Taking a Look at Hydroelectricity - 1078 Words

Fossil fuels have been a means of obtaining energy for decades. In 2006, humankind uses one billion barrels of fossil fuels per year and in 2012, it multiplies up to 30 billion barrels per year. Chris Nelder, an energy futurist and analyst, says, â€Å"[Soon] You will never see cheap gasoline again. You will probably never see cheap energy again (Nelder).† Indeed, scientists predict that we are extremely close to the peak oil production, a state of extracting the maximum oil each year (The Peak Oil Theory Explained). After the occurrence, oil output will drastically deplete while the price increases. Therefore, since energy is essential in life, we are in need of alternative sources. This essay will be explaining the solution, which is hydroelectricity: what it is, how it works and the implications it brings. Hydro is derived from Greek origins meaning water. In other words, hydroelectricity is a form of energy generated by converting water into electricity. Hydroelectricity is considered a type of renewable energy due to its use of water. There is an unlimited supply of water in the world because of its continued and unending cycle: rain, evaporation and condensation. Ancient Romans were recorded as the first to develop the turbine method, which plays a major role in hydroelectric power plants. Hydroelectricity’s driving force is gravity since it makes the water run from higher grounds to lower levels (Hydropowers Unexpected Side Effects). The falling of water creates theShow MoreRelatedWater Quality Of The Thames River2330 Words   |  10 PagesCity of London. However, we will also like to make a couple of adjustments to the design of the dam to solve not only the water pollution issue of the Thames River but to also add the bonus of enabling the City of London to generate a little hydroelectricity and opening the dam to the public. We support the current plan from the City to London to redesign the dam. However, we want to propose changes to the design of the dam. Currently, the Springbank Dam is a barrage dam. A barrage dam consistsRead MoreAlternative Energy is the Solution to the Fossil Fuel Dilemma1366 Words   |  6 PagesHowever, a new design in wind turbines has been developed that will improve efficiency of wind turbines. â€Å"Popular Science† discusses the latest wind turbine prototype and its possibilities: Weisbrich’s modular Wind Amplified Rotor Platform (WARP) looks like a stack of wheel rims laid on their sides, with a pair of turbines mounted to each of the rims concave surfaces. Wind-tunnel tests at Rensselaer Polytechnic Institute in Troy, New York, suggest that the WARP design can amplify wind speeds byRead MoreAnalysis Of Timothy Egan s The Big Burn Essay958 Words   |  4 Pageshe writes about the many people who perished during this disaster. 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Financial Ratios and Stock Return Predictability Free Essays

The results indicate that DY and EY ratios has direct positive association with stock return where as B/M ratio has significant negative relationship with stock return. Therefore we can say that the above mentioned ratios are able to predict stock returns, furthermore it can be seen that as compare to dividend yield and earning yield the ratio of book to market has the highest predictive power. Moreover when we combine these financial ratios the predictability of stock returns will enhance. We will write a custom essay sample on Financial Ratios and Stock Return Predictability or any similar topic only for you Order Now Keywords: Financial ratios, Stock return, Karachi Stock Exchange, Dividend Yield, Earning Yield. 1. Introduction Stock Market plays a very significant role in the economic growth of a country. According to A. Schrimpf (2010) there is significant economic aftermath of the existence of stock return predictability. S. Kheradyar et al, (2011), â€Å"The Analytics of Economic Time Series†, states that in stocks market share prices move randomly i. e. on certain day share prices are like to go down as they were like to up. Such random behavior worried some of the financial economists and followed by further research. Hence such random movement of share prices lead to a hypothesis called Random Walk Hypothesis. Random walk hypothesis suggest that it is difficult to predict share prices because stock prices evolved, now it will be showing upward trend but after some time such might be showing downward trend. Hence predicting 100% accuracy of stock return is almost impossible. In contrast to Random Walk Behavior is efficient market hypothesis. According to efficient market hypothesis share prices are fairly priced in the stock market or prices of stock demonstrates information in the market is widely and equally available to all and no one in the market can outperform or can beat the market. With the passage of time researchers tries to find out most accurate variables for predicting stock prices, some were tend towards financial and some were towards profitability ratios i. e. book to market ratio, price to earnings ratio, 1 Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 3, No 10, 2012 www. iiste. org dividend yield, etc some were tend towards cash flow ratios like price to cash flow ratio, cash burn ratio, etc and some focused on macroeconomic variable like interest rate, law and order situation and inflation rate etc. In this research article we have investigated 3 above mentioned ratios to determine whether they predict stock returns. This research study has used the stock return and the above mentioned financial ratios association at two samples as the foundation for the formulation of Eight hypotheses. On the grounds of their appropriate regression models the eight hypotheses are divided into two sets. In this study we have used the two models of simple and multiple regressions to apply Predictive regression; it is an important tool for predicting stock returns. A set of panal data is used for the formulation of these two models. For tackling the problem of heteroskedasticity and non-normality distributed residuals, we applied generalized least squares method. 2. Literature Review Campbell and Shiller (1988) stated in their study that as dividend yield has the ability to confine expected return and expectation about growth in dividend yield so dividend yield is good predictor of stock return. Chan, L. Hamao, Y. Yakonishok, J. (1991), found that in Japanese market fundamental variables like dividend yield, price to earnings ratio, book to market ratio and firm’s size have significant impact on expected earning/returns of stocks. They notify that there is indirect relationship between earning yield and stocks returns in Japan. In comparison of the size of the firm and earning yield, B/M and dividend yield (cash flow yield) are significantly related with returns of stocks. They further added that an important variable both economically and statistically is book to market ratio and this need to be observe because either the afterward half of the sample is judged or for the first time test is applied the book to market ratio shows it continuation. Mukerji, S. Dhatt, M. Kim, Y. 1997), on Korean Stock market for a period of 1982-1992 establish a direct relationship between return of stocks and D/E, S/P and B/M, moreover an indirect relationship between size of firm and return of stocks. They demonstrated that P/E ratio is less trustworthy indicator than B/M and S/P. Beta is a week proxy for assessment of risk when compare with debt to equity ratio. B/M and S/P are responsible for the direct relationship between re turn of stocks and debt to equity. However a P/E and B/M ratio becomes the base for indirect relationship between return of stocks and size of the firm. Kothari and Shanken (1997) found for US market that dividend yield and book to market ratios have dependable proof for expected real return over a period 1926-1991, and there lies a track of time series variations. Pontiff and Schall (1998) stated that as for predicting power is concerned book to market ratio has some predictability power for predicting stock returns. Lewellen (2002) conducted his study in US he found that predictability power of dividend yield for predicting stock returns is more than P/E and B/M ratios. Ang, A. , and Bekaert, G. , (2006), in their studies tried to forecast interest rate and stock returns with the help of predictive power of dividend yield. They found for short term forecasting, dividend yield predictive power is more than the long term forecasting. But as for the expected growth of cash flow prediction is concerned than dividend yield is a good predictive variable. Akyol, A. (2006), â€Å"analyzed the effect of firm’s size, beta, and book-to-market value on the stock returns in Istanbul stock exchange. He used data from July 1993 to December 2005 for Istanbul Stock Exchange and used Fama and French (1992) methodology to construct portfolios represented accurately by size-beta and then size-book-to-market, he found that book to market and Beta of a firms have no effect on the stock return’s in Istanbul stock exchange. Size of the firm was the only variable which was negatively related to the stock returns in Istanbul stock exchange. He also found that book to market, size and beta is not related with January effects. Hjalmarsson, E. (2004), in his study tried to find out Global stock returns predictability. He took twenty thousand monthly observation form forty international stock markets. In which 24 were of developed economy and 16 were of developing economy. However his study showed that dividend yield and price to earnings ratio has little power of predictability and defends his conclusion by adding that international result is showing deviation from traditional view because the method use internationally may not count for determination of variables. 2. 1 Hypotheses H1: return of stock and DY has no association in time (t) and (t-1) respectively in sample one. H2 return of stock and EY has no association in time (t) and (t-1) respectively in sample one. H3: return of stock and B/M has no association in time (t) and (t-1) respectively in sample one. H4: return of stock and DY has no association in time (t) and (t-1) respectively in sample two. H5: return of stock and EY has no association in time (t) and (t-1) respectively in sample two. H6: return of stock and B/M has no association in time (t) and (t-1) respectively in sample two. 2 Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 3, No 10, 2012 ww. iiste. org H7: return of stock and DY, EY, B/M combination has no association in time (t) and (t-1) respectively in sample one. H8: return of stock and DY, EY, B/M combination has no association in time (t) and (t-1) respectively in sample two. 3. Research Methodology In order to check predictability power of earning yield, dividend yield and book to market ratios for predicting stock returns the study has taken a sample of 100 firms for a period of 2005-2011. We have applied certain screening criteria’s for companies to be included in the sample. First, the firm must be listed on the KSE before Jan 1st 2005. 2nd, for more than twelve months a stock must not be deferred. 3rd, for the study period of seven years a company stock must not be delisted. 4th, data must be available for all sample firms and variables. Finally, for a period of more than twelve months the dividend yield of firms must not be zero. The study has divided the selected firms into two equal samples, which will reduce the effects of random sampling errors and for the predictive regression two samples produce different estimation. The study is based on secondary data, which is collected from, â€Å"State Bank of Pakistan†, company’s annual reports, business recorder and from â€Å"Karachi stock exchange†. Following S. Kheradyar et al, (2011) this study includes stock returns as dependent variable while dividend yield, earning yield and B/M ratios has been taken as independent variables. 4. Measurement of Variables 4. 1 Stock Return Following Lewellen (2001) and S. Kheradyar et al, (2011) we have used stock return as dependent variable. Stock return is measured by dividing capital gain along with dividend per share on market price per share. Following is the formula for stock returns. SRi = DPs + capital gain/market price 4. 2 Book to Market Ratio For finding value of company by comparison of market value of a share to its book value, study tends towards book to market ratio. For finding book value of a firm the study divide equity of a firm by its total number of outstanding shares. As for market price is concerned study tend towards the ongoing price of share in stock market. If a firm offer high return and having high book value than its market value, the firm is riskier and in future returns of stock will be lowered than today. The following formula is used for calculating book to market value: B/M = Book Value per share Market value per share Lewellen (2001) states that as compare to P/E ratio B/M has higher predictive power for predicting stock return. But when study compare B/M ratio with dividend yield than dividend yield is good forecaster than B/M ratio. 4. 3 Dividend yield Following S. Kheradyar et al, (2011) second independent variable in this study is Dividend yield which is calculated as dividing dividend per share on market price per share. If market price is lower than dividend yield will be higher and give a riskier signal for investment. Contrast to higher dividend yield is low dividend yield; such happen when market price per share is higher than dividend yield and gives an optimistic view for investment. The following formula demonstrates how to calculate dividend yield: Dividend Yield (%) = (Dividend per Share / Market rate per share) x 100 4. Earning Yield The empirical literatures lay foundations of the predictive power of earning yield on stock return, and find out the association between earning yield and stock return is considerable, because earning yield plays as a risk factor in relation with stock return. Moreover, the earning yield can demonstrate the efficiency of market that has an important role in emerging markets, thus this study uses earning yield as the empirical predictor of stock return. Following S. Kheradyar et al, (2011) we have measured earning yield as earning per share divided by price of share. 5. Regression Model In this research article we have investigated three financial ratios EY, DY and B/M to determine whether they predict stock returns. This research study has used the stock return and the above mentioned financial ratios association at 3 Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 3, No 10, 2012 www. iiste. org two samples as the foundation for the formulation of Eight hypotheses. On the grounds of their appropriate regression models the eight hypotheses are divided into two sets. In this study we have used the two models of simple nd multiple regressions to apply Predictive regression; it is an important tool for predicting stock returns. A set of panal data is used for the formulation of these two models. For tackling the problem of heteroskedasticity and non-normality distributed residuals, we applied generalized least squares method. Following S. Kheradyar et al, (2011) we have used panal models to formulate predictive regressions. Hence we have used simple regression model to test the first 6 hypothesis which are formulated on the basis of association between each financial ratio and future stock returns. The simple regression model has the following form: SR it = ß0 + ßi Xi (t-1) + eit Where, SR it= in time period t, the return of ith stock, ß0= the estimated constant, ßi= ith stock predictable coefficient, Xi (t-1) = in period t-1 financial ratios of the ith stock, eit = error term. Similarly following S. Kheradyar et al, (2011) we have used multiple regression model to test the other two hypotheses H7 and H8, these two hypotheses are formulated on the basis of relationship between combined financial ratios and future stock returns. The model has the following form: SR it = ß0 + ßi1 DYi (t-1) + ßi2 EYi (t-1) + ßi3 B/Mi (t-1) + eit Where, SR it= in time period t, the return of ith stock, ß0= the estimated constant, ßi1= for DY the Ith stock predictable coefficient, ßi2= for EY the Ith stock predictable coefficient, ßi3= for B/M the Ith stock predictable coefficient, DYi (t-1) = is ith stock DY factor in period of time t-1, EYi (t-1) = EY factor of ith stock in period of time t-1, B/Mi (t-1) = B/M factor of ith stock in t-1 time period, eit = error terms. 6. Results and Discussion For the first 6 hypothesis the predictive regression results are summarized in Table 1. The coefficient of dividend yield in Table 1 demonstrates a positive relationship of dividend yield in period (t-1) and stock returns in period (t) in both samples that is when dividend yield increases by one unit it will cause an increase of 0. 021 and 0. 010 units in stock returns of two samples respectively. As for the p-value of coefficient of Dividend yield is concerned it is 0. 016 in sample one which is less than 0. 5, so the relationship is statistically significant and the null hypothesis H1 is rejected, however in sample two the association is insignificant so hypothesis H4 cannot be rejected. The coefficient of earning yield in Table 1 demonstrates a positive relationship of earning yield in period (t-1) and stock returns at period (t) that is when earning yield increases by one unit it will cause an increase of 0. 013 and 0. 008 units in stock returns in the two samples respectively. As for the p-value of coefficient of earning yield is concerned it is 0. 19 and 0. 010 in the two samples respectively which is less than 0. 05, so the relationship is statistically significant, therefore we will reject hypothesis H2 and H5. The negative coefficient of Book to market value in table 1 notifies an inverse relationship of B/M and stock returns in both samples that is if B/M ratio increasing the stock return will be decreasing and vice versa. The p-value of coefficient of B/M value 0. 000 indicates that the relationship is statistically significant in both samples, so hypothesis H3 and H6 have been rejected. S. Kheradyar et al, (2011) found that DY has negative influence on stock return, and a positive association between EY and stock return. He also found a positive impact of B/M on stock return in (2) (1) 4 Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 3, No 10, 2012 www. iiste. org sample 2 but a negative one in sample 1. It can also be noticed by looking at the adjusted R-square that B/M has the highest predictive power, and this result is also supported by S. Kheradyar et al, (2011). Insert Table 1 Here) Now we will test to see whether stock return predictive power increases with the combination of EY, B\M and DY. We will reject H7 and H8 because it can be seen in Table 2 that the predictive regressions are statistically significant. Thus we can say that stock return can be predicted by the combination of EY, B\M and DY. Also we can say that as compare to the other two ratios, the variations of the ratio of book to market has greater i mpact on stock return, because in both samples it has the highest coefficient. Similarly by looking at the adjusted R-square we can say that in the two samples stock return predictive power increases when the combination of EY, B\M and DY increases. (Insert Table 2 Here) 6. Conclusion Literature regarding predictability of stock returns has changed over the last 20 years. With evolution researchers and economists separated price to earnings ratio, dividend yield, inflation, and book to market ratio, beta, industry returns, interest rate, and size of firms from amongst other variables which were considered important for predicting return of stocks. Presently strong evidences are present regarding variables for predicting stock returns. Analysis showed that financial ratios have significant power of predictability for forecasting returns of stock and they predict future stock return of Pakistani market, and B/M has higher predictive power as compare to other ratios. Similarly the predictability of stock return is enhanced by the combination of financial ratios. References A. Schrimpf, (2010). International Stock Return Predictability under Model Uncertainty. Journal of International Money and Finance, 29: 1256-1282. S. Kheradyar, I. Ibrahim, and F. Mat Nor, (2011). Stock Return Predictability with Financial Ratios. International Journal of Trade, Economics and Fiance, 2(5): 391-396. J. Y. Campbell, and R. J. Shiller, (1988). Stock Prices, Earnings and Expected Dividends. Journal of Finance, 43(3): 661-676. Chan, L. Hamao, Y. Lakonishok, J. (1991). Fundamental and Stock Returns in Japan. The Journal of Finance, 17391764. Mukerji, S. Dhatt, M. Kim, Y. , (1997). A Fundamental Analysis of Korean Stock. Financial Analyst Journal, 53: 7580 Kothari, S. P. , Jay A. Shanken, (1997). Book-to-Market, Dividend Yield and Expected Market Returns: A TimeSeries Analysis. Journal of Financial Economics 44: 169-203. J. Pontiff, and L. Schall, (1998). Book-to-Market Ratios as Predictors of Market Returns. Journal of Financial Economics, 49: 141–160. Lewellen, J. , (2002). Predicting Returns with Financial Ratio. National Bureau of Economics Research, MIT working paper no. 4374-02 Ang, A. and Bekeart, G. , (2006). Stock Returns Predictability. The Review of Financial Study, 651-707. E. F. Fama and K. French, (1992). The Cross-Section of Expected Stock Returns. Journal of Finance, 47: 427-465 Lewellen, J. , (2001). Predicting Returns with Financial Ratios. Journal of Financial Economic, 209-235. How to cite Financial Ratios and Stock Return Predictability, Papers

The influence of Christianity free essay sample

The Influence of Christianity on the Western countries Western Culture refers to the culture that has developed in the western world, while traditional western culture is said to have been created by three main historical factors: Ancient Greece, the Roman Empire, and Christianity. For the important role Ancient Greece and Roman Empire in human Civilization, the influence ot them on the western culture Is easily to be understood. However, In which aspects, or how Chrlstlanlty, the religion based on the life and teachings of Jesus Christ, Influenced western culture? In this article, I will discuss some Influence of Christianity on the estern culture. Firstly, during Middle Ages, Christianity played a very important part in uniting the Europe confronted with chaos. Europe, especially the western part reached more understanding and agreement in culture thanks to Christianity. It made a great difference in shaping the general morality at that time. Moreover, the spirit of chrlstlanlty profoundly affected the clvlllzlng of the Germans. We will write a custom essay sample on The influence of Christianity or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Generally. the whole social values of the western world have been Influenced by the thought of Christianity. Secondly, Christianity made contributions to the classical culture or in ther words to the reconstruction of the classical civilization. Christianity was the only organization realizing the significance of Greek and Roman culture when the priceless classical culture was in the greatest danger of extinction. Much classical works had been copied, protected and then carried forward by chrlstlanlty. It Is not only meaningful to the grand classical culture but also to the development of the whole human race in terms of civilization. Besides, a new branch of sub]ect scholasticism, which is thought to be an essential section of philosophy was started nd stimulated by Christianity-Thirdly, since there were no public schools then; it is Christianity that took the responsibility of education in the society. In addition, along the early phase ot Middle Ages. most ot the common people were illiterate, Christians were the very group able to save and spread culture, Besides, all the schools then were founded by Christianity, it Is never too much to perceive the Importance of Its role in education. Their students could study seven liberal arts derived from Greek and Roman culture which served to pass on the spirit of Christianity. And because Christianitys leading position in Middle Ages, literature took the church literature as its mainstay with the majority of writers being Christians. Through literature Christianity reaffirmed Its status in Middle Ages, While speaking ot art, Christianity made Its unique Influence. The chrlsuan Art was creauve with Its own Impressive characteristics. The highest achievement In art Is believed to be In construction. With the church becoming the center of peoples life, building churches gained more and more attention and support. Nymphaeum and Gothic architecture are two distinguished innovations in architecture. The master work like cathedral of Pisa best conveyed the involving charms of nymphaeum: and Notre Dame de Paris represented higher elegance and grandness than the former ot Gothlc architecture. The art of painting n Middle Ages was also born under the Influence of Christlanlty. The themes of paintings at that time are all concerned with Christianity. Though, finally paintings more related to the reality appeared, we cant deny the impact of organization. And in many ways, Christianity served as government to help people, which laid a foundation of its irreplaceable position. All in all, Christianity has played an important role in western culture. Jesus Christ was one of the most influential persons in human history, and his preaching of salvation, redemption and immortality not only affected the social structure, the humanistic spirit and the morality but also their literature, philosophy and other aspects. Besides, in order to educate its clergy, the Roman Catholic Church founded many seminaries throughout Europe. These, in turn, grew into todays universities and colleges. Nearly as monasticism, Christianity has great influence on the western culture.