To what extent does financial engineering have an important role - Free Essay Example

Sample details Pages: 5 Words: 1649 Downloads: 6 Date added: 2017/06/26 Category Engineering Essay Type Analytical essay Did you like this example? As we are in modern world today, everything around us has been changing continuously. The world that we see today is different from the world in 40 years ago. Technologies are one example, which has been improving dramatically. Don’t waste time! Our writers will create an original "To what extent does financial engineering have an important role" essay for you Create order Letter had been a popular way to communicate and then land line telephone came to help communication more easily and the following is mobile phones, which have more and more convenient until today. The most important technologies are computer and internet. These technologies have improved from local communication to instant global communications. People from Africa can talk with his friend in Thailand within a few second of connecting. Furthermore, money can be transferred from country to another country within one day. Undoubtedly, people around the world have equal chance to take a great number of news, information of stock market and financial figures from all over the world. Hence, financial markets will respond without delay. It is clear that globalization has made information in financial market spread fast and developed in term of size and complication. Implication of globalization in financial markets is that there are more speculators, which increase volatility of financi al markets. The meaning of volatility of financial markets is amount ofÂÂ  uncertainty or riskÂÂ  about the size of changes inÂÂ  aÂÂ  securitys value. Due to the volatility of markets, they created an increasing demand for intelligent financial product to manage financial risk. This foundation contributes to establishment of financial engineering (Galitz 1994). This essay will provide background information of financial markets and financial engineering and then examine the role of financial engineering in financial market. The reader of this essay might have basic background in finance. Hence, technical terms are defined clearly and avoided to discuss in deep knowledge. Background knowledge of Financial Market Financial market is a market where financial asset are exchanged (Fabozzi, Modigliani, Jones, Ferri 2002). Financial asset can be classified as tangible asset (such as, money, building, land or machinery) or intangible asset (future benefit, patents). Participants in financial market are household, corporations or government. There are various ways that financial market can be classified. It can be classify by financial claim, such as debt market and equity market. Another type of classification, which is generally used, is classified by financial assets that are traded in. Firstly, it is capital market, where is divided into two submarket; stock market and bond market. Secondly, money market, it is a source of short-term borrowing and lending. Thirdly, derivative market, this market is necessary for financial engineering because it is where financial instruments are used to manage financial risk. Financial market can be found in almost countries in the world because of three main functions of financial markets. First, interaction of buyers and sellers in the market determine the price of the traded asset. The price depends on demand(buyer) and supply(seller) (Fabozzi 2002). Second, the market provides liquidity, which is offer investor to sell financial asset (Fabozzi 2002). Third, it reduces cost of transactions, which is search costs and information costs (advertisement) (Fabozzi 2002). Background knowledge of Financial Engineering The term financial engineering is defined in numerous definitions, but most definitions are about managing and reducing risk. It is generally defined that is application of various mathematical, statistical and computational techniques to solve practical problems in finance. Similarly, a few of definitions in books are explained in the same way. First, it is referred to adjustment or tuning existing financial product to increase profits or reduce risk in financial market that changing continuously (Eales 2000). Another definition that totally clarifies the concept of financial engineering is Financial engineering is the use of financial instruments to restructure an existing financial profile into one having more desirable properties (Galitz 1994). It seems that this term has wide range of definition due to a vast of utilization and knowledge in this field. Goal of financial engineering is different in each position in financial markets. There are two sides in financial market, which are buyer and seller. For buyer side, such as investor, an achievement is to take high profits from investment in financial markets. For seller side, such as the company treasurer, it may be diminished influences of currency on a project that is in initial stage (Galitz 1994). Hence, achievements of financial engineering depend on position in financial market. Instruments of financial engineering Mechanical engineer has knowledge about materials and machineries system such as, theories of solid and gear system. This knowledge seems to be tools of mechanical engineer that are applied to create new machinery. Similarly, financial engineering has knowledge about financial market, mathematics and computer programming, which are tools for managing risk in financial market. Many of instruments were invented or developed to do a particular job, whereas they were found to have an extensive variety of other uses as well. Therefore, each type of situation in financial market needs to be supplied by suitable instruments. Financial instruments can be divided into six sectors, which are fixed income instruments, equities, currencies and commodities, derivatives, credit instruments and structured products (Neftci 2008). In this essay will explain only financial instrument in derivatives market, which has futures contracts and options. However, swaps is another financial instrument in derivative market, I would not describe it in the essay due to complication of its structure. There are distinct characteristics of each financial instrument in derivatives market. First, a futures contract is a contract that is an agreement between two parties to buy or sell an asset at a certain time in future for a certain price (Hull 2006). For example, in July 2010, company A sign a future contract between company B that company B will sell live cattle 50 units to company A with unit price of 100 pounds in Dec 5, 2010. This means that at Dec 5, 2010 company A have to pay 5000 pounds to company B and company B have to transfer 50 live cattle to company A. The contracts can be any asset, such as pork, sugar, wool, stock indices and currencies. The benefits of futures in term of managing risk will be explained in later. The second instrument in derivative market is options. There are two basic types of options. A call option offers the holder the right to buy the underlying ass et by a certain date and a certain price. On the other hand, a put option gives the holder right to sell the underlying asset by a certain date and a certain price (Hull 2006). The price of the contract is called exercise price or strike price. The distinction between futures and options is that options allow the holder does not have to exercise, which mean holder have choices to sell or buy at favorite price, but the holder of future contract must buy or sell at certain price. Consequently, both futures contracts and options have similar condition, but they are use in different situation, which will be explained in next paragraph. Role of financial engineering in financial market (450) As I mentioned, roles of financial engineering are divided into sell side and buy side. Financial engineering is useful for those buy side and sell side. To begin with buy side, they can be person or company who want to buy futures contracts or options and used the contracts as a tool to hedge the risk. For example, suppose that it is Sep 5, 2009 , Import Co., based in United States , know that it will have to pay 10,000 pounds on Dec 5, 2009, for goods it has purchased from a British supplier. The USD-GBP is important factor that affect to the exact money (USD) that have to pay to British supplier on Dec 5, 2009. Hence, Import Co. can use futures contracts to hedge its foreign exchange risk by buying pounds (GBP) from financial institution in the 3-month forward. This would have the effect of fixing price to be paid to British supplier because whatever exchange rate in the next three months is Import Co can pay the same amount of money by using exchange rate in future contracts. F inancial engineering has responsibility to calculate exchange rate of future contracts that should buy. Hence, Risk in foreign exchange rate can be managed by financial engineering. Moreover, the buy side can be investors, who use financial engineering to maximize the income with utilizing the idle money. Financial engineering have mathematics and computer programming skill, which can create a model of any financial indices with a certain uncertainty. This is some examples of using financial engineering from buy side in financial market. For sell side, can be financial institution that set the price of futures and options in each contract. Price of options and futures for each contract have profound implication because they have to set in appropriate position. It seems setting price of goods. If the price is too low, company might lose money, whereas if the price is too high, consumers might not interest in this product. Another important role is that creating new financial instr uments. Financial market is developing everyday with an increasing of complicated structure. Thus, new financial instruments need to be created to manage new type of risk and There are wide ranges of financial instruments and they have numerous roles in financial markets. Development of financial market needs to support by new instruments. Hence, the role of financial engineering will be increased. Financial crisis and financial engineering (400) Conclusion (200) Financial engineering has crucial role in financial market today and it is increasing continuously. Due to globalization, financial market has been improving. Volatility of financial market also increases as well. This is the reason that financial engineering was established. Financial engineering has major role is that managing risk in financial market. There are many type of instruments that be applied into the market, such as futures contract and options. For example, future contracts can be used for hedge foreign exchange rate. There are also other types of instruments for dealing with financial problem. Consequently, in the next century, financial engineering might be interested more and more.

Vygotskys Sociocultural Theory Of Development - 831 Words

Socio-cultural developmental theory Vygotsky’s sociocultural theory of development is essential in d primary school and early childhood settings. Through an understanding of the socio-cultural theory, it facilitates pedagogical practices and teaching strategies for educators. The socio-cultural theory is underpinned by the influence of the environment and cultural contexts such as beliefs, values and skills in facilitating development (Mooney 2013, p. 77). Smidt (2009, p. 7) states that children’s understanding of the world and lives is shaped by social interactions from families, peers, educators and community (Nolan Raban-Bisby 2015, p. 31). Vygotsky theorised that interpersonal relationships and experiences contributed to higher†¦show more content†¦77). Using cultural tools is important as children use it in interaction with others and it helps in completion of tasks or achieving objects and acquiring higher mental functions (Bodrova Leong 2001, p. 11). Wetsch 2007 (cited in Henderson Edwa rds 2016, p. 77) states that over time to achieve objects of activity, cultural tools are modified and implemented by children to suit their purpose. However, one of them most important cultural tools is language, as during early childhood language growth is rapid and through dialogue with more knowledgeable others, children can complete tasks (Berk Meyers 2016, p. 322). Henderson and Edwards (2016, p. 77) also states the importance of the adult’s role in acquiring cultural tools as adults have already learnt and used these tools where they share their knowledge of the cultural tools through interactions with children. Within the socio-cultural theory, there is an emphasises on the influence of nurture and the world (Berk Meyers 2016, p. 9), as social interaction is the fundamental concept in child development. 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Character of Three Mistakes of Mu Life Free Essays

Govind: Govind Patel is an ordinary guy with whom anybody can relate. He has very few desires but he is obsessed with the desires he covets. His main ambition is to become a businessman as he thinks that being a Gujarati, business is in his blood. We will write a custom essay sample on Character of Three Mistakes of Mu Life or any similar topic only for you Order Now His best friends are Omi and Ish (Ishan). Govind is an agnostic. His father has abandoned him and his mother, who runs a business of selling home-made food items. To support her financially, he takes mathematics tuitions. He continues these tuitions even after starting the cricket shop business. He is the narrator of this story and the one who makes the â€Å"Three Mistakes†. During the course of the story he falls in love with Vidya, Ishan’s younger sister for whom he is a private tutor. Govind is the one who looks after the financial part of the business as he has good business sense and mathematical skills. Ishaan: He is a big cricket freak and also a patriot at heart. Ishan has been the best cricketer in his locality and school. He suggests the name of their business as â€Å"Team India Cricket Shop†. He helps Govind’s business by organising daily cricket coaching camps. He has a family which makes life situation by keeping quiet. He has a younger sister, Vidya, about whom he is quite protective. When he discovers that a boy called Ali is a very talented batsman, he decides to go any length to give Ali proper training. Ishan usually looks after day-to-day shop activities as he has genuine interest in any cricket-related thing. Omi: He is the son of the Hindu priest of the local temple. His family enjoys great respect among the people. Through Omi’s parents and maternal uncle (who own few shops as a part of the temple trust property), they readily get a place to start their business. He is a rather dumb kind of boy and has not many dreams, but likes to concentrate on having a healthy body. However, he resents growing up and being a saint like his father. He is a religious person and actively takes part in his maternal uncle’s (Bittoo Mama) religious politics. He is however confused about his religious views which are mainly influenced by Bittoo Mama. Vidya: She is Ishan’s younger sister. She is a rebel at heart and dreams to break free from the constraints of a typical middle-class family and society, to go toMumbai, do a course in PR and become independent. She however despises maths which is required for her medical entrance exams. Hence, Ish asks Govind to take her mathematics tuition. However, in between their tuition they fall in love, have intimate sexual relations, which is unaccepted by anyone. Only Omi figures out the relationship Govind and Vidya share and also reminds Govind about the consequences of Ish getting to know about it. Ali: One of the students in Ish’s coaching classes and a great batsman because of a rare nature’s gift. However, he doesn’t play too much cricket as he gets tired really fast and enjoys playing marbles. He is a Muslim boy and respects Ish like a Guru. He too, like Ish is patriotic at heart. He denies the offer of Australian scholarship and wants to play in the Indian side. Bittoo Mama: He is the maternal uncle of Omi. Mama runs the trust of the temple and agrees to rent the place to the three friends for the Cricket Shop business. He is an active member of a Hindu political Party. He follows the preachings of Parekh-ji, a political-cum-spiritual leader and has complete faith in him. He has locked his horns with Ali’s father who belongs to the Secular Party. He has a son Dhiraj. Mama is not fond of Govind as he is an agnostic. He is the mainantagonist of the story. Govind’s mom: Gujarati woman. She wants her son to pursue a degree in Engineering. She runs a home-made food business. She cares about Govind a lot and supports him well through his hardships and struggles. Ali’s Father: He is a devout Muslim and works for a secular party. He is a very kind-hearted person who wants Ali to take his education seriously despite his mediocre financial condition. He treats the three friends very well when they go to visit Ali in his house. Overall he is a good person. Fred Li: He’s an Australian Cricket Team member and a fast bowler. He invites the three friends and Ali to Sydney when they travel to Goa to see India-AustraliaOne Day International and meet him in the stands. He spots talent in Ali and wants to help him getting a chance to be trained in his academy in Australia. Loosely based on Brett Lee How to cite Character of Three Mistakes of Mu Life, Papers

Into the blazing stillness of grief, the mourning angst echoes like an unruffled midnight roar Essay Example For Students

Into the blazing stillness of grief, the mourning angst echoes like an unruffled midnight roar Essay Into the blazing stillness of grief, the mourning angst echoes like an unruffled midnight roar that brings forth the dread in every living creature in that once quiet lay in Lebanon. The affected are perplexed with helplessness, hunger, disease, isolation and foreboding, you will hear a piercing ill-omened outcry à ¢Ã¢â€š ¬Ã¢â‚¬Å" a heartbreaking veil of a lifes canvass grounded by hostilities. Lives lost in gray, hope mislaid and the future is vanished- turning back the tide of time beyond the beginnings. Incredulity? let us not be unsighted by our faith. If our counsel recite that illustrious exodus of our bible from the heart of its pious wisdom; let all amen. But in times of treachery to perfidy a flimsy faith to trail a ruthless plot calculated to deceive an innocuous heart is a dismal and to those who are sentient consenting such leader perfecting in conspire? Let you be haunted by the souls you slaughtered. The obliteration is vast, its disturbing trauma will forever last until the end of age, its psychological horror will rut in the souls of those who witnessed the bloody times that ensnare the lives of the innocent. Like a perpetual vista; that furious fire that doom and the times of war will forever be evoked. And why did it happen?. Like any other manner of fight, supremacy is the typical raison dÃÆ' ªtre in dealing with all sorts of impact in order to victor a game. And such political drama; like an ensemble à ¢Ã¢â€š ¬Ã¢â‚¬Å" these religious brawny have had perfected the art of manipulating the poor using the obverse of religious kinds in order to sham and denote the might of control even if it causes a ruinous means of war. That, as it happens it has eroded a once carved footprints of hope, dreams and aspirations. And as we all find the ray of hope faded in the light; let not the sunrise fade to those who are among victims.