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Tag: career in finance

Why Is Chartered Financial Analyst a Good Career Option?

Posted on by Imarticus Learning

In recent times, Chartered Finance Analyst (CFA) is a designation which is quite revered and regarded by most as a key certification for professionals in the areas of portfolio management and research.

The chartered financial analyst program is a certification from the CFA Institute. It is a globally regarded certification. It is essentially a self-study methodology, graduate level program for professionals who want to pursue a career in investment. A person coming out of any discipline or academics can pursue the CFA program.

Applications to the program are usually from students and undergraduates to an early professional who intent to get a boost to their career. Although it is important to note that just getting a certification will not guarantee the same.

Passing all the three exams of CFA in itself is a very daunting job when compared to the efforts and commitment of the time required as against other management programs like the MBA. In fact, there are many MBA pass outs and CA’s who join CFA to get into core investment banking jobs. CFA gives a great technical grounding and offers broad-based scopes suitable for investment banking, research analyst, equity research and portfolio management.

The CFA course focuses on ethics, portfolio management, accounting, corporate finance, fixed income and equity investments, so basically if one does not have a very specific choice but needs to build their career in the field of finance then they should opt for the CFA certification as it is broad-based, opening many career opportunities.

Passing a CFA exam shows that the person pursuing the same has the ability to show commitment, tenacity, comes across as a professional with resilience, and rigour. In addition to the learnings from the course, the charter holders are also considered internationally mobile as well due to their association with the global professional network.



Some of the most common jobs taken by the CFA professionals

Portfolio Management:
Since CFA focuses on essentially training you on portfolio management skills, this job becomes a no-brainer for most pass outs. Under this profile, you are responsible for making financial/investment-based decisions for people who have given the control of their money to you or to your company.

Research Analyst:
Here the profile is responsible for analysing the financial transactions and records of the firm for its clients. Here you need to prepare your observations and reports and primarily have an insight of what the client would want to know about the financial health of the organization in such a way that nothing essential is overlooked before making any strategic decisions.

There are many other nomenclatures for this role within the organization, such as investment analyst, rating analyst, financial analyst, equity analyst, to name a few.

Consultant:
Here the person needs to provide suggestions that will benefit the firm with professional advice. The CFA course covers corporate finance which will assist the professional to make alternative decisions and suggestions to the third party or the client satisfying their requirements.

Accountant/Auditor:
Here you are required to keep a track of all financial footprints and documents of the business or company that you are associated with.

Investment Banking Analyst:
Here a person needs to check all possible pit stops, analyse, evaluate, all possibilities before any investment is made. The person usually is responsible for directing and making the firm aware of mergers and acquisitions. The task can be efficiently performed by any CFA pass out as the course has a section on corporate investment, equity investment, economics and more which prepares them to handle such requirements.

These are just a few opportunities out of the many that you can take advantage of if you wish to pursue the CFA certification.

So to conclude, it is quite obvious that in recent times many organizations and individuals alike are getting highly interested in CFA. The fact that a CFA certification will benefit the organization and the individual in revenue growth and career growth, it is perhaps why most organizations are also considering sending employees usually from the start up a level for this certification as the long-term advantages cannot be ignored.

It is then true to say that the CFA designation does distinguish the charter holders from other counterparts in the eye of professionals and investors. As a successful CFA charter holder has already proved the test of time and their ability and intention of commitment to conducting their professional life according to high professional standards.

Financial Markets And Their Roles

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A financial market, unlike the other markets, is more of an intangible concept and basically refers to a marketplace where buyers and sellers usually participate in an exchange of assets such as equities, bonds, derivatives and currencies. The basic characteristic of any financial market comprises of transparent pricing, basic regulations regarding costs and fees and a number of market forces, that determine the prices of securities that trade. These financial markets can be found almost in every single country across the world, some of these may be small, with a very few numbers of participants, while some are huge in terms of the amount of money they trade, for example, the New York Stock Exchange.
It is basically investors, who have an access to a great number of financial markets and exchanges, that deal with a vast array of financial products. Some of these markets have always been open to private investors, while some have always remained, pretty much exclusive in terms of catering to major international banks and financial professionals. There are a variety of financial markets, which make up the field of finance.
Certification in Capital MarketsCapital Markets

These markets are where individuals and various organizations, deal with the trading of financial securities. There are a number of organizations and companies, that sell securities on these markets, in order to raise funds for themselves. This is why the capital markets consist of both primary as well as secondary markets. Any organization or corporation requires capital in order to finance its various operations, as well as to engage in long-term investments. In order to accomplish this, the corporation raises money through the sale of securities, basically bonds and stocks; all of which is in the name of the company.
Stock Markets

These are markets, which allow all of the investors to buy and sell the shares in publicly traded companies. They are popularly known to be the most vital area of a market economy, this is because they provide companies, with the access to capital and all the investors, with a chance to have a percentage of ownership in the company. This market is divided into primary markets as well as secondary markets.
Bond Markets
A bond refers to any debt investment in which, an investor loans money to an entity, this can be either corporate or governmental. This entity basically borrows the funds for a specific period of time Bonds are usually used by a number of companies, municipalities, states as well as governments, in order to finance a variety of projects and activities. This markets basically deals with buying and selling of bonds on the various credit markets, all over the world. This market is also referred to as the debt market or credit market or fixed-income market. The many types of bonds are corporate bonds, municipal bonds, notes and bills which are also known as treasuries and so on.
All of these markets require a financial professional, wither a corporate banker, investment bankers or portfolio manager and so on, to deal with their various aspects. The various attractive benefits that these markets offer are a result of a lot of finance aspirants seeking positions in the field of financial markets. Imarticus Learning is one of the best institute for finance and investment banking training and very much preferred by these professionals, in order to get a hang of how the markets work, through various certification courses in corporate finance, investment banking and so on.

Confused Between Model Building Approach Historical Simulation? Things To Consider!

Posted on by Imarticus Learning

If you consider Basel II, there are two ways of calculating Market Risks VAR:
• Historical Simulation Approach
• Model Building Approach

What makes them different?

Historical Simulation approach is most frequently used by organisations. As the name suggests, we consider daily changes in past/historical values to compute the likelihood of the variations in values of current portfolio between given time frame. The other advanced version of this model places more emphasis on recent observations. The key assumption in historical simulation is that the set of possible future outcomes is fully represented by what occurred in a definite historical time frame/window.

On the other side, model-building approach involves assumptions about the joint probability distributions of the returns on the market variables. This model is also known as variance-covariance approach.

This is more apt for portfolios which has short as well as long positions in their bucket. This consists of commodities, bonds, equities, etc. in the portfolio. Here, the mean and standard deviation are computed from the distribution of the underlying assets returns and the correlation between them.

Daily returns on the investments are normally assumed to be multivariate normal which can be the models biggest drawback. Hence, model-building approach makes it easy to calculate Var.

Model Building approach assumes two things:
• The daily change in the value of a portfolio is linearly related to the daily returns from market variables
• The returns from the market variables are normally distributed

Shortcomings of Historical Simulations
Over reliance on past data can fail to serve the purpose as markets change every moment. The momentum can be gradual or sudden, but does not remain static.

Large number of factors like Technology, regulatory changes, economic conditions, seasonal patterns, etc. influence market and in such scenarios manager who are using historical simulation can face unfavorable situation.

Shortcomings of Model Building Approach
Also this approach is much more complex to use when a portfolio comprises of nonlinear products such as options. It is also a grim task to relax the assumption that returns are normal without a significant increase in totaling time.

When to use? Model building vs. Historical simulation.
Depending on the situation, appropriate model should be adopted by the organisation. While both of them have pros and cons, it is important to list down the objectives of risk model before adopting either of them.

Model building approach producer quicker results and can be used in conjunction with volatility and other correlation procedures.

The advantage of the historical simulation approach is that the joint probability distribution of the market variables is determined by historical data. This approach may not be very complicated however, it is little slow for computation. However, the methodology used in historical simulation is in line the risk factor and does not involve any estimation of variances or covariance’s which are statistical parameters.

One should use historical simulation model only when they have data on all risk factors over a justified historical period if they want the model to depict strong representation of the outcome in future.

To know more about model building join Imarticus Learning’s Financial Modeling Certification Courses, which will help you understanding opportunities in the Investment Banking, Private Equity, Budgeting and Financial Control space.

 

Fundamentals of Forecasting – Basic Modeling Hygiene – III

Posted on by Imarticus Learning

By Reshma Krishnan
We are continuing to understand the Fundamentals of Forecasting. Please click here for Part 1 and Part 2.
Many aspiring candidates ask us what is so special about the FMVC program at Imarticus Learning. After all, shouldn’t an MBA suffice? The problem with MBA’s, regardless of which school you go to, is that they don’t teach you role specific issues. For instance, they don’t have specific modeling modules. They will have a forecasting module but they won’t teach you how to model or how to forecast step by step. In the Financial Modelling and Valuation Course (FMVC), India’s leading Forecasting and Financial Modeling program, we teach you the minutae and we go into specifics. One such specific is modeling and forecasting hygiene.
Hard Coding- the model users bane.
This is the first thing I teach in modeling class. Hard Coding is essentially a stand alone number in a cell, which has no back up. It says nothing about the number. You must never hard code a forecasted number because the forecast is always done on the back of an assumption, which has to be modeled in. Hard coded numbers are usually past data, actual data that has been verified and been the result of auditing. A forecasted number should always be a linked number from an assumption.
Colour Coding
Staying with hard coded numbers, it always helps to colour code. In fact, in my class, I mark an assignment zero if it is not colour coded. Red hardcoded number tells me that the forecaster had no option but to hard code. All actuals should be in a different colour to forecasts and all delta numbers, that is the variable you are using to arrive at a forecast needs to also be in a different number.
Give the delta its own cell
Let’s say you want to increase the sale of pencils in 2017 by 10% from 2016. You have two ways to do it.
=(2016 revenue cell) x 10% +(2016 revenue cell) = 2017 revenue.
Or
You create a special cell for 10%
= ((2016 revenue cell) x (10% cell) )+(2016 revenue cell) = 2017 revenue.
Here I am assuming that revenue is growing by 10% . This helps me change the delta as I see fit which then changes my model. The delta is the rational for my model. If you hide it within a formula, I have to constantly look at formulas to find my assumptions.
Learn more about Forecasting by joining our course, FMVC,Financial Modeling and Valuation Course, India’s leading program in Financial Modeling and Valuation and focused on improving your chances on having a career in Investment Banking or Equity Research.

Fundamentals of Forecasting – the Basic Premise of Forecasting – II

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By Reshma Krishnan
We are continuing to understand the Fundamentals of Forecasting. Please click here
The fewer the assumptions, the stronger the forecast – at least in the beginning when you are learning how to model. Most investment Banking models end up running into 40 assumption sheets, each linked to another. While you might believe such minutiae makes a difference, it’s almost always just to make yourself feel better. Yes, your ability to understand every cost element is good, but its futile if your understanding of the industry works or its cost structure is weak. Key assumptions built into the forecast can also be lost, like trees in a forest. Links can be very hard to find. A simple forecast on the other hand helps you understand what drives basic line items while giving you the ability change basic assumptions. So for instance if you are forecasting the cost of a cup of tea, you break the cup of tea into its major elements, milk, tea, sugar. Three basic drivers, but if you decide to link the price of tea not to the retail rate but to an auction rate that is further linked to an auction house pricing, there are many chances your Financial Analyst coursemodel will be faulty for no tangible benefit.

Forecasting is hard- if it wasn’t, financial modeling and forecasting would not be the number one skill required in financial services, especially Equity Research, or the most popular program in Financial Services Education. It requires patience and a deep thorough understanding of the industry. Forecasting is what Equity Research Analysts do all the time which is why Equity Research Analysts are industry specialists. You won’t find an analyst doing both steel and retail e-commerce. If you are not detail oriented, you are not going to be great at forecasting.
Your forecast is as good as your data, or your weakest link- using solid numbers always feels like an attractive proposition. Investment Bankers love to receive solid data from the clients. Equity Research analysts love to receive solid numbers from the industry or a company but what data do you trust. How often do you use that data? Can you remove the bias in the data. Data you receive from clients will almost always be optimistic, same with industry. Data you receive from Private Equity will almost always be pessimistic. There is bias in every data and your job is to remove bias.
Learn more about Forecasting by joining our course, FMVC, Financial Modeling and Valuation Course, India’s leading program in Financial Modeling and Valuation and focused on improving your chances on having a career in Investment Banking or Equity Research.

What Can You Do with Your FMVC Certificate?

Posted on by Imarticus Learning

The great thing about short programs in Financial Services at Imarticus Learning is that you learn skills that can be ‘applied’ rather than just theory, or even cases that are general in nature. We offer one of the leading professional courses in Financial Modeling in Mumbai, which allows you to pursue multiple career opportunities.

Learning Financial Modeling and Valuation is extremely important when you are pursuing a career in both Financial Services and Corporate Finance. The ability to forecast financial statements and build a robust model that is dynamic and clearly reflects underlying assumptions is imperative. The more robust your model, the more accurate your analysis and therefore your company or asset valuations.

Financial Modelling and Valuation is a skill useful across careers like

  • Investment Banking– A good investment banker is at heart a good modeler and someone who is able to fundamentally value a company.
  • Both valuation and forecasting is both a science and an art, therefore you not only need a strong grasp of the fundamentals but an intuitive understanding of their limitations to be able to model and value effectively.
  • Investment Bankers create Financial Models to help make Pitch Documents, Information Memorandums and create scenarios that will help them fine tune valuations. They need to forecast cash flows to be able to do a DCF as well as future Profitability numbers which they can apply multiples to.
  • Private Equity and Venture Capital– As investors, Private Equity professionals need to be able to create financial models of prospective companies they want to invest in to be able to both value as well us understand future cashflows which will determine valuation at exit. Private Equity professionals also have to learn how to create specialized investment specific financial models like Leveraged Buy Out models which will also incorporate the debt into future cashflows to arrive at optimum valuation once you build in exit multiples etc.
  • CEO’s– Financial models are prepared by CEO’s and controllers for both budgeting and funding purposes. Models help finance teams understand cashflow requirements which help them manage their treasury better. Financial Models are also critical to valuing mergers through building in synergy. We call this merger models. Merger models will involve combining the future cashflows of two companies to understand synergy potential that arises out of various economies of scale. This synergy calculation will help in valuation and calculation of control premium
  • Equity Research- Financial Modeling and Valuation is a critical element in the Equity Research toolkit. Equity Research analysts do fundamental analysis to help recommend a ‘buy’ ‘sell’ or hold on a stock. They do this by understanding the industry fundamentals, doing porter’s analysis, and applying these dynamics to a Financial Model which will help them value the company down to the price of a share at any point in time. Their expertise in an industry helps them fine-tune the model.

Financial Modelling and Valuation is also critical to project finance, corporate banking and essentially any role in Corporate Finance which makes FMVC the most career orientated financial modeling course in Mumbai and the most seful certification to help you enhance your resume and kick start your career.

Overview of Careers in Finance

Posted on by Imarticus Learning

The field of Finance is often said to be all about the science of money management. A career in Finance would entail coordinating between assets and liabilities. The finance industry is popularly known to provide lucrative careers and demand intellect of the highest order. As a rule, this prestigious industry attracts a lot of aspirants looking for a career with great opportunities.

Possession of just a graduate degree thins the chances of getting into this field. Thus, it becomes important to either be an MBA or have a higher degree to guarantee a smooth entry herein. There are many courses like certification programs in investment banking, courses in corporate finance and so on. There are a lot of programs offering training to clear various finance exams and acquire certain designations and licenses. Lately a lot of institutes have started offering programs to clear the CFA exams (Chartered Financial Analyst) as well as for the license required to enact certain kind of transactions. One can go for any such short term or long term course to enhance their resume and better their career prospects.

Investment Banking is the most sought after career in Finance. Today, Banks are no longer limited to being agents of withdrawal and depositing of money. There are many types of banks like the investment banks, which act as financial advisors to firms, hedge funds wherein the money of wealthy individuals and companies is managed, the difference here is that there are huge risks taken when it comes to buying and selling public stocks.

Then there are Private Equity firms, which instead of buying securities (stocks) by entire corporations and make convert them into private entities. These firms then either get the corporation entirely under their own banner, or improve their financial situation to earn profits. There are also real estate firms which have their dealings in buying or developing already existing real estate projects. There are firms which deal in ‘real money’ which go on to invest money in various firms to reap the benefits of the same.

There are a lot of roles that a career in Finance offers and a college degree is not always required for them. There are a lot of aspirants, who tend to start off a stint with banks and then after a considerable experience, move on to get a MBA degree. It is imperative to know that investment banking jobs usually have cut-throat competition and roles here include mergers and acquisitions, providing financial advices in terms of financial modeling, evaluation of the firm and so on.

Financial analyst and Financial Advisors also are jobs of substance, if one is very interested to work with data and draw relevant insights; the former career is always preferred. The job profile of a Financial Advisor, with the flexibility of the work and the proximity to the clients as well as the fact that the competition is less, is chosen by quite a few. There are many other career profiles like working for hedge fund firms, private equity firms, portfolio managing jobs, trading, analyst jobs etc. There are also Investment Banking Media jobs, where someone with great communication skills and a sparkling knowledge of the market can work with media houses.

The field of Finance offers high quality careers which demand individuals with great intellect and motivation, in addition to the challenging environment and great compensation. The fact that there is such high competition to get into this field, goes to prove that one needs to have refined skill set for the same.

Imarticus Learning is a renowned education institute offering a host of short term and long term courses in investment banking, corporate finance and more.

Boosting Your Career Through a Diploma In Corporate Finance

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Have you been reading the headlines lately and wonder what does it mean when they said Flipkart acquired Myntra? Did they merge? Was it an acquisition? When do they mean when they say company ‘X’ was valued at 3 times GMV? What is Gross merchandise value? Why three times? Why a multiple at all? What on earth are multiples? I would like to be part of this world.
The world is Corporate Finance, an all encompassing term that deals with sources of funding and analyses the capital structure of an organization and provides you with tools to increase share holder value and allocate financial resources effectively so that you get maximum return on your investment. So questions like, should I make this steel plant or buy it? Should I create this web portal or should I buy a competitor. We would then do cost benefit analysis, which would tell us, which would be the route that results in a better return on our investment and increase shareholder value. How does shareholder value increase? That’s part of our classroom series but that’s what you would learn in a Diploma in Corporate Finance (DCF) at Imarticus Learning.
Corporate FinanceA Corporate Finance Diploma in India and globally is usually broken down into two parts. The first part will deal with Corporate Finance Theory and Techniques because Finance is, as you probably know, very technical. Practical application is extremely important but is not possible without understanding the Fundamentals of Corporate Finance. For instance you really cannot value a company without understanding the impact of Time Value of money. For instance why is one rupee today more valuable than one rupee down the line? And if that is the case, my company cashflows down the line will be worth less today. I need to bring those cashflows forward, after factoring in that impact of time on them, add them all up and come to a value for my company. The factor is called a discount rate and we arrive at it by understanding how we have funded the business and the cost of funding the business. Lost but interested?
Fundamentals usually begin with a thorough understanding of Accounting Theory and Financial Statement Analysis, Valuation, the concept of Debt and Equity and capital structure, M&A and Asset Disposal ending with Regulations and Ethics. Once we appreciate the fundamentals, we begin to apply it to the real world. The second section will usually be dedicated to understanding Corporate Strategy, why companies exist and how they make money. You will then move on to how companies grow and the various vehicles they use for growth, which will then move into applying what you learnt in section one to various companies and markets to understand how to create and measure shareholder value and the ways in which shareholder value can grow.
For more information on Diplomas on Corporate Finance in Mumbai and online, please visit https://imarticus.org/finance-courses/ .

Listening: The Forgotten Managerial Skill

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by Zenobia Sethna.
In this age of self promotion, most people don’t tire of hearing their own voices – gloating, complaining, advising, gossiping, what have you. Skills such as listening need to be trained in soft skills training courses. So, if you are the rare one who truly, actively listens to others, and does not talk much, you will stand out. Think about it – people pay a shrink good money to listen to their problems, cause its so rare in real life.
The Dalai Lama said, ‘When you talk, you are only repeating what you already know, but when you listen you may learn something new.’ Just one of the many benefits of listening. Your boss or your subordinates feeling heard and acknowledged, which would make them trust you more, is another.
Most people do not listen with the intent to truly understand, but rather with the intent to reply. And just because you’re quiet and you let others do 75% of the talking, doesn’t mean you’re a good listener either. A powerful listener is able to pay attention to what another person is saying without getting distracted with their ego or personal agenda.

So how do you sharpen your listening skills?

  • When interacting one on one, give the other party your undivided attention. Yes, that means stop fiddling with your damn phone and put it aside. The texts and phone calls can wait. Really.
  • Don’t interrupt. Let the person speak freely. The goal is to shine the spotlight on them, not you.
  • Truly be “present,” instead of daydreaming or thinking about something else.
  • Make direct eye contact with the other party and lean in / forward to show you are interested. Likewise don’t distract the talker (and show you are bored) by cracking your  knuckles, fidgeting, swaying your legs, or worst of all, yawn.
  • Pay attention to the body language of the talker – we know as much as 80% of communication is non-verbal. This is the number one lesson taught in investment banking schools in India. In other words, you can master the act of listening, but won’t be a good listener if you can read body language. ‘The most important thing in communication is hearing what ISN’T said’, said Peter Drucker.
  • Forget outdated advice that tells you to repeat statements that you just heard, in order to show the talker that you were paying attention. Something like “So, Tenaz, what I hear you saying is that Geeta’s work is really poor?” Really? What’s the point? Repeating exactly what you heard a minute ago makes you sound like a parrot. Instead, stop repeating and offer some analysis or your interpretation of what the talker just said. Something like “So what you are getting at is that you may have to fire Geeta…”
  • You can show you’re in sync with what the person is saying by using “yes”, “yeah”, “mhmm”, “okay” occasionally.  This sounds trivial, but it’s important to not act like a zombie and demonstrate some interest and comprehension.
  • Open the door to deeper communication by asking open ended questions that encourage reflection and interpretation.
  • Validate what you heard. Listening keenly does not mean you have to agree with everything you hear. You can disagree and even express your disagreement. You only need to show the other party that you value their opinion and they feel validated for expressing how they feel.

A wise man said ‘God gave you two ears and only one mouth.’ That surely ought to tell us something.
Imarticus Learning is India’s leading education institute, offering certified industry-endorsed training in Financial Services and the Analytics Domain. Each course also has a module on soft skills training.