Chapter 4 Section Four National Economy and cities
principle of finance Chapter 4
Chapter4Asset PricingThe previous sections provided the micro-economic foundation of the market equilibrium models we analyze in this section.Recall that we modeled the behaviour of investors in terms of the Mean-Variance Utility model and we focused on the criteria that lead investors in the choice of portfolios of available securities.In this section we study di¤erent models of market equilibrium that we may observe in the aggregate…nancial market.We shall focus on two main theories:CAPM,where the main idea is that equilibrium rates of return on all risky assets are a function of their covariance with the market portfolio;APT,where the main idea is that the return on risky assets is a linear combination of various common factors that a¤ect asset returns.As we shall see the…rst theory can be thought of as a particular case of the second theory.We shall focus on the theoretical models,as well as on the empirical evidence relating to their validity.Both theories have been extensively studied and extensively criticized on the grounds of underlying irrealistic assumptions and/or lack of empirical support.It is thus very questionable whether the study we undertake here provides a future corporate executive with quick and ready-to-use formulaes...However,as a theory can only be replaced by a...better theory(and there is none available at the moment),our aim is to gather some further insights on the ideas of risk and uncertainty peculiar to…nancial markets.4.1CAPM:The TheoryWe explicitly derive the theoretical model from the portfolio models we studied in the previous section.Before we do that,however,let us state the assumptions we’buy’if we are to believe in the model.The capital market we have in mind is perfect in that:There are no transaction costs or taxesAll information regarding securities is freely available to each investorAll investors can borrow or lend any amount at a given interest rateWe assume that all investment mature in one periodInvestors are risk-averse and make decisions using the Mean-Variance rule4.1.1The Capital Market Line(CML)We are now going to combine the analysis of portfolio models with one risky asset and one risk-free asset with that of portfolio models with many risky assets.Suppose there are many available risky securities in the economy and a risk-free asset.We can represent the model by means of the following picture:The transformation curves in the picture show the combinations of attainable risk-returns that can be obtained by choosing di¤erent portfolios.Each point on each curve representsa di¤erent set of investment proportions(including the set of e¢cient portfolios).It isclear that there is an advantage in diversifying the portfolio,i.e.in choosing a portfolio that’blends’the risk associated to the risky assets(since the envelope curve for the fully diversi…ed portfolio lies to the left of the constrained portfolios that include fewer securities).Capital Market LineMr. B'soptimalPoint M represents the best e¢cient portfolio in the following sense.Suppose the investor can also borrow or lend at the risk-free rate of interest,r f.Now consider a portfolio that includes part of the risk-free asset and part of an e¢cient portfolio.(Loosely speaking,generalize the analysis of Section3.1.1,by considering an e¢cient portfolio instead of a single risky asset)As you remember from the picture in Section3.1.1the budget line,that we now call the Capital Market Line(CML),was obtained by joining the risk-return of a portfolio including only the risk-free asset and the risk-return of a portfolio including only the risky asset.Here,this could mean joining the point r f with any of the e¢cient portfolios.What is the best choice among all e¢cient portfolios?It is exactly portfolio M,with returns r m and risk m,as it gives the highest possible slope for the CML.Note that these considerations do not depend on preferences,i.e.we do not use indi¤erence curves to determine M(an argument analog to the Fisher Separation Theorem holds here).Is M necessarily the…nal choice for all investors?No,as preferences might be di¤erent.The relevant indi¤erence curve for two investors,A and B,are drawn in the picture:A prefers a mixed portfolio of risk-free asset and the mixture of risky assets M;B prefers a levered portfolio that combines M with riskless loans.They would hence choose di¤erent points along the CML.However,independently of their tastes,they both agree on what is the proportion of each security in the risky portion of their portfolio.In other words,they all agree that the best capital market line has equation:CML line:r x=r f+r m r f mxand each investor will choose according to her/his preferences one speci…c point on this line (this might be M itself,but not necessarily so).4.2CAPM:a’rigorous’derivationRecall that in the previous Section we derived the main equation that forms the basis of Capital Asset Pricing Model(CAPM)in a rather intuitive way.The equation states that in equilibriumexpected returns on an asset must be the risk free return plus the risk adjustment,where the latter term re‡ects the extra return that people demand in order to bear the risk that the asset embodies:CAPM :r i =r f + i (r m r f )’Beta’of i : i = im 2mwhere i provides a measure of how risky asset i is,relative to the stock market.Here we would like to derive explicitly that equation.Speci…cally,we want to show that the i coe¢cient comes exactly from the model we looked at in the previous Section and is obtained (as shown by Sharpe and Treynor,who developed the CAPM model in the early sixties -reference in the textbook)by formally analyzing what goes on the second ”bullet”of the above description,in the derivation of the point M.We want to derive the best e¢cient portfolio that corresponds to point M in the picture.Consider a generic portfolio that includes a fraction x of risky asset i (with return r i and risk i )and a fraction (1 x )of the market portfolio m (with return r m and risk m ).As usual,we call this portfolio x and we already know that returns and risk on this portfolio are as follows:portfolio x f x of asset i;(1 x )of asset m gexpected return of x r x =xr i +(1 x )r mvariance of x 2x =x 2 2i +(1 x )2 2m +2x (1 x ) im standard deviation of x x =p 2xWe also know that the changes in the expected return and in the risk with respect to the percentage of asset i held in the portfolio (namely x )are given by:dr x dx=r i r m d 2x dx=2[x ( 2i + 2m 2 im ) 2m + im ]It is more convenient to derive d x =dx instead of d 2x =dx:By applying the chain rule,we obtain:d x dx =d p 2x dx =d p 2x d 2d 2dxwhere:d p 2x d 2=121p 2xHence:d x dx =121p x 2 2i +(1 x )2 2m +2x (1 x ) im 2[x ( 2i + 2m 2 im ) 2m + im ]Hence along any point of the envelope of the e¢cient portfolios including asset i and the market portfolio m ,the slope of the curve is simply given by the ratio between “how r x changes,if x changes”and “how x changes if x changes”:Slope of the return/risk trade-o¤line dr x d x =dr x =dx d x =dxwhere the numerator and the denominator have been derived before.This is true for any portfolio including asset i and the market portfolio m .The smart insight of Sharpe and Treynor at this point is the following.What is an equilibrium market portfolio ?It is a portfolio that includes all securities in proportions given by their value weights (i.e.their market value relative to the market value of all assets).In other words,in equilibrium prices adjust in such a way that all assets are held by investors.As a result the market portfolio m,must already include asset i in the right equilibrium proportions.Hence the percentage x of asset i in the portfolio x we are looking at,must be the excess demand for asset i (as the equilibrium proportion is already in portfolio m).But in equilibrium excess demand must be zero.Hence,in order to …nd an equilibrium,we need to set x =0in the above formulaes.If we do so,the above equation simpli…es a great deal and we obtain:Slope of the return/risk trade-o¤line for x equal zero dr x d x x =0=r i r m 1p 2m[ 2m + im ]=r i r m 1m[ 2m + im ]This is the …rst important result.The second is more straightforward:we know that in equilibrium the slope of the Return/Risk Trade-o¤Line must be the same as the slope of the Capital Market Line.So we need to set these two equal:Slope of the return/risk trade-o¤line for x equal zero =Slope of CML liner i r m 1 m[ 2m + im ]=r m r f m And now we are done...We can re-write this equation to solve for r i :r i =r f + im 2m[r m r f ]The ratio between the covariance of asset i and the market portfolio and the variance of the market portfolio is called the Beta of asset i,as we previously said.4.3Properties of the CAPM4.3.1How returns adjustAccording to the model we just derived the expected return on any asset should be the risk-free return r f plus the risk-premium i [r m r f ].Clearly,the Beta of the risk-free asset is zero ( f =0)and the Beta of the market portfolio itself is one ( m =1).For any asset we can graph the linear relation between expected return of an asset and its Beta,in the CAPM model:This line is known as the Security Market Line (SML)and in equilibrium all assets that are held have to lie along this line.The equation of this line is:SML line:r i =r f + i [r m r f ]What would happen if some asset’s expected return and beta did not lie on the SML?The expected return on the asset is the expected change in its price divided by its current price:Expected return on an asset =Expected value ofP 1 P 0P 0Suppose that you found an asset i whose expected return,adjusted for risk,was higher than the risk-free rate:r i i[r m r f]>r f.Then this asset is a very good deal.Hence people want to buy it.As they do so,they will bid up today’s price.Hence P0will rise.Hence the expected return will fall.How far will it fall?Just enough to lower the expected rate of return back down to the SML line.4.3.2Systematic vs.Unsystematic RiskThe total risk associated to a security can be decomposed into two parts:Non-systematic Risk:This is the part of a security’s risk that does not depend on the market.This is called also diversi…able risk,as it can be eliminated by combining it in a diversi…ed portfolio.Systematic Risk:This is the part of a security’s risk that can not be eliminated by including the security in a diversi…ed portfolio.This stems from market‡uctuations,or more precisely from the relation between the risk on a security’s returns and the market portfolio.In order to identify these two components,let us re-write the equations of the CML and of the SML:CML line:r x=r f+r m r f mxSML line:r i=r f+[r m r f] i or r i=r f+r m r fmi mSuppose i>0,as it is generally the case.What is the di¤erence between these two lines?Remember that the x of the CML is an e¢cient portfolio,while the SML line holds for any portfolio(not necessarily e¢cient).So the di¤erence between the two lines is due to the di¤erence between x(the risk of an e¢cient portfolio)and i m(the risk of any generic portfolio).Thus the risk component that determines the risk premium is the factor i m.Hence total risk can be decomposed as:Total Risk of i=Non-systematic Risk+Systematic Riski=[ i i m]+ i mThe…rst term is diversi…able(if i>0),while the second is unavoidable.The picture illus-trates:4.4CAPM:the empirical evidence4.4.1Calculating Beta in practiceIn order to apply the CAPM theory a method must be found estimating each future beta.Although Beta can be estimated on the basis of subjective probability beliefs,it is common practice to use past data to estimate future Betas.If we assume that the rate of return on the risk-free asset is r%per year,the systematic risk of a security can be estimated on the basis of historical data using the following regression equation:y it= i+ i y mt+e twhere:–y it is the rate of return on security i in year t in excess of the risk-free interest rate,i.e.y it=r it r ft(this can be the return itself if the return on the risk-free asset is constantover time);–y mt is the rate of return on the market portfolio m in year t in excess of the risk-freeinterest rate,i.e.y mt=r mt r ft(this can be the return itself if the return on therisk-free asset is constant over time);– i is the regression line intercept;–e t is the residual error(i.i.d);– i is security i systematic risk1.If you run this OLS regression,the estimate of the coe¢cient i,that we call b i,is given by:b i=Cov(y i;y m) V ar(y m)b i is a number and it is exactly the estimate of i,based on past data.4.4.2How can we test the validity of CAPM?There is a huge amount of empirical studies that have addressed this question over the last30 years....Here we only give some of the main ideas.Recall that the basic equation of the CAPM model is:CAPM:r i=r f+ i(r m r f)where r i is the expected return of security i and i is the ex-ante systematic risk on security i’s returns.In order to test the validity of the theory we need to…nd some numerical values to use instead of these ex-ante unknown variables.The easiest think that comes to mind(our,as well as most researchers)is to take some time average of observed returns as a proxy for r i(we could call it r i)and to use the corresponding estimate of i,that we called b i before.If we take N securities and for each of them we have T observations of their annual rates of return,we can run N regressions(one for each security)as those we described in the previous subsection,that is a time-series regression of the returns on each security on those of the market portfolio.We obtain N pairs of(r i,b i)that we could use to estimate CAPM instead of(r i; i)respectively.Now that (r i,b i)are numbers,we can run a cross-section regression of the type:r i= 0+ 1b i+u iwhere u i is the error term.If the CAPM provides a good explanation we expect the outcome of this regression(i.e.the estimates of 0and 1)to say that:0is not signi…cantly di¤erent from the return on the risk-free asset(some interest rate); 1is not signi…cantly di¤erent from(r m r f)the relation is indeed linear;the regression has a good…t(i.e.other variable should not be relevant).Results obtained in many empirical studies are very di¤erent...On the top of that,the whole procedure of testing CAPM empirically has been questioned(the main critique is known as Roll’s critique).1Systematic Risk was actually de…ned asim,but as m is the same for all securities,we can do without.4.5Arbitrage Pricing TheoryOn the grounds that CAPM is not entirely satisfactory,a di¤erent model of risk-return trade-o¤has been suggested in the mid-seventies.The model is known as Arbitrage Pricing Theory(APT),and can be thought of as an extension of the CAPM in the following sense.The CAPM predictsthat the returns on each security will be linearly related to a common factor,which is the returnon the market portfolio.The APT assumes that the rate of return on each security is a linearfunction of many common factors(that could be anything from GDP to the Dow-Jones stock index).If we denote by e r i the random return on security i(that has mean r i)and e f1;e f2;:::::;e f k the k random factors common to all assets in consideration(with means f1;f2;::::::;f k respectively),then the APT model is based on the following equation:e r i=r i+ i1(e f1 f1)+::::::::::+ ik(ef k f k)+"iwhere"i is a zero-mean noise term,and the il for l=1;::::;k are the sensitivities of the returnson asset i to the l-th common factor.Note that there is no assumption behind this model that investors are risk-averse and that theymake choices according to the mean-variance rule.The basic idea behind the APT model(from where the word Arbitrage comes)is the following Investors can create a zero-beta portfolio with zero net investment.What is a zero-beta portfolio with zero net investment?It is a portfolio that includes say n securities i=1;2;::::;n,in proportions x i such that: –P i i x i=0(this is the meaning of’zero-beta portfolio’),–and for which net investment is zero,that is P i x i=0(this is only possible whensome of the stocks are held short and some are held long,i.e.when some of the x i s arenegative and some are positive).Now suppose for simplicity that we consider only one factor e f,with mean f in the APT model:e r i=r i+ i(ef f)+"i(4.1) Then returns on asset i are generated by this process.So the returns on the portfolio we are looking at are:X i x i e r i=X i x i r i+(e f f)X i x i i+X i x i"ior:e r x=r x+(ef f)X i x i i+X i x i"iwhere e r x P i x i e r i and r x P i x i r i are the portfolio x rate of return and mean rate of return respectively.But,by construction P i x i i=0and P i x i"i is close to zero for a large portfolio.Hence the returns on this portfolio are constant and given by:e r x=r xIf we recall that the portfolio is also a zero investment portfolio whenever P i x i=0,this is exactly a zero-beta portfolio with zero net investment.In equilibrium the mean return on this portfolio must also be zero by arbitrage (otherwise you would be able to make money by buying this portfolio,its demand would increase,its price would go up and its return would go down...):e r x =r x =0Now,let us summarize the conditions we have imposed to derive this portfolio:8<:P i x i =0P i x i i =0P i x i r i =0By a theorem of linear algebra it must be that r i and i are linearly related in an equation of the type:r i =a 0+a 1 i for all i =1;2;:::::;nand it can be shown that the values of the intercept and of the slope of this straight line are:a 0=r xa 1=f r xwhere r x is the mean return on the zero-beta portfolio and f is the mean of the common factor e f,and corresponds to the mean return of a portfolio that has a beta of one (a one-beta portfolio).Hence,we infer that:r i =r x +[f r x ] iBut this is exactly the mean of the risk-return relation implied by APT (to see this,calculate the mean of equation 4.1).From this we can see that the CAPM model can be thought of as a particular case of the APT model.To this aim,take exactly the market portfolio as the common factor (as this has indeed a beta of one)and take the portfolio x to be a portfolio that includes only the risk-free asset (which has clearly a beta of zero and,if capital markets are perfect,is also a zero investment portfolio).If f =r m and the return on the risk-free asset is r f ;then the above equation reads:r i =r f +[r m r f ] iwhich is exactly the CAPM equation we saw before.4.5.1How can we test APT?The APT is basically an equation that says that the returns of a security are generated by a number of common factors.There is actually little or no theory behind it to explain which factors are to be included and how they a¤ect the returns.Hence,conceptually,the idea of testing the theory is not really appropriate.What one can do (and many people have)is to run various ad hoc regressions to identify common factors that have a good explanatory power in the relation.Factors like the in‡ation rate,the interest rate,various indicators of production are usually included in the regression.As it may be expected,there is no agreement among researchers as to how many factors are to be included and which ones prove to be more appropriate.4.6Capital Budgeting and Risk Please refer to Chapter 9in Brealey-Myers.。
财务分析与证券定价(英文)chapter(4)
Link to Previous Chapter
Chapter 14 brought the focus of forecasting to the profitability of operations
and growth in net operating assets. It also
developed simple forecasting schemes based solely on information in
How is financial statement analysis utilized in forecasting ?
How are proforma
future financial statements prepared ?
How is pro forma analysis
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financial statements
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Chapters 11 and 12 laid out the analysis of Financial statements that uncovers
the drivers of residual
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This Chapter
Convert Forecasts to a
4
V alu ation
Trading on the Valuation
5
Outside Investor Com pare Value with Price to BUY, SELL or HOLD
Inside Investor Com pare Value with Cost to ACCEPT or REJECT Strategy
Chapter 4 Section Four National Economy and cities(4学时)
1.A B r i e f I n t r o d u c t i o n t o U.K.E c o n o m yBritain was the first country to start the industrial revolution in the 18th century. Britain is a capitalist country.The characteristic of the economic system of capitalism is that it protects private enterprise. Britain began its market economy about 300 years ago.Britain is a trading nation.(W h y?)In Britain, the domestic market is limited. So, it has to find more markets outside the country. It has to find more markets in the world.E g.Each year Britain exports some one-third of its gross domestic product. It is the fourth largest exporter in the world. Its exports account for about 5% of the world’s total trade volume.Britain is also one of the world’s largest importers.Because Britain lacks raw materials, or we may say its home supply of raw materials is inadequate, Britain has to buy up a large proportion of the raw materials sold in the world market. Britain’s major trading partners are industrialized countries.2.A b s o l u t e D e c l i n e a n d R e l a t i v e D e c l i n eWhat is absolute decline?What is relative decline?Does British economy belong to the former one or the latter one?Britain was the first country in the world to start the industrial revolution. It took the lead in the development of economy in the world in the 19th century. But by 1900, it was overtaken by both the US and Germany.In the Post-war period, the U.K. economy experienced boom and bust (the fluctuation of U.K. economy).The reasons of the economic decline:1) Being in debt;2) The end of the empire;3) Large military spending;4) A catching-up by Germany and Japan;5) Lack of a close relationship between industry and banks.A Characteristic of the UK economy----A low rate of domestic industrial investment coupled witha very high rate of overseas investment.3.R e c e n t H i s t o r yB r i t a i n’s s l o w g r o w t h o f p r o d u c t i v i t y,s o a r i n g i n f l a t i o n,a n d l a r g e u n e m p l o y m e n t g a v e b i r t h t o t h e m o c k i n g t e r m“B r i t i s h D i s e a s e”.I n1979,M a r g a r e t T h a t c h e r b e c a m e B r i t a i n’s f i r s t-e v e r w o m a n P r i m e M i n i s t e r.S h e c a r r i e d o u t a n e x t e n s i v e p r o g r a m o f p r i v a t i z a t i o n.T h e n e w d o c t r i n e a d v o c a t e d r e d u c t i o n o f t a x e s s o a s t o s t i m u l a t e i n v e s t m e n t a n d c o n s u m p t i o n.T h a t c h e r’s e c o n o m i c p o l i c y a c h i e v e d r e m a r k a b l e s u c c e s s:1)I n f l a t i o n f e l l t o a b o u t4p e r c e n t.2)B r i t a i n a c h i e v e d a n a v e r a g e3p e r c e n t i n c r e a s e i n i t s e c o n o m i c g r o w t h.3)T h e w o r k e r’s t a k e-h o m e p a y i n c r e a s e d b y20p e r c e n t.4)P r o f i t a b i l i t y o f i n d u s t r i a l c o m p a n i e s w a s h i g h.T h a t c h e r’s p o l i c y w a s l i k e a c o i n w i t h t w o s i d e s:1)H i g h U n e m p l o y m e n t;2)W i d e n e d g a p b e t w e e n t h e p o o r a n d t h e r i c h;3)H i g h c r i m e r a t e s;4)U n s a t i s f a c t o r y s o c i a l s e r v i c e s.4.T h e C u r r e n t U.K.E c o n o m yD i v i s i o n o f t h e e c o n o m i c s e c t o r s:1)p r i m a r y i n d u s t r y2)s e c o n d a r y i n d u s t r y3)t e r t i a r y i n d u s t r i e s/s e r v i c e i n d u s t r y5.C a s e S t u d y:T h e A e r o s p a c eA e r o s p a c e i n d u s t r yL a r g e c o m p a n i e s“B i g F o u r”:L l o y d s;B a r c l a y s;M i d l a n d;T h e N a t i o n a l W e s t m i n s t e r B a n k。
新编研究生综合英语教程unit4
The concept seems a simple one, useful when applied to making everyday decisions about how best to spend limited time and money. However, even professional economists have forgotten or had difficulty in applying it.
Text A Opportunity Cost
International Economics 国际经济学 Chpt 4
4.1 Theories for Trade Protection
Strategic Trade Policy
Because of the small number of firms, the assumption of perfect competition does not apply. There are only a few firms in effective competition in some industries. This argument locates the market failure that justifies government intervention in the lack of perfect competition. It is possible in principle for a government to alter the rules of the game to shift these excess returns from foreign to domestic firms.
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国际经贸高级英语精读第4单元课文翻译及答案
Though the majority of European government officials are currently optimistic, the difficulties that have been experienced do not bode well for the future of the EMU in its present form. While current problems center on controlling government deficits to meet Maastricht conditions, the exchange rate crises of the recent past call into question the basic desirability of the project. Until these issues are addressed, national economies should not be forced to fit Maastricht conditions and arbitrary deadlines, as such action will only create unnecessary economic turmoil. The current delays in monetary unification are necessary; more caution would be in the best interest of the people of Europe.
expecting payment in French francs will see the value of that payment fall if the franc depreciates against the German mark. The volatility of exchange rates is, in effect, a cost that international firms must take into account when estimating profits. However, under the system in place before the beginning of the present monetary unification process, this cost was also quite small. Under that system, nations set the exchange rates that their central banks used for conversion between currencies. Then, whenever a nation increased the money supply, the market exchange rate would fall a bit, but the banks’ exchange rate would remain stable. Arbitraguers would not take advantage of small differences between the central bank’s pegged rates and market rates because regulations on capital flow made such
全新版大学英语综合教程第四册第四单元讲义
Global Reading Detailed Reading
After Reading
Unit 4 Globalization Supplementary Reading
Part Division of the Text Match the ideas Further Understanding
Before Reading
China and the WEF
Before Reading
Global Reading Detailed Reading
After Reading
Unit 4 Globalization Supplementary Reading
The World Economic Forum An independent, international organization incorporated as a Swiss not-for-profit foundation whose motto is “DeetaniletdrReeapdinrgeneurship in the global public interest”. It believes that economic progress without social development is not sustainable, while social development without economic progress is not feasible.
Unit 4 Globalization
Before Reading Global Reading Detailed Reading After Reading Supplementary Reading
劳动仲裁法英文版
中华人民共和国劳动争议调解仲裁法(英文版)Law of the People's Republic of China on Mediation and Arbitration of L abor DisputesDecember 29, 2007(Adopted at the 31st Session of the Standing Committee of the 10th National People's Congress on December 29, 2007)Chapter I: General ProvisionsChapter II: MediationChapter III: ArbitrationSection 1 General ProvisionsSection 2 Application and AcceptanceSection 3 Hearing and AwardChapter IV: Supplementary ProvisionsChapter I: General ProvisionsArticle 1 The Law is formulated in order to fairly and timely resolve labor dis putes, protect the lawful rights and interests of the parties and promote harmon ious and stable labor relations.Article 2 The Law shall apply to the following labor disputes between employi ng units and laborers within the territory of the People's Republic of China:1. disputes arising from the confirmation of labor relations;2. disputes arising from the conclusion, performance, alteration and termination of labor contracts;3. disputes arising from name removal, dismissal, resignation or vacation of offi ce;4. disputes arising from working hours, rest days and leave days, social insura nce, fringe benefits, training and labor protection;5. disputes arising from labor remunerations, work injury medical expenses, eco nomic compensation or damages; or6. other labor disputes prescribed by laws and regulations.Article 3 The resolution of labor disputes shall be based on facts and follow t he principles of lawfulness, fairness, timeliness and mediation-oriented to protec t the lawful rights and interests of the parties.Article 4 Where a labor dispute arises, a laborer may have a consultation with the employing unit or request the labor union or a third party to have a consult ation with the employing unit in order to reach a settlement agreement.Article 5 Where a labor dispute arises, the parties are not willing to have a c onsultation, the consultation fails or the settlement agreement is reached but not performed, an application for mediation may be made to an mediation institut e. Where the parties are not willing to mediate, the mediation fails or the medi ation agreement is reached but not performed, an application for arbitration ma y be made to the labor dispute arbitration commission. Where there is objectio n to the arbitral award, litigation may be initiated to a people's court unless ot herwise specified herein.Article 6 Where a labor dispute arises, the parties have the responsibility to gi ve evidence for their own claim. Where the evidence relevant to the dispute m atter is handled and managed by the employing unit, the employing unit shall give such evidence. Where the employing unit does not give evidence, it shall assume any unfavorable consequences.Article 7 Where the party in a labor dispute consists of more than 10 laborers, and they have a joint request, they may recommend a representative to partici pate in mediation, arbitration or litigation activities.Article 8 The labor administrative department of people's governments at the c ounty level or above together with labor unions and enterprise representatives sh all establish a labor relation tripartite mechanism to jointly study and resolve major issues of labor disputes.Article 9 Where an employing unit violates state provisions and labor remunera tions are in arrears or not paid in full, or work injury medical expenses, econom ic compensation or damages are in arrears, the laborer may make a complaint t o the labor administrative department which shall handle the matter in accorda nce with the law.Chapter II: MediationArticle 10 Where a labor dispute arises, the parties may apply for mediation t o the following mediation institutes:1. Enterprise labor dispute mediation commission;2. Basic-level people's mediation institutes established in accordance with the la w;3. Institutes with labor dispute mediation function established in towns and vill ages and districts.The enterprise labor dispute mediation commission shall comprise employee rep resentatives and enterprise representatives. Employee representatives shall be lab or union members or recommended by all employees, and enterprise representativ es are designated by the responsible person of enterprise. The officer of the en terprise labor dispute mediation commission shall be a labor union member or a person recommended by both parties.Article 11 The mediators of labor dispute mediation institutes shall be citizens that are impartial, connected with the mass and passionate about mediation wor k, and have certain legal knowledge, policy level and cultural level.Article 12 The parties that apply for labor dispute mediation may submit an a pplication in writing or orally. Where it is an oral application, the mediation ins titute shall record the basic particulars of the applicant, the matter in dispute t hat requires mediation, the reason and time on the spot.Article 13 To mediate labor disputes, the facts and reasons of both parties shal l be listened and mediation is conducted with patience to assist in reaching an agreement.Article 14 Where an agreement is reached after mediation, a mediation agreem ent shall be prepared.The mediation agreement shall be signed or sealed by both parties, and signed by the mediator as well as sealed by the mediation institute to take effect. It s hall be binding on both parties and both parties shall perform the agreement.The parties may apply for arbitration in accordance with the law if no mediati on agreement is reached within 15 days of the receipt of the mediation applica tion by the labor dispute mediation institute.Article 15 Where the mediation agreement is reached and either party that fails to perform the mediation agreement within the time limit prescribed in the ag reement, the other party may apply for arbitration in accordance with the law.Article 16 Where the mediation agreement is reached in respect of the paymen t of labor remunerations, work injury medical expenses, economic compensatio n or damages in arrears and the employing unit fails to perform the agreement within the time limit prescribed in the agreement, the laborer may apply to the people's court for a payment order in accordance with the law on the strengt h of the mediation agreement. The people's court shall issue the payment order in accordance with the law.Chapter III: ArbitrationSection 1 General ProvisionsArticle 17 Labor dispute arbitration commissions shall be set up pursuant to th e principles of coordinated planning, rational layout and meeting actual needs. People's governments of provinces and autonomous regions may decide to set up a labor dispute arbitration commission at the municipal and county levels; p eople's governments of municipalities directly under the central government ma y decide to set up a labor dispute arbitration commission at district and county levels; and people's governments of cities specifically designated in the state plan and cities with districts may also establish one or several labor dispute arb itration commissions. Labor dispute arbitration commissions are not set up acco rding to administrative areas level by level.Article 18 The labor administrative department under the State Council shall fo rmulate arbitration rules in accordance with the provisions hereof. The labor ad ministrative department of people's governments of provinces, autonomous regio ns and municipalities directly under the central government shall provide guida nce to labor dispute arbitration work within the administrative area.Article 19 Labor dispute arbitration commissions shall comprise the representati ve of the labor administrative department, labor union representative and enterpri se representative. The composition of the labor dispute arbitration commissions shall be an odd number.Labor dispute arbitration commissions shall perform the following functions and duties in accordance with the law:1. appointment and dismissal of full-time or part-time arbitrators;2. acceptance of labor dispute cases;3. discussion of major or complicated labor dispute cases; and4. supervision of arbitration activities.Labor dispute arbitration commissions shall set up offices to handle the day-to-day work of the labor dispute arbitration commissions.Article 20 Labor dispute arbitration commissions shall have an arbitrator registe r.Arbitrators shall be impartial and fulfill any of the following requirements:1. having served as an adjudicator;2. engaging in legal research or teaching with a designation of middle level or a bove;3. having legal knowledge and engaging in human resources management, labo r union work or other professional work for five full years; or4. having legal practice for three full years.Article 21 Labor dispute arbitration commissions shall be responsible for the la bor disputes occurred in the district under their jurisdiction.Labor disputes shall be handled by the labor dispute arbitration commission at the place where the labor contract is performed or at the place where the empl oying unit locates. Where both parties apply for arbitration to the labor dispute arbitration commission at the place where the labor contract is performed or th e place where the employing unit locates, the labor dispute shall fall within th e jurisdiction of the labor dispute arbitration commission at the place where th e labor contract is performed.Article 22 The laborer in a labor dispute and the employing unit are the partie s to labor dispute cases.Where there is a labor dispute between a labor deployment unit and a laborer, the labor deployment unit and the employing unit are the joint parties.Article 23 The third party that has an interest in the result of the handling of a labor dispute case may apply for participating in arbitration activities or be no tified to participate in arbitration activities by the labor dispute arbitration com mission.Article 24 The parties may appoint an agent to participate in arbitration activiti es. To appoint an agent to participate in arbitration activities, a power of attor ney signed or sealed by the appointer shall be submitted to the labor dispute ar bitration commission. The power of attorney shall set out the appointment matt er and the authority.Article 25 A laborer that has lost full or partial civil capability shall participate in arbitration activities by his legal representative. Where there is no legal rep resentative, an agent shall be designated by the labor dispute arbitration commi ssion. Where the laborer has died, his close relative or agent shall participate in arbitration activities.Article 26 The arbitration of labor disputes shall be conducted openly, unless t he parties agree not to conduct openly or state secrets, trade secrets or personal privacy is involved.Section 2 Application and AcceptanceArticle 27 The time limit for application for arbitration in labor disputes is on e year. The validity of arbitration shall be calculated from the date the parties know or shall have known the infringement of their rights.The validity of arbitration as prescribed in the previous paragraph shall be inte rrupted where either party claims its rights against the other party; or the releva nt department requests for the right of relief, or the other party agrees to perfor m its obligations. The validity of arbitration shall be calculated again from the time of interruption.Where the parties cannot apply for arbitration within the validity of arbitration as prescribed in Paragraph One of this article due to force majeure or other pro per reasons, the validity of arbitration is suspended. The validity of arbitration shall resume following the non-existence of the reason for suspension.Where a dispute arises within the subsistence of labor relations due to labor re munerations in arrears, the laborer that applies for arbitration shall not be restri cted by the validity of arbitration prescribed in Paragraph One of this article. However, where the labor relations are terminated, the application for arbitratio n shall be submitted within one year of the termination of the labor relations.Article 28 The applicant that applies for arbitration shall submit a written arbit ration application and submit duplicates in accordance with the number of the respondents.The arbitration application shall set out the following matters:1. Name, gender, age, occupation, working unit and domicile of the laborer; na me and domicile of the employing unit and name and duties of the legal repre sentative or person-in-charge;2. the request for arbitration and the facts and reasons on which such request is based; and3. evidence and the source thereof, the name and domicile of the witness.Where the applicant has difficulty in submitting a written arbitration application, an oral application may be made and recorded by the labor dispute arbitration commission which informs the other party.Article 29 The labor dispute arbitration commission shall, within five days of r eceipt of the arbitration application, accept the application and inform the appli cant if it considers that the acceptance conditions are fulfilled; if the acceptanc e conditions are not fulfilled, it shall notify the applicant in writing and state t he reason. Where the labor dispute arbitration commission does not accept or fa ils to make a decision within the time limit, the applicant may initiate litigatio n to the people's court in respect of such labor dispute.Article 30 The labor dispute arbitration commission shall, after acceptance of t he arbitration application, serve a duplicate of the arbitration application on the respondent within five days.The respondent shall, upon receipt of the duplicate of arbitration application, su bmit a statement of defense to the labor dispute arbitration commission within 10 days. The labor dispute arbitration commission shall, within five days of re ceipt of the statement of defense, serve a copy of the defense on the applicant. Where the respondent does not submit a statement of defense, the arbitration proceedings shall not be affected.Section 3 Hearing and AwardArticle 31 The award of labor disputes cases by labor dispute arbitration com missions adopts the arbitral tribunal system. The arbitral tribunal shall comprise three arbitrators and has a chief arbitrator. Simple labor dispute cases may be arbitrated solely by an arbitrator.Article 32 The labor dispute arbitration commission shall, within five days of acceptance of arbitration application, inform the applicant of the composition of the arbitral tribunal in writing.Article 33 Where an arbitrator is under any of the following circumstances, he shall withdraw, and the parties also have the right to submit written or oral wi thdrawal application:1. he is a party to the case or a close relative of the parties or agents;2. he has an interest in the case;3. he has other relations with the parties to the case and their agents which m ay affect fair award;4. he has meetings with the parties or agents without authorization or send gifts to the parties or agents.The labor dispute arbitration commission shall timely make a decision on with drawal application and inform the parties orally or in writing.Article 34 Where an arbitrator is under the circumstances prescribed in Item 4 of Article 33 hereof or accepts bribe, practices graft or perverts the law, he shall assume legal liability in accordance with the law and the labor dispute arbitr ation commission shall dismiss him.Article 35 The arbitral tribunal shall inform both parties of the date and place of hearing in writing five days before the hearing. Where either party has a proper reason, an extension of hearing may be requested three days before the hearing. The labor dispute arbitration commission shall make a decision on ex tension or not.Article 36 Where the applicant has received a written notification but fails to be present without proper reason or withdraws from the hearing without the app roval of the arbitral tribunal, it may be deemed revocation of arbitration applic ation.Where the respondent has received a written notification but fails to be present without proper reason or withdraws from the hearing without the approval of t he arbitral tribunal, he may be absent from the award.Article 37 Where the arbitral tribunal considers that verification is required for specialized issues, the parties may agree on the verification organization, wher e there is no agreement or no agreement can be reached between the parties, v erification shall be done by the verification organization designated by the arbit ral tribunal.The verification organization may, at the request of the parties or the arbitral tri bunal, dispatch verification personnel to participate in the hearing. The parties may raise questions to the verification personnel with the permission of the arb itral tribunal.Article 38 The parties shall have the right to cross-examine evidence and debat e in arbitral proceedings. Upon the completion of cross-examination of evidenc e and debate, the chief arbitrator or the sole arbitrator shall solicit the final opi nion of the parties.Article 39 The arbitral tribunal shall, upon verification that the evidence provid ed by the parties are substantiated, confirm that it is the basis of the acknowle dged facts.Where the laborer fails to give evidence in relation to the arbitration request h andled and managed by the employing unit, the arbitral tribunal may request t he employing unit to provide such evidence within the prescribed time limit. Where the employing unit fails to provide such evidence within the prescribed time limit, it shall assume the unfavorable consequences.Article 40 The arbitral tribunal shall make a written record of the hearing. The parties and other participants of arbitration shall have the right to make corre ction if they consider that the records of their statements are omitted or in error. If no supplementation is made, such application shall be recorded.The written record shall be signed or sealed by the arbitrators, recording person nel, the parties and other participants of arbitration.Article 41 The parties may settle on their own after application for labor dispu te arbitration. Where the settlement agreement is reached, the arbitration applica tion may be withdrawn.Article 42 The arbitral tribunal shall mediate before making an award.Where an agreement is reached after mediation, a statement of mediation shall be prepared by the arbitral tribunal.The statement of mediation shall state the request for arbitration and the result agreed by the parties. The statement of mediation shall be signed by arbitrato rs and sealed by the labor dispute arbitration commission and serve on the par ties. The statement of mediation shall carry legal effect after acknowledgement.If mediation fails or either party gives back before the service of the statement of mediation, the arbitral tribunal shall make an award timely.Article 43 Where the arbitral tribunal makes an award to labor dispute cases, i t shall do so within 45 days of the acceptance of the arbitration application by the labor dispute arbitration commission. If an extension is required due to co mplexity of the case, an extension may be allowed with the approval of the of ficer of labor dispute arbitration commission and the parties shall be informed in writing, but the extension may not exceed 15 days. If no arbitral award ismade after the time limit, the parties may initiate litigation in relation to the l abor dispute to the people's court.Where the arbitral tribunal makes an award to a labor dispute case and partial facts are clear, an award may be made on such parts.Article 44 In respect of cases for the claim of labor remunerations, work injur y medical expenses, economic compensation or damages, the arbitral tribunal ma y, pursuant to the application of the parties, make an award on advance execut ion and transfer to the people's court for execution.Where the arbitral tribunal makes an award on advance execution, the followin g conditions shall be fulfilled:1. there is a clear relation of rights and obligations between the parties; and2. if there is no advance execution, the living of the applicant will be seriousl y affected.Where a laborer applies for advance execution, no security may be provided.Article 45 Awards shall be made in accordance with the opinions of arbitrators in majority, and other opinions of the arbitrators in minority shall be recorded. Where the arbitral tribunal cannot form a majority opinion, the award shall b e made in accordance with the opinion of the chief arbitrator.Article 46 The statement of award shall set out the arbitration request, the fact in dispute, the reason for award, the result of award and the date of award. The award shall be signed by arbitrators and sealed by the labor dispute arbitr ation commission. Arbitrators with different opinions towards the award may si gn or not sign.Article 47 In respect of the following labor disputes, the arbitral award shall b e the final award and the statement of award shall have legal effect from the date of making unless otherwise stated hereof:1. disputes in relation to the claim of labor remunerations, work-related injury medical expenses, economic compensation or damages which do not exceed the local monthly wage standard for an amount of 12 months;2. disputes arising from working hours, rest days and leave days and social ins urance in the implementation of state labor standards.Article 48 Where a laborer has objection to the arbitral award prescribed in Ar ticle 47 hereof, he may initiate litigation to the people's court within 15 days of the receipt of the statement of award.Article 49 Where an employing unit has evidence to prove that the arbitral aw ard prescribed in Article 47 hereof is under any of the following circumstances, it may apply for revocation of award to the intermediate people's court at the place where the labor dispute arbitration commission locates within 30 days o f the receipt of the statement of award.1. the applicable laws and regulations are in error;2. the labor dispute arbitration commission has no jurisdiction;3. the statutory proceedings are violated;4. the evidence on which the award is based is forged;5. the other party has concealed evidence that is sufficient to affect a fair awa rd;6. the arbitrator accepts bribe, practices graft, and perverts the law.If the people's court composed as collegiate bench has verified that any of the circumstances prescribed in the previous paragraph exists, it shall revoke the award.Where the arbitral award is revoked by the people's court, the parties may initi ate litigation to the people's court in relation to such labor dispute within 15 d ays of the receipt of the statement of award.Article 50 Where the parties have objection to the arbitral award of other labo r dispute cases other than those prescribed in Article 47 hereof, they may initi ate litigation to the people's court within 15 days of the receipt of the stateme nt of award. If no litigation is initiated, the statement of award shall have lega l effect.Article 51 The parties shall perform the statement of mediation and statement of award that carry legal effect within the time limit in accordance with provis ions. If either party fails to perform within the time limit, the other party may apply for execution to the people's court in accordance with the relevant prov isions of the Civil Procedure Law. The people's court that accepts the applicati on shall execute in accordance with the law.Chapter IV Supplementary ProvisionsArticle 52 Where the working personnel on the appointment system of instituti ons have a labor dispute with the unit, this Law shall be followed; if laws, ad ministrative regulations or the provisions of the State Council provide otherwise, such provisions shall be followed.Article 53 The arbitration of labor disputes are free of charge. The funding of labor dispute arbitration commissions are protected by the treasury.Article 54 The Law shall come into effect from May 1, 2008.。
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Notable ideas Classical economics, modern free market, division of labour, the "invisible hand"
As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other eases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.
Economic System and Structure
1st country to em Adam Smith and Wealth of Nations in 1776
Born5 /7/1723 Kirkcaldy, Scotland Died17 July 1790) (aged 67) Edinburgh, Scotland
Primary industries:-----p54
Primary industries: agriculture, fishing, and mining. Agriculture—intensive and productive.slightly 1% population contributing 1.4%GDP Arable farming:Wheat, barley, potato, sugar beet, oat Livestock farming:37% value of ag output--diarying, beef, sheep EU’s Common Agricultural Policy
Secondary industries:
Mining & manufacturing
Iron ore,Coal(44% energy needs) onshore oil wells and 60 offshore wells---8th largest producer of crude oil British Steel Corportion Rolls Royce The Silicon Glen in Scotland Textile industry, ---wool
1.Public Sector---State-owned enterprises, basic industries Source of Gov. Tax— incometax,VAT
2.Private Sector---privately-owned enterprises Homeownership,partnership, monoply Public Limited Company(PLC) vs. private businesses
----------2009年英语专八考试真题 Reference answer： 31-35 DBACD 36-40 BCDCA
Section 4: National Economy and Cities
Introduction— p45
Group 7 Visible trade, invisible trade
A general picture of the UK Economy
Primary industries: agriculture, fishing, and mining. Secondary industries: manufacturing Tertiary industries: services, such as banking, insurance, tourism, and the selling of goods.
31. The Head of State of New Zealand is A. the governor-general. B. the Prime Minister. C. the high commissioner. D. the monarch of the UK 32. The capital of Scotland is A. Glasgow. B. Edinburgh. C. Manchester. D. London. 33. Who wrote the Declaration of Independence and later became the U.S. President? A. Thomas Jefferson. B. George Washington. C. Thomas Paine. D. John Adams. 34. Which of the following cities is located on the eastern coast of Australia? A. Perth. B. Adelaide. C. Sydney. D. Melbourne. 35. Ode to the West Wind was written by A. William Blake. B. William Wordsworth. C. Samuel Taylor Coleridge. D. Percy B. Shelley.
英美概况
Chapter 4 Section Four National Economy and cities
Review of Section 03:
The Maori people are natives of ___ A.Australia B. Canada C. Ireland D. New Zealand The British monach is the Head of A. Parliament B. State B. C. Government D. Cabinet America celebrate the Independence day on A.July 4th B.Oct 11th C. May 31st D.Sep 6th Canada is bound by the north by A. the Pacific Ocean B.the Atlantic Ocean C. the Artic Ocean D. the Great Lakes Who is the author of the Wast Land? A. George B.Shaw B.W.B Yeats C.Dylan Thomas D.T.S Eliot
36. Who among the following is a poet of free verse? A. Ralph Waldo Emerson. B. Walt Whitman. C. Herman Melville D. Theodore Dreiser. 37. The novel Sons and Lovers was written by A. Thomas Hardy. B. John Galsworthy. C. D.H. Lawrence. D. James Joyce. 38. The study of the mental processes of language comprehension and production is A. corpus linguistics. B. sociolinguistics. C. theoretical linguistics. D. psycholinguistics. 39. A special language variety that mixes languages and is used by speakers of different languages for purposes of trading is called A. dialect. B. idiolect. C. pidgin. D. register. 40. When a speaker expresses his intention of speaking, such as asking someone to open the window, he is performing A. an illocutionary act. B. a perlocutionary act. C. a locutionary act. D. none of the above.