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The day I spent 5 hours with Robert Merton and everything was explained

Thanks to the Fisher College of Business, I met one of the of legends of Modern Finance – Robert C. Merton!!

Dr. Merton started by defining how he, Fisher Black, and Myron Scholes discovered valuation model of Options (Black Scholes Model). They started with Put option which he defined as a VALUE INSURANCE. The call option is derived from the put option by put call parity. It is the contract when you

buy an asset,

by borrowing money

and insuring the asset.

So, you pay just the insurance premium and have the complete upside of the asset with the insurance taking care of the downside!!

So, a call option is the sum of three functions:  f(asset) + f(leverage/loan) + f(premium for value insurance/put option)

He went on to talk about different types of option and their applications – information, market timing, HFT, Project Finance, Patents, Labour, Tenure, Training, HMO, Pay for view, Behavioral Dysfunction- Regret Insurance, Kenneth Arrow Risk, Option strategies, Butterfly, Digital, Real Options, Drug Discovery Phase, Movies, Public Policy, etc.

One of the most interesting was the Behavioral Dysfunction- Regret Insurance – Sometimes you lose money on a financial instrument (stocks for example) because you were emotionally attached to the stock and could not sell it at the exact price you wanted. The Lookback option gives you the right to sell the stock for the last 1 year(some time frame)’ s best price which takes away the regret from your sell.

He also talked about Long term capital management, subprime crisis and the recent financial regulation.

He also explained that financial innovations are based on models – and models are based on real historical cases and bounds to fail it times. Models depends on three things:

(1) Model

(2) User of the Model

(3) Application of the Model

So, when we evaluate financial models, we have to take the above three in consideration.

He finished by saying that innovation in financial instruments has been the best thing that has happened to society and with the increasing uncertainties, there will be a greater need for new financial instruments – which will be good for society.

The analogy he used was the 2 wheel drive vehicle and 4 wheel drive vehicle and winter in Ohio, which is snowy and cold. 4-wheel drive is safer than 2 wheel drive in winter. It was noted that after the innovation of the 4 wheel drive, the number of accidents increased. Later on, after doing a lot of research, it was found why the fatalities increased with the innovation of safe tool. The reason was that because of the innovation of 4 wheel drive, those people who once never went driving in the winter started doing so and though the innovation helped the society in giving access to increased travel, even in winter – it led to more accidents as people started taking more risk with the new tool.

New inventions leads to accidents(crisis) and crisis leads to new discoveries.

Meeting with Prof. Merton was really an inspirational experience!!

______________________________________________________________________________________________________

For the uninitiated, Robert Merton is the Father of New Age Finance – Economics Noble Laureate 1997.
Known for
Black–Scholes model
ICAPM
Merton’s portfolio problem
Merton Model
Jarrow-Turnbull model
Long-Term Capital Management

http://en.wikipedia.org/wiki/Robert_C._Merton


Just say no!!

When it comes to vertical integration and diversification, corporate strategy is usually a lot like drugs . . .

Just Say No!

— Jay Barney

Its good to be back to Fisher after a short summer!!

The quarter started with Prof. Barney’s strategy class which is also known as Advanced Strategic Management. Its a very popular class and it gets house full before summer. Some students don’t get to sit in the class only because they registered late. So, register as early as possible!

For the first class, we had to read 4 chapters from his book “Gaining and Sustaining Competitive Advantage” and a business novel “What I Didn’t Learn in Business School: How Strategy Works in the Real World.” Both the books are simply “a must read.”



The class was an introduction to Strategy and it was very elementary. He was trying to answer a very basic question – He has a lawn and he needs to mow it. What should be his strategy? Should he vertically integrate or not??

We discussed various strategic ideas and frameworks to solve “lawn mowing” problem. The class was easy and an “eye opening” experience.

The irony was that after all the strategic considerations, it was obvious for the Barney family not to vertically integrate, but Mrs. Barney still mows the lawn. That is the problem with most of the businesses – It always bottoms down to HR problem!!

It was a great way to start the quarter! Looking forward to the rest of the learning and fun.


Graduation Celebration for the Fisher MBA Class of 2010

This weekend the Fisher MBA class of 2010 graduated. It was a grand celebration. Everywhere there were happy smiling people. On the Thursday night before graduation, there was the graduate crawl. During the “crawl,” graduate students hop from one pub to the other meeting and talking with everybody. They wore white t-shirts, so that everybody could write on them and wish them luck in their transition into the professional world. It was great fun!

Then on Sunday, graduate students gathered at the stadium for the commencement. It was a great sight!

Commencement@OSU

Commencement@Fisher

They worked hard for 2 years to reach this special moment!

Best of luck to the graduate students of Fisher and OSU in their journeys into the professional world. I am sure they will make this world a better place to live each and every day.


Fisher Follies

Please watch this video before you read about Follies.

Fisher Sabotage

Follies is awesome and it’s very hilarious. It is one of those days when we get to bash our professors and make fun of things around Fisher. Don’t worry, we are allowed to do that.

This years attraction was Melissa and her gaga dance, Scott Armul’s hilarious acts. Mike Thomson and singing. There were a couple of exciting videos, you can see the link below. I will recommend you to watch them.

Fisher Diploma

The 24 Experience

The event took place at the new Ohio Union. There were snacks for everybody.

After the follies we went to a pub. There we talked with our classmates, danced with them and it was night worth remembering. That day, it was  also Prasant’s birthday. So we gave him a surprise party at Mad Mex. He  was utterly surprised as he never knew we were secretly planning his birthday.


Utsav

Utsav is the most exciting event of Fisher College of Business. This is an IMBA event. It is an event of dance, music and fashion. There is lot of Indian food. The whole B-school gets crazy about the event. Every year, we do it in front of the Fisher hall, but this year there was rain because of which we needed to shift it to the Mason Hall rotunda. The space was a bit small compared to the Fisher hall patio, but the small space created a very intimate space.

There were songs and dance in Bollywood style. Then there was the fashion show. In the fashion show, we have the professors walking with the students to showcase their clothes and their style. It was really very cool to watch our professors dressed up in Indian traditional clothes.

The food was amazing. It was during lunch time, so all the faculty and students could come together to watch and eat at the same time.

Looking forward to the next year’s Utsav.


Fisher Formal

Fisher Formal is the prom-like event for the graduate students of Fisher College of Business. It was on Friday night in mid-May in downtown Columbus. Most of the second year and the first year graduate business students were present at the event. Part of the venue was outdoor and part of it was indoor. We kept meeting all our classmates. All were dressed to kill. It was such a unifying event. We kept talking for hours about all the exciting things that has happened to us through out the year. We also talked about the exciting new year that is going to come.

The excitement of the second year students was worth mentioning. They were euphoric. This was one of their last few days in B-school and they were so nostalgic about their stay at Fisher.

There were lots of drinks and a lot of music. There was a live band playing. At midnight, everyone started dancing. The space was crowded. Because everyone were our classmates, it felt very intimate. We kept dancing for a long time. The whole night was once-in-a-lifetime experience and it was a whole lot fun. Looking forward to next year’s Fisher Formals.


Echoes from Fisher WPMBA – Erik Speicher

This quarter, I was blessed with a very good friend in Erik who is a Working Professional MBA and I will like to bring his perspective of Fisher to the world outside. We were group members for one of the finest classes this quarter – Risk Management by Prof. Rene Stulz. Prof. Stulz gave us some really engaging assignments and we worked together over the weekends to get over those. It was a great experience!

Without further adieu, let me pass it over to Erik.

Every new beginning comes from some other beginning’s end.” — Seneca, Roman Philosopher, Statesman and Author (c. 4 BCE – CE 65)

In September, 2008, I was a 44 year old man starting my MBA program at the Fisher School of Business.  It had been 21 years since I had left the hallowed halls of Ohio State with my liberal arts undergraduate degree, and now I was back for the sequel.

I was nervous about how the other (and younger) MBA students would accept an older colleague in their midst.  Would I be written off as irrelevant?  Would I be ignored?  Would I be considered an aberration or even a joke?

As the first few quarters rolled by, however, I quickly realized that I had far more in common with the other students than I had initially believed.  We were all going through same MBA ordeal with core courses, group projects, midterms, papers, and final exams.

I also noticed that I gravitated towards the same group of students.  These were what I called the MBA misfits.  By misfits, I meant that we were all unlikely candidates for business school.  Most of us had liberal arts, science, or other non-business undergraduate degrees, and each of us, in our own way, took a circuitous route in our careers which led us to Fisher.

My interactions with these colleagues reassured me that my presence in business school was not an aberration, but a trend.  More and more business schools were diversifying their enrollment to include people from non-business as well as business backgrounds.  Each group had much to teach and share with the other.

In like manner, as an older student, I had much to offer and share with my younger colleagues regarding my successes and failures in the “real world.”  They, in turn, have impressed me with their serious dedication, focus, and professionalism.

Fisher marks the beginning of a whole new chapter in my life.  In just six months, I will conclude my studies, and my goal is to become an analyst with the federal government.  You are never too old to begin again!

Best wishes to all my Fisher colleagues in their academic pursuits.

Erik Speicher

MBA Candidate Autumn 2010

Fisher College of Business


Prof. Jay Dial receives Ohio State 2010 Alumni Award for Distinguished Teaching

I can be proud of the fact that I was part of one of the most exciting moments in Fisher College of Business’s history.

It was usual Tuesday and I was sitting in my strategy formulation and implementation class, which was being taken by Prof Dial. We were doing the Zara case. We were trying to understand the intricacies of the global clothing giant Zara when suddenly, just after an hour of class, the classroom opened and President of OSU, Gordon Gee and team walked in. Wow! What is going on? There were a video cameraman and university photographer. There was Prof. Dial’s whole family – Aparna Dial and son. There were Prof. Karen Wruck, Prof. Jay Barney, Provost Joe Alutto, Alumni Association President Archie Griffin and Fisher Dean Christine Poon.

We were all excited. President Griffin presented Dial with the “Academy of Teaching” medal.  It was a big surprise for Prof. Dial. It was a really inspiring moment for us. The students who nominated him were also present. Everyone spoke in the heat of the moment. “He is truly one of our most distinguished faculty and teachers,” said Gee, who read from one student’s nomination essay: “ ‘He works our butts off and I learn a tremendous amount from him. He’s the best.’” Prof. Dial got so thrilled that he let us go that day. But he said that he is going to give us bonus learning later.

Prof. Dial is an amazing professor. His classes are very engaging and every case that he teaches has a twist at the end which most of the time reveals itself as we discuss the case. It’s an experience worth going through. He taught us the Porter’s Five  Forces, Barney’s VRIO Model, Ghemawat’s Willingness to pay model, Game Theory in Strategy, Judo strategy and so many effective models in strategy in the simplest story- like fashion. After every class, he voluntarily spends a lot of time talking with us about general things. His ideas are refined and inspiring.

He teaches a class called Intopia in winter which is a lot of work, but is very popular among students. I am looking forward to that class.

Prof. Dial – Congrats and Thanks for everything!


Fisher & OSU @ Summer


Fisher Follies to Dinner at Bendapudis

Last week we went to Neeli’s place for Dinner.

Neeli Bendapudi is the marketing professor at Fisher College of Business. She took the core mcourse in marketing for us. She is also the Director of the IMS (Initiative for Managing Services) organization at FCOB. She is a mesmerizing speaker, a multinational knowledge bank and an inspiring professor.

Its always exciting to be at or around Neeli’s. Love and knowledge keeps pouring in every second. Neeli regularly throws a party for the IMBA (Indian MBA Association) and I was part of that trip in my first quarter. It was a memorable experience.

This visit had an interesting story attached to it.  The story goes on like this:

In Fisher , there is an event called “Fisher Follies” where we get to bid and we get to auction different goods and services. It’s like a real market, but the only difference is that all the money goes to welfare (non- profit organization).

I thought if there is a market at play, as an ardent fan of economics, I should sell an economics book. I bought the book “Freakonomics” by Steven Levitt. I also got it autographed by one of our very finest finance professor Karen Wruck and put it up for auction. The price of the book was $ 14 and it got sold for $ 36. Some were selling dance lessons. Some were selling dating escorts. One was selling his haircut – you can give him his next haircut.

So among all these, Neeli was auctioning a dinner party at her house. We could not resist it. We teamed up together and bought the deal. There were two parties bidding for the deal and at the end we won. Later on we also invited the runners up bidders to join us for the dinner (after taking consent from Neeli).

The dinner party was awesome. We had a caterer serving us drinks and food. We played games. Prof. Venkat Bendapudi showed us his collection of bikes and scotch. We watched movie at her home theater and it was a once in a lifetime experience.

Looking forward to next year’s Fisher Follies Auction!


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