Parental Involvement in Preventing Bullying Behavior Essay

Parental Involvement in Preventing Bullying Behavior - Essay Example Some victims of bullying hold immature perspectives that leaders or parents are not in a position to solve the problems. This approach shows a misguided judgment as parents play a significant role in developing personality and building an individual’s general behavior. Proper parenting originates from effective interactions among family members (Berger, 2008). Parents play the protective role to a child that translates to decreased bullying engagements. Parents also act as the counselors through practical sharing of personal problems. Identifying bullying cases enables proper disciplinary action, use of other effective guiding and counseling approaches. Parents seek other alternatives to solving bullying in any given situations. Bully signs include intimidating other kids within the neighborhood, aggressive attitudes to adults and some antisocial behaviors (Berger, 2008). Some individuals depict suggestive behavior to indicate signs of victimization. Such behaviors include torn clothes, isolation cases, using illogical routines in the neighborhood. Parents provide the moral support on how to cope with cases of bullying at any given incidence. As such, the lessons focus on being assertive without aggression where the said individual is provoked. Parents also supervise children behavior from school participation and home activities (Berger, 2008). This occurs when the parents talk to the children upon notice of behavior change. Sometime the parents participate in school events to evaluate individual progress or child performance. As role models, parents provide practical examples on how to react to different situations in life (Berger, 2008). Parents ensure that children obtain intervention from relevant sources. The parents also offer approaches to reporting cases of bullying by building confidence. Parent involvement in a child’s behavior shows the direct relation to either encouraging or

The Qur’an and Islamic Law Do Not Discriminate Against Women Essay Example for Free

The Qur’an and Islamic Law Do Not Discriminate Against Women Essay Treat your women well and be kind to them for they are your partners and committed helpers. From the last sermon of Prophet Mohammed The perception of most of the world, except possible the one-sixth of it that follows Islam, is that Islam and Qur’an preached that women must be subservient to men. Everyone turns to a verse in the Qur’an which tells men that they should beat their wives. Men are the maintainers of women because Allah has made some of them to excel others and because they spend out of their property; the good women are therefore obedient, guarding the unseen as Allah has guarded; and (as to) those on whose part you fear desertion, admonish them, and leave them alone in their sleeping places and beat them; then if they obey you, do not seek a way against them; surely Allah is High, Great. (Shakirs version of the Koran, Quran, 4:34) The verse is used by opponents of Islam to denigrate the faith and even by some of the practitioners of the faith to justify their mistreatment of women, but it may not be being interpreted the way that it should be. Asma Barlas, a professor at Ithaca College and noted scholar of Islam, who identifies herself as a follower of Islam, contends that the interpretation of the verse has been taken out of context and used to portray women in Islam as victims in an attempt to force women of the faith into a position of needing rescuing. That positioning gives women in the Western world a feeling of superiority (Barlas, Southern Illinois University, 2007). The Qur’an instructs people to take God’s Holy Word, The Qur’an, as a whole, she said, and not to pick and choose the verses to follow or not to follow Barlas argues that the Qur’an does not promote the degradation of women. Instead, she said, the Qur’an promotes all humankind equally and is much less mysogonistic than the Bible, the Holy Word of the Christian faith. In her speech at Southern Illinois University, Barlas asserted that she did not speak for anyone other than herself, but her views are shared by many women in Islam. They believe that it is in historic documents used by some Muslim cultures that the Qur’an has been misinterpreted and the mistreatment of women began. â€Å"Again this is not true. Many writers who wrote about womens rights refer to the statement in 4:34 as a sign of the man is above the women in status but it is a misunderstood statement. In 4:34, the expression .. al-rijalu qawwdmuna ala al-nisai. means The men are made responsible for the women, and GOD has endowed them with certain qualities, and made them the bread earners. This expression simply means that God is appointing the husband as captain of the ship. Marriage is like a ship, and the captain runs it after due consultation with his officers. It does not assign inequality but rather assigns duties to avoid conflicts and disputes. (â€Å"Misconceptions in Islam†) The problem is that most people don’t take the time to read the original Arabic or even attempt to find an accurate interpretation of the texts, they simply believe what they are told about what the faith believes. This is part of the problem. â€Å"Nonetheless, if we take sexual/textual oppression seriously, and I believe we must, the issue of how Muslims read, or—as I will arguefail to read, the Quran becomes critical, especially for women. † (Barlas, â€Å"Muslim Women Sexual Oppression†) Unlike Christianity which prescribed women to an inferior status by saying that woman was made from the rib of man, (Ragab 1) Islam teaches that God the creator made them as halves of each other. Neither does Islam teach that man was made in God’s image as the Bible does, (Barlas, SIU) but instead teaches that the difference between God and man is so extreme that people can never understand the nature of God. This is one of the arguments that woman supporters of Islam use to argue that Islam is not nearly as mysogonistic as Christiantiy is. Instead, Barlas and others argue that Islam faith promotes equality between the sexes, even going so far as to outline specific rights of women. For example, unlike Christian women, Islamic women are given a specific right to divorce their husbands and allowed to remarry after a three month period. (Ragab 1). â€Å"Both men and women have equal rights to contract a marriage as well as to dissolve it. The precondition of marriage is merely the mutual agreement by both parties. And unlike Christianity, a woman in Islam can divorce her husband at any time if she feels that she has been dealt with unjustly or even if she is just unhappy with her spouse since marriage is based upon mutual responsibilities toward each other. Islam has also ensured the womans right to remarry pending a three month refrainment period. † (Ragab 1) Islam also promotes the equality of women in that it explitly allows them to work outside the home. Muslim countries have even elected women as prime ministers. Some people even argue that the mistreatment of women in the faith comes not from the religion but from many of the colonial overlords that once ruled countries now considered Muslim. â€Å"Much of the civil law that legislates personal and family matters in Egypt, for example, is directly based on old French law. As a result, an Egyptian man can divorce his wife much more easily than the reverse. Consequently, women often have to suffer long and expensive court procedures and have to prove that they were mistreated by their husbands before being granted a divorce. Often times, laws in Middle Eastern countries, which are legislated and enforced by men, only take bits and pieces of Islamic law and combine them with concocted rules based upon some cultural or foreign practices. † (Ragab 1) Other practices, such as the prohibition against women driving in some Muslim countries, has nothing to do with Islam (â€Å"Misconceptions of Islam†) â€Å"Why then is Islam portrayed as a religion that oppresses women and puts them in a position inferior to men? Part of that is certainly due to the stereotyped image of how Islamic women are portrayed in western media as an extension of Islam-bashing. A prominent example is the movie Not Without My Daughter in which scores of false and fictitious depictions were made of women in an Islamic country. It is also true, however, that in many so called Islamic countries, women are not treated according to their God-given rights. But this is not the fault of Islamic ideology but rather the misapplication or sometimes the outright denial of the ideology in these societies. â€Å" (Ragab 1) The misconceptions of the treatment of women in Islam are a factor of the historical writing in some sects and the way that Muslim countries have misinterpted the Qur’an (Baslas, SIU). For example, Sunna and Hadith writings claim that women must wear a veil but this is not in Qur’an. â€Å"These books do not represent the words of God in the Quran and on many occasions contradict them. † (â€Å"Misconceptions of Islam†) But too much of the world has accepted these teachings of the expression of Muslim nations as the absolute truth of Islam. â€Å"This misconception was augmented by some news media that made little effort to correct their understanding before broadcasting their views on this matter. Adding to this misconception are the regrettable practices in most so called Islamic countries or societies where myths, traditions and innovations have won over the true Islamic (Quranic) teachings and where women are traditionally subdued and oppressed. † (â€Å"Misconceptions of Islam†).

Terri Schiavo :: essays research papers

The end of life is inevitable. For most it is for seen and understood what ones final wishes are. Living wills provide those issues in question with answers. What if an individual does not have a living will? Who would be in charge in making final decisions for someone who cannot physically make those decisions? The story of Terri Schiavo brings about many questions that represents moral, ethical, and legal issues. Terri Schiavo collapsed in her home on February 25, 1990. She suffered cardiac arrest and anoxic brain damage. The lack of oxygen to the brain caused major brain damage. The cerebral cortex had been completely destroyed and replaced by cerebrospinal fluid. Her upper brain was estimated to be about 80 percent destroyed. However her brainstem, which is responsible for breathing and heartbeat, was still functioning properly. This allowed Schiavo to survive with the assistance of a feeding tube. Terri Schiavo was diagnosed to be in a Persistent Vegetative State (P.V.S). At the time of Terri Schiavo’s collapse, she was married to Michael Schiavo. Under Florida law, this made Michael Terri’s legal guardian. Terri also had the support of her parents, Bob and Mary Schindler. Michael Schiavo believed that his wife Terri would have never wanted to live life as a vegetable. Since Terri never had a living will, wishing to refuse medical treatment. Michael Schiavo is drawing his conclusion on conversations with his wife before the accident. After three years of ineffective therapy. Michael Schiavo petitioned to discontinue the life support for Terri. Her parents did not agree with Schiavo’s wishes. Bob and Mary Schindler have been battling with Michael Schiavo for over 10 years.

Epicurean Ethics Essay -- Philosophy essays

Epicurean Ethics      Ã‚   In this paper I am going to deal with Epicurean ethics. More specifically, I am going to center around the nature of pleasure and its connection with desire-satisfaction. Throughout the paper I will argue, the only thing we desire for its own sake is pleasure. Thus it is best to keep our desires simple in order to achieve the greatest feeling of pleasure. I will accomplish this by first giving arguments for why the only thing we desire for its own sake is pleasure, as well as arguments for why it is best to keep our desires simple. I will then take a look at a number of objections and give some reasons as to why these objections are unconvincing.    Before I can begin with the argumentative side of the paper, it is necessary that some background information on Epicurus be given. Epicurus was both a hedonist as well as an egoist, and was very concerned with how people get happiness. He was a psychological hedonist because he argued that we aim only at pleasure for its own sake. He was an ethical hedonist because he believed that only pleasure has true value. Similarly, he was called both a psychological and ethical egoist because he claimed that what we are aiming for and what is valuable to each of us is our own pleasure. (Epicurus (1994) text 4) With this in mind, we are ready to move on to the arguments for why the only thing we desire for its own sake is pleasure, and why it is best to keep our desires simple.    First we will examine the thesis "The only thing we desire for its own sake is pleasure." As Epicurus argued in throughout his writings, "pleasure is the goal." (Epicurus (1994) text 1.11) It is also is "the starting point ... of living blessedly" (Epicurus (1994) text 4.128)... ...t you are feeling does not resemble anything of a corpse. In all reality this feeling of relaxation is a tremendous pleasure to you.    Indeed it is quite clear after the above arguments that pleasure is the only thing that we desire for its own sake. It is also clear that not every pleasure should be taken, nor every pain avoided. Instead we should focus on what will bring us pleasure in the long run. Secondly, it is important that we keep our desires simple in order to achieve the greatest feeling of pleasure. One should not wish for more of something, but rather reduce their desires. It is these two arguments that form one of the building blocks for Epicurus' ethics.    Works Cited Epicurus. The Epicurus Reader: Selected Writings and Testimonia. Hackett Publishing Company, Inc., 1994. Translated and Edited by Brad Inwood and L.P. Gerson.   

Diversity Training Essay

Research diversity training programs and their effectiveness. Discuss the purpose of diversity training and review the types of programs that are most effective in meeting goals for improving diversity within organizations. Diversity training is recommended to provide employees with the knowledge and skills to effectively communicate and relate to shareholders of different ethnicity, gender, mannerisms, sexual orientation, religion, and age. Diversity training has a positive impact on the company because it helps employees to respond more sensitively to differences in the workplace. Employees will become more aware of their actions, and mannerisms with others in the workplace. Also, it may be necessary to train managers in diversity in order to comply with the equal opportunity/affirmative action laws. Managers that are trained can effectively address diversity issues in the workplace (Reasons for Diversity, n.d.). Diversity training is effective if employees can recognize the advantages of becoming a culturally diverse workplace. Advantages can include; attracting and retaining valuable employees, increased innovation and creativity, and improved team performance. Organizations that encompass diversity can provide a better service or product if employees can understand their customer’s culture and background. The most effective approach for improving workplace diversity is to create a program to promote diversity hiring. A position or task force should be created who’s primarily responsibility is to oversee diversity hiring and training. Typically, diversity training is effectively taught through group exercises, role play, lectures, and video presentations. In conjunction with diversity training programs, the organization should promote employee involvement through diversity committees, diversity staff positions, and affirmative action plans (Rolander, n.d.). When employees are more involved, they become more aware of their actions and the actions of others to help promote diversity. References: Reasons for diversity training. (n.d.). Retrieved April 7, 2010, from Ehow website: http://www.ehow.com/facts_4912414_reasons-diversity-training.html Rolander, G.-C. (n.d.). Creating effective diversity policies . In Divesity central. Retrieved April 7, 2010, from http://www.diversitycentral.com/ diversity_practitioners/research_07_04.html What are the ways an organization can identify managers with dysfunctional behaviors? Once these managers are identified, describe the various actions that could be undertaken to help them change these behaviors. The symptoms and warning signs of a dysfunctional manager include; arrogance in leadership, lack of leadership performance feedback (from employees), favoritism, over-management that inhibits communication between staff members, lack of collaboration, lack of teamwork, low productivity, decline in employee morale, backstabbing, and high rate of employee absenteeism and turnover (Jones, n.d.). Consequently, with bad workplace politics and performance, employees will often distance themselves and can become uncooperative if they feel discriminated against and unappreciated. In some cases, employees will resort to sabotaging the company name, and the organization will risk losing their high performers. Furthermore, employees will lose their motivation and productivity (Jones, n.d.). Once the managers are identified, performance-oriented goals should be set to cure the bad behavior (Jones, n.d.). Fist, the organization must identify the performance issues and get feedback from employees. Employee feedback can be evaluated through an employee feedback survey. The manager must be willing to participate in the change program and recognize their bad behavior. Team-building workshops can be used to educate and train management on effective communication and conflict resolution (Jones, n.d.). If differences are still apparent after arbitration, replacement of the uncooperative management is necessary. References: Jones, M. (n.d.). Dysfunctional Leadership & Dysfunctional Organization . In The Politics of failure: watch out for the warning signs of bad leadership. Retrieved April 7, 2010, from http://www.iim-edu.org/ dysfunctionalleadershipdysfunctionalorganizations/index.htm

Free Essays on Ralph Waldo Emerson

Ralph Ellison: Short Story Struggles There are many famous African American writers that are well known in today's society. Many are considered to be legends, as well as good role models for the youth of today. There are so many of these writers that are acknowledged in our history books, and there are even a few that have holidays set aside for them. Holidays for the nation to think about their contribution to our world. Although many of the African American writers are no longer alive, their outstanding achievements are still recognized, and taught to many boys and girls in schools all over the nation. Many of these writers wrote stories that at some extent represented a part of their lives. Even though one writer may have written hundreds of pieces of literature, something about their life or something about them is evident in their work. Keeping this in mind, this aspect has shaped their particular style of writing. One particular black successful writer is Ralph Ellison. Ralph Waldo Emerson was born on March 1, 1914, in Oklahoma City, Oklahoma. He was the second son of Lewis and Ida Ellison. His older brother had died while still an infant. Three years after Ralph was born, his parents had another son named Herbert. Ralph Ellison was named after the nineteenth (19th) century philosopher and writer Ralph Waldo Emerson. His father named him this, hoping that one day his son would become a poet. Lewis Ellison was killed in an accident in 1917, so he left his wife Ida to care for their two young sons. Ellison developed an interest in music, and he particularly liked jazz and classical music. When he graduated from high school at the age of nineteen (19), it was his musical abilities Page 1 that won him an Oklahoma State Scholarship to attend the prestigious black college in Alabama, known as the Tuskegee Institute. While at the Tuskegee Institute, Ellison had to find a job, to earn extra money. He decided ... Free Essays on Ralph Waldo Emerson Free Essays on Ralph Waldo Emerson Ralph Ellison: Short Story Struggles There are many famous African American writers that are well known in today's society. Many are considered to be legends, as well as good role models for the youth of today. There are so many of these writers that are acknowledged in our history books, and there are even a few that have holidays set aside for them. Holidays for the nation to think about their contribution to our world. Although many of the African American writers are no longer alive, their outstanding achievements are still recognized, and taught to many boys and girls in schools all over the nation. Many of these writers wrote stories that at some extent represented a part of their lives. Even though one writer may have written hundreds of pieces of literature, something about their life or something about them is evident in their work. Keeping this in mind, this aspect has shaped their particular style of writing. One particular black successful writer is Ralph Ellison. Ralph Waldo Emerson was born on March 1, 1914, in Oklahoma City, Oklahoma. He was the second son of Lewis and Ida Ellison. His older brother had died while still an infant. Three years after Ralph was born, his parents had another son named Herbert. Ralph Ellison was named after the nineteenth (19th) century philosopher and writer Ralph Waldo Emerson. His father named him this, hoping that one day his son would become a poet. Lewis Ellison was killed in an accident in 1917, so he left his wife Ida to care for their two young sons. Ellison developed an interest in music, and he particularly liked jazz and classical music. When he graduated from high school at the age of nineteen (19), it was his musical abilities Page 1 that won him an Oklahoma State Scholarship to attend the prestigious black college in Alabama, known as the Tuskegee Institute. While at the Tuskegee Institute, Ellison had to find a job, to earn extra money. He decided ...

Short Responses on Several Books Similarities in Family Values

Short Responses on Several Books Similarities in Family Values The working poor: Invisible in America By David Shipler Introduction America is a developed country but there still exists a group of people called the working poor. Although these people are working, they still languish in poverty. They live between a state of â€Å"poverty† and â€Å"well being†. Their efforts to move from â€Å"poverty bracket† to â€Å"well being bracket† are diminished due to negligence by the government. This book focuses on American working poor and what the government is doing to help the situation.Advertising We will write a custom report sample on Short Responses on Several Books Similarities in Family Values specifically for you for only $16.05 $11/page Learn More Summary The author writes about the group of individuals struggling to survive in the US. His focus is on the people who are working but struggling to live and meet their daily needs. He terms them as people who have been left behind. Existenc e of such groups of people at a time when the US is celebrating its prosperity is considered a disgrace. The author carries out several interviews with people who are struggling to meet their basic needs like medical care. He finds out that most of these people are working and some are even engaged in full time jobs. He is not pleased with the kind of life these people are leading despite their hard work. He believes that the government is not doing much to address the issue of the working poor. He adds that the government is not implementing laws that can help the working poor improve their living standards. Although there are laws set up to protect the working poor, the process of implementing them is very poor and this leads to their failure. The kind of leadership in place can not come up with strategies to ensure that the laws are enforced. Therefore, it is very difficult to change the situation. This book also reveals many other facts about the life of the working poor. All th ese facts give an indication of failure of leadership at state as well as national level. This means that the economic prosperity can not be sustained. The author suggests various ways by which the working poor can be helped. He insists that the government and the private sector should work hand in hand with other agents to come up with collective strategies that will improve the living standards of the working poor. In order to help the working poor, the author proposes wage reform strategy that will regulate employers on how they pay their workers. He also says that the wage reform should apply at the bottom as well as the top. It should be able to set the minimum as well as the maximum pay standards for the workers for equality purposes. The issue of excess wealth to some Americans should be considered. Some Americans are paid very high salaries leading to various imbalances and creating a huge gap between the poor and the rich. The book ends by the author appealing for ideologic al debate. He says that unless the ideological debate is encouraged and incorporated in public policies, the situation of the working poor is likely to remain the same. He says that it is time to table the facts about the working poor so that proper steps can be taken to correct the situation. Silence means prolonging the problem but not solving the problem.[1]Advertising Looking for report on american literature? Let's see if we can help you! Get your first paper with 15% OFF Learn More The central theme The main theme featured in this book is poverty. The author examines a group of Americans who are completely left behind despite their hard work. He refers to them as the working poor. Although these groups of people are working, their living standards are still low. Despite their effort and willingness to work hard, it is almost impossible for them to attain their American dream. In case of a financial obstacle, the working poor may not be able survive and this may lead to an irreversible financial downfall. They live up to their means with no funds left for emergency cases. In this book, the author holds various conversations with the working poor. He finds out that the working poor are held in dead end jobs where chances for advancement and improvement are very slim. There are no benefits and opportunities for further development. These are the factors that make the working poor languish in poverty. The author also blames the government systems that are set up to help the working poor. He says that most of these systems are only provided but not implemented. Their effects are not visible at all. Some of the working poor are also resistant to help from the systems. Others are completely unaware that there are such systems in place to help them.[2] The quantitative role played by the US The United States as a cultural entity is not very aware of the factors that contribute to poverty. This means that the US is not so sure of the solut ions that might fully correct this situation. However, there are many ways in which US play a role concerning the invisible working poor. Politically, the government has come up with laws that enforce minimum wage. The only problem is that these laws are not implemented according to the government specifications leading to their failure. In fact the working poor are being charged high bills when it comes to health care and other public services. This raises their expenditures with no increase in income leading to poverty. Although there are many upcoming ways to help the working poor, the author insists that no single way can succeed in correcting this situation. He proposes that the government should work hand in hand with the private sector to ensure that the laws are well implemented. Among the strategies proposed include changing of the present wage structure, fair distribution of public resources and coming up with programs that are more vocational. The perception of the US in the book I think the perception of the US in this book is negative. Although US is considered as a land of opportunities, there still exists a group of people who are working but still live in poverty. These people have been neglected and their welfare is not a priority anymore to America.Advertising We will write a custom report sample on Short Responses on Several Books Similarities in Family Values specifically for you for only $16.05 $11/page Learn More This is because the laws that have been put in place to help these people are not enforced into actions. The government is not committed to evaluate its law system to make sure that the laws are being obeyed. This shows how the US is less concerned with the working poor. We are told that the working poor are handled like slaves despite the existence of laws that enforce humane working conditions and minimum wage. As much as we expect the working poor people to be treated at low medical costs in hospitals , they are being charged much more money than they can afford. Any emergency treatments, transport and other medical costs are even worsening the situation of the working poor.[3] Lessons that the book holds for US citizens There are very many lessons that this book holds for the US citizens. First, the US citizens need to be very careful when choosing leaders in future. They need to elect leaders who will implement the set laws and make sure that the laws are obeyed. This will reduce poverty among the working poor. The US citizens need to learn that despite being a developed country, there are still groups of people who are languishing in poverty. With this in mind, they can be able to strategize on the factors contributing to this situation and come up with viable solutions that can help correct the situation.[4] How to change the problems addressed in the book From a personal perspective, I would encourage formation of movements and unions that will protect and fight for the righ ts of the working poor. These unions and movements will be able to push for reforms and law implementations that will see the working poor improve. From a perspective of US policy, the government needs to make sure that those laws concerning minimum wage and humane working conditions are enforced and implemented. This is through setting up of law structures and arms that will monitor the implementation process and ensure that everybody is obeying the laws.[5] Conclusion Poverty is an urgent issue in the American society especially among the working poor. These issue need to be addressed by the government in collaboration with other agents for improvement of the living standards of the working poor.Advertising Looking for report on american literature? Let's see if we can help you! Get your first paper with 15% OFF Learn More Reference List Both, Deborah and Barbara. Zang. 2009. The working poor in America. Washington, DC: National academy press. Shipler, David. 2004. The working poor: Invisible in America. New York: Knopf publishers. Footnotes David Shipler, The working poor: Invisible in America (New York: Knopf publishers 2004), 21. Ibid, 23. Ibid, 23. Ibid, 23. Deborah Both and Barbara Zang,The working poor in America (Washington, DC: National academy press 2009), 54.

SEPT 11 essays

SEPT 11 essays When people examine right and wrong, they can overcome the negative side of themselves and become better humans. As we look at the act of terrorism that occurred on Tuesday, September 11, 2001 many feel the pain that is shared throughout the United States of America. They feel the frustration, agony, sorrow, and anger. This pain is shared mutually throughout the world even. Many of these people feel that we as a nation should strike back in full force, and aggressively tear down terrorism as a whole. In this short time since the tragedy there have been numerous polls taken that say America is ready to fight a long and drawn out war against terrorism. Perhaps war is not the answer. If we are to go to war will be stooping to the terrorists level. We will be killing thousands of people to make up the lives of the ones we lost, but that is not right, because you cannot bring back their lives now. We will be terrorists in their eyes. We will be coming in to their homeland, and taking away lives of people, because of their beliefs. They believe that their way is the right way, but so do we. We believe in freedoms, and we believe in having rights as people. An additional point is we will be sending many of our young troops to fight a battle that has already been won. We are a free nation and no act of terrorism should stop us from feeling free. There is nothing we can do to bring back the lives that have been lost. Going to battle is not going to win this war of freedom, because this war has already been won? We as a nation must be strong and carry on, because if we do not we will die as a nation and the terrorist with feel satisfaction knowing that they have kille d a nation on the inside even though the nation looks strong on the outside. In the short story The Long Exile, by Leo Tolstoy, an innocent man, Askenov, is charged with murder and is sentenced to life in prison. While in prison Askeno gets a name for himse ...

X-ray Exposure Components Essay Example | Topics and Well Written Essays - 500 words

X-ray Exposure Components - Essay Example the electrons’ speed is given by kVp (kilovolt potential) which then determines the x-ray beam’s penetration, thus impacting the x-ray production’s efficiency, and determining the level of image contrast. The right kVp yields differential x-ray immersion of dense and soft anatomic structures. Increasing kVp results in an increase in the penetration of an x-ray beam. If kVp is set too low, the resultant image will be devoid of density leading to a sooty or a whitewashed appearance while in case of too high kVp, the resultant image will be too dark and over exposed. The kVp controls the electrons’ energy as they displace across the tube, or it may be said that kVp controls the electron’s speed. Therefore, the higher tube potential (kVp), the larger will be the affect of the electrons. Moreover, the greater the tube potential the greater will be the penetration. Thus, kVp monitors the beam quality by monitoring the x-ray beam energy (Gray et al., 1983) . The tube intensity and exposure time could be an unequalled exposure factor (mAs). The factor, â€Å"mAs† refers to the rate of electrons flow in a predetermined time. Where, mA refers to tube current while s denotes time in seconds. Thus the two exposure factors work in combination to control the quantity of electrons discharged at the cathode and afterward the quantity of x-rays developed at the anode. The milliampere seconds (mAs) ascertains the quantity of x-rays developed per unit time, while the quantity of x-rays arriving at the film ascertains the scale of film’s blackening. Both of these factors monitor and adjust the exposure factor’s quantitative character. These exposure factors determine and influence the quality and quantity of the x-ray beam (Hecker, & Garreau, 2012). Another important factor is the distance between the focus and detector that impacts the x-ray exposure. This relationship is quite simple as the nearer the x-ray tube is placed to the film the higher will be the intensity

Personal journal Essay Example | Topics and Well Written Essays - 250 words

Personal journal - Essay Example At least I’ll have my own four wheels and freedom to get places I need to be. It’s funny because I know I’ll mostly be using it to get to school and work on time. Oh well, it’s still liberating to know you have your own car; a vehicle you can use anytime you want to. Sometimes I notice people and the types of cars they drive. It almost defines them and their personality. I saw an elderly lady driving the other day, hands firmly on the wheel, back slightly hunched, eyes focused, and forehead wrinkled in concentration. She was driving a neat little, Ford, a family car suitable for basic day to day needs and errands. Something safe, reliable, and comforting, just like her. I wonder if people will look and analyze me when I’m sitting in my car driving down the street. First, I need to pick one out though. God, I hope I don’t get something too shabby. Maybe I’ll get it painted a bright blue or even silver to make it cooler. I’ll be o ne of the first ones among my friends to have one. We would all be able to hang out more often once school is over; cruising down in my car I don’t have yet. I still have to get a summer job though. I’ll start looking at the wanted ads tomorrow. I’ll talk to my dad again tonight and see for sure how much he can pitch in. I’ll be able to help around more with outside chores and tasks. Yeah that’ll be a good starting point to reel in my dad.

The editorial Essay Example | Topics and Well Written Essays - 750 words

The editorial - Essay Example According to Bay City News, the family has come up with a donation page in order for elicit funds for supporting Rath’s 3 months’ old daughter along with sustenance of the funeral expense. Prior to the tragedy, Officer Peter van Eckhardt stated that the California Highway Patrol officers had heard of a motorcycle speeding on the bridge, but responded at around 4:30 pm. Before long, van Eckhardt mentioned something about the officers receiving reports of a collision on the selfsame bridge. The loss aroused a search effort across different emergency arms of San Francisco. In a bid to rescue the body, the Rio Vista police, Oakley police, a CHP helicopter and the Contra Costa County Fire Protection District and Contra Costa County sheriff’s rescue boats all responded to the scene. Further, a Sig-alert was lifted at about 7:15 pm in response to the very scene. However, the emergency personnel halted the search after trying to pursue the body for up to 2 hours mainly because of the setting sun. At this point they had only come across some of Rath’s gears, though they could not figure out the way to associate the devices with Rath himself. According to Marshall , the crew was to resume the search on the next day. The move by the marine units from Solano, Contra and Sacramento counties to search for Rach’s body reveals how the units are committed to their committed to their patrolling routes. In taking such a step can to citizens serve as evidence that the state wants the very best for them. However, the state needs to adopt approaches that can allow the emergency personnel to be capable of engaging in the search processes even during night sessions. This comes in handy in case of collisions that occur around fast moving rivers. You never know, probably it is because of the directive to halt the search process after 2 hours that made Rath to be found

ArticleAbstract Assignments 06 Essay Example | Topics and Well Written Essays - 250 words

ArticleAbstract Assignments 06 - Essay Example The research applied quantitative research method in its implementation. The method is identifiable from two criteria, the type of explored data and applied research design. The research applied quantitative data in numbers of wins and losses, and a correlation study that are features of quantitative methods (Kumar, 164- 166; Lee, 77- 88). The article concludes that the Collective Bargaining Agreement has had a significant effect on competitive balance and led to greater inter seasonal parity. The major factors to the identified parity are â€Å"free agency and payroll cap† (Lee, 86). The paper makes a major contribution in identifying existence of a significant relationship between the agreement, and inter seasonal parity among teams. It therefore reconciles theoretical expectations that a change in the market system and team players would influence performance of league teams. It is also a breakthrough as the first research to identify a significant relationship between changed rules and competitive balance (Lee, 77- 88). The article is however criticized for failing to include essential elements of a research such as research hypothesis and research questions. It also fails to communicate, clearly, its applied methodology (Lee, 77-

Turkish Maritime Cabotage Rights Research Proposal

Turkish Maritime Cabotage Rights - Research Proposal Example The Republic of Turkey is strategically placed in an area between the Asian, African and European continents and the three sides of the country are encompassed by the Mediterranean Sea to the south, the Black Sea to the north and the Aegean Sea to the west. The Turkish Straits is the only water route between Black Sea and Mediterranean and have unique physical, hydrological and navigational conditions (Unescap, Turkey Report 2000/2009). It has been recently contended that the volume of traffic flow in the Straits have exceeded limits of safe navigation as there has been an increase in the number of vessels and quantities of dangerous cargo. Any accident could cause irreversible damage to the environment. In order to maintain safety of navigation, life and property in the region, the Turkish Government has adopted a set of regulations for maritime traffic in 1994. Turkey's approach to maritime transport is consistent with international regulations and principles of fostering free mari time competition, safety and environmental concerns. Turkey's maritime transport facilities are rather extensive. ... Turkey has merchant fleet with capacity more than 9.5 million DWT and about 899 ships and is in the 20th rank in the world fleet. Total capacity consists of 5 per cent public and 95 per cent private sectors. The majority of ships comprising total merchant shipping fleet are bulk carries (48 per cent), dry cargo ships (19 per cent), oil tankers (10 per cent). The other types of ships constitute 23 per cent of the fleet. (Information available from Unescap Report on Turkey, 2000/2009) Cabotage Laws and Rights: The maritime sector in Turkey is also subject to certain legal arrangements and Law 815 on Cabotage Auxiliary services rendered in Turkish ports and waters are subject to the Law on Cabotage. In accordance with the Cabotage Act, all commercial shipping and related activities between the ports and all trading in the coastal lines is reserved for Turkish-flag vessels and supply of services are given to Turkish companies only although all auxiliary services at the ports are available to all nationalities. Transportation that violates Cabotage rights is not accepted and negotiations on Cabotage transportation services in turkey have been very rigid. Turkish Code of Commerce is related to maritime transport and is harmonized in accordance with the arrangements of EU. The application and implementation of Cabotage rights is a very important milestone in Turkish Maritime Industry and this thesis will delve deeper into the maritime industry, the regulations in Turkish shipping industry and the role of Cabotage rights in helping Turkey to integrate its shipping industry with EU and international shipping standards. Turkish fleet

ArticleAbstract Assignments 06 Essay Example | Topics and Well Written Essays - 250 words

ArticleAbstract Assignments 06 - Essay Example The research applied quantitative research method in its implementation. The method is identifiable from two criteria, the type of explored data and applied research design. The research applied quantitative data in numbers of wins and losses, and a correlation study that are features of quantitative methods (Kumar, 164- 166; Lee, 77- 88). The article concludes that the Collective Bargaining Agreement has had a significant effect on competitive balance and led to greater inter seasonal parity. The major factors to the identified parity are â€Å"free agency and payroll cap† (Lee, 86). The paper makes a major contribution in identifying existence of a significant relationship between the agreement, and inter seasonal parity among teams. It therefore reconciles theoretical expectations that a change in the market system and team players would influence performance of league teams. It is also a breakthrough as the first research to identify a significant relationship between changed rules and competitive balance (Lee, 77- 88). The article is however criticized for failing to include essential elements of a research such as research hypothesis and research questions. It also fails to communicate, clearly, its applied methodology (Lee, 77-

Congress and Presidency in the United States Essay

Congress and Presidency in the United States - Essay Example The federal government of the United States is divided into three branches that are intended to perform separate functions independently. These branches are the legislature, the executive, and the judiciary. However, the legislature is more powerful since it has the role of oversight and making laws that affect the operations of the arms of government. The president, on the other hand, is the head of state and plays a significant role in the coordination of the executive to deliver its mandate to the citizens. Therefore, there is a dependency created by the Congress and the presidency, and they share legislative powers (Dewhirst and Rausch, 2009). While the doctrine of separation of powers was intended that the three arms act autonomously, it has turned out over time that it is a system of shared powers. According to Richard Neustadt, a president is a person trusted by the public to offer viable solutions to problems. Thus, he or she should work not as a master, but as a coworker with the elected leaders in the Congress (Lee, 2012). In this regard, the primary duties of the presidency are to persuade the Congress to legislate on crucial matters. Similarly, the Congress also depends on the president to signs bills into law, thereby making the sharing of power more conspicuous. Nevertheless, there are constitutional provisions that allow the Congress to pass bills into laws. For instance, if the president fails to sign a draft bill in 10 days, it automatically becomes law.

Friedrich Nietzsche Philosophy Essay Example for Free

Friedrich Nietzsche Philosophy Essay Friedrich Willhelm Nietzsche, a German Philosopher of the mid 1800`s was Born 1844 and died after a long medical condition that was thoroughly investigated but with no found result in 1900. Nietzsche is most renowned for challenging the moral integrity of Christianity in the late 1800’s despite having grown up with a background and family history of Lutheran ministers; where his Father, Uncles and Grandfathers were all Ministers. This philosopher was the most outspoken on topics such as power, pain, culture and moral acts, and from that has influenced some of the most commonly known philosophers we know of today; such as Sigmund Freud. Nietzsche viewed evil or immoral acts as â€Å"self-consciousness, free will and either/or bipolar thinking† (Curry, B. (2008). The Perspectives of Nietzsche. Retrieved from http://www.pitt.edu/-wbcurry/nietzsche.html). Nietzsche believed that Evil is within and dependant upon the determinants that affect ones moral perception. Nietzsche view on evil came from a very passionate outlook on his world, on culture and of rights and freedoms. Nietzsche put it quite plainly when he said†¦ â€Å"Some moralities are more suitable for subordinate roles; some are more appropriate for dominating and leading social roles. What counts as a preferable and legitimate action depends upon the kind of person one is. The deciding factor is whether one is weaker, sicker and on the decline, or whether one is healthier, more powerful and overflowing with life† (Brandhorst, M. (2010). Naturalism and the Genealogy of Moral Institutions: Journal of Nietzsche Studies. Issue 40, p 5-28, 16p). Nietzsche particularly critiqued Christian and Kantian morality, related to these 2 moral components of which express cultural out casting of freedom of speech and natural free will. i. Presupposes three particular descriptive claims about the nature of human agents; pertaining (connecting) to free will, the transparency of the self, and the essential similarity of all people (â€Å"the Descriptive Component†); and/or ii. Embraces norms that harm the â€Å"highest men† while benefitting the â€Å"lowest† (â€Å"the Normative Component†) In this Nietzsche is explaining that (1†²) Hold agents responsible for their actions (2†²) Evaluate and â€Å"rank† the motives for which agents act (Brandhorst, M. (2010). Naturalism and the Genealogy of Moral Institutions: Journal of Nietzsche Studies. Issue 40, p 5-28, 16p). These views help support and defend Nietzsche’s logics on moral and psychological action: these precise opinions and views influenced one of the most famous Psychologists, Sigmund Freud. In Nietzsche’s first historical writings during the early 1870’s he was merely a student studying and exploring philosophical logic and legislations of his time. With an opinionated and different perspective of immoral acts than the culture surrounding him he took initiative in making his own decisions of what was right and what was wrong. In his first published writings The Birth of Tragedy (1872) it showed his advocating view for cultural adversity; though it was deeply put down by other scholars renowned for sharing Christian based opinions of that era, Nietzsche continued to express his abrasive view against unethical stringent laws (Robertson, S. (2009). Nietzsches Ethical Revaluation: Journal of Nietzsche Studies; Issue 37, pp 66-90). This philosopher indulged himself in cultural adversity, interacting with music, nature, sciences and exploration of other cultures and religions. Nietzsche counter acted with the book Human, All-Too-Human (1878) (Robertson, S. (2009). Nietzsches Ethical Revaluation: Journal of Nietzsche Studies; Issue 37, pp 66-90) that gave him a name and furthered his career, this book touched on health and the idea of hedonistic ideas in regards to pleasure and pain relevance amongst cultural and physiological phenomena. Nietzsche is a naturalist expanding on views related to animals, earth, air, wind, fire, body touching on illogical ideas of, especially, the Christian based religion. Nietzsche was very passionate and outspoken towards Christianity however that was not his only passionate topic. The power behind Germany in the late 1860’s due to wars prior and present were a huge influence for him as the shift of legislations due to new authority was erratically changing Germany, most notably, Politically, Economically and Culturally (Osborn, R. E. (2010). Nihilisms Conscience: On Nietzsches Politics of Aristocratic Radicalism. Modern age; Vol. 52 Issue 4, p 293-308). Therefore the idea that Germany could be altered so quickly not only enraged Friedrich Nietzsche but empowered him in his righteousness as an open minded scholar and as the next generation of Germany. This shift in Germany’s political system greatly affected Nietzsche’s era, and as a passionate advocate for freedom in culture Nietzsche felt compelled to speak out against the evil of which was the becoming of Germany. In conclusion Nietzsche’ views on evil were that to have bad moral or to act in an evil way, it is an act of conscious natural behavior. He believed that Evil is within and dependant upon the determinants that affect ones moral perception. Friedrich Nietzsche was in his prime during the change of an era in Germany’s political, societal and religious systems and was compelled to stand for what he believed in. It is extremely interesting that during the early 1870’s the new King Otto von Bismarck introduced healthcare, social security and a rise in socialism to promote the economic deficit and reduce potential hierarchy, however advocated anti-socialist laws (Palante, G. (2009, June 1st). Historical Philosophical Forum. Vol. 40 Issue 2 p265-273, 8p). The anti socialist laws were created to shift the power of the Social Democratic Party (SDP) which stood for Civil and Political rights in an open society. Bismarck also reduced the affiliations and influence of the political system on Catholics; making Catholicism a growing religion that was before the early 1870’s mostly Christian based. This seems to have been a huge influence on Nietzsche as his first book, The Birth of Tragedy (1872) was based upon open society and cultural adversity. This history of Germany is so significant due to the shift in power of the church, beginning at the attempt to stop the SDP after they had just begun in 1875 in the German Parliament as a Christian based society; immediately shifting the change from Christian to Catholicism (Palante, G. (2009, June 1st). Historical Philosophical Forum. Vol. 40 Issue 2 p265-273, 8p) this provoked outrage as this meant less freedom of choice for citizens. Although Friedrich Nietzsche far from advocated Christianity, the shift of religion affected him as this meant a cultural change amongst his peers. It greatly fuelled further writings based upon honest questions surrounding concepts that drain life’s energies. These strong views are now known as ‘Nietzschean affirmation’ expanding on Nietzsche profound writing based around existentialism; Friedrich Nietzsche along with Sà ¸ren Kierkegaard (1813–1855) were the two philosophers renowned for doing so in the late 1800’s (Palante, G. (2009, June 1st). Historical Philosophical Forum. Vol. 40 Issue 2 p265-273, 8p). Existentialism is a term used by philosophical thinkers expressing that one’s life affirmation, one’s existence is determined by ones self. Despite life’s distractions and obstacles it is ones choice to live passionately, with sincere moral integrity as best as possible. This further supports how Nietzsche’s opposing thoughts towards empiricism of which means ones moral integrity is derived from senses and experience, however socially prevalent those views might have been by Germany, Nietzsche still profoundly opposed them. In books such as Daybreak: Reflections on Moral Prejudices, 1881 (Morgenrà ¶te. Gedanken à ¼ber die moralischen Vorurteile) (Osborn, R. E. (2010). Nihilisms Conscience: On Nietzsches Politics of Aristocratic Radicalism. Modern age; Vol. 52 Issue 4, p 293-308), Nietzsche’s most memorable, clearest, and intimate volumes, expressing many social-psychological insights and cultural relativity using Christian Based moral evaluations as reflections on good and evil. There were several books to follow Daybreak in the late 1880’s, Thus Spoke Zarathustra (1883–85) and Ecce Homo (1888); this volume expressed the deepest of understanding power, humans and moral behaviors. Friedrich Nietzsche’s crusade against morality had begun and he followed up with The Gay Science (Die frà ¶hliche Wissenschaft, 1882) (Osborn, R. E. (2010). Nihilisms Conscience: On Nietzsches Politics of Aristocratic Radicalism. Modern age; Vol. 52 Issue 4, p 293-308) a book in which Nietzsche becomes famous for his existential ideas pertaining the existence of life. In this book I believe Nietzsche was encouraging the citizens of Germany to speak out against the injustice towards freedom and lack of moral integrity that the German political system was advocating. As Nietzsche’s world changed around him he felt more and more compelled to change it, standing by his own philosophical views and taking his life into his hands; becoming a martyr for the freedom of speech and cultural adversity that he so dearly believed in. Nietzsche felt very patiently towards open culture as well as freedom and this era of Germany was a huge influence on his work as it was a significant shift in decisions set by the new acclaimed authority. The Battle of good and evil is a constant in a world with no balance and a constant struggle of power. Friedrich Nietzsche so profoundly advocated freedom and cultural adversity, in which has inspired leading figures in all walks of cultural life, including dancers, poets, novelists, painters, psychologists, philosophers, sociologists and social revolutionaries; however there is always a power working against that and thus the problems that were his era are still amongst us. Until people accept others and are willing to live with respect to cultural adversity then there will always be evil immoral versus good moral. Throughout the history of any sovereignty there is a constant battle for power, beliefs and cultural relativity. Friedrich Nietzsche stood for freedom of choice and through his passionate writings did so very well; however as Nietzsche has expressed so dearly it is within ones choice to act with moral integrity based upon there perception of good and evil. These are the choices that affect us daily and round us as individuals; personally I have faced immoral decisions and it is in those moments, that you do not always realize at once, the affect that decision can have on another. In agreement with Friedrich Nietzsche, to recognize and feel remorse in your conscious or subconscious decision is what differentiates good and evil. For instance, contemporarily when you are in a delicate discussion of religion amongst peers of various cultural background I have to think open-mindedly with conscious acceptance to the reasoning behind cultural and religious background before making a judgmental statement. As well as Politics in Canada is directed for different groups of people, as politics usually is, so immediately there is a divide in Canada’s cultural, ethnic, and working class; because it is in the current political power to protect Canada’s Economic, Environmental or Social well-being. There is no balance and I believe without balance in a person, country or cultural group there cannot be a sustainable approach to good and evil; there is always a stretch for that much more power on any side, affecting moral. References Brandhorst, M. (2010). Naturalism and the Genealogy of Moral Institutions: Journal of Nietzsche Studies. Issue 40, p 5-28, 16p. Curry, B. (2008). The Perspectives of Nietzsche. Retrieved from http://www.pitt.edu/-wbcurry/nietzsche.html. Osborn, R. E. (2010). Nihilisms Conscience: On Nietzsches Politics of Aristocratic Radicalism. Modern age; Vol. 52 Issue 4, p 293-308. Palante, G. (2009, June 1st). Historical Philosophical Forum. Vol. 40 Issue 2 p265-273, 8p. Robertson, S. (2009). Nietzsches Ethical Revaluation: Journal of Nietzsche Studies; Issue 37, pp 66-90.

CAPM and Three Factor Model in Cost of Equity Measurement

CAPM and Three Factor Model in Cost of Equity Measurement 1.0 INTRODUCTION AND OBJECTIVES Central to many financial decisions such as those relating to investment, capital budgeting, portfolio management and performance evaluation is the estimation of the cost of equity or expected return. There exist several models for the valuation of equity returns, prominent among which are the dividend growth model, residual income model and its extension, free cash flow model, the capital asset pricing model, the Fama and French three factor model, the four factor model etc. Over the past few decades, two of the most common asset pricing models that have been used for this purpose are the Capital Asset Pricing Model (a single factor model by Sharpe 1964, Lintner 1965) and the three factor model suggested by Fama and French (1993). These two models have been very appealing to both practitioners and academicians due to their structural simplicity and are very easy to interpret. There have however been lots of debates and articles as to which of these two models should be used when est imating the cost of equity or expected returns. The question as to which of these two models is better in terms of their ability to explain variation in returns and forecast future returns is still an open one. While most practitioners favour a one factor model (CAPM) when estimating the cost of equity or expected return for a single stock or portfolio, academics however recommend the Fama and French three factor model (see eg. Bruner et al, 1998). The CAPM depicts a linear relationship between the expected return on a stock or portfolio to the excess return on a market portfolio. It characterizes the degree to which an assets return is correlated to the market, and indirectly how risky the asset is, as captured by beta. The three-factor model on the other hand is an extension of the CAPM with the introduction of two additional factors, which takes into account firm size (SMB) and book-to-market equity (HML). The question therefore is why practitioners prefer to use the single factor model (CAPM) when there exist some evidence in academics in favour of the Fama and French three factor model. Considering the number of years most academic concepts are adopted practically, can we conclude that the Fama and French three factor model is experiencing this so-called natural resistance or is it the case that the Fama and French model does not perform significantly better than the CAPM and so therefore not worth the time and cost? The few questions I have posed above form the basis for this study. It is worth noting that while the huge academic studies on these models produce interesting results and new findings, the validity of the underlying models have not been rigorously verified. In this paper, while I aim to ascertain which of the two models better estimates the cost of equity for capital budgeting purposes using regression analysis, I also will like to test whether the data used satisfy the assumptions of the method most academicians adopt, i.e. the Ordinary Least Squares (OLS) method. I will in particular be testing for the existence or otherwise of heteroscedasticity, multicollinearity, normality of errors serial correlation and unit roots, which may result in inefficient coefficient estimates, wrong standard errors, and hence inflated adjusted R2 if present in the data. I will then correct these if they exist by adopting the Generalised Least Squares (GLS) approach instead of the widely used Ordinary Least Squares (OLS) before drawing any inference from the results obtained. My conclusion as to which of the models is superior to the other will be based on which provides the best possible estimate for expected return or cost of equity for capital budgeting decision making. Since the cost of capital for capital budgeting is not observed, the objective here, therefore, is to find the model that is most effective in capturing the variations in stock returns as well as providing the best estimates for future returns. By running a cross sectional regression using stock or portfolio returns as the dependent variable and estimated factor(s) based on past returns as regressors, R2 measures how much of the differences in returns is explained by the estimation procedure. The model that produces the highest adjusted R2 will therefore be deemed the best. The Fama-French (1993, 1996) claimed superiority of their model over CAPM in explaining variations in returns from regressions of 25 portfolios sorted by size and book-to-market value. Their conclusion was based on the fact that their model produced a lower mean absolute value of alpha which is much closer to the theoretical value of zero. Fama and French (2004, working paper) stated that if asset pricing theory holds either in the case of the CAPM (page 10), or the Fama and French three-factor model (page 21), then the value of their alphas should be zero, depicting that the asset pricing model and its factor or factors explain the variations in portfolio returns. Larger values of alpha in this case are not desirable, since this will imply that the model was poor in explaining variation in returns. In line with this postulation, the model that yields the lowest Mean Absolute Value of Alpha (MAVA) will therefore be considered the best. But since alpha is a random variable, I will pro ceed to test the null hypothesis H0: ÃŽ ±i = 0 for all i, by employing the GRS F-statistic postulated by Gibbons, Ross and Shanken (1989). My third and fourth testing measures are based on postulates by econometricians that, the statistical adequacy of a model in terms of its violations of the classical linear regression model assumptions is hugely irrelevant if the models predictive power is poor and that the accuracy of forecasts according to traditional statistical criteria such as the MSE may give little guide to the potential profitability of employing those forecasts in a market trading strategy or for capital budgeting purposes. I will therefore test the predictive power of the two models by observing the percentage of forecast signs predicted correctly and their Mean Square Errors (MSE). One other motivation for this study is also to ascertain whether the results of prior studies are sample specific, that is, whether it is dependent on the period of study or the portfolio grouping used. Theoretically, the effectiveness of an asset pricing model in explaining variation in returns should not be influenced by how the data is grouped. Fama and French (1996) claimed superiority of their model over the CAPM using the July 1963 to December 1993 time period with data groupings based on size and book-to-market equity. I will be replicating this test on the same data grouping but covering a much longer period (from July 1926 to June 2006) and then on a different data grouping based on industry characteristics. Testing the models using the second grouping of industry portfolios will afford me the opportunity to ascertain whether the effectiveness of an asset pricing model is sample specific. I will also carry out the test by employing a much shorter period (5 years) and compari ng it to the longer period and then using the one with the better estimate in terms of alpha and R2 to carry out out-of-sample forecasts. The rest of this paper is structured as follows. Chapter 2 will review the various models available for the estimation of equity cost with particular emphasis on the two asset-pricing models and analysing some existing literature. Chapter 3 will give a description of the data, its source and transformations required, with Chapter 4 describing the methodology. Chapter 5 will involve the time series tests of hypothesis on the data and Chapter 6 will involve an empirical analysis of the results for the tests of the CAPM and the Fama and French three-factor model. Finally, Chapter 7 contains a summary of the major findings of my work and my recommendation as well as some limitations, if any, of the study and recommended areas for further studies. 2.0 RELEVANT LITERATURE The estimation of the cost of equity for an industry involves estimation of what investors expect in return for their investment in that industry. That is, the cost of equity to an industry is equal to the expected return on investors equity holdings in that industry. There are however a host of models available for the estimation of expected returns on an industrys equity capital including but not limited to estimates from fundamentals (dividends and earnings) and those from asset pricing models. 2.1 Estimations from Fundamentals Estimation of expected returns or cost of equity in this case from fundamentals involves the use of dividends and earnings. Fama and French (2002) used this approach to estimate expected stock returns. They stated that, the expected return estimates from fundamentals help to judge whether the realised average return is high or low relative to the expected value (pp 1). The reasoning behind this approach lies in the fact that, the average stock return is the average dividend yield plus the average rate of capital gain: A(Rt) = A(Dt/Pt-1) + A(GPt) (1) where Dt is the dividend for year t, Pt-1 is the price at the end of year t 1, GPt = (Pt Pt-1)/Pt-1 is the rate of capital gain, and A( ) indicates an average value. Given in this situation that the dividend-price ratio, Dt/Pt , is stationary (mean reverting), an alternative estimate of the stock return from fundamentals is: A(RDt) = A(Dt/Pt-1) + A(GDt) (2) Where GDt = (Dt Dt-1)/Dt-1is the growth rate of dividends and (2) is known as the dividend growth model which can be viewed as the expected stock return estimate of the Gordon (1962) model. Equation (2) in theory will only apply to variables that are cointegrated with the stock price and may not hold if the dividend-price ratio is non-stationary, which may be caused by firms decision to return earnings to stockholders by moving away from dividends to share repurchases (Fama and French 2002). But assuming that the ratio of earnings to price, (Yt/Pt), is stationary, then an alternative estimate of the expected rate of capital gain will be the average growth rate of earnings, A(GYt) = A((Yt Yt-1)/Yt-1). In this case, the average dividend yield can be combined with the A(GYt) to produce a third method of estimating expected stock return, the earnings growth model given as: A(RYt) = A(Dt/Pt-1) + A(GYt) (3) It stands to reason from the model in Lettau and Ludvigson (2001) that the average growth rate of consumption can be an alternative mean of estimating the expected rate of capital gain if the ratio of consumption to stock market wealth is assumed stationary. Fama and French (2002) in their analysis concluded that the dividend growth model has an advantage over the earnings growth model and the average stock return if the goal is to estimate the long-term expected growth of wealth. However, it is a more generally known fact that, dividends are a policy variable and so subject to changes in management policy, which raises problems when using the dividend growth model to estimate the expected stock returns. But this may not be a problem in the long run if there is stability in dividend policies and dividend-price ratio resumes its mean-reversion (although the reversion may be at a new mean level). Bagwell and Shoven (1989) and Dunsby (1995) have observed that share repurchases after 1983 has been on the ascendancy, while Fama and French (2001) have also observed that the proportion of firms who do not pay dividends have been increasing steadily since 1978. The Fama and French (2001) observation implies that in transition periods where firms who do not pay dividends increases steadily, the market dividend-price ratio may be non-stationary; overtime, it is likely to decrease, in which case the expected return will likely be underestimated when the dividend growth model is used. The earnings growth model, although not superior to the dividend growth model (Fama and French (2002)), is not affected by possible changes in dividend policies over time. The earnings growth model however may also be affected by non-stationarity in earnings-price ratio since it ability to accurately estimate average expected return is based on the assumption that there are permanent shifts in the expected value of the earnings-price ratio. 2.2 Estimations from Asset-Pricing Models One of the most fundamental concepts in the area of asset-pricing is that of risk versus reward. The pioneering work that addressed the risk and reward trade-off was done by Sharpe (1964)-Lintner (1965), in their introduction of the Capital Asset Pricing Model (CAPM). The Capital Asset Pricing Model postulates that the cross-sectional variation in expected stock or portfolio returns is captured only by the market beta. However, evidence from past literature (Fama and French (1992), Carhart (1997), Strong and Xu (1997), Jagannathan and Wang (1996), Lettau and Ludvigson (2001), and others) stipulates that the cross-section of stock returns is not fully captured by the one factor market beta. Past and present literature including studies by Banz (1981), Rosenberg et al (1985), Basu (1983) and Lakonishok et al (1994) have established that, in addition to the market beta, average returns on stocks are influenced by size, book-to-market equity, earnings/price and past sales growth respecti vely. Past studies have also revealed that stock returns tend to display short-term momentum (Jegadeesh and Titman (1993)) and long-term reversals (DeBondt and Thaler (1985)). Growing research in this area by scholars to address these anomalies has led to the development of alternative models that better explain variations in stock returns. This led to the categorisation of asset pricing models into three: (1) multifactor models that add some factors to the market return, such as the Fama and French three factor model; (2) the arbitrage pricing theory postulated by Ross (1977) and (3) the nonparametric models that heavily criticized the linearity of the CAPM and therefore added moments, as evidenced in the work of Harvey and Siddique (2000) and Dittmar (2002). From this categorization, most of the asset-pricing models can be described as special cases of the four-factor model proposed by Carhart (1997). The four-factor model is given as: E(Ri) Rf = ÃŽ ±i + [ E(RM) Rf ]bi + si E(SMB) + hi E(HML) + wiE(WML) + ÃŽ µi (4) where SMB, HML and WML are proxies for size, book-to-market equity and momentum respectively. There exist other variants of these models such as the three-moment CAPM and the four-moment CAPM (Dittmar, 2002) which add skewness and kurtosis to investor preferences, however the focus of this paper is to compare and test the effectiveness of the CAPM and the Fama and French three-factor model, the two premier asset-pricing models widely acknowledged among both practitioners and academicians. 2.3 Theoretical Background: CAPM and Fama French Three-Factor Model There exist quite a substantial amount of studies in the field of finance relating to these two prominent asset pricing models. The Capital Asset Pricing Model (CAPM) of Sharpe (1964) and Lintner (1965) has been the first most widely recognized theoretical explanation for the estimation of expected stock returns or cost of equity in this case. It is a single factor model that is widely used by Financial Economists and in industry. The CAPM being the first theoretical asset pricing model to address the risk and return concept and due to its simplicity and ease of interpretation, was quickly embraced when it was first introduced. The models attractiveness also lies in the fact that, it addressed difficult problems related to asset pricing using readily available time series data. The CAPM is based on the idea of the relationship that exists between the risk of an asset and the expected return with beta being the sole risk pricing factor. The Sharpe-Lintner CAPM equation which describes individual asset return is given as: E(Ri) = Rf + [ E(RM) Rf ]ÃŽ ²iM i = 1,,N (5) where E(Ri) is the expected return on any asset i, Rf is the risk-free interest rate, E(RM) is the expected return on the value-weighted market portfolio, and ÃŽ ²iM is the assets market beta which measures the sensitivity of the assets return to variations in the market returns and it is equivalent to Cov(Ri, RM)/Var(RM). The equation for the time series regression can be written as: E(Ri) Rf = ÃŽ ±i + [ E(RM) Rf ]ÃŽ ²iM + ÃŽ µi i = 1,,N; (6) showing that the excess return on portfolio i is dependent on excess market return with ÃŽ µi as the error term. The excess market return is also referred to as the market premium. The model is based on several key assumptions, portraying a simplified world where: (1) there are no taxes or transaction costs or problems with indivisibilities of assets; (2) all investors have identical investment horizons; (3) all investors have identical opinions about expected returns, volatilities and correlations of available investments; (4) all assets have limited liability; (5) there exist sufficiently large number of investors with comparable wealth levels so that each investor believes that he/she can purchase and sell any amount of an asset as he or she deems fit in the market; (6) the capital market is in equilibrium; and (7) Trading in assets takes place continually over time. The merits of these assumptions have been discussed extensively in literature. It is evident that most of these assumptions are the standard assumptions of a perfect market which does not exist in reality. It is a known fact that, in reality, indivisibilities and transaction costs do exist and one of the reasons assigned to the assumption of continual trading models is to implicitly give recognition to these costs. It is imperative to note however that, trading intervals are stochastic and of non-constant length and so making it unsatisfactory to assume no trading cost. As mentioned earlier, the assumptions made the model very simple to estimate (given a proxy for the market factor) and interpret, thus making it very attractive and this explains why it was easily embraced. The CAPM stipulates that, investors are only rewarded for the systematic or non-diversifiable risk (represented by beta) they bear in holding a portfolio of assets. Notwithstanding the models simplicity in estimation and interpretation, it has been criticized heavily over the past few decades . Due to its many unrealistic assumptions and simple nature, academicians almost immediately began testing the implications of the CAPM. Studies by Black, Jensen and Scholes (1972) and Fama and MacBeth (1973) gave the first strong empirical support to the use of the model for determining the cost of capital. Black et al. (1972) in combining all the NYSE stocks into portfolio and using data between the periods of 1931 to 1965 found that the data are consistent with the predictions of the Capital Asset Pricing Model (CAPM). Using return data for NYSE stocks for the period between 1926 to 1968, Fama and MacBeth (1973) in examining whether other stock characteristics such as beta squared and idiosyncratic volatility of returns in addition to their betas would help in explaining the cross section of stock returns better found that knowledge of beta was sufficient. There have however been several academic challenges to the validity of the model in relation to its practical application. Banz (1981) revealed the first major challenge to the model when he provided empirical evidence to show that stocks of smaller firms earned better returns than predicted by the CAPM. Banzs finding was not deemed economically important by most academicians in the light that, it is unreasonable to expect an abstract model such as the CAPM to hold exactly and that the proportion of small firms to total market capital is insignificant (under 5%). Other early empirical works by Blume and friend (1973), Basu (1977), Reinganum (1981), Gibbons (1982), Stambaugh (1982) and shanken (1985) could not offer any significant evidence in support of the CAPM. In their paper, Fama and French (2004) noted that in regressing a cross section of average portfolio returns on portfolio beta estimates, the CAPM would predict an intercept which is equal to the risk free rate (Rf) and a beta coefficient equal to the market risk premium (E(Rm) Rf). However, Black, Jensen and Scholes (1972), Blume and Friend (1973), Fama and MacBeth (1973) and Fama and French (1992) after running series of cross-sectional regressions found that the average risk-free rate, which is proxied by the one month T-bill, was always less that the realised intercept. Theory stipulates that, the three main components of the model (the risk free, beta and the market risk premium) must be forward-looking estimates. That is they must be estimates of their true future values. Empirical studies and survey results however show substantial disagreements as to how these components can be estimated. While most empirical researches use the one month T-bill rate as a proxy to the risk-fr ee rate, interviews depicts that practitioners prefer to use either the 90-day T-bill or a 10-year T-bond (normally characterised by a flat yield curve). Survey results have revealed that practitioners have a strong preference for long-term bond yields with over 70% of financial advisors and corporations using Treasury-bond yields with maturities of ten 10 or more years. However, many corporations reveal that they match the tenor of the investment to the term of the risk free rate. Finance theory postulates that the estimated beta should be forward looking, so as to reflect investors uncertainty about future cash flows to equity. Practitioners are forced to use various kinds of proxies since forward-looking betas are unobservable. It is therefore a common practice to use beta estimates derived from historical data which are normally retrieved from Bloomberg, Standard Poors and Value Line. However, the lack of consensus as to which of these three to use results in different betas for the same company. These differences in beta estimates could result in significantly different expected future returns or cost of equity for the company in question thereby yielding conflicting financial decisions especially in capital budgeting. In the work of Bruner et al. (1998), they found significant differences in beta estimates for a small sample of stocks, with Bloomberg providing a figure of 1.03 while Value Line beta was 1.24. The use of historical data however requires th at one makes some practical compromises, each of which can adversely affect the quality of the results. Forinstance, the statistically reliability of the estimate may improve greatly by employing longer time series periods but this may include information that are stale or irrelevant. Empirical research over the years has shown that the precision of the beta estimates using the CAPM is greatly improved when working with well diversified portfolios compared to individual securities. In relation to the equity risk premium, finance theory postulates that, the market premium should be equal to the difference between investors expected returns on the market portfolio and the risk-free rate. Most practitioners have to grapple with the problem of how to measure the market risk premium. Survey results have revealed that the equity market premium prompted the greatest diversity of responses among survey respondents. Since future expected returns are unobservable, most of the survey participants extrapolated historical returns in the future on the assumption that future expectations are heavily influenced by past experience. The survey participants however differed in their estimation of the average historical equity returns as well as their choice of proxy for the riskless asset. Some respondents preferred the geometric average historical equity returns to the arithmetic one while some also prefer the T-bonds to the T-bill as a proxy for the riskless asset. Despite the numerous academic literatures which discuss how the CAPM should be implemented, there is no consensus in relation to the time frame and the data frequency that should be used for estimation. Bartholdy Peare (2005) in their paper concluded that, for estimation of beta, five years of monthly data is the appropriate time period and data frequency. They also found that an equal weighted index, as opposed to the commonly recommended value-weighted index provides a better estimate. Their findings also revealed that it does not really matter whether dividends are included in the index or not or whether raw returns or excess returns are used in the regression equation. The CAPM has over the years been said to have failed greatly in explaining accurate expected returns and this some researchers have attributed to its many unrealistic assumptions. One other major assumption of the CAPM is that there exists complete knowledge of the true market portfolios composition or index to be used. This assumed index is to consist of all the assets in the world. However since only a small fraction of all assets in the world are traded on stock exchanges, it is impossible to construct such an index leading to the use of proxies such as the SP500, resulting in ambiguities in tests. The greatest challenge to the CAPM aside that of Banz (1981) came from Fama and French (1992). Using similar procedures as Fama and MacBeth (1973) and ten size classes and ten beta classes, Fama and French (1992) found that the cross section of average returns on stocks for the periods spanning 1960s to 1990 for US stocks is not fully explained by the CAPM beta and that stock risks are multidimensional. Their regression analysis suggest that company size and book-to-market equity ratio do perform better than beta in capturing cross-sectional variation in the cost of equity capital across firms. Their work was however preceded by Stattman (1980) who was the first to document a positive relation between book-to-market ratios and US stock returns. The findings of Fama and French could however not be dismissed as being economically insignificant as in the case of Banz. Fama and French therefore in 1993 identified a model with three common risk factors in the stock return- an overall market factor, factors related to firm size (SMB) and those related to book-to-market equity (HML), as an alternative to the CAPM. The SMB factor is computed as the average return on three small portfolios (small cap portfolios) less the average return on three big portfolios (large cap portfolios). The HML factor on the other hand is computed as the average return on two value portfolios less the average return on two growth portfolios. The growth portfolio represents stocks with low Book Equity to Market Equity ratio (BE/ME) while the value portfolios represent stocks with high BE/ME ratio. Their three-factor model equation is described as follows: E(Ri) Rf = ÃŽ ±i + [ E(RM) Rf ]bi + si E(SMB) + hi E(HML) + ÃŽ µi (7) Where E(RM) Rf, , E(SMB) and E(HML) are the factor risk premiums and bi , si and hi are the factor sensitivities. It is however believed that the introduction of these two additional factors was motivated by the works of Stattman (1980) and Banz (1981). The effectiveness of these two models in capturing variations in stock returns may be judged by the intercept (alpha) in equations (6) and (7) above. Theory postulates that if these models hold, then the value of the intercept or alpha must equal zero for all assets or portfolio of assets. Fama and French (1997) tested the ability of both the CAPM and their own three-factor model in estimating industry costs of equity. Their test considered 48 industries in which they found that their model outperformed the CAPM across all the industries considered. They however could not conclude that their model was better since their estimates of industry cost of equities were observed to be imprecise. Another disturbing outcome of their study is that both models displayed very large standard errors in the order of 3.0% per annum across all industries. Connor and Senghal (2001) tested the effectiveness of these two models in predicting portfolio returns in indias stock market. They tested the models using 6 portfolio groupings formed from the intersection of two size and three book-to-market equity by examining and testing their intercepts. Connor and Senghal in this paper examined the values of the intercepts and their corresponding t-statistics and then tested the intercepts simultaneously by using the GRS statistic first introduced by Gibbons, Ross and Shanken (1989). Based on the evidence provided by the intercepts and the GRS tests, Connor and Senghal concluded generally that the three-factor model of Fama and French was superior to the CAPM. There have been other several empirical papers ever since, to ascertain which of these models is better in the estimation of expected return or cost of equity, most producing contrasting results. Howard Qi (2004) concluded in his work that on the aggregate level, the two models behave fairly well in their predictive power but the CAPM appeared to be slightly better. Bartholdy and Peare (2002) in their work came to the conclusion that both models performed poorly with the CAPM being the poorest. 3.0 DATA SOURCES T CAPM and Three Factor Model in Cost of Equity Measurement CAPM and Three Factor Model in Cost of Equity Measurement 1.0 INTRODUCTION AND OBJECTIVES Central to many financial decisions such as those relating to investment, capital budgeting, portfolio management and performance evaluation is the estimation of the cost of equity or expected return. There exist several models for the valuation of equity returns, prominent among which are the dividend growth model, residual income model and its extension, free cash flow model, the capital asset pricing model, the Fama and French three factor model, the four factor model etc. Over the past few decades, two of the most common asset pricing models that have been used for this purpose are the Capital Asset Pricing Model (a single factor model by Sharpe 1964, Lintner 1965) and the three factor model suggested by Fama and French (1993). These two models have been very appealing to both practitioners and academicians due to their structural simplicity and are very easy to interpret. There have however been lots of debates and articles as to which of these two models should be used when est imating the cost of equity or expected returns. The question as to which of these two models is better in terms of their ability to explain variation in returns and forecast future returns is still an open one. While most practitioners favour a one factor model (CAPM) when estimating the cost of equity or expected return for a single stock or portfolio, academics however recommend the Fama and French three factor model (see eg. Bruner et al, 1998). The CAPM depicts a linear relationship between the expected return on a stock or portfolio to the excess return on a market portfolio. It characterizes the degree to which an assets return is correlated to the market, and indirectly how risky the asset is, as captured by beta. The three-factor model on the other hand is an extension of the CAPM with the introduction of two additional factors, which takes into account firm size (SMB) and book-to-market equity (HML). The question therefore is why practitioners prefer to use the single factor model (CAPM) when there exist some evidence in academics in favour of the Fama and French three factor model. Considering the number of years most academic concepts are adopted practically, can we conclude that the Fama and French three factor model is experiencing this so-called natural resistance or is it the case that the Fama and French model does not perform significantly better than the CAPM and so therefore not worth the time and cost? The few questions I have posed above form the basis for this study. It is worth noting that while the huge academic studies on these models produce interesting results and new findings, the validity of the underlying models have not been rigorously verified. In this paper, while I aim to ascertain which of the two models better estimates the cost of equity for capital budgeting purposes using regression analysis, I also will like to test whether the data used satisfy the assumptions of the method most academicians adopt, i.e. the Ordinary Least Squares (OLS) method. I will in particular be testing for the existence or otherwise of heteroscedasticity, multicollinearity, normality of errors serial correlation and unit roots, which may result in inefficient coefficient estimates, wrong standard errors, and hence inflated adjusted R2 if present in the data. I will then correct these if they exist by adopting the Generalised Least Squares (GLS) approach instead of the widely used Ordinary Least Squares (OLS) before drawing any inference from the results obtained. My conclusion as to which of the models is superior to the other will be based on which provides the best possible estimate for expected return or cost of equity for capital budgeting decision making. Since the cost of capital for capital budgeting is not observed, the objective here, therefore, is to find the model that is most effective in capturing the variations in stock returns as well as providing the best estimates for future returns. By running a cross sectional regression using stock or portfolio returns as the dependent variable and estimated factor(s) based on past returns as regressors, R2 measures how much of the differences in returns is explained by the estimation procedure. The model that produces the highest adjusted R2 will therefore be deemed the best. The Fama-French (1993, 1996) claimed superiority of their model over CAPM in explaining variations in returns from regressions of 25 portfolios sorted by size and book-to-market value. Their conclusion was based on the fact that their model produced a lower mean absolute value of alpha which is much closer to the theoretical value of zero. Fama and French (2004, working paper) stated that if asset pricing theory holds either in the case of the CAPM (page 10), or the Fama and French three-factor model (page 21), then the value of their alphas should be zero, depicting that the asset pricing model and its factor or factors explain the variations in portfolio returns. Larger values of alpha in this case are not desirable, since this will imply that the model was poor in explaining variation in returns. In line with this postulation, the model that yields the lowest Mean Absolute Value of Alpha (MAVA) will therefore be considered the best. But since alpha is a random variable, I will pro ceed to test the null hypothesis H0: ÃŽ ±i = 0 for all i, by employing the GRS F-statistic postulated by Gibbons, Ross and Shanken (1989). My third and fourth testing measures are based on postulates by econometricians that, the statistical adequacy of a model in terms of its violations of the classical linear regression model assumptions is hugely irrelevant if the models predictive power is poor and that the accuracy of forecasts according to traditional statistical criteria such as the MSE may give little guide to the potential profitability of employing those forecasts in a market trading strategy or for capital budgeting purposes. I will therefore test the predictive power of the two models by observing the percentage of forecast signs predicted correctly and their Mean Square Errors (MSE). One other motivation for this study is also to ascertain whether the results of prior studies are sample specific, that is, whether it is dependent on the period of study or the portfolio grouping used. Theoretically, the effectiveness of an asset pricing model in explaining variation in returns should not be influenced by how the data is grouped. Fama and French (1996) claimed superiority of their model over the CAPM using the July 1963 to December 1993 time period with data groupings based on size and book-to-market equity. I will be replicating this test on the same data grouping but covering a much longer period (from July 1926 to June 2006) and then on a different data grouping based on industry characteristics. Testing the models using the second grouping of industry portfolios will afford me the opportunity to ascertain whether the effectiveness of an asset pricing model is sample specific. I will also carry out the test by employing a much shorter period (5 years) and compari ng it to the longer period and then using the one with the better estimate in terms of alpha and R2 to carry out out-of-sample forecasts. The rest of this paper is structured as follows. Chapter 2 will review the various models available for the estimation of equity cost with particular emphasis on the two asset-pricing models and analysing some existing literature. Chapter 3 will give a description of the data, its source and transformations required, with Chapter 4 describing the methodology. Chapter 5 will involve the time series tests of hypothesis on the data and Chapter 6 will involve an empirical analysis of the results for the tests of the CAPM and the Fama and French three-factor model. Finally, Chapter 7 contains a summary of the major findings of my work and my recommendation as well as some limitations, if any, of the study and recommended areas for further studies. 2.0 RELEVANT LITERATURE The estimation of the cost of equity for an industry involves estimation of what investors expect in return for their investment in that industry. That is, the cost of equity to an industry is equal to the expected return on investors equity holdings in that industry. There are however a host of models available for the estimation of expected returns on an industrys equity capital including but not limited to estimates from fundamentals (dividends and earnings) and those from asset pricing models. 2.1 Estimations from Fundamentals Estimation of expected returns or cost of equity in this case from fundamentals involves the use of dividends and earnings. Fama and French (2002) used this approach to estimate expected stock returns. They stated that, the expected return estimates from fundamentals help to judge whether the realised average return is high or low relative to the expected value (pp 1). The reasoning behind this approach lies in the fact that, the average stock return is the average dividend yield plus the average rate of capital gain: A(Rt) = A(Dt/Pt-1) + A(GPt) (1) where Dt is the dividend for year t, Pt-1 is the price at the end of year t 1, GPt = (Pt Pt-1)/Pt-1 is the rate of capital gain, and A( ) indicates an average value. Given in this situation that the dividend-price ratio, Dt/Pt , is stationary (mean reverting), an alternative estimate of the stock return from fundamentals is: A(RDt) = A(Dt/Pt-1) + A(GDt) (2) Where GDt = (Dt Dt-1)/Dt-1is the growth rate of dividends and (2) is known as the dividend growth model which can be viewed as the expected stock return estimate of the Gordon (1962) model. Equation (2) in theory will only apply to variables that are cointegrated with the stock price and may not hold if the dividend-price ratio is non-stationary, which may be caused by firms decision to return earnings to stockholders by moving away from dividends to share repurchases (Fama and French 2002). But assuming that the ratio of earnings to price, (Yt/Pt), is stationary, then an alternative estimate of the expected rate of capital gain will be the average growth rate of earnings, A(GYt) = A((Yt Yt-1)/Yt-1). In this case, the average dividend yield can be combined with the A(GYt) to produce a third method of estimating expected stock return, the earnings growth model given as: A(RYt) = A(Dt/Pt-1) + A(GYt) (3) It stands to reason from the model in Lettau and Ludvigson (2001) that the average growth rate of consumption can be an alternative mean of estimating the expected rate of capital gain if the ratio of consumption to stock market wealth is assumed stationary. Fama and French (2002) in their analysis concluded that the dividend growth model has an advantage over the earnings growth model and the average stock return if the goal is to estimate the long-term expected growth of wealth. However, it is a more generally known fact that, dividends are a policy variable and so subject to changes in management policy, which raises problems when using the dividend growth model to estimate the expected stock returns. But this may not be a problem in the long run if there is stability in dividend policies and dividend-price ratio resumes its mean-reversion (although the reversion may be at a new mean level). Bagwell and Shoven (1989) and Dunsby (1995) have observed that share repurchases after 1983 has been on the ascendancy, while Fama and French (2001) have also observed that the proportion of firms who do not pay dividends have been increasing steadily since 1978. The Fama and French (2001) observation implies that in transition periods where firms who do not pay dividends increases steadily, the market dividend-price ratio may be non-stationary; overtime, it is likely to decrease, in which case the expected return will likely be underestimated when the dividend growth model is used. The earnings growth model, although not superior to the dividend growth model (Fama and French (2002)), is not affected by possible changes in dividend policies over time. The earnings growth model however may also be affected by non-stationarity in earnings-price ratio since it ability to accurately estimate average expected return is based on the assumption that there are permanent shifts in the expected value of the earnings-price ratio. 2.2 Estimations from Asset-Pricing Models One of the most fundamental concepts in the area of asset-pricing is that of risk versus reward. The pioneering work that addressed the risk and reward trade-off was done by Sharpe (1964)-Lintner (1965), in their introduction of the Capital Asset Pricing Model (CAPM). The Capital Asset Pricing Model postulates that the cross-sectional variation in expected stock or portfolio returns is captured only by the market beta. However, evidence from past literature (Fama and French (1992), Carhart (1997), Strong and Xu (1997), Jagannathan and Wang (1996), Lettau and Ludvigson (2001), and others) stipulates that the cross-section of stock returns is not fully captured by the one factor market beta. Past and present literature including studies by Banz (1981), Rosenberg et al (1985), Basu (1983) and Lakonishok et al (1994) have established that, in addition to the market beta, average returns on stocks are influenced by size, book-to-market equity, earnings/price and past sales growth respecti vely. Past studies have also revealed that stock returns tend to display short-term momentum (Jegadeesh and Titman (1993)) and long-term reversals (DeBondt and Thaler (1985)). Growing research in this area by scholars to address these anomalies has led to the development of alternative models that better explain variations in stock returns. This led to the categorisation of asset pricing models into three: (1) multifactor models that add some factors to the market return, such as the Fama and French three factor model; (2) the arbitrage pricing theory postulated by Ross (1977) and (3) the nonparametric models that heavily criticized the linearity of the CAPM and therefore added moments, as evidenced in the work of Harvey and Siddique (2000) and Dittmar (2002). From this categorization, most of the asset-pricing models can be described as special cases of the four-factor model proposed by Carhart (1997). The four-factor model is given as: E(Ri) Rf = ÃŽ ±i + [ E(RM) Rf ]bi + si E(SMB) + hi E(HML) + wiE(WML) + ÃŽ µi (4) where SMB, HML and WML are proxies for size, book-to-market equity and momentum respectively. There exist other variants of these models such as the three-moment CAPM and the four-moment CAPM (Dittmar, 2002) which add skewness and kurtosis to investor preferences, however the focus of this paper is to compare and test the effectiveness of the CAPM and the Fama and French three-factor model, the two premier asset-pricing models widely acknowledged among both practitioners and academicians. 2.3 Theoretical Background: CAPM and Fama French Three-Factor Model There exist quite a substantial amount of studies in the field of finance relating to these two prominent asset pricing models. The Capital Asset Pricing Model (CAPM) of Sharpe (1964) and Lintner (1965) has been the first most widely recognized theoretical explanation for the estimation of expected stock returns or cost of equity in this case. It is a single factor model that is widely used by Financial Economists and in industry. The CAPM being the first theoretical asset pricing model to address the risk and return concept and due to its simplicity and ease of interpretation, was quickly embraced when it was first introduced. The models attractiveness also lies in the fact that, it addressed difficult problems related to asset pricing using readily available time series data. The CAPM is based on the idea of the relationship that exists between the risk of an asset and the expected return with beta being the sole risk pricing factor. The Sharpe-Lintner CAPM equation which describes individual asset return is given as: E(Ri) = Rf + [ E(RM) Rf ]ÃŽ ²iM i = 1,,N (5) where E(Ri) is the expected return on any asset i, Rf is the risk-free interest rate, E(RM) is the expected return on the value-weighted market portfolio, and ÃŽ ²iM is the assets market beta which measures the sensitivity of the assets return to variations in the market returns and it is equivalent to Cov(Ri, RM)/Var(RM). The equation for the time series regression can be written as: E(Ri) Rf = ÃŽ ±i + [ E(RM) Rf ]ÃŽ ²iM + ÃŽ µi i = 1,,N; (6) showing that the excess return on portfolio i is dependent on excess market return with ÃŽ µi as the error term. The excess market return is also referred to as the market premium. The model is based on several key assumptions, portraying a simplified world where: (1) there are no taxes or transaction costs or problems with indivisibilities of assets; (2) all investors have identical investment horizons; (3) all investors have identical opinions about expected returns, volatilities and correlations of available investments; (4) all assets have limited liability; (5) there exist sufficiently large number of investors with comparable wealth levels so that each investor believes that he/she can purchase and sell any amount of an asset as he or she deems fit in the market; (6) the capital market is in equilibrium; and (7) Trading in assets takes place continually over time. The merits of these assumptions have been discussed extensively in literature. It is evident that most of these assumptions are the standard assumptions of a perfect market which does not exist in reality. It is a known fact that, in reality, indivisibilities and transaction costs do exist and one of the reasons assigned to the assumption of continual trading models is to implicitly give recognition to these costs. It is imperative to note however that, trading intervals are stochastic and of non-constant length and so making it unsatisfactory to assume no trading cost. As mentioned earlier, the assumptions made the model very simple to estimate (given a proxy for the market factor) and interpret, thus making it very attractive and this explains why it was easily embraced. The CAPM stipulates that, investors are only rewarded for the systematic or non-diversifiable risk (represented by beta) they bear in holding a portfolio of assets. Notwithstanding the models simplicity in estimation and interpretation, it has been criticized heavily over the past few decades . Due to its many unrealistic assumptions and simple nature, academicians almost immediately began testing the implications of the CAPM. Studies by Black, Jensen and Scholes (1972) and Fama and MacBeth (1973) gave the first strong empirical support to the use of the model for determining the cost of capital. Black et al. (1972) in combining all the NYSE stocks into portfolio and using data between the periods of 1931 to 1965 found that the data are consistent with the predictions of the Capital Asset Pricing Model (CAPM). Using return data for NYSE stocks for the period between 1926 to 1968, Fama and MacBeth (1973) in examining whether other stock characteristics such as beta squared and idiosyncratic volatility of returns in addition to their betas would help in explaining the cross section of stock returns better found that knowledge of beta was sufficient. There have however been several academic challenges to the validity of the model in relation to its practical application. Banz (1981) revealed the first major challenge to the model when he provided empirical evidence to show that stocks of smaller firms earned better returns than predicted by the CAPM. Banzs finding was not deemed economically important by most academicians in the light that, it is unreasonable to expect an abstract model such as the CAPM to hold exactly and that the proportion of small firms to total market capital is insignificant (under 5%). Other early empirical works by Blume and friend (1973), Basu (1977), Reinganum (1981), Gibbons (1982), Stambaugh (1982) and shanken (1985) could not offer any significant evidence in support of the CAPM. In their paper, Fama and French (2004) noted that in regressing a cross section of average portfolio returns on portfolio beta estimates, the CAPM would predict an intercept which is equal to the risk free rate (Rf) and a beta coefficient equal to the market risk premium (E(Rm) Rf). However, Black, Jensen and Scholes (1972), Blume and Friend (1973), Fama and MacBeth (1973) and Fama and French (1992) after running series of cross-sectional regressions found that the average risk-free rate, which is proxied by the one month T-bill, was always less that the realised intercept. Theory stipulates that, the three main components of the model (the risk free, beta and the market risk premium) must be forward-looking estimates. That is they must be estimates of their true future values. Empirical studies and survey results however show substantial disagreements as to how these components can be estimated. While most empirical researches use the one month T-bill rate as a proxy to the risk-fr ee rate, interviews depicts that practitioners prefer to use either the 90-day T-bill or a 10-year T-bond (normally characterised by a flat yield curve). Survey results have revealed that practitioners have a strong preference for long-term bond yields with over 70% of financial advisors and corporations using Treasury-bond yields with maturities of ten 10 or more years. However, many corporations reveal that they match the tenor of the investment to the term of the risk free rate. Finance theory postulates that the estimated beta should be forward looking, so as to reflect investors uncertainty about future cash flows to equity. Practitioners are forced to use various kinds of proxies since forward-looking betas are unobservable. It is therefore a common practice to use beta estimates derived from historical data which are normally retrieved from Bloomberg, Standard Poors and Value Line. However, the lack of consensus as to which of these three to use results in different betas for the same company. These differences in beta estimates could result in significantly different expected future returns or cost of equity for the company in question thereby yielding conflicting financial decisions especially in capital budgeting. In the work of Bruner et al. (1998), they found significant differences in beta estimates for a small sample of stocks, with Bloomberg providing a figure of 1.03 while Value Line beta was 1.24. The use of historical data however requires th at one makes some practical compromises, each of which can adversely affect the quality of the results. Forinstance, the statistically reliability of the estimate may improve greatly by employing longer time series periods but this may include information that are stale or irrelevant. Empirical research over the years has shown that the precision of the beta estimates using the CAPM is greatly improved when working with well diversified portfolios compared to individual securities. In relation to the equity risk premium, finance theory postulates that, the market premium should be equal to the difference between investors expected returns on the market portfolio and the risk-free rate. Most practitioners have to grapple with the problem of how to measure the market risk premium. Survey results have revealed that the equity market premium prompted the greatest diversity of responses among survey respondents. Since future expected returns are unobservable, most of the survey participants extrapolated historical returns in the future on the assumption that future expectations are heavily influenced by past experience. The survey participants however differed in their estimation of the average historical equity returns as well as their choice of proxy for the riskless asset. Some respondents preferred the geometric average historical equity returns to the arithmetic one while some also prefer the T-bonds to the T-bill as a proxy for the riskless asset. Despite the numerous academic literatures which discuss how the CAPM should be implemented, there is no consensus in relation to the time frame and the data frequency that should be used for estimation. Bartholdy Peare (2005) in their paper concluded that, for estimation of beta, five years of monthly data is the appropriate time period and data frequency. They also found that an equal weighted index, as opposed to the commonly recommended value-weighted index provides a better estimate. Their findings also revealed that it does not really matter whether dividends are included in the index or not or whether raw returns or excess returns are used in the regression equation. The CAPM has over the years been said to have failed greatly in explaining accurate expected returns and this some researchers have attributed to its many unrealistic assumptions. One other major assumption of the CAPM is that there exists complete knowledge of the true market portfolios composition or index to be used. This assumed index is to consist of all the assets in the world. However since only a small fraction of all assets in the world are traded on stock exchanges, it is impossible to construct such an index leading to the use of proxies such as the SP500, resulting in ambiguities in tests. The greatest challenge to the CAPM aside that of Banz (1981) came from Fama and French (1992). Using similar procedures as Fama and MacBeth (1973) and ten size classes and ten beta classes, Fama and French (1992) found that the cross section of average returns on stocks for the periods spanning 1960s to 1990 for US stocks is not fully explained by the CAPM beta and that stock risks are multidimensional. Their regression analysis suggest that company size and book-to-market equity ratio do perform better than beta in capturing cross-sectional variation in the cost of equity capital across firms. Their work was however preceded by Stattman (1980) who was the first to document a positive relation between book-to-market ratios and US stock returns. The findings of Fama and French could however not be dismissed as being economically insignificant as in the case of Banz. Fama and French therefore in 1993 identified a model with three common risk factors in the stock return- an overall market factor, factors related to firm size (SMB) and those related to book-to-market equity (HML), as an alternative to the CAPM. The SMB factor is computed as the average return on three small portfolios (small cap portfolios) less the average return on three big portfolios (large cap portfolios). The HML factor on the other hand is computed as the average return on two value portfolios less the average return on two growth portfolios. The growth portfolio represents stocks with low Book Equity to Market Equity ratio (BE/ME) while the value portfolios represent stocks with high BE/ME ratio. Their three-factor model equation is described as follows: E(Ri) Rf = ÃŽ ±i + [ E(RM) Rf ]bi + si E(SMB) + hi E(HML) + ÃŽ µi (7) Where E(RM) Rf, , E(SMB) and E(HML) are the factor risk premiums and bi , si and hi are the factor sensitivities. It is however believed that the introduction of these two additional factors was motivated by the works of Stattman (1980) and Banz (1981). The effectiveness of these two models in capturing variations in stock returns may be judged by the intercept (alpha) in equations (6) and (7) above. Theory postulates that if these models hold, then the value of the intercept or alpha must equal zero for all assets or portfolio of assets. Fama and French (1997) tested the ability of both the CAPM and their own three-factor model in estimating industry costs of equity. Their test considered 48 industries in which they found that their model outperformed the CAPM across all the industries considered. They however could not conclude that their model was better since their estimates of industry cost of equities were observed to be imprecise. Another disturbing outcome of their study is that both models displayed very large standard errors in the order of 3.0% per annum across all industries. Connor and Senghal (2001) tested the effectiveness of these two models in predicting portfolio returns in indias stock market. They tested the models using 6 portfolio groupings formed from the intersection of two size and three book-to-market equity by examining and testing their intercepts. Connor and Senghal in this paper examined the values of the intercepts and their corresponding t-statistics and then tested the intercepts simultaneously by using the GRS statistic first introduced by Gibbons, Ross and Shanken (1989). Based on the evidence provided by the intercepts and the GRS tests, Connor and Senghal concluded generally that the three-factor model of Fama and French was superior to the CAPM. There have been other several empirical papers ever since, to ascertain which of these models is better in the estimation of expected return or cost of equity, most producing contrasting results. Howard Qi (2004) concluded in his work that on the aggregate level, the two models behave fairly well in their predictive power but the CAPM appeared to be slightly better. Bartholdy and Peare (2002) in their work came to the conclusion that both models performed poorly with the CAPM being the poorest. 3.0 DATA SOURCES T