Webform2 †wireless LAN, users and access points management Essay Example for Free

Webform2 – wireless LAN, users and access points management Essay Private void Page_Load(object sender, System. EventArgs e) { // intializing the sqlDataAdapter and dataSet sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM AP,sqlConnection1); sqlDataAdapter3. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM APusers,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1); sqlDataAdapter3. Fill(usersDataSet11); sqlDataAdapter2. AcceptChangesDuringFill = true; sqlDataAdapter3. AcceptChangesDuringFill = true; } private void Button9_Click(object sender, System. EventArgs e) //add button(users) { //saving the data the manager insert and adding it to the users table//goto each AP checked by the manager using SNMP protocol and add //them the user String user_name,user_id,user_MAC; String str2=,str3=; int i,j,tmp,k; user_name = TextBox1. Text. ToString(); user_id = TextBox2. Text. ToString(); user_MAC = TextBox5. Text. ToString(); int items = CheckBoxList1. Items. Count; // APs will hold the names of all the APs that the user // can access string[] APs = new string[items]; k=0; APs. Initialize(); try { apDataSet1. Clear(); sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT APname FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); DataRow [] arr = apDataSet1. AP. Select(); i = arr. GetLength(0); // add this user to the table // str2 has the names of all the APs coulms // str3 has the values of all the coulms j=0; for(j=0;ji;j++) { str3= str3 + arr[j]. ItemArray. GetValue(0) .ToString()+, ; } str3 = str3. Remove(((str3. Length)-2),2); str2= +user_name +, + user_id +, +user_MAC + , ; tmp = CheckBoxList1. SelectedIndex; for(j=0;ji;j++) { if (tmp==j) { APs[k]=CheckBoxList2. SelectedItem. Text; k++; str2= str2 + 1, ; CheckBoxList1. SelectedItem. Selected = false; tmp = CheckBoxList1. SelectedIndex; } else str2= str2 + 0, ; } str2 = str2. Remove(((str2. Length)-2),2); SqlCommand insCommand = new SqlCommand( INSERT INTO APusers (userName, id_num, mac_adr, + str3 + ) VALUES ( + str2 + ),sqlConnection1); insCommand. Connection. Open(); insCommand. ExecuteNonQuery(); insCommand. Connection. Close(); sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); / the steps to update the access points:   1. for each AP in the APs array: *  Ã‚  Ã‚   1. 1 get the AP IP address from the AP database. 1. 2 get the add entry to table object ID *   1. 3 call snmpSET function */ /* String IPaddr,OID; * for(i=0;ik;i++)   {*     DataRow [] arr = apDataSet1. AP. Select(Apname ='+APs[i]+); *  Ã‚   IPaddr = arr[0]. ItemArray. GetValue(1). ToString(); *  Ã‚   OID = avaya. addEntry(); *  Ã‚   snmpexe. snmpSet(IPaddr,OID,user_MAC); * } */ } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } TextBox7. Text=; TextBox1. Text=; TextBox2. Text=; TextBox5. Text=; TextBox3. Text=; TextBox4. Text=; } private int GetIndexofelement(string [,] arr,string elem) { int j,i = arr. Length; for(j=0;ji;i++) { if (arr[0,j]. ToString() == elem) return j; } return -1; } private void Button3_Click(object sender, System. EventArgs e) //remove user button. { CheckBox1. Visible=false; Label12. Visible=false; TextBox7. Visible=false; DataGrid2. Visible=false; DataGrid1. Visible=false; Button9. Visible=false; TextBox1. Visible=false; TextBox2. Visible=false; Label3. Visible=false; TextBox5. Visible=false; Label10. Visible=false; Label4. Visible=false; Label5. Visible=false; CheckBoxList1. Visible=false; Label1. Visible=false; Label2. Visible=false; Button10. Visible=false; TextBox3. Visible=false; TextBox4. Visible=false; DropDownList2. Visible=false; Button8. Visible=false; DropDownList1. Visible=true; Button6. Visible=true; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=false; Button16. Visible=false; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; Label6. Text=Select the user you wish to remove and press remove; /////////////////// //bring the users list into the dropdown box DropDownList1. Items. Clear(); int i=0; try { usersDataSet11. Clear(); sqlDataAdapter3. SelectCommand. CommandText = SELECT userName FROM APusers; sqlDataAdapter3. Fill(usersDataSet11); DataRow [] arr = usersDataSet11. APusers. Select(); i = arr. GetLength(0); while (i! =0) { DropDownList1. Items. Add(arr[i-1]. ItemArray. GetValue(0). ToString()); i=i-1; } sqlDataAdapter3. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM APusers,sqlConnection1); sqlDataAdapter3. Fill(usersDataSet11,APusers); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } } private void Button1_Click(object sender, System. EventArgs e)// add AP button { CheckBox1. Visible=true; Label12. Visible=true; TextBox7. Visible=true; DataGrid2. Visible=false; DataGrid1. Visible=false; Label1. Visible=true; Label2. Visible=true; Button10. Visible=true; TextBox3. Visible=true; TextBox4. Visible=true; TextBox5. Visible=false; Label10. Visible=false; Button9. Visible=false; TextBox1. Visible=false; TextBox2. Visible=false; Label3. Visible=false; Label4. Visible=false; Label5. Visible=false; CheckBoxList1. Visible=false; DropDownList1. Visible=false; Button6. Visible=false; DropDownList2. Visible=false; Button8. Visible=false; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=false; Button16. Visible=false; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; Label6. Text=Insert the AP detials and press add; } private void Button4_Click(object sender, System. EventArgs e) //remove AP button. { CheckBox1. Visible=false; Label12. Visible=false; TextBox7. Visible=false; DataGrid2. Visible=false; DataGrid1. Visible=false; DropDownList2. Visible=true; Button8. Visible=true; Button9. Visible=false; TextBox5. Visible=false; Label10. Visible=false; TextBox1. Visible=false; TextBox2. Visible=false; Label3. Visible=false; Label4. Visible=false; Label5. Visible=false; CheckBoxList1. Visible=false; DropDownList1. Visible=false; Button6. Visible=false; Label1. Visible=false; Label2. Visible=false; Button10. Visible=false; TextBox3. Visible=false; TextBox4. Visible=false; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=false; Button16. Visible=false; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; Label6. Text=Select the AP you wish to remove and press remove; //bring the APs list into the dropdown box try { DropDownList2. Items. Clear(); int i=0; apDataSet1. Clear(); sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT APname FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); DataRow [] arr = apDataSet1. AP. Select(); i = arr. GetLength(0); while (i! =0) { DropDownList2. Items. Add(arr[i-1]. ItemArray. GetValue(0). ToString()); i=i-1; } sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } } private void Button5_Click(object sender, System. EventArgs e) //show all users button { CheckBox1. Visible=false; Label12. Visible=false; TextBox7. Visible=false; DataGrid2. Visible=false; DataGrid1. Visible=true; Button9. Visible=false; TextBox1. Visible=false; TextBox2. Visible=false; TextBox5. Visible=false; Label10. Visible=false; Label3. Visible=false; Label4. Visible=false; Label5. Visible=false; CheckBoxList1. Visible=false; DropDownList1. Visible=false; Button6. Visible=false; Label1. Visible=false; Label2. Visible=false; Button10. Visible=false; TextBox3. Visible=false; TextBox4. Visible=false; DropDownList2. Visible=false; Button8. Visible=false; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=false; Button16. Visible=false; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; try { sqlDataAdapter3. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM APusers,sqlConnection1); sqlDataAdapter3. Fill(usersDataSet11,APusers); DataGrid1. DataSource = usersDataSet11; DataGrid1. DataBind(); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } Label6. Text=which operation would you like to perform? ; } private void Button6_Click(object sender, System. EventArgs e) // remove button(users) { //goto all APs listed for this user and remove the user from //ther table and then remove the user from the data base String user_name; try { user_name = DropDownList1. SelectedItem. Text. ToString(); Label6. Text=Remove user + user_name; /* * the steps to update the access points: * 0. create an array with the APs name * 1. for each AP in the APs array: *  Ã‚  Ã‚   1. 1 get the AP IP address from the AP database *  Ã‚  Ã‚   1. 2 get the remove entry to table object ID *  Ã‚  Ã‚   1. 3 call snmpSET function */ /* String IPaddr,OID; * for(i=0;ik;i++) * { *  Ã‚   DataRow [] arr = apDataSet1. AP. Select(APname ='+APs[i]+); *  Ã‚   IPaddr = arr[0]. ItemArray. GetValue(1). ToString(); *  Ã‚   OID = avaya. removeEntry(); *  Ã‚   snmpexe. snmpSet(IPaddr,OID,user_MAC); * } */ SqlCommand DelCommand = new SqlCommand(DELETE FROM APusers WHERE userName = + user_name + ,sqlConnection1); DelCommand. Connection. Open(); DelCommand. ExecuteNonQuery(); DelCommand. Connection. Close(); usersDataSet11. Clear(); sqlDataAdapter2. Fill(apDataSet1); sqlDataAdapter3. Fill(usersDataSet11); //todo: refrash list DropDownList1. Items. Clear(); int i=0; usersDataSet11. Clear(); sqlDataAdapter3. SelectCommand = new SqlCommand( SELECT userName FROM APusers,sqlConnection1); sqlDataAdapter3. Fill(usersDataSet11); DataRow [] arr = usersDataSet11. APusers. Select(); i = arr. GetLength(0); while (i! =0) { DropDownList1. Items. Add(arr[i-1]. ItemArray. GetValue(0). ToString()); i=i-1; } sqlDataAdapter3. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM APusers,sqlConnection1); sqlDataAdapter3. Fill(usersDataSet11,APusers); } catch(Exception ev). {Label6. Text=ERROR ACSESSING THE DATABASE; } } private void Button10_Click(object sender, System. EventArgs e) //add button(AP) {//updata the APs table and init the AP String AP_name,AP_ip,Location; bool active; try { AP_name = TextBox3. Text. ToString(); AP_ip = TextBox4. Text. ToString(); Location = TextBox7. Text. ToString(); active = CheckBox1. Checked; apDataSet1. AP. AddAPRow(AP_name,AP_ip,Location,active); sqlDataAdapter2. Update(apDataSet1); SqlCommand myCommand = new SqlCommand(ALTER TABLE APusers ADD +AP_name+ bit,sqlConnection1); myCommand. Connection. Open(); myCommand. ExecuteNonQuery(); myCommand. Connection. Close(); //todo: make all the users in the APusers table marked as not allowed to this AP myCommand = new SqlCommand( UPDATE APusers SET +AP_name+= 0,sqlConnection1); myCommand. Connection. Open(); myCommand. ExecuteNonQuery(); myCommand. Connection. Close(); /* the steps to update the access points: * 1. connect to the AP IP address from the AP database * 2. get the remove entry to table object ID *3. call snmpSET function */ /* String IPaddr,OID; * for(i=0;ik;i++) * { *  Ã‚   OID = avaya. setName(); *  Ã‚   snmpexe. snmpSet(AP_ip,OID,AP_name); *  Ã‚   OID = avaya. setLocation(); *  Ã‚   snmpexe. snmpSet(AP_ip,OID,Location); * }   */ }catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } TextBox7. Text=; TextBox1. Text=; TextBox2. Text=; TextBox5. Text=; TextBox3. Text=; TextBox4. Text=; } private void Button8_Click(object sender, System. EventArgs e) //remove button(AP) {//remove the APs table String AP_name; try { AP_name = DropDownList2. SelectedItem. Text. ToString(); Label6. Text=Removing AP + AP_name; SqlCommand DelCommand = new SqlCommand(DELETE FROM AP WHERE APname = + AP_name + ,sqlConnection1); DelCommand. Connection. Open(); DelCommand. ExecuteNonQuery(); DelCommand. Connection. Close(); apDataSet1. Clear();sqlDataAdapter2. Fill(apDataSet1); sqlDataAdapter3. Fill(usersDataSet11); sqlDataAdapter2. AcceptChangesDuringFill = true; sqlDataAdapter3. AcceptChangesDuringFill = true; DataGrid1. DataSource = apDataSet1; DataGrid1. DataBind(); //todo: refrash list DropDownList2. Items. Clear(); int i=0; apDataSet1. Clear(); sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT APname FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); DataRow [] arr = apDataSet1. AP. Select(); i = arr. GetLength(0); while (i! =0) { DropDownList2. Items. Add(arr[i-1]. ItemArray. GetValue(0). ToString()); i=i-1; } sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); //todo: remove the AP_name culomn from the APusers table SqlCommand myCommand = new SqlCommand(ALTER TABLE APusers DROP COLUMN +AP_name,sqlConnection1); myCommand. Connection. Open(); myCommand. ExecuteNonQuery(); myCommand. Connection. Close(); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } /*SNMP: * goto the selected AP * a. go to the data base and get the AP IP number * b. snmp. snmpSet(IP,DisableAllUsers) */ } private void Button2_Click(object sender, System. EventArgs e) // add user button. { int i=0; CheckBox1. Visible=false; Label12. Visible=false; TextBox7. Visible=false; DataGrid2. Visible=false; DataGrid1. Visible=false; Button9. Visible=true; TextBox1. Visible=true; TextBox2. Visible=true; TextBox5. Visible=true; Label10. Visible=true; Label3. Visible=true; Label4. Visible=true; Label5. Visible=true; CheckBoxList1. Visible=true; DropDownList1. Visible=false; Button6. Visible=false; Label1. Visible=false; Label2. Visible=false; Button10. Visible=false; TextBox3. Visible=false; TextBox4. Visible=false; DropDownList2. Visible=false; Button8. Visible=false; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=false; Button16. Visible=false; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; Label6. Text=Insert the user detials and press add; //bring to the checkbox list all the APs available CheckBoxList1. Items. Clear(); apDataSet1. Clear(); Try { sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT APname FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); DataRow [] arr = apDataSet1. AP. Select(); i = arr. GetLength(0); int j =i; while (i! =0) { CheckBoxList1. Items. Add(arr[j-i]. ItemArray. GetValue(0). ToString()); i=i-1; } sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } } private void Button11_Click(object sender, System. EventArgs e) //show all APs button { CheckBox1. Visible=false; Label12. Visible=false; TextBox7. Visible=false; DataGrid2. Visible=true; DataGrid1. Visible=false; Button9. Visible=false; TextBox1. Visible=false; TextBox2. Visible=false; TextBox5. Visible=false; Label10. Visible=false; Label3. Visible=false; Label4. Visible=false; Label5. Visible=false; CheckBoxList1. Visible=false; DropDownList1. Visible=false; Button6. Visible=false; Label1. Visible=false; Label2. Visible=false; Button10. Visible=false; TextBox3. Visible=false; TextBox4. Visible=false; DropDownList2. Visible=false; Button8. Visible=false; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=false; Button16. Visible=false; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; try { DataGrid2. DataSource = apDataSet1; DataGrid2. DataBind(); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } Label6. Text=which operation would you like to perform?; } private void Button7_Click(object sender, System. EventArgs e) { CheckBox1. Visible=false; Label12. Visible=false; TextBox7. Visible=false; DataGrid2. Visible=false; DataGrid1. Visible=false; Button9. Visible=false; TextBox1. Visible=false; TextBox2. Visible=false; Label3. Visible=false; TextBox5. Visible=false; Label10. Visible=false; Label4. Visible=false; Label5. Visible=false; CheckBoxList1. Visible=false; Label1. Visible=false; Label2. Visible=false; Button10. Visible=false; TextBox3. Visible=false; TextBox4. Visible=false; DropDownList2. Visible=false; Button8. Visible=false; DropDownList1. Visible=false; Button6. Visible=false; DropDownList3. Visible=true; Button12. Visible=true; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=false; Button16. Visible=false; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; Label6. Text=Select the user whose details you wish to update; bring the users list into the dropdown box DropDownList3. Items. Clear(); int i=0; try { usersDataSet11. Clear(); sqlDataAdapter3. SelectCommand. CommandText = SELECT userName FROM APusers; sqlDataAdapter3. Fill(usersDataSet11); DataRow [] arr = usersDataSet11. APusers. Select(); i = arr. GetLength(0); while (i! =0) { DropDownList3. Items. Add(arr[i-1]. ItemArray. GetValue(0). ToString()); i=i-1; } sqlDataAdapter3. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM APusers,sqlConnection1); sqlDataAdapter3. Fill(usersDataSet11,APusers); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } }private void Button12_Click(object sender, System. EventArgs e) { string user, id_num, mac_addr; int i=3, length; int APnum; user= DropDownList3. SelectedItem. Text. ToString(); original = user; Label6. Text=Update user + user; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=true; Label14. Visible=true; Label15. Visible=true; Label16. Visible=true; TextBox6. Visible=true; TextBox8. Visible=true; TextBox9. Visible=true; CheckBoxList2. Visible=true; Button13. Visible=true; //filling the text boxs with the existing user data CheckBoxList2. Items. Clear(); sqlDataAdapter3. Fill(usersDataSet11); DataRow [] arr = usersDataSet11. APusers. Select(userName ='+user+); id_num = arr[0]. ItemArray. GetValue(1). ToString(); mac_addr = arr[0]. ItemArray. GetValue(2). ToString(); //displaying the current user data in text boxs TextBox6. Text=user; TextBox8. Text=id_num; TextBox9. Text=mac_addr; CheckBoxList2. Items. Clear(); apDataSet1. Clear(); try { sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT APname FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); DataRow [] arr1 = apDataSet1. AP. Select(); APnum = arr1. GetLength(0); i = APnum; int j =i; while (i! =0) { CheckBoxList2. Items. Add(arr1[j-i]. ItemArray. GetValue(0). ToString()); i=i-1; } sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); for(i=0;iAPnum;i++) { SqlCommand myCommand = new SqlCommand( SELECT + CheckBoxList2. Items[i]. Text + FROM APusers WHERE (userName = + user +),sqlConnection1); myCommand. Connection. Open(); SqlDataReader data = myCommand. ExecuteReader(); data. Read(); CheckBoxList2. Items[i]. Selected = data. GetBoolean(0); myCommand. Connection. Close(); } } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } } private void Button13_Click(object sender, System. EventArgs e) { String user_name,user_id,user_MAC; String str2=,str3=; int i,j,tmp; user_name = TextBox6. Text. ToString(); user_id = TextBox8. Text. ToString(); user_MAC = TextBox9. Text. ToString(); int items = CheckBoxList2. Items. Count; try { apDataSet1. Clear(); sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT APname FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); DataRow [] arr = apDataSet1. AP. Select(); i = arr. GetLength(0); //todo: add this user to the table //todo: create str2 with the names of all the APs coulms //todo: create str3 with the values of all the coulms j=0; for(j=0;ji;j++) { str3= str3 + arr[j]. ItemArray. GetValue(0). ToString()+, ; } str3 = str3. Remove(((str3. Length)-2),2); Label6. Text =CheckBoxList2. SelectedIndex. ToString(); str2= +user_name +, + user_id +, +user_MAC + ,; tmp = CheckBoxList2. SelectedIndex; for(j=0;ji;j++) { if (tmp==j) { str2= str2 + 1, ; CheckBoxList2. SelectedItem. Selected = false; tmp = CheckBoxList2. SelectedIndex; } else str2= str2 + 0, ; } str2 = str2. Remove(((str2. Length)-2),2); Label6. Text =str2; SqlCommand delCommand = new SqlCommand(DELETE FROM APusers WHERE userName = + original + ,sqlConnection1); delCommand. Connection. Open(); delCommand. ExecuteNonQuery(); delCommand. Connection. Close(); SqlCommand insCommand = new SqlCommand(INSERT INTO APusers (userName, id_num, mac_adr, + str3 + ) VALUES ( + str2 + ),sqlConnection1); insCommand. Connection. Open(); insCommand. ExecuteNonQuery(); insCommand. Connection. Close(); sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT * FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); } catch(Exception ev) { Label6. Text=ERROR ACSESSING THE DATABASE; } /*SNMP: * goto the selected user * a. get all the APs IP numbers * b. for each IP *  Ã‚  Ã‚      if checked. *  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   snmp. snmpSet(IP,addUsers) *  Ã‚  Ã‚      else *  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   snmp. snmpSet(IP,removeUsers) */ Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; } private void Button14_Click(object sender, System. EventArgs e) { CheckBox1. Visible=false; Label12. Visible=false; TextBox7. Visible=false; DataGrid2. Visible=false; DataGrid1. Visible=false; Button9. Visible=false; TextBox1. Visible=false; TextBox2. Visible=false; TextBox5. Visible=false; Label10. Visible=false; Label3. Visible=false; Label4. Visible=false; Label5. Visible=false; CheckBoxList1. Visible=false; DropDownList1. Visible=false; Button6. Visible=false; Label1. Visible=false; Label2. Visible=false; Button10. Visible=false; TextBox3. Visible=false; TextBox4. Visible=false; DropDownList2. Visible=false; Button8. Visible=false; DropDownList3. Visible=false; Button12. Visible=false; Label13. Visible=false; Label14. Visible=false; Label15. Visible=false; Label16. Visible=false; TextBox6. Visible=false; TextBox8. Visible=false; TextBox9. Visible=false; CheckBoxList2. Visible=false; Button13. Visible=false; DropDownList4. Visible=true; Button16. Visible=true; Button15. Visible=false; Label11. Visible=false; Label17. Visible=false; Label18. Visible=false; TextBox11. Visible=false; TextBox12. Visible=false; TextBox10. Visible=false; CheckBox2. Visible=false; Label6. Text=Select the AP you wish to update and press select; //bring the APs list into the dropdown box try { DropDownList4. Items. Clear(); int i=0; apDataSet1. Clear(); sqlDataAdapter2. SelectCommand = new SqlCommand(  Ã‚  Ã‚  Ã‚  Ã‚   SELECT APname FROM AP,sqlConnection1); sqlDataAdapter2. Fill(apDataSet1,AP); DataRow [] arr = apDataSet1. AP. Select(); i = arr.

Managing Foreign Exchange Risk in International Trade

Managing Foreign Exchange Risk in International Trade MANAGING FOREIGN EXCHANGE RISK IN INTERNATIONAL TRADE WITH A FOCUS ON EAST MIDLANDS COMPANIES Abstract The purpose of this research is to investigate how international trade companies in the East Midlands manage foreign exchange risk. This study utilises descriptive statistics in presenting and analysing data from the primary research. The findings of the research indicate that a majority of the firms used broad business strategies in managing their foreign exchange risk. The main problems the firms had with managing foreign exchange risks centred on customer retention and receiving payments on time. The results also indicate that there were a few firms which took an integrated approach to mitigating foreign exchange risk. This research is of value to firms involved in international trade and also business development agencies which seek to assist firms which are planning to enter or are already operating in foreign markets. Chapter 1 Introduction International trade involves exporting and importing of goods or services across foreign borders and, as soon as a firm engages in import and/or export it is exposed to numerous risks. As a result firms operating outside their home country, have to deal with the economic conditions of the foreign country in which it wishes to operate in. One of the key issues firms involved in import and/ or export are faced with is dealing with foreign currency as this is the only means by which the exchange of goods or services is facilitated. To this end it is import to study and understand the impact which foreign currency has on international trade. Following the demise of the Bretton Woods agreement (1971) whereby exchange rates were allowed to float freely, managing foreign exchange has become important (Heakel, 2009). Consequently the prices of currencies were determined by market forces that is, demand for and supply of money (Mastry and Salam, 2007). Due to the constant changes in demand and supply which are in turn influenced by other external factors, fluctuations arise (Czinkota et al, 2009). As a result of these fluctuations firms are exposed to foreign exchange risks also known as currency risks. Firms trading in different currencies are exposed to three types of foreign exchange risks; economic, transaction and translational risk (Czinkota et al, 2009). Firms which are involved in international trade are exposed to economic and transaction risks as they both pose potential threats to the firms cash flow over time (Czinkota et al, 2009). Studies have shown that foreign exchange fluctuations can affect the value of a fi rms cash flow over time (Aretz, Bartram and Dufey, 2007, Judge, 2004, Bradley and Moles 2002, Allayannis and Ofek 1998, Chowdhry, 1995, Damant, 2002 and Wong 2001). More so, domestic firms although not dealing with foreign currency are also affected by foreign exchange fluctuations as the price of the commodity they trade in are also affected (Abor, 2005). Most of the extant literatures have focused on corporate risk management for financial firms and as such financial hedging with derivatives has been the central theme of currency risk management. On the other hand there has been evidence to show alternative methods exist for firms involved in international trade, these methods of managing foreign exchange risks involve strategic and operational risk management. However most of these studies have been carried out in isolation; financial hedging techniques carried out in isolation of strategic and operational hedging methods and vice versa. Little has been done to provide an integrated perspective, on utilising both techniques of managing foreign exchange risks with regards to international trade firms. This is the area in which the present study intends to explore thereby contributing to the overall literature Purpose of the Research Due to the nature of international trade which expose the firm to foreign exchange movements, thus subjecting the firm to currency risks, the purpose of this research is to explore how international trade firms deal with foreign exchange risk. The research focuses how import and export firms in the East Midlands manage their foreign exchange risk. This study also aims to explore the problems involved in managing those risks. Research Questions Consequently the research hopes to answer the following questions: Do import and export firms in the East Midlands actually manage their foreign exchange rate risks? How import and export companies in the East Midlands manage their foreign exchange risks? What problems they encounter with managing these risks? Definition of Key Terms Hedge A hedge can be defined as â€Å"making an investment to reduce the risk of adverse price movements in an asset. Investors use this strategy when they are unsure of what the market will do† (Investopedia, 2010). Derivatives Derivatives are instruments whose performance is derived from an underlying asset (Arnold, 2002) Spot Rate The spot rate is defined as the rate of exchange quoted immediately if buying or selling currency (Watson and Head) International Trade This involves the flow of goods and services between nations; it involves import and/ export of goods and services (Harrison et al, 2000) The subsequent section provides a break down of how rest of the research is set out. Chapter 2: Literature Review; this chapter provides an overview of the research topic by mapping out the key areas; theories within the risk management and finance literature are identified, explored and analysed. The concept of risk and risk management is explored. A broad classification is made on the types of risks and this is then narrowed down to include foreign exchange risk. The chapter proceeds by exploring the concept of foreign exchange and foreign exchange risks; which include the types of foreign exchange exposures. The common techniques for managing foreign exchange risks are explored. This is followed by a review of relevant literature in the key areas of the research topic. Chapter 3: Research Methodology; in this chapter the research design and strategy are discussed. Chapter 4: Research Findings and Analysis; this chapter presents the findings of the research which were obtained from the questionnaire. The findings are presented using tables, graphs and charts, to enable the reader gain a clearer understanding. An analysis of the findings is carried out by cross-tabulating the responses of the respondent in order to observe for any commonalities and/or differences. Chapter 5: Conclusion and Recommendation; this chapter concludes the research and recommendations are made. Chapter 2: Literature Review 2.1 Risk Management- Risk is an intrinsic part of any business, due to unpredictability of the forces which govern business transactions such as political, economic and social conditions; risk is a factor which cannot be completely eliminated (Watson and Head, 2007). Arnold (2002) describes risk as a situation where there is more than just one possible outcome, but a range of potential returns. It can also be defined as the chance that the actual return from an investment will be different than expected (Lamb, 2008). From the above definitions, risk does not necessarily spell doom or does not necessarily have a negative connotation. Markowitz was one of the earliest academics to point this out, by establishing a link between risks and return (risk-return trade-off). Essentially the theory; Modern Portfolio Theory (MPT) involves expected return and the degree of accompanying risk for an investment (Yorke and Droussiotis, 1994). A central theme of this theory is that the greater risk an investor accepts th e higher the potential for increased returns (Yorke and Droussiotis, 1994). While MPT purports a positive correlation between risk and return, the fact that an investment can have a range of possible outcomes is an uncertainty which can be very costly. As a result risk management is also a part and parcel of business. Risk management can be defined as â€Å"the performance of activities designed to minimize the negative impact (cost) of uncertainty (risk) regarding possible losses† (Abor, p.307, 2005). The objectives of risk management are to minimize potential losses, reduce volatility of cash flow thereby protecting earnings (Abor, 2005). While the objective for risk management is to protect companies against financial loss thereby protecting the value of the firm, traditional finance theory such as that proposed by Modigliani and Miller suggests that the market value of a firm is determined by it earning power (Arnold, 2002). The basic assumption of Modigliani and Miller theorem is that in an efficient market; with the absence of taxation, bankrupt cy costs and information asymmetry, the value of the firm is unaffected by its capital structure (Arnold, 2002). However empirical research (list authors) has shown the existence of capital market imperfections, such as taxes, agency problems and financial distress exists thus justifying risk management (Chowdhry, 1995). Furthermore, MPT also suggests that the risk and volatility of an investment portfolio can be reduced, and the gains can be enhanced, all by diversifying the portfolio among several non-correlated assets (Pearce Financial, 2008). That is, investors can maximise their expected return for a given level of risk by diversifying their investments across a range of assets ((McClure, 2006). MPT involves risk management through diversification of investments. In a simplified expression, MPT is based on the idea of not ‘putting all of ones eggs into one basket. 2.2 Types of Risk There are two broad classification of risks; Unsystematic and Systematic (Rossi and Laham, 208) Systematic risks refers to risks which affect the entire market due to events such as; exchange rate movements, changes in the price of commodities, war, recession and interest rates, however Unsystematic risks are risks which are specific to individual companies (reference). These distinctions were made by Sharpe (1960) in addition to Markowitz Modern Portfolio theory (MPT), the rationale behind it was that despite risk management practise through diversification, there were still underlying factors which affected the return potential of an investment portfolio. Chesnay Jondeau (2001) clearly point out that the correlation of assets which Markowitz talks about depends on other underlying factors and that the relationships are dynamic. They further found that major events such as general adverse movements in markets can significantly change the correlations between assets (Chesnay Jondeau, 2001). Empirical studies show that in financial crisis, assets tends to act the same, that is they are more likely to more become positively correlated, moving down at the same time (Ardelean, Brandt and Malik, 2009). Essentially, severe market crises will have a spill over effect and cause investments in several different asset classes or markets to succumb to sudden liquidation (Vocke and Wilde, 2000, Pearce Financial, 2008). However findings from Xing and Howe (2003) are contradictory, their findings show that the failure of previous studies to find a positive risk-return relationship may be as a result of model misspecification. Essentially they found that there was no agreement on the risk-return relationship amongst previous studies which had used data from one market (Xing and Howe, 2003). Thus they argued that the world market should be taken into consideration in assessing risk return-relationship in a partially integrated market (Xing and Howe, 2003). But then it only stands to reason that if markets are integrated partially or wholly, a catastrophic economic cycle such as financial crises would have an adverse effect on the world market. Thus clearly it does not matter how much one diversifies unsystematic risk, the underlying systematic risk is a problematic factor which has to be dealt with. 2.3 Foreign Exchange rate as a Systematic Risk Background Foreign Exchange rate can be defined as the â€Å"price of one currency expressed in terms of another† (Arnold, p.973, 2002). For example, if the exchange rate exchange rate between the European Euro and the Pound is â‚ ¬1.3 =  £ 1.00, this means that  £1 is equivalent to â‚ ¬1.3. Foreign Exchange (Forex) is traded on the foreign exchange market, the purpose of which is to facilitate trade and the exchange of currencies between countries (Czinkota et al, 2009). The Forex market is an informal market which does not have a central trading place (Czinkota et al, 2009). Trade is carried out it is a 24 hour market as it involves financial institutions from around the globe, as trade moves from one financial centre to another (Arnold, 2002). Thus as one market closes in one region or continent another opens in a different place (Arnold, 2002). The major trading centres are in Tokyo, Singapore, London and New York (Waston and Head, 2007). The buyers and sellers of foreign c urrencies included exporters/importers; tourists; fund managers; governments; central banks; speculators and commercial banks (Arnold, 2002). However large commercial banks account for a larger percentage of Forex trading in the currency markets, as they deal currencies on behalf of customers (Arnold, 2002). They also undertake transactions of their own in an attempt to make a profit by speculating on future movements of exchange rates (Arnold, 2002). Foreign Exchange Risk After the demise of the Bretton woods conference (1973) exchange rates were allowed to float freely; exchange rates were no longer fixed and currencies were allowed to float freely in value to each other (Czinkota et al, 2009). However freely floating exchange rate poses problems for investors and firms alike who deal with different currencies as the uncertainty of exchange rate movements can have a positive or negative impact on an investment (Czinkota et al, 2009). Foreign exchange risk also known as currency risk is the â€Å"risk that an entity will be required to pay more (or less) than expected as a result of fluctuations in the exchange rate between its currency and the foreign currency in which payment must be made† (Abor, p.3, 2005). Thus considering the potential variability of Forex and the impact it can have on international investments and international business, irrespective of the business sector, it is clear that Foreign exchange risks can be classed as systematic risks. Forex risk is an un-diversifiable risk as it affects the entire market. Having established the relationship between Forex and systematic risk and understanding that it cannot be diversified the question which presents itself is, what can be done about it? Theory states that the only way out is to hedge this risk (Bartram, 2007), the decision to hedge will be examined in Section 2.7 2.4 Types of Foreign Exchange Exposure There are three types of foreign exchange risks or exposures; Economic exposure, Transaction exposure and Translational exposure (Maurer and Valiani, 2002). Transaction exposure is the risk that arises as a result of an existing contractual agreement involving a commitment in foreign currency, this sort of risk is primarily associated with import or exports (Arnold, 2002). For example a firm which exports goods from the UK to the US; will have an agreement (contract) that the US firm buying the goods will pay for the goods at a later date (could be 30, 60 or 90 days), however changes in the exchange rates to either currency (whether an appreciation or depreciation) will either positive or negative consequences for either firms. Transaction risks also come as a result of firms making foreign investments such as opening subsidiary branches (Arnold, 2002). These risks arise in the form of payment costs associated with constructing or establishing new branches (Arnold, 2002). In order to make the necessary payments, the home-based firm would exchange its home currency for foreign currency, thereby giving rise to potential transaction risk (A rnold, 2002) Translational exposure relates to a firms earnings; it involves a firms accounting practises (Waston and Head, 2007). This risk â€Å"arises from the legal requirement that all firms consolidate their financial statement (balance sheet and income statement) of all worldwide operations annually† (Czinkota et al, p. 334, 2009). This implies that, as firms translate and consolidate foreign assets, liabilities and profits into domestic currency, there is the possibility of the firm experiencing a loss or gain (Waston and Head, 2007). This is mainly an accounting risk and as such give a real indication of the impact of exchange rate fluctuations on the value of a firm (Watson and Head, 2007). Economic exposure impacts a firms long-term cash flow, positively or negatively (Czinkota et al, 2009). This kind of risk not only affects firms involved in international trade but also has an impact on domestic firms as it can also affect the price of commodities sold (Czinkota et al, 2009). Furthermore, this sort of risk also undermines the competitiveness of a firm (Arnold, 2002). It can affect the firms competitive position directly if the home currency appreciates and foreign competitors are able to offer a much cheaper price, compared to the firms products which have become expensive as a result of the currency appreciation (Arnold, 2002). Economic risk can also affect a firms competitive position indirectly even if a firms home currency does not experience adverse movements (Arnold, 2002). For example Arnold (2002) illustrate that a South African firm selling in Hong Kong with a New Zealand firm as its main competitor can lose competitive edge if the New Zealand dollar weakens against the Hong dollar. Thus the products or commodity on offer by the New Zealand firm would be cheaper than that of the South African firm assuming both currencies (South African Rand and New Zealand Dollar) had a similar exchange rate against Hong Kong Dollar. Economic and transaction risk are more related to businesses involved in international trade, translational exposure more to do with accounting practises (Waston and Head, 2007). Consequently these are the foreign exchange exposure that will be focused on. 2.5 Foreign Exchange Risk and Natural Hedging The idea of applying natural hedging strategies as tools to hedge foreign exchange exposure is one that has received a lot of attention in recent times, as the concept focuses on using non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The various natural hedging strategies are explained below. Netting This technique relates to multi-nationals which have foreign subsidiaries, it involves reducing funds transferred by netting off the transaction between the parent company and the subsidiary firm (Watson and Head, 2007). For example â€Å"if a UK parent owed a subsidiary in Canada and sold C$2.2m of goods to the subsidiary on credit while the Canadian subsidiary is owed C$1.5m by the UK company, instead of transferring a total of C$3.7m the intra-group transfer is the net amount of C$700,00† (Arnold, p. 982, 2002). This implies that rather than both the parent and subsidiary firm managing their exposure separately they opt for a centralised management system to reduce the size of the currency flows. Consequently transaction costs and the cost of purchasing foreign exchange are mitigated (Arnold, 2002). Leading and Lagging This technique involves either settling foreign accounts by either postponing payments (lagging) till the end of the credit period allowed or prepayment (leading) at the beginning of the transaction (Watson and Head, 2007). It functions based on the anticipation a firm has that future exchange rates will either appreciate or depreciate (Czinkota, 2009). Thus if a firm anticipated a depreciation in its home currency, it lead its payments conversely if the firm anticipated an appreciation in exchange rate it would lag its payments. Invoicing in the Domestic Currency This method involves invoicing foreign customers in the firms domestic currency rather than in the foreign currency (Arnold, 2002). What this does is that it shifts the burden of risk to the foreign firm (buyer). Operational and Strategic Methods There is no one singular acceptable definition of operational hedging as it varies according to the context it is been used. Boyabatli and Toktay (2004) in their work, review and discuss a diverse cross section of views on operational hedging, they delve into the similarities in application methods of operational hedging across different academic fields. They discovered that although there were some differences in meaning in various academic fields; operations management, finance, strategy and international business, there were basic characteristics which were similar across all fields. On this basis operational hedging can be described according to its functionality. Bradley and Moles describe it as the decisions firms take in regards to the â€Å"location of their production facilities, sourcing of inputs, the nature and scope of products, strategic financial decisions such as the currency denomination of debt, the firms choice of markets and market segments† (Bradley and Mo les p.29, 2002). It involves the use of non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The objective is geared towards reducing long-term economic exposures. Operational hedging can be said to be based on the principle of real options. Real options are â€Å"opportunities to delay and adjust investments and operating decisions over time in response to resolution of uncertainty† (Triantis 2000 cited in Boyabatli and Toktay p.6, 2004). 2.6 Hedging with Financial Derivatives The different types of financial derivatives are: Forwards and Futures, Foreign currency Options and Currency Swaps. Forward contract: This enables the business to protect itself from adverse movements in exchange rates by locking in an agreed exchange rate until the agreed date of payment (Brealey, Myers and Allen, 2006). The example given by Horcher and Karen (p.95, 2005) illustrate the concept further; â€Å"a company requires 100 million Japanese yen in three months to pay for imported products. The current spot exchange rate is 115.00 yen per U.S. dollar, and the forward rate is 114.50. The company books a forward contract to buy yen (sell U.S. dollars) in three months time at a price of 114.50 and orders its merchandise. In three months time, the company will use the contract to buy yen at 114.50. At that time, if yen is trading at 117.00 per U.S. dollar, the company will have locked in a price that, with the benefit of hindsight, is worse than current market prices. If three months later yen is at 112.00 per U.S. dollar, the company will have successfully protected itself against a more exp ensive yen. Regardless of price changes, the company has locked in its yen purchase price at the forward rate of 114.50, enabling it to budget its costs with certainty†. Futures Contract: A futures contract refers to an â€Å"agreement to buy or sell a standard quantity of specified financial instrument or foreign currency at a future date at a price agreed between two parties† (Watson and Head, 2007). Although it bears some similarities to the forward contract in that it also locks in the exchange rate, however one major difference is that a forward contract can be used in a wide range of currencies while the futures contract is applicable to a limited number of currencies (Brealey, Myers and Allen, 2006). Foreign currency Options: This gives holders the right to purchase or sell foreign currency under an agreement that allows for the right but not the obligation to undertake the transaction at the agreed future date (Brealey, Myers and Allen, 2006). One key advantage of this method of hedging is that it gives holders the opportunity to take advantage of favourable exchange rate movements (Watson and Head, 2007). However a non-refundable fee on the option known as an option premium is required (Watson and Head, 2007). Currency Swaps: A currency swap is â€Å"an agreement between two parties to exchange principal and interest payments in different currencies over a stated time period† (Watson and Hedge, p. 382, 2007). Basically what this implies is that a firm can gain the use of foreign currency but avoid exchange rate risk which may arise from servicing payments (Watson and Head, 2007). 2.7 A review of Literature on hedging This section critically examines the rationale for hedging foreign exchange risk. The rationale which has been put forward for hedging risk in the existing literature (Judge, 2004) is that it maximises shareholder value. The idea behind hedging any kind of risk in general is that once a firm takes on the responsibility of actively managing risk, shareholder value is increased, thereby increasing the overall value of the firm (Judge, 2004). However finance theory proposes that shareholders are diversified and thus are not willing to pay a premium to firms for adopting hedging policies (Rossi and Laham, 2008). So in that vein, theory proposes that what is actually being maximized is the managers private utility (Tekavcic, Sernic and Spricic, 2008). Essentially finance theory states that shareholders are diversified while managers of firms are not, so in a bid to protect their income and personal asset, which are linked to the firm, they hedge against uncertainty (Baranoff and Brockett, 2008). Within this theory shareholders are willing to take on risk in exchange for greater returns (risk-return trade off) and so they invest in companies which they believe can provide such high returns. Thus managers hedging risks can be said to lead to underinvestment, which then flaws the theory of risk-return trade off (Baranoff and Brockett, 2008). This theory is based on the premise that financial markets are efficient and as such hedging activities of firm would not add value to the firm (Rossi and Laham). In addition to the complexities of the above theory, when the concept of hedging is put into the context of foreign exchange movements; the Law of one price (LOP)/ purchasing power parity (PPP) suggests that identical goods are not affected by exchange rate variations (Hyrina and Serletis, 2008). The law of one price is the foundation of the theory of PPP which posits that similar goods should have identical prices across countries once expressed in a common currency (Hyrina and Serletis, 2008, Czinkota et al, 2009). Numerous studies have been carried out to test whether or not the theory holds, however there is no general consensus as to whether or not the theory is valid. Hyrina and Serletis (2009), Glen (1992), Choi, Laibson and Madrian (2006) found that there are some flaws within the theory as the real exchange rate is not stationary. Engel and Rogers (1996) examines the impact distance has on goods sold and whether the presence of national borders separating locations were these goods are sold, also have any impact on the law of one price. Empirical evidence from the research shows distance and border have significant role to play on the differences in price of goods (Engel and Rogers, 1996). More so, that market segmentation also leads to price differentiation (Engel and Rogers, 1996). This theory just like the first are both based on the principle that the market is efficient and as such inconsistencies such as movements in exchange rate even out in time (Zanna, 2009). Without attempting to disparage the above theories, in regards to the first theory, whether or not hedging is done to propagate the interests of managers, the fact is that, the basis of the theory (Efficient Market) is flawed as there are numerous empirical evidence (Nobile, 2007; Bartram, 2007, Allayannis and Ofek, 2003, Tekavcic et al 2008, Mastry, 2003) to suggest that there are imperfections in the financial market such as high interests rates, inflation, tax and of course foreign exchange movements which can affect a firm. Thus shareholders cannot afford not to be concerned about hedging as these imperfections in the market can affect the cash flow, profit and ultimately the overall value of the firm. Thus in the same vain PPP should not hold. In regards to PPP it is necessary to indicate that there are other factors which affect the price of goods sold across national borders. Bradley (2005) states that the prices of goods for each firm are influenced by numerous factors such as; Government policies, high inflation rates and corporate income tax and thus such prices of goods cannot be the same across different borders. So to state clearly the financial market is not efficient due to market imperfections. Thus movements in foreign exchange can affect the cash flow and overall value of the firm. Consequently it is necessary for firms to focus on how to manage this risk. 2.8 Review of literature on financial derivatives and operational Strategies The extant literatures on hedging exchange rate risks with financial derivatives have focused on corporate risk management. The main thrust of literatures from authors such as Mastry (2003), Bartram et al (2003) and Galum and Roth (1993) have carried out studies which are aimed at finding the optimal financial derivative. However there is no general consensus as to an optimal financial hedging position. The reason for this can related to basic financial theory which suggests that derivative instruments should be chosen based on the degree of exposure of the firm and the payoff that can be gotten from the instrument (Bartram, 2006). Essentially what this implies instruments with linear characteristics such as forwards, futures and swaps should be used for linear exposures, while instruments with nonlinear profiles such as currency options are suitable to hedging nonlinear exposure (Stulz, 2003). Put simply the theory suggests that after firms assess the nature of its exposure, all tha t needs to be done is choose a derivative which matches that exposure. However, contrary to financial theory Bartram (2006), Ianieri (2009) found that as a result of the flexible nature of options, options can be used to hedge various types of exposures and not just nonlinear exposures. Despite these findings, merely identifying the nature of exposure and matching it with a derivative is not enough. There are other factors which influence the decision on what derivatives to use besides the nature of exposure. For instance while an option is flexible and can be adapted to suit various types of exposures, it is also be a highly complex technical method to use. The problem with currency options is that they require highly skilled individuals who can understand and use it effectively. Ianieri (2009) states that even brokers who should know how to use this method have had bad experiences with it. In an alternative view, Masry and Salam (2007) in an attempt to understand the rationale for using financial derivatives found that the size of the firm impacts on a firms decision to use financial derivatives. A study conducted by Judge (2004) shows that there is a positive relationship between the size of the firm and the foreign currency hedging decision. The general idea is that large firms have numerous resources available to them; in terms of personnel and information, and as such they are more likely to hedge using financial derivatives (Judge, 2004). So in essence the transaction costs which accompany the use of derivatives would discourage small firms from opting to hedge with financial derivatives. On the other hand Kim and Sung (2005), Managing Foreign Exchange Risk in International Trade Managing Foreign Exchange Risk in International Trade MANAGING FOREIGN EXCHANGE RISK IN INTERNATIONAL TRADE WITH A FOCUS ON EAST MIDLANDS COMPANIES Abstract The purpose of this research is to investigate how international trade companies in the East Midlands manage foreign exchange risk. This study utilises descriptive statistics in presenting and analysing data from the primary research. The findings of the research indicate that a majority of the firms used broad business strategies in managing their foreign exchange risk. The main problems the firms had with managing foreign exchange risks centred on customer retention and receiving payments on time. The results also indicate that there were a few firms which took an integrated approach to mitigating foreign exchange risk. This research is of value to firms involved in international trade and also business development agencies which seek to assist firms which are planning to enter or are already operating in foreign markets. Chapter 1 Introduction International trade involves exporting and importing of goods or services across foreign borders and, as soon as a firm engages in import and/or export it is exposed to numerous risks. As a result firms operating outside their home country, have to deal with the economic conditions of the foreign country in which it wishes to operate in. One of the key issues firms involved in import and/ or export are faced with is dealing with foreign currency as this is the only means by which the exchange of goods or services is facilitated. To this end it is import to study and understand the impact which foreign currency has on international trade. Following the demise of the Bretton Woods agreement (1971) whereby exchange rates were allowed to float freely, managing foreign exchange has become important (Heakel, 2009). Consequently the prices of currencies were determined by market forces that is, demand for and supply of money (Mastry and Salam, 2007). Due to the constant changes in demand and supply which are in turn influenced by other external factors, fluctuations arise (Czinkota et al, 2009). As a result of these fluctuations firms are exposed to foreign exchange risks also known as currency risks. Firms trading in different currencies are exposed to three types of foreign exchange risks; economic, transaction and translational risk (Czinkota et al, 2009). Firms which are involved in international trade are exposed to economic and transaction risks as they both pose potential threats to the firms cash flow over time (Czinkota et al, 2009). Studies have shown that foreign exchange fluctuations can affect the value of a fi rms cash flow over time (Aretz, Bartram and Dufey, 2007, Judge, 2004, Bradley and Moles 2002, Allayannis and Ofek 1998, Chowdhry, 1995, Damant, 2002 and Wong 2001). More so, domestic firms although not dealing with foreign currency are also affected by foreign exchange fluctuations as the price of the commodity they trade in are also affected (Abor, 2005). Most of the extant literatures have focused on corporate risk management for financial firms and as such financial hedging with derivatives has been the central theme of currency risk management. On the other hand there has been evidence to show alternative methods exist for firms involved in international trade, these methods of managing foreign exchange risks involve strategic and operational risk management. However most of these studies have been carried out in isolation; financial hedging techniques carried out in isolation of strategic and operational hedging methods and vice versa. Little has been done to provide an integrated perspective, on utilising both techniques of managing foreign exchange risks with regards to international trade firms. This is the area in which the present study intends to explore thereby contributing to the overall literature Purpose of the Research Due to the nature of international trade which expose the firm to foreign exchange movements, thus subjecting the firm to currency risks, the purpose of this research is to explore how international trade firms deal with foreign exchange risk. The research focuses how import and export firms in the East Midlands manage their foreign exchange risk. This study also aims to explore the problems involved in managing those risks. Research Questions Consequently the research hopes to answer the following questions: Do import and export firms in the East Midlands actually manage their foreign exchange rate risks? How import and export companies in the East Midlands manage their foreign exchange risks? What problems they encounter with managing these risks? Definition of Key Terms Hedge A hedge can be defined as â€Å"making an investment to reduce the risk of adverse price movements in an asset. Investors use this strategy when they are unsure of what the market will do† (Investopedia, 2010). Derivatives Derivatives are instruments whose performance is derived from an underlying asset (Arnold, 2002) Spot Rate The spot rate is defined as the rate of exchange quoted immediately if buying or selling currency (Watson and Head) International Trade This involves the flow of goods and services between nations; it involves import and/ export of goods and services (Harrison et al, 2000) The subsequent section provides a break down of how rest of the research is set out. Chapter 2: Literature Review; this chapter provides an overview of the research topic by mapping out the key areas; theories within the risk management and finance literature are identified, explored and analysed. The concept of risk and risk management is explored. A broad classification is made on the types of risks and this is then narrowed down to include foreign exchange risk. The chapter proceeds by exploring the concept of foreign exchange and foreign exchange risks; which include the types of foreign exchange exposures. The common techniques for managing foreign exchange risks are explored. This is followed by a review of relevant literature in the key areas of the research topic. Chapter 3: Research Methodology; in this chapter the research design and strategy are discussed. Chapter 4: Research Findings and Analysis; this chapter presents the findings of the research which were obtained from the questionnaire. The findings are presented using tables, graphs and charts, to enable the reader gain a clearer understanding. An analysis of the findings is carried out by cross-tabulating the responses of the respondent in order to observe for any commonalities and/or differences. Chapter 5: Conclusion and Recommendation; this chapter concludes the research and recommendations are made. Chapter 2: Literature Review 2.1 Risk Management- Risk is an intrinsic part of any business, due to unpredictability of the forces which govern business transactions such as political, economic and social conditions; risk is a factor which cannot be completely eliminated (Watson and Head, 2007). Arnold (2002) describes risk as a situation where there is more than just one possible outcome, but a range of potential returns. It can also be defined as the chance that the actual return from an investment will be different than expected (Lamb, 2008). From the above definitions, risk does not necessarily spell doom or does not necessarily have a negative connotation. Markowitz was one of the earliest academics to point this out, by establishing a link between risks and return (risk-return trade-off). Essentially the theory; Modern Portfolio Theory (MPT) involves expected return and the degree of accompanying risk for an investment (Yorke and Droussiotis, 1994). A central theme of this theory is that the greater risk an investor accepts th e higher the potential for increased returns (Yorke and Droussiotis, 1994). While MPT purports a positive correlation between risk and return, the fact that an investment can have a range of possible outcomes is an uncertainty which can be very costly. As a result risk management is also a part and parcel of business. Risk management can be defined as â€Å"the performance of activities designed to minimize the negative impact (cost) of uncertainty (risk) regarding possible losses† (Abor, p.307, 2005). The objectives of risk management are to minimize potential losses, reduce volatility of cash flow thereby protecting earnings (Abor, 2005). While the objective for risk management is to protect companies against financial loss thereby protecting the value of the firm, traditional finance theory such as that proposed by Modigliani and Miller suggests that the market value of a firm is determined by it earning power (Arnold, 2002). The basic assumption of Modigliani and Miller theorem is that in an efficient market; with the absence of taxation, bankrupt cy costs and information asymmetry, the value of the firm is unaffected by its capital structure (Arnold, 2002). However empirical research (list authors) has shown the existence of capital market imperfections, such as taxes, agency problems and financial distress exists thus justifying risk management (Chowdhry, 1995). Furthermore, MPT also suggests that the risk and volatility of an investment portfolio can be reduced, and the gains can be enhanced, all by diversifying the portfolio among several non-correlated assets (Pearce Financial, 2008). That is, investors can maximise their expected return for a given level of risk by diversifying their investments across a range of assets ((McClure, 2006). MPT involves risk management through diversification of investments. In a simplified expression, MPT is based on the idea of not ‘putting all of ones eggs into one basket. 2.2 Types of Risk There are two broad classification of risks; Unsystematic and Systematic (Rossi and Laham, 208) Systematic risks refers to risks which affect the entire market due to events such as; exchange rate movements, changes in the price of commodities, war, recession and interest rates, however Unsystematic risks are risks which are specific to individual companies (reference). These distinctions were made by Sharpe (1960) in addition to Markowitz Modern Portfolio theory (MPT), the rationale behind it was that despite risk management practise through diversification, there were still underlying factors which affected the return potential of an investment portfolio. Chesnay Jondeau (2001) clearly point out that the correlation of assets which Markowitz talks about depends on other underlying factors and that the relationships are dynamic. They further found that major events such as general adverse movements in markets can significantly change the correlations between assets (Chesnay Jondeau, 2001). Empirical studies show that in financial crisis, assets tends to act the same, that is they are more likely to more become positively correlated, moving down at the same time (Ardelean, Brandt and Malik, 2009). Essentially, severe market crises will have a spill over effect and cause investments in several different asset classes or markets to succumb to sudden liquidation (Vocke and Wilde, 2000, Pearce Financial, 2008). However findings from Xing and Howe (2003) are contradictory, their findings show that the failure of previous studies to find a positive risk-return relationship may be as a result of model misspecification. Essentially they found that there was no agreement on the risk-return relationship amongst previous studies which had used data from one market (Xing and Howe, 2003). Thus they argued that the world market should be taken into consideration in assessing risk return-relationship in a partially integrated market (Xing and Howe, 2003). But then it only stands to reason that if markets are integrated partially or wholly, a catastrophic economic cycle such as financial crises would have an adverse effect on the world market. Thus clearly it does not matter how much one diversifies unsystematic risk, the underlying systematic risk is a problematic factor which has to be dealt with. 2.3 Foreign Exchange rate as a Systematic Risk Background Foreign Exchange rate can be defined as the â€Å"price of one currency expressed in terms of another† (Arnold, p.973, 2002). For example, if the exchange rate exchange rate between the European Euro and the Pound is â‚ ¬1.3 =  £ 1.00, this means that  £1 is equivalent to â‚ ¬1.3. Foreign Exchange (Forex) is traded on the foreign exchange market, the purpose of which is to facilitate trade and the exchange of currencies between countries (Czinkota et al, 2009). The Forex market is an informal market which does not have a central trading place (Czinkota et al, 2009). Trade is carried out it is a 24 hour market as it involves financial institutions from around the globe, as trade moves from one financial centre to another (Arnold, 2002). Thus as one market closes in one region or continent another opens in a different place (Arnold, 2002). The major trading centres are in Tokyo, Singapore, London and New York (Waston and Head, 2007). The buyers and sellers of foreign c urrencies included exporters/importers; tourists; fund managers; governments; central banks; speculators and commercial banks (Arnold, 2002). However large commercial banks account for a larger percentage of Forex trading in the currency markets, as they deal currencies on behalf of customers (Arnold, 2002). They also undertake transactions of their own in an attempt to make a profit by speculating on future movements of exchange rates (Arnold, 2002). Foreign Exchange Risk After the demise of the Bretton woods conference (1973) exchange rates were allowed to float freely; exchange rates were no longer fixed and currencies were allowed to float freely in value to each other (Czinkota et al, 2009). However freely floating exchange rate poses problems for investors and firms alike who deal with different currencies as the uncertainty of exchange rate movements can have a positive or negative impact on an investment (Czinkota et al, 2009). Foreign exchange risk also known as currency risk is the â€Å"risk that an entity will be required to pay more (or less) than expected as a result of fluctuations in the exchange rate between its currency and the foreign currency in which payment must be made† (Abor, p.3, 2005). Thus considering the potential variability of Forex and the impact it can have on international investments and international business, irrespective of the business sector, it is clear that Foreign exchange risks can be classed as systematic risks. Forex risk is an un-diversifiable risk as it affects the entire market. Having established the relationship between Forex and systematic risk and understanding that it cannot be diversified the question which presents itself is, what can be done about it? Theory states that the only way out is to hedge this risk (Bartram, 2007), the decision to hedge will be examined in Section 2.7 2.4 Types of Foreign Exchange Exposure There are three types of foreign exchange risks or exposures; Economic exposure, Transaction exposure and Translational exposure (Maurer and Valiani, 2002). Transaction exposure is the risk that arises as a result of an existing contractual agreement involving a commitment in foreign currency, this sort of risk is primarily associated with import or exports (Arnold, 2002). For example a firm which exports goods from the UK to the US; will have an agreement (contract) that the US firm buying the goods will pay for the goods at a later date (could be 30, 60 or 90 days), however changes in the exchange rates to either currency (whether an appreciation or depreciation) will either positive or negative consequences for either firms. Transaction risks also come as a result of firms making foreign investments such as opening subsidiary branches (Arnold, 2002). These risks arise in the form of payment costs associated with constructing or establishing new branches (Arnold, 2002). In order to make the necessary payments, the home-based firm would exchange its home currency for foreign currency, thereby giving rise to potential transaction risk (A rnold, 2002) Translational exposure relates to a firms earnings; it involves a firms accounting practises (Waston and Head, 2007). This risk â€Å"arises from the legal requirement that all firms consolidate their financial statement (balance sheet and income statement) of all worldwide operations annually† (Czinkota et al, p. 334, 2009). This implies that, as firms translate and consolidate foreign assets, liabilities and profits into domestic currency, there is the possibility of the firm experiencing a loss or gain (Waston and Head, 2007). This is mainly an accounting risk and as such give a real indication of the impact of exchange rate fluctuations on the value of a firm (Watson and Head, 2007). Economic exposure impacts a firms long-term cash flow, positively or negatively (Czinkota et al, 2009). This kind of risk not only affects firms involved in international trade but also has an impact on domestic firms as it can also affect the price of commodities sold (Czinkota et al, 2009). Furthermore, this sort of risk also undermines the competitiveness of a firm (Arnold, 2002). It can affect the firms competitive position directly if the home currency appreciates and foreign competitors are able to offer a much cheaper price, compared to the firms products which have become expensive as a result of the currency appreciation (Arnold, 2002). Economic risk can also affect a firms competitive position indirectly even if a firms home currency does not experience adverse movements (Arnold, 2002). For example Arnold (2002) illustrate that a South African firm selling in Hong Kong with a New Zealand firm as its main competitor can lose competitive edge if the New Zealand dollar weakens against the Hong dollar. Thus the products or commodity on offer by the New Zealand firm would be cheaper than that of the South African firm assuming both currencies (South African Rand and New Zealand Dollar) had a similar exchange rate against Hong Kong Dollar. Economic and transaction risk are more related to businesses involved in international trade, translational exposure more to do with accounting practises (Waston and Head, 2007). Consequently these are the foreign exchange exposure that will be focused on. 2.5 Foreign Exchange Risk and Natural Hedging The idea of applying natural hedging strategies as tools to hedge foreign exchange exposure is one that has received a lot of attention in recent times, as the concept focuses on using non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The various natural hedging strategies are explained below. Netting This technique relates to multi-nationals which have foreign subsidiaries, it involves reducing funds transferred by netting off the transaction between the parent company and the subsidiary firm (Watson and Head, 2007). For example â€Å"if a UK parent owed a subsidiary in Canada and sold C$2.2m of goods to the subsidiary on credit while the Canadian subsidiary is owed C$1.5m by the UK company, instead of transferring a total of C$3.7m the intra-group transfer is the net amount of C$700,00† (Arnold, p. 982, 2002). This implies that rather than both the parent and subsidiary firm managing their exposure separately they opt for a centralised management system to reduce the size of the currency flows. Consequently transaction costs and the cost of purchasing foreign exchange are mitigated (Arnold, 2002). Leading and Lagging This technique involves either settling foreign accounts by either postponing payments (lagging) till the end of the credit period allowed or prepayment (leading) at the beginning of the transaction (Watson and Head, 2007). It functions based on the anticipation a firm has that future exchange rates will either appreciate or depreciate (Czinkota, 2009). Thus if a firm anticipated a depreciation in its home currency, it lead its payments conversely if the firm anticipated an appreciation in exchange rate it would lag its payments. Invoicing in the Domestic Currency This method involves invoicing foreign customers in the firms domestic currency rather than in the foreign currency (Arnold, 2002). What this does is that it shifts the burden of risk to the foreign firm (buyer). Operational and Strategic Methods There is no one singular acceptable definition of operational hedging as it varies according to the context it is been used. Boyabatli and Toktay (2004) in their work, review and discuss a diverse cross section of views on operational hedging, they delve into the similarities in application methods of operational hedging across different academic fields. They discovered that although there were some differences in meaning in various academic fields; operations management, finance, strategy and international business, there were basic characteristics which were similar across all fields. On this basis operational hedging can be described according to its functionality. Bradley and Moles describe it as the decisions firms take in regards to the â€Å"location of their production facilities, sourcing of inputs, the nature and scope of products, strategic financial decisions such as the currency denomination of debt, the firms choice of markets and market segments† (Bradley and Mo les p.29, 2002). It involves the use of non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The objective is geared towards reducing long-term economic exposures. Operational hedging can be said to be based on the principle of real options. Real options are â€Å"opportunities to delay and adjust investments and operating decisions over time in response to resolution of uncertainty† (Triantis 2000 cited in Boyabatli and Toktay p.6, 2004). 2.6 Hedging with Financial Derivatives The different types of financial derivatives are: Forwards and Futures, Foreign currency Options and Currency Swaps. Forward contract: This enables the business to protect itself from adverse movements in exchange rates by locking in an agreed exchange rate until the agreed date of payment (Brealey, Myers and Allen, 2006). The example given by Horcher and Karen (p.95, 2005) illustrate the concept further; â€Å"a company requires 100 million Japanese yen in three months to pay for imported products. The current spot exchange rate is 115.00 yen per U.S. dollar, and the forward rate is 114.50. The company books a forward contract to buy yen (sell U.S. dollars) in three months time at a price of 114.50 and orders its merchandise. In three months time, the company will use the contract to buy yen at 114.50. At that time, if yen is trading at 117.00 per U.S. dollar, the company will have locked in a price that, with the benefit of hindsight, is worse than current market prices. If three months later yen is at 112.00 per U.S. dollar, the company will have successfully protected itself against a more exp ensive yen. Regardless of price changes, the company has locked in its yen purchase price at the forward rate of 114.50, enabling it to budget its costs with certainty†. Futures Contract: A futures contract refers to an â€Å"agreement to buy or sell a standard quantity of specified financial instrument or foreign currency at a future date at a price agreed between two parties† (Watson and Head, 2007). Although it bears some similarities to the forward contract in that it also locks in the exchange rate, however one major difference is that a forward contract can be used in a wide range of currencies while the futures contract is applicable to a limited number of currencies (Brealey, Myers and Allen, 2006). Foreign currency Options: This gives holders the right to purchase or sell foreign currency under an agreement that allows for the right but not the obligation to undertake the transaction at the agreed future date (Brealey, Myers and Allen, 2006). One key advantage of this method of hedging is that it gives holders the opportunity to take advantage of favourable exchange rate movements (Watson and Head, 2007). However a non-refundable fee on the option known as an option premium is required (Watson and Head, 2007). Currency Swaps: A currency swap is â€Å"an agreement between two parties to exchange principal and interest payments in different currencies over a stated time period† (Watson and Hedge, p. 382, 2007). Basically what this implies is that a firm can gain the use of foreign currency but avoid exchange rate risk which may arise from servicing payments (Watson and Head, 2007). 2.7 A review of Literature on hedging This section critically examines the rationale for hedging foreign exchange risk. The rationale which has been put forward for hedging risk in the existing literature (Judge, 2004) is that it maximises shareholder value. The idea behind hedging any kind of risk in general is that once a firm takes on the responsibility of actively managing risk, shareholder value is increased, thereby increasing the overall value of the firm (Judge, 2004). However finance theory proposes that shareholders are diversified and thus are not willing to pay a premium to firms for adopting hedging policies (Rossi and Laham, 2008). So in that vein, theory proposes that what is actually being maximized is the managers private utility (Tekavcic, Sernic and Spricic, 2008). Essentially finance theory states that shareholders are diversified while managers of firms are not, so in a bid to protect their income and personal asset, which are linked to the firm, they hedge against uncertainty (Baranoff and Brockett, 2008). Within this theory shareholders are willing to take on risk in exchange for greater returns (risk-return trade off) and so they invest in companies which they believe can provide such high returns. Thus managers hedging risks can be said to lead to underinvestment, which then flaws the theory of risk-return trade off (Baranoff and Brockett, 2008). This theory is based on the premise that financial markets are efficient and as such hedging activities of firm would not add value to the firm (Rossi and Laham). In addition to the complexities of the above theory, when the concept of hedging is put into the context of foreign exchange movements; the Law of one price (LOP)/ purchasing power parity (PPP) suggests that identical goods are not affected by exchange rate variations (Hyrina and Serletis, 2008). The law of one price is the foundation of the theory of PPP which posits that similar goods should have identical prices across countries once expressed in a common currency (Hyrina and Serletis, 2008, Czinkota et al, 2009). Numerous studies have been carried out to test whether or not the theory holds, however there is no general consensus as to whether or not the theory is valid. Hyrina and Serletis (2009), Glen (1992), Choi, Laibson and Madrian (2006) found that there are some flaws within the theory as the real exchange rate is not stationary. Engel and Rogers (1996) examines the impact distance has on goods sold and whether the presence of national borders separating locations were these goods are sold, also have any impact on the law of one price. Empirical evidence from the research shows distance and border have significant role to play on the differences in price of goods (Engel and Rogers, 1996). More so, that market segmentation also leads to price differentiation (Engel and Rogers, 1996). This theory just like the first are both based on the principle that the market is efficient and as such inconsistencies such as movements in exchange rate even out in time (Zanna, 2009). Without attempting to disparage the above theories, in regards to the first theory, whether or not hedging is done to propagate the interests of managers, the fact is that, the basis of the theory (Efficient Market) is flawed as there are numerous empirical evidence (Nobile, 2007; Bartram, 2007, Allayannis and Ofek, 2003, Tekavcic et al 2008, Mastry, 2003) to suggest that there are imperfections in the financial market such as high interests rates, inflation, tax and of course foreign exchange movements which can affect a firm. Thus shareholders cannot afford not to be concerned about hedging as these imperfections in the market can affect the cash flow, profit and ultimately the overall value of the firm. Thus in the same vain PPP should not hold. In regards to PPP it is necessary to indicate that there are other factors which affect the price of goods sold across national borders. Bradley (2005) states that the prices of goods for each firm are influenced by numerous factors such as; Government policies, high inflation rates and corporate income tax and thus such prices of goods cannot be the same across different borders. So to state clearly the financial market is not efficient due to market imperfections. Thus movements in foreign exchange can affect the cash flow and overall value of the firm. Consequently it is necessary for firms to focus on how to manage this risk. 2.8 Review of literature on financial derivatives and operational Strategies The extant literatures on hedging exchange rate risks with financial derivatives have focused on corporate risk management. The main thrust of literatures from authors such as Mastry (2003), Bartram et al (2003) and Galum and Roth (1993) have carried out studies which are aimed at finding the optimal financial derivative. However there is no general consensus as to an optimal financial hedging position. The reason for this can related to basic financial theory which suggests that derivative instruments should be chosen based on the degree of exposure of the firm and the payoff that can be gotten from the instrument (Bartram, 2006). Essentially what this implies instruments with linear characteristics such as forwards, futures and swaps should be used for linear exposures, while instruments with nonlinear profiles such as currency options are suitable to hedging nonlinear exposure (Stulz, 2003). Put simply the theory suggests that after firms assess the nature of its exposure, all tha t needs to be done is choose a derivative which matches that exposure. However, contrary to financial theory Bartram (2006), Ianieri (2009) found that as a result of the flexible nature of options, options can be used to hedge various types of exposures and not just nonlinear exposures. Despite these findings, merely identifying the nature of exposure and matching it with a derivative is not enough. There are other factors which influence the decision on what derivatives to use besides the nature of exposure. For instance while an option is flexible and can be adapted to suit various types of exposures, it is also be a highly complex technical method to use. The problem with currency options is that they require highly skilled individuals who can understand and use it effectively. Ianieri (2009) states that even brokers who should know how to use this method have had bad experiences with it. In an alternative view, Masry and Salam (2007) in an attempt to understand the rationale for using financial derivatives found that the size of the firm impacts on a firms decision to use financial derivatives. A study conducted by Judge (2004) shows that there is a positive relationship between the size of the firm and the foreign currency hedging decision. The general idea is that large firms have numerous resources available to them; in terms of personnel and information, and as such they are more likely to hedge using financial derivatives (Judge, 2004). So in essence the transaction costs which accompany the use of derivatives would discourage small firms from opting to hedge with financial derivatives. On the other hand Kim and Sung (2005),

Compare H.G. Wells The Red Room and Farthing House by Susan Hill Essay

Compare H.G. Wells' The Red Room and Farthing House by Susan Hill "There was no mistake about it. The flame vanished, as if the wick had been suddenly nipped between a finger and thumb, leaving the wick neither glowing or smoking, but black." Ghost stories use dark and fear of it as a key element, and most occurrences happen in the night, and/or in the dark. The aim of this essay is to compare and contrast the two short stories - The Red Room by H.G. Wells and Farthing House by Susan Hill. The Red Room was written pre twentieth century and Farthing house was written post twentieth century. I will mainly look at the formulaic structure of the stories and the tension that is built up throughout them by the authors. A good ghost story involves a mixture of tension and an interesting plot or storyline. The formulaic elements - e.g. old houses/graveyards/other sinister settings, threatening housekeepers/guests/noises, staying overnight, dark/night, threatening weather (e.g. storms, thunder) and a death/previous ghostly history all help to create the genre and entice the reader to continue reading. There should be twists in the story, to help make it more interesting, and less predictable. There is also often a lot of mystery involved - mysterious key characters, unknown noises and people etc. The Red Room is a pre-20th century story, written by H.G. Wells in 1896. It is about a room that is allegedly haunted and the story is told by a young man who is spending the night there. He starts off extremely confidently but as the story goes on he becomes more and more frightened and the tension increases. The Red Room is about the personal experience of the young man whilst in the room, and his own fear o... ...ing plots. Some elements of the first formula have stuck, which is why 'The Red Room' and 'Farthing House' are so similar, although written years apart. I think that they have stuck because they are a winning combination that attracts readers. Over time ghost stories have become more popular and some stories have also been shown as films or television programmes. This shows that they are still a popular part of culture and probably will continue to be in the future. Films and television programmes still often stick to the formula - setting and history, for example. However the visual images and plots differ. Farthing House is testimony to this, the setting is similar but the plot and purpose differs. "I was not afraid anymore, not now that I knew who she was and why she had been there, getting out of her bed in Cedar room, to go in search of her baby.

Sensuality, Sexuality, and Fertility in Kubla Khan Essay -- Samuel Tay

Sensuality, Sexuality, and Fertility in â€Å"Kubla Khan† In â€Å"Kubla Khan,† Coleridge imagines a land where sensuality, sexuality, and fertility abound and share inextricable links. Any threats to the fecundity of the land exist outside of its magnificent walls. Coleridge uses this image of an impenetrable fortress of sexual creativity in considering his own mind, desiring the same productivity in his poetic imagination. By creating this connection, Coleridge finds both a source of inspiration and blurs the lines between the poet and the poem. Coleridge describes Xanadu as a land where pleasure is a virtue, by both direct statement and appealing to the senses. The most direct insight into the luxury of Xanadu is given in Coleridge’s description of the land as a â€Å"pleasure dome† (2, 36). Besides stating it outright, Coleridge emphasizes the hedonistic nature of the land by appealing to the senses. A description of the hills mentions their â€Å"enfolding sunny spots of greenery† (11). These sunny patches both illuminate the vision of flourishing vegetation, while giving a tangible warmth in the same breath. Nearby, a garden is filled with â€Å"many an incense-bearing tree† (9), perfuming the air of the dome. In his consideration of the Abyssinian maid, Coleridge continues his representation of sensual pleasure. Although unable to remember â€Å"her symphony and song† (43), Coleridge knows that any recollection â€Å"to such a deep delight ‘twould win me† (44). This later recollection demonstrates that Coleridge’s vision includes the pleasure of sound, as well as the presence of sights and sounds. Coleridge continues to emphasize the hedonism of this vision, as he purposefully equips the musical maid with a dulcimer. The Oxford... ...nd overflowing with life: the product of sensuality and sexuality. Coleridge emphasizes the interconnection of these elements by weaving them seamlessly into the same lines. In a metaphor in which he consumes the fruit of this flourishing land, Coleridge can internalize the fertility of this land and utilize it for his poetic imagination. Just as Xanadu remains safely distanced from threats against its proliferation, near the end of his poem Coleridge draws a metaphorical line around himself to discourage creative invasions. The supposed history of the poem’s composition lends some irony to this suggestion, as Coleridge claims to have ceased his transcription to answer the door. Works Cited Abrams, M. H, ed. The Norton Anthology of English Literature. New York, NY. Norton and Company, 2000. The Oxford English Dictionary Online. 27 February 2008. Sensuality, Sexuality, and Fertility in Kubla Khan Essay -- Samuel Tay Sensuality, Sexuality, and Fertility in â€Å"Kubla Khan† In â€Å"Kubla Khan,† Coleridge imagines a land where sensuality, sexuality, and fertility abound and share inextricable links. Any threats to the fecundity of the land exist outside of its magnificent walls. Coleridge uses this image of an impenetrable fortress of sexual creativity in considering his own mind, desiring the same productivity in his poetic imagination. By creating this connection, Coleridge finds both a source of inspiration and blurs the lines between the poet and the poem. Coleridge describes Xanadu as a land where pleasure is a virtue, by both direct statement and appealing to the senses. The most direct insight into the luxury of Xanadu is given in Coleridge’s description of the land as a â€Å"pleasure dome† (2, 36). Besides stating it outright, Coleridge emphasizes the hedonistic nature of the land by appealing to the senses. A description of the hills mentions their â€Å"enfolding sunny spots of greenery† (11). These sunny patches both illuminate the vision of flourishing vegetation, while giving a tangible warmth in the same breath. Nearby, a garden is filled with â€Å"many an incense-bearing tree† (9), perfuming the air of the dome. In his consideration of the Abyssinian maid, Coleridge continues his representation of sensual pleasure. Although unable to remember â€Å"her symphony and song† (43), Coleridge knows that any recollection â€Å"to such a deep delight ‘twould win me† (44). This later recollection demonstrates that Coleridge’s vision includes the pleasure of sound, as well as the presence of sights and sounds. Coleridge continues to emphasize the hedonism of this vision, as he purposefully equips the musical maid with a dulcimer. The Oxford... ...nd overflowing with life: the product of sensuality and sexuality. Coleridge emphasizes the interconnection of these elements by weaving them seamlessly into the same lines. In a metaphor in which he consumes the fruit of this flourishing land, Coleridge can internalize the fertility of this land and utilize it for his poetic imagination. Just as Xanadu remains safely distanced from threats against its proliferation, near the end of his poem Coleridge draws a metaphorical line around himself to discourage creative invasions. The supposed history of the poem’s composition lends some irony to this suggestion, as Coleridge claims to have ceased his transcription to answer the door. Works Cited Abrams, M. H, ed. The Norton Anthology of English Literature. New York, NY. Norton and Company, 2000. The Oxford English Dictionary Online. 27 February 2008.

Directing Romeo and Juliet Essay -- GCSE Romeo and Juliet

Directing Romeo and Juliet In this assignment I will be directing act 3 scene one lines 35-136 of the tragic play Romeo and Juliet I intend to use lighting, music, tone, and facial expression to affect the audiences emotions. Introduction ============ In this assignment I will be directing act 3 scene one lines 35-136 of the tragic play Romeo and Juliet I intend to use lighting, music, tone, and facial expression to affect the audiences emotions. I have chosen to use theatre rather than film, because although film is more versatile with special effects etc, I think it is more dramatic when the action is happening directly in front of the audience. Shakespeare Assignment: Romeo and Juliet I would set the scene using a background of a typical Verona street without any indication of the time the play is set. I would continue this theme throughout the play, in the style of the clothes and inside buildings etc. I think this would be better than having the actors and scenery in a stereotypical Shakespearean style for example; having the actors in tights and breeches because it would be more original so would create more dramatic impact. I would keep the clothes and buildings simple and minimalistic so that they are easy to make and wouldn't distract the audience's attention from the story, acting, and language, which should be good enough to captivate the audience. I would dress the actors in colours that reflect the characters personalities and the mood they are in. Romeo would be all in white to represent purity; this would also remind the audience of his recent marriage to Juliet, illustrating the dramatic irony of this scene. In contrast to Romeo, Tybalt should be dressed in red and black, reflecting his "fiery" personality. In this scene Romeo should appear innocent and Tybalt nasty and evil. Benvolio, being irrelevant for the duration of the scene would wear beige or grey to give the impression of neutrality. Mercutio would be wearing bright colours, but still looking sophisticated because of his relation to the prince. He would have to stand out from the rest of the characters on stage because he is often the centre of attention. I would begin the scene with bright lighting, to make it seem like a "hot" day as previously described by Benvolio (act3/scene/1line2). As the mood intensifies t... ...ience anticipate the events that they know are destined to happen. With the entrance of Tybalt, the anger Romeo feels and the tension in the audience should reach its peak, as Tybalt rushes in angrily wielding his sword looking "furious" and "fiery". Romeo should now address Tybalt coldly, and draws his sword quickly, to show that he is now determined to kill Tybalt and avenge the death of his friend. I would have Romeo and Tybalt in the centre of the stage, with a strong spotlight following them as they fight, casting shadows, which would greatly enhance the anger and sadness the characters feel. Tybalt should be killed quickly, with none of the confusion in Mercutios death, to reinforce Romeos determination. When Tybalt is down, Romeo should kneel on the floor, his clothes now covered with both Mercutios and Tybalts blood. In his despair, he ignores Benvolio, who warns him about "the Citizens" and the scene ends with him alone in the bright spotlight, when he cries "oh I am Fortunes fool", directed at the audience, rather than Benvolio, once again echoing the theme of fate, as in the prologue and the visions both Romeo and Juliet have before this scene

Crucible Character Analyses of Abigail Williams Essay

The play â€Å"Crucible† is set in Salem, Massachusetts, 1692; the government is a theocracy. Hard work and church consume the majority of a Salem resident’s time. Within the community, there are regular disputes over land; but disagreement over land boundaries is not the only simmering situation that becomes out of control. Abigail, the orphaned niece to Reverend Parris, is cast out of the house of John and Elizabeth Proctor because of her part in the infidelity and adultery committed with John Proctor. Her uncle is suspicious of her hasty exit, and even more so when he discovers her dancing in the woods. In order to avoid punishment, Abigail claims to be victimised by evil, thus causing madness that spread like wildfire through Salem, claiming many innocent souls. Yet the one who escaped punishment, Abigail, is not innocent. However, her crime, invisible to the eyes of the judges, for whom faith had replaced psychology, is not to have trafficked with the Devil; it is, with truly diabolic determination, to have brought about the ruin of the woman she cannot forgive for being married to the one she loves. Throughout the play, the people of Salem are consumed by paranoia and fear. Abigail is able to prey on that fear, as well as every other humanly weakness, and with her cunning, she is able to bend others to do her will. With a combination of lies and threats, as well as her capability to take advantage of paranoia and hysteria, Abigail seems to be an untouchable antagonist. When first introduced to the antagonist, we develop sympathy for Abigail, â€Å"enters – a strikingly beautiful girl, an orphan, with endless capacity for dissembling.† We are told that she is â€Å"strikingly beautiful† which undoubtedly gives us a brief visual aid of her appearance, author Arthur miller may have chosen to tell us this to suggest she is seductive and he emphasises the fact that she is â€Å"beautiful† with a powerful adverb, â€Å"strikingly†. We then become aware that she is an â€Å"orphan†, this uses the readers emotions to develop some sympathy for abigail, one could also suggest that with out that adult, mature, and older figure to nurture and advise abigail, she has not only become very independent, but possibly unaware of morals which maybe be the reason for the heartless actions she makes to get her way. In addition we are told that she has an â€Å"endless capacity of dissembling†, she is able to hide her true emotions/feelings in all situations, this tells us that she is a deceitful, lier but very intelligent, resourceful and highly mischievous girl. Already without abigail actually speaking, her impression has twisted and turned but is a mainly negative view. In addition when ‘interrogated’ about her where about and the events that took place the previous evening, we begin to see a ruthless character unfold, one can perceive Abigail’s talent in the area of villainy. She lies continuously in order to protect herself. She denies her role in the witchcraft as she is being questioned by Parris, â€Å"But we never conjured spirits†. Not soon after she also refuses to admit other events that took place. â€Å"No one was naked! You mistake yourself, uncle!†. It is obvious that Abigail is a compulsive liar. She sees no problem with concealing the truth and would use imperatives to manipulate people even her own family to ensure and change their thoughts and opinions. Abigail is known to some as a ‘Jezebel’ figure, someone who is commonly associated with the devil and scheming. Abigail’s evil can be seen through her interactions with the other characters in the play; she threatens Betty and Mary Warren, â€Å"Let either of you breathe a word, or the edge of a word about the other things and I will come to you in the black of some terrible night and i will a pointy reckoning that will shudder you† this shows a side to her that is devilish, threatening and in a way powerful, these threats are used to manipulate the other girls, to take part in her evil schemes only for her selfish gain.

Stigma Obesity

Laura Mealer 4/11/12 Essay #9 Stigma: Obesity The fat stigma is becoming a global problem according to an article in the New York Times by Tara Parker-Pope. â€Å"Dr. Brewis and her colleagues recently completed a multicountry study intended to give a snapshot of the international zeitgeist about weight and body image,†(NY times). ‘The findings were troubling, suggesting that negative perceptions about people who are overweight may soon become the cultural norm in some countries, including places where plumper, larger bodies traditionally have been viewed as attractive,’ according to a new report in the journal Current Anthropology.Dr. Lear, who is studying rising childhood obesity in that country and in Canada, agrees the potential for stigmatization exists. †We know in developed countries that obese people are less successful, less likely to get married, less likely to get promoted,† he said. The researchers elicited answers of true or false to state ments with varying degrees of fat stigmatization. The fat-stigma test included statements like, †People are overweight because they are lazy† and †Some people are fated to be obese,†(NY Times).Using mostly in-person interviews, supplemented with questions posed over the Internet, they tested attitudes among 700 people in 10 countries, territories and cities, including American Samoa, Tanzania, Mexico, Puerto Rico, Paraguay, Argentina, New Zealand, Iceland, two sites in Arizona and London. Dr. Brewis said she fully expected high levels of fat stigma to show up in the †Anglosphere† countries, including the United States, England and New Zealand, as well as in body-conscious Argentina. But what she did not expect was how strongly people in the rest of the testing sites expressed negative attitudes about weight.The results, Dr. Brewis said, suggest a surprisingly rapid †globalization of fat stigma. † But what appears to have changed is the level of criticism and blame leveled at people who are overweight. One reason may be that public health campaigns branding obesity as a disease are sometimes perceived as being critical of individuals rather than the environmental and social factors that lead to weight gain. †A public health focus on ‘You can change,' or ‘This is your fault,' can be very counterproductive,† he said. †Stigma is serious. ‘ â€Å"Key ideas in the global model of obesity include the notions that obesity is a disease and that fat reflects personal and social failing. In all our samples, some fat stigma is evident, and the global model suggests that the cultural shared idea that fat or obesity is a basis for judging the social and personal qualities of the individual. However, and critically, the shared cultural model also suggests the culturally correct perspective that expressing those judgments too obviously or forcefully is not acceptable. (JSTOR) â€Å"In summar y, these analyses suggest that norms about fat-as-bad and fat-as-unhealthy are spreading globally and that cultural diversity in conceptions of ideal or acceptable body size appears to be on the decline. Certainly, negative and especially discrediting ideas about fat/obesity are now seemingly much more widespread than a thorough reading of the available ethnographies would suggest. This process of cultural change appears to be happening very quickly, likely representing homogenization in beliefs in this domain just within the last decade or two.This leans us toward the age-old anthropological challenge of better understanding what drives the cultural diffusion of new ideas and feeds their gaining salience. Our findings hint that newer forms of educational media, including global public health campaigns, may be driving this trend. Whatever their source, it is important to understand the dynamics of fat-stigmatizing cultural models because of their potential influence on both physical and social well-being of individuals in a wide range of socioecological contexts. †(JSTOR)