Zoo Questions

Name: _____________________________ Date: ________ sec. ___ Survey of Animals: Zoo Questions Please type the answers of the following questions: 1. What function, other than hearing, do the African Elephant’s ears serve? Answer: _______________________________________________________________________ 2. What color is the rump of a Hamadryas Boboon? Answer: ________________________________________________________________________ 3. What is the life span of the Serval? Answer: ________________________________________________________________________ 4.What is the diet of the DeBrazza Monkey? Answer: ________________________________________________________________________ 5. The Bateleur Eagle gets his name from the French word for _____________________. ________________________________________________________________________ 6. The Nile Lechwe is known for what? Answer: ________________________________________________________________________ 7. Meerkat packs may consist of how man y individuals? Answer: ________________________________________________________________________ 8. How long will Kirk’s Dik-Dik survive in captivity?Answer: ________________________________________________________________________ 9. What bird is considered noisy and gets its name from a loud instrument? Answer: ________________________________________________________________________ 10. What is the smallest (and cutest) species of fox? Answer: ________________________________________________________________________ 11. The spiny liana is cracked by what animal? Answer: _______________________________________________________________________ 12. Which area of Africa does the Dwarf Crocodile inhabit? Answer: _______________________________________________________________________ 13. Which of the African monkeys is the most arboreal? Answer: ________________________________________________________________________ 14. What is the life span of the African Bullfrog? Answer: ________ ________________________________________________________________ 15. What are the three greatest threats to the Savannah Monitor? Answer: ________________________________________________________________________ 16. Who is the dominant of the group in Patas Monkeys? Answer: ________________________________________________________________________ 7. How fast can the Patas Monkey run (in miles per hour)? Answer: ________________________________________________________________________ 18. What is the chemical responsible for the Chilean Flamingo’s color? Answer: ________________________________________________________________________ 19. How do Yellow-Footed Tortoises recognize each other? Answer: ________________________________________________________________________ 20. What is the maximum speed of the Collared Lizard (in miles per hour)? Answer: ________________________________________________________________________ 1. The Vampire Bat was instrumental in development of medic ines in which field? Answer: ________________________________________________________________________ 22. What is the largest land predator on Earth? Answer: ________________________________________________________________________ 23. Raccoons are related to which displayed species in the zoo? Answer: ________________________________________________________________________ 24. What is the common weight of the Red Wolf (in pounds)? Answer: ________________________________________________________________________ 5. How fast can the Grizzly Bear run (in miles per hour)? Answer: ________________________________________________________________________ 26. What is the most developed sense in the American Bison? Answer: ________________________________________________________________________ 27. Few predators have withstood three centuries of settlement in North America. Name the one that the zoo displays: Answer: ________________________________________________________________________ 28. What sets the North American River Otter’s vision apart from the of many land animals?Answer: ________________________________________________________________________ 29. Why is the Polar Bear on display at the zoo so skinny? Answer: ________________________________________________________________________ 30. How does the California See Lion fend off intruders? Answer: ________________________________________________________________________ 31. Describe five differences between the Polar Bear and the Grizzly Bear: Answer: 1) †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 2) †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 3) †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. ) †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 5) †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. ________________________________________________________________________ 32. What is the main food source for the Arctic Fox? Answer: ________________________________________________________________________ 33. What was the most amazing thing I learned visiting the zoo? Answer: _______________________________________________________ _________________________________________________________________________________________________________________________________________________________________

Articles of Confederation provided the United States with an effective government Essay

Using the documents and your knowledge of the period, evaluate this statement. From 1781 up until 1789 the United States government was based off of the principles of the Articles of Confederation which were created after the Revolutionary War. The articles of confederation created a republic which limited its leaders from much of the powers needed in order to successfully govern the country. This lead to many state disputes, and political struggles. On the contrary, the Articles set up a framework for the U.S. Constitution that lead to a strong centralized government and the prosperity of the United States. The limits put forth by the Articles of Confederation led to state and political disputes, and foreign affairs, but it also had strong and effective characteristics to support a government. The Articles of Confederation’s strong views of a republic and steps set up to avoid autocracy lead to many disputes in the states. Fresh off of the war for independence with Britain, the founding fathers wrote the Articles of Confederation to ensure that their new independent country would not resemble the Autocracy that they had just liberated themselves from, so the created a republic. Their first attempt, the Articles of Confederation, caused many problems throughout the country. A major problem causer was the clause that majority vote had to be achieved in order to pass a law. This was a major problem between states for instance a letter from Rhode Island to congress stated, † I enclose their unanimous resolution [to reject] the recommendation of congress, respecting their impost on imported goods†¦Ã¢â‚¬ (document a) . Rejections of laws were a major problem between states at the time because some laws would benefit states in the south but not the north making it very difficult to pass a majority vote. One states interests could effect another’s simply by rejecting to vote. Another major  problem with the government the articles set up was their inability to make any revenue. Since the national government did not have the power to tax states they had very little. The quote by a former soldier of the revolution, â€Å"Every class of public creditors must know the inability of congress to pay their demands, unless furnished by the means of several states†¦ (doc C)† shows Congress’ lack of money and their inability to supply the people with what they need. In order to successfully run a government money is needed and the articles of confederation made it very difficult for congress to make any. In John Jays letter to George Washington, his fear of the government collapsing due to lack of money and power make known the problems the Articles of Confederation have brought upon the nation. † †¦We are going and doing wrong, and therefore I look forward to evils and calamities, but without being able to guess at the instrument, na ture or measure of them†¦(doc G)† Jay predicts that if the country stays on the path it is heading, the rich and powerful will obtain more power then the government leading to the complete failure of the articles of confederation. While many changes were made by the Articles of Confederation in order separate their habits from that of Great Britain, it caused many disputes between the states and federal government. After the Revolution and the Creation of the Articles of Confederation, foreign affairs began occurring quite frequently. After the war with Britain, exports between the United States and Britain decreased from around 6 million dollars to around 4 million and stayed their consistently from 1784 to 1792 (Doc B) . The decrease of trade was a major problem for a new country in the beginning stages of development, and also the population was rising each year which lead to a greater demand of trade goods and foods. Another foreign affair that arose was loyalists who had left the country for safety wanted payment of debts owed to them before the war. Under the articles of confederation they were not required to receive former debts and Britain was required to cede all territories in their limits to the U.S. (doc D) The demands ensuing to the war lead Britain, France, and Spain to restrict U.S. trade with their territories. Foreign affairs also arose with Spain for they had control of much of the land west of the Mississippi River. Another speech by John Jay, this time to Spain’s minister Diego de  Gardoqui, tells of Americans ambitious of expanding westward and that the jump to use the Mississippi and its territories are imminent. Minister Gardoqui disagrees and feels the people are 15-20 years away from wanting to move west.(doc F) Since their is no restriction in the Articles of Confederation to move west, like their was by Britain in the Proclamation of 1763, this causes a problem between Spain and the U.S. The Articles of Confederation lead to many foreign affairs following its establishment in 1781. Though many problems arose stemming from the Articles of Confederation it also had its positive affects towards the united states government. The main goal of congress when writing the document was to limit the power of the federal government and leave the power in the hands of the people. It may have limited the power of congress to much too large of an extent but it succeeded in limiting the government. Also the fundamental rights of the people, policy on foreign affairs, and establishment of a democratic republic created a sturdy framework for the U.S. Constitution which is still prominent today. The belief that the Articles of Confederation made a solid structure for the Constitution was shown by Rawlin Lowndes in his speech to the South Carolina State of Representatives. The quote by Lowndes, † I solemnly called on the house to consider whether it would not be better to add strength to the old confederation, instead of hastily adapting another; asking whether a man could be looked on as wise, who, possessing a magnificent building, upon discovering a flaw, instead of repairing the injury, should pull it down†¦(doc H)†. Lowndes describes the Articles of Confederation as a â€Å"magnificent building† that has minor flaws that easily could be repaired into a strong basis of government. The Articles of Confederation have the right concepts, they just need some improvements to overcome the many problems associated with them. Between 1781 and 1789 the Articles of Confederation set up an effective means of government that worked well for the short time it was in use, but it also developed problems between states, politics, and foreign affairs. In the documents, problems were brought up describing the limited power congress had, and the troubles between the U.S, Britain, and Spain. These  problems lead to the reformation of the Confederation after 1789 in which the U.S constitution was born.

Psychology. About stress Essay Example | Topics and Well Written Essays - 500 words

Psychology. About stress - Essay Example Later, he experimented upon animals by injecting toxic chemical in their bodies and found three common reactions. The organisms’ adrenal glands increased, their organs which produced the white blood cells and their lymph nodes initially expanded and shrank later, and thirdly, their intestines and stomachs bled. These reactions were termed by Hans Selye as the General Adaptation Syndrome. He said that when an organism or a human being gets into stress, the usual physiologic systems are interrupted and the resulting changes cause diseases. The physical and emotional upset organisms experienced upon injection of the toxic substance caused such patterns to develop which would cause infection, disease and ultimately death if left untreated. The General Adaptation Syndrome Selye talked about can be divided into three phases namely the alarm reaction, resistance and exhaustion (â€Å"Health News Network†). In the Alarm Reaction Stage, the resistance is lowered because of initi al depression of the immune system. This increases the tendency to acquire disease. When the stress does not stay for long, the individual recovers. With the passage of time, the body adapts to the rising levels of stress. This increases the body’s ability to resist the consequential disease.

Beloved by Toni Morrison Essay Example | Topics and Well Written Essays - 1250 words

Beloved by Toni Morrison - Essay Example Years later, Beloved, literally believed to be Sethe’s daughter returns to haunt her home in Cincinnati. One major theme of the novel is the mother-daughter relationships. Sethe and her children share strong maternal bonds that prevent her development by inhibiting her individuation. This strong bond is the one that pushes her to kill her own daughter rather than let her go into slavery (Bloom 58). Sethe and Beloved are both emotionally impaired due to Sethe’s enslavement that separates them and makes Sethe not to provide maternal care for her, thus loses her sense as a mother, while Beloved lacks familial identity. The other theme is the impact of slavery, which is mainly psychological. The experiences of slaves cause them to repress the bad memories in trying to forget the past, a repression that causes a fragmentation of their personalities thus loss of their real identities. This is the case with Denver, Paul D, and Sethe, who experience the loss of identities but B eloved makes them accept their past memories and helps them reintegrate their original selves. The relationship between the slaves and white people in the Beloved is not one that augurs too well. This is because the whites use the black people as slaves, and make them feel inferior to them. For instance, Sethe’s memories of her oppression by the whites are what make her prefer to see her children dead rather than go to suffer at the brutal hands of the masters. The white looks down on the slaves, and treat them inhumanely without minding their lives. This reveals when Seethe’s breast milk is stolen from her, denying her child her right. However, some whites treat their slaves better such as Mr. and Mrs. Garner, and do not oppress them at all. This results in some slaves hating and rebelling against the whites while those treated well love their masters. From the moment Beloved re-appears in Sethe’s life, her life begins to change. She first looks at her daughter as just that; her long dead daughter who has come back, but she later comes to realize that she is more than that. One, her coming back arouses painful memories such as her milk being taken away from her, plus when Nan nursed her daughter together with white babies. Second, she comes to realize that Beloved represents her African mother, and is a reminder of what a mother should be. This is because she realizes that her mother was hanged because she could not run away without her (Grade Saver). Denver easily recognizes her sister because they had an intimate oneness, and Denver had even drank her blood, making them one flesh. The Beloved has a structure that is largely loose in that it does not proceed continuously in one line but employs the use of much storytelling and flashbacks. Paul D is the one who introduces most of the flashbacks such as his life in Kentucky, Delaware, and the Ohio River. When it is not flashbacks, the author uses different characters to narrate stories and keep the plot going. There are narrations by Paul D, Denver, Sethe, Beloved, and other characters. Morrison assumingly employs the variation in structure to accommodate various characters to capture more experiences so the learner is exposed to more of what slaves endure. Memory has two functions in the Beloved novel. One, the author uses re-memory, which is

Software Quality Assurance Plan for the Agate Ltd Case Study Research Paper

Software Quality Assurance Plan for the Agate Ltd Case Study - Research Paper Example Tools that will be used in QA include program monitors, documentation tools, static or dynamic test tools, and operating system utilities, tree diagram, prioritization matrix and affinity diagram. The program monitors are allow partial or full monitoring of program code such as code coverage, program animation, instruction set simulator among others. The affinity diagram is used to analyze the problem in an organization. All processes in an organization are interrelated; thus, in case there is a problem in any area, it can affect the quality of the final product or service. Thus, through affinity diagram, managers will be able to organize the data and extract essential information for the Agate Ltd case study. Methodology that will be used is the black-box testing method. Black-box method deals with the functionality of the entire system. This methodology consists of graph based testing method, error guessing, BVA techniques, Boundary value analysis among others. Thus, this method will be used because it has several advantages of the others such as the tester can be non-technical, it can be used to verify contradictions in actual system, as well as specifications, and the test cases can be designed once the functional specifications are complete. It is essential for an organization ensure quality of products in each stage so as to meet the demands of customers consistently. For this reason, the QA will monitor the methods and tools used to maintain and control versions of system products through verification and validation of the products. Verification refers to the process of checking the software meets the functional requirements while validation ensures that the needs of customers are met i.e. it ensure the all the functionality expected by the customer is implemented. In addition, even a slight deviation from the functional specification is said to be a fault based on the severity of the case. Also, during the

How different was Sparta from other Greek States Essay

How different was Sparta from other Greek States - Essay Example Some scholars feel that other states felt that Sparta was too obsessed with war and power and that this is the reason why this stated paid attention to the development of a strong army and their involvement in war. Additionally, this is the city that gave a woman the right to conduct business and train for war. Resultantly, other states felt safe to associate with Sparta especially during periods of war. A deep analysis of the Sparta state will unveil the difference of this state compared with other states. The Sparta social structure comprised of three categories of individuals; the citizens, Periokioi and the Helots. The citizens formed the large group of native citizens who were the original habitants of the land. This group of people formed the loyal part of the society. They formed part of the army and had the absolute right to own any kind of property. In the structure oligarchy that existed, the citizens were the superior people that dominated the society. The Periokioi were a group of people who had migrated to this society. They formed the intermediate group that separated the inhabitants and slave. Since this group was way below the habitants, they were not allowed to partake in military action but could own land and control business. They trusted than the minority group of the Helots in this society. The Helots were those people who had entered the country and did not have the right to own land nor participate in war. The formed the source of labour and worked in the lands a nd business enterprises in the society. As observed, the country applied oligarchy unlike other nations such as Athens that were fully democratic1. On this note, this was a good environment only for the original habitants while the aboriginals were treated as inferior beings. The military system in Sparta was stronger than any other in the whole of Greece. The Original citizens in this state were compulsorily supposed to attend military training at their early age. Unlike in

Shackleton Case Questions Study Example | Topics and Well Written Essays - 500 words

Shackleton Questions - Case Study Example From this discussion it is clear that  Shackleton’s utmost strong point was his ability to keep the team together and reduce their tension even in situations of dire crisis. He managed to take fast effective decisions for the need of the moment especially when there was shortage of food on the ice and the decision to abandon the ship at the right time. However, the mains weakness lies in his shortsightedness regarding food supplies. We find examples of the men feasting and entertaining themselves with the flesh they hunted and whatever they brought along but care could have been taken to ration the food from the very beginning such that the animals could be kept alive. In fact his decision to kill McNeish’s pet worked against his relation with his subordinate since the latter never pardoned him for this.This report highlights that  Shackleton knew that an effective leader needs to inform the team members about the rewards and incentives lying in the path of achievin g the goals. He promised his men that they will be compensated in full despite the fact that their ship was lost.   His tactics are similar to that of Agamemnon who sent for Achilles with the promises to shower him with gifts of women, land and riches in order to win against Troy.  Machiavelli’s principles of ruling show some great ideas of leadership some of which have already been applied by Shackleton. According to Machiavelli, a leader can be â€Å"deceitful when it suits his purpose and not appear that way†.... He managed to take fast effective decisions for the need of the moment especially when there was shortage of food on the ice and the decision to abandon the ship at the right time (Koehn, 2010, p.12). However, the mains weakness lies in his shortsightedness regarding food supplies. We find examples of the men feasting and entertaining themselves with the flesh they hunted and whatever they brought along but care could have been taken to ration the food from the very beginning such that the animals could be kept alive. In fact his decision to kill McNeish’s pet worked against his relation with his subordinate since the latter never pardoned him for this (Koehn, 2010, p.30). When the dogs were shot in front of the men, the sight was disturbing to all of them (Koehn, 2010, p.16). In a situation where men are fighting for their own survival such a sight of death at the leader’s instructions might give them little confidence about a safe return. 3. What parallels do you see between Shackleton and other leaders whom you have studied? Shackleton knew that an effective leader needs to inform the team members about the rewards and incentives lying in the path of achieving the goals. He promised his men that they will be compensated in full despite the fact that their ship was lost (Koehn, 2010, p.15). His tactics are similar to that of Agamemnon who sent for Achilles with the promises to shower him with gifts of women, land and riches in order to win against Troy (Bass & Bass, 2008, p.366). Machiavelli’s principles of ruling show some great ideas of leadership some of which have already been applied by Shackleton. According to Machiavelli, a leader can be â€Å"deceitful when it suits his purpose and not appear that way† (Heijden,

The US Airline Industry Essay Example | Topics and Well Written Essays - 1750 words

The US Airline Industry - Essay Example This would include a political, legal, and economic perspective. Porter Five Forces Model and four Ps of marketing would also be used. Discussion Four Ps of Marketing Product/Service The service provided by the airline industry is of air travel. However, over the years, the scope of the service provided by the airline has widened and now it is only about air travel or the core service but it about the augmented service as well. These include food, internet, TV, comfortable seats, business-class travel experience, and other benefits. Consider the example of JetBlue, which has emerged as a serious player in the industry in almost 12 years. The airline is following the same business model of low cost as introduced by Southwest and followed by Frontier Airlines, Horizon Airlines, Air Tran and others. However, JetBlue has been doing one thing different, which is that, unlike other low cost players, it has extended its augmented product to include many other amenities, which has attracted thousands of customers to JetBlue (Vasigh et al., 2008, pp. 105-106). Promotion As mentioned earlier, airline industry also faces a seasonal demand pattern where there are more passengers during the vacations and holidays to specific destinations, therefore, airlines engage in aggressive promotional activities in order to ensure that they capture the most share of the pie. Furthermore, slowing growth, saturating market and high fixed also force the airline industry to engage in active and aggressive advertising. This is also the reason why that sales promotion is common within the airline industry in an attempt to attract customers (Belobaba et al., 2009, pp. 52-54). Direct marketing and personal... The airline industry is at the heart of US economy because of the direct and indirect GDP and employment it generates. The essay explores application of international business theories on the US airline industry. Although the core service is of air travel, the augmented service that includes secondary benefits such as food, entertainment, comfort and other have been in the spotlight lately. US airline industry actively uses dynamic pricing to ensure that it could squeeze maximum possible revenue from the customer, which they are willing to pay. The promotional mix used by the industry includes advertising, public relations and active sales promotion. Agents also engage personal selling and direct marketing to the big clients as well. In light of the Porter Five Forces Model, it appears that the US airline industry faces heightened competitive pressures with increasing bargaining power of customers, threat of substitutes and supplier power. The macroenvironmental analysis reveals that the airline industry will continue to face political legal pressures because of its economic and security importance. Although, if the current wave of mergers and acquisitions continue for a while then it highly likely that it would decrease the competition, rationalize pricing and remove the excess capacity. Nevertheless, smart players are more likely to come with the right marketing mix and positioning strategy and would leverage their strategic positioning to make profits as Southwest airlines has been doing for the past many years.

The Project to Open a New Tesco Superstore Case Study

The Project to Open a New Tesco Superstore - Case Study Example In order to conduct stakeholder analysis for opening new Tesco superstore, the researcher will use Mendelow’s (1981) Matrix. For sake simplicity and preciseness, UK based operation of Tesco superstore will be used as reference point. UK based customers and local society members who will buy food items and grocery items from Tesco superstore. These stakeholders will show interest in the project because opening a new store will increase their convenience for shopping. Their motivation to support the project will be directed by the desire to shop quality food items, chance to get associated with the Tesco brand name etc. Project workers, Suppliers of raw material. These stakeholders will show interest in the project for monetary interest, opportunity to get financial benefit by signing the long-term contract with the company. Their motivation to support the project will be directed by business benefits, remuneration, and higher supply margin. Top-level managers, of Tesco superstore, project managers, and government. These stakeholders will show interest in the project due to political reason, earning corporate tax, monetary compensation for project completion and annual salary. Same reasons will motivate these stakeholders to show green signal to the project. Financial institutions who lend the money to the project, social activists, and local community members. The will show interest in the project for financial and environmental sustainability reasons. Motivation to support the project will be directed by environment sustainability assurance from Tesco, assurance timely repayment of debt with additional interest, good corporate social responsibility (CSR) reputation of the company. In such context, it is suggested to Tesco superstore to use multiple communication channels to communicate the project scope top stakeholders and also engage stakeholders (Jugdev, 2012).

UK Foreign Holiday Market Essay Example | Topics and Well Written Essays - 1500 words

UK Foreign Holiday Market - Essay Example In the past few years, this market has grown at a modest rate of over 4% annually, with the significant consumer-groups in the market being families, youth, and the over-50 age group. However, the effects of global recession on this market are now gradually becoming evident. The demand for foreign holidays fell by around 15% in January, 2009 alone as the credit crunch tightened its grip on the UK economy (Devine, D 2009). A lack of consumer confidence and rising fuel prices have also recently added in, further dampening the demand. In addition, the unpredictability of British weather due to global warming, and a failure on the part of UK holiday-resorts to match services in terms of price and quality with that of their foreign competitors (Research and Markets 2007) have lowered the demand for UK holidays by foreign tourists. The overall effect is that the demand-curve for the market has shifted leftwards. Other factors like the threat of terrorism, war, and natural disasters in current years have also contributed to the left-shift of the curve, thereby resulting in lesser quantity being demanded at a lesser price in the market. However, the economic gloom does have a bright side for this market. The airline industry has been badly hit by the crunch due to which almost all air-fares have been dramatically reduced. Consequently, consumers are able to book cheap flights to almost anywhere in the world, and the overall package cost of foreign holidays has decreased. There has been an increase in demand for trips to Spain and Mediterranean shores - which surveys have pointed out as favourite holiday destinations - by the British (Holiday Watchdog 2008). This reduction in total price of the product has resulted in a downward movement of the market equilibrium point along the demand-curve. Moreover, cheaper flights also mean that UK has become more available internationally to foreign tourists, since they can now afford air-travel for leisure purposes. The fierce competition between Airbus and Boeing has created an over-capacity of aircraft, and is expected to result in an explosion of discount carriers offering flights at affordable prices. Thus, there has been an increase in the quantity demanded. The ocean cruise market, which is a complement of the overseas holiday market, is expected to reach 1.5 million annual passengers by the year 2010 (Travel Weekly 2005). This high growth prediction means that its complements (like the foreign holiday market) will also consequently grow. Also, surveys by the Confederation of Public Transport have shown that a very high priority is attached by British to the annual holiday as an item of family expenditure due to changes in consumer attitude and lifestyle over modern times (Scottish Tourist Board, et al 2006). Thus, the economic downturn has not put off the British from taking foreign holidays. On the contrary, the current poor weather in the UK has helped the tourism industry by encouraging even more people to go abroad for the summer, particularly to places that "offer consistently good weather" (Property Wire 2008). Infact, psychologically speaking, the British are more eager than ever to go on a holiday in this potentially depressing situation since one way they believe "to escape the current economic gloom is to take a foreign holiday" (Property Wire 2008). Being now considered as an annual necessity rather than a luxury, the

Cultural diversity in professional comm Essay Example for Free

Cultural diversity in professional comm Essay While America fought World War II in Europe, riots broke out in the streets of Los Angeles targeting young Latinos. They strived for the same freedom enjoyed by whites, but were treated as poorly as African Americans of the era. In effect, they tried to disassociate themselves from this faction. Young Latino men referred to themselves as pachucos and sported oversize suits known as zoot suits. In the film Zoot Suit Riots, Joseph Tovares remarkably portrayed the difficult lives of Mexican Americans in the 1940s. Zoot Suit Riots is a powerful film that explores the complicated racial tensions, as well as the changing social and political scene leading up to the riots in the streets of Los Angeles in the summer of 1943. White Americans, police and service men targeted Latinos with their racist attitudes. Tovares argues that these Mexican American adolescents were victims, but they also stood up for themselves and fought back to gain the respect they felt they deserved. This generation of Americanized Latino children wanted to be recognized as American on their own terms. To distinguish themselves from their parents’ generation, they became zoot suitors, but learned that was not enough as racism was a widespread phenomenon across America. Tovares accurately portrays the lives of Mexican Americans victimized by highlighting the Sleepy Lagoon Case. To white Americans in Los Angeles, the murder was proof that Mexican American crime was spiraling out of control. Tovares, however, uses this as evidence to support that they were mistreated because the Mexican American suspects taken into custody all wore zoot suits. This reinforced the opinion white Americans had of Mexican Americans and their apprehension of men in zoot suits. He also interviewed both Mexican Americans and White Americans who lived during this event, even some participants in the riots. His use of oral history throughout the film is captivating as you hear the voice and emotional reaction of a person who actually experienced these riots. Tovares interviews Hank Leyyas sister, an important defendant in the case, who lived through the crime, the trail, the city, everything. She remembers it all and how much it affected her brother’s life. Her emotions when describing the riots helps the viewer understand how people were affected. Sailors of the time admitted in their interviews to attacking Mexican Americans and Mexican Americans admitted to reciprocating the behavior. Tovares’ film reflects on the racist abuse Mexican Americans received not only from White American citizens, but also from authority figures. Edward Escobar’s historical article, Zoot-Suiters and Cops, supports Tovares’ argument that zoot suitors were seen as dangers to society and this brought upon the attacks on them, but Escobar focuses more on the police aspect of the riots. Escobar argues, â€Å"Police, along with local civic leaders, believed that Mexican American youth, especially young males, were inclined toward violent crime. This belief merged with police officers’ frustration over their inability to crack down on the alleged lawbreakers and led to their allowing servicemen to beat and humiliate the zoot-suiters† (Escobar, 1996). Tovares agrees that police were problematic, but focuses more on the Sleepy Lagoon Case involving Mexican and White Americans who participated or lived during the riots. Escobar states that the LAPD consistently arrested Mexican Americans at a higher rate than the general population. During the war these numbers increased, especially arresting young Mexican Americans. However, Escobar argues that police officials misinterpreted their own statistics. Reported crime actually fell during 1942 and 1943, the years of the alleged crime wave. These â€Å"increases in arrests resulted more from changes in the law and in police practices than from changes in Mexican American behavior. Specifically, new immigration and draft laws for adults and curfew ordinances for juveniles, created new classes of laws that Mexican Americans violated, increasing the arrest statistics† (Escobar, 1996). The LAPD also employed selective enforcement in barrios than in white sections like the curfew ordinance as an example. This evidence strongly supports Escobar’s argument that the LAPD was more inclined towards the harsh treatment of Mexican Americans. Escobar focuses more on this than Tovares did throughout the film. While Tovares and Escobar both focus on the discrimination zoot suiters felt, Thomas Guglielmo shifts his focus to Mexican American racism was not only in Los Angeles but also in Texas in his historical article, Fighting for Caucasian Rights. Guglielmo argues that Mexican Americans who were born in the United States showed that they only cared about the United States but needed to be looked at again. They seemed active, focusing on being American, distant from Mexico but really these Mexican American’s due to the Good Neighbor policy still identified themselves with Mexico. Compared to Tovares, Guglielmo looks at American battles in Texas and legislative matter compared to the Los Angeles zoot suit riots. Guglielmo goes against Tovares perspective and says that there is more to Mexican American racism outside of Los Angeles. During the war more people of Mexican descent lived in Texas than any other state. These Mexican Americans that lived here are fighting for equality through legislation unlike the Mexican American’s in Los Angeles who are fighting for the same but by rebelling out through wearing zoot suits and adapting to that way of life. Both Toraves and Escobar perspective is on zoot suiters and police interaction where as Guglielmo focuses more on just Mexican Americans in Texas. Guglielmo argument is not as convincing to me because he focuses too much on legislation and Mexico compared to Toraves and Escobar focus on the discrimination Mexican Americans faced during the war that resulted in the riots. Toraves, Escobar and Guglielmo all highlight the struggle Mexican American’s faced fighting for equality, just presented it in different ways. Tovares strongly emphasized why the Mexican Americans wanted to break free. They were tired of being told what to do, where to go, what to wear. They created an image for themselves that separated them from everyone else. Escobar stated that the zoot suit phenomenon resulted primarily from the racism, discrimination, and extreme poverty that people of Mexican descent faced in the United States (Escobar, 1996). It did not necessarily give Mexican American’s more rights and equality’s that they fought for indirectly but brought national attention to their race that they needed to bring attention to fight for themselves. CITATION: Esobar. Zoot-suiters and Cops: Chicano Youth and the Los Angeles Police Department during World War II. 284-303. 1996 Guglielmo. Fighting for Caucasian Rights: Mexicans, Mexican Americans and the transnational struggle for Civil Rights in World War II Texas. 1212-1237. 2006 Tovares, Joseph, dir. Zoot Suit Riots. 2002. PBS Home Video. DVD-ROM.

Mauritius National Pension Fund Financial Analysis

Mauritius National Pension Fund Financial Analysis The National Pension Fund and its financial implications on the economy of Mauritius Chapter 1: Introduction The philosophy of the National Pension Fund (NPF) includes the idea that one ought to earn a reasonable proportion after pension age of what one earned during ones working life. If you have contributed to the NPF and built up your pension points, you will get a pension which, when added to your old-age pension will be a reasonable. The National Pension Fund scheme is proposed as another mandatory saving for retirement. Once it is set up, the NPF will fit into Pillar 2 of the Multi-Pillar Model of the World Bank. The NPF nevertheless will not replace provident funds or retirement mutual funds, but rather improves saving channels for future retirees. Mauritius is found in the developing countries group where contractual savings, savings with insurance companies and pension funds exceed 40 percent of Gross Domestic Product and which represent a greater potential force in the domestic financial system. Pension funds account for 75 percent of contractual savings. The pension system is a balanced and well-managed multi-pillar. In Mauritius there have not many authors that have write specifically on that subject, that is, financial implication of National Pension Fund on the Mauritian economy. I have mainly used the research made by other analysts in other countries and try to apply it on the Mauritian economy. Obviously the result will not be the same, but try to make an estimate of it. Objectives of that Project: Analyse the overall financial implication of NPF Testing the financial effect of NPF on national savings Estimating the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF Chapter Outline Chapter one gives a brief overview of how the project is carry on. Chapter two makes an overview of the National pension fund, its evolution, structure and its financing source as well as government expenditure and the future of NPF. Chapter three is the literature review, that is, what writers around the globe have commented on the pension system. Chapter four is the research methodology. The research is carried out using regression equation to examine the financial implication NPF on our variables. Chapter five then come the analysis based on the results obtained, that is the financial effect of NPF on national savings and the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF. Then finally chapter seven will include suggestions and conclusions. Chapter 2: Literature Review Introduction Pension funds is be defined as forms of institutional investor, which collect, pool and invest funds contributed by sponsors and beneficiaries to provide for the future pension entitlements of beneficiaries (E PhilipDavis 1995). Pension fund offer individuals the mean to collect saving over their working life so as to finance their consumption needs in retirement, either by means of a lump sum or by provision of an annuity, while also supplying funds to corporations, households (via securitised loans) or governments for investment or consumption. Bodie(1990a) has formalized pension funds function as a form of retirement income insurance. E Philip Davis (1995) suggests that pension funds perform a number of the functions of the financial system more efficiently than banks or direct holdings. Their growth complements that of capital markets and they have acted as major catalysts of change in the financial landscape. But this is not the only reason for growth. It is also a consequence of fiscal incentives and benefits to employers, as well as growing demand arising from the ageing of the population. Pension funds are typically sponsored by employers, such as companies, public corporations, industry or trade groups; accordingly, employers as well as employees typically contribute. Funds may be internally or externally managed. The pension system is commonly divided into three pillars. The first pillar is the pay-as-you-go system based on payments by public institutions which are mainly funded by tax revenues. The second pillar constitutes fully funded pension funds with mandatory membership and the third pillar is based on fully funded pension saving schemes with voluntary membership. In a pay-as-you-go system, each generation pays for the costs of the currently retired in return for a commitment for the same treatment during its own retirement. Workers who spend their entire work and retirement life under a PAYGO system with constant tax rates will earn a real return on their contributions equal to the growth in the workforce plus the growth in the real wage (Samuelson, 1958, and Aaron, 1966). Pension funds provide millions of people in the world security and comfort in old age. Pension funds represent the savings of millions of people, and as Paul Myners says, the ability of funds to invest these assets effectively has a profound impact on their economic well being. Because so many people depend on pension funds to provide for their futures, ensuring the funds serve the needs of their members is a priority for Government. The social security system on the other hand as stated by law, guarantees people covered by its provisions either because they perform an occupational activity or meet the requirements established for non-contributory type social security, as well as dependent members of the family or similar, adequate protection in the contingencies and circumstances. Social Security has been defined as the protection which society provides for its members through a series of public measures against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, invalidity, old age and death; the provision of medical care; and the provision of subsidies for families with children. In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. The Social Security tax has been raising more money than is needed to pay for current benefits, in order to build up a surplus to help finance the retirement of the Baby Boom generation. The money is used in a sense to finance the government deficit, just like any other money the government borrows, Dean Baker (1998). The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. So Social Security will be the foundation of your retirement income. Thats because: You wont outlive your Social Security retirement benefit. It will be there for you for the rest of your life. Your Social Security benefit wont lose its value. From time to time, Social Security benefits are adjusted so they always keep pace with inflation. Why National Pension Fund? Worker myopia, or lack of foresight poor planning occurs because people give too little considerations to their future economic needs when making decisions about saving for retirement. Most people seem to have a natural inclination to live for today and avoid thinking about old age and death. Hence, they give very little systematic thought to the financial issues of old age until they come face to face with them. By the time they recognize they may have a problem when they retire, it is usually too late to fix. Government intervention through NPF has help people set aside a portion of their earnings when they are working so that they have an adequate income when they retire. Without compulsory contributions for retirement, myopic workers would not save enough to ensure an adequate retirement income and poverty would result. Another rationale for the existence of the compulsory contribution to the NPF is to protect the prudent that saves for retirement against those who do not save. Under a purely voluntary system some will contribute, others will not. As Boulding (1958) puts it in his argument, those who do not insure will have to be supported anyway-perhaps at lower levels and in humiliating and respect-destroying ways when they are in their non-productive phase of their life, but that they will escape the burden of paying premiums when they are in their productive phase. In fairness to those who insure voluntarily and in order to maintain the self-respect of those who would not otherwise insure, contributions for retirement should be made compulsory. Hence, mandatory contributions are necessary to achieve the retirement savings results that people need to have so as to have an adequate standard of living in their retirement years. Pension funds are also an important source of capital accumulation that can be used for different purposes as the build up the basic of national infrastructure, power stations and electric networks, Olli E. Kangas (2006). The Finnish case demonstrates that it was possible to unify social policy goals with the economic goals of building up modern industrial market economies. The Finnish experience has serves as a good example of how social policy has been successfully used as a developmental strategy, Mkandawire (2001). Pension funds are not only vital to the pension holders they provide for. They are also key players in the economy as a whole. Government Budget Pension funding issues have an important, but often hidden, impact on the finances of state governments, J. Fred Giertz (2003). In most countries, contributions to retirement funds are made by employers and employees each year. Yet, there is no requirement in the short run that these contributions be sufficient to fully fund the systems. Governments always ensure that pension payments are actually made to retirees, regardless of the level of contributions, as they are generally the funders of last resort. If pension systems are under funded, governments must deal with this problem sooner or later through additional contributions to the systems. If systems are over funded, government resources can be redirected from pensions to other government programs,J. Fred Giertz (2003). It is seen that private pensions reduce public pension spending in the longer term, once private schemes are mature. Private pensions is likely to increase budgetary pressures in the short term: if workers contributions go into their individual pension accounts, they cannot be used to pay for the pensions of the older generation; thus, governments have to finance pensions for the transition generation through taxation or borrowing, Nicholas Barr (2001). This will in a way affect the government budget. Unsustainable pension systems can be a problem to fiscal stability, economic growth, and poverty reduction. The need for pension reform has become pressing as demographic aging has strained pension systems around the world, leading to large expenditures, large deficits, and high contribution rates. In many cases the pension system has become a source of fiscal and macroeconomic instability, a constraint to economic growth, and an ineffective and or inequitable source of retirement income. J. Fred Giertz (2003)suggests thatnot only are pension asset changes large in comparison with state budgets, they are also growing and becoming more volatile. This trend is likely to continue and the relative size of state pension obligations is increasing. This suggests that pension funding is becoming an increasingly important aspect of state government. He also states that ‘state pension funding today is no sounder than in the early 1990s. This is not necessarily a cause for alarm, but it is a source of concern. Pension funding will be an increasingly important demand on state finances in the up coming years. In the G-10 (1998) report, it states that the ageing of populations could have dramatic effects on government finances. Under current policies, government spending in the G-10 countries is projected to rise sharply over the next several decades for several reasons. Per capita expenditure for the elderly is high in the areas of public retirement benefits and, in some countries, welfare support. Public expenditure on medical and health support for the elderly is also high and has been rising. If advances in medical technology come at ever increasing cost and if the incidence of health expenditure on the elderly continues to rise, the fiscal burden could become substantial in some countries. At the same time, government revenues will be adversely affected as the baby boom generation moves from its high income generating years to retirement. Countries whose revenues are tied more to consumption or value added taxes will tend to experience less of a deterioration in revenues than those that depend more heavily on income or payroll taxes. This would create a severe drag on national saving at a time when saving will be crucial to fostering the growth of labour productivity. Impacts of ageing population Norman Vincent Peale quotes that: â€Å"Age-based retirement arbitrarily severs productive persons from their livelihood, squanders their talents, scars their health, strains an already overburdened Social Security system, and drives many elderly people into poverty and despair. Ageism is as odious as racism and sexism.† Barry Bosworth (2003) argued that slowing economic growth and population aging in the major industrial countries have placed increased financial strain on pay-as-you-go (PAYGO) public pension systems. Retirement pensions have become a serious fiscal concern in most industrialized countries. Pensions are largely paid for from tax revenues and it is foreseen that contributions will need to be raised substantially during the coming decades. The World Bank (1994) states that high taxes are harmful to economic growth, since they reallocate resources to the informal sector, thereby reducing output in the more efficient formal market sector of the economy. The reasons are that many people are now nearing retirement age and that the populations nowadays live longer and have fewer children than in the past. Nicholas Barr (2001) argued that the effect on funded schemes is more restrained but equally unavoidable. When a large generation of workers retires, it liquidates its financial assets to pay for its pensions. If those assets are equities, sales of financial assets by the large pensioner generation will exceed purchases of assets by the smaller younger generation, leading to falling equity prices and, hence, to lower pensions. Alternatively, if those assets are bank accounts, high spending by the large pensioner generation will generate inflationary pressures and again reduce the value of pensions. Domestic savings The main views of the life-cycle theory stipulate that individuals try to smooth consumption over their lifetime, Brumberg and Modigliani (1954). Normally savings follow a hump shaped pattern, that is, income is relatively low when individuals are either very young or retired as during their working life savings rate is higher .Ageing Population increases the proportion of households with a relatively lower savings rate in the economy which leads to a decrease in private savings. Estimates of the impact of a change in the age structure of the population on private savings, shows that population ageing will be likely to reduce savings. As regard to public savings, population ageing is likely to exercise considerable pressure on public finances, Weil (2006). In the situation of the pension schemes of the current pay-as-you-go pension schemes that exist in many states, an ageing population implies that the number of beneficiaries increases while the number of contributors to the system decreases. The ageing population will also adversely affect public finances through higher healthcare and long-term care costs, given that older populations are more likely to make use of healthcare facilities, which, to a large extent, are provided by the public sector. Both microeconomic and macroeconomic studies find that the observed age profile of saving generally conforms with the life-cycle model, which implies that saving rates rise over a workers active career and then decline in retirement. Compared with macroeconomic analyses, microeconomic studies tend to show smaller variation in saving rates over the life cycle, this may be of the highly skewed distribution of wealth and saving across households, Ralph C. Bryant (2004). At a micro level, company or other obligatory pension funds can implement enforced saving by deferring wages and salaries, thereby reducing risk of a low replacement ratio. At a macro level, the increase in saving is not usually one-to-one, as increased contractual saving via pension funds is typically partly or wholly offset by declining flexible saving, E Philip Davis (1995). The remaining effect most likely results from liquidity constraints on some individuals (especially the young), who are unable to borrow in order to offset obligatory saving via pension funds early in the life cycle. It can also be anticipated that, even in a liberalized financial system, credit constraints will affect lower income individuals particularly severely, as they have no assets to guarantee and also have less secure employment. Therefore forced pensions saving will tend to increase their overall saving particularly markedly, Bernheim and Scholz (1992). On the other hand Samwick (2000) found a lower rate of saving in countries with extensive PAYG systems. Agosin (2002) extended their analysis and shows that the rise of saving was concentrated in the business sector, and that the net change in household saving was small. Implications for equilibrium real interest rates The forecasted declines in savings make the expected consequence of ageing on the equilibrium real interest rate ambiguous. If investment falls faster than domestic savings at each level of aggregate income, the real interest rate that clears the market for loanable funds is expected to fall, since it is difficult for savers to find profitable investment opportunities, J.C. Trichet (2007). On the other hand, if domestic savings were to fall faster than investment then the real interest rate would rise to reflect the relative scarcity of financial funds. This likely decline in interest rate that equalizes savings and investment could be identified developed financial markets. Even though the actual impact of the evolving demographic structure on the equilibrium real interest rate in the capital markets is something that is going to occur with a considerable lag, some economists have suggested that expectations of such developments may have already started to exert some influence on the pricing of bonds. Among other things, these analyses suggest that ageing could have contributed to the â€Å"flattening† of the yield curve that has been observed over the recent past, J.C. Trichet (2007). However as it is based on the assumption that capital market participants are perfectly forward looking, an assumption which is questionable, it should be treated with a great deal of caution: if it is true that financial markets tend to overreact to short term phenomena, the effects of ageing on the yield curve could be limited, DellaVigna and Pollet (2005). It has to be taken into consideration that these quantitative simulations require a number of qualifications. On one hand, some real world factors may make the true decline in the equilibrium real interest rate larger than estimated in macroeconomic models. For instance, older people may save more than predicted by the life cycle theory as they may want to leave a bequest to their children, putting further downward pressure on the equilibrium rate. The degree of risk aversion may also change with age as if the older people were systematically more risk averse than the young one, the accumulation of precautionary savings would lead to a higher than predicted savings rate and a lower than predicted real rate, Bakshi and Chen (1994).Moreover private savings rates may be significantly affected by pension reforms, Miles (2002). Pressures on Prices Hans J Blommestein (1998) states that concerns have been expressed that the growing demand for high quality private securities like equity and corporate bonds, associated with the growth of advance funded pension systems in search of investment opportunities (thereby increasing the demand for financial assets) and falling public sector borrowing requirements (thereby reducing the supply of government securities), would put strong upward pressure on the prices of financial assets. Here, the combination of the widespread privatisation of state owned enterprises and reform of pension systems brings the opportunity of killing two birds with one stone. Pension reform, which would increase the demand for equity, and privatisation, which expands the supply, at the same time permits a more balanced growth in private securities markets, at least over the medium term. In a somewhat longer term perspective, population ageing may have an impact on the risk premium, that is, the difference betwee n the returns on stocks and the yield on bonds. As asset preferences vary across age groups, the ageing of the baby boom generation could affect both absolute and relative positions of stock and bond prices. On average, middle age is the portion of the life cycle when saving rates are highest. Moreover, middle aged workers generally are more able and willing to hold a riskier portfolio; that is, one weighted more heavily towards stocks than bonds. This is a consequence of two factors: first, while still working, a stockholder is better able to make up for any bad equity returns; second, middle aged workers have a longer time horizon and thus are willing to accept more risk in exchange for the expectation of higher returns. Moreover, higher demand for stocks relative to bonds should increase the price of stocks relative to bonds, thus decreasing the equity premium. Thus, some have hypothesized that an ageing population would cause the equity premium to increase. But if the age of the population is increasing at least in part because life span is increasing, and thus time horizons are lengthening, then the ageing of the population does not necessarily imply that average risk aversion should be increasing and risk premium on stocks should be rising. After the baby boomers begin to retire, saving rates would tend to fall, stock and bond prices to decline, and the equity premium to rise as baby boom retirees shift their portfolios away from stocks toward bonds, Hans J Blommestein (1998). Population age structure can influence the demand for different classes of financial market assets both because of its effect on saving and because young, middle aged, and elderly savers may seek to hold their assets in different forms. Empirical studies have uncovered evidence that population age structure affects stock market prices and the real returns of different classes of financial assets, but the consistency of this evidence is not overwhelming. It is unclear whether the effects of demographic influences on asset prices and returns are large relative to the effects of other and less predictable determinants of prices and returns, Ralph C. Bryant (2004). Implications of population ageing for the conduct of monetary policy The life-cycle theory stipulates that , individuals during their working lives accumulate financial wealth in order to finance their consumption during retirement. As a consequence, populations who are near to retirement age will tend to have higher wealth to income ratios. Simultaneously, expected imbalances in publicly financed pension schemes make it possible to consider that the increasing number of retirees would depend more on their own accumulated wealth, as opposed to public pension provisions, to maintain their consumption levels. Consequently, the fraction of the population exposed to asset price fluctuations could increase with ageing, Young (2002). Bean (2004) argues that longer life expectancy would presumably strengthen this effect. Therefore, the transmission channel of monetary policy may be affected by ageing. In particular, the so called wealth channel, which links asset prices to consumption, may gain relative importance and play a vital role than in the past, G10 (2005). Miles (2002) points out that the monetary policy multiplier would probably rise with population ageing, mainly as a result of the increased wealth channel and greater price impact of monetary policy decisions. In spite of this, he also mentions that an older population is less likely to be credit constrained, especially when the pension system is reformed towards more funded systems. This might reduce the effectiveness of the credit channel. Depending on the relative importance of these channels, monetary policy could, in principle, become more or less effective with ageing. Miles suggests that the first effect is expected to dominate. A move towards demographic structure in which the population accounts for an increasing elderly population is expected to generate a gradual but persistent change in savings habits. This may results in an impact on the demand for all classes of assets even though certain sector of the capital market are likely to be affected more substantially than others. If, for example, older people are more risk averse and prefer to hold financial assets paying fixed income returns such as government securities, then the demand for government bonds would tend to increase relative to riskier investment options, such as equity, Bakshi and Chen (1994) and De Santis and Là ¼hrmann (2006). In this situation, where a larger part of households wealth is invested in nominal assets, price stability would be even more important for households, G10 (2005) and Bean (2004). Stable prices ensure that the real value of both pension entitlements and savings is maintained and prevent arbitrary redistributions of income and wealth to the detriment of the most vulnerable groups in society, in particular, pensioners. It is likely that, as a significant fraction of wealth is accumulated in real estate and financial assets, households exposure to asset price movements will tend to increase. This might coincide with a situation in which a large fraction of the population in their old age dis-saving phase are disposing assets in order to finance consumption during retirement. In this respect, some authors have warned that, when the baby-boom generation retires and starts to dissave, excess supply in financial markets could lead to a significant decline in asset prices, the consequences of which might be felt by the entire population, Siegel (1998), Abel (2001) and (2003). This view is known as the â€Å"asset meltdown† hypothesis. Yoo (1994) estimated that asset prices may drop by as much as 15% as a result of demographic change alone. This is why a credible commitment to maintaining price stability and, as a reflection, an orderly financial environment is and will remain so important for maintaining the standard of living of people, particularly for the poorest and the most vulnerable. Investment of Pension Fund The rapid growth of pension funds in many countries, and the stimulus they are providing to the growth of capital markets, both suggest that their activities as financial intermediaries merit considerable attention, E Philip Davis (2000). Pension funds have an impact on the stability of financial markets in several ways, most significantly through their investment behavior. Since early withdrawal of funds is usually restricted or forbidden, pension funds have long term liabilities, allowing holding of high risk and high return instruments. Accordingly, monies are intermediated by pension funds into a variety of financial assets, which include corporate equities, government bonds, real estate, corporate debt (in the form of loans or bonds), securitised loans, foreign holdings of the instruments mentioned above and money market instruments and deposits as forms of liquidity. Hellwig (1990) suggest that financial institutions can form long term relationships with borrowers, which reduce information asymmetry and hence moral hazard. Apart from economies of scale these considerations have arisen in the literature mainly for debt finance and for banks. Whereas the importance of information asymmetries and incomplete contracts is equally recognised for equity finance, the role of financial institutions as counterparts is less well developed. Equally, institutional investors such as pension funds may not rely on the same information and control mechanisms as banks. The role of pension funds is clearly not to facilitate exchange of goods, services and assets directly. This is because, unlike banks, money market funds, and to a lesser extent long term mutual funds, they do not offer liquid liabilities. Nevertheless, pension funds have had an important indirect role in boosting the efficiency of the financial systems, by influencing the structure of securities markets. This effect on micro structure links to their demand for liquidity, i.e. to transact in large size without moving the price against them, anonymously, and at low transactions costs. Pension funds provide risk control directly to households via the forms of retirement income insurance they provide, an advantage which largely reflects the unusual (among financial intermediaries) link of pension funds to employers. To assist in undertaking this risk control function they diversify assets as noted above and also act in securities and derivatives markets to hedge and control risk. As institutional investors, pension funds are well placed to use derivatives and other means of risk control; many innovations have been introduced or developed specifically to cater for their demand (Bodie 1990b, 1999). E Philip Davis (1995a) suggests that as pension funds focus mainly on government bonds and high grade corporate bonds, while banks tend to monopolise small business financing. And Lorenzo Bini Smaghi (2006) states that investing wisely matters for long term economic wellbeing, and that the portfolio allocation decision is of paramount importance in order to maintain living standards in the old age. Pension funds are the fastest growing of all financial institutions. They now cover half the labor force and represent one-eighth the financial assets of the entire household sector, Vincent P. Apilado (1972). The size of pension funds has also had an impact on the structure of financial markets: countries with large funded pension schemes tend to have highly developed securities markets; in countries with small pension-fund sectors, capital markets are relatively underdeveloped (the equity market in particular, Hans. J. Blommestein (1998). Living Standard M.  PONDS  (2003) states that the raison dà ªtre of wage indexed defined benefit pension funds is to provide insurance against standard of living risk after retirement, based on intergenerational risk sharing. Pension funds necessarily have to accept mismatch risk in providing this kind of insurance. Mismatch risk taken by the pension fund is risk for the funds stakeholders. The material living standards of tomorrows working and retired people will depend on the goods and services produced by those who will be working at the time. Changes in retirement income financing might alter the relative living standards of workers compared with retirees, but only later retirement could have a large effect in increasing living standards for both, Peter Hicks (2004). O Mauritius National Pension Fund Financial Analysis Mauritius National Pension Fund Financial Analysis The National Pension Fund and its financial implications on the economy of Mauritius Chapter 1: Introduction The philosophy of the National Pension Fund (NPF) includes the idea that one ought to earn a reasonable proportion after pension age of what one earned during ones working life. If you have contributed to the NPF and built up your pension points, you will get a pension which, when added to your old-age pension will be a reasonable. The National Pension Fund scheme is proposed as another mandatory saving for retirement. Once it is set up, the NPF will fit into Pillar 2 of the Multi-Pillar Model of the World Bank. The NPF nevertheless will not replace provident funds or retirement mutual funds, but rather improves saving channels for future retirees. Mauritius is found in the developing countries group where contractual savings, savings with insurance companies and pension funds exceed 40 percent of Gross Domestic Product and which represent a greater potential force in the domestic financial system. Pension funds account for 75 percent of contractual savings. The pension system is a balanced and well-managed multi-pillar. In Mauritius there have not many authors that have write specifically on that subject, that is, financial implication of National Pension Fund on the Mauritian economy. I have mainly used the research made by other analysts in other countries and try to apply it on the Mauritian economy. Obviously the result will not be the same, but try to make an estimate of it. Objectives of that Project: Analyse the overall financial implication of NPF Testing the financial effect of NPF on national savings Estimating the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF Chapter Outline Chapter one gives a brief overview of how the project is carry on. Chapter two makes an overview of the National pension fund, its evolution, structure and its financing source as well as government expenditure and the future of NPF. Chapter three is the literature review, that is, what writers around the globe have commented on the pension system. Chapter four is the research methodology. The research is carried out using regression equation to examine the financial implication NPF on our variables. Chapter five then come the analysis based on the results obtained, that is the financial effect of NPF on national savings and the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF. Then finally chapter seven will include suggestions and conclusions. Chapter 2: Literature Review Introduction Pension funds is be defined as forms of institutional investor, which collect, pool and invest funds contributed by sponsors and beneficiaries to provide for the future pension entitlements of beneficiaries (E PhilipDavis 1995). Pension fund offer individuals the mean to collect saving over their working life so as to finance their consumption needs in retirement, either by means of a lump sum or by provision of an annuity, while also supplying funds to corporations, households (via securitised loans) or governments for investment or consumption. Bodie(1990a) has formalized pension funds function as a form of retirement income insurance. E Philip Davis (1995) suggests that pension funds perform a number of the functions of the financial system more efficiently than banks or direct holdings. Their growth complements that of capital markets and they have acted as major catalysts of change in the financial landscape. But this is not the only reason for growth. It is also a consequence of fiscal incentives and benefits to employers, as well as growing demand arising from the ageing of the population. Pension funds are typically sponsored by employers, such as companies, public corporations, industry or trade groups; accordingly, employers as well as employees typically contribute. Funds may be internally or externally managed. The pension system is commonly divided into three pillars. The first pillar is the pay-as-you-go system based on payments by public institutions which are mainly funded by tax revenues. The second pillar constitutes fully funded pension funds with mandatory membership and the third pillar is based on fully funded pension saving schemes with voluntary membership. In a pay-as-you-go system, each generation pays for the costs of the currently retired in return for a commitment for the same treatment during its own retirement. Workers who spend their entire work and retirement life under a PAYGO system with constant tax rates will earn a real return on their contributions equal to the growth in the workforce plus the growth in the real wage (Samuelson, 1958, and Aaron, 1966). Pension funds provide millions of people in the world security and comfort in old age. Pension funds represent the savings of millions of people, and as Paul Myners says, the ability of funds to invest these assets effectively has a profound impact on their economic well being. Because so many people depend on pension funds to provide for their futures, ensuring the funds serve the needs of their members is a priority for Government. The social security system on the other hand as stated by law, guarantees people covered by its provisions either because they perform an occupational activity or meet the requirements established for non-contributory type social security, as well as dependent members of the family or similar, adequate protection in the contingencies and circumstances. Social Security has been defined as the protection which society provides for its members through a series of public measures against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, invalidity, old age and death; the provision of medical care; and the provision of subsidies for families with children. In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. The Social Security tax has been raising more money than is needed to pay for current benefits, in order to build up a surplus to help finance the retirement of the Baby Boom generation. The money is used in a sense to finance the government deficit, just like any other money the government borrows, Dean Baker (1998). The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. So Social Security will be the foundation of your retirement income. Thats because: You wont outlive your Social Security retirement benefit. It will be there for you for the rest of your life. Your Social Security benefit wont lose its value. From time to time, Social Security benefits are adjusted so they always keep pace with inflation. Why National Pension Fund? Worker myopia, or lack of foresight poor planning occurs because people give too little considerations to their future economic needs when making decisions about saving for retirement. Most people seem to have a natural inclination to live for today and avoid thinking about old age and death. Hence, they give very little systematic thought to the financial issues of old age until they come face to face with them. By the time they recognize they may have a problem when they retire, it is usually too late to fix. Government intervention through NPF has help people set aside a portion of their earnings when they are working so that they have an adequate income when they retire. Without compulsory contributions for retirement, myopic workers would not save enough to ensure an adequate retirement income and poverty would result. Another rationale for the existence of the compulsory contribution to the NPF is to protect the prudent that saves for retirement against those who do not save. Under a purely voluntary system some will contribute, others will not. As Boulding (1958) puts it in his argument, those who do not insure will have to be supported anyway-perhaps at lower levels and in humiliating and respect-destroying ways when they are in their non-productive phase of their life, but that they will escape the burden of paying premiums when they are in their productive phase. In fairness to those who insure voluntarily and in order to maintain the self-respect of those who would not otherwise insure, contributions for retirement should be made compulsory. Hence, mandatory contributions are necessary to achieve the retirement savings results that people need to have so as to have an adequate standard of living in their retirement years. Pension funds are also an important source of capital accumulation that can be used for different purposes as the build up the basic of national infrastructure, power stations and electric networks, Olli E. Kangas (2006). The Finnish case demonstrates that it was possible to unify social policy goals with the economic goals of building up modern industrial market economies. The Finnish experience has serves as a good example of how social policy has been successfully used as a developmental strategy, Mkandawire (2001). Pension funds are not only vital to the pension holders they provide for. They are also key players in the economy as a whole. Government Budget Pension funding issues have an important, but often hidden, impact on the finances of state governments, J. Fred Giertz (2003). In most countries, contributions to retirement funds are made by employers and employees each year. Yet, there is no requirement in the short run that these contributions be sufficient to fully fund the systems. Governments always ensure that pension payments are actually made to retirees, regardless of the level of contributions, as they are generally the funders of last resort. If pension systems are under funded, governments must deal with this problem sooner or later through additional contributions to the systems. If systems are over funded, government resources can be redirected from pensions to other government programs,J. Fred Giertz (2003). It is seen that private pensions reduce public pension spending in the longer term, once private schemes are mature. Private pensions is likely to increase budgetary pressures in the short term: if workers contributions go into their individual pension accounts, they cannot be used to pay for the pensions of the older generation; thus, governments have to finance pensions for the transition generation through taxation or borrowing, Nicholas Barr (2001). This will in a way affect the government budget. Unsustainable pension systems can be a problem to fiscal stability, economic growth, and poverty reduction. The need for pension reform has become pressing as demographic aging has strained pension systems around the world, leading to large expenditures, large deficits, and high contribution rates. In many cases the pension system has become a source of fiscal and macroeconomic instability, a constraint to economic growth, and an ineffective and or inequitable source of retirement income. J. Fred Giertz (2003)suggests thatnot only are pension asset changes large in comparison with state budgets, they are also growing and becoming more volatile. This trend is likely to continue and the relative size of state pension obligations is increasing. This suggests that pension funding is becoming an increasingly important aspect of state government. He also states that ‘state pension funding today is no sounder than in the early 1990s. This is not necessarily a cause for alarm, but it is a source of concern. Pension funding will be an increasingly important demand on state finances in the up coming years. In the G-10 (1998) report, it states that the ageing of populations could have dramatic effects on government finances. Under current policies, government spending in the G-10 countries is projected to rise sharply over the next several decades for several reasons. Per capita expenditure for the elderly is high in the areas of public retirement benefits and, in some countries, welfare support. Public expenditure on medical and health support for the elderly is also high and has been rising. If advances in medical technology come at ever increasing cost and if the incidence of health expenditure on the elderly continues to rise, the fiscal burden could become substantial in some countries. At the same time, government revenues will be adversely affected as the baby boom generation moves from its high income generating years to retirement. Countries whose revenues are tied more to consumption or value added taxes will tend to experience less of a deterioration in revenues than those that depend more heavily on income or payroll taxes. This would create a severe drag on national saving at a time when saving will be crucial to fostering the growth of labour productivity. Impacts of ageing population Norman Vincent Peale quotes that: â€Å"Age-based retirement arbitrarily severs productive persons from their livelihood, squanders their talents, scars their health, strains an already overburdened Social Security system, and drives many elderly people into poverty and despair. Ageism is as odious as racism and sexism.† Barry Bosworth (2003) argued that slowing economic growth and population aging in the major industrial countries have placed increased financial strain on pay-as-you-go (PAYGO) public pension systems. Retirement pensions have become a serious fiscal concern in most industrialized countries. Pensions are largely paid for from tax revenues and it is foreseen that contributions will need to be raised substantially during the coming decades. The World Bank (1994) states that high taxes are harmful to economic growth, since they reallocate resources to the informal sector, thereby reducing output in the more efficient formal market sector of the economy. The reasons are that many people are now nearing retirement age and that the populations nowadays live longer and have fewer children than in the past. Nicholas Barr (2001) argued that the effect on funded schemes is more restrained but equally unavoidable. When a large generation of workers retires, it liquidates its financial assets to pay for its pensions. If those assets are equities, sales of financial assets by the large pensioner generation will exceed purchases of assets by the smaller younger generation, leading to falling equity prices and, hence, to lower pensions. Alternatively, if those assets are bank accounts, high spending by the large pensioner generation will generate inflationary pressures and again reduce the value of pensions. Domestic savings The main views of the life-cycle theory stipulate that individuals try to smooth consumption over their lifetime, Brumberg and Modigliani (1954). Normally savings follow a hump shaped pattern, that is, income is relatively low when individuals are either very young or retired as during their working life savings rate is higher .Ageing Population increases the proportion of households with a relatively lower savings rate in the economy which leads to a decrease in private savings. Estimates of the impact of a change in the age structure of the population on private savings, shows that population ageing will be likely to reduce savings. As regard to public savings, population ageing is likely to exercise considerable pressure on public finances, Weil (2006). In the situation of the pension schemes of the current pay-as-you-go pension schemes that exist in many states, an ageing population implies that the number of beneficiaries increases while the number of contributors to the system decreases. The ageing population will also adversely affect public finances through higher healthcare and long-term care costs, given that older populations are more likely to make use of healthcare facilities, which, to a large extent, are provided by the public sector. Both microeconomic and macroeconomic studies find that the observed age profile of saving generally conforms with the life-cycle model, which implies that saving rates rise over a workers active career and then decline in retirement. Compared with macroeconomic analyses, microeconomic studies tend to show smaller variation in saving rates over the life cycle, this may be of the highly skewed distribution of wealth and saving across households, Ralph C. Bryant (2004). At a micro level, company or other obligatory pension funds can implement enforced saving by deferring wages and salaries, thereby reducing risk of a low replacement ratio. At a macro level, the increase in saving is not usually one-to-one, as increased contractual saving via pension funds is typically partly or wholly offset by declining flexible saving, E Philip Davis (1995). The remaining effect most likely results from liquidity constraints on some individuals (especially the young), who are unable to borrow in order to offset obligatory saving via pension funds early in the life cycle. It can also be anticipated that, even in a liberalized financial system, credit constraints will affect lower income individuals particularly severely, as they have no assets to guarantee and also have less secure employment. Therefore forced pensions saving will tend to increase their overall saving particularly markedly, Bernheim and Scholz (1992). On the other hand Samwick (2000) found a lower rate of saving in countries with extensive PAYG systems. Agosin (2002) extended their analysis and shows that the rise of saving was concentrated in the business sector, and that the net change in household saving was small. Implications for equilibrium real interest rates The forecasted declines in savings make the expected consequence of ageing on the equilibrium real interest rate ambiguous. If investment falls faster than domestic savings at each level of aggregate income, the real interest rate that clears the market for loanable funds is expected to fall, since it is difficult for savers to find profitable investment opportunities, J.C. Trichet (2007). On the other hand, if domestic savings were to fall faster than investment then the real interest rate would rise to reflect the relative scarcity of financial funds. This likely decline in interest rate that equalizes savings and investment could be identified developed financial markets. Even though the actual impact of the evolving demographic structure on the equilibrium real interest rate in the capital markets is something that is going to occur with a considerable lag, some economists have suggested that expectations of such developments may have already started to exert some influence on the pricing of bonds. Among other things, these analyses suggest that ageing could have contributed to the â€Å"flattening† of the yield curve that has been observed over the recent past, J.C. Trichet (2007). However as it is based on the assumption that capital market participants are perfectly forward looking, an assumption which is questionable, it should be treated with a great deal of caution: if it is true that financial markets tend to overreact to short term phenomena, the effects of ageing on the yield curve could be limited, DellaVigna and Pollet (2005). It has to be taken into consideration that these quantitative simulations require a number of qualifications. On one hand, some real world factors may make the true decline in the equilibrium real interest rate larger than estimated in macroeconomic models. For instance, older people may save more than predicted by the life cycle theory as they may want to leave a bequest to their children, putting further downward pressure on the equilibrium rate. The degree of risk aversion may also change with age as if the older people were systematically more risk averse than the young one, the accumulation of precautionary savings would lead to a higher than predicted savings rate and a lower than predicted real rate, Bakshi and Chen (1994).Moreover private savings rates may be significantly affected by pension reforms, Miles (2002). Pressures on Prices Hans J Blommestein (1998) states that concerns have been expressed that the growing demand for high quality private securities like equity and corporate bonds, associated with the growth of advance funded pension systems in search of investment opportunities (thereby increasing the demand for financial assets) and falling public sector borrowing requirements (thereby reducing the supply of government securities), would put strong upward pressure on the prices of financial assets. Here, the combination of the widespread privatisation of state owned enterprises and reform of pension systems brings the opportunity of killing two birds with one stone. Pension reform, which would increase the demand for equity, and privatisation, which expands the supply, at the same time permits a more balanced growth in private securities markets, at least over the medium term. In a somewhat longer term perspective, population ageing may have an impact on the risk premium, that is, the difference betwee n the returns on stocks and the yield on bonds. As asset preferences vary across age groups, the ageing of the baby boom generation could affect both absolute and relative positions of stock and bond prices. On average, middle age is the portion of the life cycle when saving rates are highest. Moreover, middle aged workers generally are more able and willing to hold a riskier portfolio; that is, one weighted more heavily towards stocks than bonds. This is a consequence of two factors: first, while still working, a stockholder is better able to make up for any bad equity returns; second, middle aged workers have a longer time horizon and thus are willing to accept more risk in exchange for the expectation of higher returns. Moreover, higher demand for stocks relative to bonds should increase the price of stocks relative to bonds, thus decreasing the equity premium. Thus, some have hypothesized that an ageing population would cause the equity premium to increase. But if the age of the population is increasing at least in part because life span is increasing, and thus time horizons are lengthening, then the ageing of the population does not necessarily imply that average risk aversion should be increasing and risk premium on stocks should be rising. After the baby boomers begin to retire, saving rates would tend to fall, stock and bond prices to decline, and the equity premium to rise as baby boom retirees shift their portfolios away from stocks toward bonds, Hans J Blommestein (1998). Population age structure can influence the demand for different classes of financial market assets both because of its effect on saving and because young, middle aged, and elderly savers may seek to hold their assets in different forms. Empirical studies have uncovered evidence that population age structure affects stock market prices and the real returns of different classes of financial assets, but the consistency of this evidence is not overwhelming. It is unclear whether the effects of demographic influences on asset prices and returns are large relative to the effects of other and less predictable determinants of prices and returns, Ralph C. Bryant (2004). Implications of population ageing for the conduct of monetary policy The life-cycle theory stipulates that , individuals during their working lives accumulate financial wealth in order to finance their consumption during retirement. As a consequence, populations who are near to retirement age will tend to have higher wealth to income ratios. Simultaneously, expected imbalances in publicly financed pension schemes make it possible to consider that the increasing number of retirees would depend more on their own accumulated wealth, as opposed to public pension provisions, to maintain their consumption levels. Consequently, the fraction of the population exposed to asset price fluctuations could increase with ageing, Young (2002). Bean (2004) argues that longer life expectancy would presumably strengthen this effect. Therefore, the transmission channel of monetary policy may be affected by ageing. In particular, the so called wealth channel, which links asset prices to consumption, may gain relative importance and play a vital role than in the past, G10 (2005). Miles (2002) points out that the monetary policy multiplier would probably rise with population ageing, mainly as a result of the increased wealth channel and greater price impact of monetary policy decisions. In spite of this, he also mentions that an older population is less likely to be credit constrained, especially when the pension system is reformed towards more funded systems. This might reduce the effectiveness of the credit channel. Depending on the relative importance of these channels, monetary policy could, in principle, become more or less effective with ageing. Miles suggests that the first effect is expected to dominate. A move towards demographic structure in which the population accounts for an increasing elderly population is expected to generate a gradual but persistent change in savings habits. This may results in an impact on the demand for all classes of assets even though certain sector of the capital market are likely to be affected more substantially than others. If, for example, older people are more risk averse and prefer to hold financial assets paying fixed income returns such as government securities, then the demand for government bonds would tend to increase relative to riskier investment options, such as equity, Bakshi and Chen (1994) and De Santis and Là ¼hrmann (2006). In this situation, where a larger part of households wealth is invested in nominal assets, price stability would be even more important for households, G10 (2005) and Bean (2004). Stable prices ensure that the real value of both pension entitlements and savings is maintained and prevent arbitrary redistributions of income and wealth to the detriment of the most vulnerable groups in society, in particular, pensioners. It is likely that, as a significant fraction of wealth is accumulated in real estate and financial assets, households exposure to asset price movements will tend to increase. This might coincide with a situation in which a large fraction of the population in their old age dis-saving phase are disposing assets in order to finance consumption during retirement. In this respect, some authors have warned that, when the baby-boom generation retires and starts to dissave, excess supply in financial markets could lead to a significant decline in asset prices, the consequences of which might be felt by the entire population, Siegel (1998), Abel (2001) and (2003). This view is known as the â€Å"asset meltdown† hypothesis. Yoo (1994) estimated that asset prices may drop by as much as 15% as a result of demographic change alone. This is why a credible commitment to maintaining price stability and, as a reflection, an orderly financial environment is and will remain so important for maintaining the standard of living of people, particularly for the poorest and the most vulnerable. Investment of Pension Fund The rapid growth of pension funds in many countries, and the stimulus they are providing to the growth of capital markets, both suggest that their activities as financial intermediaries merit considerable attention, E Philip Davis (2000). Pension funds have an impact on the stability of financial markets in several ways, most significantly through their investment behavior. Since early withdrawal of funds is usually restricted or forbidden, pension funds have long term liabilities, allowing holding of high risk and high return instruments. Accordingly, monies are intermediated by pension funds into a variety of financial assets, which include corporate equities, government bonds, real estate, corporate debt (in the form of loans or bonds), securitised loans, foreign holdings of the instruments mentioned above and money market instruments and deposits as forms of liquidity. Hellwig (1990) suggest that financial institutions can form long term relationships with borrowers, which reduce information asymmetry and hence moral hazard. Apart from economies of scale these considerations have arisen in the literature mainly for debt finance and for banks. Whereas the importance of information asymmetries and incomplete contracts is equally recognised for equity finance, the role of financial institutions as counterparts is less well developed. Equally, institutional investors such as pension funds may not rely on the same information and control mechanisms as banks. The role of pension funds is clearly not to facilitate exchange of goods, services and assets directly. This is because, unlike banks, money market funds, and to a lesser extent long term mutual funds, they do not offer liquid liabilities. Nevertheless, pension funds have had an important indirect role in boosting the efficiency of the financial systems, by influencing the structure of securities markets. This effect on micro structure links to their demand for liquidity, i.e. to transact in large size without moving the price against them, anonymously, and at low transactions costs. Pension funds provide risk control directly to households via the forms of retirement income insurance they provide, an advantage which largely reflects the unusual (among financial intermediaries) link of pension funds to employers. To assist in undertaking this risk control function they diversify assets as noted above and also act in securities and derivatives markets to hedge and control risk. As institutional investors, pension funds are well placed to use derivatives and other means of risk control; many innovations have been introduced or developed specifically to cater for their demand (Bodie 1990b, 1999). E Philip Davis (1995a) suggests that as pension funds focus mainly on government bonds and high grade corporate bonds, while banks tend to monopolise small business financing. And Lorenzo Bini Smaghi (2006) states that investing wisely matters for long term economic wellbeing, and that the portfolio allocation decision is of paramount importance in order to maintain living standards in the old age. Pension funds are the fastest growing of all financial institutions. They now cover half the labor force and represent one-eighth the financial assets of the entire household sector, Vincent P. Apilado (1972). The size of pension funds has also had an impact on the structure of financial markets: countries with large funded pension schemes tend to have highly developed securities markets; in countries with small pension-fund sectors, capital markets are relatively underdeveloped (the equity market in particular, Hans. J. Blommestein (1998). Living Standard M.  PONDS  (2003) states that the raison dà ªtre of wage indexed defined benefit pension funds is to provide insurance against standard of living risk after retirement, based on intergenerational risk sharing. Pension funds necessarily have to accept mismatch risk in providing this kind of insurance. Mismatch risk taken by the pension fund is risk for the funds stakeholders. The material living standards of tomorrows working and retired people will depend on the goods and services produced by those who will be working at the time. Changes in retirement income financing might alter the relative living standards of workers compared with retirees, but only later retirement could have a large effect in increasing living standards for both, Peter Hicks (2004). O