A matrix is an arrangement of â€˜cellsâ€™ in rows and columns. A spreadsheet is a simple example of a matrix. Each cell is described by its position in a column, normally denoted by an alphabetical letter, and in a row, normally denoted by a number. So â€˜cell B6â€™ on your spreadsheet is the one which occupies column B and row 6. The size of a matrix is described by the number of rows and the number of columns (in that order).

A â€˜two-by-twoâ€™ matrix has two rows and two columns. A â
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The scales that are used determine the look of the graph. For example, if the horizontal distance between â€˜Year 1â€™ and â€˜Year 6â€™ shown in Figure 2 were doubled, the line would be stretched to double its present length. If the horizontal distance were halved,
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The origin is the point on the graph where the x axis value (the output) and the y axis value (the total costs) are both zero.

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Bachelier, L. (1900) ThÃ©orie de la Speculation, Paris, Gauthier-Villars.
Banz, R. (1981) â€˜The relationship between return and market value of common stocksâ€™, Journal of Financial Economics, Vol. 9, pp. 3â€“18.
Barber, B. and Odean, T. (2000) â€˜Trading is hazardous to your wealth: the common stock investment performance of individual investorsâ€™, <
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This applies to investments where the return is defined in generic terms but the actual amount of the return may fluctuate in an unpredictable manner. As we have seen, the most obvious example is the company share, but there are others, such as debt instruments (such as many bank deposits) where there is a contractual right to interest but the interest rate fluctuates according to some formula â€“ or even simply at the whim of the bank! An important example of this type of security is the Flo
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The process of keeping up-to-date in your chosen subject area is useful for your studies and afterwards, for your own personal satisfaction, or perhaps in your career as part of your continuing professional development.

There are a great many tools available that make it quite easy to keep yourself up to date. You can set them up so that the information comes to you, rather than you having to go out on the web looking for it. Over the next few pages, you will be experimenting with some
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For those equities in issue their current market value and some indicators of their performance are provided in the daily press. Table 3 shows the closing levels and the volume of shares traded in respect of a selection of companies on the London, New York, Frankfurt and Tokyo Stock Exchanges on 7 June 2005.

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As we have discussed before, the creation of corporate regulation is often linked to perceived failures of corporations and their management to behave in the way society expect them to. Corporate governance is not an exception to this trend, and, as with accounting, different countries may well experience difficulties at different times. For example, the development of British codes of best practice, which began with the Cadbury Committee, can be related to governance scandals such as Polly P
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While acting in ways that are seen to be legitimate is important for both individuals and organisations, social institutions are not immutable. Some people and organisations seem to have a talent for changing the rules of the game.

Some writers have referred to this as being an institutional entrepreneur. At the organisational level examples might include organisations such as Microsoft or Sun Microsystems working actively to establish industry standards which favour them. At the
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While it is not possible to change our human natures, it is possible to immunise ourselves to some extent against common decision traps. Useful strategies include:

• Get in the habit of reframing problems. For example, if you are considering strategies for avoiding a loss of â‚¬10,000 try asking yourself if you would feel differently if you consider them as strategies for making a gain of â‚¬10,000.

• Think about the information you have
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We have taken a brief excursion through three different perspectives on decision making (the rational-economic, the psychological and the social) and we have considered how we think about risk from these different perspectives. How can you use these ideas to improve your own and others' decision making? The first way is to use them to develop greater insight into the pressures and influences that may be affecting how you process information, think, and decide. By becoming more aware of these
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Kahneman and Tversky (1979) developed â€˜prospect theoryâ€™ to describe this combination of risk and loss aversion. This suggests that whether an individual is risk seeking or risk averse will depend on where they are in relation to a personal reference point. The reference point divides the area where they feel as if they are in loss from the area where they feel they are in gain. This point is not usually zero, and will change over time. For example, a professional financial trader who is p
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A rational-economic perspective generally represents risk as a combination of the expected magnitude of a gain or loss, combined with some probability distribution of anticipated outcomes. Economic ideas of risk behaviour are founded largely on expected utility theory. Expected utility theory predicts that investors will always be risk averse. The shape of the utility curve (utility plotted against increasing wealth) is such that utility increases with wealth, but at a declining rate. This is
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Organisations often deal with these social pressures by decoupling responses to these different pressures. The need to appear legitimate in the eyes of important constituencies is met by actions and practices which have a purely ceremonial character: they are done for the sake of appearances and not with any real engagement. The example in Author(s): The Open University

Mimetic pressures come from the pressure to imitate what others do. The world is complicated and finding the optimal solution often difficult. One way of dealing with this complexity is to copy others. For example, in my own consulting work I carried out an assignment for British Petroleum (BP). Subsequently, other (smaller) clients would often ask me â€˜So how does BP do this?â€™, usually with little regard for the different circumstances they faced. It is this mimetic pressure that
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Broadly, there are three kinds of social pressure which affect how we make decisions:

• coercive

• mimetic

• normative.

We look at these in more detail below.

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As we noted earlier, both the rational-economic and psychological perspectives on decision making tend to ignore the social context in which we live and work. We turn now to consider this social context.

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Much of economics and finance theory rests on the notion of people as formally rational decision makers. First, people are understood to have ordered preferences. That is, if someone prefers A to B and prefers B to C then they should prefer A to C. Second, decision makers are assumed to engage in a formally rational decision-making process on the basis of those preferences.

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The premise is straightforward. Given modern telecommunications capability, it matters little where telephone support is based. India, with a large population of English-speaking graduates and low (by Western standards) wage rates is an obvious choice. The significant cost-savings look very attractive to many organisations.

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