Finding the Best Controversial Topics for a Persuasive Essay

Finding the Best Controversial Topics for a Persuasive Essay The Hidden Truth About Controversial Topics for a Persuasive Essay Persuasive speech topics for teens want to deal with the issues young men and women REALLY care about! You may trust us to supply expert assistance for many of your academic writing needs. Though people believe education is a correct and will make society, overall, a better place for everybody, others feel there's no legitimate way to provide a free college education as colleges would still have to be funded (likely through tax dollars). All people ought to be allowed to receive free high education. The One Thing to Do for Controversial Topics for a Persuasive Essay The greatest persuasive speeches aren't written in a rush. Inspiration to make your own advertising or media argumentative essay topics isn't tough to discover. Argumentative research paper topics are a whole lot a lot easier to find than to produce. Sexist advertising needs to be banned 11. You don't need to find super technical with legal argumentative essays, but make sure you do your homework on what the present laws about your favorite topic actually say. Your primary ideas should flow naturally and adhere to the topic. On the flip side, if you select a controversial topic you have very little interest in, you'll find it rather tricky to finish the assignment. If you can't locate a controversial topic on the list that is suitable for your passion, there are a great deal of different resources out there. The readers wish to read an essay that's absolutely free from any mistakes so it will be simple to comprehend. Qualities of a very good persuasive essay topic The topic needs to be specific. Researching the topic will permit you to find out more about what fascinates you, and should you pick something you truly like, writing the essay will be more enjoyable. Having selected a fantastic topic to argue about, at this point you need to make an argumentative essay outline. Selecting an excellent topic for your essay is among the most crucial and frequently tricky parts for many students. If you are in possession of a very clear essay, readers will understand easily what you wish to tell. Writing a superb persuasive essay is not a simple job, however, it's achievable. On the opposing side, obtaining a list of good persuasive essay topics is inadequate. There are just a few things that define whether an essay you're working on is going to be a good one. You should say why it's increasing in the event you need to come up with an argumentative essay. You may continue to keep your argumentative essays for your upcoming job portfolio in case they're highly graded. Always bear in mind a great persuasive essay ought to be persuasive. It's important to select debatable argumentative essay topics since you need opposing points you could counter to your own points. Usually, a structure of essay includes three chief sections, in other words, introduction, body, and conclusion. As any guide about how to compose a persuasive essay will inform you, your essay has to be organized in paragraphs with a logical progression from 1 paragraph to the next. Even if you're a specialist in a particular field, don't be afraid to use and cite external sources. You may use a variety of examples on the net at no cost. Discover which of the topics, you currently have a fairly good background on which will make it possible for you to have a relative edge. Possessing very good research abilities and selecting a great topic is critical. As an example, in college, you might be requested to compose a paper from the opposing viewpoint. Within the body, you should have three to four ideas. Whichever topic you select, always don't forget the value of literature sources. The fundamental aim of your paper is to earn an arguable statement or point. Up in Arms About Controversial Topics for a Persuasive Essay? Generally speaking, you will be asked to pick a perspective in an argument or maybe to support a particular viewpoint against critiques. A conclusion is, undoubtedly, the most significant portion of the argumentative essay because you can either support the excellent impression or destroy it entirely. There's no cause or argument mentioned in the subject. Even if you think in a specific argument very strongly, if you lack the evidence to demonstrate your point, then your argument might just be as great as lost. When you settle on this issue and pick the position on which you will base your essay, the remainder of the job can then begin. The very first thing you've got to realize searching for an ideal topic is that your opinion is the thing that matters the most. First thing you ought to do is to think about a few wide topic you want to write about. When you're picking your topic, bear in mind that it's much simpler to write about something which you presently have interest ineven in case you don't know a great deal about it.

William Clifford And William James - 1091 Words

Since the 19th century, William Clifford and William James have been the foremost religious theorist and have attempted to answer significant creation and theological mysteries. However, Clifford and James have varying views on the belief debate, each formulating a rational argument of what the basis for belief should be. Clifford’s, Ethics of Belief and James’ The Will to Believe outline their respective arguments which are vastly similar and but have marked differences. Both articles will be examined for these similarities and difference and stated within this paper. Born in 1845, William Clifford was a mathematician and philosopher famed for his philosophy of science and quest for answering ethical questions through scientific evidence (Encyclopedia Britannica, 2014). Clifford recognized several difficulties in Emmanuel Kant’s argument related to philosophy, which inspired him to begin a search for answers related to innate belief, personal responsibility of guilt, and overall creation. In the Ethics of Belief, Clifford asserts that it is always wrong to believe based on insufficient evidence, a theme that would follow his opinion on every issue he chose to tackle. William James was an American psychiatrist and philosopher, born in 1842 and touted as the leader of the philosophical movement of Pragmatism and of the psychological movement of functionalism (Encyclopedia Britannica, 2014). James’ rebuttal to the Clifford’s Ethics of Believe, was the famed Will to Believe.Show MoreRelatedWilliam Clifford and William James’ Conflict Views on Beliefs 1166 Words   |  5 PagesWilliam Clifford argues that we should never â€Å"believe anything on insufficient evidence† (Philosophy of Religion, p. 103)1 and if we do decide to believe in God without any evidence it would be considered â€Å"wrong,† however, William James’ The Will to Believe essay argues, in response to Cliffords essay, that believing anything without sufficient evidence is â€Å"an irrational rule† (James, p. 109)2. James’ essay suggests that there is some level of truth to the fact that no one can decide what it is thatRead More William Clifford s Ethics Of Belief Essay1451 Words   |  6 PagesBorn in 1845, William Clifford was a mathematician and philosopher famed for his philosophy of science and quest for answering ethical questions through scientific evidence (Encyclopedia Britannica, 2014). Clifford recognized several difficulties in Emmanuel Kant’s argument related to philosophy, which inspired him to begin a search for answers related to innate belief, personal responsibility of guilt, and overall creation. In the Ethics of Belief, Clifford asserts that it is always wrong to believeRead MoreThe Ethics Of Belief By William Kingdon Clifford1058 Words   |  5 Pagesis by William Kingdon Clifford, (born May 4, 1845, Exeter, Devon, England—died March 3, 1879, Madeira Islands, Portugal) British philosopher and mathematician. Although he was most famous for his work as a mathematician, Clifford also wrote, â€Å"The locus classicus for the ethics of belief debate is, unsurprisingly, the e ssay that christened it. â€Å"The Ethics of Belief† was published, in a journal called Contemporary Review.†(Chingell) As stated in his writing, â€Å"The Ethics of Belief,† W.F. Clifford tellsRead MoreEssay on The Ethics of Belief1693 Words   |  7 Pages This section provides us with two selections from the essays of William K. Clifford (1845-1879) and William James (1842-1910). Cliffords essay, The Ethics of Belief, is based on the concept of evidentialism. This concept holds that we should not accept any statement as true unless we have good evidence to support its truth; (Voices of Wisdom, 346). James wrote his essay, The Will to Believe, as a response to Cliffords essay where he endorsed a philosophy called pragmatism. Pragmatism is describedRead MoreThe Ethics Of Beliefs By William James846 Words   |  4 PagesBelief can be best described as confidence in the truth. Throughout the centuries, philosophers have argued over support for religious beliefs. Some, like W.K. Clifford, claim that beliefs need evidence and reason behind them. Others, like William James, would offer a philosophical justification for religious faith, and would argue against evidence and reason behind beliefs. After reading both sides of the argument, I lean towards James’s philosophical justification the most due to the fact thatRead MoreThe Ethics Of Belief By Clifford. Pascal1776 Words   |  8 Pagesother factors, the available evidence. A range of philosophers have written widely on this topic. Clifford in his Influential essay â€Å"The Ethics of Belief† defends the contention that it is always wrong for any human being to believe anything if there is insufficient evidence. He uses two stories to illustr ate wrong ways through which people arrive at beliefs. William James, however, disapproves Clifford. Pascal has a different view on belief formation where he argues that reasons for believing andRead MorePersonal Views On Anthropology And Ethnography1445 Words   |  6 Pagesgrew easier to see things without the moral outline I had when I was younger to compare against. Post-modernism, a cultural phenomenon occurring before my birth, set in motion a series of adjustments in cultural anthropology and in general society (Clifford Marcus 1986). It shaped my outlook, but more influential forces included the movement of feminism and feminist anthropology (Mascia-Lees et al. 1989). As I identify as a woman, my experiences belong to a similar realm as those discussed by feministRead MoreA Comparison of W.K Clifford and William Jamess Arguments on the Right of Belief2494 Words   |  10 PagesClifford and James Summaries of W.K. Clifford and William James’s arguments for belief | In this paper, I hope to effectively summarize W.K Clifford’s (1879) argument on the ethics of belief, followed by a summary of William James’ (1897) argument on the right to believe, and finally, provide an argument for why W.K Clifford’s (1879) argument is stronger by highlighting its strengths while simultaneously arguing against William James’ (1897) argument. According to Clifford (1879), thereRead MoreClifford s Views On Religion1488 Words   |  6 PagesClifford makes an excellent point that we should take into consideration all beliefs and ethics. But his philosophy that â€Å"it is wrong always, everywhere, and for anyone, to believe anything upon insufficient evidence† is a little harsh for me. On the other hand James’ more faith-filled philosophy based on his view of religion, recognizing facts and the truth and how the choices we make in our lives effect us everyday are some of the more relatable ethics that we can apply in our daily lives and toRead MoreWilliam James Untenable Defence Of Faith1530 Words   |  7 PagesWilliam James’ Untenable Defence of Faith In his essay ’The Will to Believe’, William James promotes a seemingly pragmatic defense of religious faith by taking a benign form of religion from an already preselected set of concepts he wishes to consider. William James’s philosophy however is not motivated by pragmatism, nor is it pragmatic, but instead is an attempt to blow smoke to veil indefensible beliefs. Faith, for the purpose of William James, would be belief lacking sufficient evidence to warrant

Leadership Development Ratings of Transformational Leadership

Question: Discuss about the Leadership Development for the Ratings of Transformational Leadership. Answer: Introduction The term leadership refers to the ability of an individual for managing a group of people (Johnston and Marshall 2016). The purpose of this report is to represent personal experience on leadership traits and qualities. Additionally, this report will show the evaluation of different leadership theories for identifying own leadership abilities. Leaders are born, note made; however, with effective training and development process, it is possible to improve leadership ability of an individual. Therefore, that individual should have the willingness to set their goals according to the requirements (Boehm et al. 2015). This report will emphasize the key abilities for improving leadership skills. Personal Statement on leadership Good leaders can influence their followers for achieving broad objectives. In case of organizational purpose, leaders influence the workforce for establishing their vision. In order to influence the workforce, a leader should build good communication with the followers. In this manner, it is possible to understand key strengths and weaknesses of the followers in an effective manner (Muenjohn and Armstrong 2015). A leader always pays close attention to the performance development of workforce. As per as my understanding concern, a leader should participate in organizational task rather than just leading the workforce. I believe that a leader should be communicative and should have the ability of problem solving. In other words, leaders should have the ability to reduce conflict within the workforce in order to maintain sustainable development (Aarons et al. 2015). The role of a leader is to set realistic goals in order to achieve overall organizational objectives. For instance, leader s should segregate the workforce based on their performance quality and expertise. Thereafter, they should allocate responsibilities according to the expertise of each individual employee for reducing their workload. Apart from that, leaders should consider employee satisfaction as the key factor in order to increase employee engagement (Henker, Sonnentag and Unger 2015). Increasing employee commitment is the major aspect, which a leader should consider as the key to success. Motivation is the most important factor, which influences the workforce to improve their performance. It is the sole responsibility of the leaders to implement effective motivational strategies for improving performance quality of employees (Deichmann and Stam 2015). Now, identifying the most effective motivational strategy is the most challenging task of a leader in which they needs to identify the appropriate motivational tool for each employee. For example, some employees can be motivated with financial interest and some others can be influenced by recognition tool (Huijun and Jianjun 2015). Moreover, enthusiasm is the most important leadership characteristic, which helps a leader to encourage the workforce in an effective manner. Leadership Experience I have different experiences in leadership activities in my college and other workplaces. I did masters in political science and masters in political accounting and apart from that, I did bachelor in business management. Therefore, I had been a part of the leadership live workshop in which I have presented my leadership skills to attract the employers. In this event, I was responsible for managing the entire event as a leader. Apart from that, I am a part of my own business and I am working as a manager. My responsibility is to manage the workforce, set objectives and enhance overall organizational performance. From this experience, I have earned a vast knowledge regarding employees needs and requirements within an organization. My previous experience, where I was performing as leader of the leadership workshop, helps me to learn how to achieve broad objective by creating short-term objectives. The organization I am running is a business consulting company in which employees are responsible for handling clients requirements to improve their business. Apart from that, they also help the clients to build new business in domestic and international market. Previously, I noticed that most of my employees were switching to other job due to low motivation. The employees were moving to other companies because of low salary hike. In order to improve the situation, I communicated with the workforce in order to understand their issues, which helps me to implement effective strategies for retaining the existing employees. However, the situation was under control within few months after identifying the issues. Reflection in leadership experience From my previous experience, I came to know that a leader should understand the needs and requirements of the followers in order to gain successive outcome. The workshop I have conducted helps me to learn the way a leader should set objectives and job allocation. From this experience, it can be said that leaders should understand priority of the activities before framing the objectives. However, this experience does not increase my knowledge regarding employee management. In my next experience, I learned the process of managing a workforce for achieving broad organizational objectives. In my organization, the workforce was not satisfied due to low salary hike. Therefore, I communicated with the workforce for understanding their actual expectation. While communicating with the employees, I came to know that monitory reason was the secondary option for the workforce. The major issues they were facing were low recognition for their work. Therefore, as a manager, I identified their abilities and based on their abilities I implemented some effective motivational tools such as incentive schemes and recognition strategy. Therefore, it can be said that a leader should be communicative in nature and should perform as per the employees behavior (Tremblay and Gibson 2016). The leadership theory I would like to introduce here is transformational leadership. This leadership approach helps me to communicate with my employees for understanding their behavioral approach. Every individual belongs from different cultural background and therefore, behavioral approach of every employee is different in nature. Transformational approach helps to communicate with every employee individually, which improve employee relationship in an effective manner (Johnston and Marshall 2016). However, Leaders with this attributes are lenient and therefore, employees can take advantage from this. Therefore, situational leadership is the most effective and globally acknowledged approach, which helps the leaders to change their approach according to the organizational situation. From my experiences, I have understood that people a leader should build the objectives as per the employees ability. Setting unrealistic goals can affect employee motivation negatively, which can further affect overall organizational performance negatively. The employees in my organization were quitting the organization due to low salary hike. It means, employee motivation was the major issue for which the employees were decided to leave their current job. The activities, which I had short-listed for handling that situation was aiming towards employee motivation and relation as well. I have handled this situation by enhancing employee wages along with introducing some lucrative incentive scheme. From this incident, I have understood that a leader should have clear understanding regarding the employees needs and requirements in order to increase employee retention. This strategy is effective for achieving long-term objectives. On the other hand, in order to achieve short-term objectives, it is highly important to implement autocratic leadership approach in which leaders can punish or reward the workforce for achieving or not achieving the organizational objectives. Implementing this particular approach for long-term process can reduce sa tisfaction level of the employees; those are non-efficient and going through a training process (Boehm et al. 2015). Autocratic leadership is only effective for the experienced employees those can perform accordingly to the organizational requirements. I believe that communication is the key factor, which helps leaders to improve organizational environment in an effective manner. Apart from that, leaders should focus on training and development in order to improve performance of the workforce (Muenjohn and Armstrong 2015). It should be the main objective of the leaders to monitor performance quality of the workforce for maintaining a long-term sustainability. Evaluation of leadership theory and self-abilities There is different leadership theories have been introduced by different authors such as autocratic, transformational, transactional and democratic. According to my leadership trait and behavior, I believe that a leader should communicative and transparent in nature. The leader should share the organizational objectives with the followers for improving employees understanding regarding what they are doing (Aarons et al. 2015). The transformational leadership approach suggests that leaders with this particular approach pay close attention to organizational change. Now, in order to implement change, these leaders try to identify the current organizational situation. Depending on the current situation, transformational leaders implement change in order to improve the overall process (Henker, Sonnentag and Unger 2015). As per the situation described before, employees in my organization were facing difficulties due to low wages. It means motivation was the factor, which was influencing th e workforce to change their job. As I am the manager, it was my responsibility to communicate with the employees for understanding their issues. Thus, it can be said that my leadership trait is similar with the transformational leadership approach. On the other hand, transformational leadership approach suggests that a leader should motivate the workforce for improving employee satisfaction level. Similarly, I have implemented many motivational strategies for improving employee satisfaction level. Democratic leadership approach is another leadership trait in which leaders take others viewpoint before taking the final decision. In this leadership approach, employees are allowed to give their valuable feedbacks in order to improve the decision even better (Deichmann and Stam 2015). However, this approach increases the chance of organizational conflict, because different employee can have different viewpoints. Therefore, democratic leaders should have the ability to handle conflict within organization. While managing the critical situation in my organization, I take suggestions from the workforce for making the final decision. It helps me to understand the probable procedures of solving the potential issues. However, there was no confliction within the workforce because all employees were facing issue of low wages (Huijun and Jianjun 2015). I believe that it is highly important to seek innovative ideas in order to improve organizational performance. Moreover, involving the workfo rce in decision-making process helps the workforce to be self-actualized. Transactional leadership approach refers to the process of both punishing and rewarding the workforce. This leadership is commonly known a managerial leadership. In this leadership, leaders are solely responsible for influencing the workforce. I believe that a leader should have the understanding regarding transactional leadership approach (Tremblay and Gibson 2016). This leadership approach is not appropriate for long-term purpose and therefore, leaders should implement this process for achieving short-term objectives. The use of this leadership approach can have negative impact on the employees satisfaction level. Action Plan In order to improve leadership traits, an individual should go through some specific steps. In order to improve leadership ability, an individual should identify personal trait in primary stage. Without understanding personal traits and abilities, it is not possible to achieve overall goals and objectives. Following is the action plan for improving leadership trait. Activities Description Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Self-assessment This activity helps to understand self-traits and ability of managing a group of people. Building mission statement Setting mission and objectives Identifying skills Identification of own skills that can be improved Identification of leaders examples Choosing at least two leaders as examples Setting realistic objectives This activity helps to set clear objectives for improving leadership ability Identification of strengths and weaknesses This step will help to identify potential issues and there possible solutions Training and development Knowing the weaknesses will help to improve those aspects Seek feedbacks Gather feedbacks from the followers Conclusion While concluding, it can be said that a leader should have the ability of understanding changing needs and demands of the workforce. The self-reflection section shows that it is highly important to increase communication with the workforce for understanding the organizational issues. Moreover, it helps to improve employee relationship in an effective manner. It is the sole responsibility of a leader to motivate the workforce by efficient motivational tools. For example, the motivational tool can be monitory or some other such as recognition and incentive trip. The action plan shows that an individual should identify the self-strengths and weaknesses in order to improve their leadership ability. Reference list Aarons, G.A., Ehrhart, M.G., Farahnak, L.R., Sklar, M. and Horowitz, J., 2015. Discrepancies in Leader and Follower Ratings of Transformational Leadership: Relationship with Organizational Culture in Mental Health.Administration and Policy in Mental Health and Mental Health Services Research, pp.1-12 Boehm, S.A., Dwertmann, D.J., Bruch, H. and Shamir, B., 2015. The missing link? Investigating organizational identity strength and transformational leadership climate as mechanisms that connect CEO charisma with firm performance.The Leadership Quarterly,26(2), pp.156-171. Deichmann, D. and Stam, D., 2015. Leveraging transformational and transactional leadership to cultivate the generation of organization-focused ideas.The Leadership Quarterly,26(2), pp.204-219. Henker, N., Sonnentag, S. and Unger, D., 2015. Transformational leadership and employee creativity: the mediating role of promotion focus and creative process engagement.Journal of Business and Psychology,30(2), pp.235-247. Huijun, Y. and Jianjun, Y., 2015. Transactional Leadership, Competitive Intensity, Technological Innovation Choices and Firm Performance.Journal of Management,4, p.001. Johnston, M.W. and Marshall, G.W., 2016.Sales force management: Leadership, innovation, technology. Routledge. Muenjohn, N. and Armstrong, A., 2015. Transformational leadership: The influence of culture on the leadership behaviours of expatriate managers.international Journal of Business and information,2(2). Tremblay, M. and Gibson, M., 2016. The Role of Humor in the Relationship Between Transactional Leadership Behavior, Perceived Supervisor Support, and Citizenship Behavior.Journal of Leadership Organizational Studies,23(1), pp.39-54.

The Practical Value of Purchasing Power Parity Theory

Background information Multinational corporations (MNCs) are faced by various risks in their operation (Gallagher Andrew, n.d, p. 595). One of these risks relate to economic risks.Advertising We will write a custom report sample on The Practical Value of Purchasing Power Parity Theory specifically for you for only $16.05 $11/page Learn More For example, the cash flows earned from the firms’ operations have to be repatriated to the parent company which means that the cash flows are subject to exchange rate fluctuations. According to Kim (2006, p.110), exchange rate refers to the price that one currency is traded for another. The exchange rates fluctuate from time to time. In a free market, the exchange rate is determined by market forces of demand and supply (Kim, 2006, p.110). Economists have developed different models that explain how the exchange rate is determined. One of the elements that managers of multinational corporations take into consi deration in their operation relate to exchange rate determination. This arises from the fact that exchange rate impacts the value of the multinational companies and hence their competitiveness. Additionally, managers of multinational companies must understand how the exchange rate is affected by external forces such as inflation and interest rates (Madura, 2010, p.233). This is due to the fact that increase in the rate of inflation and interest rate may erode the value of multinational company. Bartram, Dufey and Frenkel (2010) assert that fluctuation in the exchange rate is one of the major risks that multinational corporations are faced with. In extreme situations, exchange rate fluctuations may cause substantial losses to multinational companies and even bankruptcy. This underscores the importance of multinational corporations managing these risks professionally (Bartram, Dufey Frenkel, 2010, p.1). There are 5 main theories that explain how the exchange rate is determined. One o f these theories is referred to as the purchasing power parity.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More To maximize their wealth, investors consider developing an optimal investment portfolio. To achieve this, they integrate different investment vehicles. Some of the investment vehicles considered relate to financial securities such as bonds. Other investors consider investing in the foreign investment markets as the best option. Examples of these markets include the forward and spot market (Buckley, 2004, p. 82). The investment deals made in these markets are intended to be settled in the future. Therefore, investors make expectations regarding the yield that they will receive from the forward and spot markets. One of the hypotheses that try to explain the impact of the investors’ future expectation on the spot rate is referred to as the expectations hypothesis. Aim The obj ective of this report is to evaluate the practical value of Purchasing Power Parity theory to managers of multinational companies. T he report also evaluates whether the assertion that the forward rate is a valid predictor of the future spot rate according to the expectations hypothesis is true. Scope The report is organized into two sections. The first section illustrates the importance of purchasing power parity to managers of multinational corporations. The second part entails an analysis of the expectations hypothesis. Finally, a conclusion and a number of recommendations are outlined. The value of Purchasing Power Parity theory (PPP) to managers of MNCs This theory is based on the law of one price which states that the price of commodities in different locations have to be the same. Lack of uniformity in price means that there is a gap left for organizations to make more profit (Mankiw, 2011, p.390). For example, According to Gallagher and Andrew (n.d, p.595), Purchasing Power Parity Theory (hereafter referred to as PPP) postulates that it is the relative price of products prevailing between two countries that determine the exchange rate between these two countries. This means that a particular currency must have an equal purchasing power across different countries (Mankiw, 2011, p. 390). There are two main forms of PPP. These include: Absolute PPP Relative PPP Absolute form of PPP postulates that in the absence of international barriers, consumers will prefer sourcing their products from markets with the lowest prices (Buckley, 2004, p. 117). On the other hand, relative form of PPP stipulates that changes in the relative price of a particular basket of commodities between two or more countries determine the corresponding adjustment in the exchange rate.Advertising We will write a custom report sample on The Practical Value of Purchasing Power Parity Theory specifically for you for only $16.05 $11/page Learn More Understand ing the PPP theory enhances the effectiveness with which managers of MNCs make various operational decisions. For example, the relative form of PPP theory postulates that the consumers’ purchasing power vary due to existence of various types of market imperfections. These imperfections may arise from imposition of quotas, tariffs, and high transportation cost (Madura, 2010, p.234). To improve the demand of their products in the international market, managers of MNCs have to develop a comprehensive understanding of the exchange rate movement. This improves the effectiveness with which the firms adjust the price of their products so as to ensure uniformity with the consumer’s purchasing power between the domestic and the foreign market. Lack of uniformity in the consumers’ purchasing power may result into consumers shifting to the competitors products. The resultant effect is that the multinational corporation may experience a decline in its sales revenue (Madura, 2010, p.235). Therefore, the theory of PPP is important to managers of MNCs in making adjustment to the price of their products. The theory of PPP is also of great value to managers of MNCs in that it enables them to project how the exchange rate will respond to changes in the rate of inflation in the domestic and the foreign market. The theory asserts that the relationship between the exchange rate and the price of commodities in the foreign market is direct. On the other hand, the relationship is indirect with regard to price level in the domestic market (Ignatiuk, 2009, p.5). If the domestic country experiences an increment in the price level (inflation), the exchange rate of the domestic country relative to the foreign country will depreciate proportionately so as to reinstate the purchasing power parity between the two countries (Ignatiuk, 2009, p.5). Illustration 1 The exchange rate of country X’s currency which was initially stable experiences an increment in the rate of inflation with a margin of 5%. Similarly, the exchange rate in country Y’s currency experiences an increment in the rate of inflation with a margin of 3%. According to PPP theory, inflation in the domestic and foreign market will affect the rate of exchange between these two countries. The formula below illustrates the corresponding change in the exchange rate between the two countries. ef= [1+ Ih/ 1+ If]-1Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More = [1+0.05/1+0.03]-1 =0.0194 or 1.94%. As a result of the high inflation in the domestic market compared to the foreign market, the exchange rate in the home country will appreciate with a rate of 1.94%. The resultant effect is that the price index in the foreign market will increase similar to the domestic market. Therefore, the domestic and foreign consumers will experience an increment in the price of commodities (Madura, 2010, p.236). The above illustration shows that the price level of commodities in the home and the foreign country will increase with 5%. This means that purchasing power parity between the two countries will be restored. Illustration 2 If the rate of inflation in the foreign country is higher than the domestic market, the foreign currency will depreciate. For example, if country Y’s inflation is 7% while that of country X is 4%, the foreign currency will depreciate with 2.8% compared to the domestic currency as illustrated below. ef = [1+Ih/1+If]-1 = [1+. 04/1+0.7] -1 = -0.28 =-2.8%. Depreciation in the foreign currency as a result of the high rate of inflation will result into decline in the price of foreign commodities according to the domestic consumers’ perception (Madura, 2010, p. 236). The differential in the rate of inflation between the two countries will result into an increment in the price of commodities in the two countries with a margin of 4% (Madura, 2010, p.236). From the above illustrations, it is evident that the theory of PPP is important to managers of MNCs in that it enables them to understand how the exchange rate will be affected by inflation. The resultant effect is that managers of MNCs can be able to project their firms’ future cash flows. The PPP theory enables managers of MNCs to determine the impact of exchange rate fluctuations on its future cost and revenues (Papaioannou, 2006, p. 236). The PPP theory can also enable a firm to formulate effective risk management strategies (Madura, 2010, p. 236). For example, the firm can be able to hedge against economic risks such as exchange rate fluctuations. Additionally, understanding how inflation rate differentials between countries impact the exchange rate can enable managers of multinational companies to make effective expansion decisions. The resultant effect will be improvement in the competitiveness of the company (Papaioannou, 2006, p. 135). The expectation hypothesis There are various financial instruments that investors can consider when investing in the foreign exchange market. Some of these instruments relate to investment in transactions of currencies (Buckley, 2004, p. 83). Examples of currency transactions include forward and spot transaction According to Wesso (1999, p.13), there are a number of hypothesis which have been formulated in an effort to explain the relationship between forward rates and spot rates. One of these theories is the expectations hypothesis asserts that the forward rate of exchange fully ref lects the future spot rate (Wesso, 1999, p. 13). For example, the hypothesis suggests that a 90-day GBP / EUR Forward Rate is a valid predictor of the GBP / EUR Spot Rate in 90 days’ time. Choudhry (2004, p.61) emphasizes on the assertion that the forward rate is a valid predictor of the future spot rate. In their investment decisions, investors expect the spot rate will in the future. However, the hypothesis has been criticized by a number of authors. For example, Buckley (2004, p.125) asserts that the forward rate of is not always equal to the future spot rate. The forward rate tends to be higher than the future spot rate. This means that the forward rate over-estimates the spot-rate which means that the forward rate is not a valid predictor of the future spot rate (Choudhry, 2004, p. 62). It is also difficult for investors to project the future spot rate that will be applicable after a long period for example 30 years. Buckley (2004, p. 125) asserts that a study conducted on a number of currencies (Swiss Franc, US dollar, the Swiss Franc and the Deutschmark) with regard to the forward and spot rate revealed that the forward rate is only a valid predictor of the future spot rate if the period to maturity is 30 days and not 90 days. This illustrates that the accuracy of the forward rate as an estimator of the spot rate diminishes as the period to maturity increases (Choudhry, 2004, p.62). The criticism of expectations hypothesis is also emphasized by the fact that the future spot rate is determined by movement in forces of demand and supply in the exchange market. Investors cannot accurately predict how the market will change thus making it difficult to estimate the future spot rate on the basis of the forward rate. A study conducted by Kaserman on the validity of the expectation hypotheses revealed that forward rate result into undervaluation of the spot rate. This phenomenon is mainly experienced if the forward rate is on an upward trajectory. The hy pothesis assumes that investors are risk neutral in their investment. However, investors are risk averse in their investment process (Hallwood MacDonald, 2000, p. 35). Manzur (1993, p.18) assert that the risk averse nature of investors makes them to demand a premium in order to invest in the foreign exchange market. Therefore, a risk premium has to be included in the forward contract which means that the forward rate is not a valid predictor of the future spot rate (Manzur, 1993, p. 18). According to Buckley (2004, p. 125), the prevailing spot rate is a more effective predictor of the future spot rate compared to the forward rate. Conclusion From the above analysis, it is evident that the theory of PPP is very important to managers of MNCs. By incorporating the theory of PPP in their strategic management practices, managers of MNCs are able to understand how the exchange rates are affected by inflation. The resultant effect is that they are able to formulate effective strategies to deal with economic risks arising from exchange rate fluctuation. Effective risk management in the international market is vital in improving the value of multinational corporations. The theory also enables managers of MNCs to understand the exchange rate fluctuations and hence how their future cash flows will be affected. The theory also enables managers of MNCs to develop a comprehensive understanding of the effect of inflation rate differentials between the domestic and the foreign country. The resultant effect is that the firm is able to make optimal international expansion decisions. The report has also illustrated the criticisms that have been advanced with regard to the expectation hypothesis. The report has outlined various illustrations which show that the forward rate is a biased predictor of the future spot rate. For example, the validity of the forward rate as an estimator of the future spot rate is only applicable in the short term but not in the long term. Additionally , using the forward rate to estimate the future spot rate may result into over-estimation or under-estimation of the spot rate. Recommendations To be effective in executing their duties, managers of MNCs should consider the following. Incorporating the theory of Purchasing Power Parity so as to understand how the exchange rate is determined and how it fluctuates due to variations in the rate of inflation. To be effective in estimating the future spot rate, investors and managers should not only rely on the forward rate. However, they should take into consideration the market changes. This is due to the fact that the information provided by the forward rate is usually inefficient. Reference List Bartram, S., Dufey, G., Frenkel, M., 2010. A primer on the exposure of nonfinancial corporations to foreign exchange rate risk. Journal of Multinational Financial Management. Vol. 15, issue 4, pp. 394-413. Buckley, A., 2004. Multinational finance. New York: FT Prentice –Hall. Choud hry, M., 2004. Corporate bonds and structured financial products. Amsterdam: Elsevier Butterworth. Gallagher, N., Andrew, S., n.d. Financial management: Principles and practice. New York: Freeload Press Inc. Hallwood, C., MacDonald, R., 2000. International money and finance. Malden: Blackwell. Ignatiuk, A., 2009. The principle, practice and problems of purchasing power parity theory. Munchen, Germany: Munchen GRIN Verlag. Kim, S., 2006. Global corporate finance. Malden: Blackwell. Madura, J., 2010. Financial markets and institutions. Mason: Cengage. Madura, J., 2010. International financial management. Australia: Cengage. Mankiw, G., 2011. Principles of macroeconomics. New York: Cengage Learning. Manzur, M., 1993. Exchange rate, prices, and world trade: New methods, evidence and implications. New York: Routledge. Papaioannou, M., 2006. Exchange rate risk measurement and management: Issues and approaches for firms. South Eastern Europe Journal of Economics. Vol. 2, pp. 129-146. Ne w York: International Monetary Fund. Wesso, G., 1999. The forward rate as an optimal predicator of the future spot rate in South Africa: An econometric analysis. Web. 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