NFS - 3

No Faff Subject #1 was Statistical Methods and #2 was Global Economics. NFS #3 in the term three is Corporate Finance. Prof. Bhagwan Chowdhry from UCLA has talked about Valuation of Corporate Projects - Domestic, International and with Options. He knows what ideas need drilling in and what details need glossing over - belabored the intuitive idea of stock Beta for an hour (Only market-associated risks of a stock matter in a portfolio), while not staying more than 5 minutes on the fancied-by-all-since-pre-terms Black-Scholes slide. Seniors said he's the Bhagwan for finance wannabe-switchovers.

And only if I wasn't so bent on the technical side of his lectures, I'd have noted and posted each of his jokes. Very smart, quite funny, yet I can see a dadaji'ish nicety - Chacha Chowdhry, kya?

Time to etch something forever (Interest Rate Parity Theorem)... Have struggled to get an intuitive feel for currency exchange rates...

Assuming free money markets, Interest rate difference between countries A and B compensates for the Spot/Forward Exchange rate. If India has a greater interest rate, (8%) than US (6%), USD should be expected to appreciate 2% against INR to compensate for this difference, which then drives the Forward Exchange Rate. Simple enough, I know... but remember!

Sailing on to the role of Debt in a Firm's Market Value (Nil - Modigliani & Miller Theorem), said Prof. Chowdhry, introducing the topic: "We've been doing easy stuff; it's going to get subtler now. If you've been thinking 'Is this what I paid 15 lacs for?', here is your money's worth!"