Which is NOT a factor that affects climate?

distance from a large body of water

How is climate different than weather?

it is based on weather averaged over a long period of time

it varies in different parts of the USA

What are human resources?

resources that are used by people every day

types of fuel that are created by people

minerals that people take out of the ground to make energy

people who make products or provide services

Regions of the US | Quizalize

Short Quiz in Science 10 cite examples of practical applications of the different regions of EM waves, such as the use of radio waves in telecommunications;

Exploring the Regions and People of the US Review

Understanding Quantum Theory of Electrons in Atoms The goal of this section is to understand the electron orbitals (location of electrons in atoms), their different energies, and other properties. The use of quantum theory provides the best understanding to these topics. This knowledge is a precursor to chemical bonding. As was described previously, electrons in atoms can exist only on discrete energy levels but not between them. It is said that the energy of an electron in an atom is quantized, that is, it can be equal only to certain specific values and can jump from one energy level to another but not transition smoothly or stay between these levels. The energy levels are labeled with an n value, where n = 1, 2, 3, …. Generally speaking, the energy of an electron in an atom is greater for greater values of n. This number, n, is referred to as the principal quantum number. The principal quantum number defines the location of the energy level. It is essentially the same concept as the n in the Bohr atom description. Another name for the principal quantum number is the shell number. The shells of an atom can be thought of concentric circles radiating out from the nucleus. The electrons that belong to a specific shell are most likely to be found within the corresponding circular area. The further we proceed from the nucleus, the higher the shell number, and so the higher the energy level (Figure 9.4.1). The positively charged protons in the nucleus stabilize the electronic orbitals by electrostatic attraction between the positive charges of the protons and the negative charges of the electrons. So the further away the electron is from the nucleus, the greater the energy it has. This quantum mechanical model for where electrons reside in an atom can be used to look at electronic transitions, the events when an electron moves from one energy level to another. If the transition is to a higher energy level, energy is absorbed, and the energy change has a positive value. To obtain the amount of energy necessary for the transition to a higher energy level, a photon is absorbed by the atom. A transition to a lower energy level involves a release of energy, and the energy change is negative. This process is accompanied by emission of a photon by the atom. The following equation summarizes these relationships and is based on the hydrogen atom: The values nf and ni are the final and initial energy states of the electron. The principal quantum number is one of three quantum numbers used to characterize an orbital. An atomic orbital, which is distinct from an orbit, is a general region in an atom within which an electron is most probable to reside. The quantum mechanical model specifies the probability of finding an electron in the three-dimensional space around the nucleus and is based on solutions of the Schrödinger equation. In addition, the principal quantum number defines the energy of an electron in a hydrogen or hydrogen-like atom or an ion (an atom or an ion with only one electron) and the general region in which discrete energy levels of electrons in a multi-electron atoms and ions are located. Another quantum number is l, the angular momentum quantum number. It is an integer that defines the shape of the orbital, and takes on the values, l = 0, 1, 2, …, n – 1. This means that an orbital with n = 1 can have only one value of l, l = 0, whereas n = 2 permits l = 0 and l = 1, and so on. The principal quantum number defines the general size and energy of the orbital. The l value specifies the shape of the orbital. Orbitals with the same value of l form a subshell. In addition, the greater the angular momentum quantum number, the greater is the angular momentum of an electron at this orbital. Orbitals with l = 0 are called s orbitals (or the s subshells). The value l = 1 corresponds to the p orbitals. For a given n, p orbitals constitute a p subshell (e.g., 3p if n = 3). The orbitals with l = 2 are called the d orbitals, followed by the f-, g-, and h-orbitals for l = 3, 4, 5, and there are higher values we will not consider. There are certain distances from the nucleus at which the probability density of finding an electron located at a particular orbital is zero. In other words, the value of the wavefunction ψ is zero at this distance for this orbital. Such a value of radius r is called a radial node. The number of radial nodes in an orbital is n – l – 1. Consider the examples in Figure 9.4.2. The orbitals depicted are of the s type, thus l = 0 for all of them. It can be seen from the graphs of the probability densities that there are 1 – 0 – 1 = 0 places where the density is zero (nodes) for 1s (n = 1), 2 – 0 – 1 = 1 node for 2s, and 3 – 0 – 1 = 2 nodes for the 3s orbitals. The s subshell electron density distribution is spherical and the p subshell has a dumbbell shape. The d and f orbitals are more complex. These shapes represent the three-dimensional regions within which the electron is likely to be found. Principal quantum number (n) & Orbital angular momentum (l): The Orbital Subshell: https://youtu.be/ms7WR149fAY If an electron has an angular momentum (l ≠ 0), then this vector can point in different directions. In addition, the z component of the angular momentum can have more than one value. This means that if a magnetic field is applied in the z direction, orbitals with different values of the z component of the angular momentum will have different energies resulting from interacting with the field. The magnetic quantum number, called ml, specifies the z component of the angular momentum for a particular orbital. For example, for an s orbital, l = 0, and the only value of ml is zero. For p orbitals, l = 1, and ml can be equal to –1, 0, or +1. Generally speaking, ml can be equal to –l, –(l – 1), …, –1, 0, +1, …, (l – 1), l. The total number of possible orbitals with the same value of l (a subshell) is 2l + 1. Thus, there is one s-orbital for ml = 0, there are three p-orbitals for ml = 1, five d-orbitals for ml = 2, seven f-orbitals for ml = 3, and so forth. The principal quantum number defines the general value of the electronic energy. The angular momentum quantum number determines the shape of the orbital. And the magnetic quantum number specifies orientation of the orbital in space, as can be seen in Figure 9.4.3. Figure 9.4.4 illustrates the energy levels for various orbitals. The number before the orbital name (such as 2s, 3p, and so forth) stands for the principal quantum number, n. The letter in the orbital name defines the subshell with a specific angular momentum quantum number l = 0 for s orbitals, 1 for p orbitals, 2 for d orbitals. Finally, there are more than one possible orbitals for l ≥ 1, each corresponding to a specific value of ml. In the case of a hydrogen atom or a one-electron ion (such as He+, Li2+, and so on), energies of all the orbitals with the same n are the same. This is called a degeneracy, and the energy levels for the same principal quantum number, n, are called degenerate energy levels. However, in atoms with more than one electron, this degeneracy is eliminated by the electron–electron interactions, and orbitals that belong to different subshells have different energies. Orbitals within the same subshell (for example ns, np, nd, nf, such as 2p, 3s) are still degenerate and have the same energy. While the three quantum numbers discussed in the previous paragraphs work well for describing electron orbitals, some experiments showed that they were not sufficient to explain all observed results. It was demonstrated in the 1920s that when hydrogen-line spectra are examined at extremely high resolution, some lines are actually not single peaks but, rather, pairs of closely spaced lines. This is the so-called fine structure of the spectrum, and it implies that there are additional small differences in energies of electrons even when they are located in the same orbital. These observations led Samuel Goudsmit and George Uhlenbeck to propose that electrons have a fourth quantum number. They called this the spin quantum number, or ms. The other three quantum numbers, n, l, and ml, are properties of specific atomic orbitals that also define in what part of the space an electron is most likely to be located. Orbitals are a result of solving the Schrödinger equation for electrons in atoms. The electron spin is a different kind of property. It is a completely quantum phenomenon with no analogues in the classical realm. In addition, it cannot be derived from solving the Schrödinger equation and is not related to the normal spatial coordinates (such as the Cartesian x, y, and z). Electron spin describes an intrinsic electron “rotation” or “spinning.” Each electron acts as a tiny magnet or a tiny rotating object with an angular momentum, even though this rotation cannot be observed in terms of the spatial coordinates. The magnitude of the overall electron spin can only have one value, and an electron can only “spin” in one of two quantized states. One is termed the α state, with the z component of the spin being in the positive direction of the z axis. This corresponds to the spin quantum number ms=12. The other is called the β state, with the z component of the spin being negative and ms=−12. Any electron, regardless of the atomic orbital it is located in, can only have one of those two values of the spin quantum number. The energies of electrons having ms=−12 and ms=12 are different if an external magnetic field is applied. Figure 9.4.5 illustrates this phenomenon. An electron acts like a tiny magnet. Its moment is directed up (in the positive direction of the z axis) for the 12 spin quantum number and down (in the negative z direction) for the spin quantum number of −12. A magnet has a lower energy if its magnetic moment is aligned with the external magnetic field (the left electron) and a higher energy for the magnetic moment being opposite to the applied field. This is why an electron with ms=12 has a slightly lower energy in an external field in the positive z direction, and an electron with ms=−12 has a slightly higher energy in the same field. This is true even for an electron occupying the same orbital in an atom. A spectral line corresponding to a transition for electrons from the same orbital but with different spin quantum numbers has two possible values of energy; thus, the line in the spectrum will show a fine structure splitting. The Pauli Exclusion Principle An electron in an atom is completely described by four quantum numbers: n, l, ml, and ms. The first three quantum numbers define the orbital and the fourth quantum number describes the intrinsic electron property called spin. An Austrian physicist Wolfgang Pauli formulated a general principle that gives the last piece of information that we need to understand the general behavior of electrons in atoms. The Pauli exclusion principle can be formulated as follows: No two electrons in the same atom can have exactly the same set of all the four quantum numbers. What this means is that electrons can share the same orbital (the same set of the quantum numbers n, l, and ml), but only if their spin quantum numbers ms have different values. Since the spin quantum number can only have two values (±12), no more than two electrons can occupy the same orbital (and if two electrons are located in the same orbital, they must have opposite spins). Therefore, any atomic orbital can be populated by only zero, one, or two electrons. The properties and meaning of the quantum numbers of electrons in atoms are briefly

Key Word Definition Aid Assistance in the form of grants or loans at below market rates. For example, the UK provided aid to Nepal after the 2015 earthquake to help with reconstruction efforts. Barriers to Trade Government constraints on the flow of international goods and services, such as tariffs and quotas. For example, the European Union imposes tariffs on certain agricultural products to protect its farmers. BRICS An acronym for an association of five major emerging nations: Brazil, Russia, India, China, and South Africa. For example, BRICS nations often meet to discuss economic cooperation and development strategies. Demographic Aging The rise in the median age of a population. For example, Japan is experiencing demographic aging, with a significant increase in the elderly population. Economic Core Region The most highly developed region(s) in a country. For example, London is considered an economic core region in the UK due to its high level of development and economic activity. GNP (Gross National Product) GDP plus overseas earnings, also known as GNI (Gross National Income). For example, the GNP of the United States includes the value of goods and services produced domestically and the income earned by its citizens abroad. HIC (Higher Income Country) A country with a high level of income and development. For example, Germany is classified as a higher income country due to its high GDP per capita and advanced infrastructure. NEE (Newly Emerging Economy) A country that is experiencing rapid economic growth and industrialisation. For example, China is an example of a newly emerging economy, having rapidly industrialised and grown economically over the past few decades. LIC (Lower Income Country) A country with a low level of income and development. For example, Malawi is considered a lower income country, with a low GDP per capita and limited access to healthcare and education. GDHI (Gross Disposable Household Income) The amount of money that households have available for spending and saving after taxes and social contributions. For example, in the UK, the GDHI varies significantly between regions, with London having one of the highest levels. Gini Coefficient A measure of income inequality within a population, ranging from 0 (perfect equality) to 100 (perfect inequality). For example, South Africa has a high Gini coefficient, indicating significant income inequality within the country. Trade Unions Organisations that promote trade between member countries, such as the East African Community (EAC). For example, the East African Community (EAC) works to promote economic integration and trade among its member states. Fair Trade A movement aimed at helping producers in developing countries achieve better trading conditions and promote sustainability. For example, Fairtrade coffee ensures that farmers receive a fair price for their product and work under safe conditions. FDI (Foreign Direct Investment) Investment made by a company or individual in one country in business interests in another country. For example, Toyota's investment in manufacturing plants in the UK is an example of foreign direct investment. Debt Relief The partial or total remission of debts, especially those owed by developing countries to external creditors. For example, the Heavily Indebted Poor Countries (HIPC) initiative provides debt relief to eligible countries to help them achieve sustainable development. International Aid Voluntary transfer of resources from one country to another, often in the form of financial assistance, goods, or services. For example, the UK provides international aid to various countries through its Department for International Development (DFID). Top-Down Development Large-scale development projects led by national governments or international organisations. For example, the construction of the Three Gorges Dam in China is an example of a top-down development project. Bottom-Up Development Small-scale development projects led by local communities or NGOs, focusing on the needs of the poorest and most vulnerable. For example, WaterAid's installation of hand pumps in rural villages in Africa is an example of a bottom-up development project. Urbanisation The increase in the proportion of people living in urban areas compared to rural areas. For example, rapid urbanisation in India has led to the growth of megacities like Mumbai and Delhi. Geopolitics The study of the effects of geography (human and physical) on international politics and relations. For example, the geopolitics of the Arctic region involves disputes over territorial claims and access to natural resources. Quality of Life The general well-being of individuals and societies, outlining negative and positive features of life. For example, Scandinavian countries are often ranked high in quality of life due to their strong social welfare systems and high levels of happiness. Poverty Cycle A set of factors or events by which poverty, once started, is likely to continue unless there is outside intervention. For example, lack of education and healthcare can trap families in a poverty cycle, making it difficult for future generations to improve their living standards. Sustainable Development Economic development that is conducted without depletion of natural resources. For example, the use of renewable energy sources like wind and solar power is a key aspect of sustainable development. Humanitarian Aid Material or logistical assistance provided for humanitarian purposes, typically in response to crises including natural disasters and man-made disaster. For example, humanitarian aid was provided to Haiti after the devastating earthquake in 2010 to help with immediate relief efforts. Economic Growth An increase in the production of goods and services in an economy over a period of time. For example, China's economic growth over the past few decades has lifted millions of people out of poverty. Social Indicators Measures that describe the well-being of individuals or communities, such as health, education, and income. For example, life expectancy and literacy rates are common social indicators used to assess development. Environmental Sustainability Responsible interaction with the environment to avoid depletion or degradation of natural resources and allow for long-term environmental quality. For example, practices like recycling and conservation of natural habitats contribute to environmental sustainability. Infrastructure The basic physical and organisational structures and facilities needed for the operation of a society or enterprise. For example, good infrastructure, such as roads, bridges, and schools, is essential for economic development. Globalisation The process by which businesses or other organisations develop international influence or start operating on an international scale. For example, the globalisation of technology companies like Apple and Google has led to their products being available worldwide. Microfinance Financial services provided to low-income individuals or groups who are typically excluded from traditional banking. For example, microfinance institutions like Grameen Bank provide small loans to entrepreneurs in developing countries to help them start or expand their businesses.

Soils Southeast Asia, on balance, has a higher proportion of relatively fertile soils than most tropical regions, and soil erosion is less severe than elsewhere. Much of the region, however, is covered by tropical soils that generally are quite poor in nutrients. Often the profusion of plant life is more related to heat and moisture than to soil quality, even though these climatic conditions intensify both chemical weathering and the rate of bacterial action that usually improve soil fertility. Once the vegetation cover is removed, the supply of humus quickly disappears. In addition, the often heavy rainfall leaches the soils of their soluble nutrients, hastens erosion, and damages the soil texture. The leaching process in part results in laterites of reddish clay that contain hydroxides of iron and alumina. Laterite soils are common in parts of Myanmar, Thailand, and Vietnam and also occur in the islands of the Sunda Shelf, notably Borneo. The most fertile soils occur in regions of volcanic activity, where the ejecta is chemically alkaline or neutral. Such soils are found in parts of Sumatra and much of Java in Indonesia. The alluvial soils of the river valleys also are highly fertile and are intensively cultivated. Climate All of Southeast Asia falls within the warm, humid tropics, and its climate generally can be characterized as monsoonal (i.e., marked by wet and dry periods). Changing seasons are more associated with rainfall than with temperature variations. There is, however, a high degree of climatic complexity within the region. Temperatures Regional temperatures at or near sea level remain fairly constant throughout the year, although monthly averages tend to vary more with increasing latitude. Thus, with the exception of northern Vietnam, annual average temperatures are close to 80 °F (27 °C). Increasing elevation acts to decrease average temperatures, and such locations as the Cameron Highlands in peninsular Malaysia and Baguio in the Philippines have become popular tourist destinations in part because of their relatively cooler climates. Proximity to the sea also tends to moderate temperatures. Precipitation Much of Southeast Asia receives more than 60 inches (1,500 millimeters) of rainfall annually, and many areas commonly receive double and even triple that amount. The rainfall pattern is distinctly affected by two prevailing air currents: the northeast (or dry) monsoon and the southwest (or wet) monsoon. The northeast monsoon occurs roughly from November to March and brings relatively dry, cool air and little precipitation to the mainland. As the southwestward-flowing air passes over the warmer sea, it gradually warms and gathers moisture. Precipitation is especially heavy where the airstream is forced to rise over mountains or encounters a landmass. The east coast of peninsular Malaysia, the Philippines, and parts of eastern Indonesia receive the heaviest rains during this period. The southwest monsoon prevails from May to September, when the air current reverses and the dominant flow is to the northeast. The mainland receives the bulk of its rainfall during this period. Over much of the southern Malay Peninsula and insular Southeast Asia there is little or no prolonged dry season. This is especially marked in much of the equatorial region and along the east coast of the Philippines. While the dry and wet monsoons are important in explaining rainfall patterns, so too are such factors as relief, land and sea breezes, convectional overturning and cyclonic disturbances. These factors often are combined with monsoonal effects to produce highly variable rainfall patterns over relatively short distances. While many of the cyclonic disturbances produce only moderate rainfall, others mature into tropical storms—called cyclones in the Indian Ocean and typhoons in the Pacific—that bring heavy rains and destruction to the areas over which they pass. The Philippines are particularly affected by these storms. Plant life Tropical forests in Southeast Asia Tropical forests in Southeast Asia The seasonal nature and pattern of Southeast Asia’s rainfall, as well as the region’s physiography, have strongly affected the development of natural vegetation. The hot, humid climate and enormous variety of habitats have given rise to an abundance and diversity of vegetative forms unlike that in any other area of the world. Much of the natural vegetation has been modified by human action, although large areas of relatively untouched land still can be found. The vegetation can be grouped into two broad categories: the tropical-evergreen forests of the equatorial lowlands and the open type of tropical-deciduous, or “monsoon,” forests in areas of seasonal drought. The evergreen forests are characterized by multiple stories of vegetation, consisting of a variety of trees and plants. Although a large diversity of tree species is found in these forests, members of the Dipterocarpaceae family account for roughly half of the varieties. Deciduous forests are found in eastern Indonesia and those parts of the mainland where annual rainfall does not exceed 80 inches. Just as in the equatorial forest, a wide variety of species is normally the rule. Certain species, such as teak, have become highly valued commercially. Teak is found in parts of Indonesia, Myanmar, Thailand, and Laos. In addition to these two basic types of vegetation, other regional patterns reflect topography. Especially noteworthy are coastal and highland plant communities. Mangrove belts, of which there are more than 30 varieties, occur where silt is deposited in coastal areas. Upland forests dominated by maples, oaks, and magnolias are found especially on mainland mountain slopes. Human activity has been rapidly altering the stands of virgin forest in Southeast Asia. Most deforestation results from removal for fuelwood and clearing for agriculture and grazing. Although only a relatively small portion of the total land area has been permanently cleared for cultivation—e.g., in Java (Indonesia) and western Luzon (the Philippines)—in some areas shifting cultivation has brought about the replacement of virgin forest with secondary growth. In addition, nearly all countries have commercial logging industries; notable are those in Indonesia, Malaysia, Thailand, and Myanmar. A growing problem has been illegal logging. Thus, timber harvesting has come to contribute significantly to deforestation. Programs in social forestry and reforestation have yet to halt the rapid denuding of the landscape. Animal life Southeast Asia is situated where two major divisions of the world’s fauna meet. The region itself constitutes the eastern half of what is called the Oriental, or Indian, zoogeographic region (part of the much larger realm of Megagaea). Bordering along the south and east is the Australian zoogeographic region, and the eastern portion of insular Southeast Asia—Celebes (Sulawesi), the Moluccas, and the Lesser Sunda Islands—constitutes a transition zone between these two faunal regions. a classroom in Brazil More From Britannica education: Southeast Asia Southeast Asia is notable, therefore, for a considerable diversity of wildlife throughout the region. These differences are especially striking between the species of the eastern and western fringes as well as between those of the archipelagic south and the mainland north. The differences stem largely from the isolation, over varying lengths of geologic time, of species following their migration from the Asian continent. In addition, the tropical rain forests in many parts of the region, with their great diversity of vegetation, have made possible the development of complex communities of animals that fill specialized ecological niches. Especially numerous are arboreal and flying creatures. orangutans orangutansOrangutans (Pongo pygmaeus) in Sumatra, Indonesia. The distinction between the two faunal regions is best depicted by their mammal populations. In general, Australia is inhabited largely by marsupials (pouched mammals) and monotremes (egg-laying mammals), while Southeast Asia contains placental mammals and such hybrid species as the bandicoot of eastern Indonesia. Small mammals such as monkeys and shrews are the most numerous, while in many areas the larger mammals have been pushed into more remote areas and national preserves. Bears, gibbons, elephants, deer, civets, and pigs are found in both mainland and insular Southeast Asia, as are diminishing numbers of tigers. The Malayan tapir, a relative of the rhinoceros, is native to the Malay Peninsula and Sumatra, while the tarsier is found in the Philippines and parts of Indonesia. A number of rare endemic species are found in Indonesia and East (insular) Malaysia, including the Sumatran and Javan rhinoceros, the orangutan, the anoa (a dwarf buffalo), the babirusa (a wild swine), and the palm civet. As the pace of development accelerates and populations continue to expand in Southeast Asia, concern has increased regarding the impact of human activity on the region’s environment. A significant portion of Southeast Asia, however, has not changed greatly and remains an unaltered home to wildlife. The nations of the region, with only few exceptions, have become aware of the need to maintain forest cover not only to prevent soil erosion but to preserve the diversity of flora and fauna. Indonesia, for example, has created an extensive system of national parks and preserves for this purpose. Even so, such species as the Javan rhinoceros face extinction, with only a handful of the animals remaining in western Java

Growing up in Sioux Falls, South Dakota, a small city surrounded by endless plains, I've found unexpected echoes of home in China's smaller towns — from the warmth of locals in Huaihua, Central China's Hunan province, to the quiet charm of Yangshuo, South China's Guangxi Zhuang autonomous region. With an itch to see more of China's lesser-visited regions, I began planning a trip to the northwest with seven friends — five Americans, one Pakistani, one Zimbabwean, and one Colombian. We bought round-trip tickets from Shanghai to Yinchuan, Ningxia Hui autonomous region, for less than $120 each. From there, we planned to rent a car and drive to Xining in Qinghai, then on to Qinghai Lake, and finally to Lanzhou, Gansu. To make that possible, several of us applied for Chinese driver's licenses, a process that involved translating our US licenses into Mandarin and passing a short test on traffic laws. Within a day, we were licensed. As we piled into two rental cars in late March to begin our eight-day journey, it became clear that this wasn't just a road trip — it was the culmination of our four years in China, the Mandarin we had so diligently studied, and our ongoing effort to contribute to US-China people-to-people relations. Right away, we drew curious reactions. At the Yinchuan airport, taxi drivers offered us rides into the city, only to stare in astonishment when we told them we had rented cars. "You're driving? In China?" one driver asked, visibly surprised. It was a reaction we'd encountered multiple times during our trip, as foreign drivers are rare in China, especially in remote regions. In Yinchuan, we stocked up on snacks and adjusted to the chilly desert air. From there, we headed west, navigating wide highways framed by dramatic landscapes: arid plains, jagged mountains, and occasionally, a herd of sheep crossing the road. The vastness of the Northwest was humbling — and as someone who grew up on the wide-open prairies of South Dakota, it felt oddly familiar. One of the highlights of our trip was camping by Qinghai Lake, the largest saltwater lake in China. A few summers ago, Santiago Solano, one of my classmates from the US, cycled from Xi'an in Shaanxi to Urumqi in the Xinjiang Uygur autonomous region over the course of a month and met many kind strangers along the way. One of them was Geng San, a Tibetan lamb herder who managed a piece of land right next to Qinghai Lake and graciously invited us to camp there. "That's what China is — it's the people. The quiet generosity of an old Tibetan nomad who, years after we first met, still offered us a place to rest on his land," said Solano, who is also part of the group on this trip. But apparently, we underestimated just how cold it would be to camp next to Qinghai Lake in late March. It was deathly freezing. In preparation for the trip, we had ordered two tent kits and eight sleeping bags. However, when the temperature eventually dropped to — 10 C, all of us piled into the cars and turned the heaters on. So much for camping. From Qinghai Lake, we drove to Lanzhou, where we visited many food markets and tried every type of noodle on offer. Since we are college students, we rented a gaming hotel room — something I've only ever seen in China. At night, instead of attending local parties as we had before, we stayed in the hotel and gamed late into the morning. For me, the trip was as much about the journey as it was about the destinations. Driving through Northwest China gave us a unique perspective on the region's natural beauty and its people. At gas stations, shopkeepers greeted us with curiosity and kindness, often offering recommendations for nearby attractions. At roadside carts, we sampled local specialties, grabbing a quick skewer and a mango for the road. And at every stop, we were touched by the warmth and hospitality that make traveling in China so rewarding. As an American who has lived in China for several years, I'm often asked about my experiences here. Trips like this one remind me of the similarities between the two countries, despite their differences. Just as road trips are a quintessential part of American culture, they've become my favorite way to explore China. Whether it's driving through the rolling hills of South Dakota or the deserts of Ningxia, there's something universal about the freedom and camaraderie that come with having complete control over where you end up. Written by Charlie Howes, a 22-year-old American who has lived in China since 2019. He completed his final year of high school at Beijing No 80 High School and is currently studying at New York University Shanghai. He has founded a company in China focused on facilitating US-China trade and plans to continue living in Shanghai long term. He enjoys road trips, cycling around the world, learning languages, and meeting new people.

Introduction to Hedging Instruments: Forwards, Futures, Options, and Swaps Hedging instruments are financial tools used by businesses and investors to mitigate risk. These instruments help protect against adverse price movements in assets such as commodities, currencies, interest rates, or securities. The four main hedging instruments are forwards, futures, options, and swaps. 1. Forwards A forward contract is a customised agreement between two parties to buy or sell an asset at a predetermined price on a specified future date. Key Characteristics: Over-the-counter (OTC): Traded directly between parties, not on an exchange. Customisation: Can be tailored to suit the needs of the parties involved. Settlement: Occurs at the end of the contract, which may involve physical delivery or cash settlement. Risk: Forwards carry counter-party risk, as there is a possibility one party may default. Example: A company that needs to import raw materials in six months may enter into a forward contract to lock in the current price, avoiding the risk of price increases. 2. Futures A futures contract is similar to a forward, but it is standardised and traded on an exchange. This standardisation eliminates counter-party risk. Key Characteristics: Standardised: Contract size, expiration, and other terms are fixed by the exchange. Mark-to-market: Gains and losses are settled daily. Liquidity: Futures are highly liquid because they are traded on exchanges. Regulation: As they are traded on formal exchanges, they are more regulated than forwards. Example: A wheat farmer may sell futures contracts to hedge against a possible decline in wheat prices before harvest. 3. Options Options provide the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date. There are two types of options: call options and put options. Call Option: Gives the holder the right to buy an asset at a predetermined price. Put Option: Gives the holder the right to sell an asset at a predetermined price. Key Characteristics: Premium: The buyer pays a premium upfront to obtain the option. Limited Risk: The maximum loss is limited to the premium paid. Flexibility: Options can be used for speculative or hedging purposes. Example: An investor holding stocks may buy a put option to protect against potential declines in the stock's price. 4. Swaps A swap is a contract in which two parties agree to exchange cash flows or liabilities over a specific period. The most common types are interest rate swaps and currency swaps. Key Characteristics: Customizable: Like forwards, swaps are often tailored to meet the needs of the parties involved. Counterparty Risk: Swaps are typically OTC instruments, exposing parties to default risk. Common Uses: Used to manage interest rate risk or currency risk. Example: A company with a variablerate loan may enter into an interest rate swap to exchange its variable payments for fixedrate payments, thus locking in stable costs. Hedging instruments are essential for managing financial risk in volatile markets. Each instrument serves different purposes, with varying levels of complexity, risk, and customization. Whether through forwards, futures, options, or swaps, businesses can better plan for the future by reducing exposure to uncertain price fluctuations. Hedging Strategies for Market Risk, Credit Risk, and Currency Risk 1. Hedging Strategies for Market Risk Market risk (also known as systematic risk) arises from fluctuations in asset prices, such as stocks, bonds, commodities, and interest rates, due to economic factors or market volatility. Key Hedging Instruments for Market Risk: Derivatives (Options, Futures, and Forwards): These instruments allow investors to hedge against unfavorable price movements in stocks, commodities, or interest rates. Example: An investor holding a large stock portfolio might buy a put option to protect against a potential market downturn. If the market declines, the put option increases in value, offsetting losses in the portfolio. Short Selling: Investors can sell borrowed assets with the expectation of buying them back at a lower price, profiting from the decline. Example: A fund manager expecting a market decline may short sell stocks to hedge a portfolio against losses. Common Hedging Strategies: Portfolio Diversification: Reducing market risk by spreading investments across various asset classes (stocks, bonds, commodities) and sectors. Using Index Futures: Large portfolios can be hedged using index futures that track the performance of the overall market. If the market declines, profits from the short position in the futures contract will offset losses in the portfolio. Risk Parity: Allocating assets based on the level of risk rather than the dollar amount invested, balancing risk exposure across asset classes. 2. Hedging Strategies for Credit Risk Credit risk refers to the possibility that a borrower will default on a debt obligation. This is especially important for banks, lenders, and institutions dealing with bonds and loans. Key Hedging Instruments for Credit Risk: Credit Default Swaps (CDS): A financial derivative where the buyer of a CDS pays a premium to the seller in exchange for protection against a default on a loan or bond. Example: A bank holding corporate bonds can buy a CDS to ensure they are compensated if the issuing company defaults. Collateralised Debt Obligations (CDOs): These instruments pool together various debt instruments and allow risk to be distributed among multiple investors. Credit Insurance: Companies may use insurance to protect against the risk of a customer defaulting on payments. Common Hedging Strategies: Diversification of Loan Portfolio: Spreading out credit exposures across various industries, geographies, and borrower profiles reduces the overall risk of default. Tightening Lending Standards: Limiting exposure to highrisk borrowers by implementing stringent credit assessments. AssetBacked Securities: Banks can sell loans or bonds packaged as assetbacked securities to reduce their exposure to credit risk. 3. Hedging Strategies for Currency Risk Currency risk (or exchange rate risk) arises from fluctuations in foreign exchange rates, which can affect companies involved in international trade or with investments in foreign countries. Key Hedging Instruments for Currency Risk: Forward Contracts: A firm agrees to exchange a specified amount of currency at a predetermined exchange rate on a future date. Example: A U.S. exporter expecting payment in euros might enter into a forward contract to sell euros and lock in a favorable exchange rate. Currency Options: These give the right, but not the obligation, to buy or sell currency at a specific price. Example: A U.S.based company buying goods from Japan might buy a call option on the yen to hedge against the risk of yen appreciation. Currency Swaps: Two parties exchange interest payments and principal in different currencies to hedge against exchange rate fluctuations. Common Hedging Strategies: Natural Hedging: Companies can offset currency risk by balancing foreign revenue with costs in the same currency. For example, if a company generates revenue in euros, it can also incur expenses in euros, reducing exposure to exchange rate fluctuations. Multi-Currency Invoicing: Firms can invoice in their home currency, shifting the currency risk to the buyer. Currency Diversification: Holding a diversified basket of currencies can reduce exposure to large fluctuations in any one currency. Effective hedging strategies are crucial for managing various types of risks in financial markets. Market risk can be managed using instruments like futures and options, while credit risk can be mitigated through diversification and credit derivatives. Currency risk, often faced by multinational firms, can be hedged using forward contracts, options, or swaps. Each strategy helps firms and investors protect their portfolios, ensure financial stability, and reduce the impact of adverse movements in the financial markets. Portfolio Risk Management Techniques: Diversification, Asset Allocation, and Risk Budgeting Managing risk is a fundamental aspect of portfolio management. Investors use various techniques to control and reduce the risks inherent in investing. Three key techniques used in portfolio risk management are diversification, asset allocation, and risk budgeting. Each of these techniques helps in mitigating potential losses while aiming to achieve the desired return. 1. Diversification Diversification is a risk management strategy that involves spreading investments across different assets, sectors, or geographic regions to reduce exposure to any single risk. The idea is that different assets perform differently under various market conditions, so losses in one investment can be offset by gains in others. Key Benefits of Diversification: Reduction of Unsystematic Risk: Unsystematic risk, which is unique to a specific company or industry, can be reduced by holding a variety of investments that respond differently to market conditions. Improved Stability: A diversified portfolio is less volatile, as the negative performance of one asset can be balanced by the positive performance of others. Methods of Diversification: Across Asset Classes: Investing in a mix of asset classes such as stocks, bonds, commodities, and real estate. Example: A portfolio with 60% equities, 30% bonds, and 10% commodities is more diversified than one solely consisting of stocks. Within Asset Classes: Diversifying within a single asset class (e.g., holding stocks from different sectors like technology, healthcare, and energy). Geographic Diversification: Investing in assets across various countries or regions to mitigate country-specific risks. Example: Holding U.S. stocks along with emerging market equities can reduce risks related to a downturn in one country's economy. 2. Asset Allocation Asset allocation refers to the process of dividing investments among different asset classes (such as stocks, bonds, and cash) to align with an investor's risk tolerance, time horizon, and financial goals. Asset allocation plays a crucial role in portfolio risk management by determining the overall risk-return profile of the portfolio. Key Elements of Asset Allocation: Strategic Asset Allocation: A longterm approach that involves setting target allocations for different asset classes based on financial goals and risk tolerance. Example: A young investor with a longterm horizon might allocate 70% to stocks, 20% to bonds, and 10% to cash. Tactical Asset Allocation: A more active approach that involves adjusting the asset mix in response to short-term market conditions. Example: If the investor expects an economic downturn, they might temporarily reduce exposure to equities and increase exposure to bonds. Types of Asset Allocation Models: Conservative: Focuses on preserving capital with a larger allocation to bonds and cash (e.g., 20% stocks, 80% bonds). Balanced: A moderate risk approach with an equal focus on growth and income (e.g., 50% stocks, 50% bonds). Aggressive: Targets higher returns by investing predominantly in equities, accepting higher risk (e.g., 80% stocks, 20% bonds). Example of Asset Allocation: A 40 year old investor with moderate risk tolerance may allocate their portfolio as follows: 50% equities, 40% bonds, and 10% in alternative investments such as real estate or commodities. The equities provide growth potential, while the bonds and alternative assets offer stability and income. 3. Risk Budgeting Risk budgeting is a method of allocating risk across different components of a portfolio, rather than focusing solely on returns. The goal is to optimise the portfolio’s risk-return profile by distributing risk in a way that aligns with the investor’s objectives and risk tolerance. Key Concepts of Risk Budgeting: Risk Contribution: Each asset class or investment in the portfolio contributes a certain amount of risk (measured by metrics such as volatility or Value at Risk). Risk budgeting ensures that no single asset class dominates the overall risk of the portfolio. Example: A portfolio may contain 60% stocks and 40% bonds, but if the stocks are highly volatile, they may contribute 90% of the portfolio's risk. Target Risk: Investors set a maximum acceptable level of risk (e.g., a portfolio volatility of 10%) and allocate investments so that the total risk remains within this target. Techniques in Risk Budgeting: Risk Parity: Allocates risk evenly across asset classes, rather than allocating capital based solely on return expectations. Example: In a risk-parity portfolio, both bonds and stocks might be balanced in such a way that they contribute equally to the overall portfolio risk, even though the dollar investment in bonds may be larger due to their lower volatility. Value at Risk (VaR): This technique measures the potential loss in a portfolio over a specific time period, under normal market conditions, at a given confidence level. The risk budget ensures that the potential loss stays within acceptable limits. Example of Risk Budgeting: An investor targets an overall portfolio risk of 8% volatility. After analyzing the risk contribution of each asset class, they determine that equities, which currently make up 60% of the portfolio, contribute 70% of the risk. To adhere to the risk budget, the investor may reduce their equity exposure and increase their allocation to bonds or other less volatile assets. Diversification, asset allocation, and risk budgeting are complementary techniques used in portfolio risk management. Diversification reduces unsystematic risk by spreading investments across various assets. Asset allocation ensures that investments align with an investor's goals and risk tolerance. Risk budgeting focuses on managing the contribution of risk from each asset class to create a balanced and efficient portfolio. Together, these strategies help investors achieve a balance between risk and return, ensuring longterm portfolio stability. Risk Mitigation Through Insurance, Securitisation, and Other Financial Engineering Techniques Risk mitigation is a core objective in financial management, and various strategies can be employed to reduce or manage risks. Three major approaches are insurance, securitisation, and financial engineering techniques. Each of these methods helps firms and individuals transfer, reduce, or eliminate certain financial risks. 1. Insurance as a Risk Mitigation Tool Insurance is a traditional risk transfer method that protects against financial losses by shifting the risk to an insurance company in exchange for premium payments. It is widely used to mitigate various forms of risk, such as operational, liability, and property risks. Key Aspects of Insurance for Risk Mitigation: Risk Transfer: The insurer takes on the risk in exchange for a premium, thus protecting the insured party from unexpected financial losses. Indemnity: In the event of a loss, the insurance policy compensates the insured based on the terms of the contract. Customisable Coverage: Insurance policies can be tailored to address specific risks, such as property damage, business interruption, liability, or cyber risks. Types of Insurance for Businesses: Property and Casualty Insurance: Covers physical assets like buildings, machinery, and inventory from risks like fire, theft, or natural disasters. Liability Insurance: Protects businesses against legal liabilities arising from accidents, negligence, or professional errors. Business Interruption Insurance: Compensates for lost income if a business has to halt operations due to unforeseen events. Credit Insurance: Shields companies from losses due to the nonpayment of trade receivables. 2. Securitisation as a Risk Mitigation Technique Securitisation is a financial engineering process that involves pooling various financial assets (such as loans, mortgages, or receivables) and converting them into marketable securities. This process allows firms to transfer risk to investors, thereby reducing their exposure. Key Elements of Securitisation: Risk Transfer: By securitising assets, companies can transfer the risk of default or nonpayment to investors who purchase the securities. Liquidity Creation: Securitisation converts illiquid assets (like mortgages or loans) into liquid, tradeable securities, improving cash flow for the originating firm. Diversification of Risk: Pooling assets with different risk profiles reduces the impact of individual defaults, spreading the risk across multiple investors. Common Forms of Securitisation: MortgageBacked Securities (MBS): Pools of mortgages are bundled and sold as securities to investors, transferring the risk of mortgage defaults. Example: A bank that issues home loans can bundle those loans into MBS and sell them to investors, transferring the credit risk of potential defaults. Asset-Backed Securities (ABS): Similar to MBS, but backed by other types of assets like credit card receivables, auto loans, or student loans. Collateralised Debt Obligations (CDOs): Structured financial products that pool different types of debt, such as loans and bonds, and sell them as securities with varying risk levels. Example: A bank may issue a portfolio of auto loans and then pool these loans into an assetbacked security (ABS). The ABS is sold to investors, who take on the risk of loan defaults. By securitising the loans, the bank reduces its exposure to credit risk and generates immediate cash flow. 3. Financial Engineering Techniques for Risk Mitigation Financial engineering involves the use of complex financial instruments, derivatives, and structured products to manage or mitigate financial risks. These techniques allow firms to hedge against specific risks, optimize capital structure, and improve financial stability. Common Financial Engineering Techniques: Derivatives: Financial instruments like futures, forwards, options, and swaps are used to hedge against price fluctuations, interest rate changes, or currency movements. Example: A company with significant foreign exchange exposure may use currency forwards or options to hedge against exchange rate fluctuations, ensuring predictable cash flows. Options and Futures: Options: Provides the right (but not the obligation) to buy or sell an asset at a predetermined price, allowing firms to hedge against unfavorable price movements. Example: An airline company can buy options on jet fuel to hedge against rising fuel prices. Futures: Standardized contracts to buy or sell an asset at a set price on a future date, commonly used to hedge commodities or financial assets. Example: A wheat producer may use futures contracts to lock in a favorable price for its crop, hedging against a potential price drop. Swaps: These involve the exchange of cash flows between two parties, often used to manage interest rate risk or currency risk. Interest Rate Swaps: Firms can exchange floatingrate interest payments for fixedrate payments to hedge against rising interest rates. Currency Swaps: Used to hedge exchange rate risk in crossborder transactions by exchanging principal and interest payments in different currencies. Example: A company with a variablerate loan may enter into an interest rate swap to exchange its variable payments for fixedrate payments, locking in stable costs. Structured Products: These are customised financial instruments designed to achieve specific riskreturn objectives. They often combine derivatives with other securities to create tailored risk exposures. Example: A structured note that combines a bond with an embedded option, offering downside protection while allowing for potential upside linked to the performance of an equity index. Credit Derivatives: Tools like credit default swaps (CDS) allow investors to transfer credit risk to other parties. Example: A bondholder worried about a company’s potential default may purchase a CDS, which pays out in case of a default event. Example: A company may issue a bond with an embedded call option, allowing it to repurchase the bond if interest rates decline. This financial engineering tool enables the company to mitigate the risk of rising interest rates, reducing future borrowing costs. Risk mitigation through insurance, securitisation, and financial engineering offers businesses a variety of tools to manage and transfer risks. Insurance allows for the direct transfer of risk to an insurer, while securitisation helps companies offload risk by packaging and selling assets as securities. Financial engineering techniques, including derivatives, swaps, and structured products, provide sophisticated ways to hedge market, interest rate, and currency risks. Each approach helps organizations improve financial stability, enhance liquidity, and manage potential losses in a volatile market environment.

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