Writing With Description Essay Example for Free

Writing With Description Essay Before you begin your paragraph, you have to be sure to pick something that is worth describing. If you want to describe a character, make sure the person is interesting in some way. If you want to describe an object, make sure it has some deeper meaning beyond itself so you have enough to write about. If you pick a place, make sure you can describe it in a unique way that can capture a readers attention. For example, in the opening pages of _The Catcher in the Rye,_ Holden Caulfield describes a baseball mitt. The mitt itself is not that remarkable, but he describes it in a way that fills it with meaning because it used to belong to his deceased brother. Though not every object you describe needs an elaborate backstory, if it has some meaning behind it, this can help the description carry weight. If you want to pick a place, dont just pick any old spot at a beach, but one that is meaningful to you or, if youre writing fiction, to one of your characters in some way. This can add a layer of depth to the place in question. INTRODUCE THE PERSON, PLACE, OR THING YOU ARE DESCRIBING. If you want to get the readers attention, then you should let him or her know what youre describing as soon as possible instead of leaving them guessing. Here is an example of some opening lines in a descriptive paragraph: _Natashas basement was our sanctuary. I return to it in my best dreams and wake up feeling like I could die happy._ These opening sentences introduce the subject that is being described, the basement of the narrators friend. They make it clear that this place is very important to the narrator. ENGAGE YOUR READERS SENSE OF SIGHT. You can start with what the reader can see and appeal to his or her sense of sight to help introduce the object. Since sight is the most helpful sense, any good descriptive paragraph must  first discuss what the writer wants the reader to visualize. Using strong adjectives to illustrate your scene, moment, experience or item to the reader will help provide a visual picture in your readers mind. Keep in mind that, while adjectives can help convey a sense of the subject, overusing them can lead to boring, overwrought writing. Heres an example of the opening of a descriptive paragraph: _Even today I could paint a perfect picture of it, right up to the last piece of neglected pizza crust festering under the ping-pong table._ Immediately, the reader is given a visual description of some things in the basement: old pizza crust and a ping-pong table. The reader is given a sense of a messy, chaotic place.

Snowboarding Physics :: Snowboard Sport

Snowboard Composition The typical snowboard is designed to face the toughest conditions in any climate, even though it's use is mainly during the winter. In general, a snowboard is composed of several layers to attain a durable, yet light structure. Making the surfaces of a snowboard with a minimal friction coefficient is essential in the snowboard manufacturing industry. Like its various, eye-catching graphic designs, each and every snowboard has a unique layer structure. The two most basic yet important layers of a snowboard are the core (4) and the P-Tex/base layer (10). The core is usually made of birch wood; it is ideal for its lightweight, rigid, and flexible characteristics. Advances in core technology in recent years allowed the snowboard to become more maneuverable and portable. Hollow aluminum cells with walls in the shape of honeycombs are a breakthrough in snowboard core construction. With this type of core layer the snowboard retains its rigidity, but reduces its weight drastically. Another alternative to the wood core is a foam injected core. Foam can be injected electronically - to any cell size, thus allowing variability in rigidity. The P-Tex layer is named after the company that patented the material used for the layer. It is a special type of polyethylene plastic that allows the board to have a minimal friction coefficient when sliding down snow-covered ground, creating a "slippery" feeling. This plastic was designed to absorb wax for conditioning and extended life. A steel ring (7) serves two purposes: it protects the sides of the snowboard and puts maximum force into the snow for optimum maneuverability. The graphic layer (2) is a printed layer of fiberglass giving the snowboard an appealing design. There are literally millions of different snowboards with a unique graphic on them, but snowboard consumers may have a custom image printed on their snowboard. Multiple layers of fiberglass are usually glued on the immediate sides of the core for increased durability. A protective coating lines the top of the snowboard to protect scuffing and minor scratching on the graphics layer Different types of layers are arrangements in each type of core. Type A shows a foam core, with a large rubber sidewall (6). Type B represents the common wood core layer layout with additional protective layering. Type C shows that the aluminum honeycomb core is similar to the wood core structure, since nearly the same kinds of material are used. Snowboarding Physics :: Snowboard Sport Snowboard Composition The typical snowboard is designed to face the toughest conditions in any climate, even though it's use is mainly during the winter. In general, a snowboard is composed of several layers to attain a durable, yet light structure. Making the surfaces of a snowboard with a minimal friction coefficient is essential in the snowboard manufacturing industry. Like its various, eye-catching graphic designs, each and every snowboard has a unique layer structure. The two most basic yet important layers of a snowboard are the core (4) and the P-Tex/base layer (10). The core is usually made of birch wood; it is ideal for its lightweight, rigid, and flexible characteristics. Advances in core technology in recent years allowed the snowboard to become more maneuverable and portable. Hollow aluminum cells with walls in the shape of honeycombs are a breakthrough in snowboard core construction. With this type of core layer the snowboard retains its rigidity, but reduces its weight drastically. Another alternative to the wood core is a foam injected core. Foam can be injected electronically - to any cell size, thus allowing variability in rigidity. The P-Tex layer is named after the company that patented the material used for the layer. It is a special type of polyethylene plastic that allows the board to have a minimal friction coefficient when sliding down snow-covered ground, creating a "slippery" feeling. This plastic was designed to absorb wax for conditioning and extended life. A steel ring (7) serves two purposes: it protects the sides of the snowboard and puts maximum force into the snow for optimum maneuverability. The graphic layer (2) is a printed layer of fiberglass giving the snowboard an appealing design. There are literally millions of different snowboards with a unique graphic on them, but snowboard consumers may have a custom image printed on their snowboard. Multiple layers of fiberglass are usually glued on the immediate sides of the core for increased durability. A protective coating lines the top of the snowboard to protect scuffing and minor scratching on the graphics layer Different types of layers are arrangements in each type of core. Type A shows a foam core, with a large rubber sidewall (6). Type B represents the common wood core layer layout with additional protective layering. Type C shows that the aluminum honeycomb core is similar to the wood core structure, since nearly the same kinds of material are used.

”Pride and Prejudice” by Jane Austen Essay

Pride and Prejudice is a 19th century novel written by Jane Austen. As it is a popular novel it has been remade for television and film several times. In this essay two media adaptations are being analysed. The 1995 BBC classic drama of pride and Prejudice and a 2004 Bollywood version renamed Bride and Prejudice. The BBC adaptation of Pride and Prejudice is a period drama and has been made using the books storyline and text very closely whereas the Bollywood adaptation has only faithfully adhered to the storyline and parts have been changed to attract a modern audience. In addition to storyline, and text not changed in the BBC adaptation, costume, props and language are all in keeping with the 19th century way of life. However the Bollywood adaptation uses costume, props and language from the Indian culture, this has up dated the film and also keeps with the storyline of the book. Both adaptations have very different audiences they are trying to attract. Pride and Prejudice aims for older and more mature people, an audience who are interested in period dramas and may have read the book. The Bollywood film, however is aimed at younger audiences who may have not heard of Pride and Prejudice nor read the book. It has been changed into a romantic comedy; â€Å"romcom† rather than a more serious look at the book. The use of the Indian culture and view on marriages is a contrast to the views in the 19th century. In both productions the main theme is marriage but they use different methods to represent it. The BBC version shows how relationships and marriage were in the 19th century, in contrast to this how many of the restrictions placed in the 19th century are still in practise in the Indian culture today, however, modernizes the story. In this essay the two media adaptations, (Pride and Prejudice and Bride and Prejudice), are going to be compared to show how they have been adapted for screen. Three key scenes from both productions are going to be discussed and a number of factors to show how they have changes. The three scenes are: * The Netherfield Ball * Mr Collins/Kholi Arrival * Lydia/Lucky and Wickham relationship The Netherfield ball is the place in both adaptations where Darcy and Elizabeth/Lalita meet for the first time the two settings however are very different. In the Bollywood version the setting very much reflects the Indian culture, it is colourful and brash. The atmosphere is hectic with lots of people talking, dancing, laughing and partying. On the other hand the BBC version is more formal with talking kept to minimum and the mood is soft, this is to show what an occasion in 19th century would have been like. The BBC also has kept to tradition and there are different rooms for occasions throughout, Bollywood have used an open plan room to show the change in time and fashion. The camera shots in the scene change a lot. The BBC adaptation uses a birdseye view of the dancing and uses long shot, medium shot, close ups and point of view shot. This is to give a wide variation of the view of the ballroom and closer shots to see the actors’ facial expressions. In the Bollywood adaptation however they use only a few birdseye views of the dancing and more medium shots and point of view shots especially with Darcy and Lalita’s conversation, this shows us what the other person is feeling as they talk to one another and identify with the character. When Darcy is looking up at Lalita on the balcony and Lalita to Darcy on the ground the camera angle is pointed up and down, this gives the film a more dramatic look. Lighting also varies considerably in the two adaptations. In the Bollywood adaptation top lighting is used to brighten the room and give a party atmosphere, this changes in the scene with Darcy and Lalita on the balcony however and backlighting is mainly used. As the BBC adaptation is a period drama lighting is not as bright as the Bollywood effect, there is more under lighting used from lamps and chandeliers. The sound in both adaptations is also clearly different, the BBC use classical sounds and people play instruments for music, and the music they dance to is soft and quite compared to the Bollywood sound. Instruments again produce the music but everyone sings which gives it more volume, they also use words to reflect their feelings. Both scenes have dancing involved but they are clearly different. The BBC has again stuck with traditional dance, which has very repetitive dance moves and is slow. Also shown is how social etiquette is set out with the men only allowed to ask women to dance and how it was very rude for them to refuse. Bollywood has changed this in its adaptation; the dancing is traditional for Bollywood style, fast and very enthusiastic. The men start the dance with the women following later, the women all walk down the balcony and tighten their saris before they dance to show they are ready. Another difference between dances in Bollywood is the man and women dance towards each other rather than with each other, both of these points show how women now have more power than in the 19th century. The songs in Bollywood films offer meaning and feelings of the characters which the film hasn’t got time to express, this is something used in Bollywood and has been included to reflect this. The conversations that take place between Darcy and Lalita and Darcy and Elizabeth are very different. In the BBC version Darcy and Elizabeth do not actually have a face-to-face conversation, he makes a very rude and cutting remark about her which she later makes light of with her friends. The conversation in the BBC adaptation is also very polite and minimal but important, the conversation has not been changed from the book. However, in the Bollywood version Darcy tells Lalita how he thinks it is simpler to have an arranged marriage, she takes this the wrong way and thinks he means Indian women are simple. Lalita is very defensive towards him and tells him otherwise. This change made in the film is to display thoughts on Indian marriage and show the similarities it has with the original 19th century tradition. There is also a conversation which is both in the BBC and Bollywood adaptations of the novel, that of Mrs Bennet/Bakshi. In the scenes she talks about marriage and wealth to f riends, this conversation gives an insight into the character already and has been included in the Bollywood adaptation because the characters are the same. The costumes in both productions are exactly the same for the time. The costumes also represent the characters. Darcy is uncomfortable but more so in the Bollywood version because he cannot speak the language, cannot join in with the dancing and is a different nationality. The Bingley sister wears modern and expansive clothes, in the BBC version she wears feathers and gold jewellery. This has been changed in the Bollywood adaptation to the sister wearing designer labels, this equally shows the wealth but also the change in time. The Bennet/Bakshi sisters in both productions are not as wealthy as the Bingley sisters and this is visible in their clothes. In the BBC adaptation they do not wear feathers and the accessories are very simple likewise in the Bollywood adaptation they do not wear designer labels. In the scene the personalities of the characters are seen and they are quite similar in both adaptations. In the Bollywood adaptation Darcy is uncomfortable, however he also very rude in the BBC version. Elizabeth is lively, strong and defensive in both scenes, she also shows in the BBC adaptation when she makes light of Darcy’s comment about her. Bingley in both versions is charming and in Bollywood takes part in the dance unlike Darcy. Mrs Bennet and Bakshi both talk about marriage and don’t differ at all in the adaptations, as do the younger Bennet sisters they are flirtatious and playful. The key personality of the characters has not been changed at all and this is one way in which the Bollywood adaptation has stuck to the novel. The scene of Mr Collins/Kholi’s arrival in both adoptions is changed in many ways. Transport that Mr Collins/Kholi arrives in is very different, in the Bollywood adaptation Mr Kholi arrives in a taxi whereas in the BBC adaptation Mr Collins arrives in a carriage. This change shows the change in times and the change of country. The setting is also different and reflects the change in times and country, Mr Collins arrives out side the Bennets house in the Bennets estate which has gardens and gravel walkways, Mr Kholi however, arrives on a dusty Indian street and the Bakshis do not own any estate around them. This to show how the Bakshis live compared to the Bennets. In terms of camera shots Mr Collins/Kholi’s arrival is quite the same, the camera use medium and long shots to show both characters arriving and point of view shots from the families and Mr Collins/Bakshi’s view. Both adaptations also use close up shots of the sisters smirking at Mr Collins/Kholi, this involves the audience in the amusement they find in Mr Collins/Kholi. Lighting is different in the scenes though, Mr Collins arrives in daylight at the Bennets and toplighting is used to give a pleasant atmosphere. In the Bollywood adaptation they are inside and the lighting is darker but again toplighting is used. There are no songs or music in the scenes of Mr Collins/Kholi arriving there is only he and the families talking, however in both films sound effects are used. In the BBC adaptation the carriage arriving and in the Bollywood adaptation the Indian street, these sound effects add to the atmosphere and setting of the arrival. Another adaptation that has been made is the costume. Mr Collins wears formal dress which is the clothes which would be worn in the 19th century. The style of his clothes are also a representation of him, he is a clergyman and a very plain man. Mr Kholi’s clothes are stylish, bold and very up to date, and this represents his character very well. Mr Kholi is self-confident, loud man and does not realise often what he is saying or how he offends people, the clothes also represent his break away from the Indian culture and living in America. As well as the costumes reflecting their characters the audience can also see what the characters are like. In the BBC adaptation Mr Collins is a religious and traditional man, Mr Kholi however has turned his back on his Indian culture and moved to America for a better life. There are some parts of the Mr Collins character that are the same in the Bollywood adaptation in the same way as the BBC adaptation. Both Mr Collins and Mr Kholi look do wn to the Bennets/Bakshis, they think they are better than them. In Mr Collins’ case this is because he will inherit the Bennets estate and Mr Kholi’s because he has more money and a better life than the Bakshi’s, they are both unpleasant characters. The Bollywood adaptation has also changed the conversation of Mr Kholi compared to Mr Collins. When Mr Collins arrives he uses his language to make himself look smart, he uses substantial and intelligent words, which are incorrect. Alternatively Mr Kholi brags about his wealth and lifestyle, he also has inappropriate conversations and is very out spoken. Greetings in the two adaptations are also different too, Mr Collins greets people formally and there is no touching or hugging, this reflects the social etiquette of the 19th century instead of the informal hugs Mr Kholi gives. In both adaptations there are similarities and differences in the mannerisms of Mr Collins and Mr Kholi. Mr Collins uses formal language and, as mentioned before, incorrect in the context intelligent words. This is unlike Mr Kholi who uses casual language and does not realise what he says sometimes offends people. In the same way Mr Collins eats using social etiquette and Mr Kholi eats with his hands and mouth open, Mr Kholi also uses his hands when he talks. These changes show equally how the character is offensive but in different ways and in different circumstances. A similarity however, is that Mr Collins/Kholi feel they are more important than certain people and this shows when they both sit at the head of the table at the meal with the Bennets/Bakshis. As well as the mannerisms of Mr Collins/Kholi presenting similarities and differences, people’s reactions to Mr Collins/Kholi do too. Both of the eldest sisters in the Bennets/Bakshis smirk at each other when he says things and tries to boast about his life, this shows they are sensitive and intelligent enough to realise how stupid Mr Collins/Kholi is. Mr Bennet/Bakshi realises this too but expresses his amusement in different ways. Mr Bennet makes sarcastic comments towards Mr Collins to show him up but Mr Collins does not understand, Mr Bakshi however uses facial expressions to make fun of him. This reflects the characters of Mr Bennet and Mr Bakshi, Mr Bennet takes a more serious approach where Mr Bakshi uses childish gestures. Furthermore Bollywood has also made a change with the reaction of Darcy when he meets Mr Kholi. In the BBC adaptation Mr Collins introduces himself to Darcy and talks about his self, Darcy walks away and ignores him in contrast, Darcy is introduced t o Mr Kholi and does not ignore him. As shown by Mr Bennet and Mr Bakshi this is a reflection of Darcy’s characters, Darcy in the BBC adaptation is confident enough to be able to walk away but Darcy in the Bollywood adaptation is not, as he is a country he does not know he is polite to everyone. The reaction of people towards Mr Collins/Kholi reveals a lot about his character; he is someone who tries to be popular by knowing everyone and likes to be well thought of. One relationship, which has been adapted and changed considerably, is the Lydia/Lucky relationship. Adapted for Bollywood are a number of scenes where the main action takes place. In the BBC adaptation the scenes take place after Wickham and Lydia have eloped and are living in a grotty bedsit, this has changed for Bollywood and is replaced by scenes in public places e.g. fairground, cinema and the main scene where Lucky and Wickham go out for the day in London. The scene has been changed for Bollywood because Lucky and Wickham are not actually together yet and it is the lead up for Lucky finding out eventually who Wickham really is after pursuit by Darcy and Lalita. This change has been made for the viewer to look at their relationship in two different ways, in the BBC adaptation Lydia and Wickham have to stay in bedsit which is far form luxury, this shows how their relationship is very shameful in the 19th century. In contrast to this Lucky and Wickham meet at very public places, th eir relationship seems very open and would not be seen wrong in the public nor the viewer’s eye, but the viewer understands Wickham is a bad man. The use of media effects in both adaptations is strong. The camera effects in both adaptations are similar, in the BBC adaptation medium shots and close ups are used to give the viewer a more intimate view of Lydia and Wickham. It shows shots of Lydia running around the bedsit and close ups of Wickham’s facial expressions to the viewer to tell them he is not happy about the situation. In the Bollywood adaptation the camera plays a very important part in the chase that occurs between Wickham, Lucky, Lalita and Darcy. The camera use close ups and medium shots of the couples, and glances between the two parties. It also uses close ups of Wickham glancing back to see if they are still being chased. The camera follows Lucky and Wickham but blurs out the background to give the viewer an impression of how easily it would be to lose them in a crowd. The lighting effect in the BBC adaptation gives the atmosphere of a dark room and uses underlighting, the only available light source the viewer can see is the daylight coming through the window. Two different types of lighting is used in the Bollywood adaptation however, the first toplighting used in the chase to create a bright, modern setting for the viewer. This contrast however when Lucky and Wickham go into the cinema, the lighting is backlighting from the cinema screen and also presents to the audience that Wickham is trying to hide. Costume has also been changed considerably, the BBC adaptation use typical dress for the 19th century but change it from formal wear to very inappropriate wear in the bedsit. Lydia wears a nightdress and Wickham stays in his uniform but un-tucked his shirt and his boots are undone, this is to represent the seediness of their relationship and how wrong it was in the 19th century. Lucky and Wickham are the same in that Lucky tries to rebel against her Indian culture, like the rules set out in the 19th century, in the scene where Lucky and Lydia meet in London she wears tight jeans and a cropped top and makes no effort to show her Indian roots. Wickham also wears clothes that are very casual and he looks like a traveller, this is in contrast to Darcy’s clothes which are smart, and reveals that Wickham may not be the good character as seen by Lalita and Lucky. The costumes in both adaptations have been translated to represent the character in the same way but to show the change in different cultures and times. Lydia and Lucky wear clothes seen as normal and traditional but try to show their flirty ways by tighter clothes but in other scenes they rebel completely. In Lydia’s case she wears a very inappropriate nightdress and Lucky wears modern, tight clothes. It is the same for Wickham too; Wickham is always put in as the opposite of Darcy who is very formal unlike Wickham who wears an officer uniform or traveller’s clothes, this is also to show Wickham is not like Darcy and a bad character. Bollywood have adapted Wickham to become a traveller to be a modern representation of the BBC Wickham who becomes an officer because he has no money. In the scenes of Lydia/Lucky and Wickham the audience can see a lot about their character. Lydia and Lucky both are flirtatious, young girls who are unaware of consequences of their actions; this is displayed through Lydia’s obsession of the officers and her elopement and Lydia through her constant attention seeking of Wickham. Wickham also plays the handsome man well in both adaptations, his rough look in contrast to Darcy should also tell the viewer he is not as he seems. There are many things left out of the Bollywood adaptation that are in the BBC one. In the Bollywood adaptation we see Lucky and Wickham develop a relationship and meet up on occasions, this does not happen with the BBC as Lydia and Wickham, by chance, meet in Brighton and make a quick decision. This is to show the change in times and controversy of what Lydia and Wickham did, also it is not believable that Lucky and Wickham would have gone to London on just one meeting. The chase of lucky and Wickham also adds to the tension and thrill for the audience, this makes the viewer think, will they be caught? There is also one major difference between the BBC and Bollywood adaptation, the ending. In the BBC adaptation Darcy pays Wickham to Marry Lydia and therefore not bringing shame on the Bennets, in the Bollywood adaptation Wickham and Lydia are caught by Darcy and Lalita and Wickham is seen for the real man he is. This has been changed for the Bollywood adaptation for the happy ending that happens in Bollywood films, it would not be entirely like a Bollywood film if Lucky ended up with the bad man and not be happy. In conclusion the BBC and Bollywood adaptations of Pride and Prejudice have been made very differently. The title of the Bollywood adaptation has been changed to Bride and Prejudice to reflect the difference in the Indian culture, the main personality of the characters have stayed the same in both adaptations, costumes have been changed to reflect the difference in cultures and times yet kept so the characters traits can be seen, the contrast in settings shows the different countries and a different way in life and the change in the storyline reflects the difference in times, countries and culture. The setting of the story has been changed as the film wants to show the restrictions on 19th century marriage still coincide with the Indian view on marriages today, the characters traits were kept the same to show how they could be brought into the present day but changed slightly in their costumes, mannerisms and they way people see them. As the characters are represented through their costumes, the wealth of the families is too, the costumes have been changed in the Bollywood adaptation to traditional Indian costumes but they show the contrast to the expensive clothes of the Balraj sister compared to the Bakshi sisters. This is also the same for the Bingley sister and Bennet sisters in the BBC adaptation. I preferred the Bollywood adaptation. This is because it is not as serious as the BBC adaptation; it is more vibrant, colourful and loud. The singing and dancing breaks up the film and the comedy also puts more life into the story. The BBC adaptation is too long and does not keep my attention as much as the other. Another reason why I preferred the Bollywood adaptation was the costumes and new surroundings, the Indian culture is very bold and this made it more enjoyable to watch.

Arbitrage Pricing Theory Against Capital Asset Pricing Model - Free Essay Example

Sample details Pages: 10 Words: 3134 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Compare and contrast essay Did you like this example? In the modern financial theory, development of financial equilibrium asset pricing models has been the most important field of research. These models are widely experimented for developed markets. Explanatory factor analysis approach and Pre-specified macro-economic approach indicates two factors governing stock return which also identifies these two factors as the anticipated and unanticipated inflation and market index and dividend yield. Don’t waste time! Our writers will create an original "Arbitrage Pricing Theory Against Capital Asset Pricing Model" essay for you Create order The applications of financial equilibrium models have been very thoroughly investigated. These applications are widely used for several purposes such as predicting common stock systematic risk and defining the opportunity cost of capital. Here, lets looks at the overview from the CAPM to the APT which we will discuss further. Arbitrage Pricing Theory (APT), founded upon the work of Ross (1976,1977), purpose to analyze the equilibrium relationship between assets risk and expected return just as the CAPM does. The two major CAPM assumptions of perfectly competitive and efficient markets and homogeneous expectations are remained. Moreover, in line with the CAPM, the APT assumes that portfolios are sufficiently varied, so that the contribution to the total portfolio risk of assets unique (unsystematic) risk is about zero. The APTs two main differences from the CAPM are: (a) The explicit modeling of several factors affecting assets actual and expected returns, different to the CA PM which focus on the market portfolio only. (b) The fact that the equilibrium relationship is only closely related and is derived based on a no-arbitrage assumption. The two are interrelated, as market equilibrium in the CAPM rests on the observability and efficiency of the market portfolio. Background Studies The Arbitrage Pricing Theory (APT) was developed primarily by Stephen Ross (1976a, 1976b). It is a one-period model in which every investor believes that the stochastic properties of returns of capital assets are consistent with a factor structure. In other word, it is an asset pricing  model  based on the idea  that an assets returns can be predicted using  the relationship between that same asset and many common risk factors. This theory predicts a relationship between the returns of a  portfolio and the returns of a single asset through a linear combination of many independent macro-economic variables. (Arbitrage pricing theory (APT) (n.d.)) Macro-economic variables are: Changes in GNP growth Change in Treasure bill yield (proxy for expected inflation) Changes in yield spread between Treasure bonds and Treasury bills Changes in default premium on corporate bonds Changes in prices level of oil Ross argues that if equilibrium prices offer no arbitrag e opportunities over static portfolios of the assets, then the expected returns on the assets are approximately linearly related to the factor loadings. (The factor loadings, or betas, are proportional to the returns covariances with the factors.) This intuition is shows that the linear pricing relation is a necessary condition for equilibrium in a market where agents maximize certain types of utility. A linear relation between the expected returns and the betas is tantamount to an identification of the stochastic discount factor (SDF). The use of Factor Analysis (FA) developed by Spearman and Hotelling at the beginning of the last century as a potential tool for the extraction of the K common factors from a sample of returns. Since factor analysis only identifies the factor loadings up to a non trivial rotation, they are priced by market can be difficult when the task of extracting the K common factors. So, FA will be substitute by the use of Principal Components Analysis (PCA) whi ch to produce results are close to FA are provided by Chamberlain and Rothschild (1983). Over the years numerous studies (Trzcinka, 1986; Connor and Korajczyk, 1993; Geweke and Zhou, 1996; Jones, 2001; Merville and Xu, 2002) have documented the dominance of one factor, labeled as the market factor, which explains most of the sample variation. More limited and inconclusive results have been obtained for identifying other factors such as industry specific factors. This has usually been attributed to the lack of formal criteria for choosing the number of factors from an empirical distribution of proper value of the sample covariance matrix. In practice it is common to choose the number K by visual inspection of the scree plot or by the use of ad-hoc cut-off points of the distribution of proper value. More recently random matrix theory was employed to describe the distribution of the idiosyncratic noise component, which has a bounded support. Therefore, it is possible to choose th e number of factors as the number of eigenvalues outside the finite support of the eigenvalues due to noise, as formalized by Onatski (2005). This approach is also found in the growing econophysics literature where numerous empirical investigations of different asset markets have been performed using this method (Plerou et. al., 2002; Bouchard and Potters, 2003). These studies also document the dominance of the market factor and remain inconclusive on the identification of further factors. Brown (1989) provides Monte-Carlo evidence of an economy with K factors, each of which is priced and contributes equally to the returns. Moreover, the economy is by construction admissible under the framework of Chamberlain and Rothschild (1983) and calibrated to actual data from the NYSE. Nevertheless, he finds evidence that PCA is biased towards a single factor model. Thus, we cannot conclude that the empirical evidence presented in the numerous studies, some of which were mentioned above, is not also consistent with a setup where more than one factor is present in the economy, but where PCA fails to identify the entire set of relevant factors. Literature review Arbitrage pricing theory, developed by Ross (1976) proposes that there are various sources of risk that can be thought of as related to economy wide factors such as inflation and changes in aggregate output which cannot be eliminated by diversification., Arbitrage pricing theory calculates many betas by estimating the sensitivity of an assets return to changes in each factor instead of calculating a single beta, like the CAPM. The arbitrage pricing theory assumes that a security return is a linear function, with several common factors. The APT thus proves that the risk premium for an asset is related to the risk premium for each factor. When the assets sensitivity to each factor increases, its risk premium will increase as well. The APT anticipates that the prices of all risky assets in the economy corresponded to the condition of no arbitrage. No arbitrage define that an individual holding a well diversified portfolio could not earn any additional return by only changing the we ights of the assets included in the portfolio, holding both systematic and unsystematic risk remain constant. There is a set of underlying sources that influence all stocks returns stated by APT. The stock return is a linear function of a certain number; say k, of economic factors, but these factors are unobservable and not meaningful. According to Chen et al. (1986), these risk factors arise from changes in some fundamental economic and financial variables such as interest rates, inflation, real business activity, a market index, and also investor confidence. The APT thus starts with the assumption that returns on any stocks, Rit , are generated by a k-factors model of the following for Rit = E(Ri) + bi1 F1 + bi2 F2 + †¦+ bik Fk + ?i †¦ (1) Where E( Ri ), i=1,2,3†¦n, is the expected return of the stock i. Fj (j=1,2,3†¦k,) are unobserved economic factors. bij is the sensitivity of the security i to the economic factors j and ?i are the unique risks of th e stocks (uncontrolled factor) i-e a random error term with mean equal to zero and variance equal to ? 2 ei. Ross (1976) showed that if the number of stocks is sufficiently large, the following linear risk-return relationship holds. E(Ri) =? o + ? 1 b i 1+ ?2 b i 2+ + ?k bik †¦ (2) Where ?o is a constant risk less rate of return (the common return on all zero-beta stocks), and ? j, j = 1,2,, k represents, in equilibrium, the risk premium for the jth factor. The mean zero random common factors can be thought of as representing unanticipated changes in fundamental economy-wide variables. The magnitude and direction of the reaction in asset returns are measured by sensitivity coefficients. There are two main approaches to test the APT empirically: One can simultaneously predict the asset sensitivities and unknown factors by exploratory factor analysis on stock returns. In this case, a theory does not estimate the exact content or even the number of relevant factors . Specify prior general factors that explain pricing in the stock market. Such macroeconomic variables could be those affecting either future cash flows or future risk-adjusted discount rates in the companies. The trend of pre-specifying factors seems to be a promising avenue of research in the search for meaningful factor structure is generally accepted. The factor analysis-based empirical tests of the APT on US data have come out with relatively mixed results. Roll and Ross (1980) tested the APT for the period 1962 to 1972. They used daily data for individual equities are listed on the New York Stock Exchange and is concluded that the return generating process were found at least three and probably four priced factors. Chen (1983) discovered that the APT seems better than the traditional CAPM when evaluated by explanatory power on stock returns. He examined stocks by using daily return data during the periods of 1963 to 1978 from the New York Stock Exchange. He compared t he empirical performance of the APT with CAPM. More studies, a number of critical issues have been found when testing the theory. For example, it has been found that when the number of investigated securities increases, the number of factors seems to increase. There is a deficiency of research classifying the validity of the APT in non-US stock markets. The European results of the APT include those reported in Diacgiannis (1986), Abeysekera and Mahajan (1988), Rubio (1988), Ostermark (1989), Yli-Olli and Virtanen (1989), and Yli-Olli et al. (1990). Concerning the Scandinavian results, Ostermark (1989) reported APT-dominance on Finnish as well as Swedish data. Yli-Olli et al. (1990) using monthly data found three stable common factors across these two neighbouring countries, for the period of 1977-1986. They used the principal component analysis to get the factor loadings, and then cross-sectional OLS regressions were used for the three factor solutions to test how many factors we re priced in the two countries. The common factors that explain pricing in the stock market are first measured using pre-specified macroeconomic variables, and asset sensitivities to these factors are predicted using time series regressions. Chen et al. (1986) found that the spread between long-term and short-term interest rates, expected and unexpected inflation, industrial production and spread between high and low-grade bonds are valued in the generating process of stock returns in the US stock market. These state variables have also been found to be important in a number of other studies on US data such as Chen (1989). Martikainen et al. (1991) using monthly data tested APT for the Finish Stock Market. They used two different approaches which are exploratory factor analysis and a pre-specified macroeconomic factor approach. They tested how many factors were there affected finish stocks in the two time periods 1977-81 and 1982-86. In the first step of the test, principal co mponents analysis and varimax rotation have been used to get the factor loadings. Then, OLS regressions were made where factor loadings were consider as independent variables and the average return on stock was consider as dependent variable. The aim was to find how many factors that were priced in the market. In the second step of the test, 11 pre-specified macroeconomic factors have been used to test the APT model by using different stock market indices, price indices, interest rates and other national economic variables such as the GNP and money supply. Loflund (1992) found that international factors which are unanticipated changes in real exchange rates, inflation and unanticipated changes in future foreign economic activity would be important. National factors are unexpected inflation, unanticipated changes in the short-term interest rate, the term structure of interest rates and unexpected changes in domestic real production would be important. Booth et al. (1993) tested the APT by using monthly data for US, Finnish and Swedish stock returns during the period of 1977-86. They tested the intra-country stability of the factor patterns over a period and across different samples. They examined the cross-sectional similarities of the factor patterns of twelve 30-stock samples and used transformation analysis to test the stability. The empirical evidence indicated that two stable common factors could be found in different samples. Another essential discover was that there existed two common factors across the first US sample and Finnish and Swedish samples. Thus, the two common factors acquire have been international by nature. The results implied that for Finland the APT performed relatively poorly and for US and Swedish data one to two priced factors were identified. For developing capital markets in general and Pakistani markets in particular empirical evidence on equilibrium models are few. Khilji (1993) and Hussain and Uppal (1998) examined the d istributional characteristics of stock return in the Karachi Stock Exchange concluding that the return behavior cannot be sufficiently modeled by a normal distribution. Hussain (2000) concluded that for the period January 1989 to December 1993 the absence of this predictability pattern implied efficiency of the market without evidence of the day of the week anomaly. Ahmad and Zaman (2000) found that some of the CAPM implications are valid in the Karachi Stock Market by using sectoral monthly data from July 1992 to March 1997 with evidence in favor of positive expected return for investors but speculative bubbles were also indicated. Khilji (1994) found that the pluralities of return series are characterized by non-linear dependence. Attaullah (2001) using 70 randomly selected stocks employing monthly data tested APT in the Karachi Stock Exchange from April 1993 to December 1998. Out of 11 macroeconomic factors, unexpected inflation, exchange rate, trade balance and world oil p rices were sources of systematic risk founded by Attaullah by using Iterative Non Linear Seemingly Unrelated Regressions technique. This study employs two different factor analysis techniques and stability analysis is also performed with a relatively greater sample. Moreover macroeconomic variables used are also increase in number and regional market indices are also included. Differences between APT and CAPM Differences between APT and CAPM Equilibrium notion CAPMs assumption of an efficient market portfolio which every investor desires to hold, the APT relies on the absence of free arbitrage opportunities. Factor consideration APT is based on multi-index (multi-factor) model, while CAPM was essentially derived from a single-index (single-factor) model First difference CAPM CAPM was essentially derived from a single-index (single-factor) model which means from a process generating asset returns which was only a function of returns unique to the asset (predictable and unpredictable) and returns on two factors, the market portfolio itself and the riskless asset, or the zero-beta portfolio. The sensitivity of the assets returns to the markets was defined as the assets beta, measuring systematic (market) risk, while the unsystematic (unique) risk of the asset (portfolio) tended to zero through diversification. APT APT can then be seen as a multi-index (multi-factor) model, which means one in which the returns generating process of the portfolio is a function of several factors, generally excluding the market portfolio. The factors are not specified a priori and their choice considers on the question. Probable factors may include particular sector-specific influences, for instant price dividend ratios, as well as agg regate macroeconomic variables. The covariance of each factor with the portfolio then leads to a natural extension of measuring risk by the beta attached to each factor. In arbitrage pricing models, the betas are often referred to as the factor loadings. Second difference CAPM CAPMs assumption of an efficient market portfolio which every investor desires to hold. APT APT relies on the absence of free arbitrage opportunities. Free arbitrage cannot obtain, equilibrium in the APT specifies a linear relationship between expected returns and the betas of the corresponding risk factors. Relationships between APT and CAPM Two portfolios with the same risk cannot offer different expected returns, because that would present an arbitrage opportunity with a net investment of zero. An investor could guarantee a riskless positive expected return by short-selling one portfolio and holding an equal and opposite long position in the other. The short-selling assumpti on is important to the equilibrium, as it constitutes one side of the arbitrage portfolio as equal as the requirement that the proceeds from short-selling are immediately available. APT has caught on in financial practice as it allows for a more detailed and custom-made approach to portfolio risk management than the CAPM. 4. Supporting theory a.) Mean-variance tautology The mean-variance tautology argument applies to the Arbitrage Pricing Theory and all asset-pricing models of the form where are unspecified factors which used in APT. If the factors are returns on a mean-variance portfolio, the equation holds exactly. It is always probable to identify in-sample mean-variance efficient portfolios within a dataset of returns. It is also always possible to construct in-sample asset pricing models that exactly satisfy the above pricing equation. b.) Recall back to macroeconomic variables are: Changes in GNP growth Change in Treasure bill yield (proxy for expected inflation) Changes in yield spread between Treasure bonds and Treasury bills Changes in default premium on corporate bonds Changes in prices level of oil Shifts in the yield curve Yield curves are usually upward sloping asymptotically, the longer the maturity, the higher the yield, with diminishing marginal increases (that is, as one moves to the right, the curve flattens out). There are two common explanations for upward sloping yield curves: When the market is anticipating a rise in the risk-free rate. If investors hold off investing now, they may receive a better rate in the future. Therefore, under the arbitrage pricing theory, investors who are willing to invest their money now need to be compensated for the anticipated rise in rates-thus long-term investments will provide the higher interest. Longer the maturities entail greater risks for the investor Conclusion As a conclusion, Asset Pricing Model is very useful tools that enable financial analysts or investors to evaluate the risk in a specific investment. At the same time, set a specific rate of return with respective amount of risk for an investment or portfolio. The CAPM method is simpler than ATP method which takes into consideration of the factor of time and does not get too wrapped up over the Systematic risk factors that sometimes we cannot control. These are two methods that different from each other, they try to explain and provide the same type of information in a unique way for the same purpose. Nowadays, people become more exposed to a highly volatile stock market and try to invest their money in any types of investment. Thus these pricing methods become the key factor when evaluating an investment and will greatly put in perspective the return to risk ratio in order to make a good financial decision. Finally, Arbitrage Pricing Theory (APT) is a very detailed pricing me thod. The APT is based on five different economical factors which make the result become more reliable.