Rational Choice Theory Essay Example for Free

Rational Choice Theory Essay A Significant theory to me will be the Rational Choice theory. This theory explains how people make decisions by seeking the most cost-effective means to achieve a specific goal without reflecting on the worthiness of that goal; to maximize personal advantage by weighing costs against benefits without moral or ethical values. It is a popular theory as it is an efficient system that explains and predicts a behavior of a person, and to larger extent, a collective group of people. Understanding this theory would allow a person to understand quickly how decisions are made, and the impact of the decisions on a society — how it functions and performs economically. Based on this theory, people’s measured decisions are often calculated based on financial benefits and costs. Singapore, by and large, has functioned on this theory, which has benefited from this tool of measurement and prospered since the days of nation building. However, this theory will work perfectly only if everyone in the society shares the same values, had perfect information, and the ability to make the most rational decisions at any point in time. People living in a society with homogenous values, such as Singapore, have similar behavioural patterns, which enable this theory to work. However, on a global scale, this theory will no longer work as peoples’ values are varied and culturally diverse. The most rational choice for one man might be an irrational choice for another. And when this occurs, there will be unpredictability and the results that follow can be disastrous. The Great Financial Crisis is a good example of the rational choice theory gone awry. Financial institutions’ goal is to maximize profits. To maximize profits, financial institutions have to find ways to create profits. One of these methods was to get creative with offering mortgage to people who wanted to own homes. Credit terms were made easy and the securities in place to safeguard the process were ignored. These consolidated loans were sold to big investment banks which resold them as securities offering high returns. Credit agencies working for these investment banks told investors’ that securities were safe. Selling a financial product based on a large group on loans was supposed to limit the risk if a few loans went bad. However, a large number of loans, later known as toxic, were borro wed by individuals with no financial means. Furthermore, many of these loans were offered in the form of adjustable rate mortgage, which started out with an initial period of low interest rate, and later ballooned up to three times the initial rate. All these borrowers were saddled with a monthly mortgage payment way beyond their monthly income. To make matters worse, the sprint to own a house on such easy terms had created a housing bubble, causing house prices to escalate astronomically. This phenomenon further pushed people to borrow way beyond their means. Consequently, millions of homeowners were unable to repay their mortgage loans. The financial institutions disregarded moral and ethical values to draw up shady credit schemes. Consolidated mortgages were bundled in with the toxic ones and resold for profits. Individuals felt the need to buy a house simply because everyone else was buying a house without the discretion of affordability and the hyper-inflated housing prices. Ea ch acted on imperfect knowledge to maximize personal benefits and disregard moral and ethical values. Rational choice theory can be an efficient method as a decision-making tool to attain goals, but it is definitely too simple an application on a macro context. To make a good decision, one has to balance cost-benefit analysis with moral and cultural factors.

Use of Rhetorical Strategies in Richard Wright’s Autobiography, Black Boy :: Wright Black Boy Essays

Use of Rhetorical Strategies in Richard Wright’s Autobiography, Black Boy Richard Wright grew up in a bitterly racist America. In his autobiography Black Boy, he reveals his personal experience with the potency of language. Wright delineates the efficacious role language plays in forming one’s identity and social acceptance through an ingenious use of various rhetorical strategies. Richard’s own identity as well as his personal identification of others is formed through language. For example, in Richard’s encounter with the Yankee, Richard used language to fill up the â€Å"yawning, shameful gap.† He uses personification to emphasize the awkwardness of their conversation. This awkwardness was a result of the Yankee’s probing questions. Richard described it as an â€Å"unreal-natured† conversation, but, paradoxically, he also admits, â€Å"of course the conversation was real; it dealt with my welfare.† The Yankee man then tried to offer Richard a dollar, and spoke of the blatant hunger in Richard’s eyes. This made Richard feel degraded and ashamed. Wright uses syntax to appropriately place the conversation before making his point in his personal conclusions. In the analogy, â€Å"A man will seek to express his relation to the stars†¦that loaf of bread is as important as the stars† (loaf of bread being the metonymy for food), Wright concludes â€Å" it is the little things of life â€Å" that shape a Negro’s destiny. An interesting detail is how Richard refuses the Yankee’s pity; he whispers it. From then on, Richard identified him as an enemy. Thus, through that short, succinct exchange of words, two identities were molded. Language is also pivotal in determining Richard’s social acceptance. For instance, Mr. Olin, a white man tries to probe Richard into fighting another black boy. Richard was disturbed. He uses contrast to show his disturbance, â€Å"the eye glasses†¦were forgotten. My eyes were on Mr. Olin’s face.† A certain dramatic irony exists exists when Richard asks, â€Å"Who was my friend, the white man or the black boy?† The reader knows it is the black boy. Wright uses detail such as Mr. Olin’s â€Å"low, confidential,† voice to create an apocryphally amiable tone. If Richard complies with Mr. Olin’s deceiving language, he would gain the social acceptance of the white men. If not, he would be ostracized as a pariah. Wright uses a metaphor, â€Å"my delicately balanced world had tipped† to show his confusion.

Tax and Gearing

W22Extra: Tax and Gearing: More Questions Multiple Choice 1) Which of the following statements is false? A) In general, the gain to investors from the tax deductibility of interest payments is referred to as the interest tax shield. B) The interest tax shield is the additional amount that a firm would have paid in taxes if it did not have leverage. C) Because Corporations pay taxes on their profits after interest payments are deducted, interest expenses reduce the amount of corporate tax firms must pay. D) As Modigliani and Miller made clear in their original work, capital structure matters in perfect capital markets.Thus, if capital structure does not matter, then it must stem from a market imperfection. As Modigliani and Miller made clear in their original work, capital structure does not matter in perfect capital markets. Thus, if capital structure matters, then it must stem from a market imperfection. ————————— Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€ Rosewood Industries has EBIT of $450 million, interest expense of $175 million, and a corporate tax rate of 35%. 2) Rosewood's net income is closest to: A) $450 million B) $180 million C) $290 million D) $95 million Net income = (EBIT – Interest expense)(1 – ?C) = (450 – 175)(1 – . 35) = $178. 75 3) The total of Rosewood's net income and interest payments is closest to: A) $270 million B) $355 million C) $290 million D) $450 million Net income + Interest = (EBIT – Interest expense)(1 – ? C) = (450 – 175)(1 – . 35) = $178. 75 + $175 = $353. 73 4) If Rosewood had no interest expense, its net income would be closest to: A) $405 million B) $160 million C) $450 million D) $290 million Net income = (EBIT – Interest expense)(1 – ? C) = (450 – 0)(1 – . 35) = $292. 50 5) The amount of Rosewood's interest tax shield is closest to: A) $115 million B) $290 millionC) $175 million D) $60 million Interest tax shield = Interest expense(? C) = 175(. 35) = $61. 25 ——————————————————————————— Fly by Night Aviation (FBNA) expects to have net profit available for shareholders next year of ? 24 million and Free Cash Flow of ? 27 million. FBNA's marginal corporate tax rate is 40%. 6) Establish FBNA's EBIT A) ? 43 million B) ? 40 Million C) ? 45 million D) ? 60 million EBIT = NI + Taxes + Interest expense FCF = NI + Interest expense => 27 = 24 + interest expense = 3 (EBIT – Interest Expense)(1 – 0. ) = NI (EBIT – 3)(0. 6) = 24 (EBIT – 3) = 24/0. 6 = 40 EBIT = 40 + 3 = $43 7) IF FBNA increases leverage so that its interest expense rises by ? 1 million, then the amount its profit for shareholders will change is closest to: A) -? 400,000 B) -? 600,000 C) ? 400,000 D) ? 600,000 (EBIT – Interest Expense – chg IE)(1 – 0. 4) = NI + chg NI (- chg IE)(0. 6) = chg NI -1m (. 6) = -600,000 Or, -$1m (1 – . 4) = -$600,000 8) IF FBNA increases leverage so that its interest expense rises by ? 1 million, then the amount its Free Cash flow will change is closest to: A) -? 600,000 B) -? 400,000C) ? 600,000 D) ? 400,000 FCF = NI + Interest expense chg FCF = chg NI + chg Interest expense = – 600,000 + 1m = +400,000 Or, $1m (0. 4) = $400,000 ————————————————————————— LCMS Industries has ? 70 million in debt outstanding. The firm will pay only interest on this debt (the debt is perpetual). LCMS' marginal tax rate is 35% and the firm pays a rate of 8% inte rest on its debt. 9) LCMS' annual interest tax shield is closest to: A) ? 2. 8 million B) ? 2. 0 million C) ? 3. 6 million D) ? 5. 6 million Annual Tax shield= annual debt interest ? C = ? 70M ? 0. 08 ? .35 = 1. 96M 10) Assuming that the risk is the same as the loan, the present value of LCMS' interest tax shield is closest to: A) ? 45. 5 million B) ? 20. 0 million C) ? 24. 5 million D) ? 35. 0 million PV of Tax shield = debt ? ?C = ? 70M ? .35 = 24. 5M 11) Assuming that the risk of the tax shield is only 6% even though the loan pays 8%, then the present value of LCMS' interest tax shield is closest to: A) ? 24. 5 million B) ? 18 million C) ? 33. 0 million D) ? $20. 0 million PV of Tax shield = debt ? ?C ? rD / rD2 = $70M ? .35 ? .08/. 06 = 32. 67

9 Spanish Verbs Based on Venir

Usually meaning to come, venir is one of the most common verbs in Spanish. Like many other verbs, venir can be combined with prefixes to expand its meaning. As you can see from the examples below, many of the words formed by combining venir with a prefix are related to English words that end in -vene. Thats because the English verbs come from the Latin verb venire, which is also the source of venir. Following are the most common verbs formed using the venir root along with examples of their use. Avenir Avenir typically means to reconcile, to get along, or to come to an agreement. It is frequently used in the reflexive form. Nos avenimos a firmar la Carta de la Paz, un documento que debemos fortalecer. (We came together to sign the Peace Letter, a document we ought to strengthen.)Tras largas negociaciones, los empresarios finalmente se avinieron con los sindicatos. (After lengthy negotiations, the business owners finally came to an agreement with the unions.) Contravenir Meanings of contravenir include to violate, to infringe, and to contravene. Este tipo de medidas contravenerà ­an el principio de libre circulacià ³n. (This kind of step violated the principle of free circulation.)Los usuarios que usen las computadoras de la biblioteca no contravendrà ¡n las leyes sobre derechos de autor o marcas registrada. (Library computer uses will not violate the laws about copyright or trademarks.) Convenir Although convenir can sometimes refer to convening, it more often refers to being suitable or agreeing. Los representantes convinieron en que debà ­an esperar hasta recibir mas informacià ³n. (The representatives agreed that they ought to wait until they receive more information.)Espero que el Congreso convenga, tambien aprobando el artà ­culo que se discute. (I hope that the Congress convenes, also approving the article under discussion.) Devinir Devenir is not related to the English verb divine but instead usually means to become or to happen. Cuando la mente deviene quiescente, el soplo deviene controlado. (When the mind quiets down, breathing becomes controlled.)No puedes devenir lo que no eres naturalmente. (You cant become what you naturally arent.) Intervenir Intervenir can refer to intervening, but it can also have a weaker meaning that refers just to participating in something. El Banco Central intervino cuando el tipo de cambio tocà ³ $2,98. (The Central Bank intervened when the exchange rate reached $2.98.)Los varones intervienen menos que las mujeres en el cuidado de los hijos. (The men participate less in the care of children than the women do.) Prevenir While prevenir often refers to preventing something, it can also refer to merely warning or even just expecting. Ambas vacunas previnieron la diseminacià ³n cloacal del virus de influenza aviar. (Both vaccines prevented the sewage-connected dissemination of the bird flu virus.)El gobierno no previno el desastre de Nueva Orleans. (The government did not anticipate the New Orleans disaster.) Provenir Provenir typically means to come from somewhere. Provengo de la ciudad de Talca en Chile. (I come from the city of Talca in Chile.)Como mi apellido indica, mi padre proviene de Alemania. (As my surname indicates, my father comes from Germany.) Sobrevenir Sobrevenir frequently refers to something coming or happening suddenly, although it can also refer to something that merely happens subsequent to something else. En la madrugada sobrevino el terremoto. (The earthquake came suddenly in the dawn.)Hay que identificar la probabilidad de que sobrevenga un tsunami. (It is necessary to determine the chance that a tsunami will occur.) Subvenir Subvenir is often translated as to pay or to defray; it typically refers to the payment for necessities. El populismo pretende que el estado subvenga a toda necesidad social tengan las personas. (Populism hopes that the state will provide for every social necessity that people have.)La madre subviene a todas las necesidades del nià ±o. (The mother pays for all the childs needs.) Conjugation of Verbs Based on Venir All these verbs are conjugated in the same way as  venir, which is irregular in nearly all its simple forms. For example, this is how prevenir is conjugated in the indicative present tense: yo prevengo, tà º previenes, usted/à ©l/ella previene, nosotros/nosotras prevenimos, vosotros/vosotras venà ­s, ellos/ellas previenen.