Ontario Teachers Pension Plan Essay Example for Free

Ontario Teachers Pension Plan Essay Ontario Teacher’s Pension Plan Board: Hedging Foreign Currency Exposure Ontario Teacher’s Pension Plan Board: Hedging Foreign Currency Exposure Issue Identification The Ontario Teacher’s Pension Plan (OTPP) is a defined contribution plan that was created in 1917 to provide and administer a pension plan for Ontario school teachers. Sponsored by the Ontario Government and the Ontario Teacher’s Federation, the plan currently supports 343,000 teachers, former teachers and pensioners. The recent government decision to eliminate the 30% constraint on foreign investments and the increased volatility in the currency market has prompted the OTPP Investment Committee to address the following: 1. Whether to continue the International Equity Swap Program 2. Whether to administer changes to the Foreign Exchange Hedging Policy Goals and Objectives In order to come to a decision, it is necessary that any solution put forth must align with the goals and objectives of the fund. OTPP is a long-term fund determined to minimize risk, costs and the additional contributions required to fund the plan while maximizing its returns. OTPP Investment Strategy In the early 1990’s the OTPP board realized that it was essential to begin investing abroad to diversify risk and to capitalize on international opportunities to achieve greater returns, given the size of the fund. However, it was not until 1996 that the Foreign Exchange Hedge Program (FX Hedge Program) was implemented in response to a significant rise in currency exposure. As the fund faced increased foreign currency risk, risk management became essential and thus, a hedging policy of 50% of its foreign currency exposure was introduced. Due to the fact that OTPP has a continual commitment in supporting its pensioners, it must expose itself to limited risk and effectively hedge against any unexpected changes in its investments. Hence, a conservative policy of hedging 50% of foreign exchange exposure was enforced. Additionally, the International Equity Swap Program (IE Swap Program) was implemented as a solution to the government restriction of 30% ownership of foreign investments. Since most assets were tied up in non-marketable Ontario Debentures, a swap program enabled OTPP to reallocate its assets. OTPP Performance Evaluation The strategic decision to diversify beyond Canada and into global markets has proved to be beneficial to the OTPP investment portfolio. It has contributed substantial value to the fund over the 10 year period (1995-2005) by reducing potential losses, since five of the six foreign currencies appreciated against the Canadian dollar. For the past 15 years, OTPP investments have also consistently outperformed the benchmark rate of returns, generating a 10-year average rate of return of 11. 4% and a gross return of $15. billion over benchmark returns. Despite the portfolio’s negative rate of returns in 2001-2002, it has still produced considerable investment growth in relation to the benchmark, demonstrating the strength of OTPP’s investment policies in risk management. However, since interest rates have declined by approximately 3% (1990-2004), the value of the pension fund has increased. This has resulted in larger amount of payments made to pen sioners. Additionally, the demographics of the OTPP plan membership have changed significantly over the past 30 years. The ratio of active members per retiree has decreased from 10:1 in the 1970s to the present ratio of 1. 6:1. Moreover, the expected years retirees rely on the pension have also increased to 29 years. All these factors have exerted a great deal of pressure on the pension plan to sustain its funding with contributions from fewer working teachers. With the foreign currency market being increasingly volatile, OTPP is concerned regarding its future ability to support pension payments. Decision Criteria The Investment Committee must consider the following criteria when deciding whether to implement changes to the International Equity Swap Program and Foreign Exchange Hedging Policy: the fund’s exposure to foreign exchange risk, transaction costs, and an alignment of goals and objectives of the fund. Alternative: Although OTPP has performed well in the past, the future outlook of the pension plan remains uncertain. Therefore, OTPP has four alternatives to the future direction of the fund. OTPP can continue or discontinue the IE Swap Program and maintain or revise the current 50% FX Hedge Policy. Continue/Discontinue the Swap Program Previously, the swap program was used as a means to bypass the government restriction on foreign investment. With the regulation being lifted, OTPP has to now evaluate whether the swap program remains necessary. The program has allowed OTPP to reallocate their assets cost-effectively as it eliminates OTPP’s cost of transacting directly in foreign exchange market. Moreover, since OTPP does not gain ownership of the securities, it has reduced the amount of cash required and limited its risk by transferring the risk to counter-parties (UBS, Credit Suisse, JP Morgan, etc. ).

Heinrich Schliemann Essay -- essays research papers fc

"We could describe (Heinrich) Schliemann's excavations on the hill of Hissarlik and consider their results without speaking of Troy or even alluding to it," Georges Perrot wrote in 1891 in his Journal des Savants. "Even then, they would have added a whole new chapter to the history of civilization, the history of art" (qtd. in Duchêne 87). Heinrich Schliemann's life is the stuff fairy tales are made of. A poor, uneducated, and motherless boy rises through his hard work and parsimonious lifestyle to the heights of wealth (Burg 1,2). He travels the world and learns its languages ("Heinrich Schliemann"), takes a beautiful Greek bride, and together they unearth the treasures of Troy and the citadel of Agamemnon, thereby fulfilling the dream he has chased since childhood (Calder 18,19; Burg 8). Indeed, by presenting his life in romantic autobiographies as a series of adventures, starring Heinrich Schliemann as the epic hero (Duchêne 14), h e ensured his status as a lasting folk hero and perennial bestseller (Calder 19). The reality was that Heinrich Schliemann was an incredible con man, a generally unlikable braggart who succeeded only because of his queer mix of genius and fraudulence. He had a shylock's conscience when it came to business dealings, and his shady methods pervaded both his life and his archaeology (Burg, 15-31). Schliemann had a habit of rewriting his past in order to paint a more dramatic picture of himself. Among the events he reported that have been found to be grossly untrue are his tales of being entertained by the American president Millard Fillmore and his wife in 1851, and his narrow escape from the San Francisco fire of that same year (Traill 9-13). More disturbing is when he applies these tactics to his archaeology. In December of 1981 Professor David Traill, a Latinist, concluded that the "Treasure of Priam", Schliemann's most impressive find at Troy, was actually a composite of several small finds uncovered from beyond the walls of the city. Schliemann had collected the pieces from 1871 to 1873 in order to produce a single find large enough to earn him the respect of fellow archaeologists, and also permission from the British to excavate at Mycenae (Calder 33). Twenty years of research led the Traill to the belief that, "the question is no longer whether but rather t... ...tp://www.astro.virginia.edu/~eww6n/bios/Schliemann/> "Homeric Questions Part III - Archaeology- 9/6/98." The Mining Company, <http://archaeology.miningco.com/library/weekly/aa090698.htm?pid=2765&cob=home>(6 September 1998) Kiernan, Mary K. "Heinrich Schliemann." Lecture at Vero Beach High School, 21 October 1997. Lost Treasures of Troy. BBC, London. 1994 "The Minoan Costume." FirstNet, <http://www.firstnethou.com/annam/costhist.html/minoan.html/index.html> Traill, David. Schliemann of Troy: Treasure and Deceit. New York: St. Martin's Press, 1995. "Troy." Thinkquest Organization, <http://www.thinkquest.org/tqfans.html> "Troy VI." Dartmouth Archaeology, <http://devlab.cs.dartmouth.edu/history/bronze_age/lessons/23.html> "TROY: 4000 year old Ancient City." <http://www.iit.edu/~agunsal/truva/truva/truva.html> "Western Anatolia and the Eastern Aegean." <http://devlab.dartmouth.edu/history/bronze_age/lessons/7.html#9>(3 July 1996)            

Microsoft Opens the Gates: Patent, Piracy, and Political Challenges in China Essay

Microsoft faced many macro risks when operating in China. Many of these risks included software piracy, Chinese government pressure to transfer technology, host government promotion of competitor products, discriminatory procurement practices by sub-national authorities in China, and the strong encouragement for Microsoft to enter joint ventures with local firms. One main micro risk that Microsoft faced was when the Beijing Municipal government avoided Microsoft by awarding operating system software contracts for 2,000 PCs to Red Flag Linux. I see these risk increasing due to the fact that the Chinese Central Bank has put new restrictions to foreign exchange transactions in attempt to control the flow of convertible currency out of the country. This restriction set in place by the Chinese Central Bank was described as a â€Å"crackdown† on illegal transactions. This change will effectively make it more difficult for both domestic and international companies to move capital in and out of China. In result, only increasing the risks for MNCs to do business in China. Another main reason why I see the risks increasing is that the Chinese government has not made an effort to control the piracy/counterfeiting issues. Counterfeiters are China’s largest state owned factories. These risk are also found in other developing countries such as India where piracy and counterfeiting is a big issue. After the U. S. – China accord on intellectual property rights in 1992, it encouraged Microsoft to explore further opportunities in China. In order to manage political risk in China, initially, Microsoft signed various agreements with Chinese PC producers to pre-load its software on their computers. Other approaches to manage political risk included opening Microsoft Research China (Microsoft’s second international research lab and the first one in Asia) and signed agreements with China’s top four computer makers to preinstall Windows XP on their machines. One of the most notable approaches was when Microsoft signed an accord with the Shanghai Municipal government whereby agreed to help develop Shanghai’s software sector, expand its Shanghai regional support center into a global support center, and train thousands of software architects. Ultimately, Microsoft continued to manage political risks throughout the years by continuing to build agreements with Chinese PC manufacturers, develop new partnerships and better its relations with the Chinese government. I favor the strong ties that Microsoft built over the past two decades with the Chinese government and feel that all the techniques they used to manage political risk were needed in order to conduct profitable business in such a scrutinized country and economy. Going forward, Microsoft should continue to try and enforce IPR and keep healthy relationships with the Chinese for obvious reasons. They should keep developing partnerships and build a Microsoft oriented software sector in China through training/certification to strengthen the company’s forecast. By having to deal with lower levels of government, it created an initial challenge to â€Å"win† over the lower level of government in order to strengthen Microsoft’s overall relationship with China. Specific challenges included when the they signed agreements with China’s State Development & Planning Commission to invest in education/training, signed a large investment and cooperation deal with the Beijing Commission on Science & Technology and struck partnership deals with various Chinese companies such as Petro China. Although Microsoft kept making strong efforts to strengthen the relationship with China, they still faced many challenges to overcome China’s discrimination towards the company by requiring all ministries to purchase Linux based software. These challenges created new opportunities for Microsoft to create new initiatives to benefit the Chinese economy which in result helped them build a strong footprint in China. Yes other firms do have the same risk management options as Microsoft did. Other firms did have the same risk management options because all MNCs faced the same macro/micro issues that Microsoft faced when entering the China markets which included pressure to transfer technology, host government promotion of competitor products, discriminatory procurement practices by sub-national authorities in China, and the strong encouragement to enter joint ventures with local firms. Microsoft is creating serious risks by supporting, financing, and transferring technology to local Chinese software firms but had to do so in rder to have success in China. By them giving back to the Chinese economy, in return a large percentage of software users are using Microsoft product legally and illegally. In result, the end user is most likely using a Microsoft product and creates brand awareness. Microsoft used the appropriabiltiy theory to manage their risks by only sharing information with their partners that is only appropriate in order to make the partnership work.

The Development Of A Nations Foreign Policy Strategy

The development of a nation’s foreign policy strategy must be built with consideration of various components. Since there is no established world â€Å"leader†, multiple spheres of power and influence develop. One of the most inevitable factors affecting forging policy is location. The development of influence based simply on geographic location has not gone unnoticed from nations participating in global relations. In a consistently turbulent world, nations are constantly realizing their relevance on the world stage. Nations will often realize this relevance and continue to develop it for their benefit and political gain. The intersections of economic, social, political, and geographic connections result in strategy being developed solely on the location of a nation. When it comes to the importance of strategic location in relation to foreign policy, it is imperative that a nation implements strategic location when developing their foreign policy approach. Strategic loc ation can be described as either the strategic acquisition of land based on potential political and economic significance or the recognition of geographic significance for foreign policy on previously acquired territory. Strategic location can be used as either a reactive or proactive tool to determine a countries foreign policy tactic. The strategy that lies in location rests in factors such as the intersection of trade routes, sharing of borders, and neighboring influence. These factors and many othersShow MoreRelated The Impact of Chinas Modern Foreign Policies on Economic Growth1229 Words   |  5 PagesThe Impact of Chinas Modern Foreign Policies on Economic Growth Recent Chinese economic policies have shot the country into the world economy at full speed. As testimony of this, Chinas gross domestic product has risen to seventh in the world, and its economy is growing at over nine percent per year (econ-gen 1). 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