Topic Selection


Identify a chapter from the text that you wish to cover. It should have a rationale that leads to some benefit for you and others. Explain why you would want to cover that topic and what benefit understanding it would provide the class. Only one person can select any chapter. You may not “camp out” on a topic. Rather, prepare your entire statement that should essentially fit onto one page and load it onto the wiki site with one access. Thus, you should prepare the statement in a word processor and simply copy it onto the wiki page. In order to prepare your statement adequately, you will need to read over the chapter — rather quickly to understand what it is about.

Enter your name followed by your topic suggestion sequentially below. That is, simply enter your name, the chapter number, and idea following the previously entered person's topic. I entered a casual version for chapter 1 to give you an idea of the approach to use.

Arlyn Rubash - Chapter 1 Introduction:

This sets the foundation for the remaining material. In particular the conventions and caveats are important to understanding how things are presented in the text. I think we need a background in this chapter's material to properly begin our look at risk adjustments and the methodology for accomplishing them.

My name Chapte

explanation of topic choice

My name Chinh Pham - Chapter 6 Repo Market

I would like to study this chapter because this sounds like an interesting way to borrow money at lower cost. This seems to be a very interesting topic of turning from an unsecured to loan to a secured loan which resulted in lower interested rate for the borrower. Assuming the process is doable in real life by normal people, I would like to learn how to do this process so I can borrow capital at a lower interest rate so I can have more capital to invest.

Kimberly Pouilly – Chapter 3- Cash Flow Engineering and Forward Contracts

I would like to study this chapter because in farm management my income is derived mostly from forward contracts. It is the only way to guarantee income; however, it is mostly a “crap-shoot” because I do not have enough information to KNOW I am making the best decisions with regards to trading.
I am also interested in learning about currency forwards. Many times I have money to invest but am limited due to my company’s liquidity requirements. I would like to learn more about these in the hopes of providing myself with more diverse and profitable investment option.

Nick Roth - Chapter 11: Pricing Tools in Financial Enginering

This chapter seems to unify a lot of topics covered in the first half of the book. I would appreciate exploring the pricing tools and asset pricing models to better understand the different approaches to pricing. I've also read and heard a lot about identifying and capitalizing upon arbitrage opportunities and I believe that this chapter will provide further insight on how to do so. I think it would be valuable to understand state prices as presented in this chapter and how they can be made practical in environments with liquid option prices at different strikes. Seeing that choosing the correct pricing method is very important, I think it would be beneficial to understand each method and and the contexts in which they apply.

Petr Michlik - Chapter 4: Engineering Simple Interest Rate Derivatives

My motivation for picking this topic is rather pragmatic. Forward rate agreements or foreign currency futures are important for anybody and should not be left out. Personally, I am a bit struggling with terminology, it has been 2 years since I had a Finance class (If I remember correctly I am not alone) and chapter 4 would be (together with chapter 3) a good warm-up. From another perspective, Eurocurrency (or Eurodollar) futures are relevant to company (such as mine) that have balance sheet in Dollars and do business in Europe - I would be interested in discussion like hedging future rate agreements with Eurocurrency futures.

Nicole Turner - Chapter 5: Introduction to Swap Engineering

During my brief overview of the text, I decided that the more detailed work on swap engineering would be beneficial to cover. Basically, when reading through the introduction to Chapter 5 I found a few important points I felt I would like to cover during the course of this class. I would like to get a better understanding of the basket idea, where adding an asset with the same risk as the basket doesn't change the risk, but can change other characteristics about the portfolio. Also, I would like to learn about how swaps can make a portfolio more liquid or more useful for hedging (including the ability to hedge risks such as interest rate risk or speculation on changes in prices). Since swaps are one of the most heavily traded financial contracts today, I feel this can be a beneficial aspect of finance to cover.

Ron Murray - Chapter 16: Credit Markets: CDS Engineering

I selected Credit Default Swaps because they are very relevant in the world today. We covered them very briefly in FIN 623 and I thought they seemed like an interesting topic. More specifically I would like to cover how they are used as a hedging tool and what arbitrage scenarios may present themselves if used appropriately. I would also like to learn if/how they have changed since they came on the scene in the 1990s. I find it fascinating that in Finance we can hedge most any position and yet these CDS did not come along until the late 90s. I would like to discuss the circumstances around the beginning uses of these swap tools. Was it hedging or did someone see and arbitrage opportunity.

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