Rostow and Gunder Frank Essay Example

Rostow and Gunder Frank Paper This essay will try to discuss the factors which led to the rapid industrialisation of Japan. It will give a historical perspective including the Meiji restoration, World War two, Korean War and the OPEC oil crisis in the 1970s. These were four of the most important factories involved in the economic and industrial evaluation of Japan. From this point the essay will explain in depth the theories of the original sociological thinkers Marx, Weber and Durkheim. These theories are the under pinning for modernisation and underdevelopment theories of Rostow and Gunder Frank. After this, the religious ideas and beliefs will be discussed at length including Shintoism, Buddhism, Confucianism and Webers protestant ethics and the spirit of capitalism. Lastly, the Japanese managerial process will be explained in relation to the organisation and the individual worker. After many years of conflict between the shogunate and the divine emperor, the shogun offered his resignation to the emperor Meiji. Imperial rule had been restored and the era known as the Meiji restoration had begun. The restoration was the period between 1868 and 1912, it signalled the point in history where Japan left its feudal roots and began the road to industrialisation. The process of change was major and started with the abolition of many Japanese cultural, military and class institutions. The abolition of the Shogunate, Tokugona regime resembled a feudalist form of society. The restoration could be likened to a bourgeoisie revolution, not led by the farm workers and working classes, but the aristocracy. Samurais became the new power in Japan. Next was the abolition of the Daimyo, Japan became centralised and the Hans were abolished. We will write a custom essay sample on Rostow and Gunder Frank specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Rostow and Gunder Frank specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Rostow and Gunder Frank specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The Samurais already trained in bureaucracy, classics and warfare took over as administrator. The four level class system was removed; this meant all citizens were equal in the eyes of the law. Institutions of centralised rule and centralised bureaucracy were set up, this would include the promise of parliamentary democracy, officially the emperor was the ruler but a group of young Samurai would look after matters of the state. State education was put into practice in 1890, less than 50% of children were in education by 1910 and once fees were abolished, it was 100%. Some students at this time were sent to universities in the west to learn modern technologies, but would also learn some of the problems that faced western nations like class structures and revolutionary struggles. State directed industrialism was used, all built from scratch and heavily subsidised through tax until profitable. Japan entered World War Two on the side of Germany; this was in anticipation that the Japanese could build a bigger empire in Asia following British defeat. They attacked the US navy base in Pearl Harbour, this mistake made the United States enter the war. This lead to two nuclear weapons being dropped on Hiroshima and Nagasaki on the 6th and 9th of August 1945. By the end of the war Japanese industrial production was less than 30% of pre war levels, Japan had lost all its empire and its cities were reduced to rubble. The American General McArthur invaded Japan and began the process of industralisation and change for the second time in Japans history, Japan could now start rebuilding from scratch with the help of America and its money. All military leaders were put to death, while the emperor was spared to keep the Japanese public in order. The Korean War had a major influence on the reconstruction of the new Japan. Following World War two and the Japanese defeat, the American forces pulled out of South Korean to concentrate on Japan. The communist block countries of Russia and China saw this as a sign of weakness in the capitalist west. Russia and China backed North Korean in an invasion on South Korean. President Truman alone, with General McArthur used the forces that were based in Japan to repel the invasion. The war lasted just three years, but over five million people were killed. As Japan was close to Korea and already occupied by the American forces, its economy and industry benefited from the American war effort. In October of 1973 Middle-eastern OPEC nations stopped exports to the US and other western nations. This was meant to punish the western nations that supported Israel, in the Yom Kippur War, but they also realised the strong influence that they had on the world through oil. The Arabs began to ship oil to Western nations again, but this time at inflated prices. One of the long-term effects of the embargo was an economic recession throughout the world. The era of economic growth, which had been in effect since World War two had now ended. For Japan this was a major problem, most of its new industries were heavily dependant on oil. It was at this time in its history that it left heavy industrial manufacturing and started to develop new high technologies for export instead. The sociologist Emile Durkheim was preoccupied with the changes transforming society in his life time; he was particularly interested in social and moral solidarity. This being that what holds society together and what stops it descending in to anarchy. Durkheims theory on social change argued that with the advent of the industrial era, society was going through a major change. Society was changing from simple to more complex way of life. Durkheim contrasted two types of solidarity, mechanical (simple) and organic (complex) which was related to the division of labour in society. Traditional societies have a low division of labour, thus is characterised by mechanical solidarity. Because most of the members of the society are involved in very similar occupations, they are bounded together by common experience and shared beliefs. The strength of these shared beliefs is repressive and the community swiftly punishes anyone who challenges the conventional ways of life. Mechanical solidarity is grounded in consensus and similarity of belief. As industrialisation takes hold, the mechanical solidarity that people have starts to fade and is replaced by organic solidarity. The specialisation of tasks and the increasing differentiation in advanced societies would lead to a new order featuring organic solidarity. As the division of labour expands, people become more dependant on one and other because each person needs goods and services that those in other occupations supply. Relationships of economic and mutual dependency come to replace shared beliefs in creating social consensus. Max Weber sought to understand the nature and causes of social change and unlike Marx he rejected the materialist and class conflict (which will be discussed later) of social change. He argued that human motivation and ideas were the forces behind social change. Ideas, values and beliefs have the power to bring about change to society, and the individual has the ability to act and shape their future. With the emergence of modern society came major shifts in patterns of social action. Individuals started to move away from the traditional beliefs supported by religion, custom and habit and increasingly engaged in rational, instrumental calculations that took into account efficiency and future consequences. The development of science, modern technology and bureaucracy was described by Weber as Rationalisation. Giddens (2001) states that this is the organisation of social and economic life according to the principles of efficiency and on the basis of technical knowledge. In Webers view, the industrial revolution and the rise of capitalism were proof of a large shift towards Rationalisation. Weber saw the scientific quality of the west as one of its most distinctive traits. Moreover, bureaucracy expands with economic and political growth, and is seen to be the most effective way of organising large numbers of people. The economist Walt Rostow designed a model that suggests that the development of human society to be both be a process of evolution, and to possess an inner logic, which leads societies towards Modernisation. His work is based on the idea that development can happen in five stages. The first stage is called traditional society; this is feudal societies based primarily on agriculture production. These societies are constrained by the limited technology on which agriculture is based. However, feudal societies do contain within them the ability and potential for further development. The second is the transitional stage or precondition for take off. The important preconditions include increases in scientific and technological discoveries which are used to improve the production process. Secondly, there develops a group of individuals who see the advantages in investment in factory production. At this state of the development Rostow said that there is a growth of lateral relations of world trade between nations, and finally the growth of the modern state which uses rational ideas. The third is called the take off stage, this happens to different countries at different times in history. In this way the unevenness of the process is pinpointed as being important, for example because England was one of the first countries to modernise it lead the way for others to follow.

Being Filipino essays

Being Filipino essays I guess most Filipino have a lot of pride. They are the ones that have screen names like pinoy this or pinay that. Let me explain what a pinoy is, it is a Filipino boy and a pinay is a Filipino girl. Filipinos be representing especially with the little flags in their car window like me. The type of cars that you would usually see those flags are in those little rice rockets called Hondas. Most of the younger generation that show the most pride dont really know their own culture. The younger generations of Filipinos seem to have all this pride in being Filipino which you should be proud to be but lose there culture. Most young Filipinos dont even know how to speak the language or cant even understand the language. If you ask me to talk in Filipino I wouldnt be able too. I bet if you ask a majority of Filipino teenager if they could speak Filipino they wouldnt be able to. The reason I believe why Filipino teenagers cant speak is because English and Tagalog (Filipino dialect) are the two main languages in the Philippines and when they immigrate here the main language is English so most parents would just speak to there children in English. So I guess partly that it isnt our fault being emersed in American culture and not knowing how to speak contribute to the loss of our culture. A lot of Filipinos now know that they are losing their culture and are doing something about it. Most colleges and university have a Filipino clubs, which set up performance, and talent show showing traditional folk dance and music. This is great for many youth to learn about Philippines culture. Every year the Filipino youth association holds a festival showing dance and different types of the Filipino culture to the younger generation. These things do attract the teenage audience and allows them to learn and have fun while there doing it. Filipinos came from the Philippines and came here to ...

Case Note Essay Example | Topics and Well Written Essays - 500 words - 1

Case Note - Essay Example Job characteristics theory is a working design with a set of principles for job enriching in organizations. Job characteristics theory has five major aspects of address including motivation, satisfaction, performance, absenteeism, and turnover. The scenario at DrainFlow in which employee dissatisfaction is a common occurrence, the employees should be given incentives as motivation for every good performance and an encouragement to other employees to work harder. Additionally, the duties of the order processors and the billing agents need to merge to ensure that customer issues are addressed from a single department. Such would prevent employee dissatisfaction from customer complaints. Indeed, Reynaldo has little clue on the implementation of cash reward system. In the current scenario at DrainFlow, proves very tedious for the implementation of the system considering that different departments handle customers at different levels and, therefore determining which employee to reward would be ideally a tough task. In order for effective implementation of the cash reward system, it is significantly important that all the departments operate from a common command center. In such a setting, a customer will deal with a particular employee from the time the customer submits a plumbing problem, sending of a plumber, and making payments all occur from a common pull. Such a way would ensure an easy track of the best-performing employees and worthy of a reward. Financial incentives are indeed a better way of rewarding best-performing employees for the success of an organization. The advantages associated with financial incentives includes increased performance among employees as a means of getting the financial incentives and recognizing of employee priorities and work on the areas of under-performance. Financial incentives also have its disadvantages such as the genesis of division among employees, especially

Leadership Essay Example | Topics and Well Written Essays - 1000 words - 4

Leadership - Essay Example Then there are those who believe that these two concepts are two different extremes, they believe that a good manager can never become a productive leader. Certain individuals even hold the view that both concepts operate together and a manager can play a leaders role while being in a management position. An organization comprising of teams and groups require the assistance of both leaders and managers to operate successfully. Several similarities may exist within the roles of the managers and the leaders, and several differences that separate both the positions even exist. This writing will focus on the differences between the two roles while accepting the fact that one single individual can play both roles at the same time. Body Leadership is referred to as a process in which an individual has the task of influencing a team of individuals with the aim of achieving common goals (MANNING, 2003, p.5). This means that leadership is firstly a process and it involves a sub process called influencing and cannot occur without the availability of a group and aims at attaining goals. These components of the definition of leadership are available in almost every theory and definition related to leadership. A leader is supposed to have several characteristics, some of the most important characteristics a leader should have in order to be successful includes: skills to coach others, confidence in one self and others, he should be do as he say or in other words there should be consistency between what he preach and what he does, he should have creative skills and should have an eye for creativity to acknowledge the creativity shown by others (MANNING, 2003, p.364). Some other skills that a leader require is emotional intelligence, emotional intelligence is referred to as the ability to figure out the emotional issues that one is suffering and then helping them to solve those issues. A leader should have a strong vision of the future and should be able to inspire others thr ough the vision and should be motivated towards the long term achievements of the organization. He should be able to not only respond to the needs of his/her team members at the team level, he should address their issues at the individual level as well. A leader should be high in self esteem and should view him positively, he should stand for trust and integrity and pass on the same message to his/her followers. He should have adopted or learned technical skills in order to assist team members when ever required, he/she should have the ability to not only delegate responsibility, he should even delegate authority so followers can accomplish their task in the best manner and he should always provide feedback to employees to keep them motivated. These are some of the characteristics and skills of a leader, these skills and characteristics do overlap with the skills and abilities of a manger, still there is tremendous amount of difference between these two occupations. Several definiti ons that differentiate leadership from management and managers are available. This does not necessarily means that both these positions cannot be handled by one single individual. One individual has the ability to carry out the responsibilities of a leader as well as a manager. Management is defined as a body that has the power to direct individuals within an organization by administering, supervising these individuals. Both leadership and management have various aspects in common. The principle job of both the responsibilities includes influencing others within an organization, assisting those who are working with them and for them in an

Policy analysis 2 Assignment Example | Topics and Well Written Essays - 500 words

Policy analysis 2 - Assignment Example This resulted to various birth complications during the delivery process. The introduction of Medicaid cover has enable sufficient access to proper medical services by pregnant women in the state thus increasing its birthrate. The year 2013 recorded increase in the number of registered births in the state of Georgia. The figure rose to 133,947 which depict a 25% increase when compared to the registered birth records in 2011. This is as a result of various approaches put into practice by the Georgia medical service council. For instance, the percentage Medicaid maternal cover for all pregnant women was raised from 25% to 40% thus reducing the labour expense by 15%. GORRC (2013). As a result, 53,579 births were covered by Medicaid in the year 2013. This included an approximate 50% (Gutowski et. al, 2010. Pg. 5) outpatient and inpatient lactation consultation fees where a cost per encounter was $250 (Breastfeeding Inc). The approximate medical saving per woman was $27.5 thus generating a total cost savings of $3683543 from the improved infant health outcomes. Women without lactation consultation were also entitled to the Medicaid fee. The improved infant health led to an increase rate of breast finding as women with no lactation consultation rose to 70% compared to 40% in the previous years (GORRC). This notion indicated a positive approach in infant health care increased the number of women who breastfeed to those using powdered milk (NRDC, 2010). Women who breastfeed were approximately 45, 221 while those who do not breast feed their children summed up to 8358. This approach reduced the incidences of Otitis to babies who are not breastfed and women in the stage of breastfeeding. Episodes of Otitis media reduced from 60% in 2011 to 40.42% in 2013 (U.S. Department of Health and Human Services, 2011). Despite the improved infant health care in Georgia, the consultation fee ought to be high for the low income earners in the state. As a result, the figure of

Impact of Discount rate Changes on Stock Market Return

Impact of Discount rate Changes on Stock Market Return CHAPTER 1 Stock market plays an important role in the economic development of a country. Stock exchange performance has attained significant role in global economics and financial markets, due to their impact on corporate finance and economic activity. For instance stock exchanges enable firms to acquire capital quickly, due to the ease with which securities are traded. Stock exchange activity, thus, plays an important role in helping to determine the effects of macroeconomic activities. Stock market returns are the returns that the investors generate out of the stock market; it can be in the form of dividends or profits, as a company gets its dividends and profits in the form of their share holders in the secondary market. Well there is a definite change in the market as with the behavior changes with the discount rate, changes can be technical or non-technical. Technical changes refers to the internal changes and non-technical as external changes which are mostly related to the behavior and response of the customers and consumers. Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements. Karachi Stock Exchange 100 Index  (KSE-100 Index) is a  stock index  acting as a standard to compare prices on the  Karachi Stock Exchange  (KSE) over a period of time. In formative representative companies to calculate the index on, companies with the maximum  market capitalization  are selected. On the other hand, to ensure maximum market representation, the company with the maximum market capitalization from each sector is also incorporated.. 1.2 Problem Statement To study the impact of discount rate changes on stock market return 1.3 Research Hypothesis: The expected discount rate change announcements have impact on stock market return. 1.4 Outline of the Study The aim of the study is to observe Impact of Discount rate Changes on Stock Market Return. This Study is observing on Karachi Stock Exchange (KSE). The  Karachi Stock Exchange  is a  stock exchange  situated in  Karachi,  Pakistan, established on 18 September, 1947 it started with 5 companies with a capital of Rs. 37 million. It is Pakistans biggest and oldest stock exchange, with a lot of Pakistani as well as overseas listings. Its present premises are placed on Stock Exchange Road, in the heart of Karachis Business District. KSE starts with a 50 shares index. As the market develops a representative index was needed. In poor political condition, social issues, financial and other problems, KSE played a very important role in the financial system of Pakistan. KSE 100-index showed a return of 40.19% and became the sixth best markets in the year 2007. It gets a biggest milestone by touching of KSE-100 Index level of 15,000 for the foremost time in the history of Karachi sto ck exchange on 20 April, 2008. On the other hand, the raise of 7.4 percent in 2008 build-up the best performer in all the emerging market. The KSE 100TM Index closed at 9645 points on 19 June, 2010. Although by 30th July total market capitalisation of the KSE reached Rs2.95 trillion, approximately around 35 billion dollars CHAPTER 2 LITERATURE REVIEW As it can be figured out by the models of stock market and about the interest rates, value of share in the stock market, maturity of the bonds with short run and long run and the value of the capital as well as the factor of production, All these things influence a great deal towards the changes as well as the demand and supply model. Equilibrium is also there, which is basically an intersection, the point where the quantity of supply equal to the quantity demands. Output and interest rates plays a bigger role in the discount changes, as from the different policies, laws and models have been mentioned in the previous studies. If prices are fixed country can never faced inflation because of the nominal and real rates. Output depends on the stock market and fiscal policy (Blume, 1994). The stock market is the ratio of steady-state profit to the steady-state interest rate. If the money increases in the market the steady-state effects are quite clear, Output and stock market are higher in the equilibrium. The higher money stock lowers the real interest rate and thus the cost of capital. This was all about a monetary expansion under fixed price. We find that in the pre-79 period, there was no securities market response to either technical or nontechnical changes, while in the post-79 period there was no response to technical changes (Hardouvelis and Gikas, 1987). Discount rate changes will affect market rate and equity returns if such changes brings information about either short- or long- run monetary policy objectives. So an in increase in the discount will definitely help to attract more and more people towards the policy, and there will be a huge amount of change in the customers and clients response towards it. As a result, current (spot) and expected short-term rates rise in reaction to reduced short-run money growth. Long-term rates and forward rates may also increase to reflect the higher expected short-term rates. It doesnt have much impact over the long-term rates as it has on short-term rates just because the monetary policy and consumers response (Maberly, 1992). Short term rates makes more people attractive and kind of working well for the secondary markets, so mostly they all rely on the short-term rates, as they prefer short-term rates than long-term rates. And short-term is the one which affect a great deal. The impact of discount rate changes on equity prices can operate through two possible channels. This is most readily seen by viewing the value of the firm as the present value of its future net cash flows. To some extent discount rate increases (decreases) result in increases (decreases) in interest rates. It has also based on the capital or investment as well, capital can fall or rise just because of the stock prices, stock prices has an ultimate effect on capital and economic activity can be disturbed too, that also can be altered due to this price change. If the capitalization rates and cash flow expectation are affected by discount rate changes, these effects will also work in the same direction. From previous studies we have an i dea that stock prices declines to be associated with discount rate increases (Ederington and Lee, 1993). Considering the New York stock exchange, the stock return data are the daily percentage return on the New York Stock Exchange value-weighted index and is denoted SP. The interest rate data are for constant maturity Treasury securities and include eight different maturities: 90-, 180-, and 360-day bills and three-, five-, seven-, ten-, and twenty-year bonds. These rates are obtained from DRI, who compile them from the Federal Reserve Board Statistical Release from DRI. These eight interests are used to calculate seven forward rates in addition to the 90-day bill rate. The stock price coefficient for the post-79 period suggests a 1 percent increase (decrease) in the discount rate will result in a decline (increase) of 1.06 percent in stock prices. A similar finding in reported for the interest rate data. Only one interest rate series evidences a significant market reaction in the pre-79 period, while six of the eight interest rates indicate a significant market response over the post-7 9 period (Gerety, and Mulherin, 1992). Although the early researches result indicates that the real issue is whether the observed announcement effect, regardless of the monetary policy regime, indicates market inefficiency. In classification of the discount rate changes from the previous discussion we have evaluated that to assess properly the announcement effects of discount rate changes, it is necessary to distinguish technical from nontechnical changes. There are several short comings with this approach that limit its usefulness in predicting discount rate changes and cast substantial doubt on the assumption of discount rate erogeneity (Lee and Bong, 1992). Researches rely on two different methods to classify discount rate changes. The best model, both in terms of in-sample fit and prediction of actual discount rate changes, related changes in the discount rate (measured in basis points) to the spread between the Fed Funds rate and the discount rate. Nonetheless, if the model incorporates the relevant information set, then by construction the forecast and optimal predictions based on available information and, therefore, rational. Through the study of different modules we came on to know in conclusion that the purpose of this has been to reconcile previous findings of both an endogenous discount rate and discount rate announcement effects with market efficiency (Harris, 1986). By classifying discount rate changes as either technical or non-technical, and recognizing that the latter are (at least) partially endogenous, it is argued that, within the framework of market efficiency, the discount rate can fail tests of statistical erogeneity and still exhibit announcement effects. The empirical evidence of this paper supports this view and suggests that previous studies were missing specified by not controlling for the purpose of discount rate change. The evidence also implies that the common assumption contained in virtually all theoretical and empirical macroeconomic models, that the discount rate is either purely endogenous or purely exogenous, is inappropriate. This also specifies market only react when there appears to be a shift in policy- in the discount rate. At least from this standpoint, one cannot rule out the discount rate as a useful tool of monetary policy. Eventually, our results support the existence of efficient markets based on the dual findin gs that only nontechnical changes are characterized by announcement effects and that virtually the entire market adjustments occurs by the end of the announcement day (Jones, 1994). From previous studies the issue of monetary neutrality has long been debated by financial economists. There was evidence been brought in to the market which says that increases in the growth rate of money raises stock returns? Monetary policy affects the real economy, and whether its effects are quantitatively important, remain open questions. These questions by examining the effects of monetary policy innovations on stock return data. Theory posits that stock prices equal the expected present value of future net cash flows. To examine the relationship between monetary policy and stock returns, a variety of empirical techniques are employed. The size portfolios are useful for investigating why monetary policy matters, if in fact it does. If monetary policy has real effects, one reason for this could be that it affects firms balance sheets. To investigate whether monetary policy affects size and industry portfolios, both impulse responses and innovation accounting methods are used. Al l the results in table one to four measures the effects of monetary policy shocks on nominal stock returns. In considering the question of monetary neutrality, we are interested in whether monetary policy affects real stock returns. Thus rather than complicate the analysis by considering the best way to measure expected inflation we focus on results using nominal returns. Through the different systems results reported are robust to minor changes in the specification. When total reserves are dropped, employment growth or unemployment is used instead of industrial production growth, the non stationary variables are first-differenced, and the number of lags is changed (Marshall and David, 1992). There was another approach to identifying monetary shocks is Data and Methodology which is been made to the use of Federal Reserve statements and other historical documents over the period to identify exogenous changes in monetary policy and the responses of real variables. This narrative approach has recently employed to assemble a much larger sample of monetary policy shocks. An alternative way is used to test whether monetary policy affects stock returns (Morse, 1981). A growing number of papers in both the economics and finance literature focus on the effect of economic news on asset returns. Nonetheless, there seems a wide gap between these two literatures. These elements of surprise in one particular type of news announcements of short-term interest rate decisions made by the Open Market Committee affect the volatility of the stock market in the short term. Relationship between monetary policy and daily stock market volatility from two vantage points: days around regularly scheduled meetings of the stock market committee, the main monetary policy making body and days of actual policy decisions involving the target level of the federal funds rate (Fama and Kenneth, 1995). Turning to the days of actual policy decisions regardless of whether they were announced on regularly scheduled meetings days. Some evidence was found that such decisions tend to boost volatility in the stock market. The effect of policy decisions is greatest that exclude those decisions that were fully anticipated by market. Besides identifying monetary policy announcements as an important source of short-run volatility in the stock market, this will also addresses broader issues in the finance literature. In particular, higher interest rates induce higher leverage ratios, which in turn increase the risk associated with holding stocks and the volatility of stock returns (Patell and Wolfson, 1984). In examining the relationship between the stock market and fiscal policy, all models combined two different approaches widely used in the monetary economics and finance literature. In particular, in analyzing the markets response to scheduled and unscheduled announcements, a potentially interesting issue is whether the corresponding impulse response functions for volatility are significantly different. Other issues that also merit further consideration include a closer look at the relationship between first- and second- moment responses to policy news and the explicit analysis of risk premiums around announcements days (Penman, 1987). From all these models and theories, have come to know that anything that happens in the secondary market, it does have an impact over the entire economy as we have gone through from the different examples across the world. Even if it is pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies and all this process makes things more complicated especially for the investors and then it effects the stock market. Monetary policy on the other hand takes things more attractive for the investors and share holders that they believe their money is in safe place so they would love to invest as long as they are sure about the monetary policy (Stoll and Whaley, 1990). Policies are always made for the betterment of the people who are your clients or customers as per organization requirements, it also refers to the trust that how much they trust on their policies that people could come and invest. Banks do the same thing; the only thing they sell is trust, because as many people trust on you as they will go on to be their customers. Many of the sources indicate that there is a connection between news and stock prices, finance literature highlights that too. The finance literature focus on economic announcements per se, without controlling for the element of surprise in such announcements, might help to explain why so many studies have failed to find a significant link between market volatility and economic news. Either by implicitly assuming that the conditional volatility of stock returns is time invariant or by simply leaving its time-varying nature unspecified, monetary economists have failed to consider a potentially significant effect of policy surprises on the short-run behavior of the market (Wood and McInish, 1985). Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements (Richard Roll and Stephen Ross, 1986). CHAPTER 3 RESEARCH METHOD This chapter explains the methodology used for the research study. The main research data set is used in this paper consist of KSE 100 index listed on Karachi Stock Exchange. It is the data for last ten years 2000 to 2010 for every monetary policy has been announced Data would be collected through the website and business recorder website. This chapter also discusses the methods to evaluate validity and reliability of research for the factors associated with the Impact of Discount rate Changes on Stock Market Return. 3.1 Method of data collection: The secondary data which was used in this research was available on the website of Karachi Stock Exchange from 2000 to 2010. 3.2 Sample size and Sampling Technique: In this research, data from the year 2000 to 2010 has been taken as a sample size. The data collected through Karachi Stock Market and State Bank of Pakistan 3.3 Instrument of Data Collection: This research was carried out through Secondary Data. 3.4 Statistical tool used: In order to measure the relationship between the variables stock market return and discount rate and impact of discount rate change on stock market return, Regression is used as a statistical tool in this research. SPSS software is used to evaluate the relationship between the two variables CHAPTER 4 RESULTS Hypothesis Testing Ho: The expected discount rate changes announcements have impact on stock market return. Table 4.1 From the above Durbin Watson value, it has been clarified that there was an existence of auto correlation in the data set. In order to resolve the issue we have generated the lag variables of the dependent variable up to the level 2. Table 4.2 Form the above table we can observe the value of the Adjusted R Square is .934 or 93.4%. It means that 1 unit change in the set of independent variables brings out the 93.4% change in the variation of dependent variable. With the inclusion of the lag variables in the data set, the problem auto correlation has been resolved. The Durbin Watson value mentioned in the above table is 1.964 closer to 2. Value closer to 2 means that there is no auto correlation exists in the data set. Table 4.3 From the above table we can observe that the significant value of the above ANOVAs test model 2 is less that 0.05. It means that the data is suitable for the application of regression model. Table 4.4 The above table shows the coefficient value of the analysis. As it can be observed that, the significant value of the discount rate is less than 0.05 it means that the change in discount rate has a significant impact on the stock therefore; the Null hypothesis is not rejected. At 95% confidence interval level the significant value of alpha/constant is 0.000 it means that the in the absence of all the variables the minimum return of the KSE is equal to the alpha value. The Beta value of lag 1 is 5376.550 it means that the today returns from the stock market is dependent on the stock market returns after the announcement of last monetary policy. For e.g. if the current stock return are equal to 1 the stock returns after the announcement of the next monetary policy is 5376.550 times of the current stock returns. The relationship of the lag 2 stock returns is vice versa of the lag 1 stock returns. It has a negative relationship with the current stock returns. Graph 4.1 The above diagram shows the trend of the KSE index and the change in discount rates for the last 10 years in the country. On a whole an upward trend has been observed in the KSE 100 index it is due to the increase in the FDI investments as well as the development in the financial sectors. The change in the discount rate shows overall a mix trend, we can observe a huge peaks and valleys in the graph. In our research, we have not found any significant relationship among the announcement of change in discount rate and stock returns. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect i s that, the change in the discount rate affects the profitability of the companies in the next coming quarters so, immediately the affect in the stock returns are not massive that are in the long run. 4.2 Hypotheses Assessment Summary The hypotheses of this research study are based on variables like stock market return and discount rate intraday. The significant value is less than 0.05 It means that the data is suitable for the application of regression model. S.NO. Hypotheses T SIG. RESULT H1 the expected discount rate changes announcement have impact on stock market return. 11.991 .000 Accepted CHAPTER 5 CONCLUSIONS, DISCUSSIONS, IMPLICATIONS AND FUTURE RESEARCH 5.1 Conclusion As anticipated, expected discount rate changes, representing existing public information, have no impact on the trading volume for the current period nor does for any other periods. Public information also induces trading only in the current period but not in the future periods. More trading has occurred during the decreasing discount rate periods than the increasing discount rate periods as evidenced by the significant parameter. 5.2 Discussion This research shows that the change in the discount rate shows overall a mix trend, it can be observed a huge peaks and valleys in the graph. In this research there was no significant relationship found among the announcement of change in discount rate and stock returns. The reason behind this is, other than monetary policy there are lots of other factors that are contributing towards the stock returns in Karachi stock market. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect is that, the change in the discount rate affects the profitability of the companies in the next coming qua rters so, immediately the affect in the stock returns are not massive that are in the long run. In this research it has been identified more accurately that if and when the stock market responds to the release of the discount rate change information. More importantly, studying the market volatility and trading volume sheds additional light on the information literature. Equity returns respond negatively and significantly to the unexpected announcements of discount rate changes, while the expected changes generally have no bearing on the equity returns. 5.3 Implementations For practical implementation, this research can be used to analyze the impact of Discount rate Changes on Stock Market Return as The effect of discount rate changes on stock market returns. Equity returns generally respond negatively and significantly to the unexpected announcements; however, the effect of expected changes on equity returns is insignificant. Abnormal trading volume occurs only in period. 5.4 Recommendations Pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies nd all this process makes things more complicated especially for the investors and then it effects the stock market. CHAPTER 6 REFERNCES Blume, L, 1994, Market statistics and technical analysis, the role of volume. Journal of Finance, 49, 153-181. Ederington, L.H and Lee, J.H, 1993, How markets process information, News releases and volatility, Journal of Finance, 48, 1161-1191. Fama and Kenneth, 1995, Size and book-to-market factors in earnings and returns, Journal of Finance, 50, 131-156. Gerety, M.S and Mulherin, H.J, 1992, Trading halts and market activity, An analysis of volume at the open and the close, Journal of Finance, 47, 1765-1784. Harris, L, 1986, A transaction data study of weekly and intradaily patterns in stock returns, Journal of Financial Economics, 16, 99-117. Hardouvelis, Gikas, 1987, Reserves announcements and interest rates, Does monetary policy matter? Journal of Finance, 42, 407-422. Lee, Bong-Soo, 1992, Causal relations among stock returns, interest rates, real activity, and inflation, Journal of Finance, 47, 1591-1603. Maberly, E.D, 1992, Odd-lot transactions around the turn of the year, Journal of Financial and Quantitative Analysis, 27, 591-604. Jones, 1994. Information, trading and volatility, Journal of Financial Economics, 36, 127-154. Morse, D, 1981, Price and trading volume reaction surrounding earnings announcements, A closer examination. Journal of Accounting Research 19, 374-383. Marshall and David, 1992, Inflation and asset returns in a monetary economy, Journal of Finance, 47, 1315-1342. Penman, S.H, 1987, The distribution of earnings news over time and seasonalities in aggregate stock returns, Journal of Financial Economics, 18, 199-228. Patell, J.M and Wolfson, M.A, 1984, The intraday speed of adjustment of stock prices to earnings and dividend announcements, Journal of Financial Economics 13, 223-252. Richard Roll, and Stephen Ross, 1986, Economic forces and the stock market, Journal of Business, 59, 383-403. Stoll and Whaley, 1990, The dynamics of stock index and stock index futures returns, Journal of Financial and Quantitative Analysis, 25, 441-468. Wood, and McInish, 1985, An investigation of transaction data for NYSE stocks, Journal of Finance 60, 723-739. Impact of Discount rate Changes on Stock Market Return Impact of Discount rate Changes on Stock Market Return CHAPTER 1 Stock market plays an important role in the economic development of a country. Stock exchange performance has attained significant role in global economics and financial markets, due to their impact on corporate finance and economic activity. For instance stock exchanges enable firms to acquire capital quickly, due to the ease with which securities are traded. Stock exchange activity, thus, plays an important role in helping to determine the effects of macroeconomic activities. Stock market returns are the returns that the investors generate out of the stock market; it can be in the form of dividends or profits, as a company gets its dividends and profits in the form of their share holders in the secondary market. Well there is a definite change in the market as with the behavior changes with the discount rate, changes can be technical or non-technical. Technical changes refers to the internal changes and non-technical as external changes which are mostly related to the behavior and response of the customers and consumers. Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements. Karachi Stock Exchange 100 Index  (KSE-100 Index) is a  stock index  acting as a standard to compare prices on the  Karachi Stock Exchange  (KSE) over a period of time. In formative representative companies to calculate the index on, companies with the maximum  market capitalization  are selected. On the other hand, to ensure maximum market representation, the company with the maximum market capitalization from each sector is also incorporated.. 1.2 Problem Statement To study the impact of discount rate changes on stock market return 1.3 Research Hypothesis: The expected discount rate change announcements have impact on stock market return. 1.4 Outline of the Study The aim of the study is to observe Impact of Discount rate Changes on Stock Market Return. This Study is observing on Karachi Stock Exchange (KSE). The  Karachi Stock Exchange  is a  stock exchange  situated in  Karachi,  Pakistan, established on 18 September, 1947 it started with 5 companies with a capital of Rs. 37 million. It is Pakistans biggest and oldest stock exchange, with a lot of Pakistani as well as overseas listings. Its present premises are placed on Stock Exchange Road, in the heart of Karachis Business District. KSE starts with a 50 shares index. As the market develops a representative index was needed. In poor political condition, social issues, financial and other problems, KSE played a very important role in the financial system of Pakistan. KSE 100-index showed a return of 40.19% and became the sixth best markets in the year 2007. It gets a biggest milestone by touching of KSE-100 Index level of 15,000 for the foremost time in the history of Karachi sto ck exchange on 20 April, 2008. On the other hand, the raise of 7.4 percent in 2008 build-up the best performer in all the emerging market. The KSE 100TM Index closed at 9645 points on 19 June, 2010. Although by 30th July total market capitalisation of the KSE reached Rs2.95 trillion, approximately around 35 billion dollars CHAPTER 2 LITERATURE REVIEW As it can be figured out by the models of stock market and about the interest rates, value of share in the stock market, maturity of the bonds with short run and long run and the value of the capital as well as the factor of production, All these things influence a great deal towards the changes as well as the demand and supply model. Equilibrium is also there, which is basically an intersection, the point where the quantity of supply equal to the quantity demands. Output and interest rates plays a bigger role in the discount changes, as from the different policies, laws and models have been mentioned in the previous studies. If prices are fixed country can never faced inflation because of the nominal and real rates. Output depends on the stock market and fiscal policy (Blume, 1994). The stock market is the ratio of steady-state profit to the steady-state interest rate. If the money increases in the market the steady-state effects are quite clear, Output and stock market are higher in the equilibrium. The higher money stock lowers the real interest rate and thus the cost of capital. This was all about a monetary expansion under fixed price. We find that in the pre-79 period, there was no securities market response to either technical or nontechnical changes, while in the post-79 period there was no response to technical changes (Hardouvelis and Gikas, 1987). Discount rate changes will affect market rate and equity returns if such changes brings information about either short- or long- run monetary policy objectives. So an in increase in the discount will definitely help to attract more and more people towards the policy, and there will be a huge amount of change in the customers and clients response towards it. As a result, current (spot) and expected short-term rates rise in reaction to reduced short-run money growth. Long-term rates and forward rates may also increase to reflect the higher expected short-term rates. It doesnt have much impact over the long-term rates as it has on short-term rates just because the monetary policy and consumers response (Maberly, 1992). Short term rates makes more people attractive and kind of working well for the secondary markets, so mostly they all rely on the short-term rates, as they prefer short-term rates than long-term rates. And short-term is the one which affect a great deal. The impact of discount rate changes on equity prices can operate through two possible channels. This is most readily seen by viewing the value of the firm as the present value of its future net cash flows. To some extent discount rate increases (decreases) result in increases (decreases) in interest rates. It has also based on the capital or investment as well, capital can fall or rise just because of the stock prices, stock prices has an ultimate effect on capital and economic activity can be disturbed too, that also can be altered due to this price change. If the capitalization rates and cash flow expectation are affected by discount rate changes, these effects will also work in the same direction. From previous studies we have an i dea that stock prices declines to be associated with discount rate increases (Ederington and Lee, 1993). Considering the New York stock exchange, the stock return data are the daily percentage return on the New York Stock Exchange value-weighted index and is denoted SP. The interest rate data are for constant maturity Treasury securities and include eight different maturities: 90-, 180-, and 360-day bills and three-, five-, seven-, ten-, and twenty-year bonds. These rates are obtained from DRI, who compile them from the Federal Reserve Board Statistical Release from DRI. These eight interests are used to calculate seven forward rates in addition to the 90-day bill rate. The stock price coefficient for the post-79 period suggests a 1 percent increase (decrease) in the discount rate will result in a decline (increase) of 1.06 percent in stock prices. A similar finding in reported for the interest rate data. Only one interest rate series evidences a significant market reaction in the pre-79 period, while six of the eight interest rates indicate a significant market response over the post-7 9 period (Gerety, and Mulherin, 1992). Although the early researches result indicates that the real issue is whether the observed announcement effect, regardless of the monetary policy regime, indicates market inefficiency. In classification of the discount rate changes from the previous discussion we have evaluated that to assess properly the announcement effects of discount rate changes, it is necessary to distinguish technical from nontechnical changes. There are several short comings with this approach that limit its usefulness in predicting discount rate changes and cast substantial doubt on the assumption of discount rate erogeneity (Lee and Bong, 1992). Researches rely on two different methods to classify discount rate changes. The best model, both in terms of in-sample fit and prediction of actual discount rate changes, related changes in the discount rate (measured in basis points) to the spread between the Fed Funds rate and the discount rate. Nonetheless, if the model incorporates the relevant information set, then by construction the forecast and optimal predictions based on available information and, therefore, rational. Through the study of different modules we came on to know in conclusion that the purpose of this has been to reconcile previous findings of both an endogenous discount rate and discount rate announcement effects with market efficiency (Harris, 1986). By classifying discount rate changes as either technical or non-technical, and recognizing that the latter are (at least) partially endogenous, it is argued that, within the framework of market efficiency, the discount rate can fail tests of statistical erogeneity and still exhibit announcement effects. The empirical evidence of this paper supports this view and suggests that previous studies were missing specified by not controlling for the purpose of discount rate change. The evidence also implies that the common assumption contained in virtually all theoretical and empirical macroeconomic models, that the discount rate is either purely endogenous or purely exogenous, is inappropriate. This also specifies market only react when there appears to be a shift in policy- in the discount rate. At least from this standpoint, one cannot rule out the discount rate as a useful tool of monetary policy. Eventually, our results support the existence of efficient markets based on the dual findin gs that only nontechnical changes are characterized by announcement effects and that virtually the entire market adjustments occurs by the end of the announcement day (Jones, 1994). From previous studies the issue of monetary neutrality has long been debated by financial economists. There was evidence been brought in to the market which says that increases in the growth rate of money raises stock returns? Monetary policy affects the real economy, and whether its effects are quantitatively important, remain open questions. These questions by examining the effects of monetary policy innovations on stock return data. Theory posits that stock prices equal the expected present value of future net cash flows. To examine the relationship between monetary policy and stock returns, a variety of empirical techniques are employed. The size portfolios are useful for investigating why monetary policy matters, if in fact it does. If monetary policy has real effects, one reason for this could be that it affects firms balance sheets. To investigate whether monetary policy affects size and industry portfolios, both impulse responses and innovation accounting methods are used. Al l the results in table one to four measures the effects of monetary policy shocks on nominal stock returns. In considering the question of monetary neutrality, we are interested in whether monetary policy affects real stock returns. Thus rather than complicate the analysis by considering the best way to measure expected inflation we focus on results using nominal returns. Through the different systems results reported are robust to minor changes in the specification. When total reserves are dropped, employment growth or unemployment is used instead of industrial production growth, the non stationary variables are first-differenced, and the number of lags is changed (Marshall and David, 1992). There was another approach to identifying monetary shocks is Data and Methodology which is been made to the use of Federal Reserve statements and other historical documents over the period to identify exogenous changes in monetary policy and the responses of real variables. This narrative approach has recently employed to assemble a much larger sample of monetary policy shocks. An alternative way is used to test whether monetary policy affects stock returns (Morse, 1981). A growing number of papers in both the economics and finance literature focus on the effect of economic news on asset returns. Nonetheless, there seems a wide gap between these two literatures. These elements of surprise in one particular type of news announcements of short-term interest rate decisions made by the Open Market Committee affect the volatility of the stock market in the short term. Relationship between monetary policy and daily stock market volatility from two vantage points: days around regularly scheduled meetings of the stock market committee, the main monetary policy making body and days of actual policy decisions involving the target level of the federal funds rate (Fama and Kenneth, 1995). Turning to the days of actual policy decisions regardless of whether they were announced on regularly scheduled meetings days. Some evidence was found that such decisions tend to boost volatility in the stock market. The effect of policy decisions is greatest that exclude those decisions that were fully anticipated by market. Besides identifying monetary policy announcements as an important source of short-run volatility in the stock market, this will also addresses broader issues in the finance literature. In particular, higher interest rates induce higher leverage ratios, which in turn increase the risk associated with holding stocks and the volatility of stock returns (Patell and Wolfson, 1984). In examining the relationship between the stock market and fiscal policy, all models combined two different approaches widely used in the monetary economics and finance literature. In particular, in analyzing the markets response to scheduled and unscheduled announcements, a potentially interesting issue is whether the corresponding impulse response functions for volatility are significantly different. Other issues that also merit further consideration include a closer look at the relationship between first- and second- moment responses to policy news and the explicit analysis of risk premiums around announcements days (Penman, 1987). From all these models and theories, have come to know that anything that happens in the secondary market, it does have an impact over the entire economy as we have gone through from the different examples across the world. Even if it is pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies and all this process makes things more complicated especially for the investors and then it effects the stock market. Monetary policy on the other hand takes things more attractive for the investors and share holders that they believe their money is in safe place so they would love to invest as long as they are sure about the monetary policy (Stoll and Whaley, 1990). Policies are always made for the betterment of the people who are your clients or customers as per organization requirements, it also refers to the trust that how much they trust on their policies that people could come and invest. Banks do the same thing; the only thing they sell is trust, because as many people trust on you as they will go on to be their customers. Many of the sources indicate that there is a connection between news and stock prices, finance literature highlights that too. The finance literature focus on economic announcements per se, without controlling for the element of surprise in such announcements, might help to explain why so many studies have failed to find a significant link between market volatility and economic news. Either by implicitly assuming that the conditional volatility of stock returns is time invariant or by simply leaving its time-varying nature unspecified, monetary economists have failed to consider a potentially significant effect of policy surprises on the short-run behavior of the market (Wood and McInish, 1985). Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements (Richard Roll and Stephen Ross, 1986). CHAPTER 3 RESEARCH METHOD This chapter explains the methodology used for the research study. The main research data set is used in this paper consist of KSE 100 index listed on Karachi Stock Exchange. It is the data for last ten years 2000 to 2010 for every monetary policy has been announced Data would be collected through the website and business recorder website. This chapter also discusses the methods to evaluate validity and reliability of research for the factors associated with the Impact of Discount rate Changes on Stock Market Return. 3.1 Method of data collection: The secondary data which was used in this research was available on the website of Karachi Stock Exchange from 2000 to 2010. 3.2 Sample size and Sampling Technique: In this research, data from the year 2000 to 2010 has been taken as a sample size. The data collected through Karachi Stock Market and State Bank of Pakistan 3.3 Instrument of Data Collection: This research was carried out through Secondary Data. 3.4 Statistical tool used: In order to measure the relationship between the variables stock market return and discount rate and impact of discount rate change on stock market return, Regression is used as a statistical tool in this research. SPSS software is used to evaluate the relationship between the two variables CHAPTER 4 RESULTS Hypothesis Testing Ho: The expected discount rate changes announcements have impact on stock market return. Table 4.1 From the above Durbin Watson value, it has been clarified that there was an existence of auto correlation in the data set. In order to resolve the issue we have generated the lag variables of the dependent variable up to the level 2. Table 4.2 Form the above table we can observe the value of the Adjusted R Square is .934 or 93.4%. It means that 1 unit change in the set of independent variables brings out the 93.4% change in the variation of dependent variable. With the inclusion of the lag variables in the data set, the problem auto correlation has been resolved. The Durbin Watson value mentioned in the above table is 1.964 closer to 2. Value closer to 2 means that there is no auto correlation exists in the data set. Table 4.3 From the above table we can observe that the significant value of the above ANOVAs test model 2 is less that 0.05. It means that the data is suitable for the application of regression model. Table 4.4 The above table shows the coefficient value of the analysis. As it can be observed that, the significant value of the discount rate is less than 0.05 it means that the change in discount rate has a significant impact on the stock therefore; the Null hypothesis is not rejected. At 95% confidence interval level the significant value of alpha/constant is 0.000 it means that the in the absence of all the variables the minimum return of the KSE is equal to the alpha value. The Beta value of lag 1 is 5376.550 it means that the today returns from the stock market is dependent on the stock market returns after the announcement of last monetary policy. For e.g. if the current stock return are equal to 1 the stock returns after the announcement of the next monetary policy is 5376.550 times of the current stock returns. The relationship of the lag 2 stock returns is vice versa of the lag 1 stock returns. It has a negative relationship with the current stock returns. Graph 4.1 The above diagram shows the trend of the KSE index and the change in discount rates for the last 10 years in the country. On a whole an upward trend has been observed in the KSE 100 index it is due to the increase in the FDI investments as well as the development in the financial sectors. The change in the discount rate shows overall a mix trend, we can observe a huge peaks and valleys in the graph. In our research, we have not found any significant relationship among the announcement of change in discount rate and stock returns. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect i s that, the change in the discount rate affects the profitability of the companies in the next coming quarters so, immediately the affect in the stock returns are not massive that are in the long run. 4.2 Hypotheses Assessment Summary The hypotheses of this research study are based on variables like stock market return and discount rate intraday. The significant value is less than 0.05 It means that the data is suitable for the application of regression model. S.NO. Hypotheses T SIG. RESULT H1 the expected discount rate changes announcement have impact on stock market return. 11.991 .000 Accepted CHAPTER 5 CONCLUSIONS, DISCUSSIONS, IMPLICATIONS AND FUTURE RESEARCH 5.1 Conclusion As anticipated, expected discount rate changes, representing existing public information, have no impact on the trading volume for the current period nor does for any other periods. Public information also induces trading only in the current period but not in the future periods. More trading has occurred during the decreasing discount rate periods than the increasing discount rate periods as evidenced by the significant parameter. 5.2 Discussion This research shows that the change in the discount rate shows overall a mix trend, it can be observed a huge peaks and valleys in the graph. In this research there was no significant relationship found among the announcement of change in discount rate and stock returns. The reason behind this is, other than monetary policy there are lots of other factors that are contributing towards the stock returns in Karachi stock market. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect is that, the change in the discount rate affects the profitability of the companies in the next coming qua rters so, immediately the affect in the stock returns are not massive that are in the long run. In this research it has been identified more accurately that if and when the stock market responds to the release of the discount rate change information. More importantly, studying the market volatility and trading volume sheds additional light on the information literature. Equity returns respond negatively and significantly to the unexpected announcements of discount rate changes, while the expected changes generally have no bearing on the equity returns. 5.3 Implementations For practical implementation, this research can be used to analyze the impact of Discount rate Changes on Stock Market Return as The effect of discount rate changes on stock market returns. Equity returns generally respond negatively and significantly to the unexpected announcements; however, the effect of expected changes on equity returns is insignificant. Abnormal trading volume occurs only in period. 5.4 Recommendations Pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies nd all this process makes things more complicated especially for the investors and then it effects the stock market. CHAPTER 6 REFERNCES Blume, L, 1994, Market statistics and technical analysis, the role of volume. Journal of Finance, 49, 153-181. Ederington, L.H and Lee, J.H, 1993, How markets process information, News releases and volatility, Journal of Finance, 48, 1161-1191. Fama and Kenneth, 1995, Size and book-to-market factors in earnings and returns, Journal of Finance, 50, 131-156. Gerety, M.S and Mulherin, H.J, 1992, Trading halts and market activity, An analysis of volume at the open and the close, Journal of Finance, 47, 1765-1784. Harris, L, 1986, A transaction data study of weekly and intradaily patterns in stock returns, Journal of Financial Economics, 16, 99-117. Hardouvelis, Gikas, 1987, Reserves announcements and interest rates, Does monetary policy matter? Journal of Finance, 42, 407-422. Lee, Bong-Soo, 1992, Causal relations among stock returns, interest rates, real activity, and inflation, Journal of Finance, 47, 1591-1603. Maberly, E.D, 1992, Odd-lot transactions around the turn of the year, Journal of Financial and Quantitative Analysis, 27, 591-604. Jones, 1994. Information, trading and volatility, Journal of Financial Economics, 36, 127-154. Morse, D, 1981, Price and trading volume reaction surrounding earnings announcements, A closer examination. Journal of Accounting Research 19, 374-383. Marshall and David, 1992, Inflation and asset returns in a monetary economy, Journal of Finance, 47, 1315-1342. Penman, S.H, 1987, The distribution of earnings news over time and seasonalities in aggregate stock returns, Journal of Financial Economics, 18, 199-228. Patell, J.M and Wolfson, M.A, 1984, The intraday speed of adjustment of stock prices to earnings and dividend announcements, Journal of Financial Economics 13, 223-252. Richard Roll, and Stephen Ross, 1986, Economic forces and the stock market, Journal of Business, 59, 383-403. Stoll and Whaley, 1990, The dynamics of stock index and stock index futures returns, Journal of Financial and Quantitative Analysis, 25, 441-468. Wood, and McInish, 1985, An investigation of transaction data for NYSE stocks, Journal of Finance 60, 723-739.

The Moral Judges of Nathaniel Hawthornes The Scarlet Letter :: Scarlet Letter essays

The Moral Judges of The Scarlet Letter If human beings are evil, then they can easily appoint themselves as judges, and from their point of view, the decisions they make are moral. These judges try to make themselves look better, by lowering the criminal below their level. These moral judges also try to play God, by selecting, and if they have enough power, executing their decision as a punishment for the crime committed. It is as clear as glass, that these decisions that come from evil beings will also be immoral, and evil. Decisions made by moral judges reflect how much evil they possess within them. Hester had to stand on the scaffold, which was a place for public shame, and had everybody judge her for her crime, committing adultery. This punishment was decided for her by a group men who had political power. These men also thought that they were punishing an evil person, Hester, because she had sinned, and offended God. If that was true, why would a mortal decide, and act as God for God? These men in power made Hester look bad, so people on town would think that they are better than Hester, and because of that they would not sin, or they will too, will be punished. When Hester was standing on the scaffold, she was being judged by everybody, and since humans are evil, than their response towards her were not be positive, but evil. A group of women were talking with each other, and deciding on a punishment for Hester: "'What do we talk of marks and brands, whether on the bodice of her gown, or flesh of her forehead,'" (p. 49). To which another replied "'This woman has brought shame upon us all, and ought to die'" (p. 49). It is a good thing they didn't have any political power. This shows how full of evil these human self appointed judges are, and they do not only judge Hester, they also judge judges' decision. Hawthorne comments this barbarism by describing these judges: "...the ugliest as well as the most pitiless of these self-constituted judges," (p. 49). These evil women set themselves up themselves as moral judges in order to make themselves look like angels, by turning Hester into a devil.