The Hunters: Phantom Chapter 11

Elena hung up the phone. She and Bonnie had discussed everything that was going on, from the mysterious appearance of Celia's and Meredith's names to Margaret's upcoming dance recital. But she hadn't been able to bring up what she had real y cal ed to talk about. She sighed. After a moment, she felt under her mattress and pul ed out her velvet-covered journal. Dear Diary, This afternoon, I talked with Caleb Smallwood on the front lawn of my house. I barely know him, yet I feel this visceral connection with him. I love Bonnie and Meredith more than life itself, but they have no idea what it's like to lose your parents, and that puts a space between us. I see myself in Caleb. He's so handsome and seems so carefree. I'm sure most people think his life is perfect. I know what it's like to pretend to have it together, even when you're coming apart. It can be the loneliest thing in the world. I hope he has a Bonnie or a Meredith of his own, a friend he can lean on. The strangest thing happened while we were talking. A crow flew straight at us. It was a big crow, one of the biggest I've ever seen, with iridescent black feathers that shone in the sun and a huge hooked beak and claws. It might have been the same one that appeared on my windowsill yesterday morning, but I wasn't sure. Who can tell crows apart? And, of course, both the crows reminded me of Damon, who watched me as a crow before we even met. What's strange – ridiculous, really – is this dawning feeling of hope I have deep inside me. What if, I keep thinking, what if somehow Damon's not dead after all? And then the hope collapses, because he is dead, and I need to face that. If I want to stay strong I can't lie to myself. I can't make up pretty fairy tales where the noble vampire doesn't die, where the rules get changed because it's someone I care about. But that hope comes sneaking up on me again: What if? It would be too cruel to say anything about the crow to Stefan. His grief has changed him. Sometimes, when he's quiet, I catch a strange look in his leaf green eyes, like there's someone I don't know in there. And I know he's thinking of Damon, thoughts that take him somewhere I can't follow anymore. I thought I could tell Bonnie about the crow. She cared about Damon, and she wouldn't laugh at me for wondering whether there were some way he might still, in some form, be alive. Not after she suggested the very same thing earlier today. At the last minute, though, I couldn't talk to her about it. I know why, and it's a lousy, selfish, stupid reason: I'm jealous of Bonnie. Because Damon saved her life. Awful, right? Here's the thing: For a long time, out of millions, there was one human Damon cared about. Only one. And that one person was me. Everyone else could go to hell as far as he was concerned. He could barely remember my friends' names. But something changed between Damon and Bonnie, maybe when they were alone in the Dark Dimension together, maybe earlier. She's always had a little crush on him, when he wasn't being cruel, but then he started to take notice of his little redbird. He watched her. He was tender with her. And when she was in danger, he moved to save her without a second thought as to what it might cost him. So I'm jealous. Because Damon saved Bonnie's life. I'm a terrible person. But, because I am so terrible, I don't want to share any more of Damon with Bonnie, not even my thoughts about the crow. I want to keep part of him just for me. Elena reread what she had written, her lips pressed tightly together. She wasn't proud of her feelings, but she couldn't deny they existed. She leaned back on her pil ow. It had been a long, exhausting day, and now it was one o'clock in the morning. She'd said good night to Aunt Judith and Robert a couple of hours ago, but she didn't seem to be able to make it into bed. She'd just puttered around after changing into her nightdress: brushing her hair, rearranging some of her possessions, flipping through a magazine, looking with satisfaction at the fashionable wardrobe she hadn't had access to in months. Cal ing Bonnie. Bonnie had sounded odd. Distracted, maybe. Or perhaps just tired. It was late, after al . Elena was tired, too, but she didn't want to go to sleep. She final y admitted it to herself: She was a little afraid to go to sleep. Damon had been so real in her dream the other night. His body had felt firm and solid as she held him; his silky black hair had been soft against her cheek. His smooth voice had sounded sarcastic, seductive, and commanding by turns, just like the living Damon's. When she had remembered, with a sickening horror, that he was gone, it had been as if he had died al over again. But she couldn't stay awake forever. She was so tired. Elena switched off the light and closed her eyes. She was sitting on the creaky old bleachers in the school gym. The air smel ed of sweaty athletic shoes and the polish they used on the wooden floor. â€Å"This is where we met,† said Damon, who she now realized was sitting beside her, so close the sleeve of his leather jacket brushed her arm. â€Å"Romantic,† Elena replied, raising one eyebrow and looking around the big empty room, the basketbal hoops hanging at each end. â€Å"I try,† Damon said, a tinge of a laugh coloring his dry voice. â€Å"But you chose where we are. It's your dream.† â€Å"Is it a dream?† Elena asked suddenly, turning to study his face. â€Å"It doesn't feel like one.† â€Å"Wel ,† he said, â€Å"let me put it this way. We're not actual y here.† His face was serious and intent as he gazed back at her, but then he flashed one of his sudden, bril iant smiles and his eyes slid away. â€Å"I'm glad we didn't have gymnasiums like this when I did my studies,† he said casual y, stretching out his legs in front of him. â€Å"It seems so undignified, with the shorts and the rubber bal s.† â€Å"Stefan said that you played sports then, though,† Elena said, distracted despite herself. Damon frowned at Stefan's name. â€Å"Never mind,† she said hastily. â€Å"We might not have much time. Please, Damon, please, you said you're not here, but are you anywhere? Are you al right? Even if you're dead†¦ I mean real y dead, dead for good, are you somewhere?† He looked at her sharply. His mouth twisted a little as he said, â€Å"Does it matter that much to you, princess?† â€Å"Of course it does,† Elena said, shocked. Her eyes were fil ing with tears. His tone was light, but his eyes, so black she couldn't tel where the iris ended and the pupil began, were watchful. â€Å"Everyone else – al your friends – this town – they're al okay, though, aren't they? You have your world back. There are such things as col ateral damages you have to expect if you're going to get what you want.† Elena could tel from Damon's expression that what she said next would matter dreadful y. And, in her heart of hearts, hadn't she admitted to herself the other day that, as much as she loved Damon, things were better now, that everything could be good again with the town saved and her returned to her old life? And that she wanted it that way, even if it meant Damon was dead? That Damon was what he said: collateral damage? â€Å"Oh, Damon,† she said at last, helplessly. â€Å"I just miss you so much.† Damon's face softened and he reached for her. â€Å"Elena – â€Å" â€Å"Yes?† Elena murmured. â€Å"Elena?† A hand was gently shaking her. â€Å"Elena?† Someone stroked her hair, and Elena nuzzled sleepily into the touch. â€Å"Damon?† she said, stil half dreaming. The hand paused in its stroking and then withdrew. She opened her eyes. â€Å"Just me, I'm afraid,† said Stefan. He was sitting next to her on her bed, his mouth a straight, tight line, his eyes averted. â€Å"Oh, Stefan,† said Elena, sitting up and throwing her arms around him. â€Å"I didn't mean – â€Å" â€Å"It's al right,† Stefan said flatly, turning away from her. â€Å"I know what he meant to you.† Elena pul ed him toward her and looked up into his face. â€Å"Stefan. Stefan.† His green eyes had a distant expression. â€Å"I'm sorry,† she said pleadingly. â€Å"You have nothing to apologize for, Elena,† he said. â€Å"Stefan, I was dreaming about Damon,† she confessed. â€Å"You're right, Damon was important to me, and I†¦ miss him.† A muscle twitched at the side of Stefan's face, and she stroked his jaw. â€Å"I wil never love anyone more than I love you, Stefan. It would be impossible. Stefan,† she said, feeling like she might cry, â€Å"you're my true love, you know that.† If only she could reach out and show him with her mind, make him understand what she felt for him. She'd never ful y explored her other Powers, never ful y claimed them, but losing their telepathic connection felt like it might kil her. Stefan's expression softened. â€Å"Oh, Elena,† he said slowly, and wrapped his arms around her. â€Å"I miss Damon, too.† He buried his face in her hair and his next words were muffled. â€Å"I've spent hundreds of years fighting with my only brother, with us hating each other. We killed each other when we were human, and I don't think either of us ever got over the guilt and the shock, the horror of that moment.† She felt a long shudder go through his body. He sighed, a soft, sad sound. â€Å"And when we final y started to find our way back to being brothers again, it was al because of you.† His forehead stil resting on her shoulder, Stefan took Elena's hand and held it between both of his, turning it over and stroking it as he thought. â€Å"He died so suddenly. I guess I never expected†¦ I never expected Damon to die before I did. He was always the strong one, the one who truly loved life. I feel†¦Ã¢â‚¬  He smiled a little, just a sad twist of his lips. â€Å"I feel†¦ surprisingly lonely without him.† Elena entwined her fingers with Stefan's and held his hand tightly. He turned his face toward hers, meeting her eyes, and she pul ed back a little so she could see him more clearly. There was pain in his eyes, and grief, but there was also a hardness she had never seen there before. She kissed him, trying to erase that hard edge. He resisted her for half a second, and then he kissed her back. â€Å"Oh, Elena,† he said thickly, and kissed her again. As the kiss deepened, Elena felt a sweet, satisfying sense of rightness sweep through her. It was always like this: If she felt distanced from Stefan, the touch of their lips could unite them. She felt a wave of love and wonder from him, and held on to it, feeding the emotion back to him, the tenderness between them growing. With her Powers gone, she needed this more than ever. She reached out with her mind and emotions, past the tenderness, past the rock-solid love that was always waiting for her in Stefan's kiss, and delved deeper into his mind. There was a fierce passion there, and she returned it, their emotions twining together, as their hands held each other harder. Beneath the passion, there was grief, a terrible, endless grief, and farther stil , buried in the depths of Stefan's emotions, was an aching loneliness, the loneliness of a man who had lived for centuries without companionship. And in that loneliness was the taste of something unfamiliar. Something†¦ unyielding and cold and faintly metal ic, as if she had bitten into foil. There was something Stefan was holding back from her. Elena was sure of it, and she reached deeper into his mind as their kisses intensified. She needed al of him†¦ She started to pul back her hair, to offer him her blood. That always brought them as close as they could possibly be. But before he could accept her offer, there was a sudden knock on the door. Almost immediately it opened and Aunt Judith peeked in. Elena, blinking, found herself alone, her palms stinging from the speed with which Stefan had pul ed away from her. She looked around hastily, but he'd vanished. â€Å"Breakfast is on the table, Elena,† Aunt Judith said cheerful y. â€Å"Uh-huh,† Elena said, distracted, peering at the closet, wondering where Stefan had hidden himself. â€Å"Are you al right, dear?† her aunt said, her forehead creased with concern. Elena had a sudden picture of how she must look: wide-eyed, flushed, and disheveled, sitting in her rumpled bed and looking wildly around the room. It had been a long time since Stefan had needed to use his vampiric speed for anything as mundane as not getting caught in her bedroom! She gave Aunt Judith a reassuring smile. â€Å"Sorry, I'm stil half-asleep. I'l be right down,† she said. â€Å"I'd better hurry. Stefan wil be here to pick me up soon.† As Aunt Judith left the room, Elena final y caught sight of Stefan, waving from the lawn below her open window, and she waved back, laughing, the strange emotions at the bottom of Stefan's mind put aside for the moment. He gestured that he was going around to the front of the house and that he would see her in a minute. She laughed again and jumped up to get ready for the picnic at Hot Springs. It was nice to be the kind of girl who worried about getting grounded. It felt†¦ pleasurably normal. A few minutes later, as Elena, now dressed in shorts and a light blue T-shirt, her hair pul ed back in a ponytail, headed down the stairs, the doorbel rang. â€Å"That'l be Stefan,† she cal ed as Aunt Judith appeared in the kitchen doorway. Elena grabbed her beach bag and picnic cooler from the bench in the hal . â€Å"Elena!† Aunt Judith scolded. â€Å"You have to eat something before you go!† â€Å"No time,† Elena said, smiling at the familiarity of the argument. â€Å"I'l grab a muffin or something on the way.† She and Aunt Judith had exchanged these words, or similar ones, most mornings of Elena's years in high school. â€Å"Oh, Elena,† Aunt Judith said, rol ing her eyes. â€Å"Don't move, young lady. I'l be right back.† Elena opened the door and smiled up into Stefan's eyes. â€Å"Why, hel o there, stranger,† she said softly. He kissed her, a sweet touch of his lips on hers. Aunt Judith hurried back into the hal way and pressed a granola bar into Elena's hand. â€Å"There,† she said. â€Å"At least you'l have something in your stomach.† Elena gave her a quick hug. â€Å"Thank you, Aunt Judith,† she said. â€Å"I'l see you later.† â€Å"Have fun, but please don't forget Margaret's dance recital tonight,† Aunt Judith said. â€Å"She's so excited about it.† Aunt Judith waved good-bye from the doorway as Elena and Stefan strol ed toward the car. â€Å"We're meeting the others at the boardinghouse and caravanning to Hot Springs,† Stefan said. â€Å"Matt and Meredith are both bringing their cars.† â€Å"Oh, good, we won't be as crowded as we were yesterday. Not that I minded sitting on your lap, but I thought I might squish Celia in the middle,† Elena said. She turned her face up and stretched like a cat in the sunshine. A breeze tossed her ponytail, and she closed her eyes and enjoyed the sensation. â€Å"It's a gorgeous day for a picnic,† she said. The world was alive with birdsong and with the rustle of trees. A faint tracery of white clouds underscored the bright blue of the sky. â€Å"Would it be jinxing ourselves to say it feels like the kind of day where nothing could go wrong?† she asked. â€Å"Yes, it absolutely would be jinxing ourselves to say that,† Stefan said, straight-faced, unlocking the passenger-side door for her. â€Å"Then I won't say it,† Elena said. â€Å"I won't even think it. But I feel good. I haven't been to Hot Springs for ages.† She grinned with pure pleasure, and Stefan smiled back at her, but Elena was struck once again by that certain something new – something troubling – in his eyes.

Agricultural Practices

Agriculture has been practiced by men since time immemorial. Â  Practically speaking it refers to the process of producing crops that will feed the people and make them survive. Agriculture does not pertain to a single method alone, but over the years, there are evolutionsand innovations that this method of food production has undergone.Organic farming makes use of the natural processes of food production – from planting to harvest stage. Organic farmers make do with natural fertilizers like manure, compost, and residues instead of purchasing commercial fertilizers.Some benefits of organic farming include the prevention of soil erosion which is usually caused by the lack of nutrients in the soils, and empowering farmers to come up with their own natural production methods. On the other hand, some drawbacks raised by critics involve food and water contamination, poor quality of food, and even depletion of natural resources.Another farming or agricultural practice deals with fo od production which primarily intends to feed the family working on that land. This is subsistence farming. The farmer’s capacity is to provide only enough food for him and his family’s regular activities, but in worse cases, they still experience famine.Some strategies are being evaluated and conducted to determine if this farming practice can offer the farmers to produce more than what they need for economic purposes.With the advent of technology through continuous research, there now exists the modern agriculture practice. This type of agriculture greatly relies on engineering and technology. This also gave birth to the popular and controversial genetically modified foods (GMF) like rice, corn, vegetables, and fruits to name some.Issues and debates have been raised in support and in opposition to this breakthrough. Proponents maintains the belief that genetic engineering is the answer to the increasing population by producing in greater volume without risking the qu ality of food, while critics argue that the negative effects of these GMF, though not yet observable, will be noticeable on a long-term basis.Agriculturist and scientists must exert their collaborative effort in improving the agricultural systems along with protecting the health and safety of the natural resources and the consumers.Reference:Open-Encyclopedia. Retrieved, April 30, 2007, from http://open-encyclopedia.com/

Discuss the similarities and differences in the international trade Essay

Discuss the similarities and differences in the international trade Politics between China and Taiwan - Essay Example Correspondingly, international trade politics between two or more nations also project a clearer picture about the political relationships between those nations (Buthe & Milner, 2008). Correspondingly, this essay will focus on discussing the international trade relations persisting between China and Taiwan, with an intention to understand the similarities and dissimilarities between the political positioning and strategies adopted by these nations when dealing with their diplomatic relations. From a critical point of view, the political relations between these two nations can be described in terms of limited communication, rigidities, and instability. Despite of the instability between these two nations, still trade relationships between them blossomed after 2001 when China became a member nation of the World Trade Organization (WTO). Supporters to this trade relation have often argued that it has been mainly due to the stability in trade relationships between these two nations that have led towards the decreasing level of recurrent political friction to a major extent (Roberge & Lee, 2009). China and Taiwan has remained focussed towards maintaining bilateral trade relationships, which has continued between them since long. The result of this trading effort was that both these nations ended up making a trading profit of $102 billion and the records of 2007 subsequently projected China as the largest trading partner of Taiwan (Roberge & Lee, 2009). As an improvisation step, both these nations started making huge investments with an aim of setting up of new industries linking the economic trade affairs of both these nations. The two nations have also made efforts in terms of convincing banks and other investment organizations for investing in the markets of both these nations. Emphasising the potentials of the trade relation, during 2009, China and Taiwan tended towards signing up of an

Researchers View Essay Example | Topics and Well Written Essays - 500 words

Researchers View - Essay Example They include advocacy, constructivism, pragmatism, and post-positivism. The purpose of this paper is to assess a researchers’ world view and explain how it influences the approach to research. Makoe, Richardson, and Prince (2008) represent the post-positivism philosophical world view. Post-positivism world view, also known as the scientific method of research deals with reduction research i.e. it reduces ideas into small variables that are used to test the theory and the sample subject. This world view is used to generalize population through qualitative research using a large number of samples. Thus, the research done by Makoe, Richardson, and Prince (2008) used qualitative research to find out the conceptions of adult students embarking on distance education. One assumptions of post-positivism stated by Creswell (2009) are that knowledge is conjectural. This means that the truth can never be found in research, and that is why researchers nullify the hypothesis. For instance according to Makoe, Richardson, and Prince (2008), there is no consensus about how the conceptions of learning can be characterized and whether they constitute a developmental hierarchy. Another assumption according to Creswell (2009) is that data, evidence and rational considerations shape knowledge. This means that the researcher collects the information based on observations or from questionnaires filled by the participants. From the article, researchers collected data using a 60-item questionnaire which were mailed to students taking preparatory courses by distance learning. According to Creswell (2009) in quantitative method of research, researchers reduce ideas into small variables, which they use to formulate questions and hypothesis. In Makoe, Richardson, and Prince (2008), researchers used the information they collected to come up with a hypothesis that all adult learners taking long distance education hold distinctive conceptions of learning; hence they

A real world example of how science has been misused and report on the Essay

A real world example of how science has been misused and report on the subject - Essay Example e modern information technologies, which are obviously the by products of the growth of science, are very effectively employed by governmental agencies and the international bodies of administration. But, it is alarming to note that information technology devices are so effectively used by terrorists and criminals as well all over the world, which obviously is a serious misuse of science and its development. Two major areas where science has made drastic changes are in the fields of nanotechnology and information technology and there is no doubt that these are two areas where its misuse takes dominant forms. Between the two, scientific develops in nanotechnology assumes greater significance as many of the scientific inventions that led to the making of atom bombs, nuclear weapons and other weapons of mass destruction has posed great threat to international peace and security. My attempt in this short essay is to deal with the misuse of science with regard to nanotechnology. Nano-science and Nano-engineering form the basis for nanotechnology. Nano-technology applies to many fields and its misuse can turn human life into misery. Developments in nanotechnology have given rise to the formation of new atomic and nuclear weapons. When Albert Einstein developed the theory of mass-energy equivalence, E=MC2; no one thought that it would pave the way for a nuclear age. But the atomic bombings of Hiroshima and Nagasaki by the United states during the second world war (August 1945) was a shock to the international community and from then onwards we do find an international competition among world nations to be nuclear powers, and many have attained nuclear power so far. The great amount of funding spent on nanotechnology and related fields (very often in the name of national defense) by world nations is quite shocking. A research conducted by US nanotechnology consultancy revealed that â€Å"the total spending on nanotechnology R&D worldwide exceeded $8.6 billion in 2004. US

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What Duration of Ultraviolet Exposure Kills Bacteria Lab Report

What Duration of Ultraviolet Exposure Kills Bacteria - Lab Report Example This has lead to modification of the law by replacing the speed of reaction constant by the growth rate constant. The modification proved not to be ideal since the graph s obtained after plotting the logarithm growth rate constant against reciprocal absolute temperature results into curves instead of a straight line. It is good to note that the same relationship is applicable to the breakdown of nucleotide and the growth of yeasts and mould (Pommerville, 2007). Ultra violet light is an electromagnetic radiation whose wavelength is less than that of visible light but more than that of X-rays and falls within the range of 10 nm to 400nm with energies of between3eV and 124Ev.My study Hypothesis is that; any amount of UV light exposure will kill bacteria in culture media. Numerous for both. Numerous for both Numerous for both 30 and 23 137 and None Numerous for both Numerous for both Numerous for both 110 and 178 159 and 240 Line chart with the breakdown of the results obtained from the experiment. LINE GRAPH Figure; Showing number of counted bacteria against time. Discussion A change in the DNA base sequence can be referred to as mutation. This change can be beneficial or of neutrality to an organism but in most cases it does turn out to be harmful due to the fact that it results into loss of useful function of a cell. Mutation in the case of bacteria is natural and does happen at a speed of 107-108/base pair in one round of replication. This speed increases in the presence of mutagens. These mutagens can be in the form of chemicals likes nicotine or also in the form of electromagnetic radiation. For the electromagnetic radiations considered as mutagen, they are broadly divided into two types; ionizing radiation and non-ionizing radiation. Ionizing ones carry a lot of energy that can remove electrons from molecules in a cell like DNA or RNA. They include x-rays or gamma radiations. Ultra-violet (UV) radiations on the other hand form part of the non-ionizing radiat ion. Its mutagenic effect comes by it exciting the electrons in the DNA molecules leading to the formation of an extra bond between adjacent pyramidine bonds and for this reason, it is called pyrimidine dimer (Pommerville,2007)UV light is invisible to the naked yes and has high energy than the normal light. The light is absorbed by the double in pyrimidine base, opening the bond and allows it to react with the surrounding molecules. In case the next molecules are a pyrimidine, the two reacts to form a direct covalent bond. The sole reason for wrapping with aluminum foil is to protect the bacterial DNA from the effect of ultra-violet highlighted above. The exposure time which led to visible realization of death was after 48 Hrs 10 Minutes. At this time the number of the remaining bacteria could be counted, meaning that most of them had succumbed due to the effect of the UV on them. It was evident that not all the bacteria died as a result of exposure to the UV radiation. Like any oth er microorganism, bacteria can sense and is capable of adapting to the changes in its immediate environment. Bacteria forms endospores (proteinaceous coat surrounding the spore and provides resistance to harsh external conditions).With this the bacteria is capable of surviving harsh environmental conditions that would kill them. The stress of which UV radiation is part of can therefore be overcome through endospore formation which was the case for those that survived after the massive death. According to (Pommerville,2007)Spores lacking the

George cantor. infinite numbers Essay Example | Topics and Well Written Essays - 1000 words

George cantor. infinite numbers - Essay Example Cantor had the passion of becoming a mathematician and in 1862; he joined University of Zurich (Putnam, 10). Cantor later moved to the University of Berlin following the death of his father. Here, he specialized in mathematics and physics and this institution gave him the chance to interact with great mathematicians such as Weierstrass and Kronecker bringing him closer to his career as a mathematician (Putnam, 12). After graduating from the university, he ended up becoming an unpaid lecturer since he could not secure himself a stable employment. In 1874, he got a position as an assistant professor at the University of Halle. It is in this same year that he married. His intensive research and analysis in mathematics had not ended yet and it is during this same year that he published his first article on set theory. In his research on set theory, Cantor dug deep into the foundations of infinite sets, which interested him most. He published a number of papers on set theory between 1874 and 1897 and come to the end of 1897; he was in a position to prove that integers in a set contained equal number of members to those contained in cubes, squares and numbers. He also provided that the counts/numbers in a line which is infinite needs to be equal to the points in a line segment in addition to his earlier statement that values which cannot be used as solutions to algebraic equations such as 2.71828 and 3.14159 in transcendental numbers will be extremely bigger than their integers. Before these provisions by him, the subject of infinity used to be treated as revered. Such a view had been propagated by mathematicians such as Gauss who provided that infinity should only be used for speaking purposes as opposed to being used as mathematical values. However, Cantor opposed Gauss’s argument saying that sets are complete number of members. In fact, Cantor went ahead and termed infinite numbers to be transfinite and as a result came up with completely new discoveries (J oseph, 188). Such discoveries saw him promoted to be the professor in 1879. Kronecker opposed Cantor’s argument on the basis that only â€Å"real† numbers may be termed to be integers terming decimals and fractions as irrational with the interpretation that they were not elements of consideration in mathematics’ business. However, some other mathematicians such as Richard Dedekind and Weierstrass supported Cantor’s argument and responded to Kronecker proving to him that Cantor was actually right. Kronecker’s opposition did not stop or delay Cantor’s work and in 1885, he extended his theory of order types and cardinal numbers in such a way that his previous theory on ordinal numbers gained some special importance. The extension was followed by the article he published in 1897 that marked his final treat to the theory of sets. As a conclusion, Cantor elaborated on the operation of set theory. He provided that if X and Y are unique sets which a re equivalent to a subset of Y and Y is equivalent to a subset, say subset X, then X and Y must be equivalent. This provision on set theory received great support from many mathematicians such as Schrat and Bernstein, making it the most prominent and his greatest contribution to mathematics. Following this provision, Cantor’s work and contribution in mathematics went down and almost ceased.

Human and Utilitarianism Essay Example for Free

Human and Utilitarianism Essay Let me begin by defining Utilitarianism: utilitarianism is the belief of doing what is right for the greater number of people. It is a theory used to determine the usefulness of the happiest outcome and how it will affect everyone else. Now, this sounds like a amazing theory, what would be better than making yourself and others happy? I found myself at first agreeing with this theory up until I really looked into it. At first I found myself thinking that not everything is about being happy; some may have to suffer for the happiness of others. For example, there were two boats one contains three criminals on death row being transported to prison and the other boat contains ten happy, loving families simply enjoying a vacation. Both ships have bombs that will go off in a matter of seconds, blowing up both ships and killing everyone. However, there is a solution. I for some odd reason have a device that sets off a bomb on ONE SHIP and deactivates the other. Now the morally right thing to do would be what? What is moral and right? Taking lives? Or saving them? I do not believe in ‘playing God’ or taking lives. I would simply ignore the Utilitarianism way of thinking and walk away. I would let nature take its course. If God has arranged this to happen, then it is meant to happen. Who am I to walk in and ‘play God’ ? I have to say I agree with Hospers when he says â€Å"A hundred men might gain great pleasure from beating up or killing just one Insignificant human being; but other mens lives are not theirs to dispose of. † (Hospers) A Utilitarian would approach this situation by asking himself/herself, what will bring happiness? What will do good for greater numbers of people? Why should the prisoners get to live? There are only three prisoners, and have done nothing good but cause harm to society. What have these families done? The Utilitarian will start to analyze each detail of the situation. They first see that there are only three prisoners as opposed to ten large families. Hence, there are less people on the prisoners boat. Then he/she will see that the prisoners have already been sentenced to death, all being on death row. However, the main point will be that these are three bad men. Doing bad things, and causing pain and sorrow to others. Why should ten happy families be punished for their wrong doings? The Utilitarian would settle for simply deactivating the bomb on the prisoners boat. Believing that killing them will bring greater good and happiness to all. My argument to this is a human life is a human life; what if one of those men are actually innocent and were convicted for a crime he didn’t commit? What if the other criminal was to be released in the morning and go home to a family of eight children and a loving wife? Truth is we don’t know. Utilitarianism fails to acknowledge that a life is a life- we are not suppose to be playing God. We don’t decide who lives and who dies, even if it is for the greater good. We should just let nature run its course. Utilitarianism is a theory of always choosing pleasure over pain for the greater good of all. I believe that I have kept a closed mind towards Utilitarianism. The prisoners are already on death row, which means they are going to die for the evil they have set loose on our world. Why should I sacrifice the lives of innocent families, for a couple of men that have caused unhappiness to all? I want to reach happiness, as does everyone else in the world. I mean does the world function over what the greater good for all is? Is that why we have soldiers in Iraq sacrificing their lives for the greater good of America? Maybe I have just overlooked all the positive outcomes of Utilitarianism. I find myself agreeing with a lot of what it has to say. I want happiness, I want innocent lives to be saved, and I want to strive for the greater good of all. I find it interesting how easy it is to fall into the comfort of Utilitarianism. It goes along with my morals and values and yet I still feel a sort of guilt. If I were to deactivate the bomb on the ship with the families and let the prisoners die, I would still be taking a human life. In my religion (Catholicism), a life is a life. We must forgive sinners and those who have sinned against us. But if these prisoners are on death row†¦were they already destined to die? Would that already be in God’s plan? Was it God who sacrificed his only son for all of us sinners? I feel in a way that makes God himself a follower of utilitarianism. He set the example of offering his only son for our sins, to open the gates of heaven for everyone. Yet one of the Ten Commandments is â€Å"Thou shall not kill. † Is that not hypocritical? As I keep analyzing this situation I realize that God is God. He decides who lives and who dies, not us. I feel that it’s hard to stick to my morals when hearing the theory of Utilitarianism. Allowing someone to die at my hand for the greater good, for happiness of others. That just sounds selfish to me, kind of like the holocaust. Did all those innocent Jews endure experimentation and torture for the greater good of all? I mean, if it weren’t for these grotesque experiments we wouldn’t know the maximum altitude that crews in damaged planes can parachute safely to the ground or find the cure/treatment for hypothermia. The Jews were used as guinea pigs for the greater good of everyone else. Is that not Utilitarianism? So many people could have died of hypothermia if that experiment was never conducted. But how many innocent lives were lost to reach this conclusion? Is there a limit to how much sacrifice should be made for the greater good? There should be. This is where I cannot connect with Utilitarianism, the fact that some sort of evil has to be done to help others. I see hypocrisy in this theory; it wants happiness but wants to rule out evil. People are evil, mean and rude. No one can be happy all the time; no one can bring eternal happiness. This takes me back to my original example, who would I save? The prisoners on death row or the innocent families? The Utilitarian’s seem to have a more interesting argument. Its funny how by writing this paper, my views changed. I look at the situation differently now. I do not feel as biased and conservative as before. My ideas have changed to a more liberal understanding sense. Why release these evil me back into the world? We have enough chaos and evil. These are just three men who chose their paths and now have to pay for it. They were sentenced to death for a reason, I will not be held responsible for the innocence of happy families, children, parents, aunts and uncles. They are not in prison because they have not done anything wrong. They simply stepped onto a ship, whose fate I now hold in my hands. I have made my choice; I will deactivate the bomb on the families boat and let the prisoners face death.

Malaysian Conventional and Islamic Equity Mutual Fund

Malaysian Conventional and Islamic Equity Mutual Fund An Analysis Of Companies Portfolio Performance Using Sharpe Ratio: A Study On The Differences Of Performance Between Malaysian Conventional And Islamic Equity Mutual Fund In 2007 1.0 Introduction 1.0.1 Chapter Description In this chapter, explaining the background of the study, problem statement, objectives of the study, hypotheses, significance of this study, as well as the scope and limitations during the process of completing this study. 1.0.2 Background of the Study Portfolio evaluation is on the time before 1960. Investors evaluated portfolio performance almost entirely on the basis of the rate of return. They were aware of the concept of risk but did not know how to quantify or measure it, so they could consider it explicitly. Developments in portfolio theory in the early 1960s showed investors on how to quantify and measure risk in terms of the variability of returns. Still, because no single measure combined both return and risk, the two factors had to be considered separately as researchers such as Friend, Blume, and Crockett (1970). Specifically, the investigators grouped portfolios into similar risk classes based on a measure of risk (such as the variance of return) and compared the rates of return for alternative portfolios directly within these risk classes. Before 1960, investors evaluated portfolio performance almost entirely on the rate of return, although they knew that risk was a very important variable in determining investment success. The reason for omitting risk was the lack of knowledge on how to measure and quantify it. After the development of portfolio theory in early 60s, and CAPM in subsequent years, risk, measured as either by standard deviation or beta, was included in evaluation process. However, since there was not a single measure combining return and risk, two factors were to be considered separately that were researchers grouped portfolios into similar risk classes and compared rates of return of portfolios in the same risk class. There are many kinds of measurement such as Jensen, Treynor and also Sharpe to evaluate the companys portfolio performance. Jensens alpha has been a popular performance measure because it is a return concept. Related to Dr. William F. Sharpes contribution to style analysis of investment performance, the Sharpes alpha is related to the Jensens alpha in the sense that both measures excess returns. They differ, however, in the selection and construction of benchmarks. Sharpe (1966) developed a composite index which was very similar to the Treynor measure, the only difference was that it was being used as standard deviation, instead of beta. To measure the portfolio risk, the researcher needs the average rate of return for Portfolio during a specified time period, the average rate of return on risk-free rate during the same period, Sharpe performance index and the standard deviation of the rate of return for Portfolio during the time period. Sharpe preferred to compare portfolios to the capital market line (CML) rather than the security market line (SML). Sharpe index, therefore, evaluated funds performance based on both rate of return and diversification (Sharpe 1967). For a completely diversified portfolio Treynor and Sharpe indices would give identical rankings. Although the mutual fund industry in Malaysia started as far back as 1959 with the establishment of the Malayan Unit Trust Ltd, the development of the industry did not take-off until the 1980s with the launching of the Amanah Saham Nasional (ASN). In 2004, the Commission approved 17 new Syariah-based unit trust funds, bringing the total number of such funds to 71 or 24.4% of the total 291 approved funds in the industry as at the end of 2004 (2003: 55 funds or 24.3% of the total industry). Of the 71 Syariah-based unit trust funds, 14 were balanced funds, 14 were bond funds, 39 were equity funds, 2 two were fixed income funds and two were money market funds. The number of units in circulation for Syariah-based unit trust funds also increased from 8.59 billion units as at the end of 2003 to 13.16 billion units in 2004. The number of accounts registered an increase of 23.4% or 80,848 accounts, with a total of 427,000 accounts in 2004. One conventional fund made changes to its investment objectives and operations which enabled it to comply with the requirements of Syariah-based unit trust funds. In terms of value, the NAV of Syariah-based unit trust funds grew to RM6.76 billion representing 7.7% of the industry, an increase of 0.9% from the previous year. Over a 10-year period (1995-2004), the NAV of Syariah-based unit trust funds grew at a compounded annual growth rate (CAGR) of 26.18% while the overall industry CAGR was 7.89%. The recognition of the increasing dominance and importance of unit trusts as an investment instrument has spurred researchers to devise appropriate techniques to assess portfolio performance. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. Therefore, the primary aim of this paper is to present new evidences for the analysis of companies portfolio performance using Sharpe ratio by studying the differences the performance between Malaysian conventional and Islamic Equity Mutual Fund in 2007. 1.0.3 Overview of Conventional and Islamic Mutual Fund Mutual fund or better known as unit trust in Malaysia is an investment vehicle created by asset management companies specializing in pooling savings from both retail and institutional investors. Individual investors seeking liquidity, portfolio diversification and investment expertise are increasingly choosing unit trust funds as their investment vehicle. However, these investors do differ in their preferences based on their risk threshold, liquidity needs and their needs to comply with religious requirement. In the Malaysian context, the performance of mutual funds or more popularly known as unit trust funds as reported by Shamsher and Annuar (1995), Tan (1995), Leong and Aw (1997), Annuar et al,. (1997) and Low and Noor A. Ghazali (2005) concluded that on average, funds were unable to beat the market. The number of unit trust has grown dramatically in recent years. Unit trusts are now the preferred way for individual investors and many institutions to participate in the capital markets, and their popularity has increased demand for evaluations of fund performance. Muslims are not allowed to invest in standard mutual funds since their religion prohibits them from investing in certain equities, like those of banks or companies that deal in pork, alcohol, pornography and certain entertainment related products. An Islamic mutual fund is similar to a â€Å"conventional† mutual fund in many ways; however, unlike its â€Å"conventional† counterpart, an Islamic mutual fund must conform to the Sharia (Islamic Law) investment precepts. The Sharia encourages the use of profit sharing and partnership schemes, and forbids riba (interest), maysir (gambling and pure games of chance), and gharar (selling something that is not owned or that cannot be described in accurate detail; i.e., in terms of type, size and amount) (El-Gamal 2000). The Sharia guidelines and principles govern several aspects of an Islamic mutual fund, including its asset allocation (portfolio screening), investment and trading practices, and income distribution (purification). When selecting investments for their portfolio (asset allocation), conventional mutual funds can freely choose between debt-bearing investments and profit-bearing investment, and invest across the spectrum of all available industries. An Islamic mutual fund, however, must set up screens in order to select those companies that meet its qualitative and quantitative criteria set by Sharia guidelines. 1.1 Problem Statement At some levels, people are always interested in evaluating the performance of their investments. Having to spend the time and incurred the expense to design an asset allocation strategy and select the specific set of securities to form their portfolios, investors whether they are individuals, corporations, or financial institutions. It must be periodically determined whether this effort is worthwhile. Investors in managing their own portfolios should evaluate their performance, as should those who pay one or several professional money managers to make these decisions for them. It is imperative to determine the realized investment performance which justifies the additional costs of engaging professional management. Comparing a portfolios historical returns to those produced by other managers or indexes can be instructive; such comparisons do not produce a complete picture of the portfolios performance. Indeed, the central tenet of the modern approach to performance measurement is that it is impossible to make a thorough evaluation of an investment without explicitly control the risk of the portfolio. Given the complexity and importance of the issues involved, it is not a surprise to learn that there is not a single universally accepted procedure for risk-adjusting portfolio returns. Nevertheless, there are several techniques that are commonly employed. Some previous studies found results that are inconsistent with Chuas findings. These studies include Ewe (1994), Shamsher and Annuar (1995), and Tan (1995). Shamsher and Annuar (1995), focused their study on the performance of 54 unit trusts covering the period of late 80s to early 90s. They found out that the returns on investment in unit trust were well below the risk free and market returns. Furthermore, the results indicated that not only the degree of portfolios diversification was below expectation but the actual returns and risk characteristics of funds were also inconsistent with their stated objectives. Tan (1995) analyzed performance of 12 unit trusts over a 10-year period, 1984-1993. He concluded that unit trusts in general perform worse than the market portfolio. Consistent with Chuas findings, Tan also concluded that government sponsored funds performed better than private funds. As we can see, there are three portfolio performance evaluation techniques that comprise the basic ‘toolkit for measuring risk-adjusted performance. Although some redundancy exists among these measures, each of them provides unique perspectives, so that best viewed as complementary measures. In particular, examining the controversy surrounding the selection of the proper benchmark to use in the risk-adjustment process and discussing why these benchmark problems become larger when beginning to invest globally. From here, how to evaluate the performance of the investments in order to reduce the risk taken? What measurement can contribute to evaluating a good investment? Therefore, it is interesting to analyze the companies portfolio performance by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia by using Sharpe ratio. 1.2 Objectives of Research The general purpose of this study is to analyze the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia. A careful review on those questions has led to the development of the following specific research objectives which are: i. To measure and rank both relative quantitative performances of mutual fund (conventional/Islamic) on the basis of their return, total risk, coefficient of variation and Sharpe ratio. The term performance contains both the return and the risk undertaken by these mutual funds. ii. To investigate whether both mutual funds (conventional/Islamic) are earning higher returns than the benchmark returns (or market Portfolio/Index returns) in terms of risk. iii. To determine the relationship between dependent variable and independent variable. 1.3 Scope of Study The study is on the analysis of the companies portfolio performance in determining the measure of average daily return, total risk (standard deviation), coefficient of variation and Sharpe ratio. Moreover, to observe the differences in terms of performance between conventional and Islamic mutual fund in the context of Malaysian capital market by comparing them to the stock market index or Kuala Lumpur Composite Index (KLCI) benchmark. The scopes of the study are stated as follow:  § The relationship between two variables: the return on equity mutual fund as the dependent variable whereas the return on stock market index (KLCI) as the independent variable for conventional and Islamic fund.  § The period of study will cover one (1) year starting from January 2007 to December 2007 using the daily basis collected from The Star and New Straits Times newspapers and also from the internet.  § This research will also focus on the conventional and Islamic Equity Mutual Fund companies available in Malaysia. 1.4 Theoretical Framework The theoretical framework shows the relationship between the independent variables and dependent variable. The independent variable is the return on KLCI while the dependent variable is the return of Equity Mutual fund companies in Malaysia. Schematic diagram for the theoretical framework in this study is as follows: Market Index Equity Fund Market Index Islamic Equity Fund Independent Variable Dependent Variable 1.5 Hypotheses According to Uma Sekaran (2003), a hypothesis can be defined as a logically conjectured relationship between two or more variables expressed in the form of testable statement. Hypothesis can be divided into two categories which are Ho which is a Null Hypothesis and Ha which is an Alternate Hypothesis. The term â€Å"null† can be thought of as meaning â€Å"no change† or â€Å"no difference†. The second hypothesis is called alternative hypothesis. It is summary of the case if the null hypothesis is not true. It is stated that Ha, the alternative hypothesis is a statement of a view that has been prepared to be accepted if Ho is rejected. The hypotheses of this study are: Hypothesis 1: Ho: There is no relationship between the return on KLCI and the return on Conventional equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Conventional equity mutual fund. Hypothesis 2: Ho: There is no relationship between the return on KLCI and the return on Islamic equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Islamic equity mutual fund. 1.6 Limitations of the Study Data Collection and Cost Limitation The major source of data gained is from the secondary sources. The data is only available at certain places and it requires cost to obtain the data. Besides, it also requires costs in the process of printing, photocopying, data services and transportations to obtain the information. The information about the topic studied is also difficult to search in the library because of the limited information. As a result, it causes problems to the researcher to gather and collect the information. The information and data related to the study is rather difficult to obtain. Thus, the accuracy of the study depends on the accuracy of the data available and may not perfectly precise. In addition, data is also limited since it relies on the secondary sources alone. Lack of Experience and Expertise Since this research is the first research experience for the researcher, undoubtedly there are still lots of things to improve. The lacks of experience especially in data collection and time management have been the limitations to the researcher. Moreover, the researcher has limited knowledge on the topic and needs more understanding on the topic studied. Time Constraint Time is very limited for the researcher to complete the research. The researcher has to be very smart in scheduling the time to make sure the research is completed in time. Thus, time constraint has been identified as one of the limitations for the researcher. 1.7 Significance of the Study This research analyzes on the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic Equity Mutual Fund in Malaysia. Therefore this study will provide some information that can be useful because the data and findings from this research will help other researchers to produce better result in their research. This research is also significant to: To Researcher As a finance student, issues in measuring portfolio performance are so much important and crucial. By studying about measurement of portfolio performance in depth, a better understanding and knowledge is gained. This research has given the researcher the opportunity to get the experience in practice as well as in theories. To other researcher This study also can be a useful reference to other researchers who are keen to carry on the study regarding the performance of mutual fund in Malaysia. There are several fruitful areas in this study that can be further examined by other researchers. Further study will give an opportunity to other researchers to expand their view and knowledge. To do so, they need to refer to numerous literatures and hopefully, this research can come in handy for them. To Finance Students This research will be very useful for finance students in having more knowledge about the companys portfolio performance and the differences in the performance between conventional and Islamic Equity Mutual fund in Malaysia. They can use this research as a guide and as references in their studies in portfolio management and mutual fund in Malaysia. To Businesses This research is very important to businesses in realizing the effects of portfolio management on their performance. This is important so that they will have clear direction in deciding their investment. To Investors This study plays an important role in decision making since it gives the investors a prior knowledge of which Equity Mutual Fund companies is the best to invest and whether those companies provide high returns on investment. Moreover, revealing the specific volatility patterns in returns might also benefit investors in risk management and portfolio optimization. This research is also important to investors so that they can have a clearer picture of their investment choices. For investors the study can help them to know the risk and return of their investment transaction. 1.8 Definition of Terms Portfolio A collection of investments are all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices. Sharpe Ratio A risk-adjusted measure developed by William F. Sharpe, calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the funds historical risk-adjusted performance. Mutual Fund (Unit Trust) A form of collective investment constituted under a trust deed or a pooled investment plan where the capital contributions of investors are combined into a legally formed trust fund. Equity fund Equity fund or stock fund is a fund that invests in Equities more commonly known as stocks. Such funds are typically held either in stock or cash, as opposed to bonds, notes or other securities. Return Based on Investopedia definition, return can be defined as the gain or lossof an investment over a specified period, expressed asa percentage increase over the initial investment cost. Gains on investments are considered to beany income received from the security, plus realized capital gains. Risk The quantifiable likelihood of loss or less-than-expected returns Risk-adjusted return A measure of how much an investment returned in relation to the amount of risk it took on. Often used to compare a high-risk, potentially high-return investment with a low-risk, lower-return investment. Benchmark A standard, used for comparison. For example, the Nasdaq may be used as a benchmark against which the performance of a technology stock is compared. Regression Analysis A statistical technique used to find relationships between variables for the purpose of predicting future values. Coefficient of Determination A measure of the correlation between the dependent and independent variables in a regression analysis. R-squared A measurement of how closely a portfolios performance correlates with the performance of a benchmark index, such as the SP 500, and thus a measurement of what portion of its performance can be explained by the performance of the overall market or index. Values for r-squared range from 0 to 1, where 0 indicates no correlation and 1 indicates perfect correlation. Kuala Lumpur Composite Index (KLCI) The Kuala Lumpur Composite Index (KLCI) is a stock market index generally accepted as the local stock market barometer. KLCI was introduced in 1986 to public the need for a stock market index which would serve as an accurate performance indicator of the Malaysian stock market as well as the economy. It is used to be the main index, and is now one of the three primary indices for the Malaysian stock market which the other two are FMB30 and FMBEMAS, Bursa Malaysia. It contains 100 companies from the Main Board with approximately 500 to 650 listed companies in the Main Board which comprise of multi-sectors companies across the year 2000 to 2006 and is a capitalization-weighted index. 2.0 Literature Review 2.1 Chapter Description Literature review is the documentation of a comprehensive review of the published and unpublished work from the secondary sources of data in the areas of specific interest to the researcher. The reason of the literature review is to ensure that no important variable that has in the past been founded repeatedly to have an impact on the problem is ignored. (Uma Sekaran, 2005 page 63). 2.2 Literature Review of Evaluated Portfolio Performance Craig W. French (2003) discussed on what is involved in evaluating portfolio performance, including the need to adjust for differential risk and differential time periods, the need for a benchmark, and constraints on portfolio managers. It also considered the difference between the portfolios performance and the managers performance. For measurement this paper used well-known risk-adjusted (composite) measures of Sharpe portfolio performance. Investors who had all (or substantially all) of their assets in a portfolio of securities should rely more on the Sharpe measure because total risk is important. Joel Owen and Ramon Rabinovitch (1998), for the last four decades, numerous authors have been suggesting methods to evaluate portfolio performance. Sharpe (1966) proposed performance measures which had produced a score for every portfolio being evaluated. These scores were used to compare the performance of any two portfolios or rank the performance of all portfolios in a given set. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. 2.3 Literature Review of Sharpe Ratio Francisco Peà ±aranda (2007) in her paper commented on developments beyond mean-variance preferences to some alternatives to the Sharpe ratio. The main goal of those measures was to give a similar ranking to Sharpe ratios when returns were symmetrically distributed and showed a preference for skewness when they were not. Moreover, performance measures could be used to guide asset allocation since they can be used as the criterion to maximize with portfolio. Raphie Hayat (2006), the attractiveness of the Sharpe Ratio came from its intuitiveness and simplicity. The Sharpe Ratio are simple because it could rank funds on the base of a single and intuitive since it only rewarded funds with a higher ratio if their returns were higher with the same level of risk or if the risk was lowered while keeping the same level of return. Zhidong Bai, Keyan Wang, and Wing-Keung Wong (2006) stated that the asset performance evaluation was one of the most important areas in investment analysis. In order to compare the performance among assets, several statistics had been developed and among them, the Sharpe-ratio statistic was the most prevalent. However, the major limitation of the Sharpe-ratio statistic was that its distribution is only valid asymptotically, but not valid for small samples. Nevertheless, it was important in finance to test the performance among assets for small samples. Tzu-Wei Kuo and Cesario Mateus (2006), the Sharpe ratio was well known risk-adjusted performance measures and easily understood by an individual investor. Thus, investors could evaluate the exchange-traded funds (ETFs) performance, based on the Sharpe ratio. However, the Sharpe ratio relied on the assumption that returns were normally distributed having these measures difficulty in evaluating the performance with skewed return distributions. Martin Eling and Frank Schuhmacher said that the classic Sharpe ratio was adequate in evaluating investment funds when the returns of those funds were normally distributed and the investor intended to place all his risky assets into just one investment fund. Because hedge fund returns differed significantly from a normal distribution, other performance measures had been proposed and encouraged in both academic and practice-oriented literature. The Sharpe ratio measured the performance of an investment fund by considering the relationship between the risk premium and the standard deviation of the returns generated by a fund. The Sharpe ratio were an adequate performance measure if the returns of the investment funds were normally distributed and the investor wished to place all his risky assets in just one investment fund. Andreas G Merikas, Anna A Merikas and Ioannis Sorros (2005) examined the exact relationship between the Sharpe ratio and the information ratio. Sharpe in 1994 asserted that the information ratio was a generalized Sharpe ratio. Sharpe ratios had been estimated for each fund in each category, and an average ratio for each category. The Sharpe ratio would generally be positive since excess returns of funds over the risk free rate would be positive, unlike excess returns of funds over the market, which could be negative, as the return of the risk free bond was smaller but at the same time less volatile than the return of the market. Cheryl J. Frohlich, Anita Pennathur and Oliver Schnusenberg in their research, Sharpe reward-to-variability ratio was used if total variability was thought to be the appropriate measure of risk, a stocks (portfolios) risk-adjusted returns could be computed using the Sharpe Index. The Sharpe and Treynor Index eliminated the problem of only considering return as a measure of performance. However, neither ratio was independent of the time period over which it is measured. This means that the ratio can change from one period to another with different results. Moreover, both ratios also ignored the correlation of a fund with other assets, liabilities, or previous realizations of its own return. Mario Onorato (2004), the Sharpe Ratio of any investment was defined as its excess return, it is return in excess of a benchmark return divided by the standard deviation of excess return. The benchmark represents a risk free investment alternative. Moreover, although the Sharpe ratio has become part of the modern financial analysis, its applications typically did not account for the fact that it was an estimated quantity, subject to estimation errors that would be substantial in some cases. The statistical properties of Sharpe ratios depended intimately on the statistical properties of the return series on which they are based. This suggests that a more sophisticated approach to interpreting Sharpe ratios is called for, one that incorporates information about the investment style that generates the returns and the market environment in which those returns are generated. Wei Zhen (2004), in his paper said that the Sharpe (1966) and Treynor (1965) performance measures were widely accepted in both academia and industry to assess the Risk-adjusted value of a particular portfolio. It could be shown, after some mathematical treatment, that the Sharpe performance measure was useful when the portfolio of interest represented all of the investors investment, while Treynors measure was preferred when the portfolio under discussion was only a portion of the whole investment package. Robert McCauley and Guorong Jiang (2004), through the Sharpe ratio it compared the returns of portfolios in relation to their risk by dividing their returns in excess of the riskless rate of return by the volatility of their returns. A portfolio with a higher Sharpe ratio was preferred in that it offered a higher return per unit of risk, as measured by return volatility. William Goetzmann, Jonathan Ingersoll, Matthew Spiegel and Ivo Welch (2002), the Sharpe ratio is one of the most common measures of portfolio performance. It was used as a tool for evaluating and predicting the performance of mutual fund managers. Since then the Sharpe ratio, and its close analogues the Information ratio, the squared Sharpe ratio and M-squared, have become widely used in practice to rank investment managers and to evaluate the attractiveness of investment strategies in general. The appeal of the Sharpe measure was clear. It was an affine transformation of a simple t-test for equality in means of two variables, the first variable being the managers time series of returns and the second being a benchmark. The Sharpe ratio was also ubiquitous in academic research as a metric for bounding asset prices. Andrew Worthington and Helen Higgs (2002), the Sharpe ratio (also known as the reward-to-volatility ratio) indicated the excess return per unit of risk and was calculated by dividing the return in excess of the risk-free rate by the standard deviation of returns. In the current context, the Sharpe ratio was the most appropriate performance measure for an investor whose portfolio was composed wholly of a given artists work. Verena Kugi (1999), the Sharpe ratio measured the change in the portfolios return with respect to a one unit change in the portfolios risk. The higher this Reward-to-Variability-Ratio the more attractive was the evaluated portfolio because the investor received more compensation for the same increase in risk. Graphically, the Sharpe ratio was equal to the slope of a straight line connecting the position of the evaluated portfolio, for example a fund, with the risk-free rate. To determine the quality of performance, the Sharpe index of the evaluated portfolio was compared to the Sharpe index of the market or benchmark portfolio. The portfolios Sharpe index being higher than the markets Sharpe index indicated that the portfolio manager had outperformed the market. Respectively, a lower Sharpe ratio was a sign of underperformance. Any portfolio that was positioned on the capital market line had a Sharpe ratio equal to that of the market and was therefore characterized by neutral perform ance. Youguo Liang and Willard McIntosh (1998), the Sharpes alpha captured the excess return of Malaysian Conventional and Islamic Equity Mutual Fund Malaysian Conventional and Islamic Equity Mutual Fund An Analysis Of Companies Portfolio Performance Using Sharpe Ratio: A Study On The Differences Of Performance Between Malaysian Conventional And Islamic Equity Mutual Fund In 2007 1.0 Introduction 1.0.1 Chapter Description In this chapter, explaining the background of the study, problem statement, objectives of the study, hypotheses, significance of this study, as well as the scope and limitations during the process of completing this study. 1.0.2 Background of the Study Portfolio evaluation is on the time before 1960. Investors evaluated portfolio performance almost entirely on the basis of the rate of return. They were aware of the concept of risk but did not know how to quantify or measure it, so they could consider it explicitly. Developments in portfolio theory in the early 1960s showed investors on how to quantify and measure risk in terms of the variability of returns. Still, because no single measure combined both return and risk, the two factors had to be considered separately as researchers such as Friend, Blume, and Crockett (1970). Specifically, the investigators grouped portfolios into similar risk classes based on a measure of risk (such as the variance of return) and compared the rates of return for alternative portfolios directly within these risk classes. Before 1960, investors evaluated portfolio performance almost entirely on the rate of return, although they knew that risk was a very important variable in determining investment success. The reason for omitting risk was the lack of knowledge on how to measure and quantify it. After the development of portfolio theory in early 60s, and CAPM in subsequent years, risk, measured as either by standard deviation or beta, was included in evaluation process. However, since there was not a single measure combining return and risk, two factors were to be considered separately that were researchers grouped portfolios into similar risk classes and compared rates of return of portfolios in the same risk class. There are many kinds of measurement such as Jensen, Treynor and also Sharpe to evaluate the companys portfolio performance. Jensens alpha has been a popular performance measure because it is a return concept. Related to Dr. William F. Sharpes contribution to style analysis of investment performance, the Sharpes alpha is related to the Jensens alpha in the sense that both measures excess returns. They differ, however, in the selection and construction of benchmarks. Sharpe (1966) developed a composite index which was very similar to the Treynor measure, the only difference was that it was being used as standard deviation, instead of beta. To measure the portfolio risk, the researcher needs the average rate of return for Portfolio during a specified time period, the average rate of return on risk-free rate during the same period, Sharpe performance index and the standard deviation of the rate of return for Portfolio during the time period. Sharpe preferred to compare portfolios to the capital market line (CML) rather than the security market line (SML). Sharpe index, therefore, evaluated funds performance based on both rate of return and diversification (Sharpe 1967). For a completely diversified portfolio Treynor and Sharpe indices would give identical rankings. Although the mutual fund industry in Malaysia started as far back as 1959 with the establishment of the Malayan Unit Trust Ltd, the development of the industry did not take-off until the 1980s with the launching of the Amanah Saham Nasional (ASN). In 2004, the Commission approved 17 new Syariah-based unit trust funds, bringing the total number of such funds to 71 or 24.4% of the total 291 approved funds in the industry as at the end of 2004 (2003: 55 funds or 24.3% of the total industry). Of the 71 Syariah-based unit trust funds, 14 were balanced funds, 14 were bond funds, 39 were equity funds, 2 two were fixed income funds and two were money market funds. The number of units in circulation for Syariah-based unit trust funds also increased from 8.59 billion units as at the end of 2003 to 13.16 billion units in 2004. The number of accounts registered an increase of 23.4% or 80,848 accounts, with a total of 427,000 accounts in 2004. One conventional fund made changes to its investment objectives and operations which enabled it to comply with the requirements of Syariah-based unit trust funds. In terms of value, the NAV of Syariah-based unit trust funds grew to RM6.76 billion representing 7.7% of the industry, an increase of 0.9% from the previous year. Over a 10-year period (1995-2004), the NAV of Syariah-based unit trust funds grew at a compounded annual growth rate (CAGR) of 26.18% while the overall industry CAGR was 7.89%. The recognition of the increasing dominance and importance of unit trusts as an investment instrument has spurred researchers to devise appropriate techniques to assess portfolio performance. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. Therefore, the primary aim of this paper is to present new evidences for the analysis of companies portfolio performance using Sharpe ratio by studying the differences the performance between Malaysian conventional and Islamic Equity Mutual Fund in 2007. 1.0.3 Overview of Conventional and Islamic Mutual Fund Mutual fund or better known as unit trust in Malaysia is an investment vehicle created by asset management companies specializing in pooling savings from both retail and institutional investors. Individual investors seeking liquidity, portfolio diversification and investment expertise are increasingly choosing unit trust funds as their investment vehicle. However, these investors do differ in their preferences based on their risk threshold, liquidity needs and their needs to comply with religious requirement. In the Malaysian context, the performance of mutual funds or more popularly known as unit trust funds as reported by Shamsher and Annuar (1995), Tan (1995), Leong and Aw (1997), Annuar et al,. (1997) and Low and Noor A. Ghazali (2005) concluded that on average, funds were unable to beat the market. The number of unit trust has grown dramatically in recent years. Unit trusts are now the preferred way for individual investors and many institutions to participate in the capital markets, and their popularity has increased demand for evaluations of fund performance. Muslims are not allowed to invest in standard mutual funds since their religion prohibits them from investing in certain equities, like those of banks or companies that deal in pork, alcohol, pornography and certain entertainment related products. An Islamic mutual fund is similar to a â€Å"conventional† mutual fund in many ways; however, unlike its â€Å"conventional† counterpart, an Islamic mutual fund must conform to the Sharia (Islamic Law) investment precepts. The Sharia encourages the use of profit sharing and partnership schemes, and forbids riba (interest), maysir (gambling and pure games of chance), and gharar (selling something that is not owned or that cannot be described in accurate detail; i.e., in terms of type, size and amount) (El-Gamal 2000). The Sharia guidelines and principles govern several aspects of an Islamic mutual fund, including its asset allocation (portfolio screening), investment and trading practices, and income distribution (purification). When selecting investments for their portfolio (asset allocation), conventional mutual funds can freely choose between debt-bearing investments and profit-bearing investment, and invest across the spectrum of all available industries. An Islamic mutual fund, however, must set up screens in order to select those companies that meet its qualitative and quantitative criteria set by Sharia guidelines. 1.1 Problem Statement At some levels, people are always interested in evaluating the performance of their investments. Having to spend the time and incurred the expense to design an asset allocation strategy and select the specific set of securities to form their portfolios, investors whether they are individuals, corporations, or financial institutions. It must be periodically determined whether this effort is worthwhile. Investors in managing their own portfolios should evaluate their performance, as should those who pay one or several professional money managers to make these decisions for them. It is imperative to determine the realized investment performance which justifies the additional costs of engaging professional management. Comparing a portfolios historical returns to those produced by other managers or indexes can be instructive; such comparisons do not produce a complete picture of the portfolios performance. Indeed, the central tenet of the modern approach to performance measurement is that it is impossible to make a thorough evaluation of an investment without explicitly control the risk of the portfolio. Given the complexity and importance of the issues involved, it is not a surprise to learn that there is not a single universally accepted procedure for risk-adjusting portfolio returns. Nevertheless, there are several techniques that are commonly employed. Some previous studies found results that are inconsistent with Chuas findings. These studies include Ewe (1994), Shamsher and Annuar (1995), and Tan (1995). Shamsher and Annuar (1995), focused their study on the performance of 54 unit trusts covering the period of late 80s to early 90s. They found out that the returns on investment in unit trust were well below the risk free and market returns. Furthermore, the results indicated that not only the degree of portfolios diversification was below expectation but the actual returns and risk characteristics of funds were also inconsistent with their stated objectives. Tan (1995) analyzed performance of 12 unit trusts over a 10-year period, 1984-1993. He concluded that unit trusts in general perform worse than the market portfolio. Consistent with Chuas findings, Tan also concluded that government sponsored funds performed better than private funds. As we can see, there are three portfolio performance evaluation techniques that comprise the basic ‘toolkit for measuring risk-adjusted performance. Although some redundancy exists among these measures, each of them provides unique perspectives, so that best viewed as complementary measures. In particular, examining the controversy surrounding the selection of the proper benchmark to use in the risk-adjustment process and discussing why these benchmark problems become larger when beginning to invest globally. From here, how to evaluate the performance of the investments in order to reduce the risk taken? What measurement can contribute to evaluating a good investment? Therefore, it is interesting to analyze the companies portfolio performance by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia by using Sharpe ratio. 1.2 Objectives of Research The general purpose of this study is to analyze the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia. A careful review on those questions has led to the development of the following specific research objectives which are: i. To measure and rank both relative quantitative performances of mutual fund (conventional/Islamic) on the basis of their return, total risk, coefficient of variation and Sharpe ratio. The term performance contains both the return and the risk undertaken by these mutual funds. ii. To investigate whether both mutual funds (conventional/Islamic) are earning higher returns than the benchmark returns (or market Portfolio/Index returns) in terms of risk. iii. To determine the relationship between dependent variable and independent variable. 1.3 Scope of Study The study is on the analysis of the companies portfolio performance in determining the measure of average daily return, total risk (standard deviation), coefficient of variation and Sharpe ratio. Moreover, to observe the differences in terms of performance between conventional and Islamic mutual fund in the context of Malaysian capital market by comparing them to the stock market index or Kuala Lumpur Composite Index (KLCI) benchmark. The scopes of the study are stated as follow:  § The relationship between two variables: the return on equity mutual fund as the dependent variable whereas the return on stock market index (KLCI) as the independent variable for conventional and Islamic fund.  § The period of study will cover one (1) year starting from January 2007 to December 2007 using the daily basis collected from The Star and New Straits Times newspapers and also from the internet.  § This research will also focus on the conventional and Islamic Equity Mutual Fund companies available in Malaysia. 1.4 Theoretical Framework The theoretical framework shows the relationship between the independent variables and dependent variable. The independent variable is the return on KLCI while the dependent variable is the return of Equity Mutual fund companies in Malaysia. Schematic diagram for the theoretical framework in this study is as follows: Market Index Equity Fund Market Index Islamic Equity Fund Independent Variable Dependent Variable 1.5 Hypotheses According to Uma Sekaran (2003), a hypothesis can be defined as a logically conjectured relationship between two or more variables expressed in the form of testable statement. Hypothesis can be divided into two categories which are Ho which is a Null Hypothesis and Ha which is an Alternate Hypothesis. The term â€Å"null† can be thought of as meaning â€Å"no change† or â€Å"no difference†. The second hypothesis is called alternative hypothesis. It is summary of the case if the null hypothesis is not true. It is stated that Ha, the alternative hypothesis is a statement of a view that has been prepared to be accepted if Ho is rejected. The hypotheses of this study are: Hypothesis 1: Ho: There is no relationship between the return on KLCI and the return on Conventional equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Conventional equity mutual fund. Hypothesis 2: Ho: There is no relationship between the return on KLCI and the return on Islamic equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Islamic equity mutual fund. 1.6 Limitations of the Study Data Collection and Cost Limitation The major source of data gained is from the secondary sources. The data is only available at certain places and it requires cost to obtain the data. Besides, it also requires costs in the process of printing, photocopying, data services and transportations to obtain the information. The information about the topic studied is also difficult to search in the library because of the limited information. As a result, it causes problems to the researcher to gather and collect the information. The information and data related to the study is rather difficult to obtain. Thus, the accuracy of the study depends on the accuracy of the data available and may not perfectly precise. In addition, data is also limited since it relies on the secondary sources alone. Lack of Experience and Expertise Since this research is the first research experience for the researcher, undoubtedly there are still lots of things to improve. The lacks of experience especially in data collection and time management have been the limitations to the researcher. Moreover, the researcher has limited knowledge on the topic and needs more understanding on the topic studied. Time Constraint Time is very limited for the researcher to complete the research. The researcher has to be very smart in scheduling the time to make sure the research is completed in time. Thus, time constraint has been identified as one of the limitations for the researcher. 1.7 Significance of the Study This research analyzes on the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic Equity Mutual Fund in Malaysia. Therefore this study will provide some information that can be useful because the data and findings from this research will help other researchers to produce better result in their research. This research is also significant to: To Researcher As a finance student, issues in measuring portfolio performance are so much important and crucial. By studying about measurement of portfolio performance in depth, a better understanding and knowledge is gained. This research has given the researcher the opportunity to get the experience in practice as well as in theories. To other researcher This study also can be a useful reference to other researchers who are keen to carry on the study regarding the performance of mutual fund in Malaysia. There are several fruitful areas in this study that can be further examined by other researchers. Further study will give an opportunity to other researchers to expand their view and knowledge. To do so, they need to refer to numerous literatures and hopefully, this research can come in handy for them. To Finance Students This research will be very useful for finance students in having more knowledge about the companys portfolio performance and the differences in the performance between conventional and Islamic Equity Mutual fund in Malaysia. They can use this research as a guide and as references in their studies in portfolio management and mutual fund in Malaysia. To Businesses This research is very important to businesses in realizing the effects of portfolio management on their performance. This is important so that they will have clear direction in deciding their investment. To Investors This study plays an important role in decision making since it gives the investors a prior knowledge of which Equity Mutual Fund companies is the best to invest and whether those companies provide high returns on investment. Moreover, revealing the specific volatility patterns in returns might also benefit investors in risk management and portfolio optimization. This research is also important to investors so that they can have a clearer picture of their investment choices. For investors the study can help them to know the risk and return of their investment transaction. 1.8 Definition of Terms Portfolio A collection of investments are all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices. Sharpe Ratio A risk-adjusted measure developed by William F. Sharpe, calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the funds historical risk-adjusted performance. Mutual Fund (Unit Trust) A form of collective investment constituted under a trust deed or a pooled investment plan where the capital contributions of investors are combined into a legally formed trust fund. Equity fund Equity fund or stock fund is a fund that invests in Equities more commonly known as stocks. Such funds are typically held either in stock or cash, as opposed to bonds, notes or other securities. Return Based on Investopedia definition, return can be defined as the gain or lossof an investment over a specified period, expressed asa percentage increase over the initial investment cost. Gains on investments are considered to beany income received from the security, plus realized capital gains. Risk The quantifiable likelihood of loss or less-than-expected returns Risk-adjusted return A measure of how much an investment returned in relation to the amount of risk it took on. Often used to compare a high-risk, potentially high-return investment with a low-risk, lower-return investment. Benchmark A standard, used for comparison. For example, the Nasdaq may be used as a benchmark against which the performance of a technology stock is compared. Regression Analysis A statistical technique used to find relationships between variables for the purpose of predicting future values. Coefficient of Determination A measure of the correlation between the dependent and independent variables in a regression analysis. R-squared A measurement of how closely a portfolios performance correlates with the performance of a benchmark index, such as the SP 500, and thus a measurement of what portion of its performance can be explained by the performance of the overall market or index. Values for r-squared range from 0 to 1, where 0 indicates no correlation and 1 indicates perfect correlation. Kuala Lumpur Composite Index (KLCI) The Kuala Lumpur Composite Index (KLCI) is a stock market index generally accepted as the local stock market barometer. KLCI was introduced in 1986 to public the need for a stock market index which would serve as an accurate performance indicator of the Malaysian stock market as well as the economy. It is used to be the main index, and is now one of the three primary indices for the Malaysian stock market which the other two are FMB30 and FMBEMAS, Bursa Malaysia. It contains 100 companies from the Main Board with approximately 500 to 650 listed companies in the Main Board which comprise of multi-sectors companies across the year 2000 to 2006 and is a capitalization-weighted index. 2.0 Literature Review 2.1 Chapter Description Literature review is the documentation of a comprehensive review of the published and unpublished work from the secondary sources of data in the areas of specific interest to the researcher. The reason of the literature review is to ensure that no important variable that has in the past been founded repeatedly to have an impact on the problem is ignored. (Uma Sekaran, 2005 page 63). 2.2 Literature Review of Evaluated Portfolio Performance Craig W. French (2003) discussed on what is involved in evaluating portfolio performance, including the need to adjust for differential risk and differential time periods, the need for a benchmark, and constraints on portfolio managers. It also considered the difference between the portfolios performance and the managers performance. For measurement this paper used well-known risk-adjusted (composite) measures of Sharpe portfolio performance. Investors who had all (or substantially all) of their assets in a portfolio of securities should rely more on the Sharpe measure because total risk is important. Joel Owen and Ramon Rabinovitch (1998), for the last four decades, numerous authors have been suggesting methods to evaluate portfolio performance. Sharpe (1966) proposed performance measures which had produced a score for every portfolio being evaluated. These scores were used to compare the performance of any two portfolios or rank the performance of all portfolios in a given set. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. 2.3 Literature Review of Sharpe Ratio Francisco Peà ±aranda (2007) in her paper commented on developments beyond mean-variance preferences to some alternatives to the Sharpe ratio. The main goal of those measures was to give a similar ranking to Sharpe ratios when returns were symmetrically distributed and showed a preference for skewness when they were not. Moreover, performance measures could be used to guide asset allocation since they can be used as the criterion to maximize with portfolio. Raphie Hayat (2006), the attractiveness of the Sharpe Ratio came from its intuitiveness and simplicity. The Sharpe Ratio are simple because it could rank funds on the base of a single and intuitive since it only rewarded funds with a higher ratio if their returns were higher with the same level of risk or if the risk was lowered while keeping the same level of return. Zhidong Bai, Keyan Wang, and Wing-Keung Wong (2006) stated that the asset performance evaluation was one of the most important areas in investment analysis. In order to compare the performance among assets, several statistics had been developed and among them, the Sharpe-ratio statistic was the most prevalent. However, the major limitation of the Sharpe-ratio statistic was that its distribution is only valid asymptotically, but not valid for small samples. Nevertheless, it was important in finance to test the performance among assets for small samples. Tzu-Wei Kuo and Cesario Mateus (2006), the Sharpe ratio was well known risk-adjusted performance measures and easily understood by an individual investor. Thus, investors could evaluate the exchange-traded funds (ETFs) performance, based on the Sharpe ratio. However, the Sharpe ratio relied on the assumption that returns were normally distributed having these measures difficulty in evaluating the performance with skewed return distributions. Martin Eling and Frank Schuhmacher said that the classic Sharpe ratio was adequate in evaluating investment funds when the returns of those funds were normally distributed and the investor intended to place all his risky assets into just one investment fund. Because hedge fund returns differed significantly from a normal distribution, other performance measures had been proposed and encouraged in both academic and practice-oriented literature. The Sharpe ratio measured the performance of an investment fund by considering the relationship between the risk premium and the standard deviation of the returns generated by a fund. The Sharpe ratio were an adequate performance measure if the returns of the investment funds were normally distributed and the investor wished to place all his risky assets in just one investment fund. Andreas G Merikas, Anna A Merikas and Ioannis Sorros (2005) examined the exact relationship between the Sharpe ratio and the information ratio. Sharpe in 1994 asserted that the information ratio was a generalized Sharpe ratio. Sharpe ratios had been estimated for each fund in each category, and an average ratio for each category. The Sharpe ratio would generally be positive since excess returns of funds over the risk free rate would be positive, unlike excess returns of funds over the market, which could be negative, as the return of the risk free bond was smaller but at the same time less volatile than the return of the market. Cheryl J. Frohlich, Anita Pennathur and Oliver Schnusenberg in their research, Sharpe reward-to-variability ratio was used if total variability was thought to be the appropriate measure of risk, a stocks (portfolios) risk-adjusted returns could be computed using the Sharpe Index. The Sharpe and Treynor Index eliminated the problem of only considering return as a measure of performance. However, neither ratio was independent of the time period over which it is measured. This means that the ratio can change from one period to another with different results. Moreover, both ratios also ignored the correlation of a fund with other assets, liabilities, or previous realizations of its own return. Mario Onorato (2004), the Sharpe Ratio of any investment was defined as its excess return, it is return in excess of a benchmark return divided by the standard deviation of excess return. The benchmark represents a risk free investment alternative. Moreover, although the Sharpe ratio has become part of the modern financial analysis, its applications typically did not account for the fact that it was an estimated quantity, subject to estimation errors that would be substantial in some cases. The statistical properties of Sharpe ratios depended intimately on the statistical properties of the return series on which they are based. This suggests that a more sophisticated approach to interpreting Sharpe ratios is called for, one that incorporates information about the investment style that generates the returns and the market environment in which those returns are generated. Wei Zhen (2004), in his paper said that the Sharpe (1966) and Treynor (1965) performance measures were widely accepted in both academia and industry to assess the Risk-adjusted value of a particular portfolio. It could be shown, after some mathematical treatment, that the Sharpe performance measure was useful when the portfolio of interest represented all of the investors investment, while Treynors measure was preferred when the portfolio under discussion was only a portion of the whole investment package. Robert McCauley and Guorong Jiang (2004), through the Sharpe ratio it compared the returns of portfolios in relation to their risk by dividing their returns in excess of the riskless rate of return by the volatility of their returns. A portfolio with a higher Sharpe ratio was preferred in that it offered a higher return per unit of risk, as measured by return volatility. William Goetzmann, Jonathan Ingersoll, Matthew Spiegel and Ivo Welch (2002), the Sharpe ratio is one of the most common measures of portfolio performance. It was used as a tool for evaluating and predicting the performance of mutual fund managers. Since then the Sharpe ratio, and its close analogues the Information ratio, the squared Sharpe ratio and M-squared, have become widely used in practice to rank investment managers and to evaluate the attractiveness of investment strategies in general. The appeal of the Sharpe measure was clear. It was an affine transformation of a simple t-test for equality in means of two variables, the first variable being the managers time series of returns and the second being a benchmark. The Sharpe ratio was also ubiquitous in academic research as a metric for bounding asset prices. Andrew Worthington and Helen Higgs (2002), the Sharpe ratio (also known as the reward-to-volatility ratio) indicated the excess return per unit of risk and was calculated by dividing the return in excess of the risk-free rate by the standard deviation of returns. In the current context, the Sharpe ratio was the most appropriate performance measure for an investor whose portfolio was composed wholly of a given artists work. Verena Kugi (1999), the Sharpe ratio measured the change in the portfolios return with respect to a one unit change in the portfolios risk. The higher this Reward-to-Variability-Ratio the more attractive was the evaluated portfolio because the investor received more compensation for the same increase in risk. Graphically, the Sharpe ratio was equal to the slope of a straight line connecting the position of the evaluated portfolio, for example a fund, with the risk-free rate. To determine the quality of performance, the Sharpe index of the evaluated portfolio was compared to the Sharpe index of the market or benchmark portfolio. The portfolios Sharpe index being higher than the markets Sharpe index indicated that the portfolio manager had outperformed the market. Respectively, a lower Sharpe ratio was a sign of underperformance. Any portfolio that was positioned on the capital market line had a Sharpe ratio equal to that of the market and was therefore characterized by neutral perform ance. Youguo Liang and Willard McIntosh (1998), the Sharpes alpha captured the excess return of