Desert Exile Essay Example | Topics and Well Written Essays - 1000 words

Desert Exile - Essay Example She describes the hard life of the Japanese Americans during the Depression and after they were forced to live in the internment camp The author’s father came to the United States in 1906, and her mother came later to marry him. Belonging to a fairly well-off family, Uchida did not experience the hardships her friends did during the Depression .She describes her angst during her childhood and her mother’s sensitivity and her father’s kindness and hospitality. The book throws light on some of the customs and ways of life of the first generation Japanese Americans. Although the book is well written and is full of insights, Yoshiko Uchida who belongs to the community of Japanese Americans herself, does not seem to give a balanced view of the experiences of her community .According to a critic, Uchida â€Å"is too close to her subjects and does not have enough critical distance to give a balanced and accurate account of the internment and experience of Japanese Amer icans in the years before the internment.† Writing about the deluge of Japanese visitors they had when she was a child, Uchida writes, â€Å"I felt as though our house was the unofficial alumni headquarters of Doshisha, and I one of its most reluctant members.†(Uchida p. 11) As the author was but a young child at the time, the number of visitors must have seemed enormous to her. In chapter 2, the author speaks about her insecurities which continued into her adult life. According to her, the insecurity was probably caused by the feeling of being different. â€Å"Perhaps it was the constant sense of not being as good as the hakujin(white people)† (Uchida 27) She concedes that although they spoke Japanese at home and observed Japanese customs, her family was more liberal than many of the other Japanese families. â€Å"As a result, our upbringing was less strict than that of some of my Nesei

Identify the Individual at Risk of Skin Breakdown and Undertake the Appropriate Risk Assessment Essay Example for Free

Identify the Individual at Risk of Skin Breakdown and Undertake the Appropriate Risk Assessment Essay Upon arriving at the care home, I shut the door behind me, clocked in using my time card and signed the staff log book which is a requirement of the fire safety policy. Prior to starting my shift, I attended the hand over held in the staff office with closed doors to maintain confidentiality and privacy of the residents. The hand over gives me important changes in the residents health and social care needs, requirements and procedures that need implementing during the shift. One of the residents I usually care for is Mrs H who has just come back from a hospital admission. According to her care plan Mrs H was diagnosed with Type 2 Diabetes Mellitus and Chronic Kidney Disease Stage 4 which are predisposing factors for pressure sores. She is bed bound, cannot weight bear and had just undergone Open Reduction and Internal Fixation (ORIF) for fracture on her left tibia fibula which left her immobilised. She is also incontinent of urine and faeces which are all predisposing factors to sore development. As one of her primary carer, I was assigned to carry out a risk assessment for skin breakdown with the use of the Waterlow Scale. I knocked on Mrs Hs room before entering as a sign of respect for her privacy and greeted her good morning. I asked how she is and she smiled which means she is fine as she has difficulty speaking. I asked her if she would like to have her bed bath and she said yes please. I informed her that I also need to carry out a risk assessment for skin breakdown to identify if she is at risk of developing a pressure sore. I explained the procedures that she will expect, the reasons behind these and I asked for her permission to carry on. She obliged by softly saying ok in a very low voice. Before starting the assessment, I gathered all the things that I need. I observed standard precautions for infection control by washing my hands with soap and water and drying them with disposable paper towels. I wore a disposable plastic apron and donned a pair of disposable gloves to prevent the spread and transfer of infection from one person to another. With the help of my colleague, I gently and carefully took off Mrs Hs night dress informing her every step that I make to make her aware and to encourage her cooperation. I kept it in yellow laundry bag as per organisational policy on infection control and prevention. I covered her body with bath towels to maintain her privacy and keep her warm. I washed her face and body with the use of disposable Mediwipes with soap and warm water. I dried her up using the towel to keep her from freezing. I took off her nappy pad and washed her private front part properly and dried her afterwards. Then I informed Mrs H that I need to turn her on her side so that I can wash and examine her back. With coordinated movements from my colleague, we gently and carefully turned her on her side, taking special care not to put any undue pressure on her bad leg to prevent any further injury. I examined her back side taking note of pressure points or bony prominences on her shoulders, sacrum, elbows, ankles and heels. Her skin on her shoulders, spine, elbows and heels look fine but there is a redness on her sacral area which feels hotter than other areas of her skin. I asked Mrs H if she feels any pain in her bottom and she said yes in a very low voice. On her left heel is an abrasion which she developed while she was in the hospital. I washed her back and her bottom gently and dried them up properly as excess moisture can aggravate her skin condition. I put her soiled nappy pad in a plastic bag to be disposed of in the clinical waste bag. I applied aqueous creme on her skin especially on bony prominences to prevent drying. I applied sudocrem on her sacral area to soothe and to protect and help heal her skin. I put on a clean nappy pad on her, put on clean clothes and positioned her on her right side to relieve the pressure on her sacral area, using cushions to make her comfortable. The nurse-in-charge came inside the room to check on her left heel wound and I asked her how to clean it and what dressing should I use for it. She said I can clean it with sterile water and sterile gauze, dry it up and apply Versiva dressing for protection as advised by the tissue viability nurse. I disposed of my gloves and donned on a clean pair. I washed Mrs H wound on her heel with sterile water and sterile gauze, dried it up and applied Versiva dressing. I put on a pressure relief cushion on her left foot to relieve pressure, kept it supported and in a comfortable position. I thanked Mrs H for her cooperation during the procedure. I informed her about the condition of her skin and reassured her that it is well taken care of. I disposed of my apron, gloves and soiled dressings in the plastic bag, tied it and disposed it in a clinical waste bag. I washed my hands with soap and water again and dried it up to prevent the spread of infection.

Formulation Of A Theory :: Papers

Formulation Of A Theory The certain factors that influence the accuracy of estimation is mainly: Age, the time of day it is processed, gender and the style of the survey. The reason age has an affect on the accuracy of estimation, is because if the person is too young or too old the survey may not be reliable enough in order for it to be processed into a data collection sheet the reason being that they may not be suited to the imperial or metric measurement used in modern days. The young may not have learnt the imperial measures and the elderly may not be used to the correct terms. The effect, time has to getting good reliability is that the survey should be taken out at a convenient time of the day where food has been consumed properly and the people's minds are focused. The times which may be irrelevant to practice a survey is early in the morning or late at night where people may be tired. The gender may have a certain effect on the outcome of results because the males may differ in technical skills to females or it is possible that perhaps females are more capable of handling academical situations rather than males. The style of a survey may affect the result because if badly constructed questions are used, people will not answer the survey properly and will try to avoid them. An example of a badly constructed question is 'What is your age?'-This is personal. Many people will not want to answer. An example of a well constructed question is 'Which age group are you in? 0-20 21-30 31-50 etc. A questionnaire is usually put together to test a hypothesis. The hypothesis that will be used in this questionnaire is: 'Children will be able to estimate better than adults'. Method The data will be collected through a simple questionnaire. A stratified sample will be used. This is because in a stratified sample, the population that will be asked will be divided into

21st Century Education Essay

We want stronger relationships with their teachers, with each other and with their communities locally, provincially, nationally and globally We want teachers to know how we learn, to take into account what we understand and what we misunderstand and use this knowledge as a starting place to guide our continued learning. We want to be able to work with others in the classroom, online and in our community. We want to be able to pick up our information anywhere, anytime We want indepth learning. We need feedback in time to help us learn and in time do something about it. This literary masterpiece has the best description of the students/learners of the 21st century. They have so many conditions and aspirations with regards to their learning process. This will also help the teachers of the 21st century to be ready and bear with these conditions of the leaners. TREATING MY STUDENTS I treat each of my students equally, giving them a chance to take responsibility for their own learning, express themselves, and learn at their own pace. I also encourage them to do collaboratively that can promote not only teamwork, but also healthy competition. I believe my biggest innovation is giving students a chance to show their abilities and to work in collaboration in a technology-integrated and cultural learning environment. I will also consider their individual learning styles. The following are some tips that should be consider in treating our students in a nice and good way. Let students choose their rewards. Create a list of acceptable rewards for excellent performance, either for individual students or the class as a whole, and let your students communally decide how they want to be rewarded. This will help make sure that the reward is an actual incentive, rather than just something you’ve pushed on them that doesn’t motivate them to work harder. Don’t see failure, see opportunity. When a student has made a mistake, don’t portray it that way. Don’t see it as a failure and don’t let them see it as a failure. Show them that it is a learning experience, a way for them to see how incorrect results are achieved. Let them try again and gently show them how to do it correctly. Remember, don’t say â€Å"wrong†. Say â€Å"close† or â€Å"good try†. Remember that a skill learned through trial and error will be much stronger than one which a student may simply get right on accident or through m eans they don’t fully understand. Make them feel unique and needed. Acknowledge and appreciate each student individually, for the qualities which make them unique and wonderful human beings. Encourage those qualities. You should also make each student feel like they have something to offer and contribute. This will raise their confidence and help them to find their proper path in life. Recognize their efforts. Even if students make only occasional, small efforts, those efforts need to be acknowledged and appreciated. Tell them when they’ve done a good job, individually, and mean it. Don’t be patronizing, be appreciative. If they’ve worked particularly hard, reward them. Give respect. It is extremely important to respect your students. It doesn’t matter if they’re graduate students working on a doctoral thesis or kindergartners: treat them like intelligent, capable human beings. Respect that they have ideas, emotions, and lives that extend beyond your classroom. Treat them with dignity and they will extend the same t o you. TEACHING MY STUDENTS â€Å"One can’t believe impossible things.† â€Å"I daresay you haven’t had much practice,† said the Queen. â€Å"When I was your age I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.† Lewis Carroll, Alice’s Adventures in Wonderland Your Assignment, Should You Choose to Accept It . . . Like Alice, many educators, policy makers and even the general public respond resoundingly with â€Å"That’s impossible!† when challenged to adopt a new paradigm of education for the 21st century. Most people today adhere to a paradigm of education that is strictly 19th century. But, like the Queen, a growing number of educators are believing in and accomplishing â€Å"the impossible†. Scott McLeod, in his blog, Dangerously Irrelevant, recently reminded us of a line from Mission Impossible, and we must apply that challenge to all of society. â€Å"Your assignment, should you choose to accept it† is to take education truly into the 21st century. It is not enough to say that we are already living there. Technically it is the 21st century, but our schools are not there, and our challenge now is to reinvent schools for the 21st century – for the sake of our children, our students and the welfare of our world. Making such a paradigm shift is not easy. After all, when any of us thinks of education, we usually think of what we knew as school – the way it has always been. That is how parents, policy makers, politicians and many students think of school. But we have to make the paradigm shift to 21st century education. So what is 21st century education? It is bold. It breaks the mold. It is flexible, creative, challenging, and complex. It addresses a rapidly changing world filled with fantastic new problems as well as exciting new possibilities. Fortunately, there is a growing body of research supporting an increasing number of 21st century schools. We have living proof, inspiring examples to follow, in schools across the United States. These schools vary, but are united in the fundamentals of 21st century education – see Critical Attributes of 21st Century Education and Multiple Literacies for the 21st Century. Scott McLeod has issued the challenge of creating a plan to get us from â€Å"here† to â€Å"there†. I feel that its about time that someone address’s the issues that face many students in the 21st century. The 21st century is a great place; a dynamic place that is evolving to the point where no one can predict what the world will be like in the years to come. Technology drives our planet and everyday we are getting closer and closer to finding the solutions to many of life’s problems. Society itself is changing in the sense that there is no longer one road to success. The opportunities that are out there make it possible for the everyday individual to make a difference in his community with nothing more than the laptop in his book back and the diligence to make his dreams possible. The success of these individuals is largely due to the connectivity and will of the everyday man. The Internet is an open network where people share information that they feel would make life easier, information that would break down the walls that stand in our way. The issue being with all this information and students in the 21st century is that we are still living in the good old days. Our schools train us to pass but not to excel. Things like funding prevent schools from exploring fields that are revolutionizing our world. Our students are the ones who pay the price for living in a world that believes we can live in a world that ignores the changes being made. That in good time our students will learn to adapt to the changes and handle it all on their own. But that isn’t the case. We are fighting two battles that are constantly racing to the top: one that promotes the simple life and the other that promotes change. Both sides have their pros and both sides have their cons. But something needs to be done. We have to find a way to teach our students the fundamentals while preparing them for a world that is driven by technology. Purpose and collaboration is all it will take to provide our students with the direction needed to be successf ul in the 21st century. It’s hard to believe but experiences is key to teaching students in the 21st century. As adults we can understand what these students are going through. We know what it feels like to be a student at that age and the adversities they face. Therefore wouldn’t it make more sense to teach these students not to make the same mistakes we made as students. To teach them how to confront the challenges we once faced and what to do differently when that time comes. But in a world where money restricts what we are able to accomplish, it seems almost impossible to do this. Funding prevents the everyday school from promoting classes in fields that are revolutionizing our world. Funding stops our schools from having up to date materials. And funding is what will cripple the world we live in. An efficient solution must be found that eliminate the dollar sign that stands in the way of these schools, in the way of these students. Technology is one solution to this problem. The main purpose of technology is to invent something that provides a new or better way of doing something; something that is cost efficient and provides room for expansion. These are the tools we should be equipping our students with. It would provide them with the same education they are getting from the textbooks they are so used to. The books will continue to exist but will no longer be the only resource our students are exposed to. The logic behind teaching students with technology in the 21st century is that technology appeals more to students in a world driven by technology. The average student knows what a computer is, is part of a social network of some sort, and has used technology to help them do something in their everyday lives. It would thus make perfect sense to use what they use so much as a teaching tool. Technology isn’t just entertaining; it’s also educational. Hundreds of tutorials are out there and everyday new and better programs are being created. The people themselves who make these programs made them with the sole purpose of provide an easier, better way of doing something. They are inventors, engineers, and they’re also teachers. They’re people who saw a problem and found a solution. These are the type of people we should be motivating our students to be like. We should be teaching our student not to accept things the way they are but the way they should be. Purpose is another crucial element when it comes to teaching students in the 21st century. The tools being used will have no effect if there is no purpose behind their use. Teaching in the 21st century is thus a dynamic process. There isn’t a simple answer in terms of how to teach in the 21st century. It requires creativity and resourcefulness not found in the simple lifestyle we are teaching our students to live in. The purpose behind teaching in the 21st century would be to find easier, more dynamic ways of teaching students with higher goals and expectations. Motivating students to be the best they can be and showing them how to work towards that goal. That things such as money, fear, and doubts shouldn’t be the reason to do the minimum but should instead remind us that as a student in the 21st century you should be well rounded and resourceful; ready to take whatever life throws at you. As a student in the 21st century you have to remember that you do not stand alone; that collaboration is a key and very powerful element in this idea of teaching students in the 21st century with technology. As a driving force the possibilities are endless. The community aspect and project-based learning that comes with teaching in the 21st century is what will provide the huge turnout in students who excel not only in the classroom, but also in life. Collaboration is what makes this window of opportunity possible. It teaches students how to work together and provides them with real world experience. Collaboration helps a student see that the life isn’t all about survival of the fittest but establishing connections and using the connectivity available to produce results and motivate change. This is what makes teaching in the 21st century with technology different from through the simple life and the belief that passing is more important than excelling. Neither idea is perfect. At the end of the day it all comes down to the students. The information we provide and the influence we are able to make is what will ultimately decide what our students are able to accomplish. The use of technology and the implication of 21st century skills in a world driven by technology is what open windows of opportunities to students all across the globe. Students in the 21st century are well aware of the adversities they face; so aware that they would fear taking a chance and pursing fields where they might not measure up. Our schools push this idea forward instead of persuading students to pursue these illustrious careers. What students in the 21st century need is direction and change. We need real world experience that proves to that there is a way and that accepting things the way they are is accepting defeat. If you want to see the future of education, don’t watch children in the average classroom. Watch children play a video game. You’ll see them engaged, excited, interacting, and learning—even if it’s only about how to get to the next level of the game. Because of their immersion in this computerized world, children absorb information differently from their parents. Instead of following information passively from beginning to end—as people tend to do with television shows, newspapers, and books—children interact with the new technologies. Schools now have an opportunity to apply the information technologies that are so effective outside the classroom for educational purposes. Taking advantage of these new technologies will require profound changes in the roles of teachers, students, and schools. Instead of being the repository of knowledge, teachers will be guides who help students to navigate through electronically accessible information. They will use the new technologies to build networks with each other, with parents and students, with academic and industrial experts, and with other professionals. Turning opportunity into reality requires four important changes: Industry must develop educational devices from comparatively low-price game hardware and software, thereby dramatically lowering the costs of educational technology. Communities and government should include technological change when setting the agenda for systemic change in education. Software-makers must tie the content of their products to quality information and to the national education standards as they are implemented. Teachers must receive extensive training in how to use emerging information technologies. Computers will not solve all the problems of education; many difficult issues will remain. But the new information technologies provide an unprecedented opportunity to reexamine how we educate our children.

Banc One HBS case Essay

Banc One has a problem with the alignment of two of its important strategies: (1) rapidly acquiring profitable banks and (2) sustaining high returns while mitigating interest rate risk. Banc One has been very successful in acquiring banks, and much of this is done through the sale/transfer of Banc One’s stock. This strategy relies heavily on Banc One’s ability to maintain a high stock price. The second strategy – high returns with mitigated interest rate risk – relies heavily on the use of interest rate swaps. This use of interest rate swaps has become concerning to investors – due to its complicated nature, off-balance sheet activity, and distortions in earnings metrics – which has negatively affected and continues to negatively affect Banc One’s stock price. Because both strategies are extremely successful, Banc One should not focus on abandoning either, but rather focus on educating investors about the use of interest rate swaps and their importance in not only sustaining high returns, but also providing mitigated risk, which is a strategy investors generally seek. Rather, Banc One should follow a three-step solution. The first step is to continue educating investors through prospectus-type materials (in very simplified forms) and individually informing fund managers and analysts, who are easier to educate about these complex transactions. The second step is to provide transparency with swap transactions. Although Banc One is only required to disclose swap information in the footnotes of its financial statements, Banc One should provide very detailed and clear information about specific swap transactions, to reinforce the notion that Banc One has nothing to hide with these swap transactions. For the last step, Banc One should analyze it s swap-trading procedures and identify simpler types of swap trades it could make. This would make reporting and educating on swaps easier. QUESTION 1: How could Banc One manage its interest rate risk exposure without using swaps? That is, how could it move from being asset sensitive to being neutral or liability sensitive without using swaps? The reason why Banc One needs to use swaps is to cover the gap between the duration of its asset and liabilities and thus to mitigate its exposure to interest rate risk. Therefore, another way for the bank to achieve this is by: Matching the maturities of its assets and liabilities. Since the bank has more long- term fixed-rate liabilities, it can add more long-term fixed rate assets, such as Treasure Securities to its portfolio. This will match the maturities on both sides of the balance sheet and will make the bank neutral to changes in interest rates. If rates change, an upward movement on one side of the balance sheet will offset a downward movement on the other. Matching the duration of its loans and liabilities and making sure the impact of interest rate changes on both sides of the balance sheet would cancel each other out. If the bank decides to take this approach, it can use instruments with different maturity periods in order to neutralize its exposure to interest rate risk. In order to achieve this it has to match the return of initial investment periods of its assets and liabilities. Borrow at a floating rate and use the proceeds to buy long-term fixed rate assets in order to mitigate their asset interest rate exposure. In this case the bank secures future income payments at a certain fixed rate, which it can use to pay the interest on its long-term fixed rate liabilities. Similarly, it can use the income from its floating-rate assets to repay the income on its borrowed floating-rate instruments. Thus, it neutralizes its risk-exposure. Avoid long-term liabilities in order to reduce its exposure to interest rate  risk on the asset side. In this case, the bank can borrow only through short-term liabilities and thus changes in interest rates will not affect its liabilities side more than they will impact its assets side. Purchasing options, forward, or future contracts. In this way the bank can reduce the uncertainty in the future by entering into an agreement with set terms for a specific date. Thus, if the interest rate moves in an unfavorable direction, the bank has the option to use these tools in order to mitigate the impact of the change on its balance sheet. What are the advantages and disadvantages of using swaps rather than these other means? Advantages: There are no capital reserve requirements specific to swaps. Swaps do not appear as assets on the balance sheet and thus they are not accounted for in the capital requirement calculations for the bank. This frees capital for the bank and at the same time brings insurance against its interest rate exposure. Swaps give flexibility and allow the bank to design the contracts in a way that fits its needs. Banks can tailor the durations, rates and other terms of the swap contracts and make it specific to the current situation of the bank. Furthermore, they can easily communicate with other banks in order to construct contracts, which benefit both sides. Swaps can also improve the bank’s liquidity – It can invest in short-term instruments and thus avoid locking in its funds in long-term securities. At the same time it can add swaps to its portfolio in order to mitigate some of the interest rate risk involved in the investment of short-term securities. In this manner the bank can make sure it has enough funds to meet changes in demand and at the same time it does not have to be exposed to the accompanying rate change risk. Swaps are off-balance sheet agreements; however, the income they generate is included in the company’s financials. In this case swaps are not recorded as assets or liabilities, however, they still bring income, which is included in the company’s cash flow statement and accounted for in the performance ratios of the organization. Disadvantages: Creates difficulties for the market and for investors to assess the risk and financial situation of the bank. As banks use more and more swap contracts, assessing the risk exposure of the organization becomes increasingly complex. Thus, external investors have a harder time evaluating the bank’s current situation and usually require higher returns to compensate for the perceived higher risk. Gives opportunities for speculations- Even though banks use swaps in order to mitigate interest rate exposure, they can also use them as instruments for speculations and short-term gains. If managers think they can predict the rate movement for a future period, they can be tempted to use swaps in order to gain from this movement. Thus, banks have to be careful in their strategies and should make sure they monitor the decision making process involved in the purchases and sales of swaps. They carry a small risk that the opposite party might default on the contract and leave the bank exposed to interest rate risk. What is the impact on interest rate sensitivity, accounting ratios, and capital ratios? Utilizing swaps, Banc One is more liability sensitive rather than asset sensitive. Without swaps, they would need to use its long duration assets to help control its interest rate sensitivity. Through its use of swaps, Banc One increases it return on assets. If they chose to manage interest rate risk by using methods mentioned above, the bank would hold more assets with longer durations causing the return on its assets to decrease relative to them using swaps. In the same scenario, the bank would have a lower return on equity due to the large amounts of assets needed. In  addition, the Appendix shows that although the Twin B bank has higher risk adjusted assets, the Tier I capital to risk-adjusted asset ratio is lower compared to Banc One’s ratio. References: http://www.federalreserve.gov/Boarddocs/SupManual/trading/200901/3000p2.pdf QUESTION 2: Describe how AIR’s work. Amortizing Interest Rate Swaps (AIRS) at Banc One grew out of a desire to create a synthetic collateralized mortgage obligation (CMO) similar to swaps but with the additional returns characteristic of CMO investments. Why is Banc One using them? CMO’s are desirable investments because it allows investors to get the benefits from investing in mortgage securities and it also is structured so that investors can easily estimate speed of prepayment. AIRs work best in low interest rate environments. With low interest rates, AIRS amortize faster and banks reinvest only when yields were low. AIRs have evolved to have their amortization schedule fixed by a formula instead of being tied to a group of mortgages. Another element of AIRs desirable to Banc One centered on the fixed rate or swap spread. In AIRs, Banc One would receive a fixed rate plus LIBOR. During this time period, Banc One could receive a swap spread of 120 bps over treasuries as compared to Banc One using a standard swap or comparable CMO that yielded 100 or 20 bps over similar treasuries, respectively. QUESTION 3: What are basis swaps? Basis swaps allow Banc One to transform prime-based floating rate assets to  fixed-income investments. Why is Banc One using them? Banc One was still vulnerable to basis risk even though synthetic investments partially shielded the bank from sensitivity stemming from shifts in interests rates. Between the two rates, LIBOR and prime, LIBOR changed frequently because it was traded daily while prime changed infrequently because it was governed by bankers. Basis swaps involved Banc One paying a floating rate based on prime while receiving floating rates based on three-month LIBOR and in addition Banc One would use an AIR to mitigate the risk posed by mismatched rates. QUESTION 4: What is counterparty risk? Counter-party risk is the risk that the counter-party – the other party in the transaction – will default on its obligations. How does Banc One measure this risk? The key to measuring counter-party risk is to understand the counter-party’s ability to pay, and this is done through a counter-party’s credit rating. The higher the credit rating, the greater the likelihood that that counter-party would not default. There are other ways that institutions can assess this risk, such as through an independent analysis of the company’s financial reports. How do they manage counter-party risk? Banc One managed this risk in several ways. First, it never dealt with an entity with lower than a single-A rating. Second, Banc One monitored its mark-to-market exposure to each counter-party and limited its exposure to any given company through strict guidelines. If the exposure exceeded the specified amount according these guidelines, Banc One would reallocate its swap portfolio. Third, counter-parties were required to post additional collateral as the market value of the swap changed, similar to how a margin account works with stocks. If the swap value for the counter-party dropped, it would have to post additional collateral to cover the value of a potential default. QUESTION 5: Why might Banc One’s use of swaps be damaging to the stock price? The main problem Banc One is facing is a drop in investors’ confidence due to its increased use of interest rate swaps. As confidence in Banc One falls, so does its stock price. At that time Banc One has ten pending acquisitions, with Liberty National Bancorp being the largest and if its stock falls below the â€Å"walkaway† price of $34.55 Liberty National Bancorp will either cancel the deal or the acquisition will become dilutive in violation of the bank’s established rules. What are investors and analysts concerned about? On the one hand investors are concerned about the transparency and accuracy of Banc One’s financial reports. Since interest rate swaps were off-balance sheet transactions, they underestimated the bank’s assets and in turn overestimated its earnings performance (Net interest margin, ROA and E/A ratio). In addition, the regulatory bodies (Financial Accounting Standards Board) required minimal disclosure on the companies’ swap portfolio, and as Banc One’s portfolio increased, investors felt they could not accurately assess the risk of the bank. On the other hand the fact that Banc One was acquiring heavily asset-sensitive institutions – which required it to increase its interest rate swaps portfolio to adjust to mild liabilities sensitivity – further made investors uncomfortable because they felt the growth of the portfolio might get out of control and could further cloud Banc One’s financial performance. How should Banc One respond to these concerns? The best path for Banc One is to educate investors about the bank’s use of derivatives. If Banc One does nothing, investors will likely become more concerned with Banc One’s practices and continue to withdraw from the stock, which will result in lower a lower stock price and major complications in Banc One’s investment strategy – acquiring other banks. If Banc One limits its derivatives trading, it exposes itself and its stock holders (which it has a fiduciary duty to) to much greater levels of interest rate risk. Because Banc One’s current strategy is the most optimal strategy for higher returns with more limited risk, it must find a way to educate investors about its practices, and how these practices are in investors’ best interests. This could include the disbursement of simpler educational materials (similar to prospectuses) and meetings with fund managers and analysts to inform them of the benefits of these trading practices. Banc One should also provide more transparency to investors about the types of derivatives trades it makes, adding more information about these trades rather than detail-limited footnotes in financial statements. Banc One should also research and implement (if possible) methods to trade swaps more simply.