The Impact Of Debt On College Students Economics Essay

The Impact Of Debt On College Students Economics Essay Credit cards and debt, in general, is something that affects everyone on an almost daily basis. It is used in almost any context and has a variety of very important uses that affects life for everyone. One uses credit to buy big-ticket items such as cars or houses but the primary reason one uses credit would be that of convenience. Convenience and the ability to have a short-term load for better cash-flow are normally the reasons why people obtain credit cards. These benefits, when used correctly, can be extremely helpful for most users. However, the key focus in that statement is correct use. The problem with credit occurs when in the hands of the uneducated or inexperienced user. Most frequently, these users are college students. College students run into issues with credit typically in two areas. The primary issue they face is with credit cards, but the other, sometimes unexpected issue is with college tuition and student loans. Because of the many negatives of these issues, Credi t cards and debt, in general, are a significant problem that is currently affecting college students. Credit Cards are a negative influence on students and are a problem for a variety of reasons. One of the most basic problems, and one of the problems that leads into the others, is the issue of the often high unsecured credit lines. Credit card companies, while they usually start out limits at a low level, often increase the limits of teen credit cards rather quickly. According to Silver-Greenberg (2007), Credit card companies have modified their practices for college students, because theyre vulnerable and their parents will usually bail them out (p. 2). The reality is that these credit lines have absolutely nothing to do with a college students ability to pay back the loan and are in no way relational to income. By granting credit lines to college students that are so inflated, it seems like the credit card companies are almost asking for the lines to be abused by the students. The fact is, is that this can be seen very simply just by studying the student population at large. Resea rch by Joo, Grable, and Bagwell (2005) showed that the average balance carried by a college student was around 890 dollars (p. na). A figure this high as an average for college students is way too high. Considering that there are a sizeable amount of college students that are unemployed, it seems rather ridiculous that students would be allowed to charge this amount with no conceivable way of paying back on a routine basis. What makes this whole problem of high balances even worse is the fact that the credit card companies insist upon outrageously high interest rate for college-aged new users. They do this because companies know that college students are more of a risk than regular users. They also do this because they figure that most students will carry a balance and thus, with a higher rate, they have the opportunity to make more money off college students. In addition to just having higher rates for students in general, credit card companies also engage in a practice referred to as universal default. According to Silver-Greenberg (2007), Under universal default, a student who has two credit cards and faithfully makes timely payments on one, but misses a payment on the other, can find that the interest rate hes being charged has been raised to 30% on both cards.(p. 2) Basically, the idea is that if a user is late on one card or account, the user has been late on all of his cards that engage in this practice. This practice exacerbates all of the problems that already exist with credit cards by making it even harder to be good with ones finances. It makes it especially hard for college students, who are new to credit cards in general, because it establishes a very low tolerance for mistakes. In addition, those who least can afford these practices are the ones who have to worry about it. While this practice might be acceptable for adults with an established income and credit history, it hardly makes sense for those just starting out. These high interest rates can be a big problem because two-thirds of all college students have at least one credit card and 15 percent of students have 2 cards or more. (Lee, 2002, p. 10) No doubt those numbers are on the rise as well. Student loans affect the world of credit cards as well. The average graduate from the class of 2007 owes $20,000 in college loans andà ¢Ã¢â€š ¬Ã‚ ¦for 50% of those surveyed their student loan and credit card debt was higher than their current annual salaries (National Poll, 2007, p. n/a) What this proves is that credit is a major burden for those in and out of college. It does not help that credit cards are being used to pay tuition either. Norvilitis (2002) estimates that 20 percent of students have charged tuition and expects that number to rise (p. na). If one does not qualify for a student loan and does not have cash, then a credit card might be the only way they can pay for college. With that in mind, it makes it easier to understand some credit card debt. However, in ad dition to the problems with the usage of credit cards, there are also some problems with the marketing of credit cards in my opinion. Specifically, I believe that the marketing of credit cards on college campuses goes over the line. I believe that getting a credit card should be a personal decision, not just a decision made because you see a booth signing people up at a student center. Giving away free shirts or mugs or food to get someone to sign up for a credit card is just wrong. Finally, Norvilitis (2002) suggested that students who receive cards from tables in a student union have larger debt to income ratios than students whose cards are from another source. (p. n/a) I believe this furthers the reasoning that credit cards should not be advertised on campus. I also believe that credit cards obtained from an on-campus advertiser are not taken as seriously as credit cards obtained in a normal manner. Credit cards have lot of negatives to them and they can cause a great deal of long-term harm. The reason credit cards during the teenage years have such an ability to cause long-term ham is because of the fact that the majority of students and/or teenagers have a relatively short credit history. Realistically, most college students understand that missing payments will probably not be the greatest for their credit, but they have no idea how seriously it affects them. Lee (2002) reports that over 75% of students have never seen their credit report before and that most students are unlikely to ever see their report during their college years (p. NA). This fact makes the effects of credit cards that much more dramatic. When college students are learning how to use their cards and when they make bad decisions regarding payments and carrying large balances, they really have no idea to what extent they are affecting their credit. Considering the fact that most will never see their report u ntil after college, it comes as no surprise that some college students can and will come out of school and not be able to qualify for a simple car loan. What college students do not realize is that simple mistakes in college with credit can significantly impact their future in more ways than one. Martin (2007) states that many employers check credit reports and turn down applicants who have poor credit ratings (p. na). Odds are that most students applying for jobs do not even consider their credit when wondering if they will get the job or not. Another factor that affects a students credit rating is their student loans. While it is not likely that they will miss payments on those loans, the fact is, the large outstanding balances that most carry on these loans counts against them when applying for credit to purchase a home or car. For many, this is a legitimate concern as, according to a National Poll (2007), that among respondents over age 35, 62% are still paying off student loans (p. NA). What this indicates is that credit, whether credit cards or student loans, has a significant effect on ones future. There are a variety of causes for why the use of credit with college students get out of hand and hard to manage. It is particularly hard to make a generalization as to why the majority of college students cannot manage their credit. However, there are many reasons that, in combination with each other, play a role in this problem. One main issue that causes a lot of problems is a lack of education. The majority of college students open credit card accounts without paying a whole lot of attention to what they are getting themselves into. According to Norvilitis (2002), 71% of students had no idea what interest rate they were paying on their particular credit cards. This proves the fact that college students have learned how to use their credit cards but do not understand how their credit cards really work. Most believe that there really is not a whole lot one needs to know about credit cards and the credit card companies must agree because they do not make it easy for any user to real ly learn. In fact, Norvilitis (2002) says that 59% of teens say that explanatory information from credit cards is not helpful or unreadable (p. NA). As a result, the majority of users do not learn about credit. Some do, however, but it is a small number. Personal finance classes are usually offered in high schools to teach just this sort of thing, but unfortunately there is a lack of interest. To illustrate this point, Norvilitis (2002) states that 62% of students had the opportunity to take a personal finances class, only a third actually take it. This should really come as no surprise as the majority of people assume finances should be common sense. This reasoning is what causes problems for the majority of credit card users. The other factor that comes into play regarding credit is family behavior. Generally, as with other behaviors, teens learn from their parents and look to them for guidance. This situation is no different as teens try to emulate their parents in this regard. A ccording to Palmer (2007), 84 percent of teens opened an account at their parents banks (p. na). Parents need to realize that everything that they do financially, whether or not they believe it will be noticed, affects how their teens will use credit. Joo et  al. (2005) found that students whose parents used credit cards often were a lot more likely to show positive attitudes toward credit card use; whereas, students whose parents had problems with credit card use were more likely to have negative attitudes toward using credit cards (p. na).While some parents use credit cards responsibly, some do not. Those that do not are the ones to worry about. If left uneducated, students of these parents will most likely experience issues due to their haphazard use of credit cards. Credit cards will always be misused. There are so many users it would be irresponsible to think otherwise. Furthermore, it can be counted on because there will always be ignorant people who do not pay attention to rules or consequences. However, work can be done to prevent as much misuse as possible. As it stands now, credit cards, and debt in general, are ruining some college students futures. With the lack of regulation when it comes to credit cards for students, it is no surprise. According to Palmer (2007), a survey of graduate students showed that over 50 percent would have liked to have learned more about managing their finances in college. However, without an incentive from somewhere or someone, it is likely that the availability of education in this matter will continue to be hard to come by. Likewise, credit card companies will have to have an incentive to change their practices as well. Hopefully, that day will soon come.

Outline for Speech Essay

Informative Speech Outline Title: Child Obesity, a â€Å"Growing† Concern Topic: Most Prevalent Causes of Obesity in the U. S. Specific Purpose: To educate the audience on the key causes of the increasing obesity rate in the U. S. among adults, but especially among youth. Thesis Statement: The main contributors to obesity among adults, but mostly among youth are environmental factors, lack of choosing nutritious meals, portion distortion and the factor that fuels all of these, advertising media. Do you blame the child for not getting enough physical activity or eating the right foods, or do you blame the parents for not properly monitoring what the child consumes or how he or she spends their free time? It’s easy to judge overweight people when you see them because, although obesity is becoming more prevalent, it is still seen as socially unacceptable in our appearance-based society. But, before we rush to place all the blame on the child or the family, we need to ask ourselves if maybe external factors are playing a role in this rising epidemic. Thesis Statement: The main contributors to obesity among adults, but especially among youth are, environmental factors, lack of choosing nutritious meals, portion distortion and the factor that fuels all of these, advertising media. Preview: Today I am going to talk about 4 main points that are essential in understanding why obesity is increasing in the U. S. , particularly among our youth. First, we need to understand our environmental factors. Second, we need to have knowledge of our own lack of choosing nutritious meals. Third, we need to understand the â€Å"portion distortion† in the U. S. ood industry, and lastly, we need to have knowledge of the role advertising media plays in all of this. (Transition: â€Å"Let start by defining what obesity is and how it is measured. †) BODY I. Child obesity is defined as a child whose body mass index (BMI) for their age is more than 95%. (Obesity Action Coalition) a. Body Mass Index is basically the ratio of weight to height o f a child. b. Based on this definition it is evident that the rate of obese children has more than tripled since the 1960’s. (Transition: â€Å"Now let’s take a look at the causes. †) II. Environmental factors contribute to obesity among children and adults c. It is too much high energy food and a low energy lifestyle d. Limited access to physical activities i. Lack of physical activity in school (Center for Disease Control) ii. Communities today are created for automobiles, not walking e. Advancements in technology iii. DVDs, computers, videos games, TV, etc contributes to low physical activity and high calorie consumption (American Academy of Child and Adolescent Psychiatry). f. What makes it worse is combining low amounts of physical activity with increased caloric intake (snacking, drinking, etc. iv. Sedentary behavior lowers a child’s metabolic rate (Center for Disease Control). (Transition: â€Å"We have these environmental factors, but what makes it worse is that kids today have a greater ability to choose what they eat, but lacks the knowledge of what is healthy. †) III. Lack of choosing nutritious meals is another factor of the increasing child obesity rate. g. Inability to distinguish between healthy and junk food v . There is a natural inclination in people that attracts them to foods that taste good (Beale). vi. There is an inability for children to understand the unhealthy factor in food (Beale). vii. Competitive foods overall overshadow subsidized lunches. 1. Ability for kids to buy offered junk food in vending machines, school stores, etc. (Ayala Laufer-Cahana) (Transition: We know kids are unable to make healthy choices, but what adds to this problem is the fact that home-cooked meals have been replaced with eating out, which introduces the factor of â€Å"portion distortion. †) IV. Portion Distortion is a key contributing factor to the increase of caloric intake, which leads obesity. h. The number of restaurants in the U. S. increased 75% from 1977 to 1991 (Center for Disease Control). viii. The portion sizes in restaurants have steadily increased from 1970 to 1999 (Prevention Institute). 2. Value Meals and Supersizing a. Calorie bombs wrapped in a bargain appeals to teenagers and adults alike (Prevention Institute). b. A larger profit for food industry equals a larger waistline for society. c. The hidden evils of soft drinks for unsuspecting consumers (Prevention Institute). CONCLUSION Summary statement: We have reviewed many key contributors to obesity in people, especially children. However, the one major contributor that is in a sense the invisible hand that enables and encourages negative environmental factors, lack of choosing nutritious meals, and portion distortion to become acceptable life styles, is media. Advertising media is the main source of decreased physical activity among children. Often times viewing some sort of media involves sedentary behavior combined with constant snacking on unhealthy food. Media has an even bigg

History of Cars Essay

The invention of the automobile is an evolution of ideas and actions, beginning with Leonardo da Vinci and Isaac Newton’s theoretical plans for a motor vehicle that led to the invention of the first self-propelled vehicle. The invention of the automobile changed American society by transforming a country of isolated communities into a single entity. The ultimate honor of the first motorized vehicle is attributed to Nicolas Joseph Cugnot, an engineer and mechanic in the French Military. In 1769, Cugnot made his first attempt to construct an automobile. He called it â€Å"Fardier a vapeur† and it reached a top speed of 4 km/h. Even though his first attempt failed, he presented the world with a breakthrough in technology. Cugnot also has another title to his name: the first person ever to be involved in a motor vehicle accident in 1770. He crashed his second invention of the steam-powered tricycle, which could carry 4 passengers. In 1789, the American Oliver Evans was granted the first US patent for a steam-powered land vehicle thus introduced America to a new mode of transportation. In 1807, another breakthrough was brought about. A Swiss man named Francois Isaac de Rivaz invented the internal combustion engine that used a mixture of hydrogen and oxygen for fuel. Because he only invented the engine, Rivaz had many people construct automobiles into which he could put the engine. This plan failed but it was the idea of the engine that stayed alive. A few decades later, a man named Jean Joseph Etienne Lenoir invented and patented a double-acting, electric spark-ignition, internal combustion engine fueled by gasoline. With this, Lenior was able to successfully make a 55-mile road trip and people’s lives began to change. In 1876, Nikolaus August Otto invented a successful four-stroke engine called the Otto Cycle. With this new breakthrough, the race to invent the first modern automobile began in a hurry. Gottlieb Daimer and Wilhelm Maybach took Otto’s engine a step further and made what is recognized as the prototype of the modern gas engine. The two men named their creation the â€Å"Daimler-Maybech engine† which made Dailmer considered to be the first inventor of a practical combustion ngine. Karl Benz, in 1885, became the first to design and build the world’s first practical automobile to be powered by an internal combustion engine. By January 29th, 1886, Benz received the first patent for a gas-fuelled car (only three wheels). On March 8th 1886, Daimler designed the world’s first four-wheeled automobile. In 1889, Daimler invented a V slanted 2 cylinder, four s troke engine with mushroom shaped valves. This became the standard model for all cars going forward. In America in the 1900’s, people were still relying on the electric automobiles. America’s first gasoline-powered commercial car manufacturers were brothers Charles and Frank Duryea (1893). Together, these two introduced a working gasoline automobile that easily outdated the electric vehicles. The first automobile to be mass-produced in America was the 1901 Curved Dash Oldsmobile built by American Ransome Eli Olds. A total of 425 Curved Dashes were produced just in 1901. Oldsmobile therefore took the title of America’s leading auto manufacturer from 1901-1904. A man named Henry Ford designed his first automobile and named it â€Å"Quadricycle. However, he had no real success with that invention. When he formed the Ford Motor Company in 1903, which is where he found success. His Model T, in 1903, became increasingly popular making Ford and his company the most popular in America. Because of cars, cities in America grew and suburbs appeared for the first time. Factory workers no longer needed to live near their factory because the new means of transp ortation allowed them to commute across town. Cars completely replaced any other means of transportation in both efficiency and usefulness and brought America closer together.

Using Bonds for long term obligations of debt securities - Free Essay Example

Sample details Pages: 19 Words: 5640 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Bond are long term, fixed obligation debt securities which affordable to sale to individuals and financial institutions. Bond is totally different from other debt, this is because bond is not sold directly to a single lender, and it will sell to the public. Organization that issues the bond is organization that needs fixed income for a certain period of time. Don’t waste time! Our writers will create an original "Using Bonds for long term obligations of debt securities" essay for you Create order During issuing the bond agreement are made in paying a fixed amount of interest periodically to the holder of record or repay a fixed amount of principal at the date of maturity. Intrinsic features such as coupon, par value, maturity, principal value, and the type of ownership are the features of the bond. Coupon bond mean interest income, coupon income, or nominal yield. This coupon of bond is an income that an investor of a bond received over holding period of the issues. Maturity mean number of bond matures or expires. Principal or par value, of an issue represents the original value of the obligation. Company can have many different bond issues outstanding at the same time. Bond can be different type of collateral such as either be senior, unsecured, or subordinate (junior) securities. Fact, of bond Bond When a company (or government) borrows money from the public or banks (bondholders) and agrees to pay it back later Par Value company borrows the amount of money usually PV is RM1000 Coupon Payments The organization makes regular payments to the bondholders, for example for every year or every 6 month (interest income) Indenture A written agreement between the company and the bond holder. Coupon payments will be stated, and the payment period ,money (par value) will be paid back to the bondholder. Maturity Date Date when the company pays the par value back to the bondholder Market Interest Rate Yield (it changes everyday) 1.1 Background of the Study The bond market in Malaysia has developed significantly in terms of market size, range of instruments and efficiency. The development of the bond market centre on the need to establish a well-diversified financial base to meet the changing needs of the Malaysian economy. This paper is focusing on AMBANK 8.250% (30.09.2039) BOND. However, in bond market growth the major role in developing efficient bond market in Malaysia is our own government. Malaysian bond market today also a fastest growing bond market in Asia. As at end-Dec 2009, the size of the bond market reached RM643.8 billion, approximately 90% of GDP.   The bond market has a balance mix of both public sector and private sector bonds each contributing 53% and 47% share of total bond outstanding respectively. Today, the corporate bond market makes up approximately a quarter of the total debt financing (including bank loans) to the economy compared with around 10% in 1997.  A wide variety of debt securities pro ducts are available in the Malaysian bond market, such as fixed coupon bearing bonds, floaters, asset-backed securities, convertible bonds, callable bonds, etc. Bond issuers include, among others, the Government of Malaysia, Bank Negara Malaysia, quasi government institutions, corporations as well as multilateral development banks (MDBs). To date, a total of seven issuances of MDB bonds, totaling RM3.7 billion have been issued in Malaysia. More importantly, Malaysia, among the key Islamic financial centre, offers a wide variety of Islamic bonds that are based on Shariah compliant concept. As at end-Dec 2009, Islamic bonds accounted for 38% of total bond outstanding. 1.2 Background of the company This study involving 2 organization that are:- AmBank Group AmBank Group is the sixth largest banking group in Malaysia and comprises AMMB Holdings Berhad and its subsidiaries AmInvestment Group Berhad, AmBank (M) Berhad, and AmAssurance Berhad the organization established in August 1975. These group provides a wide range of investment banking, commercial banking, retail financing and related financial services, which also include Islamic banking, underwriting of general and life insurance, stock, share and futures broking, investment advisory as well as asset, property and unit trust management. AmBank Groups core philosophy incorporates a deep-seated commitment to the satisfaction of its wide range of customers, with numerous customer-driven initiatives woven into all forms of communication and interaction with all customer groups. AMMB Snapshot Total Assets RM96.5 billion Shareholders Equity RM9.6 billion Profit after Tax and Minority Interests RM1,008.6 million Ear nings Per Share 34.7 sen basic 774 ATMs and 189 branch offices nationwide at present Staff strength of ~ 10,000 Unless otherwise stated, all figures are accurate as at 31 March 2010 (AMMB annual report). Bond Pricing Agency Malaysia (BPAM) BPAM, under the name Bondweb Malaysia Sdn Bhd, was incorporated on 27th September 2004 under the Malaysian Companies Act 1965. The organization registered as a bond pricing agency (BPA) by the Securities Commission on 28th April 2006 and has met and exceeded the requirements as outlined in the Guideline on the Registration of Bond Pricing Agencies. 18th April 2006 then, BPAM was officially appointed as First Malaysian Bond Pricing Agency. Bondweb Malaysia Sdn Bhd changed it name on 15th September 2008 to BPAM. The name change comes at a time when BPAM aims to consolidate its position as the pioneering bond pricing agency and further strengthen its position by focusing on its core business evaluated bond pricing With this status, BP AM is recognized as one of the official sources for evaluated prices on MYR bonds. 1.3 Problem Statement Bond is a fixed obligation debt securities, where the issuer need the fixed income for a certain period of time. In the case of Ambank bond, which is not frequently issue mean it not facing requirement of money problem on it area. In arising question on to what Ambank bond price affected, this study is to test the relationship between Dependent Variable (Bond price) and the Independent Variable (Trade amount, common stock price, coupon bond, and yield) of Ambank Bond in Malaysian market. It is to measure whether the variable follow the economic theory and significant to the study. 1.4 Objective of the Study General Objective: General objective of this study is to investigate the selected parameters and identify the major factors influencing the price of the Bond. Specific Objective To determine whether the common stock price, coupon bond, yield, and trading amount is statistically significantly with price of bond for Ambank and the relationship between it variable. To examine whether Ambank bond is rapidly growing in the Malaysian bond market and is it one of the bond which contributed to the growing market as stated by BPAM (Malaysian bond market is expanding). 1.5 Scope of Study This study is in the area of Malaysian bond market, where the data also gathered from Bursa Malaysia, Bond Pricing Agency Malaysia, Bank Negara Malaysia and Data stream which available at UiTM Arau Perlis. In running the data, daily basis is used for not more than 1 year. However journal from local and foreign country are used as a references. The duration that taken into consideration is from 11/2/2009 until 28/12/2010, and it is focusing on AMBANK 8.250% (30.09.2039). 1.6 Significant of the Study The significant of the study is measuring the bond price valuation for Ambank bond using the available data, where only few researcher have done the research. Now, Malaysia practically issuing Islamic Bond, and Conventional Bond. In this paper the measurement is only AMBANK 8.250% (30.09.2039), bond instrument. From the data that been collected, the result is then being analyzed. The findings of this study are supported by journal from past researcher who is local researcher or foreign researcher. The significances are about whether the Independent Variable affects the Dependent Variable. 1.7 Limitation of the Study Limitation on this paper is on availability to get the data, because of the instrument is only traded when the company need money, it not frequently issue by the issuer. The full data is only offer to the organization and not to the individuals user. The full data can be assess at bond stream where only by permission of BAPM. The data is exactly same like data stream, but it only provided by BAPM. Another limitation is on journal as a reference; because of only using specific Malaysian country the journal available may be limited. More over it also the study of the AMBANK bond . Bond that available in trading during that time is active bond rating of A2. The name of the stock is  AMBANK 8.250% (30.09.2039), this bond maturity date is more than 15 year. Bond also can be categorized as complex instrument yet to be study, it because it consist of several component that may gives varies result from the past researcher. Bursa Malaysia and Bond Hub provide some info of the bond , but it is not too detail, so this will be the limitation on the study. 2.0 Literature Review (Varma, 1996),study toward dynamic Indian interest rate, and the paper contain an applicable method for pricing interest rate options in India and valuing bonds with embedded interest rate options. The Black-Derman-Toy model (Black et al.,1994) give the most attractive tool for valuing interest rate option in India. (Varma, 1996), summarize that Indian interest rates show strong mean reversion. Interest rates do volatile more when they are high rather than when they are low. In fact, the dynamic of interest rates is proportional to the level of interest rates so that the proportionate changes in interest rates (known as volatility) are level independent. This type of model was initially proposed by Brennan and Schwartz (1979).The normal rate to which interest rates mean-revert is itself changing over time, and it too undergoes mean-reversion to a grand normal rate, this past researcher result is taken by (varma,1996). Bond prices, as we all know do not follow random walk at all. Random walk mean an investment theory which claims that market prices follow a random path up and down, without any influence by past price movement. As the bond approaches maturity, its price approaches the redemption value and all uncertainty rapidly disappears. Researchers around the world have faced a great deal on determining the dynamics of interest rates. However, a recent study (Tse, 1995) of eight different models in eleven countries found that no model was valid in all countries. Each of the three most popular models found applicability in some countries, but each was rejected in half the countries, so this mean that because of the variability of interest rate it also not applicable to a certain country. Then (Lochoff, 1993) classified in several different ways one of it, the price model are classified endogenously derived the term structure of interest rate. Hence these models are guaranteed to provide correct pricing of straight bonds. However this topic is aggressiv ely argues in Dattatreya and Fabozzi (1989). Based on it, ( Black et al,1994) create tool for pricing interest rate option in India. Black-Derman- Toy model to value bond, however the researcher study valuation of three bond and resulted to: Straight bond Rs 5300 (equal issue price) Advertise bond Rs 6300 (19% above issue price) Actual Bond Rs 5050 (20% below advertised bond and 5% below issue price) interest rate is independent of their level, valuing bond can be complex and need multiple embedded option for valuation and in bond can make big difference to their valuation some result of certain bond can be grossly misleading. Shamsher Mohamad, Taufiq Hassan, and Mohamad Ariff (2007) find 50 listed firms has issues corporate bond and having the highest ratio of corporate bond issued per dollar of GDP among all the emerging markets. Malaysia has 37.3%, even though it only issued only after year 1999( IMF working paper : 152, 2005). Topic discuss, is applyin g research could search for the price value of re-rating of companies, the spread between different ratings and also premium price for the rating can be different during to local and foreign rating agencies. Normaziah, et al (2006) examine the stock price and volume of trade cover the announce of private placement in the market. It was discuss under topic of Private Equity (Seasoned Equity) Announcements. To subject were examine over different economic condition starting from placement exercise, and of premium and discounted offer price. Result show Significant negative price reaction was observed when private placement proceeds are earmarked for working capital requirements. However, when the proceeds are earmarked for investment, the short-term reaction around the announcement day is negative but there is significant positive reaction in the post-announcement period. The average volume of trade increased significantly for the entire analysis period. Edith Hotchkiss, Gergana Jostova (2007),study topic on determinant of corporate bond trading have obtained significant positive related to bond trading for all bond and regressions. Hotchkiss and Ronen (2002) document the bond and stocks react simultaneously to firm specific information. They also state that calculating price impact toward liquidity measure remains problematic due to infrequent trading in corporate bond. Kamara(1994) has measure of immediacy risk which risk that relate to the price volatility of the bond and the time needed to execute a trade, and also is reduced with higher trading volume. Harris and Raviv (1993) theorized on trading volume is positive affected by return, cause support by Alexander, Edward and Ferri (2000) who find trading increase with bond return volatility. For Gallant, Rossi and Tauchen(1992) observe positive relation between market volatility and trading volume of NYSE- trade stock, while Chordia, Roll, and Subrahmanyam (2000) and Engle and Lange(1997) found opposi te result. On the other hand, Fleming and Remolona (1999) concluded that price reaction to public info do not have any relationship to a trading volume, but it been argue by Dungey, Frino and McKenzie. There are positive relationship between volume and prices changes, Kocagil and Shachmurove (1998). Norliza Ahmad, Joriah Muhammad, and Tajul Ariffin Masron(2009) examines the impact on four macroeconomic factors such as, KLCI, IPI,CPI and interest rate (IR) on bond yield spread of MGS and Corporate bond (CB). They also have generated : Yield spread i, t = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²0 +ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1 CPIi, t + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2 IRi, t + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3 KLCIi, t + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²5 IPIi, t + ÃÆ'Ã… ½Ãƒâ€šÃ‚ µi, t , for their study. Where it is a multiple regression analysis. The duration of this study is from January 2001 until December 2008. They found the result of findings support that CPI and IR are the major drivers that influence the changes in MGS yield spread, finding that can take into consideration is IR, CPI and IPI which have weak and no influence on MGS yield spreads, but have significant affect on yield spread of CB. From Hale (2003), bond market is able to provide fund to corporations at low cost compared to loan provides by bank. Ameer (2007) obtained result, that there were an extreme limited number of empirical evidence concerning relationship between macroeconomic variable and bond market in Asian economic. Chan, Ahmad and Wooldridge (2007), found the changes in microstructure of the Malaysian corporate bond market has led to significant improvement in liquidity. From Thau (2001) stated three type of yield in relating to invest in bond, where first, coupon yield is interest paid to bond holder as percentage of bond par values, second yield being measure by annual coupon income divide by bonds market price and lastly YTM provides measure of bond return by estimating the total amount of income for the whole duration of bond hold then bo nd been compared to the prices. Faerber (2000) stated that the inverse relationship between market rates of interest rate and bond prices in which the increase in interest rate will cause in the decrease of bond prices. Also, when decrease in bond prices will translate into wide of the yield spread and vice versa. Bonds with shorter maturity period are less sensitive to fluctuations (Bodie et al., 2008). In supporting how coupon bond will affect the price of bond, we need to understand the time value of money, using present value formula we calculated the discounting future cash flow. It is based on the assumption that each payment is re-invested at some interest rate, and when it received known as future value. BOND PRICE = C + C + ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ÃƒÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦. C + M (1+i) (1+i)2 (1+i)n (1+i)n C = coupon payment n = number of payment i = interest rate / required yield M = value at maturity or par value Or C x 1 1 BOND PRICE = (1 + i)n + M : i (1+i)n This formula gathered from book : Analysis of Investment and Management of port folios(chapter 18: The Analysis and the Valuation of bond). 3.0 Research Methodology Using BPAM data and daily data gathered, from date 11/2/2009 until 28/12/2010, and as commonly know bond is not same like common stock, this is because it only be issues by organization in certain period of time. However in this study, analyzing is on the bond price changes daily due the population of bondholder seems to grows from time to time which clearly show in the changes of the amount trading and rise on the price. The method is using secondary data, where it from government publication, the financial institution and website related. But some data is manually gathered at Uitm Perlis using data stream. 3.1 Data Collection Data are obtained from: Data stream which available at Uitm Perlis. (Price of common stock daily for Ambank) Bond pricing agency Malaysia, the daily trade list in secondary priority and active bond ( Internet Sources). Bank Negara Malaysia website. Website for certain journal and article as a reference. 3.2 Data Analysis and Findings 3.2.1 Multiple Regression Analysis This study is using multiple regression analysis, which mean more than one independent variables are used. The statistical test provided in regressing the data is coefficient value, R-squared, F-statistic, T-statistic and few other important statistics. Statistical Package for Social Science (SPSS) is conducted to get the result. The simple regression is as follow: Y = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²0 + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1X1 + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2X2 + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3X3 +ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦.ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²nXn + ÃÆ'Ã… ½Ãƒâ€šÃ‚ µ Where, Where ; Y = Dependent variable X1,X2,X3ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦Xn = Independent variables ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²0 = Intercept term or constant value ÃÆ'Ã… ½Ãƒâ€šÃ‚ ² = Coefficient for the independent variables ÃÆ'Ã… ½Ãƒâ€šÃ‚ µ = Error term 3.2.2 Regression Equation Regression equation shows that the relationship between independent variable and dependent variable. Two relationship may exist between them either positive relationship or negative relationship. Positive relationship indicates that an increase in independent variable, dependent variable will also increase. Whereas negative relationship indicates that an increase in independent variable, dependent variable will decrease. 3.2.3 Coefficient of Determination (R-Squared) R- squared is used to measure how well the overall equation explains changes in the dependent variables or know as goodness of fit. R ² = Total explained variation Total variation 3.2.4 T-statistic The T-statistic is used in the t-test to determine if there is a significant relationship between the independent and each independent variable. To carry out this Test, Standard error of coefficient (s) is needed to calculate the t-value. t- value = b S.e (b2) t- critical = t a /2, n-k-1 The critical value from t-distribution table with degree of freedom at 95% confidence interval will be used. Degree of freedom = n k 1 Hypothesis will be tested either to accept Null hypothesis or Alternate hypothesis. Accept Ho when observed T-statistic Critical T-Statistic Accept H1 when observed T-statistic Critical T-statistic The critical value for sampling at a = 0.05 with level of significant two tailed test. 3.2.5 F-Statistic F-statistic provides an overall appraisal of the regression equation to evaluate the significant of each individual component to the entire regression model. F = explain variation / ( k 1) Unexplained variation ( n k) Accept Ho when Observed F-statistic critical F-statistic Accept H1 when Observed F-statistic critical F-statistic 3.3 Theoretical Framework Common Stock Price Coupon Bond Price of bond Yield ( market rate of interest) Volume Traded Independent variable dependent variable 3.4 Hypothesis The purpose of hypothesis testing is to determine which of the hypothesis is acceptable. Ho : assigned the null hypothesis H1 : represented the alternate hypothesis 1. H0= CSP is not statistically significant to bond price H1 = CSP is statistically significant to bond price 2. H0= CB is not statistically significant to bond price H1 = CB is statistically significant to bond price 3. H0= INT is not statistically significant to bond price H1 = INT is statistically significant to bond price 4. H0= TA is not statistically significant to bond price H1 = TA is statistically significant to bond price 4.0 Data Analysis and Findings The data has been analyzed using Statistical Package for social science (SPSS) Software. In the data and finding the data is a) Measure the overall goodness of fit of the regression model by the coefficient of determination, R ². b) Examine the possible relationship between each independent variable on dependent variable using coefficient relationship. c) Using t-statistic to examine the significant relationship of each independent variable toward dependent variable. d) To examine the combination of independent variable that can be used as predictors to the dependent variables using F- Statistics 4.1 Regression Equation Regression linear function derived as : General function : f (CSP, CB, INT, TA) Multiple Regression Equation : Y = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²0 + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1CSP + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2CB + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3INT + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²4TA + ÃÆ'Ã… ½Ãƒâ€šÃ‚ µ BP = -4.476 + 0.866 CPS 0.509CB + 14.064 INT + 0.285 TA + ÃÆ'Ã… ½Ãƒâ€šÃ‚ µ ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²0 = constant value BP = Bond price CSP = Common Stock Price CB = Coupon Bond INT = Market Interest Rate (Yield) TA = Trading Amount 4.2 Research Analysis Table below show the result of regression output as stated VARIABLE CONSTANT CSP CB INT TA Beta -4.476 0.866 -0.509 14.064 0.285 t statistic -4.271 4.339 -2.293 51.388 4.742 TABLE 1 R2 = 0.98903 Adjusted R2 = 0.98890 F-statistic = 7799.50 The coefficient determination or R2 in Bond Price is 98.903%, more than 98.903% can be explained by common stock price, coupon bond, interest rate and trading amount. Another 1.097% is unexplained. The adjusted R2 show 98.890% it mean more than 98.890% can be explained by common stock price, coupon bond, interest rate and trading amount. Where another 1.11% is unexplained. Adjusted R2 is 98.890 % which is lower than R2. This is because if we add another variable (1- R2) will decrease and (n-k) will also decrease. The rises or fall of adjusted R2 and R2 is depend on the contribution of new variable to the fit of the regression more than offset the loss of degree of freedom. The coefficient of determination fit the model well, because the value more than 50%. Beta analysis (coefficient) is to examine the possible relationship between each independent on the dependent variable. From the result obtained, increase of 1 unit in common stock price will increase 0.866 units in bond price. This mean that this two variables also have positive relationship and it show the economic theory are not followed from past researcher result would be inversely relation ship but in this study, due to limitation of data the result might be affected using SPSS. This is because, when the price of bond increase, common stock price will decrease in order to make the investment equally attractive. In addition, during this time, Malaysian Bond Market is still recovering from the economic crisis that is on 2008. The economic crisis at the previous year are giving huge impact on the Malaysian economic, however most of investment instrument is having increasing in it own market. From the result obtained, it shows that increase by 1 unit of coupon bond, bond price will decrease 0.509 units . Mean that the two variables have negative relationship and it is consistent with the economic theory. This is because, only active bond are been consider and bond is daily traded and have maturity, it only being issue when organization need money, bond also long term debt and the bond rating constantly A2. The result from this finding is also because bond price is not following random walk theory, in the agreement bond holder will be paid constantly until maturity date. Instead using CB, YTM can also be used, and maybe the result can also be a positive relationship. From the result obtained, increase of 1 unit in yield will increase 14.064units in bond price. This mean that these two variables have positive relationship and it not follow the economic theory. Suppose high interest rate will give low value of bond, and low interest will give high value of bond or vice versa. However, bond is complex instrument, the relationship can also be explained by maybe there were modified d uration and cause convexity effect. Convexity is curvilinear relationship so this is maybe the reason it is not follow the economic theory. For trading amount, clearly picture that increase by 1 units of amount trade will increase 0.285 units of bond price for Ambank. This shows that, it has positive relationship and follows the economic theory. From the literature review there is some evidence that trading amount affect the bond price and till now it still being argued that whether trading amount have no relationship with bond price or connected to the bond price or also knows as price volatility. 4.3 T-statistic To examine the significant relationship of each independent variable toward dependent variable. From the t-distribution table, the book t-value is 1.960 at 95% confidence interval level. VARIABLE T-STATISTIC FINDINGS CSP 4.3391.960 Statistically significant CB -2.2931.960 Statistically significant INT 51.3881.960 Statistically significant TA 4.7421.960 Statistically significant TABLE 2 4.3.1 T-statistic for common stock price (CSP) From the above table, the calculated t-value is higher than the book t-value (4.339 1.960) at 95% confidence interval. 1. H0= CSP is not statistically significant to affect Ambank bond price in Malaysian market. H1 = CSP is statistically significant to affect Ambank bond price in Malaysian market. Discussion : accept H1 CSP is statistically significant and affect the bond price in Malaysian bond market. This result can be supported by Normaziah, et al (2006) examine the stock price and volume of trade cover the announce of private placement in the market. It was discuss under topic of Private Equity (Seasoned Equity) Announcements. To subject were examine over different economic condition starting from placement exercise, and of premium and discounted offer price. Result show significant negative price reaction was observed when private placement proceeds are earmarked for working capital requirements. TREND FOR AMBANK COMMON STOCK PRICE AND BOND PRICE IN THE STU DY TIME PERIOD BOND PRICE GRAPH 4.3.1 From the graph above, the result is significant to the study. As we can see when the price of common stocks is higher the price of bond will be lower. This can clearly picture from the price trend above, it is the nature of bond price and common stock price to affect each other and the reason is to make both of them equally attractive. 4.3.2 T-statistic for coupon bond (CB) From the above table, the calculated t-value is higher than the book t-value (2.293 1.960) at 95% confidence interval. 2. H0= CB is not statistically significant to affect Ambank bond price in Malaysian market H1 = CB is statistically significant to affect Ambank bond price in Malaysian market Discussion : accept H1 CB is statistically significant and affect the bond price in Malaysian bond market. This can be proved by formula in calculating the bond price using present value (PV). BOND PRICE = C + C + ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ÃƒÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦. C + M (1+i) (1+i)2 (1+i)n (1+i)n C x 1 1 BOND PRICE = (1 + i)n + M i (1+i)n where, C = coupon payment n = number of payment i = interest rate / required yield M = value at maturity or par value Or TREND FOR AMBANK COUPON BOND AND BOND PRICE IN THE STUDY TIME PERIOD AMBANK BOND GRAPH 4.3.2 From the above graph, the result from the regression using SPSS is si gnificant to the study. However because of the data using fixed coupon bond the result may varies from other previous researcher who is maybe using zero-coupon or other coupon bond that available. In supporting the result, what we need to be consider is in calculation of Bond Price using present value formula. 4.3.3 T-statistic for market interest (yield/INT) From the above table, the calculated t-value is higher than the book t-value (51.388 1.960) at 95% confidence interval. 3. H0= INT is not statistically significant to affect Ambank bond price in Malaysian market H1 = INT is statistically significant to affect Ambank bond price in Malaysian market Discussion : accept H1 INT is statistically significant and affect the bond price in Malaysian bond market. It can be support by Faerber (2000) stated that the inverse relationship between market rates of interest rate and bond prices in which the increase in interest rate will cause in the decrease of bond prices. TREND FOR AMBANK INTEREST AND BOND PRICE IN THE STUDY TIME PERIOD GRAPH 4.3.3 From the above graph, the result from regression is not consistent with economic theory, however from the data gathered and graph show that is when price of bond increase, the interest rate will decrease same as nature of coupon bond. From the graph this mean it affect the bond price and support by most researcher result. 4.3.4 T-statistic for trading amount (TA) From the above table, the calculated t-value is higher than the book t-value (4.7421.960) at 95% confidence interval. 4. H0= TA is not statistically significant to affect Ambank bond price in Malaysian market H1 = TA is statistically significant to affect Ambank bond price in Malaysian market Discussion : accept H1 TA is statistically significant and affects the bond price in Malaysian bond market. Support by Dungey, Frino and McKenzie(n.d). There are positive relationships between volume and prices changes. TREND FOR AMBANK VOLUME TRADING AND BOND PRICE IN THE STUDY TIME PERIOD VOLUME GRAPH 4.3.4 From the above graph, we can clearly see that bond price is increasing, and the trading amount is not frequently trade by the issuer. This is one of the reason why some past researcher state trading amount is not giving any impact or affect the bond price, but some says otherwise. 4.4 F-statistics Book F- value : Fa (k 1, n k) : F 0.05 (5-1, 351-5) : F 0.05 (4,346) : 2.46 Computed F-value is greater than book F-value (7799.504 2.46), mean that all the independent variable (CSP, CB, INT and TA) are statistically significant. H0= All the independent variable are not statistically significant to affect Ambank bond price in Malaysian market. H1 = All the independent variable are statistically significant to affect Ambank bond price in Malaysian market. From the result, the result would be accept H1 and reject H0 since it significant for the overall model. All the independent variable are statistically significant to affect Ambank bond price in Malaysia. Second objective of this study is achieved where Ambank bond is one of the bond that contributed to the rapid growing of Bond Market in Malaysia. TREND FOR AMBANK 8.250% (30.09.2039) BOND PRICE (STUDY PERIOD) GRAPH 4.4 From the graph above, it show that the Ambank Bond price is increasing so this can relate to second objectiv e, where Ambank bond is rapidly growing in the Malaysian bond market and is it one of the bond which contributed to the growing market as stated by BPAM (Malaysian bond market is expanding). From the graph it also strongly agrees to F-statistic result that all the independent variable are statistically significant to affect Ambank bond price in Malaysia. 5.0 Conclusion and Recommendation 5.1 Conclusion In conclusion, this paper can be summarized as, the research examines the relationship of some bond variable features that may affect the bond price in Malaysian market from time period not more than one year, this study is using daily data from 11/02/2009 to 28/12/2010. Bond in Malaysia is now rapidly in growing to be efficient market so it is an interesting topic need to be study. In conducting this study, Statistical Package for social science (SPSS) Software is used. Using independent variable such as common stock price, coupon bond, interest rate (yield) and amount of trading to measure the relationship where price of bond will affect by the variable. On conducting this data, the Multiple Regression Analysis technique was applied to examine the relationship between the dependent and independent variable. In measuring the relationship, statistic analysis is generated using Statistical Package for Social Science (SPSS). It been measure in term of Coefficient of Determinati on ( R2 ) , T-test (T-statistic), and F-test ( F-statistic). Based on Multiple Regression Analysis result, there is positive relationship between common stock price to the bond price of Ambank bond. However it not follows the economic theory, because many researcher and price theory stated it should be inversely relation, where stock price increase bond price will decrease, or vice versa. This result also hard to argue because of little number of researches done in Malaysia or Foreign. There also a positive relationship, between coupon bond and price of the bond, this can clearly support by present value formula. Coupon bond always connected to it maturity period. Coupon bond in this study is fixed, so the result may varies from other researcher. However it as discuss before coupon bond will reduce the bond price until it reach maturity. However, on finding toward interest rate, it is still positive relationship, but the result is not following the economic theory, suppose increase in interest will lower the value of the bond price, and vice versa. This result can be support by researcher as stated in literature review. Trading amount has positive relationship based on the finding, but result may varies from regression analysis. In this finding, we can see that it follow economic theory, where increase in amount trade also can increase the price of bond. The Coefficient of Determination ( R2 ) show from the findings is more than 50%, so the variable fit the model well. Lastly, the F-statistic result or also known as overall test for all dependent is statistically significant. Second objective that is to examine whether Ambank bond is rapidly growing in the Malaysian bond market and is it one of the bond which contributed to the growing market as stated by BPAM (Malaysian bond market is expanding) is proved, from the regression analysis of overall test is significant and the bond price trend can show the increasing price for Ambank bond. Mean it contributed to the expanding Malaysian bond market. 5.2 Recommendation Some recommendation can be made from this study: It is suggested that a longer time frame should be based for this study because bond is not frequently issued and if there a longer time frame it can may give the best result for the findings. The next research can take other economic variable as a measurement, because today Malaysian also issues Islamic and Conventional bond. These type of bond may have difference variable that can be taken into consideration. It is suggested, to do more research on bond, because there only few research that have done from previous period. So in the future it can be interesting subject to study and it also can be as future references. It is suggested that availability of the bond stream in the institution, so that the research will be more accurate in the future and finding will also significant to be study. This is because the data is only offer to the institution where it is same as the data stream provided.