IN THIS ISSUE FinXpress December 23, 2012 Company In Focus : The Walt Disney Company Editorial 1 Company in Focus 2 Term of the Week 3 Market this Week 4 News of the Week 6 Cover Story 8 Fun Corner 10 Term of the Week: K Percent Rule INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD Cover Story : Who will be Rockefellers of BRIC nations?
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IN THIS IS
SUE Fi
nX
pre
ss
December 23, 2012
Company In Focus : The Walt Disney Company
Editoria
l
1
Company in
Focus
2
Term of t
he Week
3
Mark
et this
Week
4
News of t
he Week
6
Cover Sto
ry
8
Fun Corner
10
Term of the Week: K Percent Rule
INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD
Cover Story : Who will be Rockefellers of BRIC nations?
EDITORIAL
Dear Readers,
Greetings from FinNiche!
Finally IMT is ready to bid goodbye to year 2012 and welcome year 2013 with more enthusiasm,
more fun, more learning, more adventures and much more energy. The students going on
exchange are set for their new experiences of life. Now-a-days most of the students are ready for
their upcoming New Year resolutions and are looking forward to the year 2013. We wish all
IMTians a very Happy and Prosperous New Year.
In this edition of FinXpress, we have Walt Disney as the ‘Company in Focus’. In the ‘Term of the
Week’ section, we would like to explore ‘K-Percent Rule’. The special page talks about ‘Who will
be Rockefellers of BRIC nations’.
We sincerely hope that the readers will find the content engaging. We would appreciate feedback
and suggestions for improvement. We look forward to keeping you updated and adding to your
knowledge base. Till then, “Enjoy Reading”!
Yours Sincerely,
The Editorial Board
FinXpress
December 30, 2012 PAGE 1 http://www.imtgfinxpress.co.cc
COMPANY IN FOCUS
The Walt Disney Company is an American diversified multinational mass media corporation
headquartered in Walt Disney Studios, Burbank, California, United States. It is commonly referred to
as Disney and is the largest media conglomerate in the world in terms of revenue. Founded on October 16,
1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio, Walt Disney Productions established
itself as a leader in the American animation industry before diversifying into live-action film production,
television, and travel. Taking on its current name in 1986, The Walt Disney Company expanded its existing
operations and also started divisions focused upon theatre, radio, music, publishing, and online media. In
addition, it has created new divisions of the company in order to market more mature content than it
typically associates with its flagship family-oriented brands.
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international
family entertainment and media enterprise with five business segments: media networks, parks and
resorts, studio entertainment, consumer products and interactive media.
The Walt Disney Studios or Studio Entertainment, includes the company's film, recording label, and
theatrical divisions
Parks and Resorts, featuring the company's theme parks, cruise line, and other travel-related assets
Disney Consumer Products, produces toys, clothing, and other merchandising based upon
Disney-owned properties
Media Networks includes the company's television and Walt Disney Interactive Media Group,
Internet, mobile, social media, virtual worlds and computer games operations.
The company is best known for the products of its film studio, the Walt Disney Studios, and today one of
the largest and best-known studios in Hollywood. Disney also owns and operates the ABC broadcast
television network; cable television networks such as Disney Channel, ESPN, A+E Networks, and ABC
Family; publishing, merchandising, and theatre divisions; and owns and licenses 14 theme parks around
the world. It also has a successful music division. The company has been a component of the Dow Jones
Industrial Average since May 6, 1991. An early and well-known cartoon creation of the company, Mickey
Mouse, is the official mascot of The Walt Disney Company.
December 30, 2012 PAGE 2 http://www.imtgfinxpress.co.cc
Friedman's k-percent rule is the monetarist proposal that the money supply should be increased by the central bank by a constant percentage rate every year, irrespective of business cycles. Milton Friedman coauthored a book with Anna Schwartz to summarize a historical analysis of monetary policy, called "Monetary History of the United States 1867-1960". The book attributed inflation to excess money supply generated by a central bank. It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch. Friedman proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be calculated by known macroeconomic and financial factors, targeting a specific level or range of inflation.
Under this rule, there would be no leeway for the central reserve bank as money supply increases could be determined "by a computer" and business could anticipate all monetary policy decisions
According to Friedman, "The stock of money [should be] increased at a fixed rate year-in and year-out without any variation in the rate of increase to meet cyclical needs" .Friedman was of the view that the main policy to be avoided is countercyclical monetary policy, the standard Keynesian policy recommendation at the time. He believed giving governments any flexibility in setting money growth would lead to inflation and therefore, the central bank should follow a pro cyclical monetary policy and expand the money supply at a constant rate, equivalent to the rate of growth of real GDP.
Economists and policy makers strive to formulate monetary policies using Rules but allowing scope for discretion so as to adjust the policies appropriate to the current economic situation so as to make these policies more effective.
The Friedman's k-percent rule, however, does not allow any interference from central banks in framing the monetary policy, as Friedman believed that discretion would be counterproductive and could lead to increased levels of inflation instead of controlling it. The K-percent rule does not allow any discretion in framing of monetary policies and believes in strict adherence to the proposed rule. This has caused many economists to criticize Freidmans k-percent rule
Economists and policy makers have modified Friedman's k-percent rule and have developed more sophisticated rules for framing monetary policy, using the K-percent rule as a base. Joachim Scheide, head of the Forecasting Center at the Kiel Institute for the World Economy in Germany has modified the k-percent rule to make it more applicable in context of Germany's economy. He uses three new variables "nominal domestic demand," "central bank money" and "error term with the standard characteristics" to give a more suitable model. The k-percent rule is considered as a no feedback rule, which does not allow central banks to alter monetary policy to adjust to current economic situations; thus, it is not effective in the short term.
A criticism of this rule is that, No feedback is considered in this policy, as it believes in no interference of the central bank. It does not help in the short term and does not allow central banks to respond directly to immediate financial and economic turmoil.
December 30, 2012 PAGE 3 http://www.imtgfinxpress.co.cc
MARKET THIS WEEK
SENSEX
SENSEX gained 1.05% from last week and ended at 19444.84 this week.
Simple Moving Averages
Returns – BSE Sensex
NIFTY
The Nifty rose 1.03% from last week and ended at 5908.35 this week.
Simple Moving Averages
30 Days 50 Days 150 Days 200 Days
19,090.01 18,928.83 17,961.04 17,731.13
MARKET THIS WEEK
30 Days 50 Days 150 Days 200 Days
5,781.17 5,741.25 5,424.58 5,370.40
December 30, 2012 PAGE 4 http://www.imtgfinxpress.co.cc
6 Months 14.40 % 1 Year 23.60 % 2 Years -2.90 % 3 Years 11.70 %
Returns – NSE Nifty
Overview
The Indian markets wrapped up the week ended December 28, 2012 in the green zone. The key indices were in consolidation mode and remained in a tight range throughout the week. After a negative trend for the past two-weeks, the markets witnessed lackluster trade and did not show any major movements. There were no great triggers to lift markets higher, which led the key indices to trade in a narrow range throughout this week. The market sentiments got boosted by data showing that foreign institutional investors (FIIs) remained buyers of Indian stocks during the week.
In the week gone three new companies got listed:
1. Shares of Credit Analysis & Research (CARE) surged on its listing day on Wednesday, (December 26, 2012).
2. Shares of PC Jeweler listed with modest gains on its debut on Thursday, (December 27, 2012).
3. Shares of Bharti Infratel plunged on debut on Friday, (December 29, 2012).
The markets gained in three out of four trading sessions in the truncated week gone by.
Exchange Rates vs. INR
Currency Symbol Rates % Change
US Dollar $ 54.75 -0.31%
Euro € 72.62 -0.13%
Dirham AED 14.95 0.00%
Japanese Yen
¥ 0.64 -0.5%
Chinese Yuan
CNY 8.71 0.07%
Commodities Unit Rs. / Unit % Change
Gold 10gms. 30699 0.11 %
Silver 1 Kg. 57640 0.21 %
Crude Oil 1 BBL 4996 0.02 %
RESERVE RATIOS
CRR 4.25%
SLR 23.0%
LENDING DEPOSIT RATE
Base Rate 9.75%-10.50%
Savings Deposit Rate 4.00%
Term Deposit Rate 8.50%-9.00%
POLICY RATIOS
Bank Rate 9.00%
Repo Rate 8.00%
Reverse Repo rate 7.00%
Marginal Standing 9.00%
December 30, 2012 PAGE 5 http://www.imtgfinxpress.co.cc
6 Months 14.70 % 1 Year 25.60 % 2 Years -1.50 % 3 Years 13.90 %
NEWS OF THE WEEK
Greece uncovers Tourism Scam: looks for unaccounted millions
Three Greeks were arrested on suspicion of trying to defraud the national tourism board, police said on Saturday, and the finance ministry is investigating a suspected 12-million-euro hole in the state agency's books. Tourism is one of cash-strapped Greece's few remaining money-spinners and the EOT tourism board is in charge of funding several promotion campaigns and subsidy programmes for the industry. A police statement said a former EOT adviser colluded with at least two accomplices to cash in a forged cheque of 147,000 Euros ($194,400) made out to a hotel on the Aegean island of Syros. The three, arrested earlier this week, were put in pre-trial detention after appearing before a prosecutor on Friday. Greece ranked last among the 27 European Union countries in a global corruption index compiled by anti-graft group Transparency International earlier this year. The country's governing coalition, which took power in June, has pledged to crack down on corruption, which infuriates citizens who have seen their wages cut and taxes increased as part of its 240-billion euro bailout.
Barack Obama calls for avoiding middle class tax hike
US President Barack Obama on Saturday urged Congress to protect the middle class from an income tax increase and lay the groundwork for future economic growth as Senate leaders begin work to avoid a so-called " fiscal cliff."
"We've got to do what it takes to protect the middle class, grow this economy, and move our country forward," Obama said in his weekly radio and Internet address, "Leaders in Congress are working on a way to prevent this tax hike on the middle class, and I believe we may be able to reach an agreement that can pass both houses in time.”
The comments came after Obama met with top congressional leaders Friday and said that Senate Democrats and Republicans would work overtime this weekend to try to head off a $500 billion time bomb of tax hikes and spending cuts called the "fiscal cliff" before a January 1 deadline.
Qatar Airways files $600 million claim over delays to airport opening
Qatar Airways is filing a $600 million legal claim against a contractor for a delay in opening a new international airport in the emirate's capital, Doha, it said in a press release on Saturday. Lindner Depa Interiors, a German-Dubai joint venture, holds a $250 million contract to build 19 airport lounges by the middle of 2012, said Qatar Airways, which will operate the new airport.
The $15.5 billion airport will be the hub for an airline that has grown to a fleet of 116 aircraft since its launch 15 years ago. The new airport was scheduled to open this month but is now expected to start operations in late 2013, the airline said in the release. It said Doha's existing airport had reached capacity and the delay in moving to a new facility was hindering the company's expansion plans.
Japan central bank head seeks flexibility in inflation targeting
Japan's central bank needs to maintain flexibility in monetary policy if it were to adopt an inflation target sought by the country's new premier given the potential risks to such a move, the central bank's governor told the Nikkei newspaper.
Bank of Japan Governor Masaaki Shirakawa said that the central bank would avoid a "mechanical approach" were it to set an inflation target, adding that it was vital that the government enact measures to stoke economic growth.
"Implementation that mechanically chases after an inflation target could backfire and hurt economic activity. For example, if oil prices surge and inflation picks up, we could be forced to tighten monetary policy," Shirakawa was quoted as saying in the interview published on Saturday.
December 30, 2012 PAGE 6 http://www.imtgfinxpress.co.cc
Reversal in monetary policy only when inflation is down: PMEAC
The signal for reversal of monetary policy stand by the Reserve bank will come only when inflation shows definite signs of decline, Prime Minister's Economic Advisory Council Chairman C Rangarajan said today. He also said that high inflation over the last couple of years was due to supply side constrains but that did not mean that monetary policy had no role to play in such condition. Rangarajan was delivering the P R Brahmananda Memorial Lecture on 'Dynamics of Inflation' at a conference by the Indian Economic Association.
"It is true that the extraordinarily high level of inflation in the last three years was due to severe supply side constrains, particularly of agricultural products, but that did not mean that monetary policy or for that matter fiscal policy had no role to play in such conditions," he said.
2012 saw 2-year extension to unfinished projects under JNNURM
2012 witnessed quite a few developments on the urban development front including granting of a two-year extension to unfinished projects under JNNURM but it the closing down of the Airport Metro Express line here that grabbed headlines.
For the urban development ministry, led by Kamal Nath, the Airport Metro Express came not just as an embarrassment but also a challenge. The service was closed on July 8 and a blame game between the concessionaire Delhi Airport Metro Express Private Limited and the Delhi Metro Rail Corporation (DMRC) seemed to be brewing up when the ministry had to step.
Though the ministry managed to get the faults repaired, after nearly six months of closure it appears that the high speed metro line will function only in the New Year, and chances are that it will be at a reduced speed. However, with a vast number of infrastructure projects still to complete, the ministry decided and got a two-year extension for ongoing projects. The ministry also began work to finalize the details of the second phase of JNNURM.
Painful steps necessary to bring down fiscal deficit: P Chidambaram
Finance Minister P Chidambaram today said some tough decisions taken by the government recently may have caused "immediate pain" but were necessary to bring down fiscal deficit.
Addressing the National Development Council (NDC) meeting here, the Finance Minister said: "It was imperative to contain the fiscal deficit by augmenting resources and controlling expenditure. Some measures may cause immediate pain but this was necessary to ensure that the fiscal deficit came down to 3 per cent in the next three years. Steps were also being taken to contain the Current Account Deficit (CAD)."
Maintain healthy balance of payment to achieve growth target: Pranab Mukherjee
The government will have to take corrective measures to maintain healthy balance of payment in order to achieve the economic growth targets of the 12th Plan period (2012-17), President Pranab Mukherjee said today. "I do feel that it is correct decision that to have little ambitious target around 8 per cent GDP growth ... would feasible," Mukherjee said while addressing at a function here. "But we shall have to keep in mind that the balance of payment (Bop) crisis can assume larger (proportion) if correct measures are not taken now. Planning commission and finance ministry will have to address these issues," he said.
The President said gross capital formation was projected at 37 per cent of the GDP in the 12th Plan and it was projected that 35.1 per cent would be from gross domestic savings and external support would be 2.9 per cent.
December 30, 2012 PAGE 7 http://www.imtgfinxpress.co.cc
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