Examine the factors which have influenced consumption over the past Essay

Examine the factors which have influenced consumption over the past three years in the UK. Has consumption been let get out of control - Essay Example If compared to the past, the consumption in UK could be characterized as rather increased; however, the whole situation cannot be referred as being out of control. It is rather an expected outcome especially if taking into consideration the development of technology and the changes in the social and cultural ethics across Britain – as a consequence of globalization and the entrance in the country of people with different social and cultural background; more specifically, Britain has become – mainly for professional but also for educational reasons - a favourable destination of people from developing countries but also of those belonging in member states – a phenomenon well developed after the enlargement of European Union. Under these terms, the characteristics of consumption in Britain could be expected to be influenced by many different factors especially the country’s social and cultural ethics while the culture of the people living across the country à ¢â‚¬â€œ this culture can be differentiated as explained above – is another important factor influencing the characteristics of consumption developed across the country. Of course, consumption is a multidimensional social phenomenon; apart from the factors mentioned above other factors – related with the individual’s personal perceptions – can also affect the rate of consumption through the years in a particular region. In UK which is a highly developed country consumption related with a series of social activities (travelling, entertainment, shopping) has been increased the last 3 years following the development of technology but also the improvement of the standard of living in all areas across the country. This increase reflects also the development of the national economy compared to the economies of other countries within the international community. In any case, the rates of consumption across

Study of The Capital Asset Pricing Model (CAPM) 02165 Essay

Study of The Capital Asset Pricing Model (CAPM) 02165 - Essay Example The only condition followed in this case is the investor has to behave in conformity maintaining prescription of portfolio theory. Early practitioners are of opinion that beta is the only explanatory factor, which has the ability to explain cross-sectional variation in the asset prices. Therefore, the CAPM model has successfully examined the predictions, which are made for measuring the risk-return relationship of asset prices (Black, Jensen and Scholes, 1972). Though the model was initially developed by Harry Markowitz, it was later modified by Lintner and Sharpe. The model actually explained that if a particular investor selects a portfolio for a period of time then he/she is said to be risk averse (Black, Jensen and Scholes, 1972). However, the modified version of the model is developed based on the following assumptions: CAPM has gained prominence in corporate finance, but there are many criticisms regarding its validity in the security market. The risk-return relationship is questioned, whether it has the ability to help the investor for making a good investment decision. Sharpe (1964) and Lintner (1965) had identified the linear relation that exists between return, risk and beta of a stock. Beta is defined as a variable, which aims at explaining cross sectional returns of the stocks. The equation aims at explaining the risk-return relationship of the stocks to a great extent. The beta value is dependent on type of assets (Roll, 1977). It also helps in gauging the volatility of the stock with respect to market risk. The following interpretations can be made from the different value of beta (Solnik, 1974; Lahrech and Sylwester, 2011; Levy and Sarnat, 1970). The above explanations indicates towards the fact that beta can easily establish the risk-return relationship of stocks. Therefore, it can be depicted that the CAPM is a perfect model for evaluating the debt and equity status of a company by examining its risk-rerun relationship of the