...Barings Bank and Nick Leeson Introduction I would like to present the case of Barings Bank, one of the most famous histories in the world when one man led to the bankruptcy the oldest British bank. Barings collapsed on February 26, 1995, due to the activities of one trader, Nick Leeson, who lost almost $1.4 billion. The loss was caused by a large exposure to the Japanese stock market, which was achieved through the futures market. Leeson, the chief trader for Barings Futures in Singapore, had been accumulating positions in stock index futures on the Nikkei 225, a portfolio of Japanese stocks. As the market fell more than 15 percent in the first two months of 1995, Barings Futures suffered huge losses, which were made even higher due to the sale of options, which implied a bet on a stable market. As losses mounted, Leeson increased the size of the position, in a stubborn belief he was right. Finally, on 25 February 1995 he walked away, when he realized that bank was unable to make the cash payments required by the exchanges. Later, he sent a fax to his superiors, offering “sincere apologies for the predicament that I have left you in.” Nick Leeson had totally wiped out the venerable 233-year-old Baring Investment Bank, which proudly counted Queen Elizabeth as a client. He left behind huge liabilities totaling $1.4 billion, more than the entire capital and reserves of the British institution. This situation - and a similar scam at the New York branch of Japan's Daiwa Bank in October...
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...Barings |The activities of Nick Leeson on the Japanese and Singapore futures exchanges, which led to the downfall of his employer, | |Barings, are well-documented. The main points are recounted here to serve as a backdrop to the main topic of this chapter - the | |policies, procedures and systems necessary for the prudent management of derivative activities. | |Barings collapsed because it could not meet the enormous trading obligations, which Leeson established in the name of the bank. | |When it went into receivership on February 27, 1995, Barings, via Leeson, had outstanding notional futures positions on Japanese | |equities and interest rates of US$27 billion: US$7 billion on the Nikkei 225 equity contract and US$20 billion on Japanese | |government bond (JGB) and Euroyen contracts. Leeson also sold 70, 892 Nikkei put and call options with a nominal value of $6.68 | |billion. The nominal size of these positions is magnificent; their enormity is all the more astounding when compared with the | |banks reported capital of about $615 million. | |The size of the positions can also be underlined by the fact that in January and February 1995, Barings Tokyo and London | |transferred US$835 million to its Singapore office to enable the latter the meet its margin obligations on the Singapore | |International Monetary Exchange...
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...Topic: The biggest scams in the banking history Course: Banking Students: Nino Vepkhvadze, Gohar Trchunyan, Giorgi Menteshashvili & Giorgi Paksashvili Date: 04.06.2012 A fraud, by definition, is the act of deliberate deception of people to secure an unlawful gain. These are mainly for the purpose of defrauding money as well as prestige rather than immediate financial gain. A study by BBC has revealed that the average woman lies twice a day while a man tells three lies a day. However, the lies they tell differ from each other a lot, both in essence and the results yielded. This is why we decided that the frauds and scams of the banking industry as well as their influence on other financial institutions would be quite interesting and intriguing. Let us together investigate how far a human mind can go to earn as much money and glory as we desire. Jerome Kerviel’s case-Societe Generale on the edge In January 2008, A French court sentenced former Société Générale trader Jérôme Kerviel to three years in prison for his role in one of the world's biggest-ever trading scandals and ordered him to repay his former employer €4.9 billion—a sum it would take him 180,000 years to pay at his current salary. In convicting Mr. Kerviel of breach of trust, forgery, and unauthorized computer use, the judge also handed Mr. Kerviel a lifetime trading ban. The prison sentence handed to Mr Kerviel is for five years, of which two years were suspended. Throughout the trial, Mr. Kerviel and...
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...The Nikkei 225 Reconstitution The objective of this case is to understand the effects of demand on security prices, and to understand the role of price impact on trading decisions 1. As a portfolio manager for the UNIL Advisors Nikkei 225 Index fund, which has ¥100 billion of assets linked to Nikkei 225 index, what would you do when you hear the news of index reconstitution? 2. What would you do if, instead, you were at the proprietary trading desk of Goldman Sacs? Strategic Capital Management, LLC (SCM) The objective of this case is to develop an understanding of how arbitrage acts to enforce the law of one price. It also provides a venue to discuss the various real world imperfections that can prevent arbitrageurs from eliminating mispricing in the equity markets. 1. Is there an arbitrage opportunity based on market valuations of Creative Computers and Ubid as on December 9th, 1998. 2. If yes, how would you take advantage of it? 3. What are the potential risks of such a strategy? AXA MONY The objective of this case is to understand the pricing of convertible bond and how it may be utilized profitably in merger transactions (you may ignore the part of the case dealing with issues of corporate control) 1. How would you price the ORAN at issue? Is it fairly priced? How does the price of ORAN on Feb 9th, 2004, imply about the probability of deal succeeding? 2. What is the fair price of MONY stock? If this is different from the market price of $31...
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...Case study- The Collapse of Barings Bank 1. What was Nick Leeson’s strategy to earn trading profits on derivatives? The play here was very simple – trading futures on the Nikkei 225 as the underlying. The Nikkei 225 was traded as a future on both the SIMEX and the Osaka markets. There were always known to be differences between the two markets which could be arbitraged. The idea was to exploit the differences between the 2 markets , and execute in the cheaper market on client orders. This would then allow Barings to net a profit as they execute in the cheaper market but quote the client the price in the more expensive market. The underlying idea was of course to always be long one and short the other. Leeson was long Nikkei 225 futures, short Japanese government bond futures, and short both put and call options on the Nikkei Index. He was betting that the Nikkei index would rise, but instead, it fell, causing him to lose $1.39 billion. 2. What went wrong that caused his strategy to fail? Nick Leeson’s strategy failed because the Nikkei 225 index kept falling while he continued to bet that it would rise. On the 17th of January 1995 a huge earthquake struck Kobe in Japan. The Nikkei plummeted putting Leeson’s positions under a lot of stress. The Nikkei plunged to 17950 by the end of that week and Leeson started recording big losses. Leeson’s solution was however to ask for extra funds from London to meet his margin calls and continue trading. His view was that the move down...
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...NC State Gubernatorial Election 2012 Lisa Sheffield POL/215 03-10-2015 Mr. Richard Pinder NC State Gubernatorial Election 2012 In the following paper the writer will provide a brief analysis of the North Carolina State’s 2012 gubernatorial election. The North Carolina gubernatorial election took place on November 6, 2012. On January 6, 2012 Beverly Perdue, a first term democrat and the first female in the history of the state North Carolina, to govern announced she would not seek a second term in office. The next day Lt. Governor Walter Dalton declared his intention to run for the governor. Therefore, the remaining candidates to run for governor were Pat McCrory, Walter Dalton, and Barbara Howe. Lt. Gov. Walter Dalton ran on the platform “Fair Deal for Working Families”. One of his main goals was to stop sex-based wage discrimination in the workplace. He also frowned upon employers using potential employee’s credit report information when determining employment. Another subject he was very committed to was working to protect children from obscene materials on the Internet and seek tougher penalties for domestic violence perpetrators in North Carolina. Pat McCrory used education as his platform. His ideas included: budget cuts to higher education, reduce income taxes, encourage merit pay for teacher, reduce needless regulations and push for an energy strategy that included offshore and inland energy exploration for natural gas and oil. He stated if...
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...What is electric car Electric car is an alternate fuel automobile that uses electricity instead of petrol or diesel. These automobiles have electric motors and controllers used for propulsion. These vehicles do not use the traditional or the common methods of propulsion like ICE (internal combustion engine). These cars are energy efficient and are capable of reducing city pollution because of the zero tail pipe emission. The functioning of the cars greatly depends on the quality of the battery used in the car. The poor battery may result into long hours of recharging and poor speed with poor acceleration. These cars are not practically suitable for long journey but can be a good transportation vehicle for everyday use and can be recharged overnight. Why electric car India has millions of people to house, power grids to expand and factories to fuel. They all involve hydrocarbons. How, then, is a developing economy to grow sustainably? One answer may lie in a small electric car. The advantages of electric cars are multiple and compelling. Instant torque for good initial acceleration, quiet operation, low local pollution, and ease of operation (Reva -a car with automatic gear shift)are among their many compelling virtues. The principal advantage for everyone in adopting electric cars is virtually eliminating urban air pollution. The civil advantages of electrics were recognized early. Thomas Edison created a pretty good nickel-iron battery a hundred years ago, and...
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...GLOBAL ALCOHOL INDUSTRY Category-wise breakdown of global alcoholic beverages | Category |Volume(In Mn Litres) |% | |Beer |185 |78.4 | |Wine |27 |11.2 | |Spirits |19 |8.1 | |RTD’s/ high strength premixes |4 |1.7 | |Cider/ Perry |1.5 |0.6 | |Total |236 |100 | |Source: Euromonitor, HSBC | Alcoholic beverages include beer, cider, ale, wine (including sparkling barley and rice wine) and spirits such as rum, whisky, brandy, vodka and gin. Almost 40 percent of the world’s alcoholic beverage consumption involves branded drinks that are usually owned by large multinationals investing substantially in marketing and brand management. While growth determined from developing economies provides volume expansion, the mature markets provide enhanced value. The transformation in consumption patterns arising from demographic changes is redefining product development and marketing in the global alcohol beverages sector. One of the key prevailing trends is premiumisation in developing economies, marked by a growing consumption of superior...
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...Research Article A GIS‐based reconstruction of Little Ice Age glacier maximum extensions for South Tyrol, Italy 5 Christoph Knoll Department of Geography University of Innsbruck Hanns Kerschner Department of Geography University of Innsbruck Armin Heller 10 Philipp Rastner 15 20 25 30 35 40 Department of Geography Institute for Applied Remote Sensing University of Innsbruck EURAC Bolzano Keywords: Little Ice Age, glacier reconstruction, glacier development, GIS Abstract A reconstruction method of historical glacier topographies and a possibility of the usage of these results are demonstrated in this paper. This reconstruction was accomplished for 310 Alpine glaciers in South Tyrol, Italy. These glaciers are featured with a wealth of different historical (e.g. paintings, photographs and historical maps) and recent data sources (airborne laser scan based digital terrain model and digital orthophotos) that allow the reconstruction of the Little Ice Age maximum extension. These sources are among the best historical and recent documents of glaciers for the mid 19th century. The results of this reconstruction visualize the ongoing climate change in a comprehensive way. The area changes between the time of the Little Ice Age maximum extent (around the year 1850) and the recent glaciation in 2006 amounts in a ...
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...Doug likes to take 12 weeks to peak, but it could vary a little because of an injury or something but this is the basic cycle he likes to follow. The first four weeks he uses 4 sets of 6 reps in the bench press. On the 4th set he goes limit. He uses each rep as a 5-pound indicator for his next workout. He starts the cycle at 400 lbs. Example – 400 x 6, 400 x 6, 400 x6, 400 x limit (e.g. 10) So, from the last set, five pounds for each rep over six would work out to (10 reps minus 6) 4 times 5 (five pound for each rep over six)equals 20 (pounds more next workout). Example (next workout) – 420 x 6, 420 x 6, 420 x 6, 420 x 8. Many 4-20’s! Then, by following the same plan – 2 reps more than 6 in the last set equals a 10 lb. weight increase at the next workout. The highest he has reached in this program is 470 pounds for 4 sets of 6. These workouts fall twice a week of every fourth day, as desired and as his work schedule with the railroad with the railroad with the railroad allows. After 4 weeks Doug goes to a double program. One workout is the same 4 sets of 6, and the next workout is 5 sets of 3. This runs for 4 weeks or up to 4 weeks before the meet. At that time he does only 5 sets of 3 for 2 weeks. 2 weeks before the meet he goes to 5 sets of 2, timing it where he gets three workouts in but rests for five days before the meet. In past programs he had done one limit set of reps at the end of his workout with anywhere from 50 to 100 lbs. under what he was working with his...
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...Demography of Germany Concepts, Data, and Methods G. Rohwer U. P¨tter o Version 3 October 2003 Fakult¨t f¨r Sozialwissenschaft a u Ruhr-Universit¨t Bochum, GB 1 a 44780 Bochum goetz.rohwer@ruhr-uni-bochum.de ulrich.poetter@ruhr-uni-bochum.de Preface This text is an introduction to concepts and methods of demographic description and analysis. The substantial focus is on the demographic development of Germany, all data refer to this country. The main reason for this focus on a single country is that we want to show how the tools of demography can actually be used for the analysis of demographic problems. The text consists of two parts. Part I introduces the conceptual framework and explains basic statistical notions. This part also includes a short chapter that explains how we speak of “models” and why we do not make a sharp distinction between “describing” and “modeling” demographic processes. Then follows Part II that deals with data and methods. In the present version of the text, we almost exclusively discuss mortality and fertility data; migration is only mentioned in Chapter 6 and briefly considered in the context of a Leslie model at the end of the text. In addition to providing a general introduction to concepts of demography, the text also intends to show how to practically work with demographic data. We therefore extensively document all the data used and explain the statistical calculations in detail. In fact, most of these calculations are quite simple;...
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...STAT 225: Introduction to Probability Models Extra Examples 1 Introduction to Probability Extra 1.1 Let A be an event that happens 40% of the time. Let B be an event that happens 75% of the time. Answer the following 4 questions. What is the smallest probability the intersection of A and B can have? What is the largest probability the intersection of A and B can have? What is the smallest probability the union of A and B can have? What is the largest probability the union of A and B can have? .15, .4, .75, and 1 respectively. Extra 1.2 Suppose we are rolling 2 independent, fair 10-sided die. Let A be the event that the sum of the rolls is a prime number. Let B be the event that the sum of the rolls is odd. Let C be the event that the sum of the rolls is even. Find the following sets: BC , A ∩ B, A ∪ C, A ∩ C, (A ∩ C)C , A ∩ (B ∩ C)C , (A ∩ (B ∩ C))C ? BC = C, A ∩ B = A \ {2}, A ∪ C = Ω \ {9, 15}, A ∩ C = {2}, (A ∩ C)C =Ω \ {2}, A ∩ (B ∩ C)C = A, and (A ∩ (B ∩ C))C = Ω. Extra 1.3 Suppose a lottery has balls numbered 1-20. 4 balls are picked at random and without replacement. Let A be the event that all 4 balls are even. Let B be the event that all 4 balls are less than 10. Let C be the event that all 4 balls are primes. (Allow 1 to be a prime.) Find P(A), P(B), and P(C). (Hint an extended general multiplication rule could be helpful.) P(all 4 even) = (10)4 (20)4 = .0433. (9) P(all less than 10) = (20)44 = .0260. What numbers are prime? 1, 2, 3, 5, 7, 11, 13, 17, and...
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...Insights into the Food, Beverage, and Consumer Products Industry GMA Overview of Industry Economic Impact, Financial Performance, and Trends The Grocery Manufacturers Association (GMA) represents the world’s leading branded food, beverage, and consumer products companies. Since 1908, GMA has been an advocate for its members on public policy issues and has championed initiatives to increase industrywide productivity and growth. GMA member companies employ more than 2.5 million workers in all 50 states and account for more than $680 billion in global annual sales. The association is led by a board of member company chief executives. For more information, visit the GMA website at www.gmabrands.com The Food Products Association (FPA) is the largest trade association serving the food and beverage industry in the United States and worldwide. FPA’s laboratory centers, scientists, and professional staff provide technical and regulatory assistance to member companies and represent the food industry on scientific and public policy issues involving food safety, food security, nutrition, consumer affairs, and international trade. For more information, visit FPA’s website at www.fpa-food.org The member firms of the PricewaterhouseCoopers network (www.pwc.com) provide industry-focused assurance, tax, and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries across our network work collaboratively...
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...How Tesla Motors can manage the extreme competition from large and premium manufactures Daniil Chaika (119102547) Workshop Tutor: John Davison SIM336 - Strategic Management ------------------------------------------------- Contents 1.0 Introduction ……………………………………………………………………………….3 2.0 Company Background………………………………………………………………….….3 3.0 PESTEL Analysis……………………………………………………………...…………..3 4.1. Political……………………………………………………………………………..3-4 4.2. Economic……………………………………………………………………………...4 4.3. Social………………………………………………………………………………….4 4.4. Technological…………………………………………………………………………4 4.5. Environmental………………………………………………………………………...5 4.6. Legal…………………………………………………………………………………..5 4.0 Porter’s 5 Forces Analysis…………………………………………………………………5 5.7. The Threat from New Entrants……………………………………………………..5-6 5.8. The bargaining power of Buyers……………………………………………………...6 5.9. Threat of Substitution…………………………………………………………………6 5.10. The bargaining power of Suppliers…………………………………………………..6 5.11. The Intensity of Rivalry in the Industry……………………………………………6-7 5.0 Value Chain Analysis (VCA)……………………………………………………………...7 6.12. Primary Activities…………………………………………………………………..7-8 6.13. Support Activities…………………………………………………………………..8-9 6.0 SWOT Analysis……………………………………………………………………………9 7.14. Strengths…………………………………………………………………………..9-10 7.15. Weaknesses………………………………………………………………………10-11 7.16. Opportunities………………………………………………………………………...
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...How Tesla Motors can manage the extreme competition from large and premium manufactures Daniil Chaika (119102547) Workshop Tutor: John Davison SIM336 - Strategic Management ------------------------------------------------- Contents 1.0 Introduction ……………………………………………………………………………….3 2.0 Company Background………………………………………………………………….….3 3.0 PESTEL Analysis……………………………………………………………...…………..3 4.1. Political……………………………………………………………………………..3-4 4.2. Economic……………………………………………………………………………...4 4.3. Social………………………………………………………………………………….4 4.4. Technological…………………………………………………………………………4 4.5. Environmental………………………………………………………………………...5 4.6. Legal…………………………………………………………………………………..5 4.0 Porter’s 5 Forces Analysis…………………………………………………………………5 5.7. The Threat from New Entrants……………………………………………………..5-6 5.8. The bargaining power of Buyers……………………………………………………...6 5.9. Threat of Substitution…………………………………………………………………6 5.10. The bargaining power of Suppliers…………………………………………………..6 5.11. The Intensity of Rivalry in the Industry……………………………………………6-7 5.0 Value Chain Analysis (VCA)……………………………………………………………...7 6.12. Primary Activities…………………………………………………………………..7-8 6.13. Support Activities…………………………………………………………………..8-9 6.0 SWOT Analysis……………………………………………………………………………9 7.14. Strengths…………………………………………………………………………..9-10 7.15. Weaknesses………………………………………………………………………10-11 7.16. Opportunities………………………………………………………………………...
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