Just one more day to go … and the course sadly comes to an end with the Credit Risk exam tomorrow evening. It’s great to think of the feeling of having all the evenings and weekends for myself and my family going forward, but also it’s sad to miss school. One doesn’t realise when one’s here! The Financial Engineering exam this evening was a pleasurable experience – brilliant subject with the best and the liveliest professor ever! Oh well, looking forward to tomorrow’s exam now, and the grand dinner, disco and mid-night raving in a top notch night club in WC on Friday night. But yes, the mission isn’t accomplished, at all, yet ….. it’s just the beginning!
The finishing line is near, another 2 months to go and I become an alum! The feeling is too good for words! The satisfaction of having done a well-rounded program with a variety of subjects (unlike an MFE from a U.S. School, nothing against an MFE though), and the brilliant faculty and curriculum, and the myriad of accomplished & ambitious people I have met over the course of 2 years … all make it a memorable journey. Well, the journey has just begun actually, all we did in school was just get tooled up, and it’s time we put our knowledge to test … looking forward to the near future! What a great time now … so many interesting things (and sad, e.g. Greece) happening out there …. and the result market dynamics … can’t wait to unleash myself lol HURRAY and PHEW!
Sekhar Kanuri Loves Fixed Income!!!
And tonight is the big night, when I’d be uttering those words filled with emotion and unconditional love … “Dear Fixed Income, Will you marry me?”. I will be wearing a “cap” and an expensive wide “collared” shirt (it was “costless” by the way, but “callable” by the person who rented it out to me), and my heart rate will be at “par” with my beloved one. Just need to “hedge” the risk associated with a shift in our rates – you never know what we might do together! Probably just go off on a “random walk”. I can foresee us “swapping” our joys and sorrows for the rest of our lives. Watch the space to see what happens ….
The evolution of the interest rate term structure is the most beautiful thing I have ever seen! We live, breathe, eat, sleep, and drink the term structure – the replication, pricing, and hedging of several instruments depend on how it evolves! Long live Vasicek and Cox-Ingersol-Ross! And hats off to our genius and amazingly entertaining professor Dr. Suleyman Basak!
The last few months of my Masters program, and incidentally the busiest of all times, it is good that my learning is following an upward sloping convex function, but it’s bad I’m using a huge discount rate for my family, home, and even myself!! Maybe it’s just me trying to grasp Fixed Income and Option Hedging … maybe. No time even for a haircut, no time for going out with the family, no time to get stuff sorted at home, no time to visit any friends, no time to workout or run, no concept of a weekend or holiday, no time to analyze my portfolio, no time for the little one, and sorry no time to blog any further …! The “time” asset class will lose all its value soon as I’ll have so much of it, so I better short some futures on time expiring in June!
Every now and then, it strikes me that I am mingling with some of the top brains in the world when I am at London Business School. Not always does an average person get this opportunity! The achievements of some of my class mates (some very recently) make great impressions on me, and fuel my own ambition even further. Hats off, reverence and my deep respect to these hardworking & successful people. As an aside, I sometimes wish I studied at a top school, such as London Business School, much early on in life, but as they say better late than never
Indeed, what holidays? The next 2 weeks is the only time I have before I’m deep in the water with 3 very interesting and time-consuming electives, along with an exciting & challenging project work to complete. So I better cover some ground the little of this year that’s left. It’s going to one heck of a ride till July 2010 which is when my program completes. I am really not looking forward to July as much as I am looking forward to making my MiF project/thesis a grand success. It’s no exaggeration to state that the project is a consummation of the whole program with my future career goals. Right now, time is the most valuable commodity (so, stop blogging and get some work done, will ya!)
Should Britain join the European Monetary Union (EMU)? Would we have better weathered the crisis, if we were part of the EMU? Is the EMU at the risk of a break-up? Would Greece breaking out of the Euro be a big deal? Is the next major crises a sovereign debt crisis? Can regulation do anything to contain the financial excess that led to the recent crisis? Why is the Big Mac much cheaper in Mumbai than in London? Is a weakening dollar the perfect recipe for U.S. economic recovery? How long will the present carry trade continue? Can the Chinese Yuan/Renminbi be one of the global reserve currencies in the next decade? How can Britian manage its huge current account deficit, and does it affect our international competitiveness?
If any of these questions intrigue you, you might find yourself at home in Professor Richard Portes and Helene Rey’s classes as part of the Global Capital Markets & Currencies (GCMC) elective.
I would refrain from being apologetic about my blogs being monotonous of late – all of them singing praises of my professors and the electives, but it’s my duty to be honest and share my great experience with readers. This elective has greatly contributed to my understanding of these topics, and who better than professor Portes and Rey! I am privileged to have been their student. We have had guest speakers from the BBC, Financial Times, UK govt and a couple of investment banks. The final session gave us the opportunity to speak to the current deputy governor of the Central Bank of Turkey, and ask him some topical questions! The session was very involved and informative.
Highly recommend this elective to finance and MBA students alike. It’s a lot of fun and learning!
Why aren’t the Turks comfortable studying the subject of Options & Futures? It’s because they have to study the “Greeks”! Jokes aside, this elective has truly been a rewarding experience for me. I have heard laurels of several quant finance professors at our school, but I cannot think of anyone better than Lucie Tepla, who could have taken me through this subject and with the greatest ease. Lucie knows the subject inside out, and the slides presented in class were so succinct yet comprehensive! The weekly homework contained topical (and challenging) questions, which I hope have equipped us to price, replicate, hedge, and arbitrage options & futures in our banking roles, now or in the future. The elective ends this week with a review of all chapters in advance of the final exam next week, and I have to thank Lucie for her eternal patience and enthusiasm in clarifying my queries, in an enlightening fashion many a time. Highly recommend this elective to prospective MBAs and MiFs.
On a totally different note, I just wanted to add this is a great time for those with large outstanding student loans to repay them off quickly! It is old news that the Bank of England base rate at 0.5% has been the lowest for years now. While this doesn’t particularly attract savers, it is a boon in disguise for those with outstanding loans, and with the choice (and ability) to repay now as opposed to repaying later. One could easily make a killing at the principal by repaying large chunks of one’s loan in the next 1-2 years.
It may be argued that quantitative easing — whereby BoE printed electronic money to buy back government debt from banks in order to unclog the credit flow pipelines — may be blamed for inflation in later years to come (2011 onwards). Nevertheless, inflation could be influenced not just by the abundance of money, but also the balance between the supply and demand for essential commodities. Regardless, the only way it appears the interest rate will head in the future is upwards!! Therefore, if there’s an ideal time to pay back loans, it is NOW!!