IRP Indian Rupee Vis-a-Vis Us Dollar free essay sample

Treasury bill, issued in different political jurisdictions anddenominated in different currencies are perfect substitutes in all private portfolios. The degree of financial integration has important macroeconomic implications interms of the effectiveness of fiscal and monetary policy in influencing aggregatedemand as well as the scope for promoting investment in an economy. The free and unrestricted flow of capital in and out of countries and the everincreasingintegration of world capital markets can be attributed to the process ofGlobalization. The benefits of such integration are liquidity enhancement on one handand risk diversification on the other, both of which are instrumental in makingmarkets more efficient and also facilitate smooth transfers of funds between lendersand borrowers. India began a very gradual and selective opening of the domesticcapital markets to foreign residents, including non-resident Indians (NRIs), in theeighties. The capital market opening picked up pace during the nineties. Real interest parity, uncoveredinterest parity and covered interest parity gives a indication of financial integration of economy. We will write a custom essay sample on IRP: Indian Rupee Vis-a-Vis Us Dollar or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Three definitions of financial integration are as follows: (i) Real interest parity hypothesis states that international capital flows equalize real interest rates across countries. (ii) Uncovered interest parity states that capital flows equalize expected rates of return on countries’ bonds regardless of exposure to exchange risk. iii) Covered interest parity states that capital flows equalize interest rates across countries when contracted in the same currency. Only definition (iii) that the covered interest differential is zero is an unalloyed criterion for â€Å"capital mobility† in the sense of the degree of financial market integration across national boundaries. Condition (ii) that the uncovered interest differential is zero requires that (iii) hold and that there be zero exchange risk premium. Condition (i) that the real interest differential be zero requires condition (ii) and in addition that expected real depreciation is zero. Literature Review The uncovered interest parity (UIP) theory states that differences betweeninterest rates across countries can be explained by expected changes in currencies. Empirically, the UIP theory is usually rejected assuming rational expectations, and explanations for this rejection include that expectations are irrational. There appears to be overwhelming empirical evidence against UIRP, at least at frequencies less than one year. Other research shows that UIRP holds in long term. The results of these long horizon regressions are much more positive — the coefficients on interest differentials are of the correct sign, and most are closer to the predicted value of unity than to zero. Research done by Ravi Bansal and Magnus Dahlquistconclude that the often found negative correlation between the expected currency depreciation and interest rate differential is, contrary to popular belief, not a pervasive phenomenon. It is confined to developed economies, and here only to states where the U. S. nterest rate exceeds foreign interest rates. Research done for emerging markets by Frank S. Skinner shows that there isindeed violations in covered interest rate parity in the long-term capital markets andthe source of these violations is credit risk rather than the size of the economy orliquidity of the foreign exchange market. The covered interest parity (CIP) postulates that interest rates denominated in different c urrencies are equal once you cover yourself against foreign exchange risk. Unlike the UIP, there is empirical evidence supporting CIP hypothesis. Empirical studies by various researchers shows that the CIP holds in most cases on the Eurocurrency market (where remunerated assets have similar default and political risk characteristics) since the collapse of the Bretton Woods regime in early 1970’s. In the Indian context, Varma (1997) has undertaken an analysis of the covered interest parity. He posits a structural break in the money market in India in September 1995, with CIP become effective from that point on for the first time in the Indian money market. The structural break itself is attributed to interplay between the money market and the foreign exchange market. The period after 1995 is however witness to several deviations from the CIP. Varma has used rates on Treasury bills, certificates of deposit and commercial paper and call money rate to analyze the Indian money market. One problem encountered in examining covered interest rate parity is a lack of highquality observations on long-term interest rates the terms of which are comparableacross different markets. A ready solution is the interest rate swap market.

Vought F4U Corsair in World War II

Vought F4U Corsair in World War II The Chance Vought F4U Corsair was a noted American fighter that debuted during World War II. Though intended for use aboard aircraft carriers, the F4U experienced early landing issues that initially prevented its deployment to the fleet. As a result, it first entered combat in large numbers with the U.S. Marine Corps. A highly-effective fighter, the F4U posted an impressive kill ratio against Japanese aircraft and also fulfilled a ground-attack role. The Corsair was retained after the conflict and saw extensive service during the Korean War. Though retired from American service in the 1950s, the aircraft remained in use around the world until the late 1960s. Design Development In February 1938, the U.S. Navy Bureau of Aeronautics began seeking proposals for new carrier-based fighter aircraft. Issuing requests for proposals for both single-engine and twin-engine aircraft, they required the former be capable of a high top speed, but have a stall speed of 70 mph. Among those who entered the competition was Chance Vought. Led by Rex Beisel and Igor Sikorsky, the design team at Chance Vought created an aircraft centered on the Pratt Whitney R-2800 Double Wasp engine. To maximize the power of the engine, they selected the large (13 ft. 4 in.) Hamilton Standard Hydromatic propeller. While this significantly enhanced performance, it presented problems in designing other elements of the aircraft such as the landing gear. Due to the propellers size, the landing gear struts were unusually long which required the aircrafts wings to be redesigned. In seeking a solution, the designers ultimately settled on utilizing an inverted gull wing. Though this type of structure was more difficult to construct, it minimized drag and allowed for air intakes to be installed on the leading edges of the wings. Pleased with Chance Voughts progress, the U.S. Navy signed a contract for a prototype in June 1938. Chance Vought XF4U-1 Corsair prototype during tests at the National Advisory Committee for Aeronautics (NACA), Langley Research Center at Hampton, VA, in 1940-41.   NASA Langley Research Center Designated the XF4U-1 Corsair, the new aircraft quickly moved forward with the Navy approving the mock-up in February 1939, and the first prototype took flight on May 29, 1940. On October 1, the XF4U-1 made a trial flight from Stratford, CT to Hartford, CT averaging 405 mph and becoming the first US fighter to break the 400 mph barrier. While the Navy and the design team at Chance Vought were pleased with the planes performance, control issues persisted. Many of these were dealt with by the addition of a small spoiler on the leading edge of the starboard wing. With the outbreak of World War II in Europe, the Navy altered its requirements and asked that the aircrafts armament be enhanced. Chance Vought complied by equipping the XF4U-1 with six .50 cal. machine guns mounted in the wings. This addition forced the removal of fuel tanks from the wings and an expansion of the fuselage tank. As a result, the XF4U-1s cockpit was moved 36 inches aft. The movement of the cockpit, coupled with the aircrafts long nose, made it difficult to land for inexperienced pilots. With many of the Corsairs problems eliminated, the aircraft moved into production in mid-1942. Chance Vought F4U Corsair GeneralLength: 33 ft. 4 in.Wingspan: 41 ft.Height: 16 ft. 1 in.Wing Area: 314 sq. ft.Empty Weight: 8,982 lbs.Loaded Weight: 14,669 lbs.Crew: 1PerformancePower Plant: 1 Ãâ€" Pratt Whitney R-2800-8W radial engine, 2,250 hpRange: 1,015 milesMax Speed: 425 mphCeiling: 36,900 ft.ArmamentGuns: 6 Ãâ€" 0.50 in (12.7 mm) M2 Browning machine gunsRockets: 4Ãâ€" 5 in High Velocity Aircraft Rockets orBombs: 2,000 lbs. Operational History In September 1942, new issues arose with the Corsair when it underwent carrier qualification trials. Already a difficult aircraft to land, numerous problems were found with its main landing gear, tail wheel, and tailhook. As the Navy also had the F6F Hellcat coming into service, the decision was made to release the Corsair to the U.S. Marine Corps until the deck landing problems could be resolved. First arriving in the Southwest Pacific in late 1942, the Corsair appeared in larger numbers over the Solomons in early 1943. Marine pilots quickly took to the new aircraft as its speed and power gave it a decisive advantage over the Japanese A6M Zero. Made famous by pilots such as Major Gregory Pappy Boyington (VMF-214), the F4U soon began to rack up impressive kill numbers against the Japanese. The fighter was largely restricted to the Marines until September 1943, when the Navy began flying it in larger numbers. It was not until April 1944, that the F4U was fully certified for carrier operations. As Allied forces pushed through the Pacific the Corsair joined the Hellcat in protecting US ships from kamikaze attacks. F4U Corsair attacks Japanese ground targets on Okinawa, 1945. National Archives and Records Administration In addition to service as a fighter, the F4U saw extensive use as a fighter-bomber providing vital ground support to Allied troops. Capable of carrying bombs, rockets, and glide bombs, the Corsair earned the name Whistling Death from the Japanese due to sound it made when diving to attack ground targets. By the end of the war, Corsairs were credited with 2,140 Japanese aircraft against losses of 189 F4Us for an impressive kill ratio of 11:1. During the conflict F4Us flew 64,051 sorties of which only 15% were from carriers. The aircraft also saw service with other Allied air arms. Later Use Retained after the war, the Corsair returned to combat in 1950, with the outbreak of fighting in Korea. During the early days of the conflict, the Corsair engaged North Korean Yak-9 fighters, however with the introduction of the jet-powered MiG-15, the F4U was shifted to a purely ground support role. Flown throughout the war, special purpose-built AU-1 Corsairs were constructed for use by the Marines. Retired after the Korean War, the Corsair remained in service with other countries for several years. The last known combat missions flown by the aircraft were during the 1969 El Salvador-Honduras Football War.