AIM: Define and contrast exotic derivatives and plain vanilla derivatives.
Questions:
09.01. In comparison to a plain vanilla derivative, each of the the following is true of an EXOTIC derivative EXCEPT for (most likely answer):
a. BETTER hedge effectiveness
b. BETTER liquidity
c. LOWER basis risk
d. HIGHER (more) counterparty risk
09.02 Which is not an EXOTIC (according to Hull)?
a. Compound option
b. Bull call spread
c. Executive stock option (ESO) with four (4) year vesting
d. Option indexed to S&P 500
Answers:
09.01. In comparison to a plain vanilla derivative, each of the the following is true of an EXOTIC derivative EXCEPT for (most likely answer):
a. BETTER hedge effectiveness
b. BETTER liquidity
c. LOWER basis risk
d. HIGHER (more) counterparty risk
b. BETTER liquidity
The benefit of nonstandard terms is a better hedge but the price is typically less liquidity.
The essential difference between vanilla and exotic is similar to the difference between forward and futures: a vanilla derivative has standard terms which enables exchange trading; the exotic has non-standard terms which often requires OTC. As such, the primary (typical) trade-off is between liquidity and basis risk. A vanilla instrument will tend to have higher liquidity due to standardized terms but the exotic can be customized to LOWER basis risk (and thus giving BETTER hedge effectiveness).
09.02 Which is not an EXOTIC (according to Hull)?
a. Compound option
b. Bull call spread
c. Executive stock option (ESO) with four (4) year vesting
d. Option indexed to S&P 500
b. Bull call spread
The bull call spread is a TRADING strategy (long call plus short call with higher strike price): combinations of vanilla options are still vanilla. In regard to (c) and (d), these are American options with non-standard features.

|

• 
• 
• 
• 
• 
• 

Are you looking for a powerful freeware desktop calculator that can take care of all complex mathematical calculations? Look no further, SpeedCrunch is the one for you.
Speed Crunch is a high precision and powerful freeware desktop calculator for Windows, Mac and Linux. It is easy to use and is loaded with plenty of useful features and functions (as in mathematics functions).

Useful libraries
Download it here SpeedCrunch comes loaded with various libraries that you can use immediately:
Math book – A small library that contains the formula for 2D/3D objects and quadratic equations.
Constants library – If you have difficulties remembering the value for atomic mass or astronomical units, don’t worry, it is all documented in the constants library. This library contains most of the constant values you will ever need.
Functions – provides you with access to frequently used functions such as abs, acos, bin etc.

|

• 
• 
• 
• 
• 
• 

Hi
Welcome! Business Talk On is a new business blog launched on June 11, 2010 led by Yasin E, (Lead Contributor), Adil E, Barry A, Rudolph M with deep financial, entertainment, digital industry and professional examinations FRM, CFA, IMC, CAIA & IFQ verticals.

Business Talk On is dedicated to aggregating, exam tips & tricks, exam strategies, exam notes, general exam discussions, reporting, and analysing the top news stories across the web and delivering them to you at rapid-fire pace
Thank you for reading Business Talk On, we hope you enjoy the blog!
Participate:

The Business Talk On is a community blog, and you are encouraged to participate in the following ways:

* Send news and/or tips via e-mail or IM (TBItips).
* Comment
* Write (Send posts, refer TBI to your blog, or become a regular contributor)
* Send photos and/or videos
* Follow us on Twitter
* Send feedback and/or suggestions
* Become a fan of Business Talk On’s Facebook page.


Cheers
YeahScene

|

• 
• 
• 
• 
• 
• 

Hi,
For those of you who are interested I'm working on a study time table in Excel if you wish to receive a copy please email me.
Best
4Sight

|

• 
• 
• 
• 
• 
• 

'Islamic finance has big potential in Russia'

04/03/2010 06:00:00 AM GMT

Much has been written recently about the Russian government thinking of reviewing legislation to facilitate Islamic finance. Maxim Osintsev is a Russian banker with a difference. He is a fluent Arabic speaker and has a passion for Islamic finance, which he says comes from the heart. As managing director, Oil & Gas Department at Sberbank, the largest commercial bank in Russia, he is on a mission to convince his colleagues and senior management that purely as a business proposition Islamic banking makes sense because there is a ready made potential market of 20 million Muslims in the federation. Sberbank (the National Savings Bank of Russia) is 60 percent owned by the Russian government through the Central Bank of Russia and 40 percent by the private sector including 24 percent by foreign investors and its shares are publicly listed and traded on various stock exchanges including the London Stock Exchange. Not surprisingly, the chairman of Sberbank's supervisory committee is Sergey Ignatiev, who is also the chairman of the Central Bank of Russia. Sberbank has a 50 percent share of retail deposits and 31 percent share of the total Russian loan market. Its total assets at end January 2010 were 6.99 trillion rubles. At the same time Sberbank is also expanding overseas and is set to enter the GCC (Gulf Cooperation Council) market, which is another reason why it should also have Islamic financial products in its portfolio. Here Osintsev discusses with Arab News why Islamic finance has big potential in Russia and the CIS countries, and outlines a potential roadmap for the future implementation of Islamic finance in the country. Much has been written recently about the Russian government thinking of reviewing legislation to facilitate Islamic finance. What is the state of Islamic finance in Russia? At the moment there is only potential, for Islamic finance has yet to come to Russia. There has been the odd financial institution trying to introduce an Islamic financial product. The potential for Islamic finance however is great. In Russia there are 20 million Muslims mainly in Tatarstan and the northern Caucasus. Islamic finance is not only for Muslims but for anyone interested in socially responsible investments and ethical finance. Sberbank is currently expanding its presence abroad. We have a wholly-owned subsidiary bank in Kazakhstan and Ukraine. We are also looking to buy a bank in Belarus and we have opened representative offices in China and India respectively. Hopefully we are also contemplating to open a representative office or branch in the Middle East, either in Abu Dhabi, Dubai or Bahrain. I think there is a strong probability that we will first open a representative office in Abu Dhabi. What is your take on the Islamic finance proposition? The logic is very simple. Firstly, there is a market and demand for such services. There are after all 20 million people who are potential customers. Why should we overlook this opportunity? Secondly, if we are thinking of entering the Middle East markets, then it is necessary to offer such products. Having Islamic financial products as part of our services makes sense and I think it would be in Sberbank's interest to do offer them. I recently organized a special in-house seminar for our senior management, including Herman Gref, the chairman of Sberbank's management board and CEO, to familiarize them with this alternative system of financial management and the concepts behind Islamic banking. Islamic finance is the interest of my heart. I graduated from Moscow State University specializing in Arabic language and the economies of the Arab world. After graduation, I worked in the Russian Trade Mission in Libya for five years. I am interested in promoting Islamic finance in Russia and personally I think the bank can do much in this field. In the wake of the global financial crisis and the attack on "Casino Capitalism", do you think that Islamic finance has something to offer to emerging economies such as Russia? I think Islamic finance is a viable alternative to Casino Capitalism and also a good niche banking proposition. If such services are in demand, why don't we offer them? How are your colleagues at Sberbank viewing your interest in Islamic finance? Sberbank is very Russian and a very traditional bank. When I was first started attending seminars on Islamic banking, some of my colleagues ridiculed and laughed at me. Others were skeptical about Islamic banking. After I organized the seminar in the bank, there was great interest and many of my colleagues participated in the seminar. My legal counsel is now very interested in Islamic finance. My approach is slowly and slowly educating and creating awareness of Islamic finance. Has there been any reaction from or interaction with the CBR? The senior officials at the CBR are highly qualified and educated and I am sure that they are aware of the existence of Islamic finance, but I think they are not familiar with its concepts or principles. The CBR must be aware of the developments toward authorization of Islamic banks in the UK, and the introduction of tax neutrality laws to facilitate the introduction of Islamic financial products in the UK, France, Luxembourg and Ireland. They cannot ignore these developments in Europe. As the largest bank in Russia, we too cannot ignore this phenomenon sweeping the European Union. I sincerely hope that we can persuade the CBR to perhaps set up an ad hoc Islamic finance advisory group to demystify and explain Islamic finance to the CBR and eventually to promote new financial inclusion policies that would facilitate the adoption of new regulations for banks involved in alternative finance such as Islamic banking. I understand this is how the UK also started with Islamic finance, with the Bank of England setting up such an advisory group. I feel I have the responsibility for lobbying for the establishment of such an advisory group. My task is to promote the idea of Islamic finance to my top management. I also hope to set up an internal working group on Islamic finance at Sberbank. Do you think that non-Muslim countries mistakenly see Islamic finance only as a religious phenomenon as opposed to an alternative system of financial management? We should not look at Islamic finance as a religious phenomenon per se. It is a faith-based alternative ethical system of financial management. The word Islamic does not appear in the UK legislation for such products including sukuk, where they call them Alternative Financial Investment Bonds. Unfortunately, Europeans are afraid of the word "Islamic" because of its religious connotations. What is potential for Islamic finance in the Russian economy? The potential benefit for the Russian economy is huge, especially financing infrastructure projects through the issuance of sukuk, whose major subscribers these days can be 65 percent from the West including hedge funds. There will be some balance between interest of Russian corporates interested in sukuk and investors interested in buying such papers. There are signs that Russia and the CIS countries are just starting to look at sukuk and other such products. For Sberbank, there is a simple logic - if we expand into the Middle East, then it becomes imperative to offer Islamic financial products. Sberbank is a traditional bank with a universal banking license comprising retail banking and investment banking. We have a slightly different model and a plan for up to 2016. Currently we only offer commercial banking services but we are now in the process of establishing an investment banking arm. We are actively considering issuing sukuk. We have a wholly-owned transport subsidiary which owns a good asset pool - transport railway carriages, trucks and other industrial goods - ideal for securitization and asset-backed sukuk issuances. This interest at the moment is in-house and we have not approached the CBR or the Capital Markets Authority, the securities regulator in Russia in the above respect. It is too premature to talk about other Islamic finance products for the Russian market. But I believe sukuk could be the first such product - both corporate and retail. -- Arab News

---

|

• 
• 
• 
• 
• 
• 

Hi All,
At least once a  year I'd like to write a post on my blog inviting you the readership to comment on a number of areas of my blog.
These include:

• Content (topics covered, post length, types of posts, post frequency, depth of exploration of topics etc)
• Design (navigation, colors, fonts etc)
• Blog Features (RSS feed, blog tools etc)
• Community (how it could be enhanced)

 Moreover, surveys will appear during the coming months relating to HOT topics within finance & banking
Survey Topics will include:
Survey 01: Which are Hottest Credentials?
Survey 02: The Most Useful Post-Crisis Qualification?   
Survey 03:  Best Career Choice for CFA charter Holder?
Survey 04:  Best Career Chaoice For FRM Charter Holder?
Survey 05:  Which are the hottest financial city?
Survey 06:   Best Division in Investment Bank?

Best

|

• 
• 
• 
• 
• 
• 

Point your mobile/cellphone on the image and learn more About Me

|

• 
• 
• 
• 
• 
• 

A week ago I was asked this question... How difficult is the FRM in comparison to the CFA.  I'm reading both FRM & Can't Finish Actuary  mmmm FRM is tough NO BS don't take my word for it.
Read what these guys have to say..... http://www.linkedin.com/answers/professional-development/professional-organizations/PRO_ORG/495370-14286389

|

• 
• 
• 
• 
• 
• 

IslamicAdvisory.com, the only online Islamic Finance training organization, is about to launch its CIFE program. Learn how this will help you advance your career by logging on to www.IslamicAdvisory.com.
7 REASONS WHY BANKERS PREFER THE CIFE™
The Highest Accreditation Standard Available Online
The CIFE™ is rigorously tested by a team of bankers and scholars who check that the training, quizzes, and certification conforms with AAOIFI, the leading industry standard in Islamic finance. While other certificates claim “Shariah-compliance,” we explicitly abide by a known Shariah standard anyone can check against. And because we are a DIFC registered company, we have to ensure that we comply with international standards of quality and customer service.
Up-To-Date Certification
Can you really be sure that your 3-year old workbook or last year’s CD is up-to-date? With the CIFE™, when Islamic finance innovates, our online content innovates right there with it. So you can be sure that you’re never left behind.
More Training Than Anyone, Growing Every Week
At launch we had 20 modules. Today we have 35. And by next year we will have over 100, God willing. We’ve already been called the “Amazon of Islamic Finance.”
Beyond Workbooks, CDs, and Crash Courses: Interactive and Engaging
Do workbooks work? Are crash courses rushed? Do conferences bore you? No more. Designed to suit your pace, the CIFE™ runs on an interactive learning platform, filled with guided quizzes, exercises, and how-to explanations, overcoming the monotony of traditional self-study programs.
Cutting Edge Training, Not Distance Learning
The beauty of the Internet is that you get new training material all the time. So you don’t have to wait around for next year’s workbook. You never pay more for new material because once you subscribe, you get access to everything.
Practical Training from Bankers, Not MBA Theory from Professors
Degree programs are taught by professors, not bankers. So most of what you learn is theory, not practical tools. And the people who hire you know this too. The CIFE™ is based on the most practical Islamic finance training on the market. Find out for yourself. Try it before you buy it for free. Bankers simply love the training.
Convenient
There are no study guides or CDs to juggle. Everything you need to take the CIFE™ is streamed directly to your computer, 24 hours a day.

Click here

 You Need to Ask Yourself 7 Questions Before You Choose Your Islamic Finance Certificate

|

• 
• 
• 
• 
• 
• 

Style Matters In Financial Modeling

Let's say you're perusing the want ads and come upon an ad for an equity analyst. The pay is great; there are travel opportunities. It looks like the job for you. Glancing down the list of qualifications, you mentally check off each one:

• Bachelor's in engineering or mathematics - check
• Master's in economics or business administration - check
• Curious, creative thinker - check
• Can interpret financial statements - check
• Strong technical analytical skills - check
• Modeling experience required - check, no wait, better get some 8x10 glossies made up.

The truth is, when companies want their equity analysts to have modeling experience they don't care how photogenic they are. What the term refers to is an important and complicated part of equity analysis known as financial modeling. In this article, we'll explore what a financial model is and how to create one. (To learn more about a job as an equity analyst, see Becoming A Financial Analyst.)

Click to learn more http://www.investopedia.com/articles/financialcareers/07/financial_modeling.asp

 

 

|

• 
• 
• 
• 
• 
• 

Definitions of yeah on the Web

yea: not only so, but; "I therein do rejoice, yea, and will rejoice"

 wordnetweb.princeton.edu/perl/webwn

yes; Expressing joy, celebration, glee, etc



en.wiktionary.org/wiki/yeah

|

• 
• 
• 
• 
• 
• 

Definitions of scene on the Web:

• the place where some action occurs; "the police returned to the scene of the crime"
• an incident (real or imaginary); "their parting was a sad scene"
• view: the visual percept of a region; "the most desirable feature of the park are the beautiful views"
• a consecutive series of pictures that constitutes a unit of action in a film
• picture: a situation treated as an observable object; "the political picture is favorable"; "the religious scene in England has changed in the last century"
• a subdivision of an act of a play; "the first act has three scenes"
• fit: a display of bad temper; "he had a fit"; "she threw a tantrum"; "he made a scene"
• graphic art consisting of the graphic or photographic representation of a visual percept; "he painted scenes from everyday life"; "figure 2 shows photographic and schematic views of the equipment"
• setting: the context and environment in which something is set; "the perfect setting for a ghost story"
• scenery: the painted structures of a stage set that are intended to suggest a particular locale; "they worked all night painting the scenery"

|

• 
• 
• 
• 
• 
• 

Interest in Linkedin from lawyers, accountants and other professionals has taken off recently. And it makes sense. Despite the hype over Twitter and Facebook, Linkedin offers the greatest opportunity for professionals to make connections that lead to business.
Read the full story by Ian Brodie
http://www.ianbrodie.com/marketing/linkedin-tips-professionals/

|

• 
• 
• 
• 
• 
• 

This resource is intended for people who…

* …are new to LinkedIn and wondering how to use it to help you in your business and career
* …have been using LinkedIn a while but felt like you haven’t really been accomplishing anything with it
* …are trying to persuade their friends to join LinkedIn and want to communicate the value proposition
* …think there’s no real value in LinkedIn (and those who want to rebutt them)
Read the full story
http://linkedintelligence.com/smart-ways-to-use-linkedin/

|

• 
• 
• 
• 
• 
•