Price risk management in the copper market using commodity derivatives and options strategies

Metals price risk management is a key issue related to financial risk in metal markets because of uncertainty of commodity price fluctuation, exchange rate, interest rate changes and huge price risk either to metals’ producers or consumers. Thus, it has been taken into account by all participants in metal markets including metals’ producers, consumers, merchants, banks, investment funds, speculators, traders and so on. Managing price risk provides stable income for both metals’ producers and consumers, so it increases the chance that a firm will invest in attractive projects. The purpose of this research is to evaluate risk management strategies in the copper market. The main tools and strategies of price risk management are hedging and other derivatives such as futures contracts, swaps and options contracts. Hedging is a transaction designed to reduce or eliminate price risk. Derivatives are financial instruments, whose returns are derived from other financial instruments and they are commonly used for managing financial risks. Although derivatives have been around in some form for centuries, their growth has accelerated rapidly during the last 20 years. Nowadays, they are widely used by financial institutions, corporations, professional investors, and individuals. This project is focused on the over-the-counter (OTC) market and its products such as exotic options, particularly Asian options. The first part of the project is a description of basic derivatives and risk management strategies. In addition, this part discusses basic concepts of spot and futures (forward) markets, benefits and costs of risk management and risks and rewards of positions in the derivative markets. The second part considers valuations of commodity derivatives. In this part, the options pricing model DerivaGem is applied to Asian call and put options on London Metal Exchange (LME) copper because it is important to understand how Asian options are valued and to compare theoretical values of the options with their market observed values. Predicting future trends of copper prices is important and would be essential to manage market price risk successfully. Therefore, the third part is a discussion about econometric commodity models. Based on this literature review, the fourth part of the project reports the construction and testing of an econometric model designed to forecast the monthly average price of copper on the LME. More specifically, this part aims at showing how LME copper prices can be explained by means of a simultaneous equation structural model (two-stage least squares regression) connecting supply and demand variables. A simultaneous econometric model for the copper industry is built: {█(Q_t^D=e^((-5.0485))∙P_((t-1))^((-0.1868) )∙〖GDP〗_t^((1.7151) )∙e^((0.0158)∙〖IP〗_t ) @Q_t^S=e^((-3.0785))∙P_((t-1))^((0.5960))∙T_t^((0.1408))∙P_(OIL(t))^((-0.1559))∙〖USDI〗_t^((1.2432))∙〖LIBOR〗_((t-6))^((-0.0561))@Q_t^D=Q_t^S )┤ P_((t-1))^CU=e^((-2.5165))∙〖GDP〗_t^((2.1910))∙e^((0.0202)∙〖IP〗_t )∙T_t^((-0.1799))∙P_(OIL(t))^((0.1991))∙〖USDI〗_t^((-1.5881))∙〖LIBOR〗_((t-6))^((0.0717) Where, Q_t^D and Q_t^Sare world demand for and supply of copper at time t respectively. P(t-1) is the lagged price of copper, which is the focus of the analysis in this part. GDPt is world gross domestic product at time t, which represents aggregate economic activity. In addition, industrial production should be considered here, so the global industrial production growth that is noted as IPt is included in the model. Tt is the time variable, which is a useful proxy for technological change. A proxy variable for the cost of energy in producing copper is the price of oil at time t, which is noted as POIL(t ) . USDIt is the U.S. dollar index variable at time t, which is an important variable for explaining the copper supply and copper prices. At last, LIBOR(t-6) is the 6-month lagged 1-year London Inter bank offering rate of interest. Although, the model can be applicable for different base metals' industries, the omitted exogenous variables such as the price of substitute or a combined variable related to the price of substitutes have not been considered in this study. Based on this econometric model and using a Monte-Carlo simulation analysis, the probabilities that the monthly average copper prices in 2006 and 2007 will be greater than specific strike price of an option are defined. The final part evaluates risk management strategies including options strategies, metal swaps and simple options in relation to the simulation results. The basic options strategies such as bull spreads, bear spreads and butterfly spreads, which are created by using both call and put options in 2006 and 2007 are evaluated. Consequently, each risk management strategy in 2006 and 2007 is analyzed based on the day of data and the price prediction model. As a result, applications stemming from this project include valuing Asian options, developing a copper price prediction model, forecasting and planning, and decision making for price risk management in the copper market.

Performance evaluation of VIP latrines in the Upper West Region of Ghana

The prevalence of Ventilated Improved Pit (VIP) latrines in Ghana suggests that the design must have a high user acceptance. The two key factors attributed to user acceptance of a VIP latrine over an alternative latrine design, such as the basic pit latrine, are its ability to remove foul odors and maintain low fly populations; both of which are a direct result of an adequate ventilation flow rate. Adequate ventilation for odorless conditions in a VIP latrine has been defined by the United Nations Development Program (UNDP) and the World Bank, as an air flow rate equivalent to 6 air changes per hour (6 ACH) of the superstructure’s air volume. Additionally, the UNDP determined that the three primary factors that affect ventilation are: 1) wind passing over the mouth of the vent pipe, 2) wind passing into the superstructure, and 3) solar radiation on to the vent pipe. Previous studies also indicate that vent pipes with larger diameters increase flow rates, and the application of carbonaceous materials to the pit sludge reduces odor and insect prevalence. Furthermore, proper design and construction is critical for the correct functioning of VIP latrines. Under-designing could cause problems with odor and insect control; over-designing would increase costs unnecessarily, thereby making it potentially unaffordable for benefactors to independently construct, repair or replace a VIP latrine. The present study evaluated the design of VIP latrines used by rural communities in the Upper West Region of Ghana with the focus of assessing adequate ventilation for odor removal and insect control. Thirty VIP latrines from six communities in the Upper West Region of Ghana were sampled. Each VIP latrine’s ventilation flow rate and micro-environment was measured using a hot-wire anemometer probe and portable weather station for a minimum of four hours. To capture any temporal or seasonal variations in ventilation, ten of the latrines were sampled monthly over the course of three months for a minimum of 12 hours. A latrine usage survey and a cost analysis were also conducted to further assess the VIP latrine as an appropriated technology for sustainable development in the Upper West Region. It was found that the average air flow rate over the entire sample set was 11.3 m3/hr. The minimum and maximum air flow rates were 0.0 m3/hr and 48.0 m3/hr respectively. Only 1 of the 30 VIP latrines (3%) was found to have an air flow rate greater than the UNDP-defined odorless condition of 6 ACH. Furthermore, 19 VIP latrines (63%) were found to have an average air flow rate of less than half the flow rate required to achieve 6 ACH. The dominant factors affecting ventilation flow rate were wind passing over the mouth of the vent pipe and air buoyancy forces, which were the effect of differences in temperature between the substructure and the ambient environment. Of 76 usable VIP latrines found in one community, 68.4% were in actual use. The cost of a VIP latrine was found to be equivalent to approximately 12% of the mean annual household income for Upper West Region inhabitants.

Invitational rhetoric : alternative rhetorical strategy for transformation of perception and use of energy in the residential built environment from the Keweenaw to Kerala

This dissertation explores the viability of invitational rhetoric as a mode of advocacy for sustainable energy use in the residential built environment. The theoretical foundations for this study join ecofeminist concepts and commitments with the conditions and resources of invitational rhetoric, developing in particular the rhetorical potency of the concepts of re-sourcement and enfoldment. The methodological approach is autoethnography using narrative reflection and journaling, both adapted to and developed within the autoethnographic project. Through narrative reflection, the author explores her lived experiences in advocating for energy-responsible residential construction in the Keweenaw Peninsula of Michigan. The analysis reveals the opportunities for cooperative, collaborative advocacy and the struggle against traditional conventions of persuasive advocacy, particularly the centrality of the rhetor. The author also conducted two field trips to India, primarily the state of Kerala. Drawing on autoethnographic journaling, the analysis highlights the importance of sensory relations in lived advocacy and the resonance of everyday Indian culture to invitational principles. Based on field research, the dissertation proposes autoethnography as a critical development in encouraging invitational rhetoric as an alternative mode of effecting change. The invitational force of autoethnography is evidenced in portraying the material advocacy of the built environment itself, specifically the sensual experience of material arrangements and ambience, as well as revealing the corporeality of advocacy, that is, the body as the site of invitational engagement, emotional encounter, and sensory experience. This study concludes that vulnerability of self in autoethnographic work and the vulnerability of rhetoric as invitational constitute the basis for transformation. The dissertation confirms the potential of an ecofeminist invitational advocacy conveyed autoethnographically for transforming perceptions and use of energy in a smaller-scale residential environment appropriate for culture, climate, and ultimately part of the challenge of sustaining life on this planet.

Community managed rural water supply systems in the Dominican Republic : assessment of sustainability of systems built by the National Institute of Potable Water and Peace Corps, Dominican Republic

In the Dominican Republic economic growth in the past twenty years has not yielded sufficient improvement in access to drinking water services, especially in rural areas where 1.5 million people do not have access to an improved water source (WHO, 2006). Worldwide, strategic development planning in the rural water sector has focused on participatory processes and the use of demand filters to ensure that service levels match community commitment to post-project operation and maintenance. However studies have concluded that an alarmingly high percentage of drinking water systems (20-50%) do not provide service at the design levels and/or fail altogether (up to 90%): BNWP (2009), Annis (2006), and Reents (2003). World Bank, USAID, NGOs, and private consultants have invested significant resources in an effort to determine what components make up an “enabling environment” for sustainable community management of rural water systems (RWS). Research has identified an array of critical factors, internal and external to the community, which affect long term sustainability of water services. Different frameworks have been proposed in order to better understand the linkages between individual factors and sustainability of service. This research proposes a Sustainability Analysis Tool to evaluate the sustainability of RWS, adapted from previous relevant work in the field to reflect the realities in the Dominican Republic. It can be used as a diagnostic tool for government entities and development organizations to characterize the needs of specific communities and identify weaknesses in existing training regimes or support mechanisms. The framework utilizes eight indicators in three categories (Organization/Management, Financial Administration, and Technical Service). Nineteen independent variables are measured resulting in a score of sustainability likely (SL), possible (SP), or unlikely (SU) for each of the eight indicators. Thresholds are based upon benchmarks from the DR and around the world, primary data collected during the research, and the author’s 32 months of field experience. A final sustainability score is calculated using weighting factors for each indicator, derived from Lockwood (2003). The framework was tested using a statistically representative geographically stratified random sample of 61 water systems built in the DR by initiatives of the National Institute of Potable Water (INAPA) and Peace Corps. The results concluded that 23% of sample systems are likely to be sustainable in the long term, 59% are possibly sustainable, and for 18% it is unlikely that the community will be able to overcome any significant challenge. Communities that were scored as unlikely sustainable perform poorly in participation, financial durability, and governance while the highest scores were for system function and repair service. The Sustainability Analysis Tool results are verified by INAPA and PC reports, evaluations, and database information, as well as, field observations and primary data collected during the surveys. Future research will analyze the nature and magnitude of relationships between key factors and the sustainability score defined by the tool. Factors include: gender participation, legal status of water committees, plumber/operator remuneration, demand responsiveness, post construction support methodologies, and project design criteria.

Technical communication in the global context : a heuristic approach to disciplinary identity and pedagogical practices

There is nothing new or original in stating that the global economy directly impacts the profession of technical communicators. The globalization of the workplace requires that technical communicators be prepared to work in increasingly linguistically and culturally diverse contexts. These new exigencies have natural repercussions on the research and educational practices of the field In this work, I draw on rhetoric, linguistics, and literacy theory to explore the definition, role and meaning of the global context for the disciplinary construction of professional and technical communication. By adopting an interdisciplinary and diachronic perspective, I assert that the global context is a heuristic means for sophisticating the disciplinary identity of the field and for reinforcing its place within the humanities. Consequently, I contend that the globalization of the workplace is a kairotic moment for underscoring the rhetorical dimension of professional and technical communication.

EVALUATION OF INTELLIGENT COMPACTION CONTROL IN THE M-189 RECONSTRUCTION PROJECT AT IRON RIVER, MICHIGAN

This research evaluated an Intelligent Compaction (IC) unit on the M-189 highway reconstruction project at Iron River, Michigan. The results from the IC unit were compared to several traditional compaction measurement devices including Nuclear Density Gauge (NDG), Geogauge, Light Weight Deflectometer (LWD), Dynamic Cone Penetrometer (DCP), and Modified Clegg Hammer (MCH). The research collected point measurements data on a test section in which 30 test locations on the final Class II sand base layer and the 22A gravel layer. These point measurements were compared with the IC measurements (ICMVs) on a point-to-point basis through a linear regression analysis. Poor correlations were obtained among different measurements points using simple regression analysis. When comparing the ICMV to the compaction measurements points. Factors attributing to the weak correlation include soil heterogeneity, variation in IC roller operation parameters, in-place moisture content, the narrow range of the compaction devices measurement ranges and support conditions of the support layers. After incorporating some of the affecting factors into a multiple regression analysis, the strength of correlation significantly improved, especially on the stiffer gravel layer. Measurements were also studied from an overall distribution perspective in terms of average, measurement range, standard deviation, and coefficient of variance. Based on data analysis, on-site project observation and literature review, conclusions were made on how IC performed in regards to compaction control on the M-189 reconstruction project.