Three main areas of Finance

Three main areas of Finance

Financial Markets and Institutions

Investments

Financial Management (Managerial Finance)

Financial Markets and Institutions

Money markets provide companies and governments with short-term liquidity (raise cash to pay bills).

Capital markets provide companies and governments with long-term financing (“capital”).

Typical financial institutions involved: banks, investment banks, stock brokerages, mutual funds, pension funds, S&Ls, insurance companies

Levels of interest rates and changes in interest rates are of great importance.

Investments
Sale of stocks and bonds

Security analysis

Advising

Portfolio Management

Financial Management

Financial management is the study and practice of making dollar denominated decisions within a single firm. Most people in finance work in financial management.

Constant Growth Stock Valuation

Constant Growth Stock Valuation

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Stock Valuation is more difficult than Bond Valuation because stocks do not have a finite maturity and the future cash flows, i.e., dividends, are not specified. Therefore, the techniques used for stock valuation must make some assumptions regarding the structure of the dividends.

A constant growth stock is a stock whose dividends are expected to grow at a constant rate in the forseeable future. This condition fits many established firms, which tend to grow over the long run at the same rate as the economy, fairly well. The value of a constant growth stock can be determined using the following equation:

 

where

• P₀ = the stock price at time 0,
• D₀ = the current dividend,
• D₁ = the next dividend (i.e., at time 1),
• g = the growth rate in dividends, and
• r = the required return on the stock, and
• g < r.

Constant Growth Stock Valuation Example

Find the stock price given that the current dividend is $2 per share, dividends are expected to grow at a rate of 6% in the forseeable future, and the required return is 12%. Solution:

 

Top of Form

Example Problems
Use the following information to determine the stock price.
Current Dividend:	$
Growth Rate:		%
Required Return:		%
Stock Price:	$

Bottom of Form

 

Please see the Constant Growth Stock Exercise for additional example problems which illustrate the calculation of the other variables, i.e., the growth rate, required return, and dividend.

Dividend Yield and Capital Gains Yield

The constant growth stock equation can be rearranged to obtain an expression for the expected return on the stock as follows:   When expressed in this manner, it is apparent that the expected return on the stock equals the expected dividend yield plus the expected capital gains yield where the dividend yield and capital gains yield are defined as follows:

 

A more general form of the Constant Growth Stock Valuation formula which can be used to find the price of the stock at any period t in the future is given by the following

What are the legal rules regarding a valid offer?

When one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other person to such act or abstinence, he is said to make a proposal.”

The person making the proposal is called the ‘offeror’ or ‘promisor’. The person to whom the offer is made is called the ‘offeree’ or ‘promisee’.

Offer and Acceptance

A offers to sell his scooter to B for Rs. 5,000. This is a proposal. A is the offeror or promisor and B is the offeree.

Legal Rules Regarding Offer :

An offer to be valid must comply with the following rules:

1. Offer may be express or implied:

An offer may be express or may be implied from the conduct of the parties or circumstances of the case.

Express Offer: An express offer is made by words spoken or written.

Examples:

(1) A says to B, “Will you purchase may car for Rs. 15,000? It is an oral offer.

(2) A, through a letter asks B to buy his car for Rs. 15,000. It is a written offer.

Implied Offer – An implied offer is not made by words spoken or written. It is implied from the conduct of the parties or from the circumstances.

Example:

(1) Public Transport, like, Railways. DTC in Delhi or MEST in Mumbai offer to carry passengers for a certain fare on a particular route.

(2) Public Telephones or Weighing Machines in public places like, Railway Stations or Cinema Houses offer their services for a certain amount, say one rupee.

2. Offer may be specific or general:

A specific offer is one which is made to a particular person. It can be accepted by the person to whom it has been made, no one else can accept such an offer.

Example:

A offers to sell his watch to B for Rs. 200. This is a specific offer made to B. It is B alone who can accept this offer and no one else can accept this offer, i.e., C or D cannot accept this offer.

A general offer is made to the world at large. Therefore, it can be accepted by any person.

Example:

1. A advertised in a Newspaper that he would give Rs. 100 to anyone who finds and returns his lost dog.

2. A company advertised that a reward of Rs. 100 would be given to any person who contracted influenza after using the medicine (Smoke balls) made by the company according to the printed directions. One lady, called Mrs. Carlill, purchased and used the medicine according to the printed directions of the company but suffered from influenza. She filed a suit to recover the reward of Rs. 100. The Court held that there was a contract as she had accepted a general offer by using the medicine in the prescribed manner and as such, she was entitled to recover the reward from the company.

3. Offer must give rise to legal obligation:

An offer to be valid must create legal relationship between the parties. The very purpose of entering into an agreement is to make it enforceable at a Court of law. If the offer has not been made with this intention it will not become a contract even if it is accepted by the party to whom it was made.

Example:

A promised to pay Rs. 30 to his wife every month. Later, A failed to pay the amount. The wife filed a suit against the husband to recover the amount. The Court held that she could not recover as the promise was not made with an intention to create any legal relationship.

4. Terms of an offer must be definite and certain:

The terms of an offer should not be vague or indefinite.

Example:

A has two cars – Ambassador and Fiat. He agrees to sell one of his cars to B for Rs. 20,000.

It is not clear as to which of the cars A has agreed to sell. A might be thinking to sell the Ambassador car while B might be thinking to purchase the Fiat car. The offer is not definite.

5. Offer must be distinguished from an invitation to offer:

An offer must be distinguished from an invitation to offer. The shopkeepers generally display their goods in showcases with price tags. The shopkeeper in such cases is not making an offer so that you can accept it. He is, on the other hand, inviting you to make an offer which he may or may not accept. Thus you cannot compel a shopkeeper to sell the goods displayed in the showcase at the marked price. However, if there is specific law to sell goods at marked price then the seller will have to sell at marked price. For example, during National Emergency essential commodities like sugar etc. have to be sold at marked price.

6. Offer must be distinguished from a mere declaration of intention:

A declaration of intention to make an offer is not an offer. It is regarded as an invitation to offer. An advertisement for sale in a Newspaper or Magazine etc. is not an offer for sale.

Example:

A advertised to sell certain furniture by auction, B reached A’s house to purchase the furniture. However, A changed his mind not to sell the furniture. B cannot compel A to sell the furniture or even to recover his damages, i.e., conveyance charges and damages for inconvenience caused to him due to cancellation of the sale.

It should be noted that a general offer can be made through advertisement if the terms are certain and capable of being accepted.

Example:

A lost his camera in a DTC bus. He announced a reward of Rs. 100 to the finder who may return it to him. B found the camera after reading the advertisement and returned it to him. B is entitled to the reward.

7. Offer must be communicated:

An offer must be communicated to the person to whom it is made. A person can accept the offer only when he knows about it. If he does not know it, he cannot accept it.

Example:

G sent his servant L to trace his lost nephew. Later on G, announced a reward for tracing the boy. L without knowing about the advertisement of the reward traced the boy and restored him to G. When L came to know of the reward, he claimed it. G refused to give the reward. The Court held that L was not entitled to recover the reward as the offer was not communicated to L. He could not accept an offer which he did not know.

8. Communication of Special Terms:

Special terms of a contract must be communicated. Generally, such cases arise in respect of general offers, like tickets or receipts for depositing luggage at the Railway Station or receipts for clothes given for dry cleaning etc. The rule in these cases is that parties are not bound unless conditions printed are properly communicated.

Example:

A passenger was traveling from Dublin to White haven with his luggage. On the back of the ticket, a special condition was printed according to which the Shipping Co. would not be liable for the loss of luggage. However, this condition was not communicated to the passenger in as much as no such words as RT.O. or See Back were printed on the face of the ticket to draw the attention of the passenger. The court held that the passenger was not bound by those conditions as those were not communicated to him. Hence the company was liable to pay for the loss of the luggage.

It should be noted that an acceptor is bound by the condition even if the conditions are printed in a foreign language. He should ask for its translation.

Again, an acceptor cannot even plead that he was illiterate or blind, provided the notice is reasonably sufficient for the class of persons to which he belongs.

Again, it should be noted that the special terms of the contract should be brought to the notice of the offeree at the time of offer was made. If the special terms are brought to the notice of the offeree after the contract was made, the offeree will not be bound by them.

Example:

A and his wife took a room on hire in a hotel. After booking the room, they entered the room and saw a notice on the wall of the room. The proprietors not responsible for articles lost or stolen unless handed over to the manager for safe custody.”

Due to the negligence of the hotel staff, their property was stolen. Held, the proprietor of the hotel was liable as the notice was not binding, because it came to the knowledge of the client only after the contract to take the hotel on hire had already been made.

9. Offer must be made with a view to obtaining the consent of the other party to do or to abstain from doing the act:

The offer must be made with an intention to get the consent of the other party to do or to abstain from doing the act and not simply with a view to making known the intention of making an offer.

Example:

A tells B, “I may sell my Television if I can get Rs. 2,000 for it. It is not an offer as it has not been made with a view to get the consent of B. It is a mere declaration of intention. Therefore, B cannot accept it by saying. “I can pay you Rs. 2,000 for it.” B is not accepting A’s offer but is making his offer which A may or may not accept.

10. Offer should not impose an unnecessary obligation to communicate non-acceptance:

Thus an offeror cannot say that if acceptance is not communicated by Sunday next, the offer would be considered as accepted.

Example:

A offers his car to B for Rs. 20,000 saying, “If you do not reply by Sunday next, I shall presume, you have accepted the offer.”

In this case, no contract will be created even if the acceptor does not reply as the law does not permit a party to impose an unnecessary obligation of the acceptor if he does not want to accept the offer. Thus in the above example, if the acceptor does not accept the offer he will be put to an unnecessary burden of informing the offeror that he does not want to accept the offer.

Tender:

A continuous offer is called a standing offer. For example, in our daily life we do not ask the newspaper vendor daily to supply the newspaper or the grocer to supply bread and butter. In such cases, we do not repeat the offer to the supplier of the above articles every day. We make such offer once for all. If we do not want the supply of such article in future, we ask the supplier to stop the supply of such goods. A tender is a standing offer. It may be specific or continuous.

Continuous or Standing offer :

Very often, tenders are invited for the supply of goods as and when required. In such a case, the tender is a standing offer. When such a tender is accepted it does not become a contract. It simply indicates that as and when goods are required and order will be placed, both the parties are free to revoke the tender.

Example:

A agreed to supply coal to B up to 1,000 tons at Rs. 500 per ton as and when required for the year 1978. B placed an order for 10 tons in the month of January, 1978. However, if before any order is placed by B, A revokes his offer as to future supply, A is not bound to supply any coal. Similarly, B is not under an obligation to place the order for the supply of coal with A. B can place an order with any other coal supplier also. B is not prevented from placing an order with any other supplier.

Thus a standing offer does not create a binding contract between the parties. A binding contract is created only when an order according to the terms of the tender is placed with the party accepting the tender.

Specific Tender :

Sometimes tenders are invited for the supply of specific quantity of goods or service. In such a case, when a tender is accepted it becomes a contract.

Cross Offers :

Sometimes two parties make similar offers to each other without knowing the offer made by the other. These are called cross offers. In such a case, no binding contract will be created as no one has accepted the offer made by the other.

Example:

D of Delhi by a letter makes an offer to M of Mumbai to sell his car for Rs. 10,000. At the same time M of Mumbai makes a similar offer to D of Delhi to buy his (D’s) car for Rs. 10,000. Offers of both D and M cross each other in the post. These offers are called cross offers. Such offers do not constitute acceptance of one’s offer by another. For example, it will not mean acceptance of D’s offer by M or M’s offer by D. Both are making the offer and none of them is accepting the offer. Hence, there is no contract.

All contracts are agreements but all agreements are not contracts.

All contracts are agreements but all agreements are not contracts. Explain this statement. Ads

INTRODUCTION:
                             No doubt it is a valid and true statement. Before critically discussing the statement, we must know the exact and basic meanings of the two terms contract and agreement in the context of business law. For understanding the meaning, we have to go to the contract act 1872 that is applicable in subcontinent.
              A contract is a legally binding agreement or relationship that exists between two or more parties to do or abstain from performing certain acts. There must be offer and acceptance for a contract to be formed. An offer must backed by acceptance of which there must be consideration. Both parties involved must intend to create legal relation on a lawful matter which must be entered into freely and should be possible to perform.
            
Definition of contract
According to section 2(h) of the  Contract Act 1872: 
 ” An agreement enforceable by law is a contract.”
A contract therefore, is an agreement the which creates a legal obligation i.e., a duty enforceable by law.
From the above definition, we find that a contract essentially consists of two elements:
(1) An agreement and (2) Legal obligation i.e., a duty enforceable by law.

Example;

A promises to sell a horse to B for Rs.100,000, and B promises to buy horse at that price.

All contracts are agreements:
 For a Contract to be there an agreement is essential; without an agreement, there can be no contract. As the saying goes, “where there is smoke, there is fire; for without fire, there can be no smoke”. It could will be said, “where there is contract, there is agreement without an agreement there can be no contract”. Just as a fire gives birth to smoke, in the same way, an agreement gives birth to a contract.

What is agreement?

An agreement is a form of cross reference between different parties, which may be written, oral and lies upon the honor of the parties for its fulfillment rather than being in any way enforceable. 

As per section 2 (e) of Contract At 1872:
 ” Every promise and every set of promises, forming the consideration for each other, is an agreement.” Thus it is clear from this definition that a ‘promise’ is an agreement.

What is a ‘promise‘?
 the answer to this question is contained in section 2 (b) which defines the term.” When the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”
An agreement, therefore, comes into existence only when one party makes a proposal or offer to the other party and that other party signifies his assent thereto. 

All agreements are not contracts
  As stated above, an agreement to become a contract must give rise to a legal obligation. If an agreement is incapable of creating a duty enforceable by law. It is not a contract. Thus an agreement is a wider term than a contract. 
     Agreements of moral, religious or social nature e.g., a promise to lunch together at a friend’s house or to take a walk together are not contracts because they are not likely to create a duty enforceable by law for the simple reason that the parties never intended that they should be attended by legal consequences
       On the other hand, legal agreements are contracts because they create legal relations between the parties.
EXAMPLE: a- A invites B to dinner. B accepts this invitation but does not attend the dinner. A can not sue B for damages. It is social agreement because it does not create legal obligation. So it is not a contract.

b- A promises to sell his car to B for one million. It is legal agreement because it creates legal obligations between the parties. So it is a contrac
According to section 10 of the contract act 1872,
                                                                          “All agreements are contracts if they are made by the free consent of the parties, competent to contract, for a lawful consideration and with a lawful object and not hereby declared to be void.”
    Thus an agreement becomes a contract when at least the following conditions are satisfied.
1-free consent
2-competency of the parties
3-lawful consideration
4- lawful object.

Conclusion:
                  In a nut shell, an agreement is the basis of a contract and contract is the structure constructed on these basis. An agreement starts from an offer and ends on consideration while a contract has to achieve an other milestone that is enforceability. Due to this, breach of an agreement does not give rise to any legal remedy to the aggrieved party while breach of contract provides legal remedy to the aggrieved party against the guilty party. Thus we can say that all contracts are agreements but all agreements are not contracts.

RULES REGARDING MINOR’S AGREEMENT

RULES REGARDING MINOR’S AGREEMENT

A minor’s agreement being void is wholly devoid of all effects. When there is no contract there should be no contractual obligation on either side.

1. An agreement with or by minor is void
            Section 10 of the Indian Contract Act requires that the parties to a contract must be competent and Section 11 says that a minor is not a competent. BUt either section makes it clear whether the contract entered into by a minor is void or voidable. Till 1903, court in india wee not unanimous on this point the privy council made it perfectly clear that a minor is not competent to a contract and that a contract by minor is void ab initio.
    The leading case is:

MOHRI BIBI V. DHARMO DAS GHOSE (1903)

    “A minor borrowed Rs. 20000 from B and as a security for the same executed a mortgage in his favor. He became    a major a few months later and filled a suit for the declaration that the mortgage executed by him during his majority was void and should be cancelled. It was held that a mortgage by a minor was void and B was not entitled to replacement of money.

 

2. No ratification

            An agreement with the minor is completely void. A minor cannot ratify the agreement even on attaining majority, because a void agreement cannot be ratified. A person who is not competent authorize an act cannot give it validity by ratifying.

   But If on becoming major, minor makes a new a new promise for fresh consideration, then this new promise will be binding.

 

3. Minor can be a promise or beneficiary

            If a contract is beneficiary to a minor it can be enforced by him. Their is no restriction on a minor from bring a beneficiary, for example, being a payee or a promisee in a contract. Thus a minor is capable of purchasing immovable property and he may sue to recover the possession of the property upon tender of the purchase money. Similarly a minor in whose favor a promissory note has been executed can enforce it.

 

4. No estoppel against a minor 

            Where a minor by misrepresenting his age has induced the other party enter into a contract with him, he cannot be made liable on the contract. There can be no estoppel against a minor. It means he is not estoppel from pleading his infancy in order to avoid a contract.

 

5. No Specific performance Except in certain cases

            A minor’s contract being absolutely void, there can be no question of the specific performance of such contract. A guardian of a minor cannot bind the minor by an agreement for the purchase of immovable property ; so the minor cannot ask for the specific performance of the contract which the guardian had no power to enter into.

But a contract entered into by guardian or manager on minor’s behalf can be specifically enforced if

(a) The contract is within the authority of the guardian or manager.

(b) It is for the benefit of the minor.

(LALCHAND V. NARHAR 89 IC 896)

 

6. Liability for torts

            A trot is a civil wrong. A minor is liable in tort unless the tort in reality is a breach of contract. Thus, where a minor borrowed a horse for riding only he was held liable when the he lent the horse to one of his friends who jumped and killed the horse.

   But a minor cannot be made liable for a breach of contract by framing the action on tort. you cannot convert a contract into a tort to enable you to sue an infant.

 

7. No insolvency

            A minor cannot be declared insolvent as he is incapable of contracting debts and dues are payable from the personal properties of minor and he is not personally liable.

 

8. Partnership

            A minor being incompetent to contract cannot be a partner in a partnership firm, but under Section 30 of the Indian Contract Act , he can be admitted to the benefits of partnership.

 

9. Minor can be an agent

            A minor can act as an agent. But he will not to be liable to his principal for his acts. A minor can draw, deliver and endorse negotiable instruments without himself being liable.

 

10. Minor cannot bind parent or guardian

            In the absence of authority, express or implied, an infant is not capable of binding his parent or guardian, even for necessaries. The parents will be held liable only when the child is acting as an agent for parents.

 

11. Joint contract by minor and adult

            In such a case, the adult will be liable on the contract and not the minor. In Sain Das Vs Ram Chand, where there was a joint purchase by two purchaser, one of them was a minor. It was held that the vendor could enforce the contract against the major purchaser and not the minor.

 

12. Surety for a minor

            In a contract of guarantee when an adult stands for a minor then he (adult) is liable to third party as there is direct contract between the surety and the third party.

 

13. Minor as Shareholder

            A minor, being incompetent to contract cannot be a shareholder of the company. If by mistake he become a member, the company can rescind the transaction and remove his name from register. But, a minor may, acting through his lawful guardian become a shareholder by transfer or transmission of fully paid shares to him.

 

14. Liability for necessaries

            The case of necessaries supplied to a minor or to any other person whom such minor is legally bound to support is governed by section 68 of the Indian Contract Act. A claim for necessaries supplied to a minor is enforceable by law. But a minor not liable for any price that he may promise and never for more than the value of the necessaries. There is no personal liability of the minor, but only his property is liable.


To render minor’s estate liable for necessaries two conditions must be satisfied.
(a) The contract must be for the goods reasonably necessary for his support in his station in life.   

(b) The minor must not have already a sufficient  supply of these necessaries.

Types of Marketing

Types of Marketing

The concept of marketing encompasses a wide coverage and may even be associated with sales. In fact, sales and marketing are two different concepts although both are closely coordinated. Marketing is the presentation of the products and services and making them available to the customers with the goal of generating profits.

Sales, on the other hand, is the output of marketing implementations. A business produces good product sales out of effective marketing programs while poorly planned marketing plans end up in low sales generation.

Focusing more on the concept of marketing, a business organization must invest in intensive marketing activities, what with the stiff competition that exists in almost every kind of industry. Marketing introduces your products and services to your potential customers and target market. It is an important factor in the success of a business.

Marketing is otherwise known as advertisement of the products and services that your company can offer to the market. So, the old maxim that no advertising is the worst kind of advertising remains to be true especially at this time when modern marketing methods have been introduced.

Marketing can be conducted in various types and techniques. A company can invest in any marketing technique that works best and is effective to the customers. But in this article, let us mention three proven types of marketing that most companies have been using in their product and services campaigns.

Offline Marketing

The advent of modern marketing has been very helpful for most business, but traditional marketing is still as effective and powerful as it used to be. Not to be overlooked in this age of computers and internet technology, offline marketing is still widely used by many businesses.

Tri-media or advertising through print ads, television, and radio have proven to be effective means of advertising and increasing product awareness even until now. Newspapers continue to be used actively and widely circulated by many print media organizations where businesses occupy portions and spaces in the Classified Ads to introduce their products and services.

However, companies reap more benefits if online and offline marketing methods are combined. A good example is the use of direct mail in order to lead customers to the company website. In fact, a company can save a lot with proper combination of marketing methods since offline marketing can be costly.

Online Marketing

Online marketing is equally powerful and effective as offline marketing. In fact, companies save a lot on their marketing campaigns which are done through the internet. Small-scale businesses can benefit greatly from online advertising if marketing budget is an issue.

Apart from the savings a company can get, it can also advertise its products alongside large-scale companies. Affiliate marketing is a common type of online marketing where a company ties up with an affiliate or an online advertiser that will take care of advertising the company’s products and services to thousands of online users. Another example is online video campaign with a production cost that is a lot lesser than television advertising.

One particular advantage of online marketing over traditional forms of advertising is that it can easily reach a huge number of individuals in a short span of time. Plus, the advertisement lasts longer and is unlimited.

Word of Mouth Advertisement

Word-of-mouth marketing is probably the best form of advertisement a company can ever invest in. Not a single penny is spent by the company with this kind of advertising; only excellent customer satisfaction is needed to make this campaign effective. Always keep a proactive approach in dealing with customers and go the extra mile. Building good relationships with customers keeps them in the business. The good news is they will tell their friends and people they know about your company and the kind of customer service you have. With an effortless process, your customers gradually increase in number which in turn increases company profit.

Ads

In business, companies must understand that everything is a risk. Even the cost of investing in marketing campaigns is a risk since it is not a guarantee that the company will succeed. But a company that will not make the move to be known to the public will also run the risk of losing the business eventually because of lack of public awareness on the products and services. Any type of marketing can be effective as long as a proper marketing strategy is designed.

Socio Economic profile in bangladesh Top important questions answer

Socio Economic Profile of Bangladesh

What are the structural adjustment policies in relation to self-reliance in Bangladesh?

Ans: This report aims at improving our understanding of the impact of structural adjustment policies (SAP) on the environment in Bangladesh. Obviously, the domain of SAP is very broad and may not be always well defined, so are its impact on environment. However, one advantage of this study has been that the domains of SAP and their impacts on environment have been determined through a lengthy process of three regional consultative meetings, six focus group discussions and a workshop at the national level (Bhattacharya and Titumir 1998a). The value added from the current exercise lies in rationalizing a jigsaw puzzle already solved by the people – i. e. looking up and assembling secondary evidence to establish the link between SAP policies and its impact on environment in Bangladesh.

The structural adjustment policies in relation to self-reliance in Bangladesh: The participants in regional consultative meetings and focus group discussions expressed their views on many aspects of environment. Obviously, the impact of SAP on environment will vary by region and also the understanding of the impact will also depend on the type of the participant. Many issues came up in the consultative process and these issues have been summarized with the help of Figure 1. The impact on environment originates from the negative externalities that arise from pursuing a set of development strategies. In the present context the key development objectives are increasing food production and pursuing an export-led growth strategy. The World Bank “supported the Government’s primary objective to increase food grain production, to the end of attaining self-sufficiency and a more equitable income distribution (World Bank 1990, p. iii, underline original). The World Bank also supported the strategy of the Government “to develop a broader and diversified industrial and export base” (World Bank 1990, p. iv, underline original). Also the outcomes of these objectives were desired to be  rapid, “the World Bank Group’s mission is to help Bangladesh reduce poverty by promoting  rapid, job-creating economic growth and interventions ” (World Bank 1998, p. 1, author’s underline). These two sets of development strategies were thought to have generated two sets of environmental impacts as depicted in Figure 1. Note that the two sets have been separated for the purpose of exposition whereas in reality such separation may not be possible. For example, privatization (as a policy for following an export led path of growth) is likely to have an impact on the use of spurious fertilizers (as an element of the growth objective of increasing food production) if not regulated properly. Let us look at the first set of cause and effect. Excessive emphasis on (rapidly) increasing yield has led to excessive use of fertilizers. On the other hand current input pricing policy distorts related prices of various types of fertilizers (say between phosphatic and nitrogenous fertilizers as we will se later) resulting in the use of an unbalanced mix of fertilizers. Such pricing policy may have led to use of spurious fertilizers as well. Liberalization of imports may also have resulted in excessive use of fertilizers or use of spurious fertilizers or use of an unbalanced mix of fertilizers. Thus excessive use of fertilizers, use of spurious fertilizers and their use in inappropriate mix may have caused land degradation as reflected in a decline in micro nutrient and erosion of soil fertility. This set of “cause and effect” chain takes us to the major issue of fertilizer policy.

The second set of cause and effect takes us to the issue of shrimp management policy. The specific structural adjustment policies here involve promotion of non-traditional exports and privatization. Availability of cheap labour and supply of a product of nature helped shrimp producers and exporters to benefit from market opportunities outside. Shrimp culture in the coastal region of Bangladesh has resulted in many negative environmental consequences. One of them is increased salinity of soil and the another is loss in biodiversity (resulting from shrimp seed collection and throwing away of by-catches).

Thus the environmental impacts of SAP call for participation of the civil society in the formation of two sets of policies: fertiliser policy and shrimp management policy. Such participation essentially means pressurising the policy  makers to incorporate environmental consequences in the policy formulation process.

–o–

2. What are the features of foreign trade of Bangladesh? Discuss the necessity of import in Bangladesh. Do you think import is essential for increasing export volume from Bangladesh? If yes, why?

Ans: The features of foreign trade of Bangladesh: Trade is an integral part of the total developmental effort and national growth of all economies including Bangladesh. It particularly plays a central role in the development plan of Bangladesh where foreign exchange scarcity constitutes a critical bottleneck. Export trade can largely meet ‘foreign exchange gap’, and export growth would increase the import capacity of the country that, in turn, would increase industrialization, as  well as overall economic activities.

Bangladesh’s import needs are substantial; hence the need to rapidly increase exports is immediate.  In order to finance the imports and also to reduce the country’s dependence on foreign aid, the Government of Bangladesh has been trying to enhance foreign exchange earnings through planned and increased exports. However, the global trade scenario has exposed structural limitations of the Bangladesh economy, posing a variety of challenges for the country that has underdeveloped technology and a low capital base.

In this paper we discuss the composition, performance and trends of foreign trade of Bangladesh. In the process, we examine Bangladesh’s export and import performance compared to those of various countries, regions and the world over the years. We also discuss the sources of Bangladesh’s imports and directions of

Bangladesh’s exports and the dynamic changes over the years, and highlight the trends of export and import shares to GDP and trade balance positions with different countries, regions as well as the world. Trade policy reforms of Bangladesh and major issues, challenges and policy options are also discussed briefly.

The necessity of import in Bangladesh: To analyze the import composition of Bangladesh it is observed that the import share of principal primary commodities (in total imports) showed a declining trend in recent years. On the other hand, the shares of principal industrial goods and capital goods reported a slight increase. The import payments for principal primary commodities, in  FY 1998-99, were US$ 1,448 million representing 18.06% of total import payments. These figures decreased to US$ 980 million and $ 1,098 million (11.66% and 11.73% of total import payments) in FY 1999-2000 and 2000-01 respectively. The import shares of principal industrial goods increased to 14.58% and 15.34% in FY 1999-2000 and FY 2000-01 from 13.77% in FY 1998-99. The share of import payments for capital goods in total imports increased to 25.63% in FY 2000-01 from 24.56% in FY 1998-99. Import payments for rice and wheat significantly decreased in FY 1999-2000 and FY 2000-01 compared to FY 1998-99, which implies that the country is making progress in food production. The share of import payments for petroleum products increased significantly in FY 2000-01 compared to FY 1998-99. Total import payments stepped up to US$ 9363 million in FY 2000-01 from US$ 8403 million in FY 1999-2000 recording an increase by 11.42% (GOB 2002; Bangladesh Bank 2002-03).

Yes, I think import is essential for increasing export volume from Bangladesh.

If you want to start an import export business, there are so many things that you need to consider. You should be well versed with the different facets of the industry and you need to possess the right knowledge.

 

Getting the needed licensing requirements and contacting the consulates or embassies are some of your tasks.

Today, international trade is really among the hottest industries because countries from all over the world has their respective supplies of merchandise and commodities that other countries need. Because of this, trading has already existed since prehistoric men, the biblical age, and the great caravans. Thanks to the modern technological advances, import export businesses today are quite rewarding in terms of personal satisfaction and profit.

Importing and exporting is big business. Savvy traders will surely love the benefits of this type of business. The import business is very popular because of availability, cachet, and price. Importing is necessary since one can’t possibly grow everything in his or her home country. Another thing is that a lot of people think that buying imported items like Egyptian cotton, French perfume, German beer, and Scandinavian furniture is better than buying the ones found locally because they think that the items are classier. Did you know that some imported items are cheaper than the ones found locally? Some great examples are Mexican clothing, Taiwanese electronics, and Korean toys. Two factors can affect the import and export business – the available resources in the local area and the technology. For example, if one country has an extensive resource of oil and refinery technology it ill export oil to other countries but in turn it will need to import clothes.

This kind of business is not for everyone. If you’re the kind of person who is sales-phobic, this may not be the business opportunity for you. You need to enjoy making follow-ups and sales pitches. Aside from that, you should be an enthusiastic person, good in tracking shipping receipts and invoices, and most especially, you should be excited in dealing with different kinds of people and cultures. Having some background in the import export business is an advantage. By the time you open your business, you should be well versed. Adequate preparation is necessary if you want to succeed.

You should contact the embassies and consulates of other countries and establish communication. A registration number is required and you can obtain it from the local taxation department. You will need to comply with the various licensing requirements. Choose to export in countries where there are no trade barriers so that you can conduct business smoothly. You will also need to secure a Letter of Credit and you can check with the bank about it. As you can see, there are so many considerations so try to prepare ahead of time.

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3. Mention the objectives of SAPTA. How is SAPTA important for Bangladesh economy?

Ans.: THE OBJECTIVES OF SAPTA:
1. To gradually liberalize the trade among member countries of SAARC.
2. To eliminate trade barriers among SAARC countries and reduce or eliminate tariffs.
3. To promote and sustain mutual trade and economic cooperation among member countries.

ADMINISTRARION OF SAPTA: SAPTA agreements are administered on the following lines.
1. The benefits to the members countries are accorded on equitable basis of reciprocity and mutuality .
2. The agreement would be improved step by step to mutual negotiations
3. The agreement takes the special needs of less developed countries into consideration.

Following the ratification of SAPTA by all member states, the 16th session of the council of the ministers (New Delhi , December 1995) agreed that member states should strive for the realization of a South Asian Free Trade Area ( SAFTA).
An Inter Governmental Expert Group (IGEG) on transition to SAFTA comprising experts from the member countries was set up as an ad-hoc body by the CEC to identify the necessary steps towards moving into a free trade area.
The IGEG had met twice and held in depth discussions and agreed on the draft terms of references for the group and had also drawn up a broad frame work of action plans for achieving SAFTA.
In order to give impetus to intra-SAARC trade under the SAPTA agreement and to promote economic cooperation in the region, the commerce ministers of SAARC countries met in New Delhi in Jan 1996. It was since been decided that the commerce ministers shall meet annually and second meeting was held in Islamabad in April 1998.

SAPTA important for Bangladesh economy: The South Asian Free Trade Area or SAFTA is an agreement reached on 6 January 2004 at the 12th SAARC summit in Islamabad, Pakistan. It created a free trade area of 1.6 billion people in Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka (as of 2011, the combined population is 1.8 billion people). The seven foreign ministers of the region signed a framework agreement on SAFTA to reduce customs duties of all traded goods to zero by the year 2016.

The SAFTA agreement came into force on 1 January 2006 and is operational following the ratification of the agreement by the seven governments. SAFTA requires the developing countries in South Asia (India, Pakistan and Sri Lanka) to bring their duties down to 20 percent in the first phase of the two-year period ending in 2007. In the final five-year phase ending 2012, the 20 percent duty will be reduced to zero in a series of annual cuts. The least developed nations in South Asia (Nepal, Bhutan, Bangladesh, Afghanistan and Maldives) have an additional three years to reduce tariffs to zero. India and Pakistan ratified the treaty in 2009, whereas Afghanistan as the 8th memberstate of the SAARC ratified the SAFTA protocol on the 4th of May 2011.

Abstract: One major trend in the global economy in recent years has been the accelerated movement towardregional economic integration. Among the various possible levels of economic integration SAPTA is at thevery beginning stage. The main objective of inception of SAPTA was to give leverage to the trading of theSAARC member countries. In this article, through using ANOVA (both one factor and two-factor withreplication) technique, it has been tried to find out whether there is a significant change in trading had beenmade. In overall sense, it can be said that the change in trade is significant, though such change is notsignificant for each of export and import of each of the countries.

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4. What is current population growth rate in Bangladesh? Do you think that population growth is a burden for Bangladesh? If yes, Why? How can we transform this burden into blessings for the economy?

Ans.: Current Population growth rate in Bangladesh: 1.579% (2012 est.)

The average annual percent change in the population, resulting from a surplus (or deficit) of births over deaths and the balance of migrants entering and leaving a country. The rate may be positive or negative. The growth rate is a factor in determining how great a burden would be imposed on a country by the changing needs of its people for infrastructure (e.g., schools, hospitals, housing, roads), resources (e.g., food, water, electricity), and jobs. Rapid population growth can be seen as threatening by neighboring countries.

Source: CIA World Factbook – Unless otherwise noted, information in this page is accurate as of July 26, 2012

Yes, I think that population growth is a burden for Bangladesh.

Bangladesh currently has a population approaching 150 million and will add another 100 million before stabilizing, unless fertility can soon drop below replacement level. This level of fertility decline will require a change in marriage patterns, which have been minimal so far, even with increasing female schooling. It would also benefit from a long-awaited shift to long-term contraception. In addition to the consequence of huge population size, the density of population is already five times that of any other ‘mega’ country (>100 million), a very challenging situation for an agricultural society. Most of the future growth will be urban, increasingly in slums. Numbers of young people will not increase, but numbers of older people will increase 10-fold this century, creating a large burden on the health system, especially for chronic illnesses. High density of population means that agricultural land is virtually saturated, with very limited capacity to expand food production. Climate change may have dramatic impacts on agriculture, through flooding and drought resulting from weather changes and geopolitical influences on transborder rivers. Rising sea-levels and consequent salinity will affect crops and require shifts to alternative land use. Serious long-term planning is needed for meeting the growing needs of the population, both for distribution and consumption.

Can we transform this burden into blessings for the economy: A puzzling feature of the fertility plateau was the fact that contraceptive prevalence rates (CPRs) continued to rise steadily throughout the 1990s, from 44.6% (1993/1994) to a peak of 58.1% in 2004, followed by a slight fall to 55.8% in 2007, due to a fall in traditional methods. Experience from other countries suggests that such a rise in the CPR would produce a concurrent decline in fertility. Recent studies have not satisfactorily explained this paradox. An examination of the range of fertility determinants indicates that potentially important factors, such as delayed age at marriage, do not appear to have played a counter-balancing role in the Bangladesh case; nor have less powerful factors, such as postpartum amenorrhoea linked to breastfeeding, changed in any significant way. There has been a gradual shift in the use of permanent and long-term contraception towards a greater dependence on temporary methods, but this is mainly among older fertile women who are not contribu- ting much to overall childbearing rates. One possible factor may be that adoption of modern contraception has gradually been substituting for reliance on induced abortion. This pattern, seen in Matlab (2,3), appears to require quite high levels of CPR before a substitution begins to take place. This may well be context-specific and presumably depends on the level of fertility and the speed of the decline.

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5. What main hazards does Bangladesh face due to climate change? What can be done by the government or the individuals to minimize the climate risk?

Ans.: Main hazards does Bangladesh face due to climate change: Climate change deals with variations in climate that is, any long term change in the statistics of weather over periods of time that range from decades to millions of years. It encompasses all forms of climatic inconstancy (that is, any difference between long term statistics of the meteorological elements calculated for different periods but relating to the same area) regardless of their statistical nature or physical causes (Enzler 1998).  The term is often used in a more restricted sense to denote significant change in the mean values of a meteorological element ( in particular temperature or amount  of precipitation) in the course of a certain period of time, where the means are taken over periods of the order of a decade or longer. Climate change may occur in a specific region or across the whole earth.

Can be done by the government or the individuals to minimize the climate risk: There is currently no requirement for local authorities to take action on climate change. This coupled with limited funding means there is a significant risk that local authorities will not develop and implement sufficiently ambitious low-carbon plans. This report emphasizes the crucial role councils have in helping the Bangladesh government meet its carbon targets and preparing for the impacts of climate change. It outlines specific opportunities for reducing emissions and highlights good practice examples from a number of local authorities. The Committee recommends that a statutory duty and/or additional funding is needed to ensure local authorities have stronger incentives to act.

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Financial Management Analysis

Financial Management Analysis.