Archive for October, 2009

Chicago Litigation

chicago litigation

When A Dog Bites Get A Personal Injury Lawyer

Every year, millions of people throughout the country suffer from dog bites. In our society, many people have come to think about their pets as people with fur or hair, forgetting that they are still animals and do not have the capacity to reason and think like humans. For this reason, the law holds the pet owner responsible for the actions of their pets.

Injuries can range in severity from a mild bite that doesn’t even break the skin, to a vicious mauling that can cause severe injuries and even death in the most extreme cases. Some dogs, such as pit bulls, have even been banned in some areas due to their violent tendencies and propensity to cause serious damage when attacking individuals.

Many of these deaths are handled in criminal court where precedents have been set for sentencing owners to many years in prison. In addition, a victim can file a civil lawsuit seeking to recover costs from medical bills and punitive damage. In order to get the compensation that they deserve because of a dog attack, victims need to consult with a personal injury lawyer or a wrongful death attorney.

Hiring a personal injury attorney or a wrongful death lawyer can allow victims to understand whether or not their case has merits and can be successfully argued in court. In many areas, there are clear laws and regulations that govern whether or not a victim of a dog attack can win damages from litigation. In order to prove culpability, a judge or jury must consider a number of factors. The first issue that will have to be determined is whether or not the dog in question actually caused the injury.

Next, the owner of the dog must be identified. Only then can a lawsuit be filed against that pet owner. Another consideration that a judge or jury has to make is whether or not the attack was the result of provocation from the victim.

If the attack was a result of the victim having provoked the dog, the case may not have merits and may not result in an award of damages. If, on the other hand, a person was walking by and minding his own business when attacked, a personal injury award may be granted. Finally, it must be determined whether or not a person had the legal right to be in the same area as the dog when the injury occurred.

Pet owners have a responsibility to keep the public safe from their pets. Owners of any dog, particularly dangerous dogs like pit bulls, should secure their yards with fences and make sure that their pet habitats are enclosed. Signs should also be posted to warn the public about potentially dangerous dogs.

Many jurisdictions also have leash laws that require any dog in a public area be fitted with a collar and leash. Not only does this protect the public, but it is also important to ensure the safety of the pet.

Dog bites happen all the time and often result in severe and painful injuries or even death. The law holds dog owners responsible for the behavior of their pets and provides methods of receiving compensation for injuries that result from attacks. Consulting a personal injury lawyer or wrongful death attorney is the only way for victims to make sure that they receive fair compensation for their injuries.

Unitrin, Inc. Reports Solid Second Quarter Net Income of $37.8 Million
CHICAGO—-Unitrin, Inc. reported today net income of $37.8 million for the three months ended June 30, 2010, compared to $41.9 million for the same period in 2009. Net income from continuing operations was $37.5 million for the three months ended June 30, 2010, compared to $39.5 million for the same period in 2009.

Bc Litigation

bc litigation

How does both the Marxist and capitalist philosophical crisis get stimulus from the each other? (5 of 10)

How does both the Marxist and capitalist philosophical crisis get stimulus from the each other? (5 of 10)

How does play the role of the state in balancing from alienation to participation in the productive forces in the socialist state for winning the hearts of the common people and killing the adverts through its influential nearest of productive and non-productive forces on the name religion, region, welfare, democracy, socialism, and terrorism in the world, without sharing in the affairs of the state and leaving it free to rule in the hands of political parties in democratic and secular India and in all global states?

 

In the list of non-productive forces, religion occupied the first place from the ancient period; the Egyptian gods had their origin in nature. The belief of the people was and is the internal matter of every body in the world. The belief as an idea is a matter of the individual and how it was taken place in his mind and how it would be replaced with another belief is unanswerable question to anybody in the world. Belief, thought, and feelings of everybody could be identified with the acts of the same individuals in the society on a particular reactions or actions on few occasions that could be identified by everybody. But the sources all these beliefs, thoughts, and feelings could be identified through more than three to four ways that were taken place in the minds of the people in general and a person in particular.

 

Particular ideas of a bunch of the people could be identified with its available sources in any country and in any society. The history of the different regions in the world could be identified with the popular religions of past and present days in the world. There were the traditions and practices of the gods prior to the days of Abraham. After the Old Testament the ideas and traditions of the people were changed. The practices of the faith and the feeling on the creations of world were changed. And in later times, Jesus Christ, upon who’s preaching and practice all most the beliefs of the region were further changed in the place of old ideas in their minds in a massive way.

 

The ideas, beliefs, and thoughts are different from issue to issue, subject to subject, action to action, need to need, and to the time to time. So no idea of any individual is permanent and could never be expected on expected lines by anybody.

 

 However, the sources of ideas, thoughts and beliefs are concerned that the sources could be identified from childhood of any individual to the time of his death, from the surroundings at the early child hood of anybody, and the period of growth through the parents, teachers, and in the adult period friends and the society where he is a member. After finding the living source, while education, or after the education, the another new place would add to know about all that things what were he saw and understood about its reasons, caused, effects and its needs during the lifetime.

 

If I say exactly every one have to learn a lot and his whole life is not enough to understand the whole things of the history of thousands and thousands of years of the past and it is ever changing from minute to minute. So the whole life is not enough to understand the drop of the ocean. In essence it is impossible to understand the whole things of the globe. So the branches of all the subjects which were in the past originated and developed from time to time on the broad line of the non-productive section and are treated as the knowledge about the things of the past present and of the future. The book on the social sciences, engineering, bio sciences and arts are the sources of the knowledge in the field of education and useful to those who are engaged in these subjects have to learn through these theory works. If these books are weighted it goes to the waste paper market without any validity.

 

Hence it is listed in the non-productive section of the society and those who are engages in the teaching profession should be counted as the members of the non-productive forces and the total cost and the payments of them through the federal or central governments in any country are treated as burden on the society and its productive forces. Because these educational instituted and universities with its maintenance are the part of the state affair and the social productive forces have to bear it through the taxes or levies on the people whose who live in the state.

 

It is another question for the rulers of Indian government to think over about non-refunding of the amount spent on education of medicine in making the students as doctors and after getting the degree at the cost of one million rupees of the government, simply constructing their own clinics and hospitals for changing thousands of rupees for simple stomach pains like complaints by the poor and down trodden in rural and in urban areas in India.

  1)Hence the subjects of the all political and governmental sections have been developed from the main source of the social productions by the productive relations whom were and are ever changing from time to time. Consequently the basic spirit of the progress and development in this field is entirely depended upon itself only. Because the players in its development need material, tools, (subject knowledge) skilled labor, basic need of its further development and its sustainability in the society itself.

 

2) Productive field’s requirements for further progress and development, the skilled labor, productive instruments, and productive relation in which the masters and slaves or the lords or the slaves or the masters and the slaves were to work for the progress of the society. This filed was and is the important and potential enough to feed the whole members of society including its depended field of non-productive including its service related works of them men of those who were engages in such fields

 

3) The common differences within these sections were the regular business of the society from the past to the present. It means the different and number of sections in the non-productive fields were to live with differences each against each whenever the interests of any section was suspected by the other within these fields, the protective measures were initiated from all those who were in its supervisory power. The struggles within itself and their unity were continued because they are not the losers and gainers of the economical benefits and losses. These sections were the depended sections of the society and were under control of the state. So that the state or the king at that time had to take care of these sections to go smoothly in their regular affairs until and unless sees that no effect could be suspected to the other sections of the society. The same continuation from the period of master slave relations to the present state and its machinery level of treatment was and is continuing in the present capitalist system too. a brief history of the state from its date of origin to present state of capitalism, how had it become strong and potential in dominating the social productions and catalyzing the equations of the social transitions through its magnificent formulas and logics if we understand the complete picture of the society in an organized form it would be beneficial to replace the present social system upon which the system of capitalizing the resources for more benefit of the poor and oppressed classes of the societies in the world.

The origin of the state was an essential and greater need at the time when the people began to feel it as their need what I stated about it from the ancient period of the history, that had made the society to sustain it as unavoidable thing to come into being to serve as a savior and protector of the societies and due to its widened subjects it was completely alienated from the work of the social productive field and settled in the non-productive field and have given an indication to the remained people of the society that its field and its subsections were and are very beneficial and easy to resume with an assurance to have the wealth unceasingly.

 

So the state, religion, entire organs of the state, education, arts, technical trainings etc, which could not produce any article, or commodity for the society and keeps its functions going in smooth way through its subjects, of laws, security personnel Prisons and judiciary. To feed all its branches it had taken so many steps from warring and annexing the others societies and its states to feed its depended people of all its branches from it origin to the present state.

 

However war and winning the territories, with gaining of the wealth from the defeated territories was the game of the kings and warriors from the history of Sumerians. Gilgamesh’s urr city was constructed by 3000bc as par one claim, but it’s the fact the king and history of the kings could be ascertained with a little of deference in the lengthy period of the state’s history. Here the state’s city and the name of the king and their contributions are different from each other till the reports and evidences are proved about their works in such remote history of past

 

They invented the Sumerian cuneiform script first in 3200 BC, due the relationship and living together as a civilization they were already in practice of agriculture in the year of 10000 BC. It is not easy to conclude about the past happenings without evidence on the developmental phases of the state. Ubaid culture and their civilization was claimed to be existed there prior to the Sumerians. In India, it is appeared that the city state Kashi was stated to be the first state and it had Varanasi as its capital city. In the thin picture to locate the exact feature of the state for its origin is very hard but I can say till present the Gilgamesh was the first king and the history had proved about his existence there archaeologically.

For practical purpose of confirming the period of the origin of the state in the world history, in which the emergence of the state did not have the same reasons at all times of its origins in the other states. It is better to estimate about its origin and its features, three models could be discussed in detail. Firstly it is confirmed fact that only after forming the civilization the state had been emerged from it within the civilizations as it is in the case of Sumerians. The Greeks who invented their Greek language much later to the period of Sumerians and thirdly, from Indian history, Rig-Veda is the first book through which the grim picture of the nature of the society could be known. In these three models with the developments in each field and its contradictions would be discussed. Firstly in the list of non production field and its struggles within itself, would go on through the relations religion with state, Slaves with masters, kings and wars with reasons leading to the development of the societies and extensions of the empires on global level.

 

Hegel divided the religions into three different forms. Of them one is natural religion which is in practice in Egypt and India. Second is in the form of arts which is practiced by Greeks and Romans. The third is revelation in the form of revelation which is Christianity.

Sumerian  kings list which was believed written by Acadians in 3rd millennium BC in Sumerian language and it is based of their mythology and the period of each ruler was told in thousands of years of the reign. The clear demarcation between mythology and materiality could be made through the archaeological findings only. Without archeological support the historical events and happenings of the past in the ancient history would never be claimed in the chain of progress and development of the society.

 

The epic of the Gilgamesh in the ancient text of Babylonia had given some amount of the suspicions about the ancient kingdom’s existence prior to the popular story of floods which discusses about the floods event in the bible. The Exact description of the state and its nature of society which was run under the command and control of the king Gilgamesh at that time could be understood through his own writings on the tablets, known as twelve table law to the modern world. The archeological support through the clay tablets on which his own declarations and his feeling were written in a mix of thoughts relating to the material as well as his spiritual beliefs about his subjects in his state. . In exact estimation about his rule at that time the description itself was available on the clay tablets on which in Acadians languages and it was stated to be written by the king himself about the conditions of his state and his affairs.

 

I like to adopt the way to materialize the content out of divinity from his subjects which are available in material form. The principle of accepting or rejecting any description on the things was or is in existence upon its entirety or on it partially or in a bit wise, according to the principle of applicability of its part or of its entirety in formulating any idea about the past in which the thing was or is existed. Because bible as a book, it is accepted by the most of the people.

 

At the same time, in the absence of the written history beyond the period of composition of the book, it is necessary to take some contents mentioned in the bible into consideration for further findings about the things to prove whether that things were existed or not in the period upon which the bible is still have a  claim. If the fire of seventh century did not take place in Alexandria’s library, one million copies may give many evidences to the world about the past.

 

And the enthusiastic archaeologists carried the spade and book in hands and moved on the lines on biblical claims on the areas and locations. For example, shekel was used as currency at that time, so that Abraham used that in the market and bought something in his needs at that time. Following acts were taken place by the Abraham upon whom we must rely and depend upon that the incidents or acts were done in his life

 ”And Abraham hearkened unto Ephron; and Abraham weighed to Ephron the silver, which he had named in the audience of the sons of Heth, four hundred shekels of silver, current money with the merchant (Genesis 23:16)”

 

The measurements and accounts for the exchange of the value of the commodities through which the daily live of the people was run according to its social and statutes of the state at that time. The silver value with its origin cost, as a value in the market as a currency in measuring the values and the values of the commodities were identified in exchange of the commodities. At the time of emergence of the value system the currency for exchange of the commodities were emerged there in the market at that biblical time. The state had not intervened much with its cheating role into the commercial market through introduction of the currency as an instrument of exchange value of the commodities at that time of biblical societies

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The cities were well built and the social value systems were in practice and confirm that the humans were living with all matured way in the society. The cities were built at the cost of the societies through the slaves and the gated were the protective measure of the societies. It is proved in the verse of bible, which is as follows.

 

 

“Unto Abraham for a possession in the presence of the children of Heth, before all that went in at the gate of his city (genesis 23:18)”

 
“Early the next morning Abraham got up and saddled his donkey. He took with him two of his servants and his son Isaac. When he had cut enough wood for the burnt offering, he set out for the place God had told him about.( Genesis 22:3)”

 

The rules as penalties for the losses or about the wrong doers also mentioned in the bible and confirm that the society of the biblical period was governed by the state. Punishments could be seen in that society through the following verses.

 

“If the ox shall push a manservant or a maidservant; he shall give unto their master thirty shekels of silver, and the ox shall be stoned (genesis23:32)”

 

“And if any mischief follow, then thou shalt give life for life,(genesis23:23)

The penal laws of the time were originated from the common aspiration of those who were the wrong doers and suffered and the same were implemented by the state, which was in its primary stage in which all three parts of modern legal system was vested in one hand only. The king was the sole for his all decisions that were directly implemented through his own channel of spying the people and finding their positions with their wishes. So the following law was introduced.

Eye for eye, tooth for tooth, hand for hand, foot for foot (genesis23: 24)”

This kind of law was and is the first in its king in the world and it has its source firstly in the bible only and the biblical area, and its people were practiced in their societies.

The calculation of the value system of the live stock with exchanging values in the market and the preparation before journey could be understood through the following biblical verses.

 

“…Thirty female camels with their young, forty cows and ten bulls, and twenty female donkeys and ten male donkeys (Genesis 32:15)”

 

“…they loaded their grain on their donkeys and left.”(Genesis 42:26)”

So they brought their livestock to Joseph, and he gave them food in exchange for their horses, their sheep and goats, their cattle and donkeys. And he brought them through that year with food in exchange for all their livestock.( Genesis 47:17)

 

The transportation system was the established through donkeys at that time firstly then camel, horses were emerged in the list of transport for the goods and journey. It is understood through the following verse about the “best things of Egypt “

“And this is what he sent to his father: ten donkeys loaded with the best things of Egypt, and ten female donkeys loaded with grain and bread and other provisions for his journey.( Genesis 45:23)”

At the same time there was a practice to bury the dead in their own land only. It means there was no practice of common burial place for the dead at that time.

“”And the field, and the cave that is therein, were made sure unto Abraham for a possession of a buryingplace by the sons of Heth. (genesis23:20)”

Furthermore, a relief of a day after six days works; it was suggested at that time through the following verse, without going into the controversy of interpolations in the bible. And it was the great contribution of six days working in seven days and one day rest was based on the animals which needed to have a rest. Work and rest was emerged from the totality of the whole society of that time. In the absence of the evidences in this regard, the bible is itself an evidence to find the real reasons of working and resting equations in the whole spectrum of humans and in animals.

 

 

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“Six days do your work, but on the seventh day do not work, so that your ox and your donkey may rest and the slave born in your household, and the alien as well, may be refreshed.( Exodus 23:12)’

The percentage of tribute also recommended to set for their lord from the plundered material as it is seen in the following verse.

 

“From the soldiers who fought in the battle, set apart as tribute for the LORD one out of every five hundred, whether persons, cattle, donkeys, sheep or goats.( Numbers 31:28)“

 

 

Now again coming back to the topic about the role of state in the commerce of the society how the state was turned a direct in cheating the people through the minting of coins and currency from ancient time to present which is known as barter system, in which the state could not play its role, but on the invention of coins and currency, the state had been increased by its revenue deceitfully to meet the growing warring expenditures from time to time.

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The value of the food material was divided into two types. One is perished and another is durable. Those who need the material if that was non-decay able, it was known that it could be useful to them in future. And those who have such material in large have been treated as their helpful and they had paid a particular attention towards them. At the same time those who had the material that had no durability, had made them to do something better than throwing out from their possession. Those who possess non-durable food material used to give to other in exchange of his bread for a wine.

 

The wine and bread’s combination was they found a good for both in need of hungry and some entertainment, so the practice was initiated at that time to exchange the material what they had and exchanged from each other. In that system of exchange the value of the article or commodity, could not be seen how much the labor was applied to gain it but to loose it on the system of need and needful time was determined to gain that valuables or loose the valuables.  Meat and bread was very much exchangeable commodities between the two needy individuals on sensing the equal needs between the two. Iron bars were emerged as a weighting system of exchanging the commodities in the place of exchange system.

 

 A system of common instrument as an item for exchange of the commodities was emerged in the place of exchange of commodities in the commerce in which the state had no role to play in the market affairs. As per the common instrumental system the weighting and downsizing the iron bars to purchase the other items was in practice. This system was introduced by Spartans of Greece. In India these two systems were in common use but the coins of skin was in use in India. In common instrument as iron bars in sales and in purchases there was to cut down the sizes of the iron bars for a while for other commodities was created a major problem to all the people, and even more problems were caused to the poor who needed to cut down all the iron bars very frequently for fulfilling their needs. Consequently they had to bear the loss and wastage of the iron for which they needed another system of measurement they needed. And the role of those who posses more than their needs they had to come forward for assurances on buying and purchasing the articles in the market.

 

 In some societies they were played a role of middle men in the commercial affairs of the society. The deposits of the commodities at any trustworthy of the society by all in a way of mutual consent to buy and sell basis as he was aware of the people with needs. The iron was not to break into pieces so easily as copper to break in such a way that would never cause any hard labor and loss of some pieces in waste had gained prominence in that societies of both roman and Greeks with a difference of time. The copper was the metal which had its value in the market for its own worth of its weight and the same copper metal was used as instrument in exchanging commodities in both ways of its cost with worth as a metal. The needs and feelings of the losses were some more increased with the replacement of the iron by the copper.

 

In the process of continuing developments in the field of weights and measurements, there were continuous problems they faces such as the calculation of the labor which was applied on the commodity to get into in the market. The calculation of the labor was a great loss to the poor and worker at the same time his master too. No barter system was partial, but the people were partial for their subjects themselves only. Those who have the commodities had the exchange through the silver bars till the emergence of the coins and currency. At that time of barter system the sate has no role to play in the field of commerce because it had its role of collection of tribute from those who have such positions and wealth in the society in the reasonable manner.

 

And the deceitful act was not in the commerce the state was to play role in the market affairs. It was free of markets and the people were practiced such system but every system have its strengths and weakness which spirits the people to find more effectiveness in the interest of the people. The gold coins in some countries were introduced by the kings in their respective territories. Prior to the gold, copper, iron, there was the entry of the state into the commerce by stamping on the silver bars for its guarantee of its weight and value so as to avoid the double work of braking for its calculations. On any bar was stamped by the sign of king the people began believing that the guarantee was there about the bar through which they could buy their needy commodities without any further complications in the market of those empires.

 

The roman king, Servious Tullius(578-535BC)fifth king, who had been believed by one of the available sources, minted ponds with bronze weighting one, five, and  ten And the cost and value had no difference. This kind of introduction of the pounds with the bronze metal was his need of his survival. The collection of the tribute in material form like, food grain, sheep, goat, ox, horses was not easy job for his subjects of state affairs. The system of collection of tribute from the different people of his empire like, war lords, farmers, land lords, free men and slaves, in order to meet the war requirements by the roman king who had  introduced the coinage for the first time in the world.

 

The roman king was proved very honest at the time of introducing the system of pounds of bronze metal was equally valuable in weight and value, without a difference between its cost and its value as an instrument of sale and purchase in the market. So that the people of his empire was easily adopted a change in the system of collection of tribute to the king. One pound was divided into twelve ounces a ‘real ounce of good copper’. ‘A good copper coins in worth and value was continued from the time of Alexander the first to Robert Bruce a pound of silver of the same weight and fineness  with the English pound sterling ,English French and Scots pennies too contained all of them originally a real penny weight of silver, the twentieth part of the ounce’ . ‘The roman, as in the latter ages of the republic was reduced to the twenty fourth part of its original value and instead of we a pound, came to weight only half of the ounce.

 

The English pound and penny containing at present about a third only’.. it means from the period of invention of the coins and noted either from the bronze and silver metal to gold coins, the kings were continued the practice of the issuing the coins with both value and worth, until the increase of the king’s affairs in wars they resorted to cut short the worth of the coins in weight and the value of the coins and noted they continued with their royal signs and symbols by benefiting themselves in the coins. When the instrument, in the market for sale and purchase the people invented on their own need and the demand, has been shifted from the hands of the people to the king’s subjects, the loss of the people both in the worth and in value made the kings to fill the treasures by another way from the commerce illegitimately and deceitfully. In other words, the royal families and the kings whose values in the people were once in high degree and they were known to the people that they were their protectors from the other invasions and the plunders with killings.

While their  expansions of the territories with widening of the royal subjects in the wars, the coinage and notes with the royal signs ,they found the way of securing the benefit from the field commerce along with other sectors which made them some hundreds to fold of wealth gatherer for the treasury of the royal subjects. From the origin of the state from a small unit to the mighty form of widened subjects and expansions of the territories, they were allowed to follow the codes of their laws in their societies at their times to all the people according to their values and worth in calculation of their wealth. These were made them to emerge many classes in their societies. The roman period which was started to grow into strong form as state to continue its existence, in which what was their twelve tables said about them to follow as their written law to be read in the following verses.

The summoning system was based on the individual complaints on the causes of the losses to them by somebody upon which he was to complain against the wrong doer to the magistrate, on receipt of the complaint the magistrate has given a power to get the wrong doer into the court by force for which the force was assigned in doing such work in the field of the judiciary. During the king’s period the king was to see such individual cases in the sense of justifying the individuals in the most cleverly manners. Consequently separate department was constituted to look in to such matters from the society as a king had empowered to discharge his duties moreover some social laws were also introduced restricting the funerals inside the city with instructions not to shed the tears by women at the death. The equality statues also defined and restricted the marriages between the plebeians and patricians. The political activities also was under scanner restricted the meetings in the night there in their empire. For all such details the following laws are available which were known as the basic laws of the early rise of the roman empire.

” Table I.
1. If anyone summons a man before the magistrate, he must go. If the man summoned does not go, let the one summoning him call the bystanders to witness and then take him by force.”
“2. If he shirks or runs away, let the summoned laid hands on him”.
“6-9. When the litigants settle their case by compromise, let the magistrate announce it. If they do not compromise, let them state each his own side of the case, in the comitium of the forum before noon. Afterwards let them talk it out together, while both are present. After noon, in case either party has failed to appear, let the magistrate pronounce judgment in favor of the one who is present. If both are present the trial may last until sunset but no later”.

“Table II.
2. He whose witness has failed to appear may summon him by loud calls before his house every third day.”

“Table III.
1. One who has confessed a debt, or against whom judgment has been pronounced, shall have thirty days to pay it in. After that forcible seizure of his person is allowed. The creditor shall bring him before the magistrate. Unless he pays the amount of the judgment or some one in the presence of the magistrate interferes in his behalf as protector the creditor so shall take him home and fasten him in stocks or fetters. He shall fasten him with not less than fifteen pounds of weight or, if he chooses, with more. If the prisoner chooses, he may furnish his own food. If he does not, the creditor must give him a pound of meal daily; if he chooses he may give him more”.
“3. Against a foreigner the right in property shall be valid forever”.

“Table IV.
1. A dreadfully deformed child shall be quickly killed.
2. If a father sells his son three times, the son shall be free from his father.
5. A child born after ten months since the father’s death will not be admitted into a legal inheritance”.

“Table V.
1. Females should remain in guardianship even when they have attained their majority.”

“Table VI.
1. When one makes a bond and a conveyance of property, as he has made formal declaration so let it be binding”.

“Table VII.
1. Let them keep the road in order. If they have not paved it, a man may drive his team where he likes.
9. Should a tree on a neighbor’s farm be bent crooked by the wind and lean over your farm, you may take legal action for removal of that tree.
10. A man might gather up fruit that was falling down onto another man’s farm”.

“Table VIII.
2. If one has maimed a limb and does not compromise with the injured person, let there be retaliation. If one has broken a bone of a freeman with his hand or with a cudgel, let him pay a penalty of three hundred coins. If he has broken the bone of a slave, let him have one hundred and fifty coins. If one is guilty of insult, the penalty shall be twenty-five coins”.
“3. If one is slain while committing theft by night, he is rightly slain”.
“4. If a patron shall have devised any deceit against his client, let him be accursed”.
“10. Any person who destroys by burning any building or heap of corn deposited alongside a house shall be bound, scourged, and put to death by burning at the stake provided that he has committed the said misdeed with malice aforethought; but if he shall have committed it by accident, that is, by negligence, it is ordained that he repair the damage or, if he be too poor to be competent for such punishment, he shall receive a lighter punishment”
“23. A person who had been found guilty of giving false witness shall be hurled down from the Tarpeian Rock”.
“26. No person shall hold meetings by night in the city”.

“Table IX.
4. The penalty shall be capital for a judge or arbiter legally appointed who has been found guilty of receiving a bribe for giving a decision”.
“5. Treason: he who shall have roused up a public enemy or handed over a citizen to a public enemy must suffer capital punishment”.
“6. Putting to death of any man, whosoever he might be unconvicted is forbidden”.

“Table X.
1. None is to bury or burn a corpse in the city.
3. The women shall not tear their faces nor wail on account of the funeral”.

“Table XI.
1. Marriages should not take place between plebeians and patricians”.

“Table XII.
5. Whatever the people had last ordained should be held as binding by law”.

The Hammurabi code of law, in which, certain laws were identified with the bible, and now the roman laws in the form of twelve table, as all these laws were initiated in their kingdoms to ensure security and safety of the people in the world. The Manu code of laws were compared with the code of laws of Hammurabi and found that the slave system was not directly taken place in India and clarified that the Indian system had no such similarities with the Egyptian, Sumerian, and biblical societies in India.

 

So that Indian society and its civilization had its own system with difference of the other systems in the world. Consequently it has to understand it from its own source from its origin, growth and present development from the way what it had contributed for its development. The study of these laws in the societies where all these were emerged and developed shows how the societies were worked in its ancient civilizations and its relative factors within the society which evolves in and around of each of the subjects of the societies by influencing each other on the development of its own factors within themselves alone.

 

In other words the widening subjects of the state under the non-productive fields dragged the people under their control from the productive fields of the societies from time to time with every development of the different sectors of the productive non-productive fields o the societies most of old ancient societies including Greeks Athenian, Spartan, and in roman empires. The Roman Empire was the best example in the history from the period of origin of the state to the development of its fullest form under the control of the different kings and kingdoms, in which the twelve table laws were emerged. It is the fact that the ten members were appointed to write laws of twelve table through which the courts were first formed to find the individual violation of the social laws such as the debts, damages, compendiums, with other penal laws were initiated to check the individuals first in the history of the jurisprudence in the roman empire.

 

It is also evidence that the first code of laws was written by the king himself and put all his laws were in practice for his development of his kingly subjects and issues in the world materialistically. Because the bible as a first book of faith, which was and is the first book of the world as known to the majority of the global people including the Islamic people also believes that it is the first book of faith upon which most of the worldly people have faith and believes for their routine practices in their lives. In essence the bible is still not considered to be the book of the world materialistically. So that it needs its archeological evidences on the issues which discusses in the history of the societies of the world.

 

Keeping its nature upon its subjects, in view I took some subjects of the social laws and social things which were in practice at the time of Abraham, Joshua, animals, measurements, and weights, social and individual needs with territorial identifications in support of the findings from the history. Eye for eye, tooth for tooth, hand for hand, foot for foot (Genesis23:24) has been mentioned in the Hammurabi code of laws which are given below.

 

If a man put out the eye of another man, his eye shall be put out. [Law no 194, an eye for an eye]. In whole of 282(including some missing laws) laws in the Hammurabi code of laws, only one law is the same which is available in the bible in common, but the period of these two books have no relations between the two laws. The code of laws was emerged from the materialistic world and complete form of laws related to the society and the people with all their business of social transactions under the command of the state. The state, it is known that the society at that time of Hammurabi, the king who contributed all these laws for the smooth administration in the society in which many fields were found and developed in its already clarified way of the productive and non-productive forces in all their fields and complete variation of the non-productive fields of society which was taken the complete shape of the state at the cost of the productive forces as equally needful to the state, society and to the productive fields with its relations within that society.

 

All the laws were found in material form and emerged from the society and found no role of divinity though they could have their gods and their religion at the time of the king who wrote all these laws for his royal subjects only. It is now become essential no know about the period of the bible was written, for exact evidences of the social laws with its relation to the productive and non-productive forces on the basis of the things which were related to material things only. Hence it is not possible to take the bible into account for its material existence at that time archeologically. 

 

At the same time I would never take all the archeological evidences here but the social things which were in existence to calculate the social life of the people, market commodities, exchange of the materials, productive forces, non-productive forces, the relations of the productive forces with the valuation of the social classes of the biblical society.

 

The period of composition from its first book genesis to its last book revelation had been taken 145 years from 1400 BC to 50 AD. In many accounts its events in the history is coming out through the archaeological evidences. It is not only a book of religious thoughts of the people but it is also a historical document also. Its narration about the issues reflects the social conditions of that time, from the period of Abraham to Jesus Christ. The state had been developed so widely in the most civilized manner from the barbarians to the administration of justice. Abrahams’ wife case and his piece of land dispute with his neighbor shows a change in the social laws which actually emerge from the society itself. They made bricks and burnt it thoroughly and build a tower first which was perhaps the first temple in the biblical religion.

 

They built the city too with the tower which should reach to the heaven in its height as they decided to build the cities and temple. While traveling Abraham feared to disclose of  the relation with wife as his wife before the pharaoh who could kill Abraham as the power of king has in his and to own any woman for him. And Abraham asked his wife to keep the fact in secret and they told to the pharaoh on asking him about the lady when he confronted him. The pharaoh as they thought he would take his lady, if they tell to his the she is his wife. After many years, Abraham took back his woman with all material on realization of the relationship of wife and husband between him and his woman. Another most important and barbarian law which had its base in bible only and it had been widely applied and practiced in other societies there.

 

How the society was at the time of Abraham could be understood through the initiation of some rules to follow in the society as these are now in practice and its practical purpose would never be belittled on the name of religion. Religions in the world though have more or less had the impact on the character of the individuals of the societies which were run by the productive forces of the societies but the religions as non-productive were proved very influential in molding the nature and character of the individuals in the society.

 

The societies in which men women, children, sons, daughters, grand mothers, grand daughters, daughters in law, mothers in law etc were and every one had their relations with each other. At the same way the forbidden acts were initiated in these societies though they have been associated with religious beliefs and their affiliations on the beliefs of the gods at the time of these initiations were come into being in different times in the societies.

 

These ideas, if we call these initiations as ideas, before introducing in to societies at the time of its need to put the people in order for a specific goal, or for some other purpose of worldly or heavenly, the people were obliged with a sense that these ideas in their lives could be helpful in dealing with the other people in the societies.

 

Though these were no way concerned with the productive instruments but these laws are concerned as a set of acts assigned to all humans at that time in all the related acts of the humans while dealing with each others at working places, or at their homes or at their meeting points wherever they needed to have relations with each other. Few laws known as the Ten Commandments to the world as a set of ideas in the mind of introducer to the people of the society on any claim or in any name, declaring these laws are the laws of the lord, and the god. The reasons in believing these laws are not concerned with the point of believing these laws of ideas but it is cause of believing that the following up of these laws would be more or less helpful for that society in general and about the way of living for the individuals in particular. These laws before introduction into the society were of course have no such influence and its power over the people but the people began the felling that these laws could be useful either for worldly or for the heavenly believing it as useful for them. Because the humans and animals are not the same to live on the food, sex, generations and death. But the human mind and the feeling were ever changing and would never be fixed in any frame for the specific purpose of chemical or biological findings from the days of the origin to the present day of the capitalism.

These laws are known as the laws written by Moses himself for those people who were followed him and his ways of life. I do not find any need to go into the depth behind the validity and reasons for introducing such laws to the people in their society, because, we could never judge the past from the present state of development from the basic developments of the societies to present time which what we would decide ourselves that our acts are correct and the past is not correct.

All these such presumptions are useless and baseless, because the history is something like a dead body upon which many post mortems and inventions could be carries out for research purposes. And the same dead body would never answer to all those questions that simply asks and left without giving any results with their observations on the dead body.

Moreover the history is something like a big record room from which we can find many more evidences and proofs to confirm the things of the facts or to prove as the historical things through a set of ideas which related to the findings for the present from the past. And the past is silently handed over its complete visible things partially and it keeps the remained in itself for further researchers about it through their ideas only. Moreover the judgments on the historical happenings with its things always remain incomplete as it had not been proved and founded by thousands of inventions on it and it always unresolved in many ways in every field.

 

Unnumbered mysteries still attracts all the scientists to carry out the more and more research works on many secrets in all most all fields, in medical, astronomical, chemical, and other hundreds of its branches are expanded from its basic sciences from the early periods of the human origin. Now it’s a matter of social sciences where the religion and social laws were mixed and led the human mankind towards its progress and advancements from its earlier period.

 

The Moses’ exodus, whether it is believable or unbelievable in the sense of modern age, it is essential for every reader or writer to go into its roots of society with its social laws, in the absence of the scripts in the world. After the progress and development of the civilizations in the world, bible and spade were found many sites there in the surrounding areas of the much popularized promised land of Abraham, proving the biblical historical incidents and its king’s names with their kingdoms of the ancient period of biblical era from which many resembling features are related and stated to be that the area and biblical history had given many more social laws to the world.

 

And the same laws are almost continuation in the daily lives of the majority people in the world. If the religion and its contributions or its exploitations whatever we like to say about history with its relation to the society is nothing, but whatever we say about it represents the mind and concept of those who are really concerned or not concerned with the developments of the society and religion in thousands of years, and it had been proved that they are still in need to find more and more about all these developments of the religion and society, because what we have been used to say all about the relation between the religion and society is all remained unresolved questions only and now it is again going back to read about all these things with its related factors with a realizations based on the failures in understanding these relations with all its factors to find what is really the ideologies needs to pull the masses on the philosophies of the past.

 

The ideas of the people about any material facts could not succeed on material things of the past and even present at almost all levels. After industrial revolutions and upon believing its new kind of relations among the people based on the new kind of productive forces, Karl Marx theory, Hegel’s theory and Lenin’s interpretation of Marxism, Leninism, and later  period of Marxism, the ideas of materialism are still continuing in the human minds. For example in India, in all most all hospitals they constructed temples either within the premises of hospitals or very nearer for those who attend the temples seek blessings of the gods.

 

At the same time the doctors also preys the gods before performing the operations on the patients. Even in the doctors’ houses, in their private rooms in hospitals, we would find the photos of such gods who preys their blessings. In government buses or in luxury buses we can find the gods garlanded photos above the cup boards for the drivers who seek the blessing for safety of himself and for the passengers. We sees many deaths of devotees returning from Balaji , temple of Tirupati and from the Ayyappa temple and now India has stood first in road accidents in the world even after having millions of gods in India.

 

Though the people in the issues of religion never become materialistic in approach either in their personal or in social lives as they live partially on material facts and used to live under the laws knowingly most of it, unknowingly least of the laws. It indicates that the people have every right to adopt whatever the way they like and what they like to reject from their lives, is a subject to know about it into depth for the better understanding of the role of the religious beliefs and material facts. If we go into if in depth, the first in its kind the word ” belief” comes before us for understanding the first step of feelings, other than the word” trust” in the series of the transformation of the understanding phases of the things of the past, in present and about future also.

Every one has belief on certain degree of the things in his life and move in his lives as per his works, in daily lives.

 

One question would come in my mind about a Jew, who thinks about him is very personal, but I want him to think in my way what I want to think about him. Is it possible? First I ask him to vacate the land of Israel. Secondly he must leave Israel without any relief to them by accommodating somewhere in the world. Is it possible? Thirdly I want all global capitalists of top hundred to handover their assets to the labor, workers and their servants. Is it possible? Fourthly, I want to lay down all weapons of all security forces of the world in the interest of the global peaces and prosperity. Is possible? 

 

The military tensions zone in world is Indian and Azad Kashmir which would be solved peacefully by merging India and Pakistan prior to the status of undivided India. I appeal the two states for the peace and prosperity in the interest of Pakistan, India and for the disputed Kashmir. Is it possible? All the human beings are equal in the world, and all religions are no way concerned with the material world. If I seek all the global people to desist their faiths in Judaism, Christianity, Islam, Hinduism, Buddhism, Jainism and other remained religions in the world. Will they follow it? Even pope asks the people they would never follow it. After the collapse of the soviet union and the remained socialist block including the Chinese people started believing the capitalist societies would save from their own models they built in their respective states with the help of the global leader united states for the developments of all these states including Russian state after its collapse which had helped in emerging many states within Russia.

 

Thousands of people died for the socialist Russia and people’s china for the long historical revolutionary way of these two states for the period of one century from the dates of the Karl Marx’s writings, which are primarily as a basic source for the socialist phase of the societies under the control of the state. The stat which was and is based and belong to the non-productive forces and directly depended upon its society and on its sources, without progress of its richness, the states could not do anything.

 

So that the state as a leader of the societies have stood forefront in leading all the members of the different societies without proper plans for further developments in the long run asked the help and support of the world capitalist states, collapsed as a result of dependence on other states despite depending on its own people. They failed to record the discontentment of the people of all sections in a planned manner, because they have been already isolated from the regular contacts and finding the needs for their supplies in their states. Details about the Social laws and state laws are already available in separate article.

 

The alienated forces of the state further isolated from sharing their role along with the people in their respective societies of all socialist states led them to bow down in economic and philosophical aspects for the socialist conceptual administration of the state economy. I am not to find the reasons for the failure of the socialist system of governance in the socialist block of Russian and Chinese state, but I really found the fundamental defects in the philosophy of Marxism, Leninism and its Maoism, as well as the new way of Nepalese Prachanda path which was and is continuing version of the socialist revolutions in the world.

 

So that it is necessary to come back from the back period to the present stage of capitalism as a pre-requisite for the philosophy of socialism, with additions to all issues of the Marxism, Leninist, and of Maoism, about, people, state, society, religion, productive mechanisms, non-productive elements’ dependence and total domination over the productive forces with its relations once again in the new and changing fundaments of the global world. Firstly the social laws were introduced by the Moses’ and all these are not negligible in understanding of the real role of the religion with its philosophy for the present society. All these laws were practiced by the people at the time of its introduction in the society there. Now all these laws are known the world that these laws were introduced by Moses himself.

 

The past thing of the history now had turned and became as a belief for many Jews in the world. At the same time the New Testament in which what incidents were taken place as incidents are now proving that these were the real happenings and facts in the history of the man king through the archaeological findings in all these days. .the laws of Moses were showed how society was in its nature what it needed to transform from the role of out side of the productive forces is to be understood. One of the Ten Commandments is still practical in the world including all the socialists and communist in the world which is as follows

 ”Remember the Sabbath day by keeping it holy. 9 Six days you shall labor and do all your work, 10 but the seventh day is a Sabbath to the LORD your God. On it you shall not do any work, neither you, nor your son or daughter, nor your manservant or maidservant, nor your animals, nor the alien within your gates. 11 For in six days the LORD made the heavens and the earth, the sea, and all that is in them, but he rested on the seventh day. Therefore the LORD blessed the Sabbath day and made it holy.”

 

Though this law may be in the zeal and love of presenting himself as the lord to the people, but it has been in practice to take a rest after the work of six days and it is also understood that the calculation of the “time and days were already were in existence at the time of these laws were introduced to the society. Moreover the following laws of the Moses are known that these were helpful by honoring father and mother, restricting the people from murder, adultery, and stealing, wrong testimony against neighbor and avoiding coveting the neighbor’s wife. The direct social laws like these are not found in rig Veda. The Indian civilization in which such basic laws for the family are not found basically as a family as a unit in south Asian region till now.

Exodus 20

The Ten Commandments

 1 And God spoke all these words:

 2 “I am the LORD your God, who brought you out of Egypt, out of the land of slavery.

 3 “You shall have no other gods before [a] me.

 4 “You shall not make for yourself an idol in the form of anything in heaven above or on the earth beneath or in the waters below. 5 You shall not bow down to them or worship them; for I, the LORD your God, am a jealous God, punishing the children for the sin of the fathers to the third and fourth generation of those who hate me, 6 but showing love to a thousand {generations} of those who love me and keep my commandments.

 7 “You shall not misuse the name of the LORD your God, for the LORD will not hold anyone guiltless who misuses his name.

 8 “Remember the Sabbath day by keeping it holy. 9 Six days you shall labor and do all your work, 10 but the seventh day is a Sabbath to the LORD your God. On it you shall not do any work, neither you, nor your son or daughter, nor your manservant or maidservant, nor your animals, nor the alien within your gates. 11 For in six days the LORD made the heavens and the earth, the sea, and all that is in them, but he rested on the seventh day. Therefore the LORD blessed the Sabbath day and made it holy.

 12 “Honor your father and your mother, so that you may live long in the land the LORD your God is giving you.

 13 “You shall not murder.

 14 “You shall not commit adultery.

 15 “You shall not steal.

 16 “You shall not give false testimony against your neighbor.

 17 “You shall not covet your neighbor’s house. You shall not covet your neighbor’s wife, or his manservant or maidservant, his ox or donkey, or anything that belongs to your neighbor.”

 

The king David and his role are not new for anybody in building his kingdom, temple and the temple town in the kingdoms of the Judaism. The lists of kings and their acts in molding the society is to be seen with the following developments, it is to take  from the period of King David (1050-920 BC) to Ahab(born c. 853 – BCE Reigned c. 874–c. 853 BCE)

 

 Saul, David and Solomon ruled the undivided Israel. Some important incidents were taken place while the transferring the  power from one king to another in the most desirable way by the people who were in greater need for the king as they were sought their king to be acted for them by neighboring kingdoms. Bible code of the present day in relation to the predictions of the past and about future would be discussed in some other time in separate article

 

The people of Hebrew began to feel the need of king how would protect them and rule them like other monarchs of the Egyptian, Mesopotamian, Canaanites, Philistines, Moabites, and Ammonites. And went to ask the Samuel1 and 2nd, who sought Saul to act as king in obedient way, but he could not able to rule them under the instructions and wishes of the Yahweh’s. For the period of two years only his rule was existed. Yahweh selected David. It was stated that the differences were the main reason over the kings who had been in obedience of the orders of the Yahweh only.

 

The Hebrew people were in such a need, in which Yahweh’s role was imminent in selecting the kings at that time. On the selection of the soul. It was proved that he had reluctant in obeying the orders of the Yahweh. Moreover he was not wealthiest king to rule the Hebrew in Israel. The king Saul after words, killed in the hands of Palestine, who carried out attack on him. On the issue of his death, there are contradicting version that one group argues that he had been committed suicide and another group says that Saul was not died at the spot where the attack was carried out, but at the hands of his soldier who was helping him to save the life.

 

The history of the first king how was ended is still in mystery in absence of any proofs about him and about his assassins at that time. Moreover the wealthiest man among the Hebrews to rule as a king under the command of Yahweh was an essential condition to become their king. It established that the wealth and abeyance of the orders of the Yahweh were the preconditions for selection of any king for the Hebrew tribes at that time.

 

The military ruler, the king David is known in the history of the Hebrews proved the essentialities of their state to fulfill the needs of the people at that time, in his reign of forty years. His merits are not new to the world to remind but it is needed to discuss about the relationship of the people with the kingship, maintenance of temple relations with the king and the expeditions against the other states will give us some important conclusions about the nature of the society and their needs at the time of the king David.

 

As a mighty ruler of the kingdom of Israel, he defeated Palestine and he expanded his kingdom into the empire. He made Jerusalem as capital for his empire by uniting some tribes into one empire, with his force. He killed twenty two thousand Syrians and captured the places of Palestinians. He got the name of uniting the small enemies of Hebrew people into his empire. He took up many works for construction works at Jerusalem, and he built a centre of worship in his empire.  In the matter of the court affairs, the local elders were acted as judges in the cases and they had been restricted to deal the cases in proper way by putting the law for them to throw away in case of bribes in their duties. The king was the applet authority upon the judgments of the cases by these judges in Israel. The king was the war leader with mighty forces, in the Israel with the war lords, to look after all the affairs of the kingship, besides all the duties. The duty of the king was to appoint the lords to the priests for the implementation of the Moses’ laws in the temples what the king David constructed during his life time.

 

The king and his duties once were in accordance with the Yahweh was changed from the earlier king to the present king, David in a span of a short period in the history of Israel. Now the king David had been proved the real king and enjoyed the maximum support of his people in his empire. There was the provision to appoint the gatekeeper who looks not to enter unclean into the temple .however the king David had developed Israel as an empire with some little deviations of the wishes of the Yahweh, but he led the transition of the tribal society into a perfect monarchy in the system of governance.

 

It is no need to remind that the ‘state’ of Israel under command of the king David did not face any defeat in his reign of forty years. setting aside his eldest son, and the stories about the Bathsheba’s promise, the king David had made his son  king in the presence of the priest , his son Solomon whose rule could be in 967 b. c. e was not much successful in dealing the foreign affairs of this empire. On the growing of the state Israel, the neighboring states were eager to come over into its affairs on his weakness in the governance. His name is still known with the name of Solomon temple in Jerusalem. The Solomon temple was built in 1000b c e. in Jerusalem.

 

The developments and expansion of the king’s subjects were already taken place during the period of the king David and he took out further with the same spirit and zeal in the interest of the Judaism in Jerusalem. The neighboring kingdoms were equally ambitious to attack his kingdom and plunder the wealth from his empir

What are better birth control options?

I had a tubal litigation 4 years ago, after my 2nd child, but got pregnant last year. Since my baby’s birth, I have tried bc pills, but bleed almost continually for 3 months. My Dr switched me to the patch, but I bled for 6/8 weeks and my breasts started leaking milk again…definitely not pregnant or nursing for over 1 year. Do not want IUD, what is a better option?

I have the IUD. Thats the best out there that I know of. I got it after I had my daughter. I have had it for 2 years and my hubby and I havent gotten pregnant yet. All my friends have it too and swear by it. But if you dont want the IUD i dunno what else to tell ya. The pill hardly works, I know of ALOT of ppl who have gotten pregnant on the pill….me being 1 of them. So just dont have sex.

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Toronto Litigation

toronto litigation
What should a student in highschool do who wants a career in law?

I want to be a litigation attorney, in either Child Advocacy, Criminal or Family. What should I do in highschool to prepare myself for universities, and in what subjects should I excel in to get in to the universty of my choice? (I am particularly not good in math)

P.S. I want to go to University of Toronto (Ontario, Canada). It is the top school in Canada for Law.

To start with get a math tutor but concentrate on political science and the history of the justice system, you will need good math skills no matter which area you practice in and studying the history of the judicial system will teach you some areas to avoid.~

NewsFlash: Toronto Enturbulated by Invading BattleToads!

The Growing Popularity of Collaborative Law in Divorce

The process of ending an established marriage can drain family finances relative to the animosity between spouses and the marriage rights at stake. Disagreements over property and child custody inevitably require many trips to the lawyers and extended court appearances.

The disruption in the lives of family members involves emotional fallout as it is without adding the frustration and anger over loss of money into the equation. The notion of collaborative law was thought up by American lawyer Stu Webb in 1990. Rather than using a neutral arbitrator each party is represented by a lawyer in a four-way negotiation. The family or divorce lawyers provide advice on the entitlements of each in a non-adversarial manner in order to bypass lengthy court procedures and the ongoing expenses of bitter litigation. The spouses sign a contract to renounce their right to threaten or pursue an action during the collaborative process. If one party later takes it to court both attorneys have to drop out and can no longer represent them, nor can they make use of any of the information disclosed.

In the past the divorce lawyer was stereotyped in comedy routines as the hand-wringing victor who was the beneficiary of a windfall every time an unfaithful husband got his just rewards in court. The real fact is that deep emotions are involved and those feeling can’t help but rub off on those interviewing them and hearing stories of neglect or abuse, not to any professional with a heartbeat. In homes where domestic violence has occurred and where children are involved the situation is delicate and even a repentant spouse may repeat the pattern that resulted in the split.

The attorneys choosing the collaborative route are specially trained in handling sensitive issues. Although first impression might suggest the lawyer is giving up hefty fees, the ultimate effect may prove to be more referrals and future business will come of the efficient and timely handling of the family crisis, and after all the time saved will enable the lawyer to accept more client cases. The deep financial recession puts pressure on the new lower middle class to the point where the legal fees of divorce cause less money to be available for the children. Separating is expensive and a court divorce is almost a luxury if the warring parties pit lawyers against each other in a long drawn-out conflict. Psychologists known in this context as “divorce coaches” and child psychologists counsel the family in preparation and the lawyers set the agenda and coach the spouses in four-way meetings.

Using the collaborative approach lawyers advise their respective clients of laws that apply to their circumstance, guide them a process of cooperative conflict to find solutions to problems, provide all disclosure and discovery, avoid using adversarial tactics, and model listening skills for each spouse so the interests of both are promoted. In this they can expedite the parting of the ways in a dignified manner, making the best of a bad situation.

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Litigation Flow Chart

litigation flow chart

Financial Modelling

FINANCIAL MODELING

 

Financial modeling is a process of forecasting performance of a certain asset, using relationships among operating, investing, and financing variables. The central aim of all financial modeling is valuation under uncertainty: how to estimate the value of a security when its future trajectory, or the trajectory of the other securities or economic variables it depends on, is unknown. Usually, financial modeling requires a great deal of spreadsheet work.

 

 

Financial Modeling Application

 

ü       Business valuation, especially discounted cash flow

ü       Cost of capital or WACC

ü       Modeling the term structure of interest rate and credit spread

ü       Option pricing

ü       Real options

ü       Risk modeling

ü       Portfolio problems

 

 

Standard and Premise of Business Value

 

Before the value of a business can be measured, the valuation assignment must specify the reason for and circumstances surrounding the business valuation. These are formally known as the business value    standard and premise of value.

 

Business valuation results can vary considerably depending upon the choice of both the standard and premise of value. For example, a business buyer and seller may bargain to establish the value of business assets that approaches the fair market value standard.

 

However, the value conclusions based on the going concern premise and that of assemblage of business assets may be quite different. One reason is that an operating business creates value by means of its ability to coordinate its capital, human and management resources to produce economic income. The same set of assets not currently used to produce income is generally worth less.

 

Reasons for Business Valuation

 

Business people may need to conduct business valuation for a number of reasons including sale, estate tax planning, estate tax valuation, divorce, business purchase price allocation, collateral documentation, litigation and documenting that a sales price is equitable.

 

Fair market value

 

“Fair market value”, a central standard of measuring business value, is defined as the price at which property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. See IRS Rev. Rul. 59-60, 1959-1, Cum. Bulletin 237, codified at 26 C.F.R. § 20.2031-1(b).

 

The fair market value standard incorporates certain assumptions, including the assumptions that the hypothetical purchaser is reasonably prudent and rational but is not motivated by any synergistic or strategic influences; that the business will continue as a going concern and not be liquidated; that the hypothetical transaction will be conducted in cash or equivalents; and that the parties are willing and able to consummate the transaction.

 

These assumptions might not, and probably do not, reflect the actual conditions of the market in which the subject business might be sold. However, these conditions are assumed because they yield a uniform standard of value, after applying generally-accepted valuation techniques, which allows meaningful comparison between businesses which are similarly situated.

 

Elements of business valuation

 

Economic conditions

 

A business valuation report generally begins with a description of national, regional and local economic conditions existing as of the valuation date, as well as the conditions of the industry in which the subject business operates. A common source of economic information for the first section of the business valuation report is the Federal Reserve Board’s Beige Book, published quarterly by the Federal Reserve Bank. State governments and industry associations often publish useful statistics describing regional and industry conditions.

 

Financial Analysis

 

The financial statement analysis generally involves common size analysis, ratio analysis (liquidity, turnover, profitability, etc.), trend analysis and industry comparative analysis. This permits the valuation analyst to compare the subject company to other businesses in the same or similar industry, and to discover trends affecting the company and/or the industry over time. By comparing a company’s financial statements in different time periods, the valuation expert can view growth or decline in revenues or expenses, changes in capital structure, or other financial trends. How the subject company compares to the industry will help with the risk assesment and ultimately help determine the discount rate and the selection of market multiples.

 

Normalization of financial statements

 

The most common normalization adjustments fall into the following four categories:

 

Comparability Adjustments. The valuator may adjust the subject company’s financial statements to facilitate a comparison between the subject company and other businesses in the same industry or geographic location. These adjustments are intended to eliminate differences between the way that published industry data is presented and the way that the subject company’s data is presented in its financial statements.

 

Non-operating Adjustments. It is reasonable to assume that if a business were sold in a hypothetical sales transaction (which is the underlying premise of the fair market value standard), the seller would retain any assets which were not related to the production of earnings or price those non-operating assets separately. For this reason, non-operating assets (such as excess cash) are usually eliminated from the balance sheet.

 

Non-recurring Adjustments. The subject company’s financial statements may be affected by events that are not expected to recur, such as the purchase or sale of assets, a lawsuit, or an unusually large revenue or expense. These non-recurring items are adjusted so that the financial statements will better reflect the management’s expectations of future performance.

 

Discretionary Adjustments. The owners of private companies may be paid at variance from the market level of compensation that similar executives in the industry might command. In order to determine fair market value, the owner’s compensation, benefits, perquisites and distributions must be adjusted to industry standards. Similarly, the rent paid by the subject business for the use of property owned by the company’s owners individually may be scrutinized.

 

Income, Asset and Market Approaches

 

Three different approaches are commonly used in business valuation: the income approach, the asset-based approach, and the market approach. Within each of these approaches, there are various techniques for determining the fair market value of a business. Generally, the income approaches determine value by calculating the net present value of the benefit stream generated by the business (discounted cash flow); the asset-based approaches determine value by adding the sum of the parts of the business (net asset value); and the market approaches determine value by comparing the subject company to other companies in the same industry, of the same size, and/or within the same region.

 

In determining which of these approaches to use, the valuation professional must exercise discretion. Each technique has advantages and drawbacks, which must be considered when applying those techniques to a particular subject company. Most treatises and court decisions encourage the valuator to consider more than one technique, which must be reconciled with each other to arrive at a value conclusion. A measure of common sense and a good grasp of mathematics is helpful.

 

Income approaches

 

The income approaches determine fair market value by multiplying the benefit stream generated by the subject company times a discount or capitalization rate. The discount or capitalization rate converts the stream of benefits into present value. There are several different income approaches, including capitalization of earnings or cash flows, discounted future cash flows (“DCF”), and the excess earnings method (which is a hybrid of asset and income approaches). Most of the income approaches consider the subject company’s historical financial data; only the DCF method requires the subject company to provide projected financial data. Most of the income approaches look to the company’s adjusted historical financial data for a single period; only DCF requires data for multiple future periods. The discount or capitalization rate must be matched to the type of benefit stream to which it is applied. The result of a value calculation under the income approach is generally the fair market value of a controlling, marketable interest in the subject company, since the entire benefit stream of the subject company is most often valued, and the capitalization and discount rates are derived from statistics concerning public companies.

 

Discount or capitalization rates

 

A discount or capitalization rate is used to determine the present value of the expected returns of a business. The discount rate and capitalization rate are closely related to each other, but distinguishable. Generally speaking, the discount rate or capitalization rate may be defined as the yield necessary to attract investors to a particular investment, given the risks associated with that investment. The discount rate is applied only to discounted cash flow (DCF) valuations, which are based on projected business data over multiple periods of time. In DCF valuations, a series of projected cash flows is divided by the discount rate to derive the present value of the discounted cash flows. The sum of the discounted cash flows is added to a terminal value, which represents the present value of business cash flows into perpetuity. The sum of the discounted cash flows and the terminal value is the value of the business.

 

On the other hand, a capitalization rate is applied in methods of business valuation that are based on historical business data for a single period of time. The after-tax net cash flow capitalization rate is equal to the discount rate minus the long-term sustainable growth rate. The after-tax net cash flow of a business is divided by the capitalization rate to derive the present value. Capitalization rates may be modified so that they may be applied to after-tax net income or pre-tax cash flows or income. There are several different methods of determining the appropriate discount rates. The discount rate is composed of two elements: (1) the risk-free rate, which is the return that an investor would expect from a secure, practically risk-free investment, such as a government bond; plus (2) a risk premium that compensates an investor for the relative level of risk associated with a particular investment in excess of the risk-free rate. Most importantly, the selected discount or capitalization rate must be consistent with stream of benefits to which it is to be applied.

 

Build-Up Method

 

The Build-Up Method is a widely-recognized method of determining the after-tax net cash flow discount rate, which in turn yields the capitalization rate. The figures used in the Build-Up Method are derived from various sources. This method is called a “build-up” method because it is the sum of risks associated with various classes of assets. It is based on the principle that investors would require a greater return on classes of assets that are more risky. The first element of an Build-Up capitalization rate is the risk-free rate, which is the rate of return for long-term government bonds. Investors who buy large-cap equity stocks, which are inherently more risky than long-term government bonds, require a greater return, so the next element of the Build-Up method is the equity risk premium. In determining a company’s value, the long-horizon equity risk premium is used because the Company’s life is assumed to be infinite. The sum of the risk-free rate and the equity risk premium yields the long-term average market rate of return on large public company stocks.

 

Similarly, investors who invest in small cap stocks, which are riskier than blue-chip stocks, require a greater return, called the “size premium.” Size premium data is generally available from two sources: Morningstars’ (formerly Ibbotson & Associates’) Stocks, Bonds, Bills & Inflation and Duff & Phelps’ Risk Premium Report.

 

By adding the first three elements of a Build-Up discount rate, we can determine the rate of return that investors would require on their investments in small public company stocks. These three elements of the Build-Up discount rate are known collectively as the “systematic risks.”

 

In addition to systematic risks, the discount rate must include “unsystematic risks,” which fall into two categories. One of those categories is the “industry risk premium.” Morningstar’s yearbooks contain empirical data to quantify the risks associated with various industries, grouped by SIC industry code.

 

The other category of unsystematic risk is referred to as “specific company risk.” Historically, no published data has been available to quantify specific company risks. However as of late 2006, new research has been able to quantify, or isolate, this risk for publicly-traded stocks through the use of Total Beta calculations. P. Butler and K. Pinkerton have outlined a procedure using a modified Capital Asset Pricing Model (CAPM) to calculate the company specific risk premium. The model uses an equality between the standard CAPM which relies on the total beta on one side of the equation; and the firm’s beta, size premium and company specific risk premium on the other. The equality is then solved for the company specific risk premium as the only unknown. While this is ground-breaking research, it has yet to be adopted and used by the valuation community at large.

 

It is important to understand why this capitalization rate for small, privately-held companies is significantly higher than the return that an investor might expect to receive from other common types of investments, such as money market accounts, mutual funds, or even real estate. Those investments involve substantially lower levels of risk than an investment in a closely-held company. Depository accounts are insured by the federal government (up to certain limits); mutual funds are composed of publicly-traded stocks, for which risk can be substantially minimized through portfolio diversification; and real estate almost invariably appreciates in value of long time horizons.

 

Closely-held companies, on the other hand, frequently fail for a variety of reasons too numerous to name. Examples of the risk can be witnessed in the storefronts on every Main Street in America. There are no federal guarantees. The risk of investing in a private company cannot be reduced through diversification, and most businesses do not own the type of hard assets that can ensure capital appreciation over time. This is why investors demand a much higher return on their investment in closely-held businesses; such investments are inherently much more risky.

 

Capital Asset Pricing Model (“CAP-M”)

 

The Capital Asset Pricing Model is another method of determining the appropriate discount rate in business valuations. The CAP-M method originated from the Nobel Prize winning studies of Harry Markowitz, James Tobin and William Sharpe. Like the Ibbotson Build-Up method, the CAP-M method derives the discount rate by adding a risk premium to the risk-free rate. In this instance, however, the risk premium is derived by multiplying the equity risk premium times “beta,” which is a measure of stock price volatility. Beta is published by various sources (including Ibbotson Associates, which was used in this valuation) for particular industries and companies. Beta is associated with the systematic risks of an investment.

 

One of the criticisms of the CAP-M method is that beta is derived from the volatility of prices of publicly-traded companies, which are likely to differ from private companies in their capital structures, diversification of products and markets, access to credit markets, size, management depth, and many other respects. Where private companies can be shown to be sufficiently similar to public companies, however, the CAP-M model may be appropriate.

 

Weighted Average Cost of Capital (“WACC”)

 

The weighted average cost of capital is the third major approach to determining a discount rate. The WACC method determines the subject company’s actual cost of capital by calculating the weighted average of the company’s cost of debt and cost of equity. The WACC capitalization rate must be applied to the subject company’s net cash flow to invested equity. One of the problems with this method is that the valuator may elect to calculate WACC according to the subject company’s existing capital structure, the average industry capital structure, or the optimal capital structure. Such discretion detracts from the objectivity of this approach, in the minds of some critics.

 

Once the capitalization or discount rate is determined, it must be applied to an appropriate economic income streams: pretax cash flow, aftertax cash flow, pretax net income, after tax net income, excess earnings, projected cash flow, etc. The result of this formula is the indicated value before discounts. Before moving on to calculate discounts, however, the valuation professional must consider the indicated value under the asset and market approaches.

 

Careful matching of the discount rate to the appropriate measure of economic income is critical to the accuracy of the business valuation results. Net cash flow is a frequent choice in professionally conducted business appraisals. The rationale behind this choice is that this earnings basis corresponds to the equity discount rate derived from the Build-Up or CAP-M models: the returns obtained from investments in publicly traded companies can easily be represented in terms of net cash flows. At the same time, the discount rates are generally also derived from the public capital markets data.

 

Asset-based approaches

 

The value of asset-based analysis a business is equal to the sum of its parts. That is the theory underlying the asset-based approaches to business valuation. The asset approach to business valuation is based on the principle of substitution: no rational investor will pay more for the business assets than the cost of procuring assets of similar economic utility. In contrast to the income-based approaches, which require the valuation professional to make subjective judgments about capitalization or discount rates, the adjusted net book value method is relatively objective. Pursuant to accounting convention, most assets are reported on the books of the subject company at their acquisition value, net of depreciation where applicable. These values must be adjusted to fair market value wherever possible. The value of a company’s intangible assets, such as goodwill, is generally impossible to determine apart from the company’s overall enterprise value. For this reason, the asset-based approach is not the most probative method of determining the value of going business concerns. In these cases, the asset-based approach yields a result that is probably lesser than the fair market value of the business. In considering an asset-based approach, the valuation professional must consider whether the shareholder whose interest is being valued would have any authority to access the value of the assets directly. Shareholders own shares in a corporation, but not its assets, which are owned by the corporation. A controlling shareholder may have the authority to direct the corporation to sell all or part of the assets it owns and to distribute the proceeds to the shareholder(s). The non-controlling shareholder, however, lacks this authority and cannot access the value of the assets. As a result, the value of a corporation’s assets is rarely the most relevant indicator of value to a shareholder who cannot avail himself of that value. Adjusted net book value may be the most relevant standard of value where liquidation is imminent or ongoing; where a company earnings or cash flow are nominal, negative or worth less than its assets; or where net book value is standard in the industry in which the company operates. None of these situations applies to the Company which is the subject of this valuation report. However, the adjusted net book value may be used as a “sanity check” when compared to other methods of valuation, such as the income and market approaches.

 

Market approaches

 

The market approach to business valuation is rooted in the economic principle of competition: that in a free market the supply and demand forces will drive the price of business assets to a certain equilibrium. Buyers would not pay more for the business, and the sellers will not accept less, than the price of a comparable business enterprise. It is similar in many respects to the “comparable sales” method that is commonly used in real estate appraisal. The market price of the stocks of publicly traded companies engaged in the same or a similar line of business, whose shares are actively traded in a free and open market, can be a valid indicator of value when the transactions in which stocks are traded are sufficiently similar to permit meaningful comparison.

 

The difficulty lies in identifying public companies that are sufficiently comparable to the subject company for this purpose. Also, as for a private company, the equity is less liquid (in other words its stocks are less easy to buy or sell) than for a public company, its value is considered to be slightly lower than such a market-based valuation would give

 

Guideline Public Company method

 

The Guideline Public Company method entails a comparison of the subject company to publicly traded companies. The comparison is generally based on published data regarding the public companies’ stock price and earnings, sales, or revenues, which is expressed as a fraction known as a “multiple.” If the guideline public companies are sufficiently similar to each other and the subject company to permit a meaningful comparison, then their multiples should be nearly equal. The public companies identified for comparison purposes should be similar to the subject company in terms of industry, product lines, market, growth, and risk.

 

Transaction Method or Direct Market Data Method

 

Using this method, the valuation analyst may determine market multiples by reviewing published data regarding actual transactions involving either minority or controlling interests in either publicly traded or closely held companies. In judging whether a reasonable basis for comparison exists, the valuation analysis must consider: (1) the similarity of qualitative and quantitative investment and investor characteristics; (2) the extent to which reliable data is known about the transactions in which interests in the guideline companies were bought and sold; and (3) whether or not the price paid for the guideline companies was in an arms-length transaction, or a forced or distressed sale.

 

The most widely used transactional databases include:

 

Institute of Business Appraisers (smaller companies)

BIZCOMPS® (smaller companies)

Pratt’s Stats® (smaller to mid-sized companies)

Public Stats™ (larger companies)

DoneDeals® (larger companies)

Alacra (larger companies)

 

Discounts and premiums

 

The valuation approaches yield the fair market value of the Company as a whole. In valuing a minority, non-controlling interest in a business, however, the valuation professional must consider the applicability of discounts that affect such interests. Discussions of discounts and premiums frequently begin with a review of the “levels of value.” There are three common levels of value: controlling interest, marketable minority, and non-marketable minority. The intermediate level, marketable minority interest, is lesser than the controlling interest level and higher than the non-marketable minority interest level. The marketable minority interest level represents the perceived value of equity interests that are freely traded without any restrictions. These interests are generally traded on the New York Stock Exchange, AMEX, NASDAQ, and other exchanges where there is a ready market for equity securities. These values represent a minority interest in the subject companies – small blocks of stock that represent less than 50% of the company’s equity, and usually much less than 50%. Controlling interest level is the value that an investor would be willing to pay to acquire more than 50% of a company’s stock, thereby gaining the attendant prerogatives of control. Some of the prerogatives of control include: electing directors, hiring and firing the company’s management and determining their compensation; declaring dividends and distributions, determining the company’s strategy and line of business, and acquiring, selling or liquidating the business. This level of value generally contains a control premium over the intermediate level of value, which typically ranges from 25% to 50%. An additional premium may be paid by strategic investors who are motivated by synergistic motives. Non-marketable, minority level is the lowest level on the chart, representing the level at which non-controlling equity interests in private companies are generally valued or traded. This level of value is discounted because no ready market exists in which to purchase or sell interests. Private companies are less “liquid” than publicly-traded companies, and transactions in private companies take longer and are more uncertain. Between the intermediate and lowest levels of the chart, there are restricted shares of publicly-traded companies. Despite a growing inclination of the IRS and Tax Courts to challenge valuation discounts , Shannon Pratt suggested in a scholarly presentation recently that valuation discounts are actually increasing as the differences between public and private companies is widening . Publicly-traded stocks have grown more liquid in the past decade due to rapid electronic trading, reduced commissions, and governmental deregulation. These developments have not improved the liquidity of interests in private companies, however. Valuation discounts are multiplicative, so they must be considered in order. Control premiums and their inverse, minority interest discounts, are considered before marketability discounts are applied.

 

Discount for lack of control

 

The first discount that must be considered is the discount for lack of control, which in this instance is also a minority interest discount. Minority interest discounts are the inverse of control premiums, to which the following mathematical relationship exists: MID = 1 – [ 1 / (1 + CP)] The most common source of data regarding control premiums is the Control Premium Study, published annually by Mergerstat since 1972. Mergerstat compiles data regarding publicly announced mergers, acquisitions and divestitures involving 10% or more of the equity interests in public companies, where the purchase price is $1 million or more and at least one of the parties to the transaction is a U.S. entity. Mergerstat defines the “control premium” as the percentage difference between the acquisition price and the share price of the freely-traded public shares five days prior to the announcement of the M&A transaction. While it is not without valid criticism, Mergerstat control premium data (and the minority interest discount derived therefrom) is widely accepted within the valuation profession.

 

Discount for lack of marketability

 

Another factor to be considered in valuing closely held companies is the marketability of an interest in such businesses. Marketability is defined as the ability to convert the business interest into cash quickly, with minimum transaction and administrative costs, and with a high degree of certainty as to the amount of net proceeds. There is usually a cost and a time lag associated with locating interested and capable buyers of interests in privately-held companies, because there is no established market of readily-available buyers and sellers. All other factors being equal, an interest in a publicly traded company is worth more because it is readily marketable. Conversely, an interest in a private-held company is worth less because no established market exists. The IRS Valuation Guide for Income, Estate and Gift Taxes, Valuation Training for Appeals Officers acknowledges the relationship between value and marketability, stating: “Investors prefer an asset which is easy to sell, that is, liquid.” The discount for lack of control is separate and distinguishable from the discount for lack of marketability. It is the valuation professional’s task to quantify the lack of marketability of an interest in a privately-held company. Because, in this case, the subject interest is not a controlling interest in the Company, and the owner of that interest cannot compel liquidation to convert the subject interest to cash quickly, and no established market exists on which that interest could be sold, the discount for lack of marketability is appropriate. Several empirical studies have been published that attempt to quantify the discount for lack of marketability. These studies include the restricted stock studies and the pre-IPO studies. The aggregate of these studies indicate average discounts of 35% and 50%, respectively. Some experts believe the Lack of Control and Marketabilty discounts can aggregate discounts for as much as ninety percent of a Company’s fair market value, specifically with family owned companies.

 

Restricted stock studies

 

Restricted stocks are equity securities of public companies that are similar in all respects to the freely traded stocks of those companies except that they carry a restriction that prevents them from being traded on the open market for a certain period of time, which is usually one year (two years prior to 1990). This restriction from active trading, which amounts to a lack of marketability, is the only distinction between the restricted stock and its freely-traded counterpart. Restricted stock can be traded in private transactions and usually do so at a discount. The restricted stock studies attempt to verify the difference in price at which the restricted shares trade versus the price at which the same unrestricted securities trade in the open market as of the same date. The underlying data by which these studies arrived at their conclusions has not been made public. Consequently, it is not possible when valuing a particular company to compare the characteristics of that company to the study data. Still, the existence of a marketability discount has been recognized by valuation professionals and the Courts, and the restricted stock studies are frequently cited as empirical evidence. Notably, the lowest average discount reported by these studies was 26% and the highest average discount was 45%.

 

Option pricing

 

In addition to the restricted stock studies, U.S. publicly traded companies are able to sell stock to offshore investors (SEC Regulation S, enacted in 1990) without registering the shares with the Securities and Exchange Commission. The offshore buyers may resell these shares in the United States, still without having to register the shares, after holding them for just 40 days. Typically, these shares are sold for 20% to 30% below the publicly traded share price. Some of these transactions have been reported with discounts of more than 30%, resulting from the lack of marketability. These discounts are similar to the marketability discounts inferred from the restricted and pre-IPO studies, despite the holding period being just 40 days. Studies based on the prices paid for options have also confirmed similar discounts. If one holds restricted stock and purchases an option to sell that stock at the market price (a put), the holder has, in effect, purchased marketability for the shares. The price of the put is equal to the marketability discount. The range of marketability discounts derived by this study was 32% to 49%.

 

Pre-IPO studies

 

Another approach to measure the marketability discount is to compare the prices of stock offered in initial public offerings (IPOs) to transactions in the same company’s stocks prior to the IPO. Companies that are going public are required to disclose all transactions in their stocks for a period of three years prior to the IPO. The pre-IPO studies are the leading alternative to the restricted stock stocks in quantifying the marketability discount. The pre-IPO studies are sometimes criticized because the sample size is relatively small, the pre-IPO transactions may not be arm’s length, and the financial structure and product lines of the studied companies may have changed during the three year pre-IPO window.

 

Applying the studies

 

The studies confirm what the marketplace knows intuitively: Investors covet liquidity and loathe obstacles that impair liquidity. Prudent investors buy illiquid investments only when there is a sufficient discount in the price to increase the rate of return to a level which brings risk-reward back into balance. The referenced studies establish a reasonable range of valuation discounts from the mid-30%s to the low 50%s. The more recent studies appeared to yield a more conservative range of discounts than older studies, which may have suffered from smaller sample sizes. Another method of quantifying the lack of marketability discount is the Quantifying Marketability Discounts Model (QMDM).

 

DISCOUNTED CASH FLOW

 

In finance, the discounted cash flow (or DCF) approach describes a method to value a project, company, or financial asset using the concepts of the time value of money. All future cash flows are estimated and discounted to give them a present value. The discount rate used is generally the appropriate cost of capital, and incorporates judgments of the uncertainty (riskiness) of the future cash flows.

 

FV=PV (1+i)n

 

DPV=FV/(1+i)n

 

COST OF CAPITAL

 

The cost of capital for a firm is a weighted sum of the cost of equity and the cost of debt (see Capital investment decisions). It is also known as the “Hurdle Rate” or “Discount Rate”.

 

Capital (money) used to fund a business should earn returns for the capital owner who risked his/her saved money. For an investment to be worthwhile the projected return on capital must be greater than the cost of capital. Otherwise stated, the risk-adjusted return on capital (that is, incorporating not just the projected returns, but the probabilities of those projections) must be higher than the cost of capital.

 

The cost of debt is relatively simple to calculate, as it is composed of the rate of interest paid. In practice, the interest-rate paid by the company will include the risk-free rate plus a risk component, which itself incorporates a probable rate of default (and amount of recovery given default). For companies with similar risk or credit ratings, the interest rate is largely exogenous.

 

Cost of equity is more challenging to calculate as equity does not pay a set return to its investors. Similar to the cost of debt, the cost of equity is broadly defined as the risk-weighted projected return required by investors, where the return is largely unknown. The cost of equity is therefore inferred by comparing the investment to other investments with similar risk profiles to determine the “market” cost of equity.

 

The cost of capital is often used as the discount rate, the rate at which projected cash flow will be discounted to give a present value or net present value.

 

Cost of debt

 

The cost of debt is computed by taking the rate on a non-defaulting bond whose duration matches the term structure of the corporate debt, then adding a default premium. This default premium will rise as the amount of debt increases (since the risk rises as the amount of debt rises). Since in most cases debt expense is a deductible expense, the cost of debt is computed as an after tax cost to make it comparable with the cost of equity (earnings are after-tax as well). Thus, for profitable firms, debt is discounted by the tax rate. Basically this is used for large corporations only.

 

Cost of equity

 

Cost of equity = Risk free rate of return + Premium expected for risk

 

Expected return

 

The expected return can be calculated as the “dividend capitalization model”, which is (dividend per share / price per share) + growth rate of dividends (that is, dividend yield + growth rate of dividends).

 

Capital asset pricing model

 

The capital asset pricing model (CAPM) is used in finance to determine a theoretically appropriate price of an asset such as a security. The expected return on equity according to the capital asset pricing model. The market risk is normally characterized by the ? parameter. Thus, the investors would expect (or demand) to receive:

 

WEIGHTED AVERAGE COST OF CAPITAL

 

The Weighted Average Cost of Capital (WACC) is used in finance to measure a firm’s cost of capital.

 

The total capital for a firm is the value of its equity (for a firm without outstanding warrants and options, this is the same as the company’s market capitalization) plus the cost of its debt (the cost of debt should be continually updated as the cost of debt changes as a result of interest rate changes). Notice that the “equity” in the debt to equity ratio is the market value of all equity, not the shareholders’ equity on the balance sheet.

 

Calculation of WACC is an iterative procedure which requires estimation of the fair market value of equity capital

 

CAPITAL STRUCTURE

 

Because of tax advantages on debt issuance, it will be cheaper to issue debt rather than new equity (this is only true for profitable firms, tax breaks are available only to profitable firms). At some point, however, the cost of issuing new debt will be greater than the cost of issuing new equity. This is because adding debt increases the default risk – and thus the interest rate that the company must pay in order to borrow money. By utilizing too much debt in its capital structure, this increased default risk can also drive up the costs for other sources (such as retained earnings and preferred stock) as well. Management must identify the “optimal mix” of financing – the capital structure where the cost of capital is minimized so that the firms value can be maximized.

 

MODIGLIANI-MILLER THEOREM

 

If there were no tax advantages for issuing debt, and equity could be freely issued, Miller and Modigliani showed that the value of a leveraged firm and the value of an unleveraged firm should be the same.

 

INTEREST

 

Interest is a fee paid on borrowed capital. Assets lent include money, shares, consumer goods through hire purchase, major assets such as aircraft, and even entire factories in finance lease arrangements. The interest is calculated upon the value of the assets in the same manner as upon money. Interest can be thought of as “rent on money”.

 

The fee is compensation to the lender for foregoing other useful investments that could have been made with the loaned money. Instead of the lender using the assets directly, they are advanced to the borrower. The borrower then enjoys the benefit of using the assets ahead of the effort required to obtain them, while the lender enjoys the benefit of the fee paid by the borrower for the privilege. The amount lent, or the value of the assets lent, is called the principal. This principal value is held by the borrower on credit. Interest is therefore the price of credit, not the price of money as it is commonly – and mistakenly – believed to be. The percentage of the principal that is paid as a fee (the interest), over a certain period of time, is called the interest rate.

 

Interest rates and credit risk

 

It is increasingly recognized that the business cycle, interest rates and credit risk are tightly interrelated. The Jarrow-Turnbull model was the first model of credit risk which explicitly had random interest rates at its core. Lando (2004), Darrell Duffie and Singleton (2003), and van Deventer and Imai (2003) discuss interest rates when the issuer of the interest-bearing instrument can default.

 

Money and inflation

Loans, bonds, and shares have some of the characteristics of money and are included in the broad money supply.

 

By setting i*n, the government institution can affect the markets to alter the total of loans, bonds and shares issued. Generally speaking, a higher real interest rate reduces the broad money supply.

 

Open market operations in the United States

 

The Federal Reserve (often referred to as ‘The Fed’) implements monetary policy largely by targeting the federal funds rate. This is the rate that banks charge each other for overnight loans of federal funds. Federal funds are the reserves held by banks at the Fed.

 

Open market operations are one tool within monetary policy implemented by the Federal Reserve to steer short-term interest rates. Using the power to buy and sell treasury securities, the Open Market Desk at the Federal Reserve Bank of New York can supply the market with dollars by purchasing T-notes, hence increasing the nation’s money supply. By increasing the money supply or Aggregate Supply of Funding (ASF), interest rates will fall due to the excess of dollars banks will end up with in their reserves. Excess reserves may be lent in the Fed funds market to other banks, thus driving down rates.

 

Credit spread options:  credit call spread is a “bearish” call spread, which has more premium on the short call.  A credit put spread is a “bullish” put spread and has more premium on the short put.

 

Credit spread (bond): In finance, a credit spread is the difference in yield between different securities due to different credit quality. The credit spread reflects the additional net yield an investor can earn from a security with more credit risk relative to one with less credit risk. The credit spread of a particular security is often quoted in relation to the yield on a credit risk-free benchmark security or reference rate.

 

RISK MODELING

 

Risk modeling refers to the use of formal econometric techniques to determine the aggregate risk in a financial portfolio. Risk modeling is one of many subtasks within the broader area of financial modeling.

 

Risk modeling uses a variety of techniques including market risk, Value-at-Risk (VaR), Historical Simulation (HS), or Extreme Value Theory (EVT) in order to analyze a portfolio and make forecasts of the likely losses that would be incurred for a variety of risks. Such risks are typically grouped into credit risk, liquidity risk, interest rate risk, and operational risk categories.

 

Many large financial intermediary firms use risk modeling to help portfolio managers assess the amount of capital reserves to maintain, and to help guide their purchases and sales of various classes of financial assets.

 

Formal risk modeling is required under the Basel II proposal for all the major international banking institutions by the various national depository institution regulators.

 

Quantitative risk analysis and modeling have become important in the light of corporate scandals in the past few years (most notably, Enron), Basel II, the revised FAS 123R and the Sarbanes-Oxley Act. In the past, risk analysis was done qualitatively but now with the advent of powerful computing software, quantitative risk analysis can be done quickly and effortlessly.

 

PORTFOLIO PROBLEMS

 

 

In finance, a portfolio is an appropriate mix of or collection of investments held by an institution or a private individual. In building up an investment portfolio a financial institution will typically conduct its own investment analysis, whilst a private individual may make use of the services of a financial advisor or a financial institution which offers portfolio management services. Holding a portfolio is part of an investment and risk-limiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain its value.

 

Portfolio management involves deciding what assets to include in the portfolio, given the goals of the portfolio owner and changing economic conditions. Selection involves deciding what assets to purchase, how many to purchase, when to purchase them, and what assets to divest. These decisions always involve some sort of performance measurement, most typically expected return on the portfolio, and the risk associated with this return (i.e. the standard deviation of the return). Typically the expected return from portfolios of different asset bundles are compared.

 

Porfolio formation

Many strategies have been developed to form a portfolio.

 

Ø       equally-weighted portfolio

Ø       capitalization-weighted portfolio

Ø       price-weighted portfolio

Ø       optimal portfolio (for which the Sharpe ratio is highest)

 

VALUATION OF OPTIONS

 

Black–Scholes:

 

The term Black–Scholes refers to three closely related concepts:

 

Ø       The Black–Scholes model is a mathematical model of the market for an equity, in which the equity’s price is a stochastic process.

Ø       The Black–Scholes PDE is a partial differential equation which (in the model) must be satisfied by the price of a derivative on the equity.

Ø       The Black–Scholes formula is the result obtained by solving the Black-Scholes PDE for European put and call options.

 

Binomial options pricing model: In finance, the binomial options pricing model (BOPM) provides a generalisable numerical method for the valuation of options. The binomial model was first proposed by Cox, Ross and Rubinstein (1979). Essentially, the model uses a “discrete-time” model of the varying price over time of the underlying financial instrument. Option valuation is then computed via application of the risk neutrality assumption over the life of the option, as the price of the underlying instrument evolves.

 

 

Monte Carlo option model: In mathematical finance, a Monte Carlo option model uses Monte Carlo methods to calculate the value of an option with multiple sources of uncertainty or with complicated features.

 

REAL OPTIONS ANALYSIS

 

In corporate finance, real options analysis or ROA applies put option and call option valuation techniques to capital budgeting decisions.[1]

 

A real option is the right, but not the obligation, to undertake some business decision, typically the option to make a capital investment. For example, the opportunity to invest in the expansion of a firm’s factory is a real option. In contrast to financial options, a real option is not often tradeable—e.g. the factory owner cannot sell the right to extend his factory to another party, only he can make this decision; however, some real options can be sold, e.g., ownership of a vacant lot of land is a real option to develop that land in the future. Some real options are proprietory (owned or exercisable by a single individual or a company); others are shared (can be exercised by many parties). Therefore, a project may have a portfolio of embedded real options; some of them can be mutually exclusive.

 

The terminology “real option” is relatively new, whereas business operators have been making capital investment decisions for centuries. However, the description of such opportunities as real options has occurred at the same time as thinking about such decisions in new, more analytically-based, ways. As such, the terminology “real option” is closely tied to these new methods. The term “real option” was coined by Professor Stewart Myers at the MIT Sloan School of Management; this happened most likely around 1977.

 

The concept of real options was popularized by Michael J. Mauboussin, the chief U.S. investment strategist for Credit Suisse First Boston and an adjunct professor of finance at the Columbia School of Business. Mauboussin uses real options in part to explain the gap between how the stock market prices some businesses and the “intrinsic value” for those businesses as calculated by traditional financial analysis, specifically discounted cash flows.

 

Additionally, with real option analysis, uncertainty inherent in investment projects is usually accounted for by risk-adjusting probabilities (a technique known as the equivalent martingale approach). Cash flows can then be discounted at the risk-free rate. With regular DCF analysis, on the other hand, this uncertainty is accounted for by adjusting the discount rate, using e.g. the cost of capital) or the cash flows (using certainty equivalents). These methods normally do not properly account for changes in risk over a project’s lifecycle and fail to appropriately adapt the risk adjustment. More importantly, the real options approach forces decision makers to be more explicit about the assumptions underlying their projections.

 

Generally, the most widely used methods are: Closed form solutions, partial differential equations, and the binomial lattices. In business strategy, real options have been advanced by the construction of option space, where volatility is compared with value-to-cost, NPVq. Latest advances in real option valuation are models that incorporate fuzzy logic and option valuation in fuzzy real option valuation models.

 

Real options are a field of academic research, and at the present one of the leading names in academic real options is Professor Lenos Trigeorgis (University of Cyprus). An academic conference on real options is organized yearly (Annual International Conference on Real Options).

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