...In the book, The Talent Code, written by Daniel Coyle, it says that geniuses come from practice, dedication, and hard work, rather than being born with it and doing nothing to improve on their talent. Dweck states that there are two mindsets. One is a fixed mindset, where a person tends to avoid challenges, give up easily, ignore useful negative feedbacks, and easily feels threatened by others. The other one is growth mindset, where a person tends to embrace new challenges, persist in the face of setbacks, learn from criticism, and find inspiration from other successful people. Dweck says that “Although you might have one of these mindsets, you can still change them” (Fixed vs. Growth Mindset). Having a fixed mindset does some of its advantages,...
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...California Debt and Investment Advisory Commission Duration Basics Introduction Duration is a term used by fixed-income investors, financial advisors, and investment advisors. It is an important measure for investors to consider, as bonds with higher durations (given equal credit, inflation and reinvestment risk) may have greater price volatility than bonds with lower durations. It is an important tool in structuring and managing a fixed-income portfolio based on selected investment objectives. Investment theory tells us that the value of a fixed-income investment is the sum of all of its cash flows discounted at an interest rate that reflects the inherent investment risk. In addition, due to the time value of money, it assumes that cash flows returned earlier are worth more than cash flows returned later. In its most basic form, duration measures the weighted average of the present value of the cash flows of a fixed-income investment. All of the components of a bond—price, coupon, maturity, and interest rates—are used in the calculation of its duration. Although a bond’s price is dependent on many variables apart from duration, duration can be used to determine how the bond’s price may react to changes in interest rates. This issue brief will provide the following information: < A basic overview of bond math and the components of a bond that will affect its volatility. < The different types of duration and how they are calculated. < Why duration is an important...
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...Interest Rate Risk Dr HK Pradhan XLRI Jamshedpur Hull Ch 7 Fabozzi chapters on duration & Convexity, Ch-7, Convexity Stochastic Process notes Session Objectives j Valuation of fixed income securities Risks in fixed income securities Traditional measures of risk – (we know PVBP, duration and convexity, M-Square) M Square) VaR based risk measures Interest rate volatility calculations Portfolio risk & Cash flows mapping issues Var for Interest Rate Derivatives Interest rate risk and Bond portfolio management Profile of Interest Rate Markets, Instruments & Institutions Bond Price P 1 y C1 1 1 y C2 2 1 y Ct C3 3 1 y n Cn price Sum of the present values of each cashflows p P n t 1 1 y t M 1 y n yield price < par (discount bond) price = par (par bond) price > par (premium bond) Concept of Accrued Interest p When you buy a bond between coupon dates, you pay the seller: Clean Price plus the Accrued Interest – pro-rated share of the fi coupon: i d h f h first interest d does not compound b d between coupon payment dates. LD Days Accrued Interest Total T from last Coupon between Coupon Date Dates Days ND (Coupon) Dirty Price Clean price Accrued Interest Accrued Interest Face * C T LD * 2 ND LD Bond Valuation Value of a bond is the present value of future cashflows, so...
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...Budgets & Break-even analysis. P6 Illustrate the use of budgets as a means of exercising financial control of a selected company Fixed Costs- The running costs of a business such as rent and wages. Variable Costs- Costs that varies with the level of output or sales.An example of a variable cost would be direct labor costs. The breakeven point to two decimal places is 6.12 (£68) | Fixed Cost | Variable Costs | Total | Revenue | Profit/Loss | 0 | 416 | 0 | 416 | 0 | -416 | 1 | 416 | 12 | 428 | 80 | -348 | 2 | 416 | 24 | 440 | 160 | -280 | 3 | 416 | 36 | 452 | 240 | -212 | 4 | 416 | 48 | 464 | 320 | -144 | 5 | 416 | 60 | 476 | 400 | -76 | 6 | 416 | 72 | 488 | 480 | -8 | 7 | 416 | 84 | 500 | 560 | 60 | 8 | 416 | 96 | 512 | 640 | 128 | 9 | 416 | 108 | 524 | 720 | 196 | 10 | 416 | 120 | 536 | 800 | 264 | Three ways in which the Hotel Excellent can attract more customers for 2011 and reasons why the method would be effective: 1) Cut down on the variable and fixed costs. The hotel’s costs have risen which has resulted in more loss than profit, therefore if the hotel lower their costs there may be more room for profit. The hotel could get their supplies from cheaper suppliers, could switch companies for their electricity, gas, water and lay off staff if a high volume of staff is not essential. 2) To increase sales the Hotel Excellent could advertise and promote themselves more; this will bring publicity and attention to the hotel. Advertising...
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...行、农业银行、上海银行、太平洋保险、平安证券、富国基金等。 主编出版：《固定收益证券定价理论》、《财务报表分析技术》、《公司财务》、《衍生产品定 价理论》、《商业银行管理学》多本金融教材，备受金融学习者与从业人员好评。 新浪微博：汤震宇CFA_金程教育 联系方式： 电话：021－33926711 2-156 邮箱：training@gfedu.net 100% Contribution Breeds Professionalism 前导课程大纲 CFA一级框架结构 金 金程服务平台及百题分析报告 务 台 析 计算器使用 财务前导 3-156 100% Contribution Breeds Professionalism CFA 考试知识点及其比重 TOPIC AREA LEVELⅠ LEVELⅡ LEVEL Ⅲ Ethical and Professional Standards (total) 15 10 10 Quantitative Methods 12 5-10 0 Economics 10 5-10 0 Financial St t Fi i l Statement A l i t Analysis 20 15-25 15 25 0 Corporate Finance 8 5-15 0 Investment Tools (total) 50 30 60 30-60 0 Analysis of Equity Investments 10 20-30 5--15 Analysis of Fixed Income Investments 12 5-15 10--20 Analysis of Derivatives 5 5-15 5--15 Analysis of Alternative Investments 3 5-15 5--15 Asset Valuation (total) 30 35-75 35--45 Portfolio Management (total) 5 5-15 45--55 100 100 100 TOTAL 4-156 100% Contribution Breeds Professionalism 知识框架分析——Ethics 知识框架分析——Ethics Code of Ethics Integrity g y Credit ...
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...Part Ⅰ Portfolio Overview Holding Period: 09/14/2010 ~ 11/30/2010 76 days Settlement Date: 09/14/2010 Position: 6 of 6 Part Ⅱ Securities Analysis *CN Government Bond 10-year is based on CNY. CNY per USD=6.74690 as of 09/14/10; CNY per USD=6.66730 as of 11/30/10 CNY per USD=6.64110 as of 10/15/10 1. CN Government Bond 10-Year The yield and price were relatively stable during the first 30 days of my holding period until Oct. 19th when the People’s Bank of China increased its benchmark rate by 0.25 percentage point on in order to take control of the stubborn inflation. The yield increased and the price fell. However Chinese RMB has been appreciating from 6.74590 USD/CNY to 6.66730 USD/CNY during my holding period. The foreign exchange gains partially offset the loss of market value of the bond. The rate of return is 1.269%. I will sell the bond because the Chinese government has potential to continuously increase the interest rate and besides the US dollar shows a strong appreciation trend recently. 2. US. Government Bond 10-Year There are several factors contributed to the fluctuation of the price and yield of Treasury. In early September, the interest rate for 2-7 year treasury notes have declined to record low level, causing the market value of the portfolio increased. The decline of the price of Treasuries at the end of September is due to profit-taking after recent gains. The yield surged and the price decreased after Fed announcement of QEⅡ. I considered...
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...Question 1 Are interest rate changes predictable? Interest rates are not entirely predictable but can be inferred from present interest rate prices. For example, when current interest rates are exceptionally low, future interest rates can be expected to rise and vice versa. Question 2 Consider a two year coupon bond which pays an annual coupon of 5% with a principal value of $100. Using the zero coupon bonds B(0, 1) and B(0, 2): 1. What is the strategy to replicate the coupon bond? 2. What is the strategy to hedge the coupon bond? PV of 2 year coupon bond = 5 B(0,1) + 105 B(0,2) 1. To replicate the bond, I should buy 5 units of B(0, 1) bonds and 105 units of B(0, 2) bonds. 2. To hedge the bond, I should do the opposite and sell 5 units B(0, 1) bonds and 105 units B(0, 2) bonds. Question 3 Consider three zero coupon bonds; B(0, 1)=0.95, B(0, 2)=0.90, and B(0, 3)=0.85: 1. What is the zero rate term structure? B(0,T) = e-rT/365 r(0,T) = -ln( B(0,T))365/T r(0,1) = -ln 0.95 = 0.0513 r(0,2) = -(ln 0.90)/2 = 0.0527 r(0,3) = -(ln 0.85)/3 = 0.0542 2. What is the forward rate term structure at one year intervals? In other words, f(0, 1, 2) and f(0, 2, 3). f(0,1,2) = B(0,1) / B(0,2) – 1 = 0.95/0.9 – 1 = 0.05556 f(0,2,3) = B(0,2) / B(0,3) – 1 = 0.90/0.85 – 1 = 0.05882 3. Name two other possible term structures that can be inferred. The other term structures are discount rate and simple interest rate structures. Question 4 The current date is January...
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...Chapter 4 – Bond Price Volatility Extra Questions 1. Be sure you understand all the relationships shown in Exhibit 4-11 2. The price of a bond can be written as either as the sum of series of discounted CFs (Equation 4.1, page 63) or as the sum of the PV of an annuity and the discounted maturity value (Equation 4.9, page 67). Note that the PV of an annuity formula used in Equation 4.9 is derived from the difference between a perpetuity starting at time zero and a perpetuity starting at time n. The difference is an annuity starting at time 0 and ending at time n. Equation 4.3 is the first derivative of price w.r.t. yield (∂P/∂y) using equation 4.1. The numerator of equation 4.10 is first derivative of the price w.r.t. yield using equation 4.9. Consider either equation 4.3 or the numerator of 4.9. Determine only the sign of following second derivative and mixed partial derivatives: * ∂2P/∂y2 * ∂2P/∂y∂C * ∂2P/∂y∂n (a) Does duration increase or decrease as the initial yield increases?(decrease) (b) Does duration increase or decrease as the coupon increases?(decrease) (c) Does duration increase or decrease as the maturity increases?(increase) 3. (This is questions 2 and 4 from the text.) Consider semi-annual bonds A and B. | Bond A | Bond B | Coupon | 8% | 9% | Yield to maturity | 8% | 8% | Maturity (years) | 2 | 5 | Par | $100.00 | $100.00 | Price | $100.00 | $104.055 | Produce an Excel...
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...Chapter 09 - Interest Rate Risk II Chapter Nine Interest Rate Risk II Chapter Outline Solutions for End-of-Chapter Questions and Problems 1. What is the difference between book value accounting and market value accounting? How do interest rate changes affect the value of bank assets and liabilities under the two methods? What is marking to market? Book value accounting reports assets and liabilities at the original issue values. Market value accounting reports assets and liabilities at their current market values. Current market values may be different from book values because they reflect current market conditions, such as current interest rates. FIs generally report their balance sheets using book value accounting methods. This is a problem if an asset or liability has to be liquidated immediately. If the asset or liability is held until maturity, then the reporting of book values does not pose a problem. For an FI, a major factor affecting asset and liability values is interest rate changes. If interest rates increase, the value of both loans (assets) and deposits and debt (liabilities) fall. If assets and liabilities are held until maturity, it does not affect the book valuation of the FI. However, if deposits or loans have to be refinanced, then market value accounting presents a better picture of the condition of the FI. The process by which changes in the economic value of assets and liabilities are accounted is called marking to market. The changes can be beneficial...
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...Bond Valuation By Anuj Joshi Note 1 Bond Valuation Fixed income paying securities. 1. Theoretical price or value of bond depends upon. i. Coupon Payment : Fixed amount of interest to be received after prescribed frequency. ii. Maturity Value [Unless otherwise given is exam, we should take face value] iii. Discount Rate : It should always be market interest rate 2. What is market interest rate Market interest rate is derived from comparable listed bond. The comparison is based on risk and life of the bond. E.g. If we are valuing a bond which is unlisted and have 5 years of life, then we should look for a bond which is similar in risk profile (i.e. same credit rating)and having similar life. The YTM (Yield to Maturity) of listed bond is called market interest rate The YTM of a bond is nothing but IRR of the bond. 3. Value of a bond = PV of Coupon Amount + PV of Maturity Value [Remember CF and discount rate are before tax] Concept Point: i. Coupon rate is a historical rate and should never be used as a discount rate. In exam, if no other information is available, then only we should assume coupon rate of interest as market rate of interest. ii. Remember, Cost of Capital or Discount Rate is a future concept and it represents opportunity cost on the date of valuation. iii. YTM of a similar bond (i.e. current market interest rate) is the appropriate discount rate for bond valuation. How to value a bond which pays interest at a frequency lower than annually (e...
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...take an action to resolve the problem with maximum efficiency and minimum error. During las weeks I came up with two scenarios of keeping our company alive and continue to operate, which are: 1. Overhaul of machine and continue to work with it for more 5 years 2. To get a new machine, which will generate more profit and will be able to produce higher quality products. This proposal is meant for director of the Financial Department of our company. Response and action is needed immediately, because future revenues are at risk. This proposal will give you the full view of both scenarios and future revenues that we are going to face. If any questions occur, please feel free to ask me, so I can answer you with the full potential. Problem Analysis During last three years we experienced usual ups and unusual downs in our production. Especially last month our machine declined to work two times, so we had to postpone...
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...evidence. Other sources on the web can provide expert opinions on subjects that can give your piece a different critical viewpoint and form new arguments that you might not have thought of. Take care to confirm what you are reading is accurate before trusting it as fact. Use of computers in education and research has completely changed the way things were made before. For example, a lecture to the students or the presentation of a paper to a Congress are completely different with respect to those of only a few decades ago, when blackboard, transparencies or photographic slides were used. There are many positive aspects of using computers, for example making a talk very attractive. However, there are also negative aspects. In this paper an analysis is presented of advantages and disadvantages I experienced and of consequences of using computers. Advantages and Disadvantages of Computers As you know nowadays almost every home, office or school has a computer or even a few of these devices. Anyway, these modern technologies without which lots of people cannot imagine their lives have some advantages as well as disadvantages. To begin with, I would like to comment on the advantages. So firstly, computer gives you the opportunity to access a lot of information about everything not to mention the fact that you can store large amounts of information on the computer in a database. One computer disk can hold the same amount of information as several books. And don’t forget about the...
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...The way we think and the way we perceive how we progress in life is characterized by the type of mindset that we have individually. In the article by Maria Popova she talks about how there is two types of mindsets the fixed and growth mindsets. The fixed mindset is the mindset of fearing to be wrong or the mindset that doesn’t want to keep on learning and become more intelligent but rather keep working the same problems to be perceived as smart. On the other hand, the growth mindset is the type of mindset where someone is more open to learning from mistakes and accepts new challenges in order to gain intelligence not just act intelligent. In my opinion I think that I relate most with the fixed mindset. As bad as it may seem after reading...
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...saying people in the community I am hear to inform you about the water pollution that we have found in our system. As you know that the company has been producing water for our community but it has com to our attention that people have been getting sick so we did our own research and it come to find out that there have been waste in out water that has not been cleaned out are it may be possible oil. I would like to reach out to the public so they would not drink the water until they fix the problem. We will give everyone bottled water until the problem is fixed. like how did they let it get this far for people to get sick and why we have to shut down the whole water system? How long will it take before we are able to use our water aging without getting sick? I have came to he conclusion that the water is what is making everyone sick and so everyone is on the same page they should not use their water until the problem is fixed. In order to fix the problem we have to clean out the water and send it back through and make sure it is safe enough for our citizens to use. The questions that I asked myself are what is it that everybody is doing to make them sick? Have they ate at the same restaurants have they went to the same store are what? Then we have found out that everyone has drunk water from the faucet instead of bottle water. The fallacies that I encountered were that the water company did not want to admit to the fact that the water is what is making everyone sick. When I...
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...often had the highest grades in every test. Playing with numbers makes me feel free because I can find more than one way to solve just one question. I always made questions and focused one’s attention to find solutions. However, if you think that you have talent, then you don’t practice anymore; it will make your brain become slower and slower. You will be lagged behind your classmates who have intension. Practicing everyday will help you calculating faster and improving your accuracy. Besides being good at math, I was also interested in fixing machines. I often fixed my things in my house even though they were in good condition. If they were not broken, I would also dismantle them, so my parents called me a naughty boy. In my family, I was mostly self-fixed machines although I still had few mistakes. My father could fix machines, but he didn’t do that because he knew that’s my favorite job. I disassembled and fixed them many times until I could remember the structure of machines. I was a curious boy because I often wanted to know everything. I took apart household appliances to see how they work. I used to send weeks just repairing my computer. My parents told me that my face was very excited when I worked with machines, but it did not...
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