Discuss the Role of Exchange Traded Currency Options in Risk Essay

Discuss the Role of Exchange Traded Currency Options in Risk Management - Essay Example Over the counter (OTC) transactions are primarily utilized in currency options trade. Leverage is integral to exchange traded currency options. In this regard, returns associated with the resultant transactions are massive. On the same note, such transactions come with a downside of risks. Combining traded currency options with concurrent forex pair enhances locking in of profits. As a result, risks are minimized. Therefore, the role of exchange traded currency options in the management of risks can be evaluated on the degree with which they manage to reduce risks in the underlying transactions and investment activities in the options market. In the view of risk management by the use of exchange traded currency options, foreign exchange rates for different currencies around the world becomes essential to consider. On the same note, it is important to note that different countries have adopted different exchange rate regimes in regard to world currencies. Fixed, flexible or both excha nge rate regimes are used by countries around the world. ... Individuals and investors are termed as risk averse, risk takers or risk neutral. Given this three distinct behaviours, the decision rules taken under each of the three factors depict the role of exchange traded currency options. Literature Review Currency options are hedged to accomplish various desired outcomes that are predetermined by the individual or the company that engages in currency options transactions. The roles of exchange traded currency options in managing risks can be evaluated from two different perspectives. One, prices and rates of exchange in the option market must be assessed for their characteristic risk magnitude. Two, the marginal utility of the individual, investor or the investing company must be assessed for its relevancy in the context of exchange traded currency options. Holton (2003, p. 132) notes that risks that pertain to prices can neither be hedged nor insured. Risks that pertain to exchange rates in the foreign exchange market however, can be hedged . This is done through continued exchange of currencies that can be divided into simpler units that can continuously be handled. In other words, calls and puts therefore become essential in evaluating risk management in the light of exchange traded currency options. Risks associated with foreign exchange dealings are more or less business risks as Lam (2003) notes. Numerous international corporations face unaccountable business risks that do not threaten their daily business aspects, but also the long term operations and performance. The management is accountable for overseeing financial stability. In the light currency options, multinational corporations account for risky business circumstances by engaging in international transactions especially those that involve foreign

Overview of the GCC States Essay Example | Topics and Well Written Essays - 1500 words

Overview of the GCC States - Essay Example This is aimed at providing an economical balance in the Gulf region and also envisaged a common currency in the area (Low and   Salazar, 2011). This would help the council to foster the growth of the private sector in the economy of the Gulf region through economic co-operation, scientific and technological progress, joint ventures and strengthening the ties of the people among the Arab states. The Gulf Co-operation Council also aims to set up a unified military structure involving the Arab States. About GCC Gulf Corporate Council is the economic and political alliance of six different Middle Eastern Countries, such as Qatar, Saudi Arabia, Kuwait, Bahrain, Oman and The United Arab Emirates (MSU, 2013). In the year 2007, the states of Gulf Corporate Council supported the International compact document with Iraq which was adopted in Egypt. In the year 2011, Saudi Arabia suggested that the Gulf Corporate Council intensify their integration in order to form a confederation. However, se veral objections rose against this specific proposal of Saudi Arabia by the other GCC countries. Several discussions are going on regarding the future membership of Morocco, Jordan and Yemen. Establishment of GCC GCC is the short form of Gulf Corporate Council. GCC was founded in Abu Dhabi in the year 1981. The original council of GCC comprised a total 630 million acre Persian Gulf state of the UAE, Saudi Arabia, Bahrain, Oman, Kuwait and Qatar. The integrated economic agreement between the GCC countries was signed in Abu Dhabi in the year 1981 (Britannica, 2013). These six countries are referred to as the Gulf Corporate Council states. There are several key objectives behind the formation of GCC. Fostering technical and scientific progress in agriculture, mining, industry, animal and water resources is one of the major objectives of Gulf Corporate Council. The GCC states aimed to develop several scientific research centers in order to enhance countries’ growth. In addition, they are trying to establish several important joint ventures. This strategy and idea can enhance the business environment of GCC countries. Devising similar regulations in different social, political and economical fields, such as finance, trade, religion, tourism, customs, administration and legislation is another major objective of the states of Gulf Corporate Council (Ahmad & Faris, 2010). These countries were facing threat of several outside attacks. Therefore, they tried to cohesive strong military presence in these countries. This unified military force is recognized as Peninsula Shield Force. In the year 1981, these several states of Gulf Corporate Council aimed to establish a common currency by 2010. GCC tries to encourage the cooperation of several private sector organizations. According to the states, this co-operation can enhance the economic environment of these six countries. Healthy social balance of a country is very much important in order to achieve future growth ( Kirgis, 2006). Therefore, Gulf Corporate Council aimed to strengthen the ties between the people of these countries. However, in the year 2006, Oman announced that the council cannot meet the objective within the target date. In addition, the country also announced that the

Traditional Budgeting and Budgetary Controls Weaknesses

Traditional Budgeting and Budgetary Controls Weaknesses This answer briefs the practice of budgets in two entirely different businesses; one in a very stable and static market place and the other in a very dynamic, rapidly changing, innovative environment. Budgeting and budgetary control is commonly used in a traditional manner by most business entities in the world in spite of its manifold limitations. In a fast changing business environment, traditional budgeting need not be the only budgeting approach to be exercised in a company. There are quite a few alternatives like Zero-Based Budgeting, Beyond budgeting, Activity-Based Budgeting, etc. which are much beneficial and rewarding for a business entity. Budget A budget is a plan, expressed in financial and/or more generally quantitative terms, which extends forward for a period into the future (Gowthorpe, 2003) . A traditional budget is usually prepared by reviewing past years budget and actual expenses, with addition or deduction towards extra business activities or reduced business activities planned and also by effecting changes towards changing factors, such as growth, inflation etc It is basically to tie managers to predetermined actions in order to achieve the planned budget. It is usually based on organizational hierarchy and centralized leadership . Benefits of traditional budgeting and budgetary controls are :- Income of budget period can be matched against budget period expenses to know whether operations will result in profit and how much profit. Actual performance can be compared with budget to know variances so that corrective actions can be taken. Budget based reports facilitates assessment of costs of goods and services provided and accomplishments of the business entity. Problems associated with traditional budgeting and budgetary controls are :- It is futile to predict what will happen in the next 12 months Serven (cited in Banham, 2000) argued, The customary system of trying to accurately predict what will happen in 12 months and budgeting accordingly is an exercise in futility. Most budgetary processes are costly and inefficient. It takes a long time to complete and by the time it is completed, it becomes no longer applicable as business environment has changed. According to Stewart (2004), there are ten reasons why budget cause problem, as shown below. Though traditional budgeting have many weaknesses, but most companies still rely on it because of its unchallenged position in the top division of accepted management practices (Hope Fraser, 1999). Therefore many companies now seek to find alternatives of traditional budgeting, even some attempt to abandon it. However, it is widely delieved by analysts that as many as half the companies that attempt the overhaul become so exhausted they give up and go back to traditional approach (Banham, 2000). Traditional Budgeting in Dynamic Business In a business that operates in a very dynamic, rapidly changing, and innovative environment, traditional budgeting is inappropriate to exercise. Budget is a barrier for the business because the vibrant market demands flexibility, fast response, innovation, process improvement, customer focus, and shareholder value (Daum, 2001). And it is the limitation of the traditional budgeting not to be able to fulfil these demands. The dynamic driven business should keep up with the change and adaptive to recent development to achieve success. Hence Beyond Budgeting approach introduced. Daum (2001) argued that, The Beyond Budgeting Model is designed to overcome traditional barriers and to create a flexible, adaptable organization that gives your local managers the self-confidence and freedom to think differently, make decisions rapidly, and collaborate on innovative projects with colleagues in multifunctional teams both within your company and across its borders. Exercising beyond budgeting may have become the turnaround for many companies of their budgeting problems. Beyond budgeting is about a performance management system, made up of a series of interdependent and interlocking process (Verlag, 2005). The objective is to create an adaptive system to the real world that ideally develops the business plan from the environment, i.e. growth of markets, performance of competitors, etc. Then, instead of trying to meet a negotiated number in the budget, business should try to beat this performance standard (Verlag, 2005). Thus it would not make managers feel undervalued. The process of beyond budgeting is portrayed in 12 principles of Beyond Budgeting (BBRT, 2005). The first six process principles is concerning performance management systems that allows employees to response faster to customer needs and competitive environment. The second six leadership principles provide a decentralization framework of responsibility to employees to facilitate them adapting quickly to potential events and improves their relative performance. Beyond budgeting can be exercised successfully by applying these principles and the business can be adaptive to the rapidly changing environment. 12 principles of Beyond Budgeting Beyond Budgeting Process Principles Targets Set aspirational goals based on continuous relative improvement not fixed targets Rewards Base rewards on relative performance with hindsight not on meeting fixed targets Planning Make planning an inclusive and continuous process not an annual event Resources Make resources available on demand not through annual budget allocations Coordination Coordinate cross company actions dynamically not though annual plans and budgets Controls Base controls on KPIs, trends and relative indicators not variances against plan Beyond Budgeting Leadership Principles Governance Base governance on clear values and boundaries not on detailed rules and budgets Performance Build a high performance culture based on relative success not on meeting targets Freedom to act Devolve decision making authority to frontline teams dont micro-manage them Accountability Create a network of small units accountable for results not centralized hierarchies Customer focus Focus everyone on improving customer outcomes not on meeting internal targets Information Promote open and shared information dont restrict it to those who need to know The benefits of beyond budgeting is it will examine targets, strategies, action plans, forecasts and management reports. Comparisons might also be made against competitors and past-year performance. It will concentrate on the key drivers of business performance. The purpose is to be alert and take advantage of new opportunities and respond to potential threats by using an advanced information system to make decisions early. Speed of action and good decisions are the result of beyond budgeting. (Hope Fraser, 1999) The major change required by beyond budgeting will raise some resistance to change (Verlag, 2005). Organisations will differ in scale, culture and business context. It would be challenging to demonstrate to key stakeholders that control can still be achieved without a budget (Max, 2005). Beyond budgeting may raise issues such as doubt of loosening control, giving front-line people decision-making authority, and trusting people to act in the best interest of the business that is not easy change to contemplate (Hope Fraser, 1999). However if these issues can be handled, the business may gain success in long term. For example, the companies that have successfully practised beyond budgeting and abandoned the traditional budgeting system are Volvo (one of Europes most profitable car manufacturers), IKEA (the worlds largest furniture manufacturer and retailer), etc. (Hope Fraser, 1999). Many organizations that have gone beyond budgeting found that their performance has improved once the budgeting process was abandoned in favour of more relative and adaptive means of planning, evaluating performance and control (Stewart, 2004). Activity-Based Budgeting (ABB). Although beyond budgeting is the most updated method, but not all companies can adapt to it. Thus the other alternative for the dynamic driven business is Activity-Based Budgeting (ABB). It aims to generate a budget from activities and resources of the company . A financial budget is prepared after preparation of an operationally feasible budget. Advantages of ABB approach. It facilitates better product, process, or activity costing and decision making, and better resource allocation to support organizational priorities. It identifies capacity issues and makes adjustment earlier in the budgeting process than under traditional budgeting which does not track resource consumption patterns. It enriches managers ability to respond to contingencies and also improves performance measurement, evaluation, and decision making (Hansen, Otley, et all., 2003). Thus, ABB can be a proper alternative for the dynamic company since it will provide more accurate analysis to quickly forecast the next budget compared to the traditional budgeting. However, ABB is not without problems. According to Barret (2003), ABB can be difficult to understand about the rules relating outputs to resources and costs. Consequently business managers tend to be doubtful of the approach. Although ABB directly relates increase in the volume of an output with increases in certain activities, it does not help in linking activities with resources. Thus any application of one of these alternatives, whether it is beyond budgeting or ABB, must be considered thoroughly subject to the business current condition. Traditional Budgeting in Static Business In a business that operates in a very stable and static market place, where there is slight change in either products or demand every year, traditional budgeting still can be appropriate (Daum, 2001). Static business would not need to take a risk to change their invariable budgetary plan as it would cost higher and consume more time than usual. However if this condition continuously persisted, the business will never develop more than its current position. It could lead to boredom for the employees who seek for challenge. As it is argued by Hope Fraser (1999), Budgets are well known for reinforcing the command and control culture, constraining freedom and autonomy, and stifling the very challenges that excite prospective managers. As an alternative to the static business, Zero-Based Budgeting (ZBB) is introduced. ZBB refers to proposals by Pyhrr (1973); Cheek (1977) et al. to modify the traditional budgeting process in organizations in which budgeting is an incremental process in relation to the prior years actual expenditures. The proposed ZBB process requires each manager to justify the budget request approximating the organizational functions were starting from ground zero. It entails clarifying the goals of an organizational unit as well as identifying the functions and projects it proposes to perform in order to achieve its goals. These activities are then ranked in order of importance (Flamholtz, 1983). Basically it is a systematic logical approach to allocate limited resources where they will be best used. Benefits of ZBB are cost saving, improving services, increase self-discipline in developing budget, reduce the entitlement mentality with respect to cost increases and make budget discussions more meaningful during review sessions (LaFaive, 2003). On the contrary ZBB also can cause problems for example, may increase the time and expense of preparing budget, may be too radical a solution for the task at hand, and can make matters worse if not conducted accordingly. Moreover a substantial commitment must be made by all sectors involved to ensure that the change is followed through (LaFaive, 2003). ZBB is recommended for the static businesses in order to improve performance. It can be useful for shaking up a process that may have grown stale and counterproductive over time (LaFaive, 2003). Variance analysis is still the most common tools to calculate the mismatch between the planned budget and the actual performance. Based on the survey by Sulaiman, Ahmad Alwi (2005), the common practice among local Japanese (about 71%) and local Malaysian companies (about 64%) is to investigate variances only when the variance exceeds a certain percentage. This is a typical characteristic of traditional budgeting. However it is inadequate to be used in today modern business. Thus Ramsey (1999) introduced diagnostic variance analysis, where budget variances are analysed in terms of the activity-based components that make up the variance, and evaluated in light of overall business performance. As a result of this analysis, the underlying cause of the variance is revealed, providing the necessary business insight to support strategic decisions. In conclusion, traditional approach cannot be abandoned completely. Budgeting is still very important in the company and need serious attention in the organization in spite of its complication (France, 2006). Zero-Based Budgeting and Activity-Based Budgeting are only improvement of traditional approach. In a dynamic driven business that evolve in rapidly changing environment like today modern business ambience, beyond budgeting can be the suitable alternative with proper handling in the organization. As for the static business, ZZB can assist the breakthrough in the organization so that the business will develop more and achieve success in the future.

The Five People You Meet in Heaven Essays -- essays research papers

This novel’s first and almost only main character is Eddie, an eighty-three year old man. He is a man who has lived almost his entire life on Ruby Pier, an amusement park right on the ocean. He is head of maintenance at the pier, which was his father’s job when Eddie was a child. Eddie is the protagonist of the novel and a dynamic one at that, as the story covers the day he was born, died, and everywhere between the two.   Ã‚  Ã‚  Ã‚  Ã‚  Eddie’s wife, Marguerite, is dead before the novel begins. She died when they were in their late forties from a brain tumor. The story flashes back to the days they spent together and shows them together in the afterlife. She is also a very dynamic character.   Ã‚  Ã‚  Ã‚  Ã‚  There are very few settings in this novel that can actually be described. The first would be Ruby Pier. Right on the ocean, this amusement park was one with the usual attractions, such as bumper cars and roller coasters. It had survived a fire a long time before the novel is set and the rubble was sold. The original owner of the pier was heartbroken and lost everything in the fire. Although it was eventually rebuilt, the owner and his wife never brought themselves to return.   Ã‚  Ã‚  Ã‚  Ã‚  A second setting in this novel is one that is almost not possible to explain. It is considered the â€Å"journey†, the place that one enters when traveling through different places in heaven. The sky constantly changes colors, from â€Å"bright lime,† to...

Agenda Setting Theory. Summary

Agenda Setting Theory I. The original agenda: not what to think, but what to think about. A. Maxwell McCombs and Donald Shaw regard Watergate (American political scandal – 1970’s. It ended in President Nixon resigning from office) as a perfect example of the agenda-setting function of the mass media. B. They believe that the mass media have the ability to transfer the salience (importance) of items on their news agendas to the public agenda. II. A theory whose time had come. A. Agenda-setting theory contrasted with the prevailing selective exposure hypothesis, reaffirming the power of the press while maintaining individual freedom.Agenda-setting theory set to prove that we don’t have as much control over our beliefs as we would like to think. (selective exposure: says people know what they are interested in, and what they believe/find important. They choose to expose themselves to media sources that provide them with information that matches their interests and c onfirms their existing beliefs) B. The hypothesis predicts a cause-and-effect relationship between media content and voter perception, particularly a match between the media’s agenda and the public’s agenda later on. causal relationships are different than correlational relationships – note how the findings change between studies). III. Media agenda and public agenda: a close match. A. In their groundbreaking study, McCombs and Shaw first measured the media agenda. B. They established the position and length of story as the primary criteria of prominence (i. e. where it was in paper – front page – and how long of an article it was – more writing equals more important (discourse makes meaning)) C. The remaining stories were divided into five major issues and ranked in order of importance. D.Rankings provided by uncommitted voters (uncommitted = undecided; these are people who have not made up their minds yet) matched closely with the mediaâ⠂¬â„¢s agenda. IV. What causes what? A. McCombs and Shaw believe that the hypothesized agenda-setting function of the media causes the correlation between the media and public ordering of priorities. B. However, correlation does not prove causation. 1. A true test of the agenda-setting function must show that public priorities lag behind the media agenda. (this would prove that one comes before another and is the cause of the other) 2.McCombs and three other researchers demonstrated a time lag between media coverage and the public agenda during the 1976 presidential campaign. C. To examine whether the media agenda and the public agenda might just reflect current events (reality), Ray Funkhouser documented a situation in which there was a strong relationship between media and public agendas. The twin agendas did not merely mirror reality, but Funkhouser failed to establish a chain of influence from the media to the public. (this was the Vietnam War example) D.Shanto Iyengar, Mark Pet ers, and Donald Kinder’s experimental study confirmed a cause-and-effect relationship between the media’s agenda and the public’s agenda. V. Who sets the agenda for the agenda setters? A. Some scholars target major news editors or â€Å"gatekeepers. † B. Others point to politicians and their spin-doctors. C. Current thinking focuses on public relations professionals. D. â€Å"Interest aggregations† are becoming extremely important. VI. Who is most affected by the media agenda? A. Those susceptible have a high need for orientation or index of curiosity. B.Need for orientation arises from high relevance and uncertainty. VII. Framing: transferring the salience of attributes. A. Throughout the last decade, McCombs has emphasized that the media influence the way we think. B. This process is called framing. 1. A media frame is the central organizing idea for news content that supplies a context and suggests what the issue is through the use of selection, emphasis, exclusion, and elaboration. 2. This definition suggests that media not only set an agenda but also transfer the salience of specific attributes to issues, events, or candidates. C. There are two levels of agenda setting. . The transfer of salience of an attitude object in the mass media’s pictures of the world to a prominent place among the pictures in our heads. (what to think about) 2. The transfer of salience of a bundle of attributes the media associate with an attitude object to the specific features of the image in our minds. (how to think about it) VIII. Not just what to think about, but how to think about it. A. Two national election studies suggest that framing works by altering pictures in the minds of people and, through the construction of an agenda with a cluster of related attributes, creating a coherent image.B. Salma Ghanem’s study of Texans tracked the second level of agenda setting and suggested that attribute frames have a compelling effec t on the public. C. Framing is inevitable. D. McCombs and Shaw now contend that the media may not only tell us what to think about, they also may tell us who and what to think about it, and perhaps even what to do about it. IX. Beyond opinion: the behavioral effect of the media’s agenda. A. Some findings suggest that media priorities affect people’s behavior. B. Nowhere is the behavioral effect of the media agenda more apparent than in the business of professional sports. C.McCombs claims â€Å"Agenda setting the theory can also be agenda setting the business plan. † D. Will new media continue to guide focus, opinions, and behavior? 1. The power of agenda setting that McCombs and Shaw describe may be on the wane. 2. The media may not have as much power to transfer the salience of issues or attributes as it does now as a result of users’ expanded content choices and control over exposure. X. Critique: are the effects too limited, the scope too wide? A. McC ombs has considered agenda setting a theory of limited media effects. B. Framing reopens the possibility of a powerful effects model.C. Gerald Kosicki questions whether framing is relevant to agenda-setting research. 1. McCombs’ restricted definition of framing doesn’t address the mood of emotional connotations of a media story or presentational factors. 2. Although it has a straightforward definition within agenda-setting theory, the popularity of framing as a construct in media studies has led to diverse and perhaps contradictory uses of the term. D. Agenda-setting research shows that print and broadcast news prioritize issues. E. Agenda-setting theory reminds us that the news is stories that require interpretation.

Paper on Depression

Thresa BigMan University of phoenix PSY270 Week 4 Depression paper Depression is a mental illness that a lot of individuals have in today’s society. According to the University of Phoenix fundamentals of abnormal psychology, describes many different mood disorders that effect many people today, â€Å"Depression is a low, sad state in which life seems dark and its challenges overwhelming.Depression can be an illness that can be manageable to an individual that has mild symptoms there are cases of depression that can be so severe that it can take over someone’s life in the aspect that it is manageable with daily living assistance and treatment plans that include assisted living environment and anti-depressants. Patients can even be misdiagnosed to have other disorders if not have a proper evaluation.Mania, the opposite of depression, is a state of breathless euphoria, or at least frenzied energy, in which people may have an exaggerated belief that the world is theirs for the taking. Most people with a mood disorder suffer only from depression, a pattern called unipolar depression. † When an individual has no history of mania and after the episode return to their normal mood others may experience periods of mania that o back and forth with periods of depression in a somewhat of a pattern is called bipolar disorder. (University of phoenix, 2011).Many individuals of all walks of life suffer from mood disorders according to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"Mood disorders also have plagued such writers as Ernest Hemingway, Eugene O’Neill, Virginia Woolf, and Sylvia Plath. † Mood disorders have different stages of symptoms, according to the university of phoenix fundamentals of psychology (2011), â€Å"The symptoms, which often feed upon one another, span five areas of functioning: emotional, motivational, behavioral, cognitive, and physical. Emotional symptoms can have the individual feelin g miserable, humiliated, and sad. In severe cases many individuals can suffer from anhedonia which can cause the patient to have the inability to feel pleasure. They begin to have no self-worth. Motivational symptoms can include according to the University of Phoenix Fundamentals of psychology (2011), â€Å"Depressed people typically lose the desire to pursue their usual activities. Almost all report a lack of drive, initiative, and spontaneity. They may have to force themselves to go to work, talk with friends, eat meals, or have sex. The patient will not have any motivation to get up and get out of bed at times. Motivational symptoms could be that a patient doesn’t want to do anything and has to force one self to do the littlest of things in their daily life. Behavioral symptoms include behaviors where the individual becomes less active productive. Cognitive symptoms people see themselves in a very negative light and do not have a high self-worth when they accomplish somet hing that is very substantial they do not see it in the right regards to see what they did was successful.Physical symptoms can include headaches, nausea, vomiting and sleeping issues. Physical symptoms can vary from person to person when it comes to mood disorders. Many times physical symptoms can often cloud proper diagnoses to mood disorders, according to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"In fact, many depressions are misdiagnosed as medical problems at first. Disturbances in appetite and sleep are particularly common (Neckelmann et al. , 2007; Genchi et al. 2004). Most depressed people eat less, sleep less, and feel more fatigued than they did prior to the disorder. Proper diagnoses are often over looked because of all the physical symptoms that a person with a mood disorder can develop. Often the symptoms are treated before depression is diagnosed. When diagnosing unipolar depression, according to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"People who experience a major depressive episode without having any history of mania receive a diagnosis of major depressive disorder. Individuals who display a longer-lasting but less disabling pattern of unipolar depression may receive a diagnosis of dysthymic disorder.Bipolar I disorder have full manic and major depressive episodes. Most of them experience an alternation of the episodes; for example, weeks of mania followed by a period of wellness, followed, in turn, by an episode of depression. Some people, however, have mixed episodes, in which they swing from manic to depressive symptoms and back again on the same day. In bipolar II disorder, hypomanic—that is, mildly manic—episodes alternate with major depressive episodes over the course of time.When dysthymic disorder leads to maojr depressive disorder, the sequence is called double depression (Taube-Schiff & Lau, 2008). † Unipolar depression is often triggered when the individual is experiencing extreme stress. Forms of treatment for these types of mood disorders may include antidepressants, individual therapy, and in extreme cases an individual may have to be under constant care as the disorder has caused them to not be able to maintain their normal quality of life and may be harmful to themselves or others.Group and family therapy can be an effective form of treatment for patients. According to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"Family-Social Treatments Therapists who use family and social approaches to treat depression help clients change how they deal with the close relationships in their lives. The most effective family-social approaches are interpersonal psychotherapy and couple therapy. † Anti-depressants are commonly given as a part of the treatment plan for a patient.According to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"Two kinds of drugs discovered in the 1950s reduce the symptoms of depression: monoamine oxidase (MAO) inhibitors and tricyclic’s. † Proper diagnoses are the most important part about treating any mental disorder. Many times physical symptoms cloud the illness. When treating this disorder it is important to diagnose to be accurate because often these types of disorders are often prescribed antidepressants as a way to treat the illness.After proper accurate diagnoses developing a treatment plan to determine what types of treatments would the patient benefit from. Assisting the patient in a proper evaluation to diagnose correctly is also a way for the patient to learn what is a normal mood or reaction to events or stress that happens in their life time can help determine what the patient is experiencing and often even why. Treatment and proper diagnoses goes hand in hand they are as important to the patient. References University of phoenix. (2011). Fundamentals of psychology. Retrieved from University o f phoenix, PSY270 website.