Application to Modern Investment Theory to EMH

Application to Modern Investment Theory to EMH The modern investment theory and its application on the efficient markets hypothesis 1. Introduction The Modern investment theory and its application is predicated on the Efficient Markets Hypothesis (EMH), assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the neo classical convention that has yielded such insights as portfolio optimization, Capital Asset Pricing Model, Arbitrage Pricing Theory and Cox Ingersoll-Ross theory of the term structure of interest rates, all of which are predicated on the EMH[2] rather than downside risks[3]. The theory of behavioral finance is opposite to the traditional theory of Finance and deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining past practices of investors and dete rmining the false performance of the investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology and sociology. It is reviewed that behavioral finance is generally based on individual behavior and financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where rational models fail to provide adequate information. Investors do not expect such research to provide a method to make lots of money from inefficient financial markets quickly. According to Shiller (2001) Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology where implications of these theories appear to be significant for efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility. It is found that in efficient market the principle of rational behavior is not always correct. Thus, the idea of analyzing other model of human behavior has come up. Gervais (2001) further explains the concept where he says that people like to relate to the stock market as a person having different moods, this person can be bad-tempered or high-spirited and can overreact one day or make amends the next. This person indicates human behavior which is unpredictable and behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding financial markets better. To do so it is important to understand behavioral finance presenting the concept of traditional theory overestimating rationality of investors, their biases in decisions casting a cumulative impact on asset prices. To many researchers the study of behavior in finance appeared to be a revolution. As it transforms peoples mentality and perception about markets and factors that influence the markets. The paradigm is shifting. People are continuing to walk across the border from the traditional to the behavioral camp. Gervais (2001, pp.2). On the contrary some people believe that may be its too early to call it a revolution. Gervais (2001) states that Fama in (1970) argued that behavioral finance has not really shown an impact on world prices, and that model contradict each other on different point of times. Giving very less account to behaviorist explanations of trends and the irregularities anomaly ( is any occurrence or object that is strange, unusual, or unique) also argued that in order to locate patterns the data mining techniques are much helpful. Other researchers have also criticized the idea that behavioral finance models tend to replace the traditional models of market functions. Some weaknesses in this area, explained by Gervais (2001)are that generally overreaction and under reaction are major causes of market behavior. In these cases People take the behavior that seems to be easy for a particular study regardless of the fact that whether these biases are either primary factor of economic forces or not. Secondly, lack of trained and expert people. The field does not have enough trained professionals both in psychology or finance fields and therefore as a result the models presented by researchers are improvised. Gervais (2001) also focused on individual behavior impacting asset prices and explained that this field of behavioral finance is currently in its developmental stage, in its way of development it is facing a lot of disagreement which itself is a productive one. He points out that if we apply the conceptual models of behavioral finance to the corporate finance, it can majorly pay off. If money managers are incorrectly rational, means they are probably not evaluating their investment strategies correctly. They might take wrong decisions in their capital structure decisions. It has been found that quite a few people foresee behavioral finance displacing the age old Efficient Markets theory. On the contrary underlying assumption that investors and managers are completely rational makes insightful sense to many people. 2. Traditional Finance and Empirical Evidence Fung, (2006) claimed that Post Keynesian theory has criticized mainstream economic theory for using statistical methods to model the world in which histori ­cal market data cannot provide, In recent years, two different lines of research experimental economics and behavioral finance have pro ­duced results that are at odds with the predictions of mainstream finan ­cial theory. This paper argues that it is beneficial to the development of good financial theory for Post Keynesian economists to engage in an exchange of ideas with the practitioners of these two lines of research. The difference of opinion originated when experimental economics and behavioral finance understood the difference between agents rationality in theory and in real world. Both had a same point of view regarding Post Keynesian economists where both of them refused to assume Post Keynesian economists assumption of economic actors being always rational by maximizing expected utility. Instead of assuming ration al economic ac ­tors who always act consistently, they often tap into insights provided by psychology to try to explain economic behavior. The use of psychol ­ogy can be traced back to Keynes, and, in fact, some of the papers in experimental economics and behavioral finance take a remark of Keynes on the psychology of economic actors as an inspiration for designing empirical tests of economic behavior. Indeed, some of these papers rec ­ognize that we live in an uncertain world, and they examine the heuris ­tics, or rules of thumb, that economic actors develop to guide their behavior in face of uncertainty. When Keynes made his remark in 1936 (the original publication date of the General Theory), there was not yet an efficient market hypothesis. But in 1970 Fama published his pioneering paper on efficient markets. In it, he defined an efficient market as a market in which prices always fully reflect available information. Traditional theory assumes that agents are rational an d the law of one price holds that is a perfect scenario. Where the law of One price[5]. And agents rationality explains the behavior of investor Professional and Individual which is generally inconsistent with rationality or future predictions. If a market achieves a perfect scenario where agents are rational and law of one price holds then the market is efficient. With the availability of large amount of information, form of market changes. It is unlikely that market prices contain all private information. The presence of noise traders (traders, trading randomly and not based on information). Researches show that stock returns are typically unpredictable based on past returns where as future returns are predictable to some extent. According to Glaser et al. (2003) Few examples from the past literature explains the problem of irrationality which occurs because of naive diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while ev aluating public information. Lately it has been found that investors` attitude towards the riskiness of a stock in future and the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors actions that stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about a stock portfolio or just about the value of each single security in their portfolio and thus ignore correlations. The concept of ownership society[6] has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As Shiller (2006) suggested that in order to improve lives of less advantaged people in our society is to teach them how to be capitalist, In order to put ownership society in its right perspective, behavioral finance is needed to be und erstood. The concept of ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance is also very helpful in understanding and justifying government involvement in investing decisions of individuals. The failure of millions of people to save properly for their future is also a core focus of behavioral finance. According to Glaser et al. (2003) there are two approaches towards behavioral finance, where both tend to have same goals. The goals tend to explain observed prices, market trading volume and Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices and Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism and Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities and individual behavior. It incorporates Prospect Theory[7], House money effect and other forms of mental accounting. Behavioral Finance and Rational debate: the article by Heaton and Rosenberg (2004) highlights the debate between the rational and behavioral model over testability and predictive success. And it was found that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviors. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, t hat utility functions, information sets and transaction costs cannot be `rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Heaton Rosenberg (2004) presented Milton Friedmans theory that laid the basis of positive economics. His methodology focused on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of economy, i.e. Investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioral approach emphasizes importance of taking limits in arbitrage. Further his methodological approach falls into the category `instru mentalism[8], which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have said that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Heaton Rosenberg (2004) further explains the concept of Rubinstein that how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, he came up with two arguments. Firstly he w ent on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, and derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as `What is the cost of capital for this firm? or `What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem lik e rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality induced mispricing exists; behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors which explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial markets have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of `testability and `predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. Ray (2006) examines a new genre of behavioral markets prediction markets and their remarkable a bility to aggregate inside and expert information from around the world in order to accurately predict all types of economic and financial variables. To date it is said that the prediction markets are the most accurately efficient markets as they prove to show all three forms of market efficiency (weak, semi-strong, and strong), in contrast to regulated markets. Prediction markets are also said to be decision markets. It initially evolved in 1988 with the first online betting market the Iowa Electronic Market. These online markets have proven their predictions accurately since the time they came into being. To be precise these prediction markets are behavioral markets with powerful statistical components that are able to predict the most likely values of future financial variables, variances around such values, and their correlations with other future financial variables. Ray (2006) says that being unregulated, prediction markets are highly effective at flushing out and thereafter a ggregating relevant information including inside and expert information regarding a particular event, globally extracting such information from savvy bettors who are eager to profit from their inside and expert information. These sorts of prediction markets have become so popular that now a days major companies use such behavioral markets to accurately forecast sales, earnings, product success, and many other financial and economic variables. The foremost tool for these markets is the wisdom of crowd. In order to accurately predict financial and economical variables he presented few conditions as a prerequisite, which included mainly having a variety of opinions, with no herd behavior, should be able to use their knowledge according to the information available with them and last but not the least is the fact that prediction markets expectations are not self fulfilling prophecies. Prediction markets are a new genre of behavioral markets that continually reveal the thinking of confid ent insiders by suggesting them to profit from their inside and expert information. The subjective evidence with a few statistical evidences corroborates the impressive ability of these markets to predict financial events of all types. The phenomenon exists from ages and effectively proves its performance especially in worlds financial markets. The demonstrated accuracy of predictions in these markets can be of significant utility to traders, financial analysts, behavioral analysts, and many others intending to forecast and analyze financial data. A persons tendency to make errors is known as cognitive bias. These errors are based on the cognitive factors that include statistical judgments, social attribution and memory being common to all the humans in the world. Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing. Crowell (1994, pp. 1). The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. He discussed the frailty of forecasts. Generally it is said that the world is divided into two groups: People forecasting positively and people forecasting negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the illusion of validity which exists even when the illusionary character is recognized. Fisher and Statman, (2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsight. Shiller (2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. History proves it that many of cognitive biases in human judgment value uncertainly will change; they may be convinced if given proper instructions, on the part-experience of irrational behavior. The three most common themes of behavioral finance are as follows: Heuristics, Framing and Market Inefficiencies. People when decide on the basis of the rules of thumb regardless of rationalizing suffer from Heuristics. Some forms of Heuristics are: Prospect theory, Loss Aversion, Status quo Bias, Gamblers Fallacy[9], Self-serving bias and lastly Money illusion. Framing is basically a problem of decision making where the decision is based on the point where there is difference in how the case is presented to the decision maker. Cognitive framing, Mental accounting and Anchoring are the common forms of Framing 3. Market Inefficiencies As observed, that market outcomes are totally opposite to rational expectations and efficient market hypothesis where mispricing, irrational decision making and return anomalies are examples of it. Fung (2006) introduced three forms of market efficiency earlier presented by Fama in 1970. In the weak form, the information set con ­tains only historical prices. In the semi strong form, information set contains all publicly available information. In the strong form, the infor ­mation contains not only all publicly available information but also insider information not available to the public. This definition of efficient mar ­kets is too general to be testable empirically. To make the model testable, he proposed a process of price formation known as the expected re ­turn or fair game efficient markets model. In this model, when investors form expectations of security prices, they fully utilize all the information that is fully reflected in those prices. It is called a fair game model, because using only the information that is fully reflected in security prices, no trading system can have expected profits or returns in excess of equi ­librium expected profits or returns. These terms have been described as specific market anomaly from a behavioral point of view. Anomaly (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Equity premium puzzle Behavioral Economic Models are restricted to a certain observed market anomaly and it adjusts the neo classical models by explaining the phenomenon of Heuristics and framing to the decision makers. It is usually said that economics get along with in the neo classical framework, with just one restriction of the assumption of rationality. Loix et. Al (2005) in their paper Orientation towards Finances explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific financial behavior as already we see extensive research on the specific finance behavior such as saving, taxation, gambling and amassing debt, and gave a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. Loix et. al (2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information and Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: greater use of debit accounts, higher savings account, wide variety of investments, greater awareness of ones financial Intimate knowledge of the details of ones savings/deposit accounts obsessed by money, higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller, (2006) in his article talked about the co-evolution of neo-classical and behavior finance that in 1937 when A. Samuelsson one of the great economists wrote about people m aximizing the present value of utility subject to a present value. Another judgment he realized was time being consistent human behavior where if at any time t, 0 4. Investing and Cognitive Bias Money Managers and Money management is a very popular phenomenon. The performance in a stock market is measured at daily basis and waiting for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, more confident one becomes of ones ability to succeed; clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions Browne (2000). Further he discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money managers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of value is the problem. The reasons for this are two-fold, one being the practical reality of managing large sums of money, and other related to behavior. As the assets under management of an advisor grow, universe of potential stocks shrinks. Analyzing why individual and professional investors do not change their behavior even when they face empirical evidence, suggests that their decisions are less than optimal. An answer to this questio n is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less damaging than if a person is wrong alone. The herd instinct allows for comfort of safety in numbers. The other reason is that individuals try to behave same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to traditional view of investment management, fundamental forces drive markets, however many other investment firms are consider being active and basing their working on their experienced Judgment. It is also believed that Judgmental overrides value and fundamental forces of markets can be lethal as well as a cause of financial disappointment. Historically it has been found that people override at wrong times and in most cases would be better off sticking to their investment disciplines and the reason to this behavior is the cognitive bias. According to Crowell (1994) and many other researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks and large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. The assumptions made by Crowell (1994, pp.2) were that Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns. Whereas the results Crowell`s survey were contrary stating that Long Term Investment had a positive correlation with size and with Price/Book stocks. Crowell further stated that according to Shefrin and Statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Discussing the concept of regrets, aversion to regret is different from aversion to risk; Regret is acute when an individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of the stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, two major Cognitive errors appear: We have a double cognitive error: good company always makes good stock (representativeness), and involves less responsibility(Less aversion to regret). (Crowell, 1994,pp.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further, taking the responsibility for actions to improve their performance in future. The reasons for all the available discip Application to Modern Investment Theory to EMH Application to Modern Investment Theory to EMH The modern investment theory and its application on the efficient markets hypothesis 1. Introduction The Modern investment theory and its application is predicated on the Efficient Markets Hypothesis (EMH), assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the neo classical convention that has yielded such insights as portfolio optimization, Capital Asset Pricing Model, Arbitrage Pricing Theory and Cox Ingersoll-Ross theory of the term structure of interest rates, all of which are predicated on the EMH[2] rather than downside risks[3]. The theory of behavioral finance is opposite to the traditional theory of Finance and deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining past practices of investors and dete rmining the false performance of the investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology and sociology. It is reviewed that behavioral finance is generally based on individual behavior and financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where rational models fail to provide adequate information. Investors do not expect such research to provide a method to make lots of money from inefficient financial markets quickly. According to Shiller (2001) Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology where implications of these theories appear to be significant for efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility. It is found that in efficient market the principle of rational behavior is not always correct. Thus, the idea of analyzing other model of human behavior has come up. Gervais (2001) further explains the concept where he says that people like to relate to the stock market as a person having different moods, this person can be bad-tempered or high-spirited and can overreact one day or make amends the next. This person indicates human behavior which is unpredictable and behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding financial markets better. To do so it is important to understand behavioral finance presenting the concept of traditional theory overestimating rationality of investors, their biases in decisions casting a cumulative impact on asset prices. To many researchers the study of behavior in finance appeared to be a revolution. As it transforms peoples mentality and perception about markets and factors that influence the markets. The paradigm is shifting. People are continuing to walk across the border from the traditional to the behavioral camp. Gervais (2001, pp.2). On the contrary some people believe that may be its too early to call it a revolution. Gervais (2001) states that Fama in (1970) argued that behavioral finance has not really shown an impact on world prices, and that model contradict each other on different point of times. Giving very less account to behaviorist explanations of trends and the irregularities anomaly ( is any occurrence or object that is strange, unusual, or unique) also argued that in order to locate patterns the data mining techniques are much helpful. Other researchers have also criticized the idea that behavioral finance models tend to replace the traditional models of market functions. Some weaknesses in this area, explained by Gervais (2001)are that generally overreaction and under reaction are major causes of market behavior. In these cases People take the behavior that seems to be easy for a particular study regardless of the fact that whether these biases are either primary factor of economic forces or not. Secondly, lack of trained and expert people. The field does not have enough trained professionals both in psychology or finance fields and therefore as a result the models presented by researchers are improvised. Gervais (2001) also focused on individual behavior impacting asset prices and explained that this field of behavioral finance is currently in its developmental stage, in its way of development it is facing a lot of disagreement which itself is a productive one. He points out that if we apply the conceptual models of behavioral finance to the corporate finance, it can majorly pay off. If money managers are incorrectly rational, means they are probably not evaluating their investment strategies correctly. They might take wrong decisions in their capital structure decisions. It has been found that quite a few people foresee behavioral finance displacing the age old Efficient Markets theory. On the contrary underlying assumption that investors and managers are completely rational makes insightful sense to many people. 2. Traditional Finance and Empirical Evidence Fung, (2006) claimed that Post Keynesian theory has criticized mainstream economic theory for using statistical methods to model the world in which histori ­cal market data cannot provide, In recent years, two different lines of research experimental economics and behavioral finance have pro ­duced results that are at odds with the predictions of mainstream finan ­cial theory. This paper argues that it is beneficial to the development of good financial theory for Post Keynesian economists to engage in an exchange of ideas with the practitioners of these two lines of research. The difference of opinion originated when experimental economics and behavioral finance understood the difference between agents rationality in theory and in real world. Both had a same point of view regarding Post Keynesian economists where both of them refused to assume Post Keynesian economists assumption of economic actors being always rational by maximizing expected utility. Instead of assuming ration al economic ac ­tors who always act consistently, they often tap into insights provided by psychology to try to explain economic behavior. The use of psychol ­ogy can be traced back to Keynes, and, in fact, some of the papers in experimental economics and behavioral finance take a remark of Keynes on the psychology of economic actors as an inspiration for designing empirical tests of economic behavior. Indeed, some of these papers rec ­ognize that we live in an uncertain world, and they examine the heuris ­tics, or rules of thumb, that economic actors develop to guide their behavior in face of uncertainty. When Keynes made his remark in 1936 (the original publication date of the General Theory), there was not yet an efficient market hypothesis. But in 1970 Fama published his pioneering paper on efficient markets. In it, he defined an efficient market as a market in which prices always fully reflect available information. Traditional theory assumes that agents are rational an d the law of one price holds that is a perfect scenario. Where the law of One price[5]. And agents rationality explains the behavior of investor Professional and Individual which is generally inconsistent with rationality or future predictions. If a market achieves a perfect scenario where agents are rational and law of one price holds then the market is efficient. With the availability of large amount of information, form of market changes. It is unlikely that market prices contain all private information. The presence of noise traders (traders, trading randomly and not based on information). Researches show that stock returns are typically unpredictable based on past returns where as future returns are predictable to some extent. According to Glaser et al. (2003) Few examples from the past literature explains the problem of irrationality which occurs because of naive diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while ev aluating public information. Lately it has been found that investors` attitude towards the riskiness of a stock in future and the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors actions that stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about a stock portfolio or just about the value of each single security in their portfolio and thus ignore correlations. The concept of ownership society[6] has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As Shiller (2006) suggested that in order to improve lives of less advantaged people in our society is to teach them how to be capitalist, In order to put ownership society in its right perspective, behavioral finance is needed to be und erstood. The concept of ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance is also very helpful in understanding and justifying government involvement in investing decisions of individuals. The failure of millions of people to save properly for their future is also a core focus of behavioral finance. According to Glaser et al. (2003) there are two approaches towards behavioral finance, where both tend to have same goals. The goals tend to explain observed prices, market trading volume and Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices and Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism and Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities and individual behavior. It incorporates Prospect Theory[7], House money effect and other forms of mental accounting. Behavioral Finance and Rational debate: the article by Heaton and Rosenberg (2004) highlights the debate between the rational and behavioral model over testability and predictive success. And it was found that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviors. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, t hat utility functions, information sets and transaction costs cannot be `rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Heaton Rosenberg (2004) presented Milton Friedmans theory that laid the basis of positive economics. His methodology focused on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of economy, i.e. Investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioral approach emphasizes importance of taking limits in arbitrage. Further his methodological approach falls into the category `instru mentalism[8], which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have said that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Heaton Rosenberg (2004) further explains the concept of Rubinstein that how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, he came up with two arguments. Firstly he w ent on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, and derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as `What is the cost of capital for this firm? or `What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem lik e rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality induced mispricing exists; behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors which explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial markets have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of `testability and `predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. Ray (2006) examines a new genre of behavioral markets prediction markets and their remarkable a bility to aggregate inside and expert information from around the world in order to accurately predict all types of economic and financial variables. To date it is said that the prediction markets are the most accurately efficient markets as they prove to show all three forms of market efficiency (weak, semi-strong, and strong), in contrast to regulated markets. Prediction markets are also said to be decision markets. It initially evolved in 1988 with the first online betting market the Iowa Electronic Market. These online markets have proven their predictions accurately since the time they came into being. To be precise these prediction markets are behavioral markets with powerful statistical components that are able to predict the most likely values of future financial variables, variances around such values, and their correlations with other future financial variables. Ray (2006) says that being unregulated, prediction markets are highly effective at flushing out and thereafter a ggregating relevant information including inside and expert information regarding a particular event, globally extracting such information from savvy bettors who are eager to profit from their inside and expert information. These sorts of prediction markets have become so popular that now a days major companies use such behavioral markets to accurately forecast sales, earnings, product success, and many other financial and economic variables. The foremost tool for these markets is the wisdom of crowd. In order to accurately predict financial and economical variables he presented few conditions as a prerequisite, which included mainly having a variety of opinions, with no herd behavior, should be able to use their knowledge according to the information available with them and last but not the least is the fact that prediction markets expectations are not self fulfilling prophecies. Prediction markets are a new genre of behavioral markets that continually reveal the thinking of confid ent insiders by suggesting them to profit from their inside and expert information. The subjective evidence with a few statistical evidences corroborates the impressive ability of these markets to predict financial events of all types. The phenomenon exists from ages and effectively proves its performance especially in worlds financial markets. The demonstrated accuracy of predictions in these markets can be of significant utility to traders, financial analysts, behavioral analysts, and many others intending to forecast and analyze financial data. A persons tendency to make errors is known as cognitive bias. These errors are based on the cognitive factors that include statistical judgments, social attribution and memory being common to all the humans in the world. Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing. Crowell (1994, pp. 1). The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. He discussed the frailty of forecasts. Generally it is said that the world is divided into two groups: People forecasting positively and people forecasting negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the illusion of validity which exists even when the illusionary character is recognized. Fisher and Statman, (2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsight. Shiller (2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. History proves it that many of cognitive biases in human judgment value uncertainly will change; they may be convinced if given proper instructions, on the part-experience of irrational behavior. The three most common themes of behavioral finance are as follows: Heuristics, Framing and Market Inefficiencies. People when decide on the basis of the rules of thumb regardless of rationalizing suffer from Heuristics. Some forms of Heuristics are: Prospect theory, Loss Aversion, Status quo Bias, Gamblers Fallacy[9], Self-serving bias and lastly Money illusion. Framing is basically a problem of decision making where the decision is based on the point where there is difference in how the case is presented to the decision maker. Cognitive framing, Mental accounting and Anchoring are the common forms of Framing 3. Market Inefficiencies As observed, that market outcomes are totally opposite to rational expectations and efficient market hypothesis where mispricing, irrational decision making and return anomalies are examples of it. Fung (2006) introduced three forms of market efficiency earlier presented by Fama in 1970. In the weak form, the information set con ­tains only historical prices. In the semi strong form, information set contains all publicly available information. In the strong form, the infor ­mation contains not only all publicly available information but also insider information not available to the public. This definition of efficient mar ­kets is too general to be testable empirically. To make the model testable, he proposed a process of price formation known as the expected re ­turn or fair game efficient markets model. In this model, when investors form expectations of security prices, they fully utilize all the information that is fully reflected in those prices. It is called a fair game model, because using only the information that is fully reflected in security prices, no trading system can have expected profits or returns in excess of equi ­librium expected profits or returns. These terms have been described as specific market anomaly from a behavioral point of view. Anomaly (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Equity premium puzzle Behavioral Economic Models are restricted to a certain observed market anomaly and it adjusts the neo classical models by explaining the phenomenon of Heuristics and framing to the decision makers. It is usually said that economics get along with in the neo classical framework, with just one restriction of the assumption of rationality. Loix et. Al (2005) in their paper Orientation towards Finances explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific financial behavior as already we see extensive research on the specific finance behavior such as saving, taxation, gambling and amassing debt, and gave a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. Loix et. al (2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information and Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: greater use of debit accounts, higher savings account, wide variety of investments, greater awareness of ones financial Intimate knowledge of the details of ones savings/deposit accounts obsessed by money, higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller, (2006) in his article talked about the co-evolution of neo-classical and behavior finance that in 1937 when A. Samuelsson one of the great economists wrote about people m aximizing the present value of utility subject to a present value. Another judgment he realized was time being consistent human behavior where if at any time t, 0 4. Investing and Cognitive Bias Money Managers and Money management is a very popular phenomenon. The performance in a stock market is measured at daily basis and waiting for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, more confident one becomes of ones ability to succeed; clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions Browne (2000). Further he discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money managers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of value is the problem. The reasons for this are two-fold, one being the practical reality of managing large sums of money, and other related to behavior. As the assets under management of an advisor grow, universe of potential stocks shrinks. Analyzing why individual and professional investors do not change their behavior even when they face empirical evidence, suggests that their decisions are less than optimal. An answer to this questio n is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less damaging than if a person is wrong alone. The herd instinct allows for comfort of safety in numbers. The other reason is that individuals try to behave same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to traditional view of investment management, fundamental forces drive markets, however many other investment firms are consider being active and basing their working on their experienced Judgment. It is also believed that Judgmental overrides value and fundamental forces of markets can be lethal as well as a cause of financial disappointment. Historically it has been found that people override at wrong times and in most cases would be better off sticking to their investment disciplines and the reason to this behavior is the cognitive bias. According to Crowell (1994) and many other researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks and large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. The assumptions made by Crowell (1994, pp.2) were that Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns. Whereas the results Crowell`s survey were contrary stating that Long Term Investment had a positive correlation with size and with Price/Book stocks. Crowell further stated that according to Shefrin and Statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Discussing the concept of regrets, aversion to regret is different from aversion to risk; Regret is acute when an individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of the stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, two major Cognitive errors appear: We have a double cognitive error: good company always makes good stock (representativeness), and involves less responsibility(Less aversion to regret). (Crowell, 1994,pp.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further, taking the responsibility for actions to improve their performance in future. The reasons for all the available discip

The Hudsons Bay Company :: essays research papers fc

  Ã‚  Ã‚  Ã‚  Ã‚  Lawmaking is a complicated, complex and comprehensive process which involves the locating, focusing and directing of social control. There are strong theories about the essence of social control. Some sociologists have even concluded that social control as a concept should be discarded totally because its power as an analytical tool was weakened through an unhealthy combination of overuse and under-explanation. As Chunn and Gavigan point out, it is not sufficient to use social control as an analytic tool when one begins with the approach that (1) either the meaning of the concept is too obvious to need definition or (2) the concept is undefinable but can be used without being defined.   Ã‚  Ã‚  Ã‚  Ã‚  For the purposes of this study, an attempt will be made to examine the dialectical relationship between legal power and social control using the Hudson's Bay Company's monolithic jurisdiction over a large part of North America. The period under study is from the Company's chartering in 1670 until 1821, when a new regulatory act was passed. An examination of the legal system which was operative in the late 17th and entire 18th century in Rupert's Land offers insight into the roots of the Canadian legal process. In spite of the corporate nature of the Company-run Rupert's Land, I believe that a close study of legal questions, cases and decisions that arose during the Company's first one hundred and fifty years will indicate that all the social control mechanisms were not in the Company's hands. Rather a synergy between the Company and the frontierspeople determined the nature of the laws.   Ã‚  Ã‚  Ã‚  Ã‚  To cope with the above-mentioned difficulties in using social control as an analytical tool, I plan to use the conceptual theme of social controls suggested by Russell Smandych. Smandych's approach returns analytical usefulness to the social control concept. He examines the layers, levels, nuances, and threads of social control that both define and confine behavior. He takes social control analysis a necessary extra step by recognizing that it is not an entirety in and of itself but that it is a collection of controls, each operating at a different level. And rather than using the controls found in a society as explanations of that society, Smandych recommends using the possibility of these controls as analytical devices for restudying and rethinking a society.   Ã‚  Ã‚  Ã‚  Ã‚  The Hudson's Bay Company was entitled to handle all law making, enforcement, and execution from 1670 until 1870. Because the Hudson's Bay Company was working with a tabula rasa (especially as it did not give consideration to aboriginal laws), judicially speaking, it offers a prime example for viewing the development of law from step one.

Thomas Cole Essay -- essays research papers fc

THOMAS COLE Landscape painting was extremely important during the middle of the nineteenth century. One of the leading practitioners of landscape painters in America was Thomas Cole. He visited many places seeking the â€Å"natural† world to which he might utilize his direct observations to convey the untainted nature by man to his audience. His works resolved to find goodness in American land and to help Americans take pride in their unique geological features created by God. Thomas Cole inspired many with his brilliant works by offering satisfaction to those seeking the â€Å"truth† (realism) through the works of others. Thomas Cole was born on February 1, 1801 in Bolton, Lancashire, England. Due to financial problems his family endured, Cole, at the ripe old age of just fourteen, had to find work to assist with the family needs. He entered the work force as a textile printer and wood engraver in Philadelphia. In 1819, Cole returned to Ohio where his parents resided. Here, a portrait painter by the name of Stein, would become Cole’s primary teaching vehicle and inspiration for his oil techniques we’ve come to be familiar with. During this time, Cole was extremely impressed by what he saw in the landscapes of the New World and how different they were from the small town of England from whence he hailed. Self taught, art came naturally to Cole. One day Cole set out to observe nature and it’s wilderness. He began painting pictures by first making oil sketches of American rocks, trees, sunsets, plants, animals, as well as distant Indians. From these sketches he formed several paintings. Most famous for his allegorical collection called the â€Å"The Course of Empire† and is well-known for his Landscape paintings, â€Å"The Oxbow,† â€Å"The Woodchopper,† and â€Å"The Clove, Catskills.† In January of 1826, Cole had become to be known for founding the National Academy of Design. During this time, many would comission him to paint pictures of American scenery, but his primary desire and goal, he says, was to create a â€Å"higher style of landscape that would express moral or religious tones.† In 1836, Cole married Maria Barstow and settled in Catskill, New York. Catskill would obviously become the inspiration for his piece, â€Å"Catskill Mountains and the Hudson River†. From these paintings he influenced many other artists. Among these artists were Frederick Edwin Church and Albert Bierstadt. ... ...s Cole did an excellent job in portraying realism in his paintings. He helped America vision a society with possibilities, opportunities, and abundance of resources. Not only did Cole inspire the nation; he also influenced many artists who are now heading Cole’s way. Cole was a brilliant man of great intelligence who stole the hearts of many. In an article written by William Church Bryant, Bryant explains, â€Å"We might dream in his funeral oration on Cole, that the conscious valleys miss his accustomed visits and that autumnal glories of the woods are paler because of his departure.† Cole died on February 11, 1848 due to an illness and was remembered by many whom he helped to see the true vision of America. Bibliography Works Cited: Harvey, Eleanor Jones. The Painted Sketch: American Impressions From Nature 1830-1880. Dallas: Harry N. Abrams, Inc., 1998. Lucie-Smith, Edward. American Realism. New York: Harry N. Abrams, Inc., 1994. Stokstad, Marilyn. Art History. Rev. ed. Vol. 2. New York: Harry N. Abrams, Inc., 1995. 973-974. Yaeger, Bert D. The Hudson River School: American Landscape Artists. New York: Smithmark Publishers, 1996.

Literary Devices in Carvers Cathedral Essay -- Raymond Carver, irony

Upon reading Raymond Carver's short story of the Cathedral one will notice the literary devices used in the short story. When analyzing the story completely, one then understands the themes, motifs, metaphors, and the overall point of the piece. This leaves the reader with an appreciation of the story and a feeling of complete satisfaction. Carver tells the story in first person of a narrator married to his wife. Problems occur when she wants a friend of hers, an old blind man, to visit for a while because his wife has died. The narrator's wife used to work for the blind man in Seattle when the couple was financial insecure and needed extra money. The setting here is important, because Seattle is associated with rain, and rain symbolically represents a cleansing or change. This alludes to the drastic change in the narrator in the end of the story. The wife and blind man kept in touch over the years by sending each other tape recordings of their voices which the narrator refers it to being his wife's "chief means or recreation" (pg 581). The narrator does not move chronologically, contrarily, but uses small flashbacks to tell his point, leading up to the actual visit of the blind man where he then tells the story in a present tense. This lets the author seem like he is actually telling the story in person, reflecting on past occurrences of his life when necessary. His tone however, is a cynical, crude, humorous tone that carries throughout the story. The word choice and sentences are constructed with simple, lifelike words, which makes the reader sense the author is really telling the story to them. The narrator is biased against the blind from the beginning. For instance, he stereotypes all blind people thinking they ... ...irst time for everything." However, because of the way her "inhaled" and "held in the smoke", the narrator believes he has been "doing it since he was nine years old" (pg. 506). This alludes to Robert's childhood, another thing the narrator and him share. Hence, upon analyzing the story, one can conclude the certain themes that parallel through the pages. Firstly, a theme of unity and trust is present at the end of the play. This is supported by the image of the cathedral, which is a place of unity. Most importantly, the notion of equality among people is the main theme within this story. The narrator starts as a biased, idiot, who dislikes all people that are not like himself. He even at times is rude to his wife. Ironically, it takes a blind man to change the man that can literally see, to rule out the prejudices and to teach him that all men are created equal.

The Da Vinci Code Chapter 93-97

CHAPTER 93 London's Opus Dei Centre is a modest brick building at 5 Orme Court, overlooking the North Walk at Kensington Gardens. Silas had never been here, but he felt a rising sense of refuge and asylum as he approached the building on foot. Despite the rain, Remy had dropped him off a short distance away in order to keep the limousine off the main streets. Silas didn't mind the walk. The rain was cleansing. At Remy's suggestion, Silas had wiped down his gun and disposed of it through a sewer grate. He was glad to get rid of it. He felt lighter. His legs still ached from being bound all that time, but Silas had endured far greater pain. He wondered, though, about Teabing, whom Remy had left bound in the back of the limousine. The Briton certainly had to be feeling the pain by now. â€Å"What will you do with him?† Silas had asked Remy as they drove over here. Remy had shrugged. â€Å"That is a decision for the Teacher.† There was an odd finality in his tone. Now, as Silas approached the Opus Dei building, the rain began to fall harder, soaking his heavy robe, stinging the wounds of the day before. He was ready to leave behind the sins of the last twenty-four hours and purge his soul. His work was done. Moving across a small courtyard to the front door, Silas was not surprised to find the door unlocked. He opened it and stepped into the minimalist foyer. A muted electronic chime sounded upstairs as Silas stepped onto the carpet. The bell was a common feature in these halls where the residents spent most of the day in their rooms in prayer. Silas could hear movement above on the creaky wood floors. A man in a cloak came downstairs. â€Å"May I help you?† He had kind eyes that seemed not even to register Silas's startling physical appearance. â€Å"Thank you. My name is Silas. I am an Opus Dei numerary.† â€Å"American?† Silas nodded. â€Å"I am in town only for the day. Might I rest here?† â€Å"You need not even ask. There are two empty rooms on the third floor. Shall I bring you some tea and bread?† â€Å"Thank you.† Silas was famished. Silas went upstairs to a modest room with a window, where he took off his wet robe and knelt down to pray in his undergarments. He heard his host come up and lay a tray outside his door. Silas finished his prayers, ate his food, and lay down to sleep. Three stories below, a phone was ringing. The Opus Dei numerary who had welcomed Silas answered the line. â€Å"This is the London police,† the caller said. â€Å"We are trying to find an albino monk. We've had a tip-off that he might be there. Have you seen him?† The numerary was startled. â€Å"Yes, he is here. Is something wrong?† â€Å"He is there now?† â€Å"Yes, upstairs praying. What is going on?† â€Å"Leave him precisely where he is,† the officer commanded. â€Å"Don't say a word to anyone. I'm sending officers over right away.† CHAPTER 94 St. James's Park is a sea of green in the middle of London, a public park bordering the palaces of Westminster, Buckingham, and St. James's. Once enclosed by King Henry VIII and stocked with deer for the hunt, St. James's Park is now open to the public. On sunny afternoons, Londoners picnic beneath the willows and feed the pond's resident pelicans, whose ancestors were a gift to Charles II from the Russian ambassador. The Teacher saw no pelicans today. The stormy weather had brought instead seagulls from the ocean. The lawns were covered with them – hundreds of white bodies all facing the same direction, patiently riding out the damp wind. Despite the morning fog, the park afforded splendid views of the Houses of Parliament and Big Ben. Gazing across the sloping lawns, past the duck pond and the delicate silhouettes of the weeping willows, the Teacher could see the spires of the building that housed the knight's tomb – the real reason he had told Remy to come to this spot. As the Teacher approached the front passenger door of the parked limousine, Remy leaned across and opened the door. The Teacher paused outside, taking a pull from the flask of cognac he was carrying. Then, dabbing his mouth, he slid in beside Remy and closed the door. Remy held up the keystone like a trophy. â€Å"It was almost lost.† â€Å"You have done well,† the Teacher said. â€Å"We have done well,† Remy replied, laying the keystone in the Teacher's eager hands. The Teacher admired it a long moment, smiling. â€Å"And the gun? You wiped it down?† â€Å"Back in the glove box where I found it.† â€Å"Excellent.† The Teacher took another drink of cognac and handed the flask to Remy. â€Å"Let's toast our success. The end is near.† Remy accepted the bottle gratefully. The cognac tasted salty, but Remy didn't care. He and the Teacher were truly partners now. He could feel himself ascending to a higher station in life. I will never be a servant again.As Remy gazed down the embankment at the duck pond below, Chateau Villette seemed miles away. Taking another swig from the flask, Remy could feel the cognac warming his blood. The warmth in Remy's throat, however, mutated quickly to an uncomfortable heat. Loosening his bow tie, Remy tasted an unpleasant grittiness and handed the flask back to the Teacher. â€Å"I've probably had enough,† he managed, weakly. Taking the flask, the Teacher said,† Remy, as you are aware, you are the only one who knows my face. I placed enormous trust in you.† â€Å"Yes,† he said, feeling feverish as he loosened his tie further. â€Å"And your identity shall go with me to the grave.† The Teacher was silent a long moment. â€Å"I believe you.† Pocketing the flask and the keystone, the Teacher reached for the glove box and pulled out the tiny Medusa revolver. For an instant, Remy felt a surge of fear, but the Teacher simply slipped it in his trousers pocket. What is he doing? Remy felt himself sweating suddenly. â€Å"I know I promised you freedom,† the Teacher said, his voice now sounding regretful. â€Å"But considering your circumstances, this is the best I can do.† The swelling in Remy's throat came on like an earthquake, and he lurched against the steering column, grabbing his throat and tasting vomit in his narrowing esophagus. He let out a muted croak of a scream, not even loud enough to be heard outside the car. The saltiness in the cognac now registered. I'm being murdered! Incredulous, Remy turned to see the Teacher sitting calmly beside him, staring straight ahead out the windshield. Remy's eyesight blurred, and he gasped for breath. I made everything possible for him! How could he do this! Whether the Teacher had intended to kill Remy all along or whether it had been Remy's actions in the Temple Church that had made the Teacher lose faith, Remy would never know. Terror and rage coursed through him now. Remy tried to lunge for the Teacher, but his stiffening body could barely move. I trusted you with everything! Remy tried to lift his clenched fists to blow the horn, but instead he slipped sideways, rolling onto the seat, lying on his side beside the Teacher, clutching at his throat. The rain fell harder now. Remy could no longer see, but he could sense his oxygen-deprived brain straining to cling to his last faint shreds of lucidity. As his world slowly went black, Remy Legaludec could have sworn he heard the sounds of the soft Riviera surf. The Teacher stepped from the limousine, pleased to see that nobody was looking in his direction. Ihad no choice, he told himself, surprised how little remorse he felt for what he had just done. Remy sealed his own fate.The Teacher had feared all along that Remy might need to be eliminated when the mission was complete, but by brazenly showing himself in the Temple Church, Remy had accelerated the necessity dramatically. Robert Langdon's unexpected visit to Chateau Villette had brought the Teacher both a fortuitous windfall and an intricate dilemma. Langdon had delivered the keystone directly to the heart of the operation, which was a pleasant surprise, and yet he had brought the police on his tail. Remy's prints were all over Chateau Villette, as well as in the barn's listening post, where Remy had carried out the surveillance. The Teacher was grateful he had taken so much care in preventing any ties between Remy's activities and his own. Nobody could implicate the Teacher unless Rem y talked, and that was no longer a concern. One more loose end to tie up here, the Teacher thought, moving now toward the rear door of the limousine. The police will have no idea what happened†¦and no living witness left to tell them.Glancing around to ensure nobody was watching, he pulled open the door and climbed into the spacious rear compartment. Minutes later, the Teacher was crossing St. James's Park. Only two people now remain.Langdonand Neveu.They were more complicated. But manageable. At the moment, however, the Teacher had the cryptex to attend to. Gazing triumphantly across the park, he could see his destination. In London lies a knight a Pope interred.As soon as the Teacher had heard the poem, he had known the answer. Even so, that the others had not figured it out was not surprising. I have an unfair advantage.Having listened to Sauniere's conversations for months now, the Teacher had heard the Grand Master mention this famous knight on occasion, expressing esteem almost matching that he held for Da Vinci. The poem's reference to the knight was brutally simple once one saw it – a credit to Sauniere's wit – and yet how this tomb would reveal the final password was still a mystery. You seek the orb that ought be on his tomb. The Teacher vaguely recalled photos of the famous tomb and, in particular, its most distinguishing feature. A magnificent orb.The huge sphere mounted atop the tomb was almost as large as the tomb itself. The presence of the orb seemed both encouraging and troubling to the Teacher. On one hand, it felt like a signpost, and yet, according to the poem, the missing piece of the puzzle was an orb that ought to be on his tomb†¦ not one that was already there. He was counting on his closer inspection of the tomb to unveil the answer. The rain was getting heavier now, and he tucked the cryptex deep in his right-hand pocket to protect it from the dampness. He kept the tiny Medusa revolver in his left, out of sight. Within minutes, he was stepping into the quiet sanctuary of London's grandest nine-hundred-year-old building. Just as the Teacher was stepping out of the rain, Bishop Aringarosa was stepping into it. On the rainy tarmac at Biggin Hill Executive Airport, Aringarosa emerged from his cramped plane, bundling his cassock against the cold damp. He had hoped to be greeted by Captain Fache. Instead a young British police officer approached with an umbrella. â€Å"Bishop Aringarosa? Captain Fache had to leave. He asked me to look after you. He suggested I take you to Scotland Yard. He thought it would be safest.† Safest? Aringarosa looked down at the heavy briefcase of Vatican bonds clutched in his hand. He had almost forgotten. â€Å"Yes, thank you.† Aringarosa climbed into the police car, wondering where Silas could be. Minutes later, the police scanner crackled with the answer. 5 Orme Court. Aringarosa recognized the address instantly. The Opus Dei Centre in London. He spun to the driver. â€Å"Take me there at once!† CHAPTER 95 Langdon's eyes had not left the computer screen since the search began. Five minutes. Only two hits. Both irrelevant. He was starting to get worried. Pamela Gettum was in the adjoining room, preparing hot drinks. Langdon and Sophie had inquired unwisely if there might be some coffee brewing alongside the tea Gettum had offered, and from the sound of the microwave beeps in the next room, Langdon suspected their request was about to be rewarded with instant Nescafe. Finally, the computer pinged happily. â€Å"Sounds like you got another,† Gettum called from the next room. â€Å"What's the title?† Langdon eyed the screen. Grail Allegory in Medieval Literature: A Treatise on Sir Gawain and the Green Knight. â€Å"Allegory of the Green Knight,† he called back. â€Å"No good,† Gettum said. â€Å"Not many mythological green giants buried in London.† Langdon and Sophie sat patiently in front of the screen and waited through two more dubious returns. When the computer pinged again, though, the offering was unexpected. DIE OPERN VON RICHARD WAGNER â€Å"The operas of Wagner?† Sophie asked. Gettum peeked back in the doorway, holding a packet of instant coffee. â€Å"That seems like a strange match. Was Wagner a knight?† â€Å"No,† Langdon said, feeling a sudden intrigue. â€Å"But he was a well-known Freemason.† Along withMozart, Beethoven, Shakespeare, Gershwin, Houdini, and Disney.Volumes had been written about the ties between the Masons and the Knights Templar, the Priory of Sion, and the Holy Grail. â€Å"I want to look at this one. How do I see the full text?† â€Å"You don't want the full text,† Gettum called. â€Å"Click on the hypertext title. The computer will display your keyword hits along with mono prelogs and triple postlogs for context.† Langdon had no idea what she had just said, but he clicked anyway. A new window popped up. †¦ mythological knight named Parsifal who†¦ †¦ metaphorical Grail quest that arguably†¦ †¦ the LondonPhilharmonic in 1855†¦ Rebecca Pope's opera anthology† Diva's†¦ †¦ Wagner's tomb in Bayreuth, Germany†¦ â€Å"Wrong Pope,† Langdon said, disappointed. Even so, he was amazed by the system's ease of use. The keywords with context were enough to remind him that Wagner's opera Parsifal was a tribute to Mary Magdalene and the bloodline of Jesus Christ, told through the story of a young knight on a quest for truth. â€Å"Just be patient,† Gettum urged. â€Å"It's a numbers game. Let the machine run.† Over the next few minutes, the computer returned several more Grail references, including a text about troubadours – France's famous wandering minstrels. Langdon knew it was no coincidence that the word minstrel and minister shared an etymological root. The troubadours were the traveling servants or† ministers† of the Church of Mary Magdalene, using music to disseminate the story of the sacred feminine among the common folk. To this day, the troubadours sang songs extolling the virtues of† our Lady† – a mysterious and beautiful woman to whom they pledged themselves forever. Eagerly, he checked the hypertext but found nothing. The computer pinged again. KNIGHTS, KNAVES, POPES, AND PENTACLES: THE HISTORY OF THE HOLY GRAIL THROUGH TAROT â€Å"Not surprising,† Langdon said to Sophie. â€Å"Some of our keywords have the same names as individual cards.† He reached for the mouse to click on a hyperlink. â€Å"I'm not sure if your grandfather ever mentioned it when you played Tarot with him, Sophie, but this game is a ‘flash- card catechism' into the story of the Lost Bride and her subjugation by the evil Church.† Sophie eyed him, looking incredulous. â€Å"I had no idea.† â€Å"That's the point. By teaching through a metaphorical game, the followers of the Grail disguised their message from the watchful eye of the Church.† Langdon often wondered how many modern card players had any clue that their four suits – spades, hearts, clubs, diamonds – were Grail-related symbols that came directly from Tarot's four suits of swords, cups, scepters, and pentacles. Spades were Swords – The blade. Male. Hearts were Cups – The chalice. Feminine. Clubs were Scepters – The Royal Line. The flowering staff. Diamonds were Pentacles – The goddess. The sacred feminine. Four minutes later, as Langdon began feeling fearful they would not find what they had come for, the computer produced another hit. The Gravity of Genius: Biography of a Modern Knight. â€Å"Gravity of Genius?† Langdon called out to Gettum. â€Å"Bio of a modern knight?† Gettum stuck her head around the corner. â€Å"How modern? Please don't tell me it's your Sir Rudy Giuliani. Personally, I found that one a bit off the mark.† Langdon had his own qualms about the newly knighted Sir Mick Jagger, but this hardly seemed the moment to debate the politics of modern British knighthood. â€Å"Let's have a look.† Langdon summoned up the hypertext keywords. †¦ honorable knight, Sir Isaac Newton†¦ †¦ in Londonin 1727 and†¦ †¦ his tomb in Westminster Abbey†¦ †¦ Alexander Pope, friend and colleague†¦ â€Å"I guess ‘modern' is a relative term,† Sophie called to Gettum. â€Å"It's an old book. About Sir Isaac Newton.† Gettum shook her head in the doorway. â€Å"No good. Newton was buried in Westminster Abbey, the seat of English Protestantism. There's no way a Catholic Pope was present. Cream and sugar?† Sophie nodded. Gettum waited. â€Å"Robert?† Langdon's heart was hammering. He pulled his eyes from the screen and stood up. â€Å"Sir Isaac Newton is our knight.† Sophie remained seated. â€Å"What are you talking about?† â€Å"Newton is buried in London,† Langdon said. â€Å"His labors produced new sciences that incurred the wrath of the Church. And he was a Grand Master of the Priory of Sion. What more could we want?† â€Å"What more?† Sophie pointed to the poem. â€Å"How about a knight a Pope interred? You heard Ms. Gettum. Newton was not buried by a Catholic Pope.† Langdon reached for the mouse. â€Å"Who said anything about a Catholic Pope?† He clicked on the† Pope† hyperlink, and the complete sentence appeared. Sir Isaac Newton's burial, attended by kings and nobles, was presided over by Alexander Pope, friend and colleague, who gave a stirring eulogy before sprinkling dirt on the tomb. Langdon looked at Sophie. â€Å"We had the correct Pope on our second hit. Alexander.† He paused. â€Å"A. Pope.† In London lies a knight A. Pope interred. Sophie stood up, looking stunned. Jacques Sauniere, the master of double-entendres, had proven once again that he was a frighteningly clever man. CHAPTER 96 Silas awoke with a start. He had no idea what had awoken him or how long he had been asleep. Was I dreaming? Sitting up now on his straw mat, he listened to the quiet breathing of the Opus Dei residence hall, the stillness textured only by the soft murmurs of someone praying aloud in a room below him. These were familiar sounds and should have comforted him. And yet he felt a sudden and unexpected wariness. Standing, wearing only his undergarments, Silas walked to the window. Was I followed? The courtyard below was deserted, exactly as he had seen it when he entered. He listened. Silence. Sowhy am I uneasy? Long ago Silas had learned to trust his intuition. Intuition had kept him alive as a child on the streets of Marseilles long before prison†¦ long before he was born again by the hand of Bishop Aringarosa. Peering out the window, he now saw the faint outline of a car through the hedge. On the car's roof was a police siren. A floorboard creaked in the hallway. A door latch moved. Silas reacted on instinct, surging across the room and sliding to a stop just behind the door as it crashed open. The first police officer stormed through, swinging his gun left then right at what appeared an empty room. Before he realized where Silas was, Silas had thrown his shoulder into the door, crushing a second officer as he came through. As the first officer wheeled to shoot, Silas dove for his legs. The gun went off, the bullet sailing above Silas's head, just as he connected with the officer's shins, driving his legs out from under him, and sending the man down, his head hitting the floor. The second officer staggered to his feet in the doorway, and Silas drove a knee into his groin, then went clambering over the writhing body into the hall. Almost naked, Silas hurled his pale body down the staircase. He knew he had been betrayed, but by whom? When he reached the foyer, more officers were surging through the front door. Silas turned the other way and dashed deeper into the residence hall. The women's entrance.Every Opus Dei building has one.Winding down narrow hallways, Silas snaked through a kitchen, past terrified workers, who left to avoid the naked albino as he knocked over bowls and silverware, bursting into a dark hallway near the boiler room. He now saw the door he sought, an exit light gleaming at the end. Running full speed through the door out into the rain, Silas leapt off the low landing, not seeing the officer coming the other way until it was too late. The two men collided, Silas's broad, naked shoulder grinding into the man's sternum with crushing force. He drove the officer backward onto the pavement, landing hard on top of him. The officer's gun clattered away. Silas could hear men running down the hall shouting. Rolling, he grabbed the loose gun just as the officers emerged. A shot rang out on the stairs, and Silas felt a searing pain below his ribs. Filled with rage, he opened fire at all three officers, their blood spraying. A dark shadow loomed behind, coming out of nowhere. The angry hands that grabbed at his bare shoulders felt as if they were infused with the power of the devil himself. The man roared in his ear. SILAS, NO! Silas spun and fired. Their eyes met. Silas was already screaming in horror as Bishop Aringarosa fell. CHAPTER 97 More than three thousand people are entombed or enshrined within Westminster Abbey. The colossal stone interior burgeons with the remains of kings, statesmen, scientists, poets, and musicians. Their tombs, packed into every last niche and alcove, range in grandeur from the most regal of mausoleums – that of Queen Elizabeth I, whose canopied sarcophagus inhabits its own private, apsidal chapel – down to the most modest etched floor tiles whose inscriptions have worn away with centuries of foot traffic, leaving it to one's imagination whose relics might lie below the tile in the undercroft. Designed in the style of the great cathedrals of Amiens, Chartres, and Canterbury, Westminster Abbey is considered neither cathedral nor parish church. It bears the classification of royal peculiar, subject only to the Sovereign. Since hosting the coronation of William the Conqueror on Christmas Day in 1066, the dazzling sanctuary has witnessed an endless procession of royal ceremonies and affairs of state – from the canonization of Edward the Confessor, to the marriage of Prince Andrew and Sarah Ferguson, to the funerals of Henry V, Queen Elizabeth I, and Lady Diana. Even so, Robert Langdon currently felt no interest in any of the abbey's ancient history, save one event – the funeral of the British knight Sir Isaac Newton. In London lies a knight a Pope interred. Hurrying through the grand portico on the north transept, Langdon and Sophie were met by guards who politely ushered them through the abbey's newest addition – a large walk-through metal detector – now present in most historic buildings in London. They both passed through without setting off the alarm and continued to the abbey entrance. Stepping across the threshold into Westminster Abbey, Langdon felt the outside world evaporate with a sudden hush. No rumble of traffic. No hiss of rain. Just a deafening silence, which seemed to reverberate back and forth as if the building were whispering to itself. Langdon's and Sophie's eyes, like those of almost every visitor, shifted immediately skyward, where the abbey's great abyss seemed to explode overhead. Gray stone columns ascended like redwoods into the shadows, arching gracefully over dizzying expanses, and then shooting back down to the stone floor. Before them, the wide alley of the north transept stretched out like a deep canyon, flanked by sheer cliffs of stained glass. On sunny days, the abbey floor was a prismatic patchwork of light. Today, the rain and darkness gave this massive hollow a wraithlike aura†¦ more like that of the crypt it truly was. â€Å"It's practically empty,† Sophie whispered. Langdon felt disappointed. He had hoped for a lot more people. A more public place.Their earlier experience in the deserted Temple Church was not one Langdon wanted to repeat. He had been anticipating a certain feeling of security in the popular tourist destination, but Langdon's recollections of bustling throngs in a well-lit abbey had been formed during the peak summer tourist season. Today was a rainy April morning. Rather than crowds and shimmering stained glass, all Langdon saw was acres of desolate floor and shadowy, empty alcoves. â€Å"We passed through metal detectors,† Sophie reminded, apparently sensing Langdon's apprehension. â€Å"If anyone is in here, they can't be armed.† Langdon nodded but still felt circumspect. He had wanted to bring the London police with them, but Sophie's fears of who might be involved put a damper on any contact with the authorities. We need to recover the cryptex, Sophie had insisted. It is the key to everything. She was right, of course. The key to getting Leigh back alive. The key to finding the Holy Grail. The key to learning who is behind this. Unfortunately, their only chance to recover the keystone seemed to be here and now†¦ at the tomb of Isaac Newton. Whoever held the cryptex would have to pay a visit to the tomb to decipher the final clue, and if they had not already come and gone, Sophie and Langdon intended to intercept them. Striding toward the left wall to get out of the open, they moved into an obscure side aisle behind a row of pilasters. Langdon couldn't shake the image of Leigh Teabing being held captive, probably tied up in the back of his own limousine. Whoever had ordered the top Priory members killed would not hesitate to eliminate others who stood in the way. It seemed a cruel irony that Teabing – a modern British knight – was a hostage in the search for his own countryman, Sir Isaac Newton. â€Å"Which way is it?† Sophie asked, looking around. The tomb.Langdon had no idea. â€Å"We should find a docent and ask.† Langdon knew better than to wander aimlessly in here. Westminster Abbey was a tangled warren of mausoleums, perimeter chambers, and walk-in burial niches. Like the Louvre's Grand Gallery, it had a lone point of entry – the door through which they had just passed – easy to find your way in, but impossible to find your way out. A literal tourist trap, one of Langdon's befuddled colleagues had called it. Keeping architectural tradition, the abbey was laid out in the shape of a giant crucifix. Unlike most churches, however, it had its entrance on the side, rather than the standard rear of the church via the narthex at the bottom of the nave. Moreover, the abbey had a series of sprawling cloisters attached. One false step through the wrong archway, and a visitor was lost in a labyrinth of outdoor passageways surrounded by high walls. â€Å"Docents wear crimson robes,† Langdon said, approaching the center of the church. Peering obliquely across the towering gilded altar to the far end of the south transept, Langdon saw several people crawling on their hands and knees. This prostrate pilgrimage was a common occurrence in Poets' Corner, although it was far less holy than it appeared. Tourists doing grave rubbings. â€Å"I don't see any docents,† Sophie said. â€Å"Maybe we can find the tomb on our own?† Without a word, Langdon led her another few steps to the center of the abbey and pointed to the right. Sophie drew a startled breath as she looked down the length of the abbey's nave, the full magnitude of the building now visible. â€Å"Aah,† she said. â€Å"Let's find a docent.† At that moment, a hundred yards down the nave, out of sight behind the choir screen, the stately tomb of Sir Isaac Newton had a lone visitor. The Teacher had been scrutinizing the monument for ten minutes now. Newton's tomb consisted of a massive black-marble sarcophagus on which reclined the sculpted form of Sir Isaac Newton, wearing classical costume, and leaning proudly against a stack of his own books – Divinity, Chronology, Opticks, and Philosophiae Naturalis Principia Mathematica. At Newton's feet stood two winged boys holding a scroll. Behind Newton's recumbent body rosean austere pyramid. Although the pyramid itself seemed an oddity, it was the giant shape mounted halfway up the pyramid that most intrigued the Teacher. An orb. The Teacher pondered Sauniere's beguiling riddle. You seek the orb that ought be on his tomb.The massive orb protruding from the face of the pyramid was carved in basso-relievo and depicted allkinds of heavenly bodies – constellations, signs of the zodiac, comets, stars, and planets. Above it, the image of the Goddess of Astronomy beneath a field of stars. Countless orbs. The Teacher had been convinced that once he found the tomb, discerning the missing orb would be easy. Now he was not so sure. He was gazing at a complicated map of the heavens. Was there a missing planet? Had some astronomical orb been omitted from a constellation? He had no idea. Even so, the Teacher could not help but suspect that the solution would be ingeniously clean and simple – â€Å"a knight a pope interred.† What orb am I looking for? Certainly, an advanced knowledge of astrophysics was not a prerequisite for finding the Holy Grail, was it? It speaks of Rosy flesh and seeded womb. The Teacher's concentration was broken by several approaching tourists. He slipped the cryptex back in his pocket and watched warily as the visitors went to a nearby table, left a donation in the cup, and restocked on the complimentary grave-rubbing supplies set out by the abbey. Armed with fresh charcoal pencils and large sheets of heavy paper, they headed off toward the front of the abbey, probably to the popular Poets' Corner to pay their respects to Chaucer, Tennyson, and Dickens by rubbing furiously on their graves. Alone again, he stepped closer to the tomb, scanning it from bottom to top. He began with the clawed feet beneath the sarcophagus, moved upward past Newton, past his books on science, past the two boys with their mathematical scroll, up the face of the pyramid to the giant orb with its constellations, and finally up to the niche's star-filled canopy. What orb ought to be here†¦and yet is missing? He touched the cryptex in his pocket as if he could somehow divine the answer from Sauniere's crafted marble. Only five letters separate me from the Grail. Pacing now near the corner of the choir screen, he took a deep breath and glanced up the long nave toward the main altar in the distance. His gaze dropped from the gilded altar down to the bright crimson robe of an abbey docent who was being waved over by two very familiar individuals. Langdon and Neveu. Calmly, the Teacher moved two steps back behind the choir screen. That was fast.He had anticipated Langdon and Sophie would eventually decipher the poem's meaning and come to Newton's tomb, but this was sooner than he had imagined. Taking a deep breath, the Teacher considered his options. He had grown accustomed to dealing with surprises. I am holding the cryptex. Reaching down to his pocket, he touched the second object that gave him his confidence: the Medusa revolver. As expected, the abbey's metal detectors had blared as the Teacher passed through with the concealed gun. Also as expected, the guards had backed off at once when the Teacher glared indignantly and flashed his identification card. Official rank always commanded the proper respect. Although initially the Teacher had hoped to solve the cryptex alone and avoid any further complications, he now sensed that the arrival of Langdon and Neveu was actually a welcome development. Considering the lack of success he was having with the ‘orb' reference, he might be able to use their expertise. After all, if Langdon had deciphered the poem to find the tomb, there was a reasonable chance he also knew something about the orb. And if Langdon knew the password, then it was just a matter of applying the right pressure. Not here, of course.Somewhere private. The Teacher recalled a small announcement sign he had seen on his way into the abbey. Immediately he knew the perfect place to lure them. The only question now†¦ what to use as bait.

Background Paper of Pirate Steel Company

The Pirate Steel Company is in the steel producing industry that manufactures in the United States. The Pirate Steel Company sells its products in the United States and many other nations abroad. Pirate Steel was considered a leader in its industry and maintained high standards of achievement until foreign competition began to affect their profitability. Though Pirate Steel has never been very cost conscience in production operations, the increases in material, labor, and other inventories has made a deep impact in Pirate Steel†s view on minimizing costs. With an increase in production costs, the selling price of the company†s manufactured goods increased as well. This increase in prices had to be closely monitored due to competition. With new regulations on production expenses, the people in production, like the foreperson and the manager, had the entire burden on them since they had to justify all repair and maintenance expenditures. With new procedures, every work order form had to be exaggerated so that it seemed necessary for repair and maintenance expenditures. Since the work order forms were exaggerated, the accountant found that these requests were filled with misleading information. All expenses were recorded properly, but an external auditor might question the fictionalized reports. The ethical dilemma of Pirate Steel Company is that the foreperson devised a strategy to get maintenance and repair orders approved by providing misleading information about the extent of the reports. The work order forms seemed to imply that new equipment was bought each time a repair was needed. With this type of fictionalized information given, the external auditors may question the accounting methods pertaining to repair and maintenance. The stakeholders in this situation are the foreperson, the accountant, customers, shareholders, management, and the executives. The foreperson was the one who initially created the plan of falsifying information about repair and maintenance needs. He did this because of fear that any job delays, due to failure of machinery, would be blamed on him. The accountant is also responsible because he must decide how he must approach this situation from an ethical standpoint. There are many options for him to choose, but only one is correct. The Utilitarian Theory emphasizes on how the consequences of an action affect the individuals involved. This is a theory of balancing negative social actions and benefits to minimize the negatives and maximize the benefits. The Utilitarian Theory would be applied as Faze approached the chief executive officer of Pirate Steel and requests that he evaluates the new cost control policy and the actions being taken with it. Faze should explain that the descriptions of the work orders should be evaluated for honesty. He should tell the CEO that if these patterns continue, it might have a negative effect on the company†s progress. The CEO should then sit with Faze and devise a more efficient plan. The Theory of Rights states that each person should be treated as fairly as possible and that others have the obligation to treat everyone equally as a sense of moral duty. The Theory of Rights could be applied in this situation allowing the accountant to overlook this minor problem because he feels that this process is the most efficient way for the company to operate. Faze must go to the production manager and let him know that the fictionalized work orders will not affect the company in the short run, but in the long run they might pose a potential loss in income due to excess expenditures in repairs and maintenance. The Theory of Justice involves equity, fairness, and impartiality. These major components are used in the way that individuals are affected by their treatment. The Theory of Justice could be applied to the situation by employees approaching the production management and demanding that the work order forms be much easier to be approved. The employees think that too much effort must be put into filling out request for repairs and maintenance. The employees also know that if their requests are not fictionalized, they will have a hard time receiving the approval for those mandatory repairs. The company should look to implement a program that will allow the employees to be able to develop the skill required to properly complete the work order forms. They should also look to perform their jobs in a way that will follow all of the rules and laws that would be applied to the situation. With these revisions in procedure, the company should be able to prepare reports with accurate information. The company will need to use a system that will allow information to be communicated fairly. The information that is included in these reports should be recorded in a way that is not intended to negatively persuade the user to get the wrong impression of the writing. These changes must be made because the company†s cost control policy is not good from an operational point of view with the requirements needed for a work order form to get approved. Faze will need to schedule a meeting between the CEO, the production manager, the accountant, and himself to be able to clearly ! illustrate the manner in which the work order forms should be completed. He would also use this opportunity to discuss any other improvements to the system that could be implemented. After this meeting, each individual could go to their respective departments and relay the message of how things have been changed. The solution to Pirate Steel†s dilemma is for Faze to maintain competence. He must keep the level of professionalism by performing the activities of the company with respect to the regulations that must be followed. The controller must also inform the production manager that the actions taken can be harmful to the company. He should maintain this level of professionalism and begin to prepare the proper reports after analyzing the information given. Faze should also develop a guide to help employees prepare reports for work orders in a responsible manner. The solution to the Pirate Steel Company†s dilemma is by Faze using objectivity. By using objectivity, Faze will be able to communicate the information fairly and unbiased. Also, the controller must disclose all information that would sway the opinion of an interested user. Disclosing this information will give all the outsiders a better understanding of all paperwork and recommendations that are presented. To show competence in the workplace, the workers must be able to continually develop skills that will improve all aspects of their job. Then they must perform all of their duties and still stay in accordance with the rules and regulations that are involved with their field, and be able to prepare reports that are accurate and honest so that they can be interpreted as they are printed. Everyone must do these things to show their reliability. One example of showing reliability is shown in this quote stated â€Å"To be reliable, information must have representational faithfulness and it must be verifiable and neutral. Accounting information may not represent faithfully what it purports to represents because it has one or both of two kinds of bias (The Accounting Review, 2000, 229).† When a worker is showing objectivity they must prove that they can communicate information in a way that others can understand it and not be persuaded to use misleading information in decision making. This quote shows an example of objectivity: â€Å"To address earnings management concerns, the NYSE, Amex, ASB, and the SEC individually adopted rules and standards focusing on the composition and activities of audit committees. Regulators hope the rules will improve the quality of financial reporting and make it harder for corporations to manipulate the data on which their reported earnings are based (Journal of Accountancy, 2000, 15).†