Embedded Options It is common to grant issuers and bondholders an option to take an action against the other party regarding the owed money, either with the principal or the coupons. Such options have a significant effect on the behaviour of the bond price because of the potential modification of the cash flows that the action may cause. Although not explicitly priced in the market, the options carry implicit economic value and are reflected in the prices of the bonds. These options are known as embedded options.

The Chartered Financial Analyst Institute has been granted a ‘provisional permission’ by the Delhi High Court to register candidates for June, 2010 CFA exam. At the same time, the institute has also been ordered to freeze its operations in India.
The Chartered Financial Analyst Institute (US), is also pulling a case against All India Council for Technical Education (AICTE).In December, 2007, the Delhi High Court had dismissed the CFA Institute’s petition seeking an an overruling of the ban imposed on it. The ban was imposed as the institute had not sought the necessary clearances to conduct a technical programme in India.
Following the order, the CFA Institute approached AICTE in January 2008 to seek approval for its India operations. It had also appealed to the division bench of the Delhi High Court against the December 2007 order. This month, however, CFA Institute publicized itself in the student community in India by means of advertisements in Indian daily – ‘Times of India’. Earlier this month, CFAI management had indicated that its members have requested it to market itself in Asian countries like India and China.
The CFA Institute has notified the candidates registered for an India test centre, that in event of revocation of ‘provisional permission’ / cancellation, the institute would either refund fees or suggest a test centre outside India.

Recently showcased at E-Summit, IIT Bombay, Pristine was also showcased at the Entrepreneurship Summit at IIT Delhi, conducted from 19-21 Feb, 2010.

Pristine conducted a workshop at IIM Calcutta on Financial Modeling using Excel. The workshop was much appreciated and got an excellent response from the participants. We hope to do similar workshops for various B-schools. If you want to conduct such a workshop at your place please contact Karuna at  +91 80800 05533.

Questions in CFA Level II are not very difficult/ different from Level I. The prime difference is that they are related to (one case and) one subject/ topic and unless you completely understand that topic and the question (Case statement) correctly, you can just do the full case wrong. On the flip side, if you understand the case statement well and attempt the question with a cool mindset, the chances of getting all questions related to a case correct are very high.
To start preparing well for CFA Level II, I advice the following:
Find the story in a topic
Find the thread that connects the questions
Try to find the kind of questions that are asked in the exam
Make sure that understand and remember the key points.

This is the article by Amit Grover, Founder, Nurture Talent Academy (www.nurturetalent.com).
One question I have been repeatedly asked in all entrepreneurship events recently has been “How important is Financial Projection for a startup?”. Like all subjective questions, the answer can range from “highly important” to “not important at all”. I have never seen any investor writing a cheque without looking at the financial projections, neither have I seen them making the projections the sole base for investment decision. It does not matter whether it is a 1, 3 or 5 year projection. All investors know that the 1st version of projections are going to change – still we insist on projections to determine how well prepared the entrepreneur is.

What is a Mortgage?
A mortgage is the transfer of an interest in property to a lender as a security for a debt like a loan of money. Although a mortgage in itself is not a debt, it is the lender’s security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.
A mortgage lender is an investor that lends money secured by a mortgage on real estate. In today’s world, most lenders sell the loans they write on the secondary mortgage market. When they sell the mortgage, they earn revenue called Service Release Premium. Typically, the purpose of the loan is for the borrower to purchase that same real estate. The borrower, known as the mortgagor, gives the mortgage to the lender, known as the mortgagee. As the mortgagee, the lender has the right to sell the property to pay off the loan if the borrower fails to pay.

What is Yield ?
The term yield indicates the amount in cash that the owners of a security will get. Generally, it does not take into account the price variations, at the difference of the total return. Yield applies to various stated rates of return on stocks (common, preferred, and convertible), fixed income instruments like bonds, notes, bills, strips, zero coupon etc. and other investment insurance products like annuities.
What is Yield spread ?
Yield spread is the difference between the quoted rates of return on two different investments, usually of different credit quality.

What is the most I can lose on this investment? This is a question that almost every investor who has invested or is considering investing in a risky asset asks at some point in time. Value at Risk tries to provide an answer, at least within a reasonable bound.
It gives the likelihood that a portfolio will suffer a large loss in some period of time, or the maximum amount that you are likely to lose with some probability (say, 99%).
It finds this by :
(1) looking at historical data about asset price changes and correlations;
(2) using that data to estimate the probability distributions of those asset prices and correlations; and
(3) using those estimated distributions to calculate the maximum amount you will lose 99% of the time.
But the things are not as simple as that. Real markets don’t go by statistics or rules of probabilty.

An exotic option is a derivative which has features making it more complex than commonly traded products (vanilla options). These products are usually traded over-the-counter (OTC), or are embedded in structured notes.
An exotic product could have one or more of the following features:
* The payoff at maturity depends not just on the value of the underlying index at maturity, but at its value at several times during the contract’s life. It could be an Asian option depending on some average, a look-back option depending on the maximum or minimum, a barrier option which ceases to exist if a certain level is reached or not reached by the underlying, a digital option, range options, etc.
* It could depend on more than one index; as in case of a basket options, Himalaya options, or other mountain range options, outperformance options, etc.
* There could be callability and putability rights.
* It could involve foreign exchange rates in various ways, such as a quanto or composite option.