Interview News WSJ – Economics & News – many people writing for them – well known people Bloomberg – Ticker – indenficiation –graphs – BBG realizes – Analyst from Banks Reuter – RIC – graphs Financial Times – subscription – more about news and less about data

Bloomberg Chart of the Day Division of News in terms of different securities and sectors Similar to topics of CFA Exam covers all areas Indices – Index provides MSCI, DB, Sunguard… Investible index UK Healthcare index – short position – short UK healthcare

Index Weighted by Market Cap EV = Market Cap + Debt Number of stocks * market traded today MSCI World Index

Awareness about Markets Global Economy Markets Story – We are the all time high on Equity market – something like dot com boom

CFA Currcuulum of Economics Level 2 Exam Forex rate

Bond Corporate Debt – spread would decrease – companies are raise debt at cheap prices – return on bond is low Sovereign Debt – US treasury ‘Structured Securities’ – MBS- Securitized – ABS Other structured products

Alternative investments Hedge Funds Private Equity Real Estate market Commodities Emerging Markets

Structuring Loan – they don’t have capacity Hedge funds, pension funds…. Structure many loans 100 – 5% 80+20 1%, 2% Prepayment risk Defaults – I am taking the loss Priority on the payments upper tranche – beat the loss

Markets S&P 500 – Equity Market – ownership – risk return MSCI Global Index – global equity Interest rates – Debt Market – GDP, MBS Proxies in term of indices

200 -180k 5% 10,10,10,10,110 Tranches - Equity Tranche - Pool – collection of cash flows priority which is pre decided Two Tranches 100 AAA - protected 3% 3,3,3,3,103 Equity tranche - new rule – very Bad rating 100 7% 7,7,7,7,107 Sell the 200k loan and recovery 180

Prepayment rate – CPR – SMM – 6%-12% - http://www. investopedia

Chance of interest rate increase Bond portfolio 100 2% 95 2

Sovereign debt Treasury US govt Municipal bonds – Detroit bankrupts in municipal bonds Risk Countries euro Zone

Industry you follow Tech – Moore Law, silicon manufacturing, patents Google buying Motora - lenenvo – patents Amd buying radeon Oil and Gas – updown stream, exploration rigs quality of oil (crude brent) etc Retail – renting Healthcare Custom adjustments Sectors in Investment Baking – wholesale

Oil Gas

Moores Law Be prepared – IT – Apple - Valuation Metric 18 months the computation power double - Hardware – multi core Mobile processors - 15 vs 20.. 4 CPUS – 2 CPUS 32nm – 45 nm Equity research report – Sell side IB teams www.webopedia.com/TERM/M/Moores_Law.html

Piyush Apple – Valuation Metric WACC -

CAPM Risk – SD High regression coeff with Market – if market mvoes 1% moves beta is 2 – 2% Beta CAPM = Return = Rf + beta (MRP) MRP (Rm – RF) 10 UST 2.6% Return of apple =

Corp Bonds Face value at the end Coupon = interest bond / yield Poor – 90 ----- yield 2/90 = 3% Yield is coupon divided by price of the bond traded in the market (simple definition) Where coupon is the amount promised to be paid each year to whoever owns the bond Coupon is fixed – but the price the bond in market may vary Which means that yield which is coupon/market price may vary 100$ FV 2$ 10 years 2025 – 100 back…