Peppa shouted, “You're incredible!”

Peppa shouted that she was incredible.

Peppa shouted that she is incredible!

Dexter said, “I have found a way out.”

Dexter said he had found a way out.

Dexter said he have found a way out.

“I am going to ask you more about it,” she said.

She said that she was going to ask him more about it.

She said that she was going to ask you more about it.

“We can go on the ferris wheel,” she said.

she said that we could go on the ferris wheel.

she said that we can go on the ferris wheel.

"You may see rabbits in the field,” Naomi said.

Naomi said that we might see rabbits in the field.

Naomi said that we may see rabbits in the field.

Transform Direct Speech to Indirect Speech

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.

Common On-Chip Peripherals: Serial Communication Interfaces: UART (Universal Asynchronous Receiver/Transmitter): Enables serial communication for data transmission and reception. SPI (Serial Peripheral Interface): Facilitates fast, synchronous serial communication with external devices. I2C (Inter-Integrated Circuit): Another common protocol for serial communication, often used for connecting sensors and other peripherals. Timers and Counters: General Purpose Timers: Used for generating precise time delays and measuring intervals. Real-Time Clock (RTC): Keeps track of time even when the DSP is in a low-power state. Watchdog Timer: Monitors the DSP's operation and resets it if it detects a fault. Interrupt Controllers: Interrupts: Allow peripherals to signal the DSP when an event occurs, enabling efficient and responsive system operation. Memory Management: DMA (Direct Memory Access): Enables data transfer between memory and peripherals without CPU intervention, improving efficiency. On-Chip Memory: Includes RAM, ROM, and flash memory for storing data and code. Audio/Video Interfaces: DAC (Digital-to-Analog Converter): Converts digital signals to analog signals for audio output. ADC (Analog-to-Digital Converter): Converts analog signals to digital signals for processing. I/O Ports: GPIO (General Purpose Input/Output): Provides flexible control over external devices. Ethernet MAC (Media Access Controller): Enables network connectivity. Other Peripherals: LCD Controller: For displaying information on LCD screens. USB Interface: For connecting to USB devices. CAN (Controller Area Network): For communication in automotive and industrial applications.

Most of the functions of a eukaryotic cell are controlled by the nucleus, shown in Figure 4-12. The nucleus is filled with a jellylike liquid called the nucleoplasm, which holds the contents of the nucleus and is similar in function to a cell’s cytoplasm. The nucleus houses and protects the cell’s genetic information. The hereditary information that contains the instructions for the structure and function of the organism is coded in the organism’s DNA, which is contained in the nucleus. When a cell is not dividing, the DNA is in the form of a threadlike material called chromatin. When a cell is about to divide, the chromatin condenses to form chromosomes. Chromosomes are structures in the nucleus made of DNA and protein. The nucleus is the site where DNA is transcribed into ribonucleic acid (RNA). RNA moves through nuclear pores to the cytoplasm, where, depending on the type of RNA, it carries out its function. Nuclear Envelope The nucleus is surrounded by a double membrane called the nuclear envelope. The nuclear envelope is made up of two phos- pholipid bilayers. Covering the surface of the nuclear envelope are tiny, protein-lined holes, which are called nuclear pores. The nuclear pores provide passageways for RNA and other materials to enter and leave the nucleus. Nucleolus Most nuclei contain at least one denser area, called the nucleolus (noo-KLEE-uh-luhs). The nucleolus (plural, nucleoli) is the site where DNA is concentrated when it is in the process of making ribosomal RNA. Ribosomes (RIE-buh-SOHMZ) are organelles made of protein and RNA that direct protein synthesis in the cytoplasm. The nucleus of a cell is surrounded by a double membrane called the nuclear envelope. The nucleus stores the cell’s DNA. FIGURE 4-12 Nuclear envelope Nucleolus Nuclear pores DNA (chromatin) Copyright © by Holt, Rinehart and Winston. All rights reserved. 80 CHAPTER 4 MITOCHONDRIA Mitochondria (MIET-oh-KAHN-dree-uh) (singular, mitochondrion) are tiny organelles that transfer energy from organic molecules to adenosine triphosphate (ATP). ATP ultimately powers most of the cell’s chemical reactions. Highly active cells, such as muscle cells, can have hundreds of mitochondria. Cells that are not very active, such as fat-storage cells, have few mitochondria. Like a nucleus, a mitochondrion has an inner and an outer phos- pholipid membrane, as shown in Figure 4-13. The outer membrane separates the mitochondrion from the cytosol. The inner membrane has many folds, called cristae (KRIS-tee). Cristae contain proteins that carry out energy-harvesting chemical reactions. Mitochondrial DNA Mitochondria have their own DNA and can reproduce only by the division of preexisting mitochondria. Scientists think that mito- chondria originated from prokaryotic cells that were incorporated into ancient eukaryotic cells. This symbiotic relationship provided the prokaryotic invaders with a protected place to live and pro- vided the eukaryotic cell with an increased supply of ATP. RIBOSOMES Ribosomes are small, roughly spherical organelles that are respon- sible for building protein. Ribosomes do not have a membrane. They are made of protein and RNA molecules. Ribosome assembly begins in the nucleolus and is completed in the cytoplasm. One large and one small subunit come together to make a functioning ribosome, shown in Figure 4-14. Some ribosomes are free within the cytosol. Others are attached to the rough endoplasmic reticulum.

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

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