Iran nuclear deal

Iran's Nuclear Deal: Challenges and Opportunities Air Commodore (R) Khalid Iqbal These days, almost everyone is curious about an erratic and hence potentially troublesome nuclear deal reached between Iran and the P 5+1 (read America). Soon after the agreement, the two sides have begun interpreting it in opposite directions. Americans are claiming that Iran would have to significantly roll back its nuclear programme, whereas Iranian interpretation does not endorse this point of view. Soon the IAEA's version would start pouring in to further compound the confusion.Moreover, Obama may not be able to hold the Israeli pressure and congressional dynamics. Hence, America may backtrack. Immediately after the agreement, Russian Foreign Minister Sergei Lavrov summarized the deal as: â€Å"This deal means that we agree that it is necessary to recognize Iran's right to peaceful atoms, including the right to enrichment, provided that the questions that remain to the Iranian nuclear programme and the programme itself come under strict control of the IAEA. This is the final goal, but it has already been set in today's document. The opponents of the deal insist that Iran has retained its potential to create a nuclear weapon. The whole of its Uranium enrichment infrastructure remains intact. A disappointed Israeli Prime Minister Benjamin Netanyahu said: â€Å"l emphasize: the deal does not envisage the elimination of a single centrifuge. † Many experts are of the view that Iran's large nuclear infrastructure, which consists of some 17,000 enrichment centrifuges, is needed if a country has 12-15 operating nuclear plants which have to be supplied with fuel rods.Of now Iran has only one nuclear power plant, in Bushehr, which receives its fuel from Russia. Iran has agreed to stringent intrusive monitoring and control procedures employing video cameras, meters and snap inspections. Interestingly it has been allowed to manufacture centrifuges to replace those becoming non-fun ctional. The number would however stay constant. Iran had never put forward its claim to the necessity of nuclear weapons; it had all along been advocating a WMD free zone in the Middle East.According to the details of the agreement, Iran will halt enrichment of uranium above 5 percent purity for the next six months, retain half of its 20 percent enriched Uranium and dispose off emaining half by diluting it to less than 5 percent enrichment level. Iran has agreed that it will not make any further advances of its activities at the Natanz Fuel Enrichment Plant, Fordow, or the Arak reactor. However, Iran will continue its safeguarded R;D practices, including its current enrichment R; D practices, which are not designed for accumulation of the enriched Uranium.It will not construct any additional facility capable of reprocessing. In addition, its nuclear facilities in Fordo and Natanz will come under the IAEA control, while the construction of a heavy-water greement, to be negotiated wi thin one year after implementation of interim agreement, Iran's nuclear would be treated at par with other NNWS member of the NPT. In return for the interim agreement, the P5+1 group, (read the United States and the ELI), have agreed to ease some of the sanctions against Iran.This will allow Iran to resume limited trade relations with the United States in the oil and gas, petrochemical and automotive sectors as well as trading in gold and precious metals. The resulting benefit for Iran will amount to $5-7 billion. Indeed in the aftermath of his agreement, many bluffs have been called. Iran stands on high moral ground because its long-time stance of not building nuclear weapons stands validated. However, Iranians are known for their farsightedness and shrewd diplomacy; it would be naive to believe that they have signed an agreement for grabbing Just IJS$ 7 billion.Likewise, Americans are also no raw to let Iran retain critical capability of enriching Uranium up to 20 percent mark and remain content with cosmetic un-enriching of already enriched Uranium. Mark Urban's story aired on BBC on November 06, that Pakistan has given final touches to he nuclear weapons in compliance to the Saudi order and, proverbially, the caravan of camels carrying the nukes would start marching towards Saudi Arabia on Kings wink of eye, has fallen flat on the ground.Like Iran, Saudi Arabia is also a signatory and compliant of the NPT, and it has also never strived for any nuclear pursuits beyond its obligations as a NNWS member of the NPT. The interim nuclear understanding has indeed thrown up an opportunity for the Americans to recede from their position of untenable rhetoric and retool their relations with Iran. Since the fall of Iranian monarchy, America has been running rom pillar to post for discovering its new sustainable and robust moorings in Asia in general and in the Middle East in particular. It has not been able to find a substitute to â€Å"Shah's Iran†.Sustainable and functional Iran-US relations could offer much relief to America in many ways. America needs to shed at least a bit of Israeli baggage to make way for some patchy and truncated Palestinian state. Moreover, America is looking for a face saving political settlement in Syria, which also needs Iranian cooperation. Furthermore, Iranian influence in Afghanistan gives it a spoiler's role in the context 2 of post 2014 Afghanistan. The interim nuclear agreement with Iran provides America an opportunity of harnessing Iranian help in achieving these objectives.Iran has recently inaugurated Afghanistan's alternative access to warm waters via Chahbahar. Americans are desperate to find an alternative to their troublesome supply routes passing through Pakistan as well as the circuitous and expensive Northern Distribution Network. American relationship with Saudi Arabia is on decline and Saudis are further unhappy with the US for not doing enough against Iran. America's rapprochement with Iran would offset its critical dependence on Saudi Arabia. As of now, the US is coping with its politico-military failures in Iraq and Afghanistan. llies that would like to drag the United States into military operations in Libya and Syria – a hard sell to a common American. With most of the Arab countries consumed by the strains of the Arab spring, America may be feeling the necessity to reconfgure the Middle East. These constraints might have prompted the US to engage with Iran, which may be ready to own Shah's vision of becoming a policeman of the Gulf. If so, such a move could restore pre 1979 the balance of power in the Middle East, when Iran served as a linchpin of Gulf security.America's attitude to the Iranian nuclear program has undergone a sudden change and the nuclear deal could herald a change of balance of power in the Middle East. It may be an equivalent of America's unprecedented rapprochement in its relations with the Communist China in 1970. Agreement provides a w indow of opportunity to revive the IPl project. Iran and Pakistan have already decided to fast track the IP portion of the project. There are indicators that donors are now showing willingness to fund the IP project. However, even if India Jumps in, Pakistan should go for completing the IP first, and later lay dditional pipeline for India.IP should not be delayed for reverting back to the integrated IPl version. Pakistan had persistently urged for a non-military solution to the standoff over Iran's nuclear programme. It has, therefore, welcomed the interim arrangement. Events unfolding during the next six months would be crucial. Pakistan needs to be watchful and prepared to confront malicious attempts to drag it into nuclear controversies. 3 {Carried by the Nation on December 02, 2013 under the heading: A Leap Forward}. Writer is Consultant Policy Email:[email  protected] com and 4 Strategic Response at IPRI.

Hallstead Jewelers

We see an increase in the break-even point, both in dollars and in sales tickets, from year 2003 to 2006. This increase is not as dramatic between the years 2003 and 2004 as it is between 2004 and 2006. The increase in break-even point in sales tickets is 1615,80 and 7623,90 respectively. The increase in the first year is due to the increase in fixed costs and also the decrease in sales. The increase between 2004-2006 is due to the dramatic increase of fixed costs because of the bigger store and higher rent and the decrease in contribution margin that is caused by the greater increase in variable costs than sales.The margin of safety on the other hand gradually decreased. The decrease between 2003-04 and 2004-06 are 20% and 47% respectively. The reason for that is the huge increase in break-even point between 2004 and 2006 and the decrease in sales for the years 2003-2004.If the company were to pursue that new idea, the net income of the company would increase to $917,01. The new bre ak-even point would be 9105,56 in sales tickets and $8.203,20 in dollar amount.Assuming that everything stays constant, because sales commissions are variable costs, if will increase the contribution margin per unit which will end up decreasing the break-even sales volume compared to 2006. The new break-even point would be 11 570,86 in sales tickets and $9487 in sales dollars.Because advertising is a fixed cost, an increase in advertising will cause an increase in break-even point. The new break-even point, everything else staying the same, would be 17 912,28 in sales tickets and $ 14.687,17 in sales dollars. Because the outcome of advertising is not certain, it carries a certain amount of risk. I would not recommend that the sisters try this because it is risky for the situation that they are in now.  The average sales ticket have to increase to $840 from $819 ($21 increase) to break-even if the fixed costs remained the same in 2007 as it was 2006.I would recommend the managers a t Hallstead Jewelers to go with the idea of the consultant, the %10 price reduction in order to increase the number of  people visiting the store. If everything goes according to the plan, they can have a profit of $900,90 and even if it doesn’t goes as smoothly as planned, this option has a 39% margin of safety, so it has a large portion of the break even sales to fall back on. Among the options given, this one is the safest and the one that will provide the highest profit.

Define and explain Orientalism Essay

Europeans used the term Orient to describe the peoples and places of Asia and the Middle East. While widely accepted prior to the late twentieth century, this term has aroused criticism among historians. The purpose of this essay is too define and explain Orientalism, and how the term Orientalist applies to Christian missionaries in the Far East. Two main examples of these missionaries are Matteo Ricci and Francis Xavier who served in China and Japan respectively. Both of these missionaries fall under the definition of Orientalists as defined by Edward Said. Edward Said defines Orientalism in multiple parts; the first of which is the academic1. Academic Orientalism is the study of the Orient for the purpose of understanding and learning. Modern historians view the term Orient to be too vague for an area as large as Asia, but it is still widely used throughout the world. Academic Orientalism attempts to study and understand the Orient from afar. Professors of Chinese language who have never spoken with a Chinese person are a common example of this detached intellectualism. Often in 18th Century Europe the Orientalist would study and judge the Orient based on second hand knowledge and conjecture. This view of understanding the Orient better than the Oriental without living it leads into the second part of Orientalism2. The second part of Orientalism as defined by Said is the justification of subjugation. Europeans believed that due to their better understanding of the history of a culture, and their superior culture they needed to dominate other cultures in order to improve them. Arthur James Balfour, a member of the British parliament once said in reference to Egypt; â€Å"We are in Egypt not merely for the sake of the Egyptians, though we are there for their sake; we are there also for the sake of Europe at large3.† Balfour meant by this that British occupation of Egypt was necessary for the protection of the Egyptians and for the benefit of all Europe. Balfour and other Orientalist believed that they understood Egypt better than the Egyptians themselves, and for this reason governed Egypt for the benefit of Egypt. This form of justification was used throughout the Orient. China, India, Philippines and others were all subjugated on the justification of the white mans burden. The idea of th e burden of the white race to civilize inferior races was a key part of Orientalism.4 One of the main points of Orientalism is the division of humanity into us and them. The Occidental and the Oriental, East and West, these are divisions created by Europeans in order to dominate the other. By separating the peoples an Orientalist can justify the subjugation and forced change of other races. Said’s overall point is that Orientalism was created by Europeans in order to justify the subjugation of the Orientals. Cultural and intellectual superiority and the separation of us and them led to three hundred years of European imperialism in the so called Orient.5 In order to understand how Orientalism affected Missionaries in China and Japan, one must first understand the Orientalist’s views of foreign religions. Most Orientalists were Christians and therefore believed all none Christians were destined for hell. â€Å"This, oddly enough, even applied to pre-Christians such as Aristotle and Abraham. In Dante’s Inferno both these men are in the first layer of Hell, even though Christianity did not exist during their lifetimes. So from this intolerant view one can see the basic attitude towards non-Christians. Muslims, Hindu and Buddhists were all considered heathen that needed the word of Jesus to save them from eternal damnation. â€Å"The Church’s commission to preach the gospel of Christ to ‘every creature’ also lays upon her the task of inviting all to accept Christ as Lord and Saviour and to join his Church through baptism.6† With this belief in mind Christian Missionaries went to the Orient to â⠂¬Å"save† the heathens and convert them to the one true faith, whether they wanted too or not.7 One of the earliest Christian Missionaries Father Matteo Ricci of the Society of Jesus, better known as the Jesuits, arrived in China in 1582 after a four month journey from Goa. He was a Roman Catholic priest who was trained the Rome in numerous subjects. The Jesuits were the most well educated order within the Catholic Church; for this reason they were particularly well suited for missionary work in Asia. The Jesuit tactic was too convert the social elites and then have their support in the conversion of the masses. This worked particularly well in Asia due to the strict social structures and relatively good education of the elites. Also the widespread belief in Confucianism fit well with Christianity. Ricci said in his work â€Å"The True Idea of God†, â€Å"the Confucian Classics contained allusions, albeit in an inchoate manner, to such Christian notions as God and a future life.8† Well educated bureaucrats in China respected Ricci’s education and intelligence, and were interested in the Western ideas he possessed9. Techniques such as Ricci’s Memory Palace interested the Chinese and often spawned further interest into the religion Ricci brought with him.10 Ricci’s view of the Chinese is full of contradictions. Many aspects of Chinese culture and government Ricci respected, such as their dress and level of education; the hygiene of the people and the relative order imposed by the Chinese bureaucracy11. At the same time that Ricci praised aspects of Chinese civilization, he abhorred a great deal of Chinese practices. Among these are the corruption rampant throughout China, the worship of heathen religions and their disrespect for human life. Ricci once remarked â€Å"This country is full of slaves. 12† Most importantly Ricci despised the widespread homosexuality within China13. There are two main reasons for describing Ricci as an Orientalist. The first is his reason for being in China. Ricci sought to convert all of China to Catholicism. He cared little for the established religions in China and sought to impose his Christian faith upon the peoples of China. Ricci once remarked â€Å"†¦Buddhism violated the very first of the Ten Commandments, and it had not raised moral standards in China despite its two thousand years during which it had been preached.14† Viewing his own faith as superior to any other and being so disdainful of all others, Ricci can be labeled an Orientalist. The second reason for labeling Ricci an Orientalist is his general disdain for all things Chinese. While he may admire certain attributes he generally views everything Western superior; for example his disgust with open prostitution in the streets of major Chinese cities. Ricci completely glosses over the fact that prostitution was legal within Rome itself. In fact prostitution within Rome was widespread. Montaigne on visiting Rome remarked, â€Å"Taking coach rides or strolling to view the prostitutes was a major Roman pastime.15† In his criticism of homosexuality, Ricci also ignores the previous acceptance of homosexuality in Europe. Montaigne remarked during his visit too Rome, â€Å"several marriages between Portuguese males had been celebrated in the church of St. John a few years before, and that the couples had went to bed and lived together for some time before being arrested and burned at the stake.16† This method of criticizing China while ignoring the fact that the same problems existed within Europe labels Ricci as an Orientalist. Ricci had additional goals beyond simply the conversion of the Chinese. Along with the conversion to Christianity Ricci hope to rebuild China along European lines. Ricci spent a great deal of time extolling the virtues of European civilization, and purity of the Catholic faith17. Ricci hoped to rid China of corruption, create a perfect Christian society, and cleanse China of heathen practices such as abstaining from meat year round and homosexuality18. These goals of changing Chinese society certainly label Ricci to be an Orientalist. Father Francis Xavier of the Society of Jesus arrived in Japan in 1549 aboard a Chinese junk. Xavier had many initial difficulties in Japan; the first of which being his inability to speak Japanese, and later to understand it. His interpreter caused Xavier many troubles later on due to his using Buddhist names for Christian figures, and forever linking Buddhism to Christianity in the minds of the Japanese19. The other difficulty for Xavier was his misunderstanding of Japanese society. When Xavier first arrived he hoped to convert â€Å"the king of Japan†, by this he meant the Shogun20. But when Xavier met the Shogun he found him to be a man of little importance who could barely maintain his own territory, let alone the whole country. Japan was in the period of sengoku, or country at war, and was divided among many feudal lords all vying for power. This state of civil war later benefited the Christian missionaries greatly, but initially confused Xavier21. Xavier spent the majority of his time in Japan attempting to convert Japanese daimyo and kokujin to Christianity. He succeeded in a few cases largely due to his link with Portuguese trade ships. Daimyo within Japan were looking for a way to gain advantage over their enemies, and trade with the Portuguese greatly enriched many lords. The Japanese believed that converting to Christianity would give them more favorable trade with the Portuguese, and for this reason many converted22. Xavier can be labeled an Orientalist for two main reasons. The first is his overall goal of converting the heathen Japanese to Christianity. His total disdain for Buddhism is apparent when he refers to the religion of Dianichi, â€Å"an invention of the devil, as also were all the other sects of Japan.23† The second reason for labeling Xavier an Orientalist is for his views on homosexuality. Ricci’s beliefs on homosexuality among Asians stem from Xavier. When Xavier was the head of the Far East mission he declared that homosexuality was an evil to be combated in Asia24. For these reasons Xavier is clearly an Orientalist the same as Ricci. For all of their efforts to convert the peoples of China and Japan, neither Ricci nor Xavier succeeded in any significant way. The problems in China were numerous; deep seated beliefs in Buddhism, Confucianism, and Taoism kept many from converting, also the lack of interest by the elite made any type of wide scale conversion impossible. In addition the basic fear of outsiders made the Chinese distrustful and angry towards the Christian missionaries25. In Japan the eventual consolidation of Japan under the Tokugawa shogunate forced all Christians too abandon their faith. The Tokugawa did not want any opposition to their regime and barred any foreigners from entering Japan. Also deep seated religious beliefs and xenophobia as in China caused few too embrace Christianity. Neither Ricci nor Xavier succeeded in their goal of converting the Far East; the task they committed their lives too. One must wonder; if they had taken a more open, non Orientalist approach, would they have been more successful? 1 Said, Edward W. Orientalism. (New York: First Vintage Books Edition, October 1979.), 2. 2 Ibid, 3. 3 Ibid, 33. 4 Ibid, 33-36. 5 Ibid, 83. 6 Manikam, Rajah B. Christianity and the Asian Revolution. (New York: Friendship Press, 1954) 185. 7 Spence, 73-75. 8 Ching, Julia. Confucianism and Christianity. (Tokyo: Kodansha International, 1977) 10. 9 Hellyer, Robert. Lecture. â€Å"The Jesuits in Asia.† Allegheny College. Meadville, Pa. 11 February 2002. 10 Spence, Jonathan D. The Memory Palace of Matteo Ricci. (New York: Penguin Books, 1985.) 2-5 11 Ibid, 210. 12 Ibid, 219. 13 Ibid, 224. 14 Ibid, 252. 15 Ibid, 208. 16 Ibid, 226. 17 Ibid, 2-5. 18 Ibid, 217. 19 Elisonas, â€Å"Christianity and the Daimyo,† (Cambridge History of Japan, volume 4, 301-372.) 307-310. 20 Ibid, 311. 21 Ibid, 312. 22 Ibid, 323. 23 Ibid, 309. 24 Spence, 224.

Human Resources Questions Essay Example | Topics and Well Written Essays - 2000 words

Human Resources Questions - Essay Example Instead of a bell curve, individual performance takes on a â€Å"power-law† – also known as the Paretian distribution wherein there are only few of the best performers can carry out most of the production output and business success (Aguinis; Miller). According to O'Boyle and Aguinis, individual performance should follow a ski jump-shaped Paretian distribution. Since only few employees are responsible for the success of the business, O'Boyle and Aguinis strongly suggest the idea that the modern HR managers should take time to re-evaluate the old strategy used in measuring employee performance (Miller; O'Boyle and Aguinis). In most cases, this can be done by carefully identifying responsible people and compensate them well for their outstanding work performances. A power-law or Paretian distribution is characterized by an â€Å"unstable mean, infinite variance, and a greater number of extreme events† (West and Deering). ... Given that a business organization is very much oriented with regards to each employee’s production output, the company should consider the importance of implementing a pay-for-performance system (McPhie and Sapin). In line with this, the HR manager should be able to tailor its pay-for-performance system based on the company’s desired level of individual work performances. For example, the individual work performance of employee A is represented by â€Å"point A†, therefore, her pay level should be at â€Å"pay A†. Assuming that most employees’ individual work performance is at â€Å"point B†, then, their individual pay level should be at â€Å"pay B†. In case an employee’s individual work performance is at â€Å"point C†, then, her individual pay level should be at â€Å"pay C†, and so on. 2. After a lot of thinking, you decide to take a risk. You quit your job in human resources management after gaining experienc e in life and career planning. You open up your own advisory and coaching practice. Your very first client, Rashid, is a 35 year old engineer who has worked for a construction firm since graduating from college but has discovered, â€Å"I really hate being an engineer now but I am not sure what I want to do. And I know I want more than a job†¦I want a calling and something that really interests me yet I don’t want to waste my skills.†What assessment instruments do you recommend for your very first client, Rashid? Be sure to fully explain why you selected the recommended instruments. The case of Rashid is a good example of a person who does not know what he wants in life. To be able to suggest the type of job suitable for Rashid, the HR manager should be able to assess

The process of consolidation Lab Report Example | Topics and Well Written Essays - 1000 words

The process of consolidation - Lab Report Example The hydrostatic pressure therein becomes gradually dissipated thereby shifting the load to the soil solid thereby triggering a decrease in volume of the soil mass. It is worth noting that the rate at which water escapes is dependent on the permeability the of the soil in question. In which case, the escape of the pore water as the result of longtime static load makes up consolidation.  Consolidation test is usually carried engineers in the design of engineered structures and performance evaluation of a structure. Consolidation test yield results which are useful in estimating the magnitude of primary and secondary consolidation settlement of a given structure. Apparatus  Ã¢â‚¬ ¢ 1 bench, 3 sample cells of soil,  Ã¢â‚¬ ¢ 3 dial gauges which can be either analog or digital,  Ã¢â‚¬ ¢ 1 weight set. The soil sample was cut from a big soil block using a rigid confining ring with a sharp edge. Excess soil from the process was sliced away to leave a sample with a diameter to height r atio of at least three. Porous stones were placed on the top and bottom of the soil sample in order to give way for drainage. A stiff loading cap was placed on top of the upper porous stone followed by placing the set up on in a loading frame.   The load was imposed on the frame by positioning different weights on the loading frame. Measurement of soil sample compression over time was recorded by looking at the dial indicator. The deflection value data was used to measure the point at which the soil sample reached the primary consolidation end.

Instant impact of the whole word Essay Example | Topics and Well Written Essays - 1750 words

Instant impact of the whole word - Essay Example When I see a building from far, I see it as a whole, and with every step forward, I start seeing more of its parts with successive loss of its identity as a unit. If I step backwards, the impact is reversed. It means that, not only the being of building but also its distance from the viewer has something to do with the perception of the viewer. It also means that both; stance of the ‘viewer’ and the nature of the ‘view’ correlate and coexist throughout the phenomenon of seeing. Just as a building is made of bricks, words are made of letters, their basic building blocks. Although I have this knowledge, yet do I ever see, at the first glance, the building in the form of bricks or its very basic building blocks? When I see a human figure, I see it as a whole and not in its x-rayed, skeletal form. The external factor; distance, however counts and impacts my vision of the image. Faculty of hearing is not different from seeing in this respect .When I hear a word a nd understand it in a flash, does "the whole use of the word come before my mind" (section 139)? If so, how? If not, how then do I really understand the word? 1†. I am of the opinion that when I hear a word and understand it in a flash, the whole use of the word comes before my mind. Regarding its mechanism; how I understand it, let me explain an example of the organoleptic or sensory perception of flavors. Whatever an expecting mother drinks or eats, the child, in the very early (fetal) stage perceives its flavor; the combinated effect of odor, taste, color and even the feel of its texture. How is it possible, while the child has never seen the color of the food? Now, can we perceive the strawberry flavor in a product, if the product is white? Not really, not at least in its full impact, reason being that red color is an essential to the ‘whole’ of strawberry. Suppose, the strawberry flavor used in the product was green , ripe, over ripe or fermented type, the ex perienced note is embedded in the retentive memory of both; mother and child. At a later stage of life, if any one of them happens to consume a product of similar flavour, the matching flavor in memory is retrieved and not only facilitates but also accelerates the process of identifying it. Similarly a data base of flavours is there in the mind of everyone and the identification of the flavour is subject to the size of the data base and the accuracy of retrieval of the relevant flavors.A flavourist recognizes more types of flavours in their true profiles on account of his or her larger data base, extensive use(repeated and faster retrieval) and accurate inference. The formal route of identification; olfactory sense, taste bud perception etc.are skipped and the brain response in case of the falavourist is as the ‘whole profile of flavour’ and not as its constituents; odor, taste, colour, texture etc. In addition to the accumulated experience there is another very importa nt factor in the instant perception of something as whole, and that is ‘intution’. I have seen sheep and goat grazing in the field with lot of ‘Datura’ plants with their very attractive, pure white, trumpet like flowers. Never, anyone of them tries or even indicates an intention of consuming this plant. How do they know about the toxic nature of the plant? Through ‘Intution’ only, I would say. Occasionally and rather strangely, a cat is seen chewing the grass. Why so, while by nature a cat is carnivorous? I think, in this case too, intution is at work. It may be a corrective action to adjust pH (say acidity) of the stomach contents. Intution is at work in both the cases with a difference that in the former case it repels while in the later case it attracts. In reference to the inherent characteristics, it had been for long, a popular belief that we see the objects by virtue of their inherent light, while now we understand that it is owing to th e ‘external’ light reflected from the surface of an object. Question is that,

Evaluation of The Capital Asset Pricing Model (GlaxoSmithKline) Essay

Evaluation of The Capital Asset Pricing Model (GlaxoSmithKline) - Essay Example This model generated the idea of beta, that is, the risk of the specific stock. The CAPM model thus is mainly used by firms for estimating the cost of equity. CAPM Assumptions The CAPM model makes some assumptions for calculating the price of the securities which are risky. These assumptions are as follows : †¢ The market is efficient and perfect. The information regarding the market is easily available to all the investors. No single investor can influence the stock price change of the market. As the market is efficient there is no transaction cost, no taxes (kapil, 2011, p.168). †¢ The investors are risk averse in nature. All the investors have same expectation about the return from the market. It is also assumed that the assets are perfectly liquid and they are divisible infinitely. It means the investor can buy or sell any amount of stock. It is also assumed that all assets can be sold or bought in the market by the investors including the human capital. †¢ At the risk free rate the investors can borrow or lend unlimited amount and they can expect risk free rate of interest from the funds. †¢ Unlimited short selling is allowed as per the assumption of CAPM model. †¢ The investors are concerned with a single period price of asset and the mean and variance of the concerned asset (Elton et al, 2009, p.283). ... CAPM Limitations CAPM model is criticised because of the number of assumptions it makes. It is assumed in the model that the market is efficient which in reality it is not. The information regarding the market is not readily available to the investors. There is also the transaction cost of trading and the taxation cost which the model does not take into consideration. In the model it is assumed that the investors are interested only for a single period of change in the asset pricing. But in reality when they invest they do the fundamental analysis of the stock which means they analyze the historical value of the asset taking a long period into consideration. The beta of the asset changes over the period, it is not stable as assumed by the CAPM model. The investors are not also risk averse in nature and also it is not possible that the assets are divisible entirely. The relationship of beta and return is weak practically (Damodaran, n.d., p.13). It is also a factor that the firm may c hange in the period for which the estimation is made. Instead of these limitations, CAPM model provides the quantitative and logical tool for measuring the risk and return relationship of the asset or the portfolio. Part II GlaxoSmithKline Risk and Return Analysis About the Company GlaxoSmithKline, a company of the pharmaceutical industry was founded in the year 2000 and listed in the London stock exchange and the New York Stock Exchange. The company is a constituent of FTSE 100 index. The company is based in London and in terms of revenue it is the third largest company in the world. The company’s business is spread throughout the world. The long term