A Person s World View May Not Be My Worldview - 1505 Words

A person’s world view may not be my worldview, so how do I differ what a worldview is? Along with, how is a person’s worldview different from a christian worldview? When I read an encyclopedia the definition might look like this, a person’s specific bias or opinion on things that influence how they look at the world and the things around them from what is there to what is expected to be there. Now that I have a definition of a worldview, what is a christian worldview? With the article A Christian Worldview there are five points that make up a christian worldview. First God exists and the world was created by him. Secondly humans who fully believe in God have enjoyment to look forward to after death because they can be with God, but everyone has a soul and spirit to go somewhere after they die. Third science and metaphysics are not the only things that explain a big bang theory and everything that exists today. Fourth is epistemology is not the only thing that h elps humans perceive real senses. Last there is a difference between objective morality and subjective morality along with the Bible being a source for christians to follow God’s will for our life (Drury 3). Likewise with the five points to a person’s worldview and a christian worldview how can all citizens legally choose not to give life to an unborn child, but not let people end their life when they are terminally ill, or go through extreme pain for the rest of their life. Currently there are four states thatShow MoreRelatedWorldview Reflection Paper1327 Words   |  6 Pagesno idea that I had a worldview. I know my worldview didn’t change, but my understanding of myself, others and what that means changed enormously. I learned something very useful and important about the way I perceive things and gain knowledge; I learned about things I didn’t know previously. In the book, The Universe Next Door (2009), Sire communicates various worldviews. For any of us to be fully conscious intellectually, we should not only be able to detect the worldviews of others but be awareRead MorePersonal Worldview Essay1009 Words   |  5 PagesPersonal Worldview Elias Cantu Grand Canyon University PHI-413V Roxanne Birchfield October 15, 2017 Personal Worldview My world view is strongly influenced by my faith, however working in the healthcare field I frequently meet individuals of different religions and faiths. A worldview is a theory of the world, used for living in the world. A world view is a mental model of reality. It is a framework of ideas and attitudes about the world, ourselves, and a comprehensive system of beliefsRead MoreWorldview Essay1313 Words   |  6 PagesWorldview Essay Today’s society consists of many worldviews. Most people tend to pull beliefs from different religions, but often stick to one main worldview. A worldview to me is the gathering of beliefs that shape what we do on a daily basis and forms our overall view on life. When I look at my beliefs critically, I am able to see my worldview and see how it compares to different worldviews, but also how it compares mainly to the Christian Worldview. My view of God is very similar to the non-denominationRead MoreThe History Of Rasselas, Prince Of Abyssinia By Samuel Johnson Essay1707 Words   |  7 PagesA worldview is a mental model of reality. It is the idea and attitudes towards the world, life, and us as individuals. Each individual has their own unique worldview. People acquire a worldview by how they go through life, it may change or even stay the same. How they grew up, life situations, values, religion, and attitudes are factors that may affect one’s worldview. There are many questions that can make up one’s worldview. How should we act? What gives life purpose? Where did we come from? TheseRead MoreMy View On The World And The Way Of Living, Working, And Socializing1199 Words   |  5 PagesThere are many things that influence my view on the world and the way of living, working, and socializing. I was raised as a Christian orthodox, but my faith in religion is diminished, don’t get me wrong I do b elieve in God, but not in church or religion. I respect every religion and cultural beliefs, but to me, religion is made to separate the peoples and their beliefs. I believe in peoples’ morale and what good they doing. I don’t understand how the person can say they are religious because everyRead MoreStereotypes And Perception Of A Worldview1221 Words   |  5 PagesIntroduction In our first class we discussed that a worldview acts as a ‘filter’ through which we understand and perceive phenomena (Koltko-Rivera, 8). This discussion was very important, as understanding the meaning of the term worldviews laid the foundation on which the following classes could be built upon. â€Å"We don t see things as they are, we see them as we are† (Koltko-Rivera, 3) was the statement that stood out most for me, it explained how we are each shaped by our own personal experiencesRead MoreWorldview As A Person s Perception Of Life And Perspective Of The World1615 Words   |  7 PagesChristian Worldview Rachel Rotolo Liberty University  Table of Contents Part I 3 Part II 3 Part III 6 References 8 Part I A worldview is often defined as a person’s perception of life and perspective of the world. A worldview involves more than how a person interprets life, but it also involves a person’s philosophy of life, and a person’s decision-making (Gutierrez Weider, 2013). Gutierrez and Weider describe a worldview as the lenses that one looks through to see the world, and that whatRead MoreWhat Is Outstanding Customer Service, Friendly Team Members?1443 Words   |  6 Pagesintentional servant style leadership that is portrayed and enforced by the company s leader and founder, S. Truett Cathy. Everyone who visits a Chick-fil-A is usually amazed by the extremely high quality customer service and the hospitality that is demonstrated by the team members from the time you enter the building, until the time that you exit . Let’s be honest, who doesn’t love hearing the infamous, It s my pleasure to serve you?† Cathy believed that, â€Å"We must motivate our selves to do ourRead MoreWorldview As A Person s Worldview1402 Words   |  6 Pagesperson’s worldview may not be my worldview, a person’s worldview is individual to the person. I would define worldview as a person’s specific bias or opinion on topics that influence how they look at the world and their surroundings from what is there to what is expected to be there. Now that I have a definition of a worldview, what is a christian worldview? With the article, A Christian Worldview, there are five points that make up a christian worldview. First, God exists and the world was created

The Relationship between Playing Multiplayer Online Games...

This research attempts to identify if any, a relationship between playing multiplayer online games and developing communication like skills. Online multiplayer video games involve thousands of players all over the world who may play solo, in teams, or with one other player. To begin the study, a survey will be created in order to gather information on the communication skills of collaborative gaming individuals. The survey will have subjects answer different questions regarding their communication behavior during videogame playing. In addition the number of years that a subject has played a particular video game or participated in online video gaming will also be gathered. The reason why using surveys is the method of choice for this study†¦show more content†¦This sample size is appropriate because the study must account for the vast number of multiplayer games that a respondent may participate in, which may have an impact on their communication skills. It is important to r ecognize however, that this particular sample, though a convenience sample, is also made up of respondents who are part of the gaming community. Thus, this sample has certain limitations in that the data will compiled from a self-selected sample. Section 3: Key Variables The main question was to identify whether online collaborative gaming improved communication skills. Four variables were used to assess whether communication skills could be improved due to online gaming they are as follows: team communication skills, communication through leadership skills, autocratic leadership skills, and leadership through democracy skills. The team communication skills variable which consists of questions on the survey 1-7 which can be found in the Appendix as 1B measure a respondents perception about their own communication skill level as a member of a cooperative team. These responses were measured by using a Likert Scale on a 5 point system with Strongly Disagree â€Å"1† to â€Å"5† Strongly Agree. These 7 questions were averaged and the higher the score received by the respondent, the better team communication skills they believe they had. The next six items, questions 8-13 were used to identify the respondents’ perceptions about their skills as a leader of aShow MoreRelatedThe Relationship between The Use of Technological Communication and Social Skills in College Students 1793 Words   |  7 PagesThis study examined the relationship between the use of technological communication and social skills in college students. A total of 100 male and female undergraduate students at John Jay College were surveyed about their social skills, technology use, Internet behavior and attitude. 60 of these participants, chosen at random, participated in a conversation taking place in a lab setting that was observed by researchers, in order to evaluate non-verbal social skills. The hypothesis was that participantsRead MoreHow Does Online Gaming Affect the Study Habits of Second Year Students?3400 Words   |  14 Pages Online game  is a video game  played over some form of  computer network, using a personal computer or  video game console. This network is usually the  internet  or equivalent technology, but games have always used whatever technology was current:  modems  before the Internet, and hard wired  terminals  before modems. The expansion of online gaming has reflected the overall expansion of computer networks from small local networks to the internet and the growth of internet access itself. Online gamesRead MoreComputer Game Addiction Researches6657 Words   |  27 PagesEffects of Computer Game Addiction to Academic Performance of Third year AB Students of Holy Cross of Davao College ______________ A Research Paper Presented to Dr. Danilo L. Mejica ______________ In Partial Fulfillment of the Course Requirement of Education 7 (Introduction to Research) ______________ By Agulo, Emily Monteverde, Rhay Brian Bedro, Edward Caesar October 2010 Holy Cross of Davao College Sta Ana Avenue, Davao City Approval Sheet This study entitled â€Å"Computer Game Addiction andRead MoreReality Is Broken Summary14202 Words   |  57 PagesREALITY IS BROKEN | WHY GAMES MAKE US BETTER AND HOW THEY CAN CHANGE THE WORLD | JANE MCGONIGAL | Summary Zhang Huijing Fashion Marketing English 2nd Year We always regard â€Å"GAMES† as â€Å"pastimes†, but in reality the functions of games are more than that. First Part_ Introduction: Reality is broken Games have had enough of reality. You are one of gamers or you definitely know some of them. Who are the gamers? From different professions, ages of people could be the gamers. They playRead MoreVideo Games: Good or Evil?2723 Words   |  11 Pagesare mostly consumed by is video games. Video games were introduced back in the 1970s, which consisted of games such as Pong, that didn’t contain much graphics. Then starting in the late 1980s, video games started to become more developed in ways such as the graphic was in much better quality than before because of the advancement in technology. With increasing development in graphics, it made the video games much more realistic than ever before, and made video games as popular as they are now. TodayRead MoreDifference Between Esports And Real Sports Games2958 Words   |  12 PagesXuecong Guan (301215261) IAT 210 Instructor: Matt Toner July 29th, 2015 The difference between eSports and real sports games Nowadays, with the rapid development of science and technology, people’s essential demand of digital games become higher and higher. And because of the creation of digital games, it brings great influence on the daily life of the human. Some people argue that playing digital games have already been daily performance; it not only can relax people from pressure and tired, butRead MoreThe Positive and Negative Effects of the Internet5097 Words   |  21 Pagesflexibility in working hours and location, especially with the spread of unmetered high-speed connections. The Internet can be accessed almost anywhere by numerous means, including through mobile Internet devices. Mobile phones, datacards, handheld game consoles and cellular routers allow users to connect to the Internet wirelessly. Within the limitations imposed by small screens and other limited facilities of such pocket-sized devices, the services of the Internet, including email and the web, mayRead MoreThe Privilege Of Interpersonal Communication2986 Words   |  12 PagesThroughout the years people have been given the privilege of interpersonal communication in many forms, such as letters, emails, texts, and social media. Letters were one of the very first mediums people used to communicate, and as the years went by technology improved, and emails were created. Emails served as a faster alternative for people in a business to contact someone else. Following that was the idea of text messaging, not only was it time efficient but also easier. That wasn’t the only thingRead MoreSci Damath Andoroid Game9675 Words   |  39 Pagesusing android operating system. Android phones are effective for the new generation of virtual game and other application. People used their mobile phone by connecting and communicating to others, but android phones can also be use as an entertainment in different application. Android phones are very popular now a day. Every month there are new releases of the newest android phones of some companies like Nokia, Sony, Samsung, Cherie Mobile and Myphone. They have new features and more applicationsRead MoreFeasibility Study on Internet Cafe Chapter 17099 Words   |  29 Pagesthe hand of getting wired in the world through the use of Internet. The technology of ISP succeeded in keeping and pushing the boundaries that leads Filipinos into the next millennium which resulted to a dramatic change in the face of technology communication in the Philippines. Through the use of the World Wide Web, Students, Businessman and other of the same sort found an indispensable tool for the research and taxation. Using the variety of websites mailing list, news groups, and chat room, the wired

Hidden Challenges of Cross Border Negotiation free essay sample

In finding out ways to negotiate, you may find numerous fulfilling to your requirement. Despite that, there also exists a crooked that you may encounter innumerable other ways of making dull cultural mistake as business augments ever more international level. Specific blunders like this are outnumbered in gravity by more astute differences emerging from cultural dispositions that influence the way people tend to reciprocate. Sebenius comments on this aspect, but his main points of convergence are in on a largely overlooked aspect to cross-border negotiation which are the ways that people from different regions and cultural boundaries come to agreement on a definite point, or basically the processes and methodologies involved in negotiations. Sebenius persuasively communicates the hazard and perils of neglecting decision-making and governance processes. In tackling the complex issue for cross boarder negotiation and giving the way out the author sets out a process for mapping out the decision-making method. We will write a custom essay sample on Hidden Challenges of Cross Border Negotiation or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The process tells us about as to who are the negotiating parties that are involved, what are the formal and casual roles people tend to play, and how a resolution is actually reached, which is nothing but a win-win situation. The Hidden Challenge of Cross-Border Negotiations is the title of an article by James Sebenius published in Harvard Business Review, 80(three): 76-85, 2002. The author asserts that an understanding of the protocol, etiquette and cultural differences in cross-cultural business situations is essential for successfulness in todays global business surroundings. The author gives an insight and discusses as to how the cultural contrariety and differences can have an effect on the business negotiations in substantially significant and unanticipated ways. , they tresses that in the situations where the agreement is reached, there arises large cultural difference in understanding the norms and traditions and also explains as to how such processes differ widely from culture to culture. An interpretation of the information and knowledge lets you design a strategy to deal with the obstacles that you have anticipated. Of coursework, there is another, evenly treasonable aspect to cross-border negotiation that is the ways and means in which people from different regions come to an agreement and the processes that are involved in negotiations. .

Effective Learning Techniques Promising Directions

Question: Discuss about the Effective Learning Techniques for Promising Directions. Answer: Introduction Learning is a process that can be described as a way of acquiring knowledge through experiences or study. It is necessary that individuals devote many resources to ensure that they achieve their objectives in the learning process. Many scholars have carried out studies to establish the best memory improvement techniques. The various memory improvement techniques can be supported by the various psychological theories that motivate the learners thus allowing them to have good learning experiences. The theories have some variations; therefore, they can be used individually or together with other theories at the same time. However, regardless of the theory of choice, the application of the various memory improvement techniques together with any of the relevant theories can be guaranteed significant improvements in their learning. Decision-making theory, humanistic perspective theory, and psychosocial motives theory are addressed in the essay on how they can best help students to learn in the university and beyond. Psychologists have different theories that explain the behavior of individuals concerning the achievement of their goals. For my case, I would choose three main theories to motivate myself to utilize the various memory improvement techniques. These theories are decision-making theory, the humanistic perspective theory, and the psychosocial motives theory. The various theories will be used to motivate the practice retrieval, judgments of learning, and distributed practice techniques respectively. Decision-making theory According to the decision-making theory, people tend to choose their behaviors as guided by their experience in risky or uncertain situations (Burton, 2015). As such, people decide what to do basing on the results they want to achieve. In this case, more effort may be spent in studying to ensure that good grades are achieved in the various disciplines in the course. As such, practice retrieval will be emphasized to ensure that memory improvement is achieved. The practice retrieval principle means that students learn by recalling information from memory. Studies prove that retrieval practice is more effective than re-studying. For instance, a study was carried out to establish the best learning method among participants that used the retrieval practice and those that used the restudying method. According to the results, the retrieval practice grouped outperformed the restudying group despite being given four chances of re-reading a passage (as cited in Schwartz et al., 2011). The memo ry technique will ensure that the information read is grasped adequately to prepare me for the various exams that will be administered in school. Furthermore, the expectancy theory will play a critical role in my future beyond the university. The reason for this claim is the fact that it will motivate me to work better in my job to achieve goals such as promotion, salary increment, and other incentives. Humanistic perspective theory The humanistic perspective theory is the second theory that will be essential in motivating the various memory improvement techniques. The theory describes how people tend to view and put meaning to their behavior as well as other peoples behaviors (Burton, 2015). In fact, one of the assumptions of the theory is that people always attempt to establish why others do what they do. According to the theory, the reasons that dictate people behaviors can affect their futures as well. Therefore, it can be used hand in hand with the judgment of learning because it can motivate an individual to perform better in the future by making the right judgment. These reasons have three key features, which are stability, the locus of control, and controllability. The first feature, which is stability, involves issues such as the likelihood of an event to affect the future positively or negatively (Burton, 2015). For instance, failing an exam due to illness is not stable since the student cannot give up. On the one hand, if a learner fails and believes he was not smart, then he will be demotivated, and this will be a stable attribution. The second characteristic, which is the locus of control, determines whether the event was caused by an internal or external factor (Burton, 2015). In this case, failures attributed to external factors such as poor teaching do not have negative impacts on the students. On the other hand, internal factors such as perceiving one as being not quick lead to demotivation. The third characteristic, which is controllability, also plays a critical role in determining the motivation of an individual (Burton, 2015). The reason for this is that people will be less motivated in situations whereby they feel they were in con trol of the situation. Another important fact about the humanistic theory is that the older adults tend to view knowledge a significant acquisition in their lives. As such, the adults have to be presented with enhanced memory techniques that addressed their specific needs. For this reason, Gross et al. (2012) conducted research to establish the characteristic of people and memory improvement programs used by older adults. It is believed that memory improvement of an older adult can be achieved by various techniques such as the mnemonic technique. The mnemonic strategies used commonly include a combination of rehearsal, categorization, association, concentration, and imagery (as cited in Gross et al., 2012). The study method involved a comprehensive review of the previously done researches before January 2010. As such, only 33 out of the 402 reviewed studies were included for the examination (Gross et al., 2012). The results proved the need for training on more strategies to enhance memory improvement among older adults. Psychosocial motives theory On the other hand, the psychosocial motives theory that emphasizes that the most basic needs of humans must be met first for them to be motivated to achieve their goals (Burton, 2015). As such, people tend to organize their needs in a hierarchy that is divided into five levels. The levels are physiological, safety, belonging, esteem, and self-actualization. Therefore, for a person to achieve their goals, they must have good health, security, safety, and good relationships. The theory is important because it can work well with the distributed practice technique. The theory can be applied by prioritizing the various activities set toward the achievement of goals during the study period. It will also help in making the controls such as when to study, what to study, and how to study to promote learning. The prioritization of the activities concerned with learning will ensure that I achieve my goals in the university and pass my exams. Besides, the theory can be used together with the mem ory improvement techniques in the job market. In the job market, the various levels of hierarchy will help in motivating oneself to achieve the various objectives of the company as well as personal goals. The psychical theory also works for hand in hand with other memory techniques such as those are practical oriented. According to Carpenter (2014), practical oriented learning techniques are more efficient because they help learners gain knowledge faster. Besides, other techniques such as the use of flashcards used by some students promote memory. Carpenter (2014) also advocates for the use of practice retrieval more than rereading materials as seen in other studies. More so, she claims that the effects of practice retrieval are best viewed in younger learners especially in cases where the students were incentivized. Furthermore, the theory motivates several other memory techniques that people tend to achieve for the sake of meeting their basic needs that will eventually lead to the achievement of their goals. The methods include self-explanation, distributed practice, keyword mnemonic, summarization, rereading, highlighting, imagery, practice testing, elaborative interrogation, and interleaved practice. Some of the techniques such as mnemonic, distributed practice, rereading, and imagery is similar to the ones presented by other studies such as the ones shown by Gross et al. (2012) and Schwarz et al. (2011). The study by Dunlosky et al. (2013) is useful because of the approach used to present the various techniques. It describes the techniques and presents the effects of the same, implementation issues, representative educational contexts, and overall assessment. Conclusions Learning is a process that requires several inputs to achieve the desired results. One of the main recourses needed in learning is the memory. As a result, many people have developed several techniques that can be used for memory improvement. Some psychological theories can be utilized together with the various methods to motivate the learners and ensure they get the best of their efforts. The memory improvement techniques include process material actively, practice retrieval, distributed practice, metamemory, mnemonic technique, self-explanation, summarization, highlighting, among others. The various techniques can be motivated through different theories such as the decision-making theory, the humanistic perspective theory, and the psychosocial motives theory. The use of the theories and memory improvement techniques will guarantee good learning experience in the university and beyond. References Burton, L. J. (2015). An interactive approach to writing essays and research reports in psychology (4th ed.). Milton, QLD: Wiley Carpenter, S. (2014). Improving student learning in low-maintenance and cost-effective ways. Journal Of Applied Research In Memory And Cognition, 2.

RESEARCH PROJECT-WEEK FOUR Essays - Safety, , Term Papers

RESEARCH PROJECT-WEEK FOUR David A. Keith BUS 642 Business Research Methods Tools Instructor: Donnie Smith August 1 6, 2017 I decided to put together a paper from one of the subjects from our instructor called, Workplace Safety. A lot of incidents can be prevented if safety issues are address early in stages of building a business and training workers the right way. Many people fall into these danger categories of getting hurt because they either was not trained right, did not listen nor understand what was being said, or slip and falls out of rushing or carelessness. A lot of accidents come from cleanup spills, obstructions being moved around, damaged carpets and floors coming apart. When dealing with any type of business, it is only proper to use good safety measures to fire hazards of evacuation planning for all employees. When we use, heavy-duty machines should come with proper training to everyone being fully educated in their fields. Issues that cause workers to fall into endangered situations comes from lack of education and management who are employees themselves can also be victims of lack of proper training and unable to teach others. I am giving my own reply to solving problems to reduce risks of harm and body injuries from happening on the job through instructing, educating, and making sure everybody is trained properly. When I look at the question, "to what kinds of operative training within a workplace makes the workplace a haven to work?" Hypothesis forms to thinking that those who are trained well become inconveniences to one's business who take time in their busy schedule teaching others about the safe rules and regulations to what will keep them safe. Cost for hire and training others make a company bigger and gross more in pay-time then not being trained at all. Through money and time, issues within a business focus to realizing how safe their place of work becomes, saves time with filing incident and accident reports, and workman compensations. An employer makes sure their worker fully understands what they are being trained without being rushed to learn that will be beneficial to the employee and employer. On averages of eighty-five staff workers are death related each year on their line of work which is why OSHA standards for training health and safety aspects comes with their line of work ( Rieve , 201 5 ). In summary of how these industries gather information of hazard on a job goes, in this article is touched by small means to which training in a safe manner for all employees is crucial for health, safety reasons, and staying on different vagaries that comes into play. This article used is short and for this type of research should do with training that is right for a workplace. Hypothesis was a form by which test were done with reason provided, and in this article made me to believe in usage of information to which safety is handled on due matters through more research taking place. Ethical concerns within the contents of this webpage were not fully analyzed the right way and I found this to be not of true facts. Safety measures by which staff members occupy within these settings are crucial to what ethic issues that manufactures and employers to chemical, machineries, and additional technologies need to think about whenever they design products with processes (Galvin, 2014). In 1970, other ethic concerns within these researches contains occupations of health and safety rules, nationwide institutes for occupations to health and safety, occupations to the safe acts of health (Galvin, 2014). As our internet continue to change and evolve into social tools turn into ways one communicates with others. To research ethics to how humans treat each other, to making certain it is done with due respect and self- respect during times of diminishing possible harm to ones researches within each participate (Landrum, 2012). I will reveal within this article of the different advantages and disadvantages of everybody who research the internet, with quick growth and steady increases from year to year. Several disadvantages come with problems with equipment's, lesser reply ratings, and more time to fix things. Several advantages come with lesser

How to Use a Sample of the Career Essay to Get a Good Writing Experience

How to Use a Sample of the Career Essay to Get a Good Writing ExperienceA sample of the career essay will help a student plan out the content and structure of the essay. It is an excellent way to get a feeling for how a standard composition should look like. This will help students determine if they are able to write a better essay and if they are comfortable with the idea of making a postgraduate degree or other professional achievement.The example sample of the career essay is a great guide. Many online institutions have samples of the career essay available, as do some high schools. It is possible to use the sample for free as an example of the kind of essay that you can expect to receive from your school, university or college.The sample will make it easier for the student to identify what he or she needs to do and what he or she needs to put into the essay. This can save the student the time and effort of trying to figure out what to write about and how to write it.This kind of essay usually has something to do with academic writing, so students should be familiar with a variety of techniques and tools. This includes using a word processor and learning about how to format his or her paper. The typical student uses a word processor to help him or her keep track of the types of thoughts that need to be included in the essay.One of the things the student should do is start with a general overview of the topics in the essay. This can help him or her create a more concise and well-organized description of the course of events in his or her life. Students should take some time to think about what they want to say about their course of events in their life.Students should decide which areas of concern they are going to focus on in the essay. They should be able to list the items and clarify what is required to make those items come to fruition. They should be able to list all of the reasons why they want to earn their postgraduate degree.The last thing that the s tudent should do is to figure out how long the essay will take to write. Most students do not have the time to sit down and write a complete work of academic literature. The sample of the career essay will help the student figure out how much time he or she can devote to this kind of essay. This will help him or her know how much time he or she can devote to it.As with all essays, the sample of the career essay will help students find out how to successfully finish their course of work and earn a postgraduate degree. The sample can help the student identify the places in the essay where he or she should use his or her persuasive skills. This will help students come up with the best possible arguments for a particular topic in their life.

Calculating and Understanding Real Interest Rates

Calculating and Understanding Real Interest Rates Finance is riddled with terms that can make the uninitiated scratch their heads. Real variables and nominal variables are a good example. Whats the difference? A nominal variable is one that doesnt incorporate or consider the effects of inflation. A real variable factors in these effects. Some Examples For illustrative purposes, lets say that youve purchased a one-year bond for face value that pays six percent at the end of the year. Youd pay $100 at the beginning of the year and get $106 at the end because of that six percent rate, which is nominal because it doesnt account for inflation. When people speak of interest rates, theyre typically talking about nominal rates.   So what happens if the inflation rate is three percent that year? You can buy a basket of goods today for $100, or you can wait until next year when it will cost $103. If you buy the bond in the above scenario with a six percent nominal interest rate, then sell it after a year for $106 and buy a basket of goods for $103, youd have $3 left. How to Calculate the Real Interest Rate   Start with the following consumer price index (CPI) and nominal interest rate data: CPI Data Year 1: 100Year 2: 110Year 3: 120Year 4: 115 Nominal Interest Rate Data Year 1: Year 2: 15%Year 3: 13%Year 4: 8% How can you figure out what the real interest rate is for years two, three, and four? Begin by identifying these notations:  i means inflation rate,  n is the nominal interest rate  and  r is the real interest rate.   You must know the inflation rate - or the expected inflation rate if youre making a prediction about the future. You can calculate this from the CPI data using the following formula: i [CPI(this year) – CPI(last year)] / CPI(last year) So the inflation rate in year two  is [110 – 100]/100 .1 10%. If you do this for all three years, youd get the following: Inflation Rate Data Year 1: Year 2: 10.0%Year 3: 9.1%Year 4: -4.2% Now you can calculate the real interest rate. The relationship between the inflation rate and the nominal and real interest rates is given by the expression (1r)(1n)/(1i), but you can use the much simpler Fisher Equation  for lower levels of inflation.   FISHER EQUATION: r n – i Using this simple formula,  you can calculate the real interest rate for years two  through four.   Real Interest Rate (r n – i) Year 1: Year 2: 15% - 10.0% 5.0%Year 3: 13% - 9.1% 3.9%Year 4: 8% - (-4.2%) 12.2% So the real interest rate is 5 percent in year 2, 3.9 percent in year 3, and a whopping 12.2 percent in year four.   Is This Deal Good or Bad?   Lets say that youre offered the following deal:  You lend $200 to a friend at the beginning of year two and charge him the 15 percent nominal interest rate. He pays you $230 at the end of year two.   Should you make this loan? Youll earn a real interest rate of five percent if you do. Five percent of $200 is $10, so youll be financially ahead by making the deal, but this doesn’t necessarily mean you should. It depends on whats most important to you: Getting $200 worth of goods at year two prices at the beginning of year two or getting $210 worth of goods, also at year two prices, at the beginning of year three. Theres no right answer. It depends on how much you value consumption or happiness today compared to consumption or happiness one year from now. Economists refer to this as a person’s discount factor. The Bottom Line   If you know what the inflation rate is going to be, real interest rates can be a powerful tool in judging the value of an investment. They take into account how inflation erodes purchasing power.