Memory Retrieval essays

Memory Retrieval essays Some of the most intriguing information we have covered in lecture has involved memory retrieval. I always enjoy finding out that others share the same questions or concerns about any topic, it lends a feeling of validation. I have often wondered why I would repeat a task after just having completed it, or why I would draw a blank when the information should be readily available. I think its almost surprising how much memory is valued in many situations, yet it is known that people have tendencies to distort their memories (Sternberg, 2003). As described in the text, eyewitness testimony is the most serious example of societys reliance on individuals memories. Eyewitness testimony is similar to everyday retelling of stories of events to others. I think people can take notice of when they are losing details of the memory of an incident. For example, the more you tell the story of the car crash you saw today on the freeway, the shorter the story will become, focusing mainly on the action, less on situational details. The next couple of days when you are remembering the accident in your head, you realize you now arent sure exactly where on the road it was, what color the one car was, and whether you had the radio on or not. You recognize that you have lost some details, but you feel confident in your memory because you still can recall the crash itself. The idea of misattribution is very interesting here. It seems as if this is the next memory distortion that occurs after transience. Whereas people are aware of transience for the most part, misattribution seems to be more unconscious. It is in the retelling of the memory that we put the memory into understandable (for others) context. In order to give a full and accurate description of the memory, you give the setting, scene, or situation in which it took place. It seems as if the act of relating a memory to another individual requires cert ...

Profile of Serial Killer Rodney Alcala

Profile of Serial Killer Rodney Alcala Rodney Alcala is a convicted rapist, torturer, and serial killer who evaded justice for 40 years. Dubbed the Dating Game Killer Alcala was once a contestant on the show, The Dating Game, where he won a date with another contestant. However, the date never happened because the woman found him to be too creepy. Alcalas Childhood Years Rodney Alcala was born on August 23, 1943, in San Antonio, Texas to Raoul Alcala Buquor and Anna Maria Gutierrez. His father left, leaving Anna Maria to raise Alcala and his sisters alone. At around the age of 12, Anna Maria moved the family to Los Angeles. At the age of 17, Alcala joined the Army and remained there until 1964 when he received a medical discharge after being diagnosed with a severe anti-social personality. Alcala, now out of the Army, enrolled in UCLA School of Fine Arts where is earned his Bachelor of Fine Arts degree in 1968. This is the same year that he kidnapped, raped, beat, and tried to kill his first known victim. Tali Shapiro Tali Shapiro was an 8-year-old on her way to school when she was lured into Alcalas car, an act that did not go unnoticed by a nearby motorist who followed the two and contacted police. Alcala took Tali into his apartment where he raped, beat, and attempted to strangle her with a 10-pound metal bar. When police arrived, they kicked in the door and found Tali laying on the kitchen floor in a large puddle of blood and not breathing. Because of the brutality of the beating, they thought she was dead and begin to search for Alcala in the apartment. A police officer, returning to the kitchen, saw Tali struggling to breathe. All attention went to trying to keep her alive, and at some point, Alcala managed to slip out the back door. When searching Alcalas apartment, the police found several pictures, many of young girls. They also found out his name and that he had attended UCLA. But it took several months before they would find Alcala. On the Run but Not Hiding Alcala, now using the name John Berger, fled to New York and enrolled in NYU film school. From 1968 to 1971, even though he was listed on the FBIs most wanted list, he lived undetected and in full view. Playing the role of a groovy film student, amateur photographer, single hot shot, Alcala moved around New Yorks single clubs. During the summer months, he worked at an all girls summer drama camp in New Hampshire. In 1971, two girls attending the camp recognized Alcala on a wanted poster at the post office. The police were notified, and Alcala was arrested. Indeterminate Sentencing In August 1971, Alcala was returned to Los Angeles, but the prosecutors case had a major flaw - Tali Shapiros family had returned to Mexico soon after Tali recovered from the attack. Without their main witness, the decision was made to offer Alcala a plea deal. Alcala, charged with rape, kidnapping, assault, and attempted murder, accepted a deal to plead guilty to child molestation. The other charges were dropped. He was sentenced to one year to life and was paroled after 34 months under the indeterminate sentencing program. The program allowed a parole board, not a judge, to decide on when offenders could be released based on if they appeared rehabilitated. With Alcalas ability to charm, he was back out on the streets in less than three years. Within eight weeks he returned to prison for violating his parole for providing marijuana to a 13-year-old girl. She told police that Alcala kidnapped her, but he was not charged. Alcala spent another two years behind bars and was released in 1977, again under the indeterminate sentencing program. He returned to Los Angeles and got a job as a typesetter for the Los Angeles Times. More Victims It did not take long for Alcala to get back into his murderous rampage. The Murder of Jill Barcomb, Los Angeles County In November 1977, Alcala raped, sodomized, and murdered 18-year-old Jill Barcomb, a New York native who had recently moved to California. Alcala used a large rock to smash in her face and strangle her to death by tying her belt and pant leg around her neck.Alcala then left her body in a mountainous area in the foothills near Hollywood, where she was discovered Nov. 10, 1977, posed on her knees with her face in the dirt.Murder of Georgia Wixted, Los Angeles County In December 1977, Alcala raped, sodomized, and murdered 27-year-old nurse Georgia Wixted. Alcala used a hammer to sexually abuse Georgia, then used the claw end of the hammer to beat and smash in her head. He strangled her to death using a nylon stocking and left her body posed in her Malibu apartment. Her body was discovered Dec. 16, 1977.Murder of Charlotte Lamb, Los Angeles County In June 1979, Alcala raped, beat, and murdered 33-year-old legal secretary Charlotte Lamb. Alcal a strangled Charlotte to death using a shoelace from her shoe and left her body posed in a laundry room of an El Segundo apartment complex where it was discovered on June 24, 1979. Murder of Jill Parenteau, Los Angeles County In June 1979, Alcala raped and murdered 21-year-old Jill Parenteau in her Burbank apartment. He strangled Jill to death using a cord or nylon. Alcalas blood was collected from the scene after he cut himself crawling through a window. Based on a semi-rare blood match, Alcala was linked to the murder. He was charged with murdering Parenteau, but the case was later dismissed.Murder of Robin Samsoe, Orange County On June 20, 1979, Alcala approached 12-year-old Robin Samsoe and her friend Bridget Wilvert at Huntington Beach and asked them to pose for pictures. After posing for a series of photographs, a neighbor intervened and asked if everything was alright and Samsoe took off. Later Robin got on a bike and headed to an afternoon dance class. Alcala kidnapped and murdered Samsoe and dumped her body near the Sierra Madre in the foothills of the San Gabriel Mountains. Her body was scavenged by animals, and her skeletal remains were discovered on July 2, 1979. Her front teeth had been knocked out by Alcala. Arrested After the Samsoe murder, Alcala rented a storage locker in Seattle, where police found hundreds of photos of young women and girls and a bag of personal items that they suspected belonged to Alcalas victims. A pair of earrings found in the bag were identified by Samsoes mother as being a pair she owned. Alcala was also identified by several people as the photographer from the beach on the day Samsoe was kidnapped. Following an investigation, Alcala was charged, tried, and convicted for Samsoes murder in 1980. He was sentenced to receive the death penalty. The conviction was later overturned by the California Supreme Court. Alcala was again tried and convicted of the murder of Samsoe in 1986 and was again sentenced to the death penalty. The second conviction was overturned by the 9th Circuit Court of Appeals. Three Times a Charm While awaiting his third trial for the murder of Samsoe, DNA collected from the murder scenes of Barcomb, Wixted, and Lamb was linked to Alcala. He was charged with the four Los Angeles murders, including Parenteau. At the third trial, Alcala represented himself as his defense attorney and argued that he was at Knotts Berry Farm on the afternoon that Samsoe was murdered. Alcala did not contest the charges that he committed the murders of the four Los Angeles victims but rather focused on the Samsoe charges. At one point he took the stand and questioned himself in third-person, changing his tone depending on if he was acting as his lawyer or as himself. On Feb. 25, 2010, the jury found Alcala guilty of all five counts of capital murder, one count of kidnapping and four counts of rape. During the penalty phase, Alcala attempted to sway the jury away from the death penalty by playing the song Alices Restaurant by Arlo Guthrie, which includes the lyrics, I mean, I wanna, I wanna kill. Kill. I wanna, I wanna see, I wanna see blood and gore and guts and veins in my teeth. Eat dead burnt bodies. I mean kill, Kill, KILL, KILL. His strategy did not work, and the jury quickly recommended the death penalty to which the judge agreed. More Victims? Immediately after Alcalas conviction, the Huntington Police released 120 of Alcalas photos to the public. Suspecting that Alcala had more victims, the police asked for the publics help in identifying the women and children in the photos. Since then several of the unknown faces have been identified. New York Murders Two murder cases in New York have also been linked through DNA to Alcala. TWA flight attendant Cornelia Michael Crilley, was murdered in 1971 while Alcala was enrolled at NYU. Ciros Nightclub heiress Ellen Jane Hover was murdered in 1977 during the time that Alcala had received permission from his parole officer to go to New York to visit family. Currently, Alcala is on death row at San Quentin State Prison. Sources Orange County District Attorney48 Hours Mystery: Rodney Alcalas Killing Game

Research and Analysis Paper Example | Topics and Well Written Essays - 1500 words

And Analysis - Research Paper Example The subsidiaries of the company are usually consolidated from the acquisition date to the date that the company stops controlling the subsidiary (Gulf times.com). The accounts for the subsidiaries are prepared at the same time as that of the mother company. The accounting policies used are consistent. The group usually eliminates all its balances, losses, gains, and transactions that arise from intra group transactions. The dividends are also fully eliminated. The losses that are found in a subsidiary are usually attributable to the non controlling interest of the company even if the results may lead to a deficit balance. If there occur a change in ownership of the subsidiary without any losses, the transaction is recorded as an equity transaction. When Mannai corp. losses a subsidiary, it derecognizes its liabilities and assets that were attributable to the subsidiary. It also derecognizes the non controlling interest that was associated with the subsidiary. The translational differ ences that were recorded in equity are also derecognized. At the same time, it recognizes fair value of the consideration that it receives, fair value that is attributable to investments received and recognizes profits or losses that are associated with the subsidiary loss. The company then reclassifies its share of components in other income generating avenues. Acquisition policy The company celebrated its 60th anniversary in 2010 and it was named as the largest service and trading company in Qatar (mannai.com) The company refocused its business in 2001 by divesting its interest that were overseas and reducing the dependence on cyclical activities. The company achieved its restructuring goal in 2004 when the company was able to attain the capacity of delivering sustainable earnings for its shareholders. The company became a public company in 2007. In 2011, the company acquired 35% controlling interest in Axiom Company. In the year 2012, mannai corp. and EFG Hermes acquired majority stake in DAMAS Ltd. Motivation for Acquisitions Although it is not directly mentioned in the consolidated statements, from the analysis, the company has motivation for acquisitions for many reasons. First, to enhance the ability of the Group to continue as a going concern based on the fact that this can only happen if the Group has enough resources to continue operating or doing business for the foreseeable future. This is evident in the way the consolidated financial statements of the group continue to be made on a basis of going concern. Second, acquisitions help the group in minimize liquidity risk. The Group has been engaged in acquisitions with the main intention of having or consolidating adequate liquidity to help meet its liabilities, under both stressed and normal conditions, without registering unacceptable risking damage or losses to the Group reputation and operations. Thirdly, since the group depends on financing from shareholders and banks loans, the acquisitions serv es to strengthen the security or collateral base for securing loans from banks. In fact, one of the risks of the group is credit risk where financial liabilities accrue as a result of banks loans or overdrafts (pp. 34). Fourthly, its motivation for acquisition is to increase market share or simply reduce competition. This is because, apart from Axiom Limited which is engaged in import, wholesale and retail sale of various mobile phones brands as well as related

Mellor, Augustus and the Creation of the Empire Essay

Mellor, Augustus and the Creation of the Empire - Essay Example He emphasized on being given the right of military command ensuring the state suffered no harm, driving the murderers of his father into exile and defeating them twice in war, undertaking civil and foreign wars by land and sea throughout the whole world but spared lives of citizens who sought pardon, he was honored twice with ovations and saluted twenty one times as an imperator. Augustus took charge of grain supply at his own financial expense during the great famine, all citizens offered sacrifices for his health at all the seats of the gods with the Roman people calling him the father of the country, his continued preaching about friendly relationships, his presentation of three gladiatorial games in his own and five in the name of his sons. Augustus also established colonies of soldiers in Africa, Sicily, Asia, Syria and Macedonia etc, which had been seized in slave war and by defeating his enemies in Spain, Gaul and from

Serpent Gods in Aztec Mythology Essay Example for Free

Serpent Gods in Aztec Mythology Essay Aztecs had a pantheon of Serpent Gods to which they attributed the creation and workings of the natural world. One of their principle gods, Quetzalcoatl, translated as feathered serpent, had many manifestations, each holding an important role part of the Aztec myths of creation and the workings of the natural world. As Braden points out the main of the many roles designated to Quetzalcoatl is that he along with his brother Huitzilopochtli took the task of creation of humanity besides the creation of life, including gods, environments and all living substances (1930, p. 120). He accomplished this task by splashing his blood on the bones and ashes of previous human beings that had existed in a previous age. Out of this auto-sacrifice of blood sprang a male and then a female child, the forbearers of all modern people. Brundage goes on to say that thus Quetzalcoatl is not only a god to be worshiped out of reverence for his powers over nature but as a father figure as well. The Aztecs saw him as a god who was benevolent and the reason for their existence (1979, p.106). Another manifestation of Quetzalcoatl is that of the wind. The Aztec name for a tornado or thunderstorm wind was ehecacoatl or roughly translated wind snake . The wind that blows before the storm is traditionally associated with complex deity. The wind is a powerful force of nature and it is easy to see how a society could attribute the characteristics of a snake to the wind. The wind swirls and moves with effortless grace, just as a snake glides along the ground. Brundage goes on to say that this shows the ease with which the Aztec mind accepted the reptilian nature of the wind (1979, p.106-107). However the most common account presents Quetzalcoatl in human form and as a holy priest who comes down from his heavenly abode to give the Aztec people a new religion. Brundage points out that he tries to make the Aztecs rituals more of a personal spiritual event. Before his arrival the legend says that the Aztecs sacrificed hundreds of humans to the various gods. In the form of the high priest Quetzalcoatl’s goal is to make Aztec ritual more simplistic and auto-sacrificial. He stresses auto-sacrifice and the sacrifice of snakes, butterflies, birds, etc. (1979, p.116). He is more concerned with the sanctity of human life. It is his opinion that if human blood is to be sacrificed it should be give directly by the person making the sacrifice. This legend ties in nicely with the creator myth. In his role as creator of the human race he sacrificed his own blood, now he is telling the people that by sacrificing their own blood it is a more precious offering that killing another person. He is seen as a divinity that is concerned for the lives of his people. Outline: 1) The main of the many roles designated to Quetzalcoatl, the principle serpent god in Aztec mythology. (Braden, 1930, p.120) A- Quetzalcoatl along with his brother Huitzilopochtli took the task of creation of humanity. 2) Another manifestation of Quetzalcoatl, which is the wind symbol connected to the characteristics of snake in nature. (Brundage, 1979, p.106- 107) A- How a society could attribute the characteristics of a snake to the wind. 3) Most common account that presents Quetzalcoatl in human form and as a holy priest. (Brundage, 1979, p.116) A- He tries to make the Aztecs rituals more of a personal spiritual event. B- He is more concerned with the sanctity of human life. References: Braden, Charles S. Religious Aspects of the Conquest of Mexico. Duke University Press. Duhram, NC: 1930. Brundage, Burr Cartwright. The Fifth Sun. University of Texas Press. Austin TX: 1979.

With reference to Dulce et Decorum Est and Anthem for Doomed Youth by E

With reference to Dulce et Decorum Est and Anthem for Doomed Youth by Wilfred Owen, examine how Wilfred Owen responded to the jingoistic poetryof Jessie Pope. " Who's for the game? The biggest that's played" ================================================ The above quotation is from Jessie Pope's "who's for the game." Wilfred Owen was born in Shropshire on the 18th of March 1893. Owen volunteered for the army in 1914 when the First World War broke out. After training he became an officer and was sent to France at the end of 1916. The following year, Owen took part in the attacks on the German Hindenburg line, where he was suffering from shell shock after a shell burst near him. The horrors of battle quickly transformed Owen and the way he thought about life. The reasons behind Wilfred Owen's poems were to indoctrinate the people of those times. "Dulce et Decorum Est" was to enable Owen to show the true meanings of war and to over right the untruthful poem of Jessie Pope and her propaganda technics. ====================================================================== Jessie Pope's poem " Who's For The Game?" ========================================= There are sporting references such as "Who'll toe the line," "Who'll grip and tackle the job unafraid." Also there are parts of the poem that incur guilt upon the men who hadn't enlisted. "Who wants a turn to himself in the show," "And who wants a seat in the stand?" and "Who thinks he'd rather sit tight?" this technique makes the reader feel responsible and pushes them to join up and be a part of 'the game'. The rhythm of the poem gives an impression of a rhyme, like something you could sing to, this is a strange way to write about the solemn ... ...arison is that of dusk, to the drawing down of blinds in a house in mourning. "And each slow dusk a drawing down of blinds," creating the image that dusk is like a blind that is being lowered. The funeral is over and rhetorical question that Owen asked at the beginning of the first stanza has been answered and the noise has vanished. All is now quiet. The long, heav 'd' sounds really drag the ending on and draw the poem to a deliberate close. In conclusion, I feel that both poets are effective, but they both present such different pictures of war. Owen's poems are excellent examples of poetry portraying the realism of war, whereas Pope's poem is an excellent example of the unfortunate attitude cultivated on the home front. The contrast between the two allows the reader to see the reality of the First World War from two immensely different perspectives.

Foreign exchange risk Essay

Toyota Motor Corporation is the world’s third largest automaker. It was established in Japan on 28 August 1937. Apart from its 12 plants in Japan, Toyota has 54 manufacturing companies in 27 countries, employs 246700 people and markets vehicles in more than 160 countries. Its capital as at March 2002 was 397 billion yen. Toyota is exposed to the fluctuation in foreign currency exchange as it operates mainly in America, Continental Europe and Britain. It is therefore affected by the fluctuation in the value of the US dollar, the Euro and to a lesser extent the British pound. Toyota’s consolidated financial statements, which are presented in the Japanese yen, are affected by the foreign exchange fluctuation, as all the amounts in the various countries’ currencies have to be translated into yen. Toyota’s primary markets based on unit sales for vehicles for financial year ended March 31 2002 were Japan (40%), North America (32%) and Europe (13%). Toyota is listed on the London, New York and Tokyo stock exchanges. In the normal course of doing business, Toyota employs derivatives financial instruments, including forward contracts and foreign currency options to manage its exposure to fluctuation in foreign currency exchange rates. Toyota does not use derivatives for speculation and trading. (http://www.toyota.co.jp/en/ir.html accessed on 14th November 2002) The profitability of Toyota’s operations is affected by many factors including the changes in the value of the Japanese yen against other currencies which Toyota does business. The financial year for Toyota is from 1 April to 31 March. IMPACT OF FOREIGN EXCHANGE RISK ON OPERATION The value of the Japanese yen has fallen generally for the past three years against the dollar and the Euro though there had been periods of  fluctuations. (http://pacific.commerce.ubc.ca/xr/data.html accessed on 14th November 2002). Changes in foreign exchange rate affect Toyota’s revenue, gross margins, operating costs, operating income, net income and retained earnings. Toyota’s cost and liabilities are affected by transaction exposure which relates primarily to sales proceed from Toyota’s non domestic sales produced in Japan. It is also affected to a lesser extent sales proceed from Toyota’s continental Europe sales produced in UK. Toyota’s use of forward exchange rate contracts and currency options is to hedge foreign exchange risk associated with trade receivables denominated primarily in U.S. dollars. Toyota also engages in foreign currency settlements with domestic counter parties. The company enters into forward contracts and purchases currency options (principally euro and dollar) to hedge certain portions of forecasted cash flows denominated in foreign currencies. Additionally, the Company enters into forward exchange contracts to offset the earnings impact relating to exchange rate fluctuations on certain monetary assets and liabilities. The Company enters into forward exchange contracts as hedges of net investments in international operations. This reduces foreign exchange risk and transaction costs in those settlements by handling receipts in the foreign currencies in which they are denominated. Toyota buys supplies from Peugeot in France and is therefore exposed to the Euro exchange rate. It also manufactures engines in Japan for BMW. These inflows and outflows as a result of dealing with these European companies expose Toyota to foreign exchange risks. Cars produced in Japan and other production sites are shipped to Europe and America, which are the major market for Toyota. Toyota has to make a decision as to which currency to price the cars. If the cars are priced in yen in order to avoid foreign exchange risk, Toyota will not be competitive in those markets, as it would have shifted the risk to its customers. If the price is in the domestic currencies Toyota will be exposed to foreign exchange risk. When there is a depreciation or appreciation of the currencies in relation to the yen, Toyota will be torn between changing the price to reflect the change in the exchange rate. This decision will depend on the price elasticity of demand  for cars among other factors. Toyota manages these risks by using forward contracts, money market hedging and option market hedging. Toyota also enters into currency borrowing to address a portion of its transaction risk. Foreign exchange forward contracts are used to limit exposure to losses, resulting from changes in foreign currency exchange rates on accounts receivable and transactions denominated in foreign currencies. Foreign exchange forward contracts, which are designated and effective as hedges of currency, risk on existing assets and liabilities are included as an offset to foreign exchange gain or loss and recorded on the existing assets and liabilities. Foreign currency option is to reduce the risks that are likely to be incurred on account receivable and anticipated transactions denominated in foreign currencies. This has reduced, but not eliminated, the effects of foreign exchange fluctuation. The preparation of Toyota’s consolidated financial statements is in conformity with accounting principles accepted in the United States of America. All assets and liabilities of foreign subsidiaries are translated into Japanese yen at the appropriate year end current rates and all income and expense accounts are translated at rates that approximate those prevailing at the time of the transaction. Toyota therefore uses the temporal method of translation. The resulting translation adjustments are included as a component of accumulated income. Toyota is exposed to translation risk when the results of subsidiaries are translated into yen. The value in yen may not reflect the true value of the subsidiary, as it will also depend on the exchange rate between the two countries at the time of the translation. This can distort significantly when results of different periods are being compared and among various geographical markets. The yen has been stronger in fiscal year 2000 as against 1999. According to Toyota’s Annual Reports, net revenue increased by 6.1% in 1999 and decrease by 0.4% in 2000. If the difference in yen used for translation purposes are eliminated, net revenue would have increased by 5.9% in 1999 and increased by 11.2% in 2000 (http://www.toyota.co.jp/en/ir.html accessed on 14th November 2002). Thus, even though the consolidation figure showed a decrease in net revenue in 2000, it was mainly due to the strengthening of the yen in 2000, which made dollar values smaller after translation. The value of the yen against the Euro and the dollar fell generally for the past three years. The fall of the yen for the past three years has made Toyota reported profit when it is translated into yen though in actual fact it may not have been so. Toyota’s net revenue for fiscal year 2002 showed a 9% increase over the previous year. This is because of the weakening yen and the translation effect. If the difference in yen value used for translation purposes is eliminated, Toyota showed only 2.8% increase. Net revenue increased by 15.5% in North America, 24.8% in Europe and 0.4% in Japan, for fiscal 2002 compared to 2001 after consolidation. If translation effect is eliminated, the net revenue in North America increases by only 2.2% and 12.9% in Europe (http://www.toyota.co.jp/en/ir.html accessed on 14th November 2002). There was a double digit devaluation of the yen to the dollar in the business year ended March 31 2002. Toyota gained 70 billion yen from favourable exchange rate. The US dollar rose to about 127 yen from about 123 yen a year ago. A strong dollar helps the earning of Toyota by boosting the value of overseas revenue when converted into yen. However, translation effect is a reporting consideration and does not affect Toyota’s underlying operation. Toyota does not hedge against translation risk. Toyota manages its operating exposure by diversifying its operation and financing. It has localised much of its production by constructing production units in most of the countries in which it operates. Local operation allows Toyota to purchase most of its supplies and resources used in the production process in currencies that matches the currencies of local revenue with local expenses. Toyota has asked its UK suppliers to settle all bills using Europe’s single currency, the euro (http://news.bbc.co.uk/1/hi/business/873840.stm accessed on 16th November 2002). This reduces its exposure to changes in the value of the pound. Toyota has diversify its finance base by being able to raise funds in more than one place and thereby take advantage in interest rate differentials. Toyota can therefore borrow in Japan, United States of America or Europe to take advantage of interest rate differentials. With the expected fall in the American Interest rate as against the Japanese interest rate, Toyota can borrow in dollars so as to take advantage of the fall in interest rates. The  expected fall in American interest will lead to a fall in the value of dollars in relation to the yen. This fall will make loans and other commitments denominated in dollars less expensive in yen terms. Toyota will therefore gain from the expected depreciation of the dollar. The most obvious source or determinant of economic currency exposure comes from firms having revenues or costs denominated in foreign currencies. These direct or transaction effects are relatively easy to identify and manage. In addition, firms that also have foreign-based operations will have translation exposures that arise from consolidation. At the same time, there are also a number of indirect effects, which can be just as important and apply both to firms engaged in international business and to domestic firms, but which are substantially more difficult to recognise. This indirect economic currency exposure arises from unexpected movements in foreign exchange rates changing the competitive situation of the firm and which affect the firm’s future cash flows (and hence value). GLOBAL ECONOMIC FORECAST INFLATION DIFFERENTIALS The exchange rate stated simply is the price of one currency in terms of another currency. Exchange rate can therefore be expressed in terms of the law of one price which states that â€Å"in the presence of a competitive market structure and the absence of transportation cost and other barriers to trade, identical products which are sold in different markets will sell at the same price in terms of a common currency† (Pilbeam, K. (1992) International Finance, Macmillan). Relative purchasing power parity says that the change in the price level of commodities in one country relative to the rate of change in price levels in another country determines the exchange rate between the two countries. This in other words means that the rate of inflation in one country relative to another determines the rate of change in their respective currencies. (Ross et al, 1999). Thus if there is higher inflation in one country in relation to others, prices of goods and services will increase in th at country in relation with others and exchange  rates have to change accordingly in response to inflation differentials. According to the World Economic Outlook of the International Monetary Fund (http://www.imf.org/external/pubs/ft/weo/2002/02/pdf/appendix.pdf accessed on 14th November 2002), inflation is expected to move from -1.40% in 2002 to -1.2% in 2003 in Japan. This is 14.3% rise in inflation in Japan. Inflation in United States of America is expected to move from 1.2% in 2002 to 1.9% in 2003. American inflation is expected to increase by 58.3% whereas inflation in the Euro area is expected to decrease by 17.4%. This means that prices of goods and services in America will increase more than prices in Japan whiles prices in Europe is expected to decrease. The expected increase in the prices in America will lead to the depreciation of the dollar against the yen in order to maintain the purchasing power parity. The relative decrease in the level of inflation in Europe as against Japan will lead to the appreciation of the Euro against the yen. The yen is therefore expected to appreciate against the dollar but depreciate against the Euro. This will affect Toyota’s revenues and profits, as whatever amount is translated from dollar to yen will be lower comparatively. However, it will gain when the Euro is translated, as values will be higher after translation. BALANCE OF PAYMENT Balance of Payment measures the flow of economic transactions between the residents of a given country and the residents of other countries during a certain period of time. The use of balance of payment data to forecast foreign exchange rates assumes a fixed exchange rate regime. The balance of payment suggests that the current account get worse as national income rises. This is because the increased income will lead to increased income will lead to increased demand for goods and services including foreign products. This will lead to an increased demand for foreign currencies and a decrease in the value of the domestic currency. The basic tendency is for domestic currency to weaken to pay for the increased imports. In a fixed exchange regime, when this falls below certain limits the domestic government will have to intervene by selling resaves of foreign currencies in the foreign exchange market (Buckley, A. 2000). The same is with surplus where instead of selling foreign currencies, the government will buy foreign  currencies. This will increase demand or supply of foreign currencies and therefore affect the price i.e. the exchange rate. Thus if domestic income levels were to rise, the increase will lead to transaction demand for money which means that if the money stock and interest rates are held constant, the increased demand can only come about through a fall in domestic prices. The fall in domestic prices will then requires a depreciation of the currency to maintain purchasing power parity. However, an increase in foreign income levels leads to a fall in foreign prices level and therefore a depreciation of the home currency to maintain purchasing power parity (Pilbeam 1993). If there is increased demand for Japanese goods and services by Americans and Europeans then the yen is likely to appreciate, as the demand for yen will increase. However, under a floating exchange system, the government has no responsibility to peg the exchange rate. The fact that the overall balance does not sum to zero will automatically alter the exchange rate in the direction necessary to obtain a Balance of Payment close to zero (Eitman et al). If the country is running a substantial current account deficit whilst the capital and financial account balance is zero, it will have a deficit Balance of Payment. There will be excess supply of domestic currency and the market will rid itself of the imbalance by lowering the price through the depreciation of the currency. INTEREST RATE DIFFERNTIALS The interest rate parity theorem implies that if interest rates are higher domestically than in a particular foreign country, the foreign country’s currency will be selling at a premium in the forward market; and if interest rates are lower domestically, the foreign currency will be selling at a discount in the forward market (Ross et al 1999). The link between interest rate and exchange rate is explained by the International Fisher Effect, which holds that the interest rate differential is an unbiased predictor of future changes in the spot exchange rate (Rugman et al 2000). This differential is also important in determing forward exchange rates because this rate would be that which neutralises the difference in interest rates between the two countries. If the interest rate of one country is expected to fall in relation to another country, this will make the demand for  financial instruments denominated in that currency to fall. This fall in demand for financial instruments will lead to a fall in demand of that currency and therefore a depreciation of that currency. However, if interest rates are expected to rise in relation to other countries, there will be an increase in demand for financial instruments denominated in that currency and an appreciation of the currency. In practical terms, the international fisher effect implies that while an investor in a low interest country can convert his funds into the currency of a high interest country and get paid a higher rate, his gain (the interest rate differential) will be offset by the expected loss because of foreign exchange rate changes. The recent announcement of a fall in the American interest rate whilst the Japanese interest rate remain constant will lead to a fall in the demand for dollar denominated instruments and therefore a fall in the value of the dollar in relation to the yen. The Euro interest rate is not expected to change and therefore the exchange rate between the yen and the Euro may not change on the basis of interest rates. RISK MANAGEMENT STRATEGIES â€Å"Toyota uses a value-at-risk analysis (â€Å"VAR†) to evaluate its exposure to changes in foreign currency exchange rates. The value-at-risk of the combined foreign exchange position represents a potential loss in pre-tax earnings that are estimated to be  ¥25.2 billion as of March 31, 2001 and  ¥24.0 billion as of March 31, 2002. Based on Toyota’s overall currency exposure (including derivative positions), the risk during the year ended March 31, 2002 to pre-tax cash flow from currency movements was on average  ¥25.0 billion, with a high of  ¥26.7 billion and a low of  ¥22.9 billion. The value-at-risk was estimated by using a variance/ covariance model and assumed a 95% confidence level on the realization date and a 10-day holding period. Toyota changed the model used for calculation of value-at-risk from â€Å"variance/covariance† method to â€Å"Monte Carlo Simulation† method because Toyota introduced a new system, which Toyota considers more effective for risk management purposes. The prior year amounts have been restated to the fiscal 2002 presentation.† (Toyota Annual Report 2002) LEADING AND LAGGING. Larger, more centralized corporations have additional options that may be employed to help control the foreign exchange risk of inter company transactions. One effective and potentially profitable approach involves leading (prepaying) payments when the payer’s currency is devaluing against the payment currency and lagging those payments if the payer’s currency is appreciating. Lagging is when a company pays its financial commitments late so as to take advantage of a devaluing currency. Leading on the other hand is paying early before a currency devalues. It serves as a means of shifting liquidity between subsidiaries to avoid bid – ask spreads and take advantage of interest rate differentials (Clark E. et al 1993). Toyota should take advantage of the fall in the interest rates in United States and subsequent expected fall in the value of the dollar. The American subsidiary should pay early all monies owned to the parent company in Japan. This will give a higher value than waiting for the dollar to devalue before paying. From a company wide standpoint, the treasurer can direct leading and lagging policy in order to take advantage of the favourable effects of exchange rate fluctuations. Additionally, leading and lagging policies may be used to shift funds from cash-rich to cash-poor affiliates, thereby improving short-term liquidity. However, leading and lagging is only possibly when the company has 100% ownership of the subsidiary. This is because the effect of an extended or reduced payment date alters the relative rate of return of each subsidiary. This is unfair to minority shareholders, as they do not necessarily benefit from such a practise that benefits the multinational as a whole. (Eiteman et al 2001). Toyota’s subsidiary in the US has minority shareholders like General Motors and these will be at a disadvantage if Toyota should use leading and lagging to manage its exposure. Inequality may arise unless the adjustment is made to reflect a subsidiary’s sacrifice. NETTING. Netting inter company transfers is another form of international cash management strategy that Toyota can employ. It requires a high degree of centralization. The basis of netting is that, within a closed group of related companies, total payables will always equal total receivables. Netting is useful primarily when a large number of separate foreign exchange  transaction occur between subsidiaries (Eiteman et al 2001). Thus instead of Toyota paying monies owed to and by each subsidiary, the subsidiaries can net off each others debt and thereby not deal in the foreign exchange market. In order to reduce the bank transaction cost, such as spread between foreign exchange bid and ask quotations and transfer fees, Toyota should establish an in house netting centre. The exposure that remains–net payments to payees–can then be hedged in the forward market if desired. The advantages of netting are  · A reduction in foreign exchange conversion fees and funds transfer fees as commissions on foreign exchange transactions and funds transfer are drastically reduced.  · A quicker settlement of obligations reducing the group’s overall exposure. REINVOICING. Reinvoicing goes one step beyond the centralized approach of multilateral netting by way of a clearing centre. A reinvoicing centre buys goods from the manufacturing subsidiary or parent, without taking possession, and reinvoices other company affiliates or third parties when it sells the goods. By conducting all transactions in the affiliate’s functional currency, the reinvoicing centre bears all currency risks. This prevents the FC exposures from distorting the subsidiary’s operating profit (loss). In addition, the reinvoicing centre allows for centralized cash flow management, increase international business expertise and opportunities for arbitrage. The centre also improves and centralizes banking relationships and acts as a central purchasing agent for subsidiaries. Most important, the reinvoicing centre can assess its net position on all inter company transactions and hedge in the forward market accordingly. Problems with reinvoicing centres are * Some countries prohibit reinvoicing centres, as well as any third-party billing (for example, France, Spain,). * They are very expensive to set up because sophisticated information systems and legal and tax expertise are required. BACK TO BACK LOANS Back to back loans is when two firms arrange to borrow money in each others currency so as to avoid the risk associated with exchange rate fluctuation. Toyota can enter into an agreement with an American company that has a subsidiary in Japan. Toyota can then lend yen to the Japanese subsidiary of the American company and the American company in turn lends Toyota’s American subsidiary money in dollars. This will reduce the risk that Toyota will have had if it had lend the money to its American subsidiary as the expected fall in the value of the dollar will have reduced the amount of yen to be received. The advantage with back to back loan is there will not be the need to change currencies as loans will have been contracted in the functional currency of the subsidiary and therefore there will be no risk. However it is very difficult to get a partner who will be prepared to enter into such an arrangement. NATURAL HEDGING Natural hedging is to manage an anticipated exposure to a particular currency by acquiring a debt denominated in that currency. Thus if a firm has a long term inflow in one currency, the firm can acquire an outflow in the form of a loan in the same currency and use the inflow to service the debt. Since Toyota’s main markets are the USA and Europe, it can take out loans in Euro or dollars and use the proceeds from its operations to pay for the loan. Toyota will then not have to bother about the exchange rate fluctuation, as it will be paying the loan from proceeds generated from local operations. Toyota is also asking its British suppliers to bill them in the Euro so as to reduce the risk. This is effective in eliminating currency exposed when the exposure cash flow is relatively constant and predictable over time (Eiteman et al 2001) FORWARD CONTRACT Forward contract is an agreement to exchange currencies of different countries at a specific future date and at a specific forward rate (Eiteman et al 2001). If Toyota has receivables denominated in US dollars in the form of loans owed to the parent company, it can enter into a forward contract to hedge against the expected fall in the value of the dollar. When the value of the dollar depreciates, Toyota will therefore not be at risk. However, should the predictions not come true and the dollar rather appreciates, Toyota would have lost the opportunity of earning more on the spot market. REFERENCES 1. BUCKLEY, A. (2000) multinational finance. 4th ed., Harlow : Financial Times Prentice Hall. 2 CLARK, E. LEVASSEUR, M. ROUSSEAU, P. (1993) international finance, London : Chapman and Hall. 3 PILBEAM, K. (1992) international finance, Basingstoke : Macmillan Education. 4 RUGMAN, A. M. (2000) international business: a strategic management approach, 2nd ed., Harlow: Financial Times/Prentice Hall. 5. EITEMAN, D.K., STONEHILL, A.I., MOFFETT, M. H. (2001) Multinational business finance, 9th ed., 6.ROSS, S.A., WESTERFIELD, R., JAFFE, J. (1999) corporate finance, 5th ed., London: McGraw Hill. 6. (http://www.imf.org/external/pubs/ft/weo/2002/02/pdf/appendix.pdf accessed on 14th November 2002), 7. (http://www.toyota.co.jp/en/ir.html accessed on 14th November 2002) 8. (http://pacific.commerce.ubc.ca/xr/data.html accessed on 14th November 2002) 9. (http://news.bbc.co.uk/1/hi/business/873840.stm accessed on 16th November 2002)