Idioms with Compare

Idioms with Compare Idioms with Compare Idioms with Compare By Maeve Maddox The verb compare comes from Latin comparare, â€Å"to pair together, couple, match, bring together.† It occurs in four common English idioms. to compare someone or something to someone or something to compare someone or something with someone or something to compare notes on something or someone to compare apples and oranges compare with or to Many speakers use â€Å"compare to† and â€Å"compare with† interchangeably; doing so is not an error. However, many writers observe a difference between the two. The Chicago Manual of Style does not state the difference as a rule, but does mention it in the section called â€Å"Good usage versus common usage: To compare with is to discern both similarities and differences between things. To compare to is to note primarily similarities between things. For example, in the context of discussing the history of wartime nursing, one might compare Clara Barton to Florence Nightingale and be done with it; both women are noted for caring for wounded men on the battlefield. Compare with would be reserved for a detailed comparison that notes differences between two people who are similar in some respects, but not in others. compare notes â€Å"To compare notes† means â€Å"to compare observations.† For example, friends attending a conference might go to different sessions and later talk to each other about what they learned. Students reading the same novel might compare notes on their individual impressions. compare apples to oranges â€Å"To compare apples and oranges† is usually used in a context in which two things are so different from one another as to defy meaningful comparison. For example, the tiny country of Finland is often held up as a model for U.S. public education, but American educators protest in such statements as this: â€Å"Finland has free health care and preschool. We don’t. You’re comparing apples to oranges.† Related post: Compared to or compared with? Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Expressions category, check our popular posts, or choose a related post below:50 Handy Expressions About HandsTime Words: Era, Epoch, and Eon20 Ways to Cry

Abercrombie and Fitch report Essay Example for Free

Abercrombie and Fitch report Essay ? Abercrombie & Fitch was established in 1892, and originally was a retailer of outdoor and sporting goods. In 1976, it went bankrupted and was acquired by Limited Brands in 1988. Michael Jeffries was nominated to become CEO in 1992, and he dramatically improved the status of A&F to be a global fashion retailer. Now the symbol of American style and beloved brand by many customers worldwide, Abercrombie and Fitch produces mainly apparel, fragrance and lifestyle goods targeting at consumers aged from 18 to 25. There are 4 sub-brands in A&F which are Abercrombie and Fitch, Abercrombie Kids, Hollister and Gilly Hicks. Each sub-brand has its own characteristics and its positioning in the fashion market is slightly different. Abercrombie & Fitch is rooted in East Coast traditions and Ivy League heritage, it is the essence of privilege and casual luxury (Abercrombie and Fitch Co. 2012, P. 3). Abercrombie Kids is for the kids who want to be like their older brothers or sisters and the core concept of it is casual and preppy looks. Hollister’s heritage stems from Southern California and was designed to represent cool beach style. Gilly Hicks is the newest and smallest brand in A&F made only for the girls’ clothes or underwear. With the opening of a flagship store in Canada in 2005, A&F started to enter the global market. Now it has 139 stores outside of the US, and it recently opened stores in Seoul, South Korea and in Shanghai, China to expand into the Asian market. We chose Abercrombie and Fitch since we would like to see how successful this multinational apparel company can be by insisting its All-American style in different cultures. We wanted to explore its unique retail strategy and brand positioning as this brand is sought after a lot of young adult. Several controversial issues of A&F were the deciding factor in our choice of company. Work Oriented Culture Of all the methods which exist for explaining cultural differences, â€Å"the dimensional approach is more influential† (Peng & Meyer, 2011). Geert  Hostede, a Dutch professor, established the overarching theory consisting of five cultural dimensions. The first is power distance which outlines the expectation and acceptance of the unequal distribution of power by the less powerful members of a country (Peng & Meyer, 2011). Individualism vs. collectivism is the cultural dimension characterized by whether the  citizens view themselves as distinctly different or dependent upon group involvement. The third cultural dimension is masculinity vs. femininity which refers to the values, traditional male or female, which are held in the highest regard. Determining the extent to which an individual will embrace uncertain circumstances is the uncertainty avoidance dimension. Finally, long-term orientation deals with the emphasis the citizens place upon â€Å"perseverance and savings for future betterment† (Peng & Meyer, 2011). The US is the home country of Abercrombie and Fitch. Scoring a 40 caused the US to be in the lower half of the countries for power distance. Hierarchy is â€Å"established for convenience† (Geert-hofstede.com, 2014) as superiors are easily accessible and communicate informally. Information is free flowing as managers take input form their subordinates. The US received the highest individuality score of 91. Citizens are considered â€Å"the best joiners in the world† (Geert-hofstede.com, 2014). It is not extreme for Americans to work with people with whom they are not familiar as deep friendships are not commonly formed. What an individual is capable of doing or has already done will determine their value of being  hired or promoted. Ranking 15th on the masculinity scale with a score of 62 indicates a masculine nation. US firms create a culture of â€Å"live to work† (Geert-hofstede.com, 2014) where higher status and financial rewards are key driving factors. Leaders which are forceful and decisive are highly valu ed. Employees who are less visible and indecisive are not able to attain success With a score of 46, the US is shown to have a below average uncertainty avoidance. Innovation is extremely valued as new ideas are quickly accepted. As compared to firms in higher uncertainty avoidance countries, US firms will quickly go after new, emerging, and risky opportunities. The US is seventh from the bottom of the list for long-term orientation with a score of 29. While future planning is involved in US firms’ decision making process, quarterly reports are incredibly significant and limit the time firms can look ahead. Employees’ savings rates in countries such as the US are much lower than those in long-term oriented nations. Home Region Oriented Firm Rugman and Verbeke in 2004 established a triad of economic power consisting of Asia, the EU, and North America. Analysis of 380 firms determined how many were home-region oriented, bi-regional, host-region oriented, or global (Rugman & Verbeke, 2004). A home-region oriented firm has â€Å"at least 50% of their sales in their home region of the triad† (Rugman & Verbeke, 2004). To be a bi-regional company, at least 20% of all sales must take place in two regions, but the company cannot have more than 50% in the region where the company is based. If a firm has more than 50% of its sales in a region different than its home region then the firm is considered host region oriented. In order to be global, a firm must have â€Å"at least 20% of their sales in all three regions of the triad, but less than 50% in any one region† (Rugman & Verbeke, 2004). A&F is considered a home region oriented company based upon the released date from 2013. Of the $4,116.9 million in sales, 64.59% or $2,659.09 million is generated in the home region, North America. $1,116.78 million or 27.13% of all their sales take place in the EU region. Asia is far behind as the remaining 8.28% of sales, 341.03 thousand dollars, is dispersed across the  rest of the world. No calculations were needed as the sales figures and percentages were given. (Csimarket.com, 2014). The industry for which A&F operates can explain their sales distribution. As the company is in the fashion and retail industry, its’ sales are incredibly dependent upon the affinity of the customers for specific brands and styles. Since the company is based in North America, the firm is much more familiar with the prevalent style which would need to be present to increase sales. A&F also established itself in their home country before expanding. These factors could explain the firmâ€℠¢s international orientation. Ownership Advantages First, one downstream ownership advantage of A&F is the possession of a specific brand image which is not easily imitable. The firm operates under different brands – Abercrombie & Fitch, Abercrombie Kids, Hollister, and Gill Hicks – for slightly different targets. Each sub-brand represents a different brand image but they eventually add up to one big image, â€Å"American Cool†. To the fashion retailers, the most important ownership advantage is their own irreplaceable brand image. In this context, A&F has its distinct position in the fashion market and is using their brand image successfully to attract the customers (Abercrombie & Fitch Co. 2012, P. 3). Second, the other ownership advantage of A&F is its’ in-store experience. A&F stimulates the customers’ senses of sight, sound, smell, and touch by utilizing handsome male models, music, fragrances, rich fabrics and interior design. Customers (mainly females) can get a chance to take a photo with the models, and this became a representative in-store experience of A&F. In addition to this, A&F uses certain perfume to attract customers and to make them remember A&F for a longer time than just seeing, which is called â€Å"scent marketing†. Also, the stores always play the video of the American beach to emphasize its â€Å"cool† brand image. A&F only sets up the flagship stores and controls them through the managers who are trained in the US and sent to the international flagship stores to monitor the whole operation. This system makes it possible to transfer this in-store experience to the newly established flagship stores very well. Therefore, all A&F stores, even those  overseas, are committing the standardized in-store experience by offering customers the same experience (Abercrombie and Fitch Co. 2012, p. 4). Uppsala Model & Network Internationalization Model – Differences â€Å"The Uppsala model views that market knowledge is gained only by operating directly in a market; thus the model focuses on experimental knowledge† (Childs & Jin 2013, p. 38). According to the Uppsala model, will increase their market commitment gradually based upon their experience in the market and based on the knowledge they gain in the market. On the other hand, according to the Network internationalization model, firms can start their internationalization before they enter the market by settling network relationship in advance. Therefore, firms do not have to follow the stages of the Uppsala model but â€Å"building a number of such relationships constitutes a large and important investment, and once established, a nd organizational or ownership advantage† (Vahlne & Johanson 2013, p. 195). Uppsala Model & Network Internationalization Model – Similarities Both models consider the network as important knowledge that firms should gain. The network facilitates information and experience by building up the trust in a relationship and also by learning from other market players. Within the Uppsala model, the core concept of the gradual extension of a company’s internationalization into a market, which gains the company valuable experience, should be based on the interplay with customers, suppliers, and other competitors. As the company’s network broadens, it can get more knowledge and at the same time its degree of internationalization will become higher. In this context, we can find similarity between the two models. International Trajectory In 2005, A&F first opened its’ flagship store in Canada. Starting from this, A&F entered the European market with opening flagship stores in major cities of the European countries, such as London, Milan, Paris, and Amsterdam. On December 15, 2009, A&F opened its first Asian flagship store in Tokyo as a starting point to enter the Asian market. Currently, A&F owns 19 flagship stores in Canada, 110 in Europe, and 11 in Asia. Among those stores, 39 are sales subsidiaries. In Canada, the Netherlands, and Hong Kong, A&F has wholly-owned subsidiaries because there are DCs in those countries, meaning that they are the most important countries in each continent (Abercrombie &  Fitch Co. 2012, PP. 19, 101102). Firms who have a strong brand image and possess asset specificity (a unique product or a unique way of doing business) are more likely to internationalize quickly (Childs & Jin, 2013). A&F is a good example of this case, so it could skip the lower stages of the Uppsala model, s uch as sporadic exports or exports through sales agents, and could set up the subsidiaries directly overseas, which only takes 7-9  years. Consequently, now we can assume that the company is already in a quite higher stage of the Uppsala-based stages model with its sales subsidiaries and wholly-owned subsidiaries. Degree and Nature of International Sourcing Abercrombie and Fitch does not own factories producing the products and it has not sourced more than 10% of its merchandise from any single member of its approximately 155 vendors in 20 countries, including the United States, China, Vietnam and Guatemala (Abercrombie & Fitch Co. 2012, p. 4). In particular, more than 90% of its suppliers are in Asia (Google.com, 2011). The company has established supplier product quality standards to ensure the high quality of fabrics and other materials used in the company’s products (Abercrombie & Fitch Co. 2012, p. 5). Abercrombie and Fitch has two distribution centers (â€Å"DCs†) in New Albany, Ohio. The two DCs were initially responsible for the distribution of merchandise to the stores and direct-toconsumer customers, both regionally and internationally. Since 2009, A&F has offshored its DCs by using a third-party DC (TNT Fashion) in Roosendaal, the Netherlands for the distribution of merchandise to stores and direct-to-consumer c ustomers located in Europe and a third-party DC in Hong Kong since 2011 for the distribution of merchandise to stores located in Asia. Its two DCs in New Albany, Ohio currently only support its North American stores, and direct-to-consumer customers outside of Europe (Abercrombie & Fitch Co. 2012, p. 5). The nature of offshoring the DCs is to broaden the direct-toconsumer business worldwide and facilitate the international expansion of Abercrombie and Fitch stores in Europe and Asia. Furthermore, Abercrombie and Fitch has a strong, cooperative and long-term relationship with its vendor factories. When the CEO Mike Jeffries was asked about the cost pressures from raw materials and labor costs, he emphasized  that a strong relationship with vendors has been key since they had assisted A&F and been fair in terms of cotton prices and other increases. He also added that A&F and vendors have been there for each other for the long term (Barrie, 2010). Strategic Advantages and Drawbacks of International Sourcing and Offshoring The first advantage of international sourcing is that A&F can hedge against the supplier risks. Since A&F has relationships with over 100 vendors in 20 countries, it can flexibly switch from one source to another when necessary. A&F has the ability to increase its total supply capacity. Even if there are a sudden wave of demand for certain products, having a strong relationship with over 100 vendors will ensure A&F a certain supply of products and therefore the supply chain will be more stable (Inboundlogistics.com, 2011). However, such global sourcing strategy also brings some disadvantages. The source of production activity is too dispersed; it is a challenge to find qualified executives who know the local business environment and understand the corporation’s inner workings especially in the Asia Pacific region (Inboundlogistics.com, 2011). We would advise Abercrombie and Fitch to send executives from the US to those countries and hire local managers simultaneously to ensure the production activity smooth. The primary advantage of offshoring is to reduce costs. Offshoring its distribution centers in Europe and Asia can save distribution and transportation costs of merchandise to stores in Europe and Asia. However, if the third-party distribution center in the Netherlands or Hong Kong shuts down suddenly, the distribution of merchandise in Europe and Asia will be totally disrupted. Therefore, A&F should leverage the risk by running an additional distribution center in some low-cost countries, such as Vietnam. This move will also support A&F’s future expansion. Opportunities and Threats in Vietnam Opportunities Labor cost in Vietnam are absolutely lower than that of China (JETRO, 2011) (NWPC, 2014). See Appendix 1 for figure 1. Government policy to attract FDI (Kim, Lee & Cheong, 2011). See AppendixThreats 2.  TPP (Trans-Pacific Partnership) – Cost reduction, lead time reduction, and tax benefit. See Appendix 3 for table 1. Currently only 16% of A&F clothes are produced in Vietnam (Google.com, 2011). See Appendix 4 for figure 2. Vietnam has a better status for lead times, infrastructure, and working circumstances than other developing countries (Kim, Lee & Cheong, 2011). As A&F doesn’t operate their own manufacturing facilities but uses vendors, it can be intense competition among the companies who want to attract vendors in Vietnam. Bangladesh, Cambodia, and Sri Lanka which have lower labor cost than Vietnam are trying to develop their infrastructure and manufacturing conditions to attract vendors. In the future, those undeveloped countries can be a threat to the Vietnam market. Minimum wage in Vietnam is increasing by 15% in 2013, and 17% in 2014 (Vettoretti & Huyen, 2013). Suggestions for the Emerging Market We suggest establishing a distribution center (DC) in Vietnam as a strategy to create synergy with the new manufacturing facilities in Vietnam. Currently, many global fashion retailers are trying to generate vertical integration in the emerging markets because they can control the demand fluctuation easily and simplify procurement and administrative procedures eliminating the need to deal with a wide variety of suppliers and distributors. If TPP is concluded, the degree of tariffs will decrease, so it would be better to concentrate on upstream investment in Vietnam. Because emerging markets are not wellorganized and there is more lack of conditions than the developed market, owning a DC will be more stable and protective. Eventually, a DC in Vietnam will create good access to the Asian market. In  overseas developed markets, A&F doesn’t own the distribution centers but uses third-party DCs in the Netherlands and Hong Kong. However in Vietnam, we assume that A&F would set up a distribution center as a wholly-owned subsidiary. The third-party logistics in outsourcing the whole distribution to a specialized company would reduce the cost. Now A&F has only third-party DCs in overseas and there is a threat to be shut down. In order to prevent this situation in advance, owning at least one wholly-owned DC is practical. Because a wholly-owned DC totally controlled by the company, the company can adjust to the demand fluctuation better than a third-party DC. Therefore wholly-owned DC will function as a safety net in a case there is an uncontrollable problem in a third-party DC. Strategic Objectives of Entering China With regard to market seeking, â€Å"China will represent the biggest market potential for our brands,† said Craig Brommers, senior vice president of marketing for A&F (Fashionunited.com, 2014). Undoubtedly, China is a huge and growing market with a population of approximately 1.4 billion. Therefore, A&F has been trying to locate its potential customers by opening the first flagship store in Shanghai and 8 Hollister stores in different cities since 2012. The company plans to open over 100 new stores under its Hollister and A&F’s label in China over the next ten years (Fashionunited.com, 2014). With regard to efficiency seeking, there are an abundant suppliers and a low-cost labor force. Specifically, over 60% of its vendors were located in China in 2011 (Google.com, 2011). Also, there has been a distribution center in Hong Kong since 2011. Therefore, A&F can achieve lower transportation costs since the delivery is closer to its target markets. Past Foreign Entry Modes Abercrombie and Fitch started its international expansion in London by opening the first overseas flagship store in 2007, and it almost adopted a single foreign entry mode in the last 7 years. A&F established a wholly-owned subsidiary when entering a new market, such as the Netherlands, UK, Hong  Kong, Singapore and Japan. However, A&F opened its first Hollister store in Dubai in 2013 through a joint venture with Majid Al Futtaim Ventures and an A&F flagship store is expected to open in Dubai in 2014 the same way (Majid Al Futtaim Ventures, 2014). For Abercrombie and Fitch, establishing wholly-owned subsidiaries is a better entry mode for international expansion. A&F can enjoy full control of the international stores since it pursues an intensely American retail and marketing strategy (Marx, 2010). Therefore, establishing a wholly-owned subsidiary enables A&F to integrate the operation of its subsidiaries tightly with itself and to control what the subsidiary should follow. In addition, it takes a lot of efforts to establish an effective relationship in a joint venture and the cultures of the companies may be incompatible. Financially, The parent company can consolidate the results of its wholly-owned subsidiaries into one financial statement (Basu, 2014).Considering that A&F is opening more international stores worldwide, the financial reporting would be too complicated if it engages in joint ventures in many different countries. Multinational Strategy – Home Replication Stage The multinational strategy of Abercrombie and Fitch closely resembles the home replication strategy. There are several evidences from practice. First of all, the local responsiveness of A&F’s international stores is very low. The staff greets shoppers in English, rather than the local language of the foreign countries. This results in foreign customer alienation since some customers will be forced to surface their rusty English during the transaction (Marx, 2010). A&F replicates its home country-based competencies such as brand positioning. Sex appeal is a big part of the brand’s charm in the United States; A&F also puts this masculine ideal into practice of its international stores. Particularly, many of the male staff members are half-naked in the stores (Marx, 2010). Finally, the implementation of its marketing strategy and operation is easier. The store design and the interior are the same worldwide along with extremely dim lightings, a strong smell of cologne and p erfume and the staff singing or dancing with the  pounding American songs. ‘Real-life’ Social and Environmental Dilemmas A ‘real life’ social dilemma has adversely impacted A&F in recent years surrounding its CEO. The official website of the company states the company strives to be â€Å"an inclusive environment that values the differences of its associates and customers† (Anfcareers.com, 2014). While this is the official statement, an interview with the CEO, Mike Jeffries, brought a contrasting view to light. Jeffries identified his target market by claiming, â€Å"a lot of people don’t belong [in our clothes]†¦Are we exclusionary? Absolutely† (Walker, 2014). A&F has since released an apology, but boycotts, negative celebrity statements, and petitions were enacted. This issue is an ethical dilemma to the firm because of their strategic place in the clothing market. In order to stay popular, an essence of exclusivity has been built around the brand, since the more exclusive the brand appears, the more interest the brand receives. This has been A&F’s approac h, but this strategy is not inclusive. The firm had to determine whether to increase their size options or continue with the current productive model. The most important stakeholders for this dilemma are the CEO and those who hold a large portion of A&F’s stock. If A&F is not able to effectively remedy the situation then the company’s profits will continue to suffer. A&F is a public company so their performance directly affects their stock. If the dilemma is not resolved quickly, it could trigger a chain reaction of a loss in profits which leads to lower stock causing several holders of the stock to drop it effectively dropping the value of the stock. The effects of this dilemma could have extremely long lasting repercussions. An environmental issue which has become a dilemma for A&F is the implementation of harmful chemicals in their signature fragrances. Within the fragrance Fierce, â€Å"11 secret chemicals that are not listed on the label† (Henricks, Malkan, & Shils, 2014) were found that heighten allergic reactions. This particular fragrance caused reactions from various activist groups such as Physicians for Social Responsibility, MomsRising, and others which total over 1.5 million people (Henricks, Malkan, & Shils, 2014). Utilizing harmful chemicals is an ethical environmental dilemma for A&F  because the current formula has generated incredible revenue. The official website of the company addresses large environmental impact areas such as limiting their carbon emissions, but nothing addresses something  which impacts the environmental on this particular scale. If A&F is able to hide these chemicals and still gain their desired sales results then it has little motivation to stop acting in this manner. The most important stakeholders surrounding this dilemma are not only the executives and upper management of the company, but also the lowest store employees. A loss in serious sales will affect most employees in a company, but this situation would directly affect individual store employees.Customers may stay away from the stores in order to avoid the negative side effects resulting in a loss of profit and jobs for store employees. Developing a Globally Standardized Strategy Currently, Abercrombie and Fitch already has an established a globally standardized strategy to cope with the selected dilemmas. The strategy is laid out on a website by the company which was created specifically for displaying the considerate side of A&F. Covering everything from the sustainability to collaborations to specific policies, A&F clearly display their globally standardized strategy to â€Å"ensure that the highest values of human rights are being upheld at our headquarters, in our stores and within our supply chain† (anfcares.org, 2014). A&F should have a globally standardized strategy. Even if ethical imperialism is not wise, the specific industry operations call for a globalized solution. Several ethical viewpoints are almost universal for garment manufacturing. Several unethical decisions such as environmental negligence and the use of harmful chemicals have resulted in scandals and dilemmas because of the accessibility of information. For example, the infamous interview with the CEO was conducted years before it gained notoriety. By having a globally standardized strategy, A&F could mitigate potential situations before they arise. The selected dilemmas have global relevance. Inclusion, the principle dealt with in the social dilemma, is incredibly important to a multitude of  cultures across the world. A store in the Netherlands which openly admitted to not wanting homosexual customers would experience a similar backlash. The environment issues also reaches across borders. Asthma, one of the problems which are heightened by the fragrances, is prevalent in â€Å"an estimated 300 million people† (Aaaai.org, 2014). Abercrombie and Fitchs’ Actions Compared to Unilever The actual solutions by A&F are not similar to the solutions practiced by Unilever. Both A&F and Unilever have explicit codes of conduct and plans to deal with ethical dilemmas which arise. Even though these plans exist, A&F has demonstrated that its actions do not always align with their official stance. Unilever’s approach to social impact such as gender equality has been greatly documented, and one of their main goals by 2020 is to â€Å"help more than 1 billion people improve their health & well-being† (Vis, 2014). The implementation of this policy is seen as Unilever has helped generate around â€Å"65,000 microentrepreneurs† (Vis, 2014). A stark contrast exists between Unilever’s actions and those of A&F. Unlike Unilever, the ultimate actions of A&F and their refusal to stock larger size clothing proves the company is dedicated to portraying a positive image without actually helping to make a positive change in society. A&F’s actions toward their environmental impact align almost with their actions for social justice. Although its’ official stance is to reduce its environmental footprint, the company has taken no action in light of the protests by environmental groups driven â€Å"to get rid toxic chemicals from the environment† (Lutz, 2013) which are the result of their colognes. Unilever’s approach towards economic longevity has been greatly noted as â€Å"75% sites [send] zero waste to landfill† (Vis, 2014). Unilever’s approach is much more preferable to A&F’s approach. From a social standpoint, Unilever’s actions have actively made a beneficial social change as Unilever continues to fulfill their promises. A&F continues to ignore their customer’s plight even though the company claims to truly care. From a corporate standpoint, Unilever’s approach is better because many news outlets have cited the company as making a positive c hange, while A&F continues to have controversies resulting in a sales drop of 10%. Overall, Unilever has a much better strategy than A&F. Figure 1: Average Monthly Wage of Asian Countries (Nwpc.dole.gov.ph, 2014) Appendix 2 Improvement of the Vietnam Government Policy on FDI (Kim, Lee and Cheong, 2011) The Vietnam government policy for FDI was dramatically improved by registering into WTO (World Trade Organization) and preparing for PNTR (Permanent Normal Trade Relations). Besides, the government adopted global standards, abolished discrimination of foreigners, and opened the service part such as finance or communication. As a result, FDI into Vietnam broadened to various areas, for example, fabrics, mining, energy, finance, logistic and so on. Especially concluding PNTR between the US made it possible to participating into WTO and encouraged foreing investors to enter into the Vietnam market. Another important change in the policy is related to the modification of legal restrictions or rules. On 1st of July, 2006, the government changed the original law for FDI which had been adapted only to the local people into the newly modified law for FDI which is commonly adapted to the both parts of foreigners a nd local people. This was the effort of the government to create more competitive investment conditions which are changing subject of application, and abolishing double price and repatriation tax. Also the government has been modifying the original business law, investment law, land law, and corporate taxation. References 1) Aaaai.org 2014, Asthma Statistics | AAAAI. [online] Available at:http://www.aaaai.org/about-the aaaai/newsroom/asthma-statistics.aspx [Accessed 14 May. 2014]. 2) Abercrombie and Fitch 2012, Annual report 2012, Abercrombie and Fitch Co., New Albany, Ohio. 3) Anfcareers.com 2014, Abercrombie & Fitch Careers. [online] Available at:http://www.anfcareers.com/page/Diversity [Accessed 15 May. 2014]. 4) Anfcares.org 2014, A&F Cares Our Strategy. [online] Available at:http://www.anfcares.org/sustainability/environment/strategy.jsp [Accessed 16 May. 2014]. 5) Barrie, L. 2010, Abercrombie & Fitch sees opportunities in higher costs. [online] Just-style.com. Available at: http://www.just-style.com/analysis/abercrombie-fitch-sees-opportunities-in-highercosts_id109585.aspx [Accessed 18 May. 2014]. 6) Basu, C. 2014, The Advantages & Disadvantages of a Wholly Owned Subsidiary. [online] eHow. Available at: http://www.ehow.com/info_8627934_advantages-disadvantages-wholly-ownedsubsidiary.html [Accessed 18 May. 2014]. 7) Childs, M. and Jin, B 2014, Is Uppsala model valid to fashion retailers? An analysis from internationalisation patterns of fast fashion retailers. Journal of Fashion Marketing and Management, 18(1), pp.36 – 51. 8) Csimarket.com 2014, Abercrombie & Fitch Co. (ANF) Jan. 31, 2014 Sales per Country and Region, Annual Report – CSIMarket. [online] Available at:http://csimarket.com/stocks/segments_geo.php?code=ANF [Accessed 18 May. 2014]. 9) Fashionunited.com 2014, Abercrombie & Fitch aims to open 100 stores in China – Report Executive. [online] Available at: http://www.fashionunited.com/executive/report/abercrombiefitch-aims-to-open-100-stores-in-china-20142304495372 [Accessed 18 May. 2014]. 10) Geert-hofstede.com 2014, United States – Geert Hofstede. [online] Available at: http://geerthofstede.com/united-states.html [Accessed 18 May. 2014]. 11) Google.com 2011, Abercrombie & Fitch Production and Expansion – Google Maps. [online] Available at: https://www.google.com/maps/ms?ie=UTF8&t=m&vpsrc=6&oe=UTF8&msa=0&msid=2073664 88920603185286.0004b07bb7b95fb0f4d6c&dg=feature [Accessed 18 May. 2014]. 12) Henricks, S., Malkan, S. and Shils, J 2014, Campaign for Safe Cosmetics : Abercrombie & Fitch: Stop Spraying Toxic Fragrance!. [online] Safecosmetics.org. Available at: http://safecosmetics.org/article.php?id=739 [Accessed 14 May. 2014]. 13) Inboundlogistics.com 2011, Supply Chain Gain: Global Growth – Inbound Logistics. [online] Available at: http://www.inboundlogistics.com/cms/article/supply-chain-gain-global-growth/ [Accessed 18 May. 2014]. 14) Kim, T., Lee, J. and Cheong, J 2011, Firm Level Productivity and Survey Results for Korean Firms in Vietnam and Indonesia. KIEP Research Paper No. Policy Analysis-11-22, pp.16-180. 15) Lutz, A 2013, Reasons Why People Hate Abercrombie & Fitch. [online] Business Insider. Available at: http://www.businessinsider.com/abercrombie-and-fitch-worst-controversies-20138?op=1 [Accessed 18 May. 2014]. 16) Majid Al Futtaim Fashion 2014, Hollister to make its Middle East debut in 2013. 17) Marx, W. 2010, In Tokyo, Abercrombie Misses Its Mark. [online] BoF – The Business of Fashion. Available at: http://www.businessoffashion.com/2010/02/in-tokyo-abercrombie-misses-itsmark.html [Accessed 18 May. 2014]. 18) Nwpc.dole.gov.ph 2014, Official Website of National Wages and Productivity Commission. [online] Available at: http://www.nwpc.dole.gov.ph/pages/statistics/stat_comparative.html [Accessed 18 May. 2014]. 19) Overseas Research Department Japan External Trade Organization (JETRO) 2011, The 21th Comparative Survey of Investment-Related Costs in 31 Major Cities and Regions in Asia and Oceania. p.68. 20) Peng, M. and Meyer, K 2011, International Business. 1st ed. London: Cengage Learning, pp.7276, 363, 458-459. 21) Rugman, A. and Verbeke, A 2004, A perspective on regional and global strategies of multinational enterprises. Journal of International Business Studies, 35(1), pp.3–18. 22) The Ohio State University Fisher College of Business 2013, Abercrombie & Fitch Equity Research Report. pp.3 – 4. 23) Vahlne, J. and Johanson, J 2013, The Uppsala model on evolution of the multinational business enterprise – from internalization to coordination of networks. International Marketing Review, 30(3), pp.189 – 210. 24) Vettoretti, A. and Huyen, H 2013, Vietnam Set to Increase Minimum Wages from December 31, 2013. [online] Available at: http://www.vietnam-briefing.com/news/vietnam-set-to-increaseminimum-wages-from-december-31-2013.html/ [Accessed 18 May. 2014]. 25) Vis, J 2014, Making Progress, Driving Change. 26) Walker, J 2014, Abercrombie & Fitch: Sorry!. [online] The Huffington Post. Available at: http://www.huffingtonpost.com/2013/05/23/abercrombie-and-fitch-apology_n_3323668.html [Accessed 18 May. 2014]. Abercrombie and Fitch report. (2016, May 19).

The Case of ServerVault Study Example | Topics and Well Written Essays - 500 words

The of ServerVault - Case Study Example This means that the company chooses customers who value security and reliability heavily in their selection of hosting provider, having the motto, 'reliable, secure and wicked fast". ServerVault claims to offer much higher level of services than the other group at the 'managed" hosting group, having seven layers of security protection which passed the U.S Department of Defense Security Standard and it's vaults are especially designed to be able to withstand the most destructive forces of nature. It's promise of reliability and speed is backed up by redundant bandwith and power supply having four to five providers of internet access in each facility. The company rakes revenue from three sources: one-time set up for new servers, monthly hosting fees and fees for additional value-added service. ServerVault enjoys the advantage of having a facility designed to generate four or five times more revenue per square foot than those of its competitors. Being in an industry where business costs occurred mainly upfront and being young in the business, ServerVault faces a deep need for financing.

Church Reformation in the 16th and 17th century Research Paper

Church Reformation in the 16th and 17th century - Research Paper Example This group rejected to live the previous ways; thus believed that the Judgment Day was near. They formed new societies and much confusion in the social order. The reformation contributed to issues such as the dead of the blacks, western rupture and eroding faith of people in the catholic churches. The fall of the Roman Emperor contributed to the reformation and circulation of protestant churches. Under the Roman Emperor Christianity spread and many churches evolved. The Roman Catholic Church, which became one of the most prominent churches to the councils evolved. It organized in Trent, which is an education centre for church teachings especially in the tradition and scripture issues. Council of the Trent is a convention of cathedral councils or theological professionals whose purpose is to resolve church policy matters or practices. The councils provide teaching programs for the community priests in order to augment pastoral care. This was initiated by the Roman Catholic Church unde r Pope Paul 1112 (Becchio and Johannes 98). The council of the Tent provided teachings, reasserted traditional practices and articulated dogmatic of the Catholic Church doctrines. These doctrines include the seven sacraments, celibacy, belief of taking wine and bread during the mass services, which they translated as the body and blood of Jesus Christ. Other doctrines included worship of remnants and saints whom they referred as the Holy Virgin Mary. Others included the significant of having faith and working towards achieving salvation. Moreover, the ecumenical councils of the Roman Catholic Church made a significant reform on dogmatic issues in the 16th and 17th century. The transformation known as the catholic reformation was the restoration era for the Catholics and it began with the Council of Trent. Some scholars consider the council of Trent as being responsible for Protestant Reformation. They laid strict issues, which the protestant minster nearly disputed. Pope Paul 111 re formed the Roman Catholicism in many European areas. In the first period of the Roman Catholicism, they church accepted the 3Nicene Creed as the basis for the catholic conviction (Queen, Prothero and Shattuck 76). They set the old and New Testament canons and fixed seven sacraments. However, this dogmatic ruled out the doctrines of Martin Luther’s beliefs of faith jurisdiction. The general council established the transubstantiation of doctrines and offered Episcopal authority verdict and other doctrine issues. However, many issues that contributed to protestant reformation started disappearing, and the church began to reclaim many of its followers by the end of the 16th century. The council of the Trent focused so much on education of the clergy because of varied reasons. First, they wanted to eradicate the mistreatments of the 4Catholic cathedral such as alms treats in order to advance the superiority of bishops. This was seen essential to the Catholics because they protesta nt churches criticized their teachings. Hence, they emphasized on the importance of the church teachings and created new rules that clergies were to follow. They followed the teachings of Martin Luther and Calvin and rejected any other reformation leaders. The council of Trent played considerable roles in renewing the catholic cathedral5 of Europe

Violence: A Means to an End? Essay examples -- Politics Government Lat

Violence: A Means to an End? The use of violence to further various political and social movements occurs throughout Latin America and its history. Its long-term effectiveness in a social context, however, is dubious. Although many of these revolutions proved initially successful in accomplishing their stated purpose, especially in the political arena, eventually the drastic changes cause regression or create a sort of culture of instability within the nation. The Haitian Revolution and the Mexican War of Independence exemplify this standard. Seen as huge successes in their time, these historical revolutions have caused deterioration in the current state of affairs in the respective nations. Despite the lasting changes they have brought about in the system of power in the country, they affected the masses little. Nations such as Cuba have seen a forceful removal of the government, which in its very purpose was designed to alter the structure of society. In these cases, violence alone is not enough to cause chan ge, but may serve to build momentum that in turn, makes change possible. Instead of the sole use of violence and intimidation tactics to force submission and support, widespread popular backing is exactly what is needed for a successful movement; a small but loyal constituency of oppressors, a significant number of oppressed, and a large amount of firepower may accomplish goals in the short-run, but will fall short of achieving lasting change. The effectiveness of a large movement by the people also lessens the success of violence in counter-revolutionary attempts. These missions, to keep control of power and subdue so-called subversives, tend to be fiercer and disregard issues such as personal freedoms and human right... ... Krause, Enrique. â€Å"The Vision of Father Morelos.† Problems in Modern Latin American History. Ed. John Charles Chasteen and James A. Wood. Wilmington: Scholarly Resources Inc., 2004. 27-30. â€Å"The Mothers of the Plaza de Mayo.† The Vanished Gallery. http://www.yendor.com/vanished/madres.html. (15 April 2005) Stein, Barbara and Stanley. â€Å"The Racial Heritage of Colonialism.† Problems in Modern Latin American History. Ed. John Charles Chasteen and James A. Wood. Wilmington: Scholarly Resources Inc., 2004. 3-6. â€Å"United States World Report 2003.† Human Rights Watch. http://www.hrw.org/wr2k3/us.html#conditions. (15 April 2005). â€Å"When the people rule.† Fidel Castro History Archive. http://www.marxists.org/history/cuba/archive/castro/1959/01/21.htm. (15 April 2005) Wucker, Michele. â€Å"The Massacre River.† Why the Cocks Fight. New York: Hill and Wang, 1999. 37.

On Adam’s Curse Essay

William Butler Yeats is an Irish dramatist, author, and poet whose works are mostly classified as lyric and almost belonging to the age of the English romantics. He was a Nobel Prize awardee and one of the founders of the Irish Literary Revival. His works are the utmost expressions of his emotions and opinions and for such they are renowned. They have made Yeats the most influential English-writing poet of the twentieth century (â€Å"William Butler Yeats†). In his work, â€Å"Adam’s Curse†, which was published in 1902, Yeats exposed to his audience the depths of his mind. He spoke of his beliefs in beauty, how it may truly be seen, and achieved. More importantly it explained how beauty is truly understood and appreciated. Typical with Yeats’ other works, the poem has a consistent rhyme and meter. For every stanza, there is a definitive sound that ties all the lines together and makes the lyric piece progress smoothly to its meaning. The rhymes are external mostly by the end of each line and the point of view utilized is first person. This means that the speaker of the poem is present as the story of the piece unfolds. The speaker is the one who experienced a disturbing occurrence. Also the speaker is the one opining on the given occurrence, the one conveying the writer’s message. The initial clue as given by the speaker of the poem is in the first stanza, where the speaker was seemingly disappointed by people’s perception of true beauty. He said that he, together with the object of his affection is talking about poetry, and how beauty is created in difficulty. The disappointment set in when he stated that there are people who believe that they know beauty and yet they find artists and poets as lazy people. They do not see the labor that is poured into by creators in their works, yet they claim to know how to appreciate real beauty (Yeats). In the second stanza, the object of the speaker’s affection agreed with the speaker in saying that beauty needs to be labored upon. Merely admiration is not the basis for knowing true beauty, nor is merely reciting a beautiful poem. This is supported by the succeeding lines where the speaker further pointed that after Adam’s fall, there had not been anything beautiful that was not a result of hard labor. In the example which was given in the poem, the beautiful feeling of love. The speaker indicated that love is beautiful and it is not easily earned. A man needs to work to achieve the love of a woman. Merely knowing the feeling of love and not taking action upon it is not the true way of appreciating love. Lovers who work for their feelings are the good laborers, while those who keep their emotions are idlers. In the case of artists and poets, which seems to be the trade of the speaker, he who creates beauty by combining words to create an image that can convey a message are the true laborers. The businessmen and merchants who claim that they are lazy have no right to claim that they know the beauty in poetry or in paintings and many other forms of art. They have no right to attest that a work is of beauty because they do not accept the labor that is behind it. They fail to accept that the secret of beauty is that it never looks like it has been labored upon. Its power is to trap life’s wonders and make it appear at an arm’s reach. This is why it is relaxing and comforting. This is the message that the poem tries to convey. The writer is telling that artists and poets are not idlers. In fact, they have what may be considered as the biggest burden of all. They are to contemplate, imagine, and create a work that can console a sorrowing heart, or bring excitement to a bored soul. Their task is difficult as they are to hide hardships in their works. It is even worse than computing for the day’s sale. There is nothing routine in it, for routine can destroy its essence. Adam’s curse that made laboring necessary is a curse that is heaviest on an artist’s shoulder and this is what Yeats conveyed in his poetry. Works Cited â€Å"William Butler Yeats†. 2009. Nobelprize. org. 27 April 2009 < http://nobelprize. org/nobel_prizes/literature/laureates/1923/yeats-bio. html >. Yeats, William Butler. 1902. â€Å"Adam’s Curse† the beckoning. com. 27 April 2009 < http://www. thebeckoning. com/poetry/yeats/yeats4. html >.

Measuring, Modeling, Managing and Optimizing Interest Rate and Credit Risks - Free Essay Example

Sample details Pages: 18 Words: 5444 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? The credit crisis, stock market down turn, and economic slowdown have resulted in a flightto-quality that has pushed credit spreads to historic highs; interest rates have fallen steeply both in the short segment of the curve, where central banks have aggressively decreased prime rates, and in the long segment with long terms sovereign bond prices being pushed up by increased demands from pensions funds and other institutional investors, Low rates and high spread offer investors extremely interesting opportunities. but they also pose serious challenges in terms of optimal passive and active contact to interest rate and credit risks. Credit spread are expected to narrow again, although it is highly in doubt when and how this contraction will take place. Don’t waste time! Our writers will create an original "Measuring, Modeling, Managing and Optimizing Interest Rate and Credit Risks" essay for you Create order The economic stimulus junk mail being pushed through in the major economies will lead to massive issues of sovereign bonds and eventually to increases in interest rates. At the same time while the current credit crunch and economic slowdown have eased the recent inflation scare the fundamental scarcity of natural resources and political pressure on central banks to relax inflation targets mean that for the medium to Long term fears of inflation are still justifiedÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ In this new environment where fixedincome products have come back centre stage there is a clear and pressing need for investors and assets managers to better understand the refined techniques that can be used to optimize investment in fixedincome products and manage the associated risks. In this chapter is planned to equip participant with the state of the art techniques to arange interest rate and credit risks to seize current opportunities in the fixed income market, and to hedge the ris ks associated with an instable credit and interest rate setting This chapter provides participants with advanced techniques to: Measure the impact of changes in interest rates and credit spreads on fixed income portfolios Model changes in interest rates and credit spreads Get around away the impact of such changes from both asset management and asset liability management standpoint,. Optimize the exposure of bonds portfolios to these changes in the context of fixed income portfolio construction Apply active strategies to benefit from expected changes in the interest rate and credit environments Interest Rate Risk Modeling I will first review empirical facts regarding the multidimensional nature of interest rate risks and present the main economic theories of the term structure of interest rates. He will then introduce competing methodologies for yield curve estimation. Finally, he will present stochastic models of term structure dynamics which make it possibl e to generate estimates for the distribution of asset and liability returns as a function of interest rate uncertainty, Measuring Interest Rate Risks:- ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Terms arrangement of interest rates empirical properties and classic theories ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Dynamics of the term structure stylized facts and theories ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Estimating the term structure direct versus indirect methods, Modeling Interest Rate Risks ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Single and multi factor models of interest rates and bond returns ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Factor models for inflation rate uncertainty and liability returns ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Model calibration empirical issues, Fixed-Income Strategies in the New Environment In fixed income strategies I will first introduce a variety of directional and relative value market timing strategies, and present arbitrage and quasi-arbitrage opportunities related to bonds, futures, and inflation-linked bonds. He will then discuss standard structured products and strategy linked notes offering exposure to proprietary benchmarks and algorithmic trading strategies. He will conclude with a review of recent market trends and an examination of current trade opportunities in a relative value framework, Semi Hedged Market Timing Strategies ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Carry and roll down strategies ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Butterfly strategies construction approaches {50/50, principal component Analysis and minimum variance} and optimization, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Conditional curve trades how to optimize the return or risk profile ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Cross market trades ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Volatility t rades gamma and Vega products Arbitrages and Quasi Arbitrage Opportunities ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Bonds versus strip arbitrage ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Cash carry arbitrage ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Asset swaps and inflation linked versus nominal bonds arbitrage, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Rich cheap analysis of bonds Structured Products and Strategy Linked Notes ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Standard structured products range accrual multi callable snow ball, spread options., ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Structured products with strategies as underlying general properties method of construction, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Examples of strategies Trade Opportunities in the New Situation ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Recent market trends, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Relative value approach in volatility matrix government or swap spreads And credit curves, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Trad e opportunities, Interest Rate Risk Management and Portfolio Construction In interest rate risk management and portfolio construction I will first present an in-depth overview of the modern techniques for managing interest rate risk either through dynamic adjustments of the factor exposure or through investment in interest rate derivatives, He will then introduce advanced techniques for estimating risk and return parameters for bond portfolio construction. Finally he will discuss the application of dynamic risk controlled strategies to fixedincome investment and show how to implement optimal substitution of treasury securities with corporate bonds to benefit from the upside potential of credit sensitive asset while hedging some of their risks,,, Interest Rate Risk prevarication from the Assets Management and ALM Perspectives ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Dynamic interest rate risk hedging duration and beyond,, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Static interests rate risk hedging futures swaps swaptions caps floors, asset swaps,, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Hedging bond portfolios asset management and ALM perspectives,, Dynamic Replacement of Credit and Interest Rate Risks:- ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Starting static to dynamic risk managemen123665 ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Energetic core satellites strategies in a fixed income environment, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Optimal substitution of independent bonds for corporate bonds, Credit Investing The market products In Credits investing I will first review the size and structure of the credit market setting out the main players, the products and the sources of credit risk. He will then detail the mechanics of the main credit products, from fixed- and floating rate bonds to credit default swaps and CDS indices, He will conclude with a discussion of products that allow investors to express a view on the macro credit environment and its volatility, and with a review of credit-based structured products,, The Credit Markets ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ An over view of the credit markets size structure players and asset types 45698 ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Rating agencies role rating methodologies, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The role of credit derivatives now looking forward, Cash based Credit Instruments ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Fixed and floating rate bonds credit risk spread measures and interest rate risk ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The asset swaps mechanics uses and risks The Credit Default Swaps ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Complete analysis of the CDS contracts, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The CDS cash basis definition and behavior ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The standard valuation model for a CDS contract ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Forward CDS digital CDS loan CDS and options on CDS, The CDS index ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Detailed mechanics of the standard CDS index contract, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Price quotation convention and CDS index valuation, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Defining and explaining the CDS index skew /.,/,/ Advanced Index Products ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Credit index options expressing a view on macro credit volatility ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Index tranches expressing a leveraged view on systemic credit risk, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Credit based C.P.P.I and C.P.D.Os, Credit Risk Model The session will focus on models used in the credit markets to assess corporate credit risk and to price and risk manages products and portfolios. I will search and introduce the Merton model and show how its extensions can assist in the evaluation of corporate risk, He will then discuss a popular pricing model used to detect arbitrage opportunities amongst credit products. He will follow with a discussion of the modeling of the risk of credit portfolios, the pros and cons of standard models will be reviewed; the pitfalls of using VaR as a credit risk measure will be exposed and an alternative proposed. He will conclude on risk return optimization for credit p ortfolios, Models Used in Credit Investing ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Structural models and their applications to debt equity arbitrage risk management and rating estimation ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Reduced form intensity models and their application to the pricing of credit risky pay offs, Portfolio Credit Risk Managements ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ identify the risks in a credit portfolio interest rate risk spread instability and correlation recovery rate uncertainty and default co rrelation ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The Gaussian copula model for portfolio credit theory and implementation, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The Credit Metrics and KMV portfolio models, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Beyond copula models fully dynamic approaches, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Risk measures for portfolio credit the problems with VaR, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Risk return optimizations for portfolio credit using cohere nt risk measures, CREDIT Trading Strategies The session will join the product and modelling knowledge gained to discuss a number of credit trading strategies. The Dominic O-Kane will first look at standard credit curve trades which can be implemented using cash or CDS. He will explain the characteristics of the CDS cash basis and the technicalities of trading this basis, He will then go over the analysis and risk of debt equity trading strategies and conclude with an analysis of index based strategies that make it possible to trade particular versus systemic credit, Bond Strategies ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Standard curve trades level slopes and twist with default risk, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Relative value in the capital structure senior versus subordinated claims, CDS Curve Strategies ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Interpreting the shape of the CDS curl, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Building a tool for trade analysis, ÃÆ' ¢Ãƒ ¢Ã ¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Trading CDS forwards, Trading the CDS Cash Basis ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Drivers of the CDS cash basis, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ How to identifing investigate implement riskmanage CDS basis trades, Debt Equity Arbitrage Using CDS ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Trade analysis using a structural models, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Event driven tradings ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Hedge ratios guess scenario based risk analysis, CDS Index Strategies ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Hedging a bonds portfolios, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Beta strategies using CDS indices to take a systemic credit risk, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Trading the CDS index skew, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Trading the index roll, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ CDS index curve trades using forwards, Chapter Introduction to European Fixed Income Securities and Markets Introduction In this chap ter we discus on Eurpon ;;;;fixed income marktes ans securties,, A bonds is a debt capital market tool issued by a borrower, who is then required to repay to the lender investors the amount borrowed plus interest over a specified period of time; Bonds are also known as fixed income instrument, or fixed interest instruments in the real markets. Usually bonds are measured to be those debt securities with terms to maturity of over one year. Debt issued with a maturity of less than one year is considered to be money market debt. There are many different types of bonds that can be issued. The most common bond is the conventional Bond. This is a bond paying periodic interest payments at a fixed rate over a fixed period to maturity or redemption, with the return of principal {the par or nominal value of the bond} on the maturity date. All other bonds will be variations of this basic structure. A bond is therefore a financial contract from the person or body that has issued the bond, that is, the borrowed funds. Unlike shares or equity capital, bonds carry no ownership privileges. The bond remains an interest bearing obligation of the issuer until it is repaid, which is usually on its maturity date. The some types of bonds in the European market reflect the different types of issuers and their respective requirements. Some bonds are safer investments than others. The advantage of bonds to an investor is that they represent a fixed source of current income with an assurance of repayment of the loan on maturity, Bonds issued by developed country governments are deemed to be guaranteed investments in that the final repayment is virtually certain. For a corporate bond in the event of default of the issuing entity, bondholders rank above shareholders for compensation payments, There is lower risk associated with bonds compared to shares as an investment, and therefore almost invariably a lower return in the long term. In this chapter we will provide a basic exp lanation of the various types of fixed income instruments encountered in the European markets as well as the definitions of some key terms and concepts that will assist the reader throughout the remainder of the book. Important groups of investors in these markets are briefly discussed in the last section of the chapter DESCRIPTION OF THE BASIC FEATURES A bond, like any security can be thought of as a package of cash flows,, A bonds cash flows come in two forms coupon interest payments and the maturity value or par value. In European markets many bonds deliver annual cash flows, As an illustration, consider a 6% coupon bond issued by the Spanish government that matures on 31 January 2008,The coupon rate is the rate of interest that is multiplied by the maturity value to determine the size of the bonds coupon payments, Note that this bond delivers annual coupon payment, Suppose one owns this bond in June 2003. what cash flows can the bondholder expect between now and the mat urity date assuming the maturity value is ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬A 100 On each 31 January for the years 2004 through 2008 the bondholder will receive annual coupon payments of ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬A 6. Moreover on the maturity date the bondholder receives the maturity value of ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬A 100 which is the bonds terminal cash flow, Type of Issuer A primary distinguishing feature of a bond is its issuer. The nature of the issuer will affect the way the bond is viewed in the market. There are four issuers of bonds: sovereign governments and their agencies, local government authorities, supranational bodies such as the World Bank, and corporations. Within the corporate bond market there is a wide range of issuers, each with differing abilities to satisfy their contractual obligations to investors. The largest bond markets are those of sovereign borrowers, the government bond markets. Term to Maturity The term to maturity of a bond is the number of years after which the issuer will repay the requirement, During the term the issuer will also make periodic interest payments on the debt. The maturity of a bond refers to the date that the debt will cease to exist, at which time the issuer will redeem the bond by paying the principal. The practice in the market is often to refer simply to a bonds term or maturity The provisions under which a bond is issued may allow either the issuer or investor to alter a bonds term to maturity after a set notice period, and such bonds need to be analyses in a different way. The term to maturity is an important consideration in the makeup of a bond. It indicates the time period over which the bondholder can expect to receive the coupon payments and the number of years before the principal will be paid in full, The bonds give up also depends on the term to maturity. Finally the price of a bond will change over its life as yields in the market change and as it approaches maturity. As we will discover later the volatility of a bonds price is dependent on its maturity, assuming other factors constant the longer a bonds maturity the greater the price volatility resulting from a change in market yields. Coupon Types As noted the coupon rate is the interest rate the issuer agrees to pay each year. The coupon rate is used to determine the annual coupon payment which can be delivered to the bondholder once per year or in two or more equal installments, As noted for bonds issued in European bond markets and the Eurobond markets coupon payments are made annually, Conversely in the UK US, and Japan, the usual practice is for the issuer to pay the coupon in two semiannual installments. An important exception is structured products which often deliver cash flows more frequently certain bonds do not make any coupon payments at all and these issues are known as zerocoupon bond,. A zerocoupon bond has only one cash flow which is the maturity value. Zerocoupon bonds are i ssued by corporations and governments. Security Description screen of a zerocoupon bond issued by the French bank BNP Paribus that matures March 11, 2005. Since the maturity value is AÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬1000 the price will be at a discount to AÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 1000, The difference between the price paid for the bond and the maturity value is the interest realized by the bondholder. One important type of zerocoupon bond is called strips. In essence strips are government zerocoupon bonds. However, strips are issued by governments directly but are created by dealer firms Conventional coupon bonds can be stripped or broken apart into a series of individual cash flows which would then trade separately as zerocoupon bonds. This is a common practice in European government bond markets.Since zerocoupon bonds can created from coupon payments or the maturity value, a distinction is made between the two. Currency Denomination The cash flows of a fixed income security can be denominated in any currency. For bonds issued by countries within the European Union the issuer typically makes both coupon payments and maturity value payments in Euros. However there is nothing that prohibits the issuer from making payments in other currencies. The bonds indenture can specify that the issuer may make payments in some other specified currency, There are some issues whose coupon payments are in one currency and whose maturity value is in another currency. An issue with this feature is called a dual currency issue . NONCONVENTIONAL BONDS The definition of bonds given earlier in this chapter referred to conventional or plain vanilla bonds. There are many variations on vanilla bonds and we can introduce a few of them here. Securitized Bonds There is a large market in bonds whose interest and principal payments are backed by an underlying cash flow from another assets,. By securitizing the asset a borrower can provide an element of cash flow backing to investors. For instance a mortgage bank can use the cash inflows it receives on its mortgage book as asset backing for an issue of bonds. Such an issue would be known as a mortgage backed security because residential mortgages rarely run to their full term, but are usually paid off earlier by homeowners the notes that are backed by mortgages are also prepaid ahead of their legal final maturity, This feature means that MBS securities are not bullet bonds like vanilla securities, but are instead known as Amortizing bonds . Bonds with Embedded Options Some bonds include a provision in their offer particulars that gives either the bondholder or the issuer an option to enforce early redemption of the bond. The most common type of option fixed in a bond is a call feature A call provision grants the issuer the right to redeem all or part of the debt before the specified maturity date. An issuing company may wish to include such a feature as it allows it to replace an old bond issue with a lower coupon rate issue if interest rates in the market have declined. As a call feature allows the issuer to change the maturity date of a bond it is considered harmful to the bondholders interests therefore the market price of the bond at any time will reflect this, A call option is included in all asset backed securities based on mortgages for obvious reasons. PRICING A CONVENTIONAL BOND The principles of pricing in the bond market are exactly the same as those in other financial markets which states that the price of any financial instrument is equal to the net present value today of all the future cash flows from the instrument In this Chapter bond pricing will be explained. this chapter we will just present the basic elements of bond pricing, ACCRUED INTEREST, CLEAN PRICE, AND DIRTY PRICE All bonds coupon paying bonds accrue interest on a daily basis and this is then paid out on the coupon date, In determination of the fair price for a bond that is not purchased on a coupon date accrued interest must be incorporated into the price. Accrued interest is the amount of interest earned by the bonds seller since the last coupon payment date. The calculation of accrued interest will differ across bonds due to day count conventions that will be discussed shortly. In all major bond markets the convention is to quote price as a clean price. This is the price of the bond as given by the present value of its cash flows but excluding coupon interest that has accrued on the bond since the last dividend payment. As all bonds accrue interest on a daily basis, even if a bond is held for only one day interest will have been earned by the bondholder. However we have referred already to a bonds all in price which is the price that is actually paid for the bond in the market. This is also known as the dirty price which is the clean price of a bond plus accrued interest. In other words the accrued interest must be added to the quote price to get the total consideration for the bond Accrual Day Count Conventions The accrued interest calculation for a bond is dependent on the day count basis specified for the bond in question. We have already seen that when bonds are traded in the market the actual consideration that changes hands is made up of the clean price of the bond together with the accrued that has accumulated on the bond since the last coupon payment these two components make up the dirty price of the bond. When calculating the accrued interest, the market will use the appropriate day count convention for that bond, A particular market will apply one of five different methods to calculate accrued interest. RISKS ASSOCIATED WITH INVESTING IN FIXED INCOME SECURITIES Risk can thought of as the possibility of unpleasant surprise. Fixed income securities expose the investors to one or more of the following types of risk (1) Interest rate risk, (2) Credit risk, (3) Call and prepayment risk, (4) Exchange rate risk, (5) Liquidity risk, (6) Inflation or purchasing power risk, Interest Rate Risk A fundamental property is that an upward change in a bonds price results in a downward move in the yield and vice versa. This result makes sense because the bonds price is the present value of the expected future cash flows. As the required yield decreases the present value of the bonds cash flows will increase, This inverse relationship embodies the major risk faced by investors in fixed income securities interest rate risk. Interest rate risk is the possibility that the value of a bond or bond portfolio will decline due to an adverse movement in interest rates, Call and Prepayment Risk As noted a bond may contain an embedded option which permits the issuer to call or retire all or part of the issue before the maturity date. The bondholder, in effect is the writer of the call option. From the bondholders perspective there are three disadvantages of the embedded call option. First relative to bond that is option free the call option introduces uncertainty into the cash flow pattern. Second since the issuer is more likely to call the bond when interest rates have fallen, if the bond is called, then the bondholder must reinvest the proceeds received at the lower interest rates. Third a callable bonds upside potential is reduced because the bond price will not rise above the price at which the issuer can call the bond. Collectively these three disadvantages are referred to as call risk. MBS and ABS that are securitized by loans where the borrower has the option to prepay are exposed to similar risks. This is called prepayment risk, Exchange Rate Risk If a European investor buys a bond whose cash flows are denominated in a currency other than euros they are exposed to an additional risk. Namely the euro denominated cash flows are dependent on the exchange rate at the time the payments are received. For example suppose a European investor purchases a US corporate bond whose payments are denominated in US dollars. If the dollar depreciates relative to the euro, then fewer euros will be received. This risk is called exchange rate risk. Thus, if an investor buys a bond in a currency other than her own, she is, in essence, making two investments an investment in the bond and an investment in the currency. Liquidity Risk Liquidity involves the ease with which investors can buy or sell securities quickly at close to their perceived true values. Liquidity risk is the risk that the investor will have to buy or sell at security at a price above or below its true value. One widely used indicator of liquidity is the size of the spread between the bid price and the ask price other things equal the wider the bid ask spread the greater the liquidity risk. For investors who buy bonds with the intent of holding them until maturity liquidity risk is of secondary importance, Inflation or Purchasing Power Risk Inflation or purchasing power risk reflects the possibility of the erosion of the purchasing power of bonds cash flows due to inflation. Bonds whose coupon payments are fixed with long maturities are especially vulnerable to this type of risk. Floaters and inflation indexed bonds have relatively low exposures to inflation risk. INVESTORS There is a large variety of players in the bond markets each trading some or all of the different instruments available to suit their own purposes. We can group the main types of investors according to the time horizon of their investment activity, Short-Term Institutional Investors Short term institutional investors include banks and building societies, money market fund managers, central banks and the treasury desks of some types of corporate. Such bodies are driven by short-term investment views, often subject to close guidelines, and will be driven by the total return available on their investments. Banks will have an additional requirement to maintain liquidity often in fulfillment of regulatory authority rules, by holding a proportion of their assets in the form of easily tradable short-term instruments, Long-Term Institutional Investors Typically long term institutional investors include pension funds and life assurance companies. Their investment horizon is long-term, reflecting the nature of their liabilities. Often they will seek to match these liabilities by holding long-dated bonds. Mixed Horizon Institutional Investors Mixed horizon institutional investors are possibly the largest category of investors and will include general insurance companies and most corporate bodies. Like banks and financial sector companies, they are also very active in the primary market, issuing bonds to finance their operations. Market Professionals Market professionals include the banks and specialist financial mediators mentioned above, firms that one would not automatically classify as investors although they will also have an investment objective. Their time horizon will range from one day to the very long term. They include the proprietary trading desks of investment banks as well as bonds market makers in securities houses and banks who are providing a service to their customers. Proprietary traders will actively position themselves in the market in order to gain trading profit, for example, in response to their view on where they think interest rate levels are headed. These participants will trade direct with other market professionals and investors, or via brokers. Market makers or traders are wholesalers in the bond markets; they make two-way prices in selected bonds. Firms will not necessarily be active market makers in all types of bonds; smaller firms often specialize in certain sectors. Chapter 7 Quantitative study of Computational Finance 7.3Quantitative and Computational Finance:- Quantitative Finance as a branch of modern finance is one of the best growing areas within the corporate world, Together with the superiority and difficulty of modern financial products this exciting control continues to act as the motivating factor for new numerical models and the subsequent development of associated computational schemes, Alternative names for this subject area are Mathematical Finance, Financial Mathematics or Financial Engineering, This is a course in the applied aspects of mathematical finance in particular derivative pricing ,The necessary understanding of products and markets required will be covered during the course. The overall theme of the course is to develop the Partial Differential Equation approach to the pricing of options, As well as a 2 hour examination during the summer term students will undertake a short computing project where they will use statistical and computational techniques to perform derivative pricing, Simulation Methods in Fina nce Brief introduction to Stochastic Differential Equations drift diffusion Its Lemma, The statistics of random number generation in Excel, Simulating asset price SDEs in Excel, Financial Products and Markets Introduction to the financial markets and the products which are traded in them Equities indices foreign exchange fixed income world and commoditys, Options contracts and strategys for speculation and hedging Black-Schools framework Comparison reduction and basic solution for the heat equation, Black Schools PDE simple European calls and puts put call parity,The PDE for pricing commodity and currency options,Discontinuous payoffs Binary and Digital options,The Greeks theta delta gamma Vega and rho and their role in hedging, Computational Finance Solving the pricing PDE numerically using Explicit Implicit and Crank Nicholson Finite Difference Schemes. Stability criteria, Monte Carlo Technique for derivative pricing, Fixed-Income Products Preface to the properties and features of fixed income products yield time period and convexity,Stochastic interest rate models stochastic different equation for the spot interest rate bond pricing PDE popular models for the spot rate solutions of the bond pricing equation 7.4Fixed Income:- The fixed income market demands a vast selection of investment options with a variety of credit quality maturities and yields to meet investors objectives, to accomplish this, fixed income groups frequently create and modify mathematical models to calculate bond pricing perform yield analysis calculate cash flows and develop hedging strategies, Fixed income research groups use the thousands of prewritten math and graphics functions in Math Works products to access bond data perform statistical analysis calculate spreads determine bonds and derivative pricing perform sensitivity analyses and run Monte Carlo simulations, Advanced graphics and rendering capabilities in MATLAB make reviewing cash flows visualizing decision trees plotting spot and forward curves and creating deployable interactive 2-D and 3-D models easy, 7.5 Equity:- Smart security investing requires in depth research and analysis, measuring all the influencing factors is an essential part of risk management, As a result research groups continually create and modify mathematical models to calculate stock value review forecasts and develop innovative risk strategies, Equity research groups use the thousands of math and graphics functions in Math Works products to access stock data perform statistical analysis determine derivatives pricing perform sensitivity analyses and run Monte Carlo simulations, The graphics capabilities in MATLAB offer a variety of ways to review time series data visualize portfolio risks and returns and create forecasting graphs 7.6 Investment Management and Trading:- To meet the investment needs of individuals institutions and governments investment firms needed to deliver a wide range of investment opportunities with risk adjusted performance and consistent returns over time, To accomplish this financial professionals need to develop and use mathematical models to optimize portfolios and develop trading strategies and systems that can respond to market conditions, Investment management and trading research groups use the thousands of math and graphics functions in Math Works products to easily access securities data perform statistical analysis determine pricing conduct sensitivity and principal component analyses and implement buy and sell criteria, The graphics capabilities in MATLAB offer a selection of ways to easily review time series data visualize portfolio risks and returns and create forecasting graphs, With Math Works deployment tools, you can easily compile and integrate your MATLAB algorithms into your system, 7.7Mathematical and statistical approaches:- According to Fund of Funds analyst Fred Gem There are two types of quantitative analysis and therefore two types of quants, One type works primarily with mathematical models and the other primarily with statistical models, While there is no logical reason why one person can not do both kinds of work this does not seem to happen perhaps because these types demand different skill sets and, much more important different psychologies, A typical problem for a numerically oriented quantitative analyst would be to develop a model for pricing and managing a complex derivative product, A typical problem for statistically oriented quantitative analyst would be to develop a model for deciding which stocks are relatively expensive and which stocks are relatively cheap, the model might include a companies book value to price ratio its trailing earnings to price ratio and other accounting factors, An investment manager might implement this analysis by buying the underpriced stocks selling the overpriced stocks or both, One of the principal mathematical tools of quantitative finance is stochastic calculus, According to a July 2008 Aite Group report today quants often use alpha generation platforms to help them develop financial models, These software solutions enable quants to centralize and modernize the alpha generation process, 7.8Areas of Computational Finance application:- Areas where computational finance techniques are employed include: Investment banking , Forecasting, Risk Management software , Corporate strategic planning , Securities trading and financial risk management , Derivatives trading and risk management, Investment management, Pension scheme, Insurance policy, Mortgage agreement, Lottery design, Islamic banking , Currency peg , Gold and commodity valuation , Collateralized debt obligation , Credit default swap, Bargaining, Market mechanism design,