory of personality types, by detailing each types and how they can shape a person. It will look at the origins and characteristics of the attitudes and functions and show how this can be linked to psychological disturbance. This essay will look at theorists that are for and against the approach in order to come to a conclusion of how either successful or unsuccessful they are to help a client reach there own personal goals. It is important to note that Carl Jung worked very closely with Sigmund Freud in  the early stage of his research, and was highly influenced by his companions work, however, both theorists were very different in their thoughts of therapist theory. Freud was concerned with the clients past, whereas Jung’s work was aimed at looking into the clients future. Freud also believed that human motivation was focused on human sexuality, whereas Jung was believed that motivation is caused by psychic energy. Even though Freud did extensive work on the subconscious, Jung believed that there was a deeper level to the  unconscious then Freud, he called this the ‘collective unconscious’. ‘Jung agreed with Freud that a person’s past and childhood experiences determined future behavior; he also believed that we are shaped by our future (aspirations) too’. (http://www. simplypsychology. org/carl- jung. html; 06. 10. 2014) Jung’s idea of the ‘collective unconscious’ can be seen as a collection of unconscious thoughts amongst individuals that ultimately will not be conscious, as the thoughts have not yet been experienced by the individual. Jung believed that peoples experiences and behaviors are shaped by this. Jung called the units of the collective unconscious ‘archetypes’ which he described as peoples untaught tendencies to experience things differently. Jung speculated that as we go through life we do so by going through a sequence of stages caused by a set of ‘archetypal imperatives’ that are shaped by behavior and personality. For example, each individual’s personality is made up of the ‘persona’. The persona is the mask that people wear in order to face the worlds social standards that make us act in a certain way. Jung identified that the  persona is developed in childhood when a child is learning to conform to parental approval. Jung said that individuals that believe their mask to be real might not really know whom or what there true self is, and can cause mental illnesses if not identified. Jung described the ‘shadow’ archetype as the element that helps an individual from forgetting their true self and even though a shadow can be seen as representing a dark side to the personality that maybe unwanted or disapproved by the individual it is this that controls the ‘ego’ and the ‘persona’. ‘The archetype is a symbolic formula which always begins to function when there are no conscious ideas present, or when conscious ideas are inhibited for external or internal reasons’ (C. G. Jung; 1960;Volume Six, Psychological Types; Routledge; Page 377) Jung saw the ‘self’ as an archetype of an individuals whole personality and described this as an individual living to their full potential. He believed that wholeness is the most important aim in life and is only achieved by a person’s individualism and the realisation that they are unique. This discovery of ones  self-realisation is a process that is when an individual looks inside themselves and finally see the world through a better vision. Jung’s research gave him reason to believe that an individual’s personality changes and develops throughout their life, with an influx of social influences. Jung’s theory of ‘personality types’ is based on the concept that people are motivated by their future goals, with an aim to develop themselves in their future life. Jung based his personality types on many other theorists who also researched this area. He specifically based his research on the way that individuals approach reality, and that persons type is the basis on how each individual has learned to communicate. He based each ‘personality type’ into four letters, each of which represented two conflicting behaviour choices. The combination of these letters amounts to sixteen personality types. The first letter represents people’s attitude in regards to how they see themselves and the external environment around them. The first letter can either begin with and ‘E’ for ‘Extrovert’, or ‘I’ for ‘Introvert’. Jung believed that ‘Extroverts’ aim their attention and interests outwards into society in a belief that the people around them recognise and respond to the individual’s life. They need interaction with other in order to fulfil their external expectations. Jung discovered that if the individual’s personality is too extroverted then the individual might fail to play up to what society requires from them and fail to identify their own needs if their ‘extroverted’ behaviour is not recognised by others. If you take an extravert you will find his unconscious has an introverted  quality, because all the extraverted qualities are played out in his consciousness and the introverted are left in the unconscious. (Jung in McGuire Hull, 1977, p. 342) Jung’s research on ‘Introverts’ show a totally different view on a person’s personality and how they view and relate to social expectations. An ‘introvert’ holds social standards and expectations inwards, and believe their own points of view and general thoughts describe what societies expectations mean to them. In other words, ‘Introverts’ give value to there own viewpoint. When an ‘introvert’ individual is in a social situation they do so by interacting on their own terms and therefore can sometimes become unable to communicate their own opinions and views with others. ‘Inferior introverted feeling typically manifests in a conscious attitude that is more or less impersonal. That is why this type may come across as cold and unfriendly; they are simply more interested in the facts than in what effect their attitude may have on others’ (Sharpe, Daryl; 19987; Personality Types – Jungs model of Typology; Inner City Books; Page 48). The next two letters in Jung’s personality types represent two functions that individuals use in their everyday life. One is the ‘perceiving’ function and the other is the ‘judging’ function. The ‘perceiving’ function in the letters is shown as the letter ‘S’ for sensation, and the other is the letter ‘N’ for Intuition. The ‘perceiving’ element is when we encounter new experiences that are unforeseeable, in other words, new situations. The ‘S’ or ‘N’ indicate how a person chooses to take in and respond to this information. The ‘Sensation’ type will accumulate information by centering their interests on what if directly in front of them. This ‘direct’ focus means this type can respond by awareness of facts and appearances. They draw their attention to the environment that is directly around them draw sensations from these. Jung said that the ‘S’ type could relate their immediate experiences to events that have occurred in the past; they tend to be very observant individuals who are influenced by information from their senses in their environment. Jung thought  that these individuals can sometimes reply too deeply on life’s immediate and materiality. ‘Sensation is an irregular function, because it is orientated not by a logical process of judgment but simply by what is and what happens, whereas the extraverted sensation type is guided by the intensity of objective influences’. (Sharpe, Daryl; 19987; Personality Types – Jungs model of Typology; Inner City Books; Page 79) The ‘N’ type uses new information my evaluating all their thoughts possible. They have a huge imagination that chooses to ignore the materialistic surface of  aspects of live, but focus on the ‘bigger picture’. The ‘Intuitive’ will try and find the meaning and future possibilities and not focus on details and factual information as the ‘S’ type would. The can sometimes be so engaged in the meaning that they can oversee the present situation. This type takes new information by looking into the future and what the outcomes may represent to themselves and their lives. They don’t necessarily see what it is, but rather what it may be. This type is very imaginative and is always dreaming about the future  and how to push for change. This type can easily jump to conclusions and make rash decision, and can even be said to confuse fact with reason. ‘Sensation and intuition are the information-gathering (perceiving) functions. They describe how new information is understood and interpreted. Individuals who prefer the sensation function are more likely to trust information that is in the present, tangible and concrete: that is, information that can be understood by the five senses. They tend to distrust hunches, which seem to come â€Å"out of nowhere. ’ (Myers, Isabel Briggs with  Peter B. Myers (1980, 1995). Gifts Differing: Understanding Personality Type. Mountain View, CA: Davies-Black Publishing. Page 45) Jungs’s next set of letter represent how we judge. The letter ‘T’ for ‘Thinking’ and the letter ‘F’ for ‘Feeling’. The judging use is how individuals observe and organize their lives behavior. These letter look at how individuals relate to their social surroundings before they act upon them. The ‘Thinker’ is a type that will use new information in a logical manner, and may tend to be a rule follower that follows social standards. These are the types that have to follow a set order and will categorise information. These types relate with their world with a clear picture as to what ‘will’ happen. They can over analyse that can sometimes distort the truth of the situation. Jung described ‘Feelers’ as individuals that organise information that is new to them on a personal level. They do this by organising their behaviour to a personal way that shares their morals that can be identified with other individuals. ‘Feelers’ have a tendency to make their judgements based on their feelings that is important to the individual; they make their judgements known to others around them and give rise to others responses that form part of their ‘external environment’. It is this personality type that prefers to create their reality with a general consensus with the interaction of others around them. This can sometimes make them reply too much on their feelings and make them dependant on the way they display themselves socially, causing the main aim to be socially accepted and not actually giving themselves any personal satisfaction. ‘Thinking and feeling are the decision-making (judging) functions. The thinking and feeling functions are both used to make rational decisions, based on the data received from their information-gathering functions (sensing or intuition). Those who prefer the thinking function tend to decide things from a more detached standpoint, measuring the decision by what seems reasonable, logical, causal, consistent and matching a given set of rules. Those who prefer the feeling function tend to come to decisions byassociating or empathizing with the situation, looking at it â€Å"from the inside† and weighing the situation to achieve, on balance, the greatest harmony, consensus and fit, considering the needs of the people involved. ’ (http://en. wikipedia. org/wiki/Personality_type#cite_note-Myers-15; 10. 10. 2014) The forth letter of Jung’s personality type is what indicates the external factors of everyday life function. The letter ‘P’ represents ‘Perceiving’ and the letter ‘J’ represents ‘Judging’. Jung believed perceivers to be individuals that are more likely to rely on their  intuition and their experiences as they happen. This is the kind of type that tends to ‘live in the now’ and are totally aware of situations that need a response in an immediate fashion. They are the type that is against a situation where they need to follow set plans and organizations for events. Sensory P types are the sort of personality that are likely to interact physically with the environment around them, which is the opposite of ‘P’ types who see what in front of them and try and make sense of what is means, or in other wise examine situations to  understand what the big picture may be. ‘Perceiving simply what is sensation see’s what is sensation sees what is in the external world, intuition sees (or what we might say â€Å"pick ups†) what is in the inner world’. (Sharpe, Daryl; 19987; Personality Types – Jungs model of Typology; Inner City Books; Page 16) Jung thought ‘Judgers’ to be individuals that rely on rational thinking. This personality type is more than likely to organise for plans and activities and believe that they can predict what is likely to happen in such events. However, if  this type is found to be in a situation that is totally unpredictable than it more than like to cause them discomfort and even become quite irritable as they are not prepared for the event and do not have a set structure to follow. Thinking ‘J’ types relate to the standards that society has created by logically thinking and analysing in regard sot cause and effect. Feeling ‘J’ types are aware of values that they share with others and therefore look at information in a personal way in regards to social relationships. ‘Judging and Perceiving preferences, within the context of personality  types, refers to our attitude towards the external world, and how we live our lives on a day-to-day basis. People with the Judging preference want things to be neat, orderly and established. The Perceiving preference wants things to be flexible and spontaneous. Judgers want things settled, Perceivers want thing open-ended. Judging and Perceiving preferences, within the context of personality types, refers to our attitude towards the external world, and how we live our lives on a day-to-day basis. People with the Judging preference want things to be neat, orderly and established. The  Perceiving preference wants things to be flexible and spontaneous. Judgers want things settled, Perceivers want thing open-ended. (https://www. personalitypage. com/four-prefs. html#JP; 09. 10. 2104) The forth letter of Jung’s personality type theory represents an individuals higher function that relates to how they interact with the world. It conveys an extrovert function that helps set goals and what helps this type to blend in with society. This forth letter shows how our ‘inferior’ function is formed to use our inner reflection on how we interpret life experiences relative to our own self needs. Jung believed that the ‘P’ type extrovert uses there judging function for their inner thoughts. The thinking ‘P’ type inwardly looks at an image of all relationships in a logical way, like a systematic approach. The feeling ‘P’ type sense their own thoughts and values on their choices or intuition, however this can be somewhat difficult for type and they may find it difficult to convey or express directly. ‘J’ type personalities who are extrovert in regard sot their judging function implement their perceiving function for their inner (introvert)  reflections. ‘Sensation’ ‘J’ types hold their information of the physical external environment, mostly if this information is appealing to them on a personal level. The intuitive ‘J’ type will relate to the meaning of this new information. From the investigation of Jungs ‘Personality type’ theory I can see that by knowing a clients personality type can prove a useful tool in relation to helping the client map out their future goals. When a clients comes in the therapy it is usually for a reason, and they will tell you what is happening in their ‘present’ situation. The Jungarian styles it would appear that the clients would tell their life story, once the therapist understands the client’s point of view they can then help the client understand what issues they are impending. Once this has been established then the client and the counselor can then start to move forward to their journey to make goals and implement them. Goals act as a good basis for the therapist and client to see how the counseling is progressing. By understanding what personality type the client is the therapist can then relate to the clients issues and offer solutions. It is also very useful to  ensure that at the beginning of therapy that the therapist determines what the clients expectations are of therapy, and find out what their beliefs and values are and what there views are on their present situation. Once this is determined then the therapist can then see what the client wants to achieve and then help them move on to the level that they can. Carl Jungs research into personality types can offer an understanding for the therapist to see a clients sense of self. With that information the therapist can then set out goals that are achievable for the client to do as they wish in the  future. An aspect that is not looked at is the ‘emotional’ aspect towards situations. A theorist called Hans Eysenck also looked into the theory of ‘extroverts’ and ‘introverts. He concluded that an extrovert is someone who has a strong inhibition that and they can react to situations calmly. ‘Introverts’ can be self-conscious and because of this trait become more alert and maybe edgy in some situations. Eysenck discovered it was important to look at the interaction of emotions with ‘extroverts’ and ‘introverts’ when helping individuals. ‘British psychologist Hans Eysenck developed a model of personality based upon just three universal trails: Introversion/Extraversion, Neuroticism/Emotional Stability and Psychoticism’ (http://psychology. about. com/od/theoriesofpersonality/a/trait- theory. htm; 10. 10. 2014) I can see that understanding personality types is just one aspect or guideline for a therapist to use in helping their client set and achieve goals. It is down to the therapist they decide that this is useful with the client they are presented with or not.

Diversification within UK Private Real Estate Portfolios

Diversification within UK Private Real Estate Portfolios A Critical Appraisal of the Literature on Diversification within Private Real Estate Portfolios in the United Kingdom   Abstract One of the two major ways in which institutional investors can invest in real estate is private real estate. Private real estate is to purchase un-securitized real estate directly through property pools, commingled real estate funds (CREFs), syndications or separate accounts that are managed by professional real estate portfolio managers or investment advisors. This form of ownership will henceforth be referred to as private real estate. There are different drivers of investing within the private real estate portfolios, including markets, sectors, management, area/building specific, scale, diversification, liquidity, tax and governance risks. The private real estate has a low level of linear dependence on equity, so private real estate requires the diversification of its portfolios. This paper provides a critical appraisal of the literature on diversification within private real estate portfolios. Does a U.K. market need to do the diversification within private real estate portfolios when British people need it? Not really. Literature Review Investment in private real estate offers considerable advantages: it is a tangible asset with low volatility; and it generates an attractive income stream and long-term capital appreciation and particularly strong diversification benefits to stocks and bonds. Thus, there is extant literature showing that private real estate has a significant place in the U.S. mixed-asset portfolio: see Ziobrowski and Ziobrowski (1997); and Firstenberg, Ross Zisler (1998); among others. Researchers conducted several studies on real estates role as a component of asset-only portfolios, specifically focusing on real estates diversification benefits. These studies compensate for some of the issues with real estate data, in particular, that of valuation smoothing. Most of these studies conclude that the allocation to real estate should be from 10% upward. The results indicate that limited diversification benefits can be gained from international investments in pure office strategies, particularly for multi-asset investors seeking to reduce risk stemming from the capital markets. Existing empirical evidence is generally consistent with firm owners portfolio diversification having a positive impact on their firms risk taking (e.g., Amihud and Lev (1981) and Faccio, Marchica and Mura (2011)). The general theme in the existing literature is that firm riskiness can be reduced primarily by means of choosing safer investments, i.e. investments that result in lower cash flow volatility or stock return volatility (e.g., Lyandres, Marchica, Michaely, and Mura (2015) and Faccio, Marchica and Mura (2011)), or lower correlation with the rest of the firm decision makers cash flows (e.g., Amihud and Lev (1981) and Gormley, Matsa and Milbourn (2013)). The association between private (constrained) firm owners portfolio diversification and investment is negative and significant in most cases (Lyandres, Marchica, Michaely, and Mura, 2015). Lyandres, Marchica, Michaely, and Mura (2015) study possible endogeneity of firm owners portfolio diversification and of firms private status does not seem to drive their results. The inclusion of owner fixed effects does not impact the qualitative relation between owners portfolio diversification and private firms capital investment (Lyandres, Marchica, Michaely, and Mura, 2015). However, the fixed-effects results may still be affected by self-selection: better-diversified owners may select to invest in companies with higher investment rates, which better their risk preferences. Lyandres, Marchica, Michaely, and Mura (2015) suggest the firms capital investment depends on portfolio diversification of their controlling owners; the effect of owners portfolio diversification on firms investment levels depends crucially on firms financial constraints: the investment-diversification relation is positive for relatively unconstrained firms and is negatively for relatively constrained ones. Owner fixed-effects, a quasi-natural experiment, and instrumental variable analysis suggest that this result is not driven by potential endogeneity of owners diversification. A matched-sample analysis, selection model, and an alternative measure of financial constraints show that Lyandres, Marchica, Michaely, and Mura (2015)s findings are also not driven by the endogeneity of their proxy for financial constraints. The analysis builds on and extends that of Hoesli et al. (2004) but broadens the length of the time series and the depth of analysis as they pertain to the real estate portfolio. They concluded that both domestic and international real estate contribute with risk diversification, and therefore portfolio efficiency, to the multi-asset portfolio and that the data support an allocation to real estate of between 15 and 25%, depending on risk preferences and the investors country of domicile. The purpose is to investigate how the composition of a real estate portfolio affects the ability to achieve risk diversification when management costs are taken into account and after removing the assumption that investors can only by a real estate market portfolio. The analysis contributes to the body of knowledge by exploring how the type of underlying tenant demand type affects the portfolio composition problem for real estate investors and thus how real estate strategies should be fashioned to more effectively support overall portfolio objectives. Hoesli and Lizieri (2007) report correlations close to zero for private real estate in the UK. Lizieri (2013) finds that the correlation of the private real estate varies significantly over the market cycle, tending to increase in periods from 1995 to 2010 of poor stock market performance. Lizieri (2013) finds that the correlations of private real estate with equities and bonds changed in the last five years of the sample from around zero to 0.4 and -0.5 respectively. This would indicate that the diversification benefits from real estate disappear when they are most needed. However, it is also found that when the variance is decomposed, a high proportion of private real estate variance cannot be explained by wider capital market factors, which indicates substantial diversification benefits. Even though data construction issues for private real estate cannot be ruled out, Lizieri (2013) concludes that the results support the diversification role of the private real estate. Ang (2012) explores the characteristics of real estate in the context of its real asset characteristics along with real estates role in the asset allocation puzzle. Ang (2012) concludes that real estate is different from other asset classes in several respects: the idiosyncratic risk, the heterogeneity of the assets and requirement to actively mange real estate holdings. Ang (2012) also points out the difficulty of including real estate in any asset allocation model on par with stocks and bonds because direct real estate total returns are not returns in the same sense as are total returns for the other asset classes. This is because real estate total returns are not transaction based nor is there a way to measure the whole market. Ang (2012) does not say that real estate has no role to play but rather that the only return derived from real estate measured on the same frequency as the return on mature asset classes is the income return. Diversification of the Private Real Estate Portfolios with Equity REIT shares An examination of resulting efficient frontiers and their corresponding optimal portfolio weights across various levels of expected return reveals that the ability of public real estate to rebalance and diversify private real estate only portfolios, using either long or short positions, is very much in doubt (Seiler, Webb and Neil Mye, 2001). Private real estate helps reduce the risk of a portfolio because it has less than a perfect correlation with stocks, bonds and all other assets. Qualitative Analysis Standard Markowitz portfolio selection model assumes jointly normal and symmetric distributions. If that holds, then mean, variance and covariance are sufficient to define effective diversification strategy. Traditional diversification strategies no longer provide desired level of protection in bear markets. Portfolio risk and expected value fall in bear markets are systematically understated. Traditional notions of risk-return trade-off are systematically overstated. Frequent portfolio rebalancing needed to maintain target level of risk, leading to higher transaction costs. For example, Stichting Pensioenfonds X: Asset Mix is an archetypical private real estate portfolio. 9% property allocation is reasonable for a well funded and growing scheme if assume under-performs equities and out-performs bonds and adds some diversification. Higher portfolio diversification reduces the variance of owners portfolio return and its covariance with the firms cash flow. As a result, higher portfolio diversification of firm owner lowers the risk avoidance incentives and leads to increased risk taking by the firm. The direct effect of higher owners portfolio diversification on an unconstrained firms capital investment is through the reduction in the variance of owners wealth and the resulting decrease in his or her risk-avoidance incentives. A more diversified owner is less concerned with higher cash flow volatility resulting from higher operating leverage, and chooses a higher level of capital investment. The result is a positive relation between owners portfolio diversification and firm investment for unconstrained firms. The mechanism behind the negative relation between a constrained firms investment and its owners portfolio diversification is different. A constrained firm cannot increase its capital investment level in response to an increase in firm owners portfolio diversification, as its investment is determined by the investment capacity constraint. The only channel the constrained firm can use to alter its cash flow volatility is the riskiness of its investments. The scale/diversification of assets depends upon the genuine efficiency from scale, diversification and impact on equity rising and the decrease of the default. The portfolio of loans demands diversification during the debt and credit crisis. High correlation among portfolios means diversification across sectors relatively little impact on risk reduction in UK historically compared to specific risk. The degree of portfolio diversification of a firms controlling owner may influence its choice of riskiness of firm strategies. The reason is that an expected-utility-maximizing risk-averse owner takes into account the variance of the private real estates overall wealth when making decisions on behalf of the firm the CEO controls. Drivers of diversification from equities Drivers of rents Demand-GDP, business and financial services, consumer spending, distribution, general price inflation, technology, profitability and other investment sentiment drivers. Supply-Construction, planning, obsolescence Drivers of yields Interest rates/term structure, credit availability, credit sentiment (high grade versus low grade), property sentiment. Other factors Tax/political risks, property specific (e.g. lease structures) The earlier studies revealed real estate, with all its illiquidity, management intensity and information asymmetry, does exhibit characteristics that complement the multi-asset portfolio by contributing diversification (Lekander, 2015). But the findings go further to suggest that diversification objectives in low-risk overall strategies are best achieved via types of real estate in which the tenant demand is less affected by global factors, whereas diversification strategies for higher overall risk strategies are best supported by real estate strategies focusing on globally dependent real estate (Lekander, 2015). When accounting for the cost of liquidity, by defining the market value as the mean of the buyer reservation price distribution, a different return pattern emerges. This has implications on the correlation characteristics of real estate, reducing the real estates diversification potential. A similar bias affects investment indices through the population of transactions available to the appraiser to determine price evidence. As such, there is a risk that the return indices measuring private real estate performance are based on market evidence that suffers from selection bias and appraisal smoothing, thus skewing the characteristics of the private real estate returns. A form test of the superiority of economic-based diversification strategies for real estate portfolio diversification was undertaken by Mueller (1992). Mueller (1992) showed that a diversification strategy based on his own classification, which relies solely on economic base, provided even greater risk-adjusted return possibilities. Data and Quantitative Analysis Model The estimates produced and updated are based on a two-quadrant approach looking at private real estate (holdings of funds and other private investors) and private real estate debt (lending by banks and other institutions). I consider a situation in which a firms controlling owner is entitled to a proportion of the firms cash flow. In addition, the firms owner is endowed with initial wealth x outside of the controlled firm, which is invested in an imperfectly diversified portfolio with a normally distributed return, whose mean is and whose standard deviation is . Our model abstracts from the reasons for imperfect diversification of the firms owner, which is a feature consistent with the data. The focus is on the effects of imperfect diversification of owners portfolios on controlled firms investment strategies. I assume that the firms controlling owner is risk-averse and that the CEO maximizes the expected utility of his or her terminal wealth, . This utility is given by , where is the firm owners Arrow-Pratt coefficient of absolute risk aversion. Assuming that the firms cash flow (discussed below) is normally distributed, investors expected utility maximization simplifies into the mean-variance criterion: . The model shows that in order to understand the impact of firm owners portfolio diversification on firms investment strategies, it is crucial to consider simultaneous choices of both the level and riskiness of firms investments. The analysis focuses on the relation between owners portfolio diversification and firms investment level, extends and complements the existing literature that focuses on the riskiness of firms investment. The interaction between these two decisions results in a non-trivial and somewhat surprising relation between owners portfolio diversification and the level of her or his firms capital investment. Comparative statics Lemma 1: If the investment capacity constraint is not binding in equilibrium, then the firms equilibrium level of capital investment and its riskiness, and respectively, are given by the following system of equations: , subject to . I am interested in the effects of controlling owners portfolio diversification on the choice of the level and riskiness of capital investment of constrained and unconstrained firms. In what follows, we present comparative statics of the firms investment level and its riskiness with respect to the standard deviation of the owners portfolio, . I also graphically illustrate these comparative statics using the numerical example to help explain the intuition. Totally differentiating the unconstrained equilibrium conditions in (3) and (4) with respect to owners portfolio standard deviation produces the following result: Proposition 1 For a firm whose capital investment is unconstrained in equilibrium, , equilibrium level of capital investment and its riskiness, and respectively, are decreasing in the standard deviation of firm owners portfolio, . The owners objective function is: subject to Maximizing the owners expected utility in (5) with respect to , while assuming that the investment capacity is binding, i.e., that , leads to the following result: Lemma 2 If the investment capacity constraint is binding, , then the firms equilibrium riskiness of investment, , is given by the following equation: Data The UK data are from the Investors Chronicle Hillier Parker (ICHP) Index and comprise 32 semi-annual observations from 1977 to 1993. The UK data are available disaggregated by three property types (offices; industrial; and retail) and by 11 regions (London, South East, South West, East Anglia, East Midlands, West Midlands, Wales, Yorkshire and Humberside, North, North West, Scotland). The data exclude shopping centres, mixed use buildings, and business space. Data for the U.K. 11 regions were also aggregated to produce three super regions as suggested by Key et al. (1994). These regions are London, South and North. Quantitative Analysis Results The estimated correlation matrices for the three UK property types and three UK regions are shown in Table I and II. As the number of regions differs from the number of property types, there is no test for the UK 11 region data comparable with the one undertaken above. It is, nonetheless, informative to analyse this data. This is done by calculating the correlations between all market segments, in which a market segment is defined as one property type in one region. The full matrix is given in Table III. In the UK it is a conventional wisdom that retail property offers least scope for regional diversification: retail sales tend not to have strong regional differences and the supply response of the retail property market does not differ significantly across regions. In contrast, in the office market, as the London market is driven by the financial sector has a strong international dimension; opportunities should exist for regional diversification within the office market. Table I. UK correlations based on semi-annual returns for 11 regions and three property types (1977-1993) In conclusion, the results show that the scope for diversification within a region varies from region to region and is greatest the further from London, while the diversification within property type is generally limited but is better for office and industrial property. Retail property is poorly correlated with either industrial or offices. Thus, full diversification by both property type and region is to be preferred. Table II Insignificant correlations between market segments by property type, based on semi-annual returns, UK, 1977-1993 IPD/MSCI Data to Explore the Most Important Characteristics of Diversification in Private Real Estate MSCI IPD is the only global provided of appraisal-based total return indices for private real estate across a number of different geographical markets. In this subsection, we look at the main factors affecting the performance of financial investments, i.e. economic growth, inflation and interest rates. These are the most important characteristics in driving differences in performance across the private real estate market over the past few decades. Also, the impact of these factors is partially overlaid with endogenous dynamics of real estate markets resulting from lagged responses of supply and demand. This subsection mainly suggests a specific real estate factor may exist that drives real estate returns but is not common with the drivers of equities or bonds, indicating the existence of long-term diversification benefits of private real estate. Table III: Comparison of key statistics for selected total return indices in the UK UK (1990-2014, monthly) Average return Standard deviation Sharpe ratio Private RE (smoothed) 7.46% 3.76% 0.69 Private RE (unsmoothed) 7.46% 7.49% 0.37 Private Re (trans.-based) 10.39% 8.84% 0.06 Source: IPD and EPRA. IPD data available since 1987 but presented since 1990 to align with other indices. Sharpe ratio calculated relative to three-month T-bills. Table IV: Overview of average annual returns and volatilities for selected international private real estate indices Table IV summarizes the risk-return statistics of the IPD and NCREIF indices across a number of countries. Whilst we are aware that the statistical significance of comparisons based on only few observations is low, it is striking that the UK market is among the most volatile ones. The broad market opinion that the UK real estate market observes tends to see stronger cyclical movements. On the other hand, the UK private real estate market offers higher liquidity and market depth. Changes in the levels and volatility of returns from commercial real estate investments in the UK over a rolling ten-year view is presented in Figure 1. Figure 1: Rolling ten-year average returns and return volatilities in the UK The risk-return profile of the UK market shows a regime shift following the financial crisis. Also, for the UK, unsmoothed real estate indices show Sharpe ratios comparable or slightly above the levels measured for equity and bond indices. However, one needs to consider that risk-return profiles may not be stable over time. Also, the risk-return profiles of investments may be different for long-term investors, although there is no conclusive evidence that the reduction of the effective volatility should be higher for real estate than for other types of assets. However, the fact that a high proportion of the return is derived from income may indeed favor real estate in the long term. Real estate factor The existence of a specific real estate factor is highly relevant for the construction of investment portfolios based on fundamental factors. Recent research supports the existence of such a factor for commercial private real estate. In order to verify the existence of a real estate factor, I ran a factor analysis for the UK following the reasoning of Mei and Lee (1994). Monthly data were used in the UK. A higher absolute value for a loading means that the factor has a higher impact, positive or negative, on the returns of the index, while a value close to zero indicates no significant impact. Table 5: Factor loading of stocks, bonds and alternative real estate index returns Source: my own calculations. The highest absolute loading for each index has been highlighted in bold in Table 5. While the levels of the loadings are not directly interpretable, the regularity in their relative values is striking. Factor F1 loads highly on stock market indices and on pubic real estate indices. In fact, it appears to represent mainly listed real estate, while pure stock indices are also influenced by F3. Factor F2 loads very highly on all private real estate indices, both smoothed and unsmoothed, as well as transaction-based indices. Factor F3 loads most strongly on bond indices and to a lower extent on stock indices. It appears justified to label F1 as a stock market factor and F2 as a real estate factor, while F3 could be associated with monetary factors such as interest rates. The above results represent a strong indication that the factor that drives direct real estate returns may indeed differ from the one that drives the returns of equities or bonds. While it is impossible to conclude on t he basis of this analysis what particular risks or drivers this factor might reflect, they seem to be different to the risks and drivers behind the equities or fixed income, which should create diversification potential. Conclusion The sections above have provided a critical appraisal of the literature on diversification within private real estate portfolios. For the UK, the opposite result was obtained for retail property and diversification across both property types and regions was to be preferred for the other two property types. The results offer some insights into real estate performance and may offer some input into the determination of a diversification ion strategy for a real estate portfolio. There are two major qualifications on the results. The first is that they are historical results and they may not be a good proxy for the future correlations. Historical returns are unlikely to be a good proxy for future returns and that probably also holds for the correlations calculated between real estate categories. The second qualification is that investors have objectives, which are more complex than just the trade-off between the level of period return and volatility of period return. Behind the analysis of regional economic base is the reasonable presumption that similarity in economic structure and performance should lead to similarity in real estate performance. However, such analyses, which focus on demand proxies, ignore supply or, at best, assume no differences in supply responses across property type or region. Testing the economic base ideas with highly disaggregated returns data is therefore very important. The UK data allow comparisons of the economic similarity of regions and the similarity of property performance. It would then be possible to infer from the UK results whether the proxying of real estate performance with economic performance is valid and perhaps at what spatial scale. Table III Real Estate Portfolio Diversification References Amihud, Y. and Lev, B., 1981. Risk reduction as a managerial motive for conglomerate mergers.   The bell journal of economics, pp.605-617. Ang, A., 2012. RealAssets. Columbia Business School Research Paper No. 12-60.   Faccio, M., Marchica, M.T. and Mura, R., 2011. Large shareholder diversification and corporate   risk-taking. Review of Financial Studies, 24(11), pp.3601-3641. Firstenberg, P.M., Ross, S.A. and Zisler, R.C., 1988. Real estate: the whole story. The Journal of  Portfolio Management, 14(3), pp.22-34. Gormley, T.A., Matsa, D.A. and Milbourn, T., 2013. CEO compensation and corporate risk:   Evidence from a natural experiment. Journal of Accounting and Economics, 56(2), pp.79-101. Hoesli, M., Lekander, J. and Witkiewicz, W., 2004. International evidence on real estate as a   portfolio diversifier. Journal of Real Estate Research, 26(2), pp.161-206. Hoesli, M. and Lizieri, C., 2007. Real estate in the investment portfolio. A report for the   Investment Strategy Council of the Royal Ministry of Finance. Key, T., Zarkesh, F., MacGregor, B. and Nanthakumaran, N., 1994. Understanding the property   cycle. Main report: Economic cycles and property cycles. London: RICS. Lekander, J.R., 2015. Real estate portfolio construction for a multi-asset portfolio. Journal ofProperty Investment Finance, 33(6), pp.548-573. Lizieri, C., 2013. After the fall: Real estate in the mixed-asset portfolio in the aftermath of the   global financial crisis. The Journal of Portfolio Management, 39(5), pp.43-59. Lyandres, E., Marchica, M.T., Michaely, R. and Mura, R., 2015. Owners Portfolio   Diversification and Firm Investment: Evidence from Private and Public Firms. Mueller, G. and Ziering, B., 1992. Real estate portfolio diversification using economic   diversification. Journal of Real Estate Research, 7(4), pp.375-386. Seiler, M., Webb, J. and Neil Mye, F., 2001. Can private real estate portfolios be   rebalanced/diversified using equity REIT shares?. Journal of R

Meaningful and Sentimental Best Man Speech -- Wedding Toasts Roasts Sp

Meaningful and Sentimental Best Man Speech Good afternoon ladies and gentlemen. I would like to echo the groom's sentiments and mention that all the bridesmaids look truly beautiful, indeed. Also, I'd like to say that the bride looks absolutely stunning today, as for the groom he just looks stunned. I am on a strict time limit from the bride, so the more you laugh at my jokes, the quicker my speech will be. It is beautiful to see so many loving family members and friends here to share in this occasion, especially those who have traveled some distances to be here with us today. For those of you who don't know me, I have been a friend of the groom's for seven years. He has many special friends, and haying the privilege of being chosen as his best man, from such esteemed company, is an honor the likes of which I have never had bestowed upon me. I like to think that my selection as one of the best men is not really because your other friend canceled on you, but because I am one of the few people in the room and indeed alive that has actually seen you hit a homerun. To be called a best man on a day like this is somewhat of a paradox. For today belongs to only one man, and that's you. No matter the size and liberality of the thoughts and tokens provided to you today you have already attained the greatest gift a man can wish for; the love of a woman as beautiful and caring as the bride. I have had the distinct pleasure of knowing, for a considerable portion of my life, both of them individually, before knowing them as a couple. The beautiful girl that every boy in our class was madly in love with and the boy from the baseball team, who I didn't like much at the time. Spending time with the two of them is like sl... ...honor and respect both and for himself and for those he loves. As is customary I should leave the groom with wise words, to help in your marriage. Since I am a bachelor, I have little experience to speak from, but I hope these help anyway: 1. Never go to bed angry; always stay up and argue. 2. Always remember those three little words that are so important in a marriage: "You're right dear.? 3. Lastly, under no circumstances will you swear at our wife, if there are ladies present. Searching around to find a pertinent closing thought, all were overshadowed by the validity of the following: " You don't marry someone because you can live with them, you marry them because you simply cannot live without them." Ladies and gentlemen, if you could all be upstanding, and join me in a toast: To the two people who are so dear in all our hearts, the bride and groom.

The Sense of Scents, the Sense of Self :: Biology Essays Research Papers

The Sense of Scents, the Sense of Self For this paper, I'd like to revisit some of the questions left unanswered in my last paper regarding the sense of smell. In that paper, I outlined some of what is now understood about how smells are identified and the initial levels of how that information is coded in the brain; for this paper I would like to trace that path (as much as possible) through to my experience of smell and then to see if my experience matches the proposed models. From this perspective, I'd like to take a last look at the "brain = behavior" equation and the notion of the "I - function" and see if I can't make some final sense of it all in a way which is not utterly dissonant with my own experiences. Let's look at smell again, then. My last paper left off with the following conclusions regarding the olfactory system. There are between 500 and 1000 unique protein receptor genes which are expressed only in the olfactory epithelium. These receptors each respond to a unique odorant or to a unique feature on an odorant molecule (epitopes). It is suggested that there is a one - to - one relationship between a specific odorant, its protein receptor, and the sensory neuron: that is, any given sensory neuron expresses only one type of receptor and is therefore responsive to only one kind of odorant. Each type of neuron is randomly distributed across one of four zones within the olfactory epithelium. The information from this population coding is then reorganized, as these axons leave the epithelium and travel to the olfactory bulb, into a very specific, spatially organized map of activity across the several hundred kinds of receptors. The span between the 1000 types of receptor neurons, a nd discrimination amongst 10,000 odors, is bridged in the interpretation of the ratios and relationships of activity level across the population. The olfactory bulb was compared to an operators switchboard, and the process of odor identification was likened to determining which switchboard lights were flashing. The obvious question then becomes, what parts of the brain watch over the olfactory bulb, monitor its activity and interpret that activity? What parts of the brain assign meaning and identity to each pattern of stimulation, and then choose an appropriate response? Some of these questions have been addressed by Walter Freeman in his investigations, and he has several useful insights into the process of preattentive perception, or the almost instantaneous recognition of the familiar. The Sense of Scents, the Sense of Self :: Biology Essays Research Papers The Sense of Scents, the Sense of Self For this paper, I'd like to revisit some of the questions left unanswered in my last paper regarding the sense of smell. In that paper, I outlined some of what is now understood about how smells are identified and the initial levels of how that information is coded in the brain; for this paper I would like to trace that path (as much as possible) through to my experience of smell and then to see if my experience matches the proposed models. From this perspective, I'd like to take a last look at the "brain = behavior" equation and the notion of the "I - function" and see if I can't make some final sense of it all in a way which is not utterly dissonant with my own experiences. Let's look at smell again, then. My last paper left off with the following conclusions regarding the olfactory system. There are between 500 and 1000 unique protein receptor genes which are expressed only in the olfactory epithelium. These receptors each respond to a unique odorant or to a unique feature on an odorant molecule (epitopes). It is suggested that there is a one - to - one relationship between a specific odorant, its protein receptor, and the sensory neuron: that is, any given sensory neuron expresses only one type of receptor and is therefore responsive to only one kind of odorant. Each type of neuron is randomly distributed across one of four zones within the olfactory epithelium. The information from this population coding is then reorganized, as these axons leave the epithelium and travel to the olfactory bulb, into a very specific, spatially organized map of activity across the several hundred kinds of receptors. The span between the 1000 types of receptor neurons, a nd discrimination amongst 10,000 odors, is bridged in the interpretation of the ratios and relationships of activity level across the population. The olfactory bulb was compared to an operators switchboard, and the process of odor identification was likened to determining which switchboard lights were flashing. The obvious question then becomes, what parts of the brain watch over the olfactory bulb, monitor its activity and interpret that activity? What parts of the brain assign meaning and identity to each pattern of stimulation, and then choose an appropriate response? Some of these questions have been addressed by Walter Freeman in his investigations, and he has several useful insights into the process of preattentive perception, or the almost instantaneous recognition of the familiar.

Bertrand Russell on Critical Thinking :: Critical Thinking Essays

Bertrand Russell on Critical Thinking The ideal of critical thinking is a central one in Russell's philosophy, though this is not yet generally recognized in the literature on critical thinking. For Russell, the ideal is embedded in the fabric of philosophy, science, liberalism and rationality, and this paper reconstructs Russell's account, which is scattered throughout numerous papers and books. It appears that he has developed a rich conception, involving a complex set of skills, dispositions and attitudes, which together delineate a virtue which has both intellectual and moral aspects. It is a view which is rooted in Russell's epistemological conviction that knowledge is difficult but not impossible to attain, and in his ethical conviction that freedom and independence in inquiry are vital. Russell's account anticipates many of the insights to be found in the recent critical thinking literature, and his views on critical thinking are of enormous importance in understanding the nature of educational aims. Moreover, it is argued that Russell manages to avoid many of the objections which have been raised against recent accounts. With respect to impartiality, thinking for oneself, the importance of feelings and relational skills, the connection with action, and the problem of generalizability, Russell shows a deep understanding of problems and issues which have been at the forefront of recent debate. The ideal of critical thinking is a central one in Russell's philosophy, though this is not yet generally recognized. Russell's name seldom appears in the immense literature on critical thinking which has emerged in philosophy of education over the past twenty years. Few commentators have noticed the importance of Russell's work in connection with any theory of education which includes a critical component. Chomsky, for example, reminds us of Russell's humanistic conception of education, which views the student as an independent person whose development is threatened by indoctrination. Woodhouse, also appealing to the concept of growth, points out Russell's concern to protect the child's freedom to exercise individual judgment on intellectual and moral questions. Stander discusses Russell's claim that schooling all too often encourages the herd mentality, with its fanaticism and bigotry, failing to develop what Russell calls a "critical habit of mind". (1) The threat of indoctrinatio n, the importance of individual judgment, and the prevalence of fanatical opinions all point up the need for what nowadays is called critical thinking; and Russell's work is valuable to anyone who wants to understand what this kind of thinking entails and why it matters in education.

Econ Syllabus

I will spend most of the time going through the theory and ideas that form the fundamentals of labor economics. However, it is important that students are aware of the simple facts of labor market in the US. Using the theory and facts, it should be possible to evaluate labor market policies.II. Prerequisite: The course is designed for economics majors and others who are already seriously interested in economics. Economics 301 Is a prerequisite. Ill. Evaluation: There are two methods used to calculate the course grade; I will choose for you at the end of the term whichever method gives you the higher grade. Method 1 Is designed to reward students who show consistent progress throughout the course, while Method 2 rewards those students who show improvement over the semester. Methods : Quizzes Homework and participation First midterm Second midterm FinalDate: Swept. 25th, 2014 class time Date: Date: Deck. 14th, 2014, Methods: Homework and participation 45% IV. Textbook (required): Labor Economics, George J, Boras (McGraw-Hill 6th edition) You can also use the 5th edition, which is much cheaper, and the content is much the same. V. Course outline: My lecture will be based on the textbook, highlighting fundamentals of labor economics that students should grasp. I plan to cover the following topics, but changes could be made, subject to the progress of the course. 1. The basics The subject of labor economics Theory and facts 2.Labor Supply (1) The basic static individual labor supply The labor/leisure choice and indifference curve The budget constraint The hours of work decision Income and substitution effects Individual labor supply Effects of taxes and subsidies (2) Extensions Life cycle labor supply Labor supply over business cycle Retirement Family labor supply Fertility and labor supply 3. Labor Demand Inputs and the production function Employment decision: short-run and long-run Elasticity of substitution Derived demand 4. Labor market equilibrium Equilibrium i n the competitive labor marketNon-competitive labor markets: monopoly and monopoly 5. Wage differentials The hedonistic wage function Labor supply and risk Safety and health regulations 6. Human capital Education and income Present value calculations Costs and returns to schooling Training Age-earning profile Policy 7. Wage structure Earning distribution Why do wages differ? Changes in the earning distribution International income distribution 8. Labor Mobility Mobility and migration Immigration in the US Models of immigration Benefits and costs of immigration Immigration policy.

Reporting Stockholders Equity

ckChapter 11 – Reporting and Analyzing Stockholders’ Equity I. Characteristics of a Corporation (Publicly held (closely held)) * Separate legal existence; * Limited liability of stockholders; limited to investment * Transferable ownership rights; * Ability to acquire capital; * Continuous life; * Corporation management: Shareholders Shareholders * Voting rights * Profit sharing * Preemptive right * Residual claim Board of Directors Board of Directors CEO(PRESIDENT) CEO(PRESIDENT) . other vps . other vps CIO CIO CFO CFO COO COO Treasurer Treasurer ControllerController * Government regulations; file application with state government-> corportate charter by-law * Additional taxes. Double taxation II. Stock Issue 1. Basics of Stock Issue: (1) Authorized Stock: The maximum amount of stock that a corporation is authorized to sell by corporate charter. (2) Outstanding Stock: Capital stock that has been issued and is being held by stockholders. Legal capital= # of issued shares x par value per share (3) Par Value Stock: Capital stock that has been assigned an arbitrary value per share in the corporate charter. 4) No-par value Stock: Capital stock that has not been assigned a value in the corporate charter. (5) Stated Value of No-par value Stock: Value per share assigned by the board of directors to no-par value stock. Authorized Issued Outstanding (6) Paid-in Capital: Amount paid to corporation by stockholders for shares of ownership. (7) Retained Earnings: Earned capital held for future use in the business. 2. Accounting for Common Stock Issues: (1) Issuing Stock at Par Example 1: On March 1, 2002, XYZ Company issued 10,000 shares of $10 par value common stock at par. (2) Issuing Stock above ParExample 2: On June 10, XYZ Company issued 5,000 shares of $10 par value common stock at $12 per share. Cash 60,000(=5,000Ãâ€"12) Common Stock50,000 Additional paid in capital14,000 (Paid in capital in excess of par) What if the common stock issued on June 10 is n o par stock with a stated value of $10? Cash60,000 Common Stock50,000 Additional Paid in capital10,000 3. Treasury Stock: * A corporation’s own stock that has been issued, fully paid for, and reacquired by the corporation but not retired. * Issued but not outstanding (1) Corporations acquire treasury stock to †¦ reissue shares to employees under bonus and stock compensation plans; * increase trading of company’s stock in securities market to enhance market value; * reduce number of shares outstanding , and therefore increase earnings per share (EPS); * prevent a hostile takeover. (2) Purchasing Treasury Stock: * Cost method: Treasury stock is increased by the amount paid to reacquire the shares, and is decreased by the same amount when the shares are later sold. Example 3: On October 15, 2002, XYZ Company acquired 2,000 shares of the stock issued on June 10 in Example 2 at $9 per share.On the balance sheet: Stockholders equity Paid in capital Common stock (par) Ad ditional paid in capital Retained earnings Less: Treasury stock (a contra equity account) * Effect of purchasing treasury stock on common stock: * Effect of purchasing treasury stock on stockholders’ equity: III. Preferred Stock * Preferred stock has contractual provisions that give it preferences over common stock in dividends and assets in the event of liquidation. * Preferred stockholders do not have voting rights. Example 4: On November 5, 2002, XYZ Company issued 5,000 shares of $10 par value preferred stock for $13 per share.Cash65,000 Preferred Stock50,000 Additional Paid in capital15,000 1. Dividend Preference * Preferred stockholders have the right to share in the distribution of corporate income before common stockholders; * The first claim to dividends does not guarantee dividends; * Cumulative Dividends: Preferred stockholders receive current and unpaid prior-year dividends before common stockholders receive any dividends. When dividends are cumulative, preferred dividends that were not declared in a given period are called dividends in arrears. Example 5:XYZ Company issued 10,000 shares of 10%, $5 par value cumulative preferred stock On January 1, 1999. XYZ had not declared any dividends until December 31, 2002. 1999: 10,000x 5 x 10% = 5,000 2000: 5,000 2001: 5,000 2002:5,000 Dec 31, 02: $20,000 in cash * Dividends in arrears are not liability. They should be disclosed in the notes to financial statements. 2. Liquidation Preference- Creditors Prefered stock holders common stock holders IV. Dividends * A distribution by the corporation to the stockholders on a pro rata basis. 1.Cash Dividends: (1) To pay a cash dividend, a company must have: * retained earnings * adequate cash * declared dividends (2) Some Important Dates: * Declaration date: the date the board of directors formally authorizes the cash dividends and announces it to stockholders. Retained earnings Dividends payable * Record date: The date ownership of outstanding shares is de termined for dividend purposes. * Payment date: The date dividends are paid. Dividends payable Cash * Cumulative effect of declaration and payment of cash dividends on accounting equation: 2. Stock Dividends: Companies pay stock dividends to †¦ * Satisfy stockholders’ dividend expectations without paying cash; * Increase the marketability of its stock; * Emphasize that a portion of stockholders’ equity has been permanently reinvested in the business. * Small Stock Dividend: If the stock dividend is less than 20%-25% of the corporation’s issued stock, it is recorded at the fair market value per share. * Large Stock Dividend: If the stock dividend is greater than 20%-25% of the corporation’s issued stock, it is recorded at par or stated value per share. Example 6:On February 1, 2003, the balance of XYZ Company’s retained earnings was $2,500,000. XYZ Company declared a 15% stock dividend on its 100,000 shares of $10 par value common stock. The cu rrent fair market value of XYZ Company’s stock is $13 per share. Retained earnings195,000 Stock dividend Distributable150,000 Additional paid in capital45,000 On March 1, 2003, XYZ Company issued the dividend shares. Stock dividend distributable 150,000 Common Stock150,000 – Effect of stock dividends on stockholders’ equity and its components: S/E Retained earnings195,000 (Decrease)Common Stock150,000 (Increase) Additonal paid in capital45,000 (Increase) NET EFFECT: No change V. Stock Splits: * The issuance of additional shares of stock to stockholders accompanied by: * A reduction in the par or stated value; * An increase in number of shares. No entry * Effect of stock splits on stockholders’ equity and its components: S/E Common Stock (Par value per share x total # of issued shares) Add. Paid in capital Retained Earnings VI. Retained Earnings: * Net income that is retained in the business. Revenues (Credit, transfer to credit of income)Income Summary(Tr ansfer N. I to retained earnings credit) Retained Earnings Expenses (Transfer debit to debid of income summary) * Deficit: a debit balance in retained earnings. Deficit is reported as a deduction in stockholders’ equity on the balance sheet. * Retained earnings restrictions- Debt covenants VII. Financial Statement Presentation: 1. Balance Sheet S/E Paid-in-capital Common stock (par value) Preferred stock (par value) Additional paid in capital Retained earnings Less: Treasury Stock 2. Statement of Cash Flows Cash Flows from Financing ActivitiesIssuance of stock (cash inflows) Repurchase of stock (cash outflows) Dividend payment (cash outflows) VIII. Ratio Analysis: 1. Dividend Record * Payout Ratio: Cash dividends declared on common stock/ Net income 2. Earnings Performance * Return on common stockholders’ equity ratio: (NI-Prefered stockholders dividends)/Average common stockholders equity 3. Debt versus Equity Decision | Bond| Common Stock| Owners’ Control| Not affected| Diluted| Tax Benefit| Bond interests are tax deductible| Dividends are not deductible| Financial Ratio(EPS)| Not affected| Lower| Fixed payment| Yes | No|