Series, DIrect Address, Multiple Adjectives Commas

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.

The endoplasmic reticulum (EN-doh-PLAZ-mik ri-TIK-yuh-luhm), abbre- viated ER, is a system of membranous tubes and sacs, called cisternae (sis-TUHR-nee). The ER functions primarily as an intracellu- lar highway, a path along which molecules move from one part of the cell to another. The amount of ER inside a cell fluctuates, depending on the cell’s activity. There are two types of ER: rough and smooth. The two types of ER are thought to be continuous. Rough Endoplasmic Reticulum The rough endoplasmic reticulum is a system of interconnected, flattened sacs covered with ribosomes, as shown in Figure 4-15. The rough ER produces phospholipids and proteins. Certain types of proteins are made on the rough ER’s ribosomes. These proteins are later exported from the cell or inserted into one of the cell’s own membranes. For example, ribosomes on the rough ER make digestive enzymes, which accumulate inside the endoplasmic retic- ulum. Little sacs or vesicles then pinch off from the ends of the rough ER and store the digestive enzymes until they are released from the cell. Rough ER is most abundant in cells that produce large amounts of protein for export, such as cells in digestive glands and antibody-producing cells. Smooth Endoplasmic Reticulum The smooth ER lacks ribosomes and thus has a smooth appear- ance. Most cells contain very little smooth ER. Smooth ER builds lipids such as cholesterol. In the ovaries and testes, smooth ER produces the steroid hormones estrogen and testosterone. In skeletal and heart muscle cells, smooth ER releases calcium, which stimulates contraction. Smooth ER is also abundant in liver and kidney cells, where it helps detoxify drugs and poisons. Long-term abuse of alcohol and other drugs causes these cells to produce more smooth ER. Increased amounts of smooth ER in liver cells is one of the factors that can lead to drug tolerance. As Figure 4-15 shows, rough ER and smooth ER form an interconnected network. Copyright © by Holt, Rinehart and Winston. All rights reserved. reticulum from the Latin rete, meaning “net”; reticulum means “little net” Word Roots and Origins The endoplasmic reticulum (ER) serves as a site of synthesis for proteins, lipids, and other materials. The dark lines in the photo represent the membranes of the ER, and the narrow lighter areas between the dark lines show the channels and spaces (cisternae) inside the ER. FIGURE 4-15 Smooth ER Ribosomes Rough ER Cisternae 82 CHAPTER 4 GOLGI APPARATUS The Golgi apparatus, shown in Figure 4-16, is another system of flattened, membranous sacs. The sacs nearest the nucleus receive vesicles from the ER containing newly made proteins or lipids. Vesicles travel from one part of the Golgi apparatus to the next and transport substances as they go. The stacked membranes modify the vesicle contents as they move along. The proteins get “address labels” that direct them to various other parts of the cell. During this modification, the Golgi apparatus can add carbohydrate labels to proteins or alter new lipids in various ways. VESICLES Cells contain several types of vesicles, which perform various roles. Vesicles are small, spherically shaped sacs that are surrounded by a single membrane and that are classified by their contents. Vesicles often migrate to and merge with the plasma membrane. As they do, they release their contents to the outside of the cell. Lysosomes Lysosomes (LIE-suh-SOHMZ) are vesicles that bud from the Golgi appa- ratus and that contain digestive enzymes. These enzymes can break down large molecules, such as proteins, nucleic acids, car- bohydrates, and phospholipids. In the liver, lysosomes break down glycogen in order to release glucose into the bloodstream. Certain white blood cells use lysosomes to break down bacteria. Within a cell, lysosomes digest worn-out organelles in a process called autophagy (aw-TAHF-uh-jee). Lysosomes are also responsible for breaking down cells when it is time for the cells to die. The digestion of damaged or extra cells by the enzymes of their own lysosomes is called autolysis (aw-TAHL-uh-sis). Lysosomes play a very important role in maintaining an organism’s health by destroying cells that are no longer functioning properly. Copyright © by Holt, Rinehart and Winston. All rights reserved. The Golgi apparatus modifies many cellular products and prepares them for export. FIGURE 4-16 CELL STRUCTURE AND FUNCTION 83 Peroxisomes Peroxisomes are similar to lysosomes but contain different enzymes and are not produced by the Golgi apparatus. Peroxisomes are abundant in liver and kidney cells, where they neutralize free radicals (oxygen ions that can damage cells) and detoxify alcohol and other drugs. Peroxisomes are named for the hydrogen peroxide, H2O2, they produce when breaking down alco- hol and killing bacteria. Peroxisomes also break down fatty acids, which the mitochondria can then use as an energy source. Other Vesicles Specialized peroxisomes, called glyoxysomes, can be found in the seeds of some plants. They break down stored fats to provide energy for the developing plant embryo. Some cells engulf material by surrounding it with plasma membrane. The resulting pocket buds off to become a vesicle inside the cell. This vesicle is called an endosome. Lysosomes fuse with endosomes and digest the engulfed material. Food vacuoles are vesicles that store nutrients for a cell. Contractile vacuoles are vesicles that can contract and dispose of excess water inside a cell. Protein Synthesis One of the major functions of a cell is the production of protein. The path some proteins take from synthesis to export can be seen in Figure 4-17. In step , proteins are assembled by ribosomes on the rough ER. Then, in step , vesicles transport proteins to the Golgi apparatus. In step , the Golgi modifies proteins and pack- ages them in new vesicles. In step , vesicles release proteins that have destinations outside the cell. In step , vesicles containing enzymes remain inside the cell as lysosomes, peroxisomes, endo- somes, or other types of vesicles. 5 4 3 2 1 Copyright © by Holt, Rinehart and Winston. All rights reserved. Proteins are assembled by ribosomes on the rough ER. Vesicles carry proteins from the rough ER to the Golgi apparatus. Proteins are modified in the Golgi apparatus and enter new vesicles. Some vesicles release their proteins outside the cell. Other vesicles remain in the cell and become lysosomes and other vesicles. Nucleus

hysical features of Southeast Asia The physiography of Southeast Asia has been formed to a large extent by the convergence of three of the Earth’s major crustal units: the Eurasian, Indian-Australian, and Pacific plates. The land has been subjected to a considerable amount of faulting, folding, uplifting, and volcanic activity over geologic time, and much of the region is mountainous. There are marked structural differences between the mainland and insular portions of the region. Mainland Southeast Asia The mainland is characterized by a series of generally north–south-trending mountain ranges separated by a number of major river valleys and their associated deltas. In many ways these ranges resemble ribs in a fan, where the interstices are deep trenches carved by the rivers. Although the mainland as a whole is similar in a structural sense, its various geologic components and the time periods of their orogenic (mountain-building) episodes differ. Much of the region has been affected by the gradual, continuing collision of the Indian subcontinent with the Eurasian Plate over roughly the past 50 million years, an event that—with diminishing intensity from west to east—has been responsible for deforming the land. Nonetheless, mainland Southeast Asia is relatively stable geologically, with no active or recently active volcanoes and, except in the northwest and north, little seismic activity. The ranges fan out southward from the southeastern corner of the Plateau of Tibet, where they are tightly spaced. A major rib of this system extends through the entire western margin of Myanmar (Burma); describing an elongated letter S, it consists of (from north to south) the Pātkai Range, Nāga Hills, Chin Hills, and Arakan Mountains. Farther to the south the same rib emerges from beneath the sea to become the Andaman and Nicobar Islands of India. Another major system extends along a straight north-south axis from eastern Myanmar east of the Salween River through northwestern Thailand to south of the Isthmus of Kra on the Malay Peninsula. It consists of a series of elongated blocks rather than one continuous ridge. The core of these blocks is granite, which has intruded into previously folded and faulted limestone and sandstone. The altitudes of the ranges diminish from above 8,000 feet (2,440 meters) on the Chinese border in the north to below 4,000 feet on the Isthmus of Kra, and the ranges are spread farther apart toward the south. The easternmost major mountain feature on the mainland is the Annamese Cordillera (Chaîne Annamitique) in Laos and Vietnam. In the portion between Laos and Vietnam, the chain forms a nearly straight spine of ranges from northwest to southeast, with a steep face rising from the South China Sea to the east and a more gradual slope to the west. The mountains thin out considerably south of Laos and become asymmetrical in form. The upland zone is characterized by a number of plateau remnants. The rather neat fanlike pattern of the mountain ranges is interrupted occasionally by several old blocks of strata that have been folded, faulted, and deeply dissected. These ancient massifs now form either low platforms or high plateaus. The westernmost of these, the Shan Plateau of eastern Myanmar, measures some 250 miles (400 km) from north to south and 75 miles from east to west and has an average elevation of about 3,000 feet. The largest of these features is the Korat Plateau in eastern Thailand and west-central Laos. This area actually is more of a low platform, which on average is only a few hundred feet above the floodplains of the surrounding rivers. It consists of a string of hills that direct surface drainage eastward to the Mekong River. The hills range in elevation from 500 to 2,000 feet, with the highest altitudes occurring near the southwestern rim. The broad river valleys between the uplands and the even wider deltas at the southernmost points contain most of the mainland’s lowland areas. These regions generally are covered with alluvial sediments that support much of the mainland’s cultivation and, in turn, most of its population centers. The most extensive coastal lowland is the lower Mekong basin, which encompasses most of Cambodia and southern Vietnam. The Cambodian portion is a broad, bowl-shaped area lying just above sea level, with numerous hill outcrops jutting above the landscape; at its center is a large freshwater lake, the Tonle Sap. To the south the river’s vast, flat delta occupies the entire southern tip of Vietnam. Outside the river deltas, the coastal lowlands are little more than narrow strips between the mountains and the sea, except around the southern half of the Malay Peninsula. The Malay Peninsula stretches south for some 900 miles from the head of the Gulf of Thailand (Siam) to Singapore and thus extends the mainland into insular Southeast Asia. The narrowest point, the Isthmus of Kra (about 40 miles wide), also roughly divides the peninsula into two parts: the long linear mountain ranges of the northern part described above give way just south of the isthmus to blocks of short, parallel ranges aligned north-south, so that the southern portion trends to the southeast and becomes much wider. In areas such as the west coast between southern Thailand and northwestern Malaysia, distinctive karst-limestone landscapes have developed. Peaks on the peninsula range from 5,000 to 7,000 feet in elevation.

Positive/Negative/Neutral Objects - How are they different? Positive: has fewer electrons than protons Negative: Has more electrons than protons Neutral: has equal numbers of protons and electrons Laws of Electric Charges - What are they? How are they applied? Like charges repel, opposites charges attract, charged AND neutral objects attract Induced Charge Separation - Explain this process. A shift of the position of electrons when a charged object is brought near it. If the charged object is positive, the electrons will move toward it. If the charged object is negative, the electrons will move away from it. Charging by Friction (What is happening with the charges? - Know electrostatic series examples) Process in which objects made from different materials rub against each other, producing a net static charge on each object. When charged by friction, one material will have a stronger attraction to electrons and will pull the electrons off the other material Charging by Conduction (Be able to explain what the electrons are doing) Charging by contact with a charged object. An object that becomes charged by contact always gets the same type of charge that is on the object that charges it. Grounding (Be able to explain how it happens) A method of removing static charges from an object. Electrons from the ground move up to the charged object. If the object is negative, electrons leave the object. If the object is positive, electrons enter the object. The ground always remains neutral Conductors/Insulators/Semiconductors (Know examples for each and characteristics) Conductor: A material that allows electrons to flow through it easily. GOOD CONDUCTORS: Silver, copper, gold, aluminium, magnesium, iron, usually metals Insulator: A material that prevents electrons from flowing through it. Plastic, wood and glass are examples. To prevent electric shocks, conductive wires are wrapped in insulators. Semiconductors: Have special properties that make them fair conductors, they are the foundation of modern electronics, including radios, computers and telephones. Charging by Induction (How do we induce a PERMANENT charge?) You can permanently charge an object using induction by attaching a conducting wire to the neutral object that goes to the ground Electric Discharge - What causes it? Know everyday examples. How is lightning formed? When two objects that have a charge imbalance are brought close together or come in contact with each other, electrons are transferred rapidly. Electrons move from the object with a more negative charge to the object with the less negative charge. Lightning occurs through an imbalance of charge between clouds and the ground. Negative charge at the bottom of a cloud repels the electrons at the earth's surface which move away, causing the ground to become positively charged Current Electricity: Refers to the electrons that flow in a controlled way through a conductor Forms of Current Electricity - Alternating Current (AC) vs Direct Current (DC) - How do they differ? AC: Electrons move back and forth, alternating their direction. produced in generating stations and is then distributed over long distances ex. Something plugged into a wall outlet

New Trends in Agriculture Extension approaches Extension has been, and still is, under attack from a wide spectrum of politicians and economists over its cost and financing. As a result, Extension Systems have had to make changes, by restating the system’s mission, developing a new vision for the future, and formulating plans for the necessary transition to achieve the desired change. 1. Privatization of Agricultural Extension Service Privatization: Process of funding and delivering the extension services by private individual or organization is called Private Extension. Concept: Privatization of extension refers to services rendered in rural area & allied aspects of extension personnel working in private agencies or organization for which farmers are expected to pay a fee & it can be viewed as supplementary or alternative to public extension services (Sarvanan & Shivalinge 1980). Privatization approaches ➢ Share cropping system ➢ Village extension contract system ➢ Public extension through private delivery ➢ Service for vouchers Strengths of Private Extension System ➢ More demand - driven rather than supply – driven ➢ High quality of services in terms of satisfying information needs of clientele, trained manpower, sustained finances and resource allocation ➢ Provides for an information mix and choices available to farmers ➢ Enhanced efficiency of staff ➢ Assure continuous supply and quality agricultural products ➢ More effective because farmer can select an adviser who is the best able to help ➢ Healthy competition among service provider will lead to better quality and lower costs for service Weakness of Private Extension System ➢ Concentrate on area having favorable physical environment ➢ More face-to-face contacts (person oriented) ➢ Increased dependence of farmers and hence exploitation ➢ No education role ➢ Deprivation of small farmers ➢ Hamper the free flow of information 2. Cyber Extension or e-extension Concepts Cyber space: it is the imaginary or virtual space of computers connected with each other on Networks, across the Globe. Cyber extension: it means 'using the power of online networks, computer communications and digital interactive multimedia to facilitate dissemination of agriculture technology. Cyber Extension thus can be defined as the extension over cyber space. Important tools of cyber extension E-Mail, Telnet, File Transfer Protocol (FTP), Gopher, Archie and World Wide Web (WWW) Strengths of Cyber Extension ➢ Access to the astounding information and continuously available ➢ Information rich and instantaneously available of information ➢ Interactive communication ➢ The information is available from any point on the globe ➢ Communication is dynamic ➢ Cut steps from traditional process ➢ Save money, time and effort ➢ Multiplicity of purpose Issues and Concerns of Cyber Extension ➢ Lack of Reliable Telecom Infrastructure in Rural Areas ➢ Erratic or no Power Supply ➢ Lack of ICT Trained manpower (willing to serve) in Rural Areas ➢ Lack of content (locally relevant and in local languages) ➢ Lack of Information Services to Rural Clientele ➢ Low Purchasing power of the Rural communities ➢ Lack of Holistic Approaches ➢ Issues of Sustainability Application of cyber extension ➢ Village information shops Dr. M.S. SwaminathanResearch Foundation, Chennai ➢ Information villagers MANAGE in Ranga Reddy District in Andhra pradesh ➢ Gyandoot net initiative of District Dhar, Madhya Pradesh. ➢ Warna wired village of National Informatics Center (NIC) in Kolhapur- Sangli Districts of Maharashtra 3. Market-Led-Extension (MLE) Concepts Market: A congregation of prospective buyers & sellers with a common motive of trading a particular commodity. Extension: It is the spreading/reaching out to the mass Market-led-extension: Agriculture & economics coupled with extension is the perfect blend for reaching at the door steps of common man with the help of technology. Dimensions of market-led extension ➢ Marketing mix: A planned mix of the controllable elements of a product's marketing plan commonly termed as 4Ps: product, price, place, and promotion. These four elements are adjusted until the right combination is found that serves the needs of the product's customers, while generating optimum income. ➢ Marketing plan: A marketing plan is a comprehensive document that outlines a business and marketing efforts for the coming year. It describes business activities involved in accomplishing specific marketing objectives within a set time frame. A marketing plan also includes a description of the current marketing position of a business, a discussion of the target market and a description of the marketing mix that a business will use to achieve their marketing goals. ➢ Market Intelligence: It is the information relevant to a company’s markets, gathered and analyzed specifically for the purpose of accurate and confident decision making. Market intelligence includes the process of gathering data from the company’s external environment, whereas the business intelligence process is primarily based on internal recorded events – such as sales, shipments and purchases. ➢ Market oriented production ➢ Use of Technology Strengths of market-led extension ➢ SWOT analysis of the market ➢ Organization of Farmers’ Interest Groups (FIGs) ➢ Enhancing the interactive and communication skills of the farmers ➢ Establishing marketing and agro-processing linkages ➢ Advice on product planning ➢ Educating the farming community ➢ Direct marketing ➢ Acquiring complete market intelligence ➢ Publication of agricultural market information Production of video films of success stories ➢ Challenges to market-led extension ➢ Gigantic size of extension system ➢ Information technology Diverse conditions ➢ Market intelligence ➢ Reforms in agricultural extension system Government Initiatives ➢ Central warehousing Corporation-1965 ➢ MSP by Commission for Agricultural Cost and Price (CACP) ➢ Food Corporation of India ➢ Then some others as: Cotton Corporation of India (CCI), Jute Corporation of India (JCI), National Dairy Development Board (NDDB), Agriculture and Processed food Export Development Authority (APEDA) etc. 4. Farmer--Led-Extension (FLE) Farmer--led-extension is defined as 'the provision of training by farmers to farmers, often through the creation of a structure of farmer promoters and farmer trainers' (Scarborough et al., 1997). Philosophy and principles ➢ Farmers and local institutions (e.g. producer organizations or village leaders) should play a key role in selecting farmer-trainers and monitoring and evaluating them. This helps make the programmes more accountable to the community or groups that they serve. ➢ Farmer-trainers are ‘of the community’; they communicate in local languages and are more sensitive to local cultures, mannerisms, farming practices, and farmers’ needs. ➢ Farmer-trainers should be selected on the basis of their skills and interest in sharing information, not just on their farming expertise. ➢ Farmer-trainers need strong linkages with and support from development agents (whether government, non-government organization (NGO), or private), the people who train and backstop them. Farmer-trainers generally serve as a complement to existing extension systems, rather than being a substitute for them. ➢ Facilitating organizations and local institutions need to be proactive in ensuring that women as well as men become farmer-trainers. ➢ Simple and appropriate reference materials should be made available to the farmer trainers. Essential Elements of Farmer--led-extension ➢ The group ➢ The Field ➢ The Facilitator ➢ The curriculum ➢ Programme leader ➢ Financing Special features of Farmer--led-extension ➢ All learning is field based & it is primary venue for learning ➢ FLE group learning constantly over the experimentation period ➢ FLE promotes healthy decisions & quality decisions ➢ Farmers conduct their own field studies with comparisons or treatments ➢ Facilitates Farmer-to-Farmer communication ➢ Field staff serve as facilitators ➢ FLE is a unique way to educate farmers ➢ It is an effective platform for sharing of experiences and collectively solving agriculture related problems. 5. Expert system Expert system is an intelligent computer program that uses knowledge and inferences procedures to solve problems (Daniel Hunt, 1986). Objectives of developing expert system ➢ To enhance the performance of agricultural extension personnel and farmer ➢ To make farming more efficient and profitable ➢ To reduce the time required in solving the problems ➢ To maintain the expert system by continuously upgrading the database Advantages of expert system ➢ Solves critical problems by making logical deductions without taking much time ➢ It combines experimental and conventional knowledge with the reasoning skills of specialists ➢ To enhance the performance of average worker to the level of an expert Limitations of expert system ➢ Expensive computer program ➢ Mostly developed not in regional languages ➢ Requires AC power and internet connection all the time ➢ Complex software requires computer skilled personnel Modules of expert system in agriculture ➢ COMAX: Integrated crop management in cotton ➢ SOYEX: Soybean oil extraction expert system ➢ PLANT/ds: Diagnosis of soybean diseases ➢ MAIZE: Maize expert system for field crop management ➢ SEMAGI: Weed control decision making in sunflowers ➢ Rice Crop Doctor: Developed by National Institute of Agricultural Extension Management (MANAGE) Difference between conventional and expert system of extension Conventional Extension ➢ Universal approachability of same information is a problem ➢ Information is given whatever is available without considering needs and resources ➢ No Cost benefit analysis ➢ Information flow depends on availability of agent ➢ Require users to draw their own conclusion from facts Expert System of Extension ➢ Universal approachability of same information is possible ➢ Information is chosen based on their needs and resources ➢ Cost benefit analysis ➢ Information through Cyber Cafe at any place at any time ➢ Conclusion is drawn based on the decision given by the expert

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