Finance-isms

13 Feb

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My most recent homework in Finance, courtesy of the Pearson platform (which can send you into a panic if you miswrote something because now, you have the “final” check), elicited a lot of complaints from my Finance class. For one thing, all our homeworks have been painfully hard and time consuming. But this took the cake: 1-2 hours each for 4 of the questions. And my super cool professor says (paraphrased, obviously):

“Look, I’m not your boss. If you don’t finish your homework, I’m not going to fire you but if you want the points, then you go for it. At some point in a 1-year MBA and in life, you have to learn to prioritize. The homeworks are there for you to learn.”

And I’ve been turning those over and over in my head. I have just been exhausted – partly because of all the changes, the commute but mainly from being sick. When I started the MBA, I wanted to focus on learning and the A’s were simply fringe benefits. I want that focus back and get away from this grades mindset. Anyway, this is really about Finance-isms that my professor has come up to explain some concepts. I promised myself I’ll document them just for laughs.

On the differences between Chapter 7 and 11 bankruptcy:

“Imagine you buy a cow and you borrowed some money to buy that cow. Well, you realized you couldn’t pay for that cow and your creditors start asking for money, so you declared bankruptcy. In a Chapter 7, you realize that the only value of the cow is in its individual parts. Let’s say, you can sell the liver. So you cut up the cow and the creditors get the pieces. In a Chapter 11, maybe the cow can still give you some milk and you can sell that milk. So you keep the cow alive until you squeeze all the value out of it.”

On using formulas for stock valuations:

“In the original Grimm’s Cinderalla, when the footman brought out the silver slipper for the stepsisters to try on, they cut off their feet to try to fit in the slipper. It’s bloody and messy.”

On evaluating the NPV of the base scenario and the proposal:

“People say that the base scenario is the status quo and that’s simply not true. The base should take into account the consequences if you don’t take the proposal. Let’s say you’re driving, and there’s a brick wall ahead. Do you veer off and hit the ditch or you cruise along? The status quo in that situation would be that you keep cruising so you don’t get to hit the ditch. That sounds good if you completely forget the brick wall ahead. The real base proposal is that if you continue to cruise along, you’ll hit the brick wall.”

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5 Responses to “Finance-isms”

  1. extremestan February 13, 2013 at 10:27 am #

    Awesome way to communicate finance concepts.!

    • lgc-c March 2, 2013 at 5:37 am #

      Exactly, this is surprisingly my favorite class right now.

  2. S. February 13, 2013 at 3:50 pm #

    A good way to simplify and much funnier …. love it 🙂
    S.

  3. Cielo V. Capitan February 14, 2013 at 3:18 am #

    This gives us a peek into your classroom/studies; appreciate it! No wonder you enjoy and love it. Would have loved it myself – but no illness and commuting, please! Love you!

Trackbacks/Pingbacks

  1. Limbo | A Whisper - April 12, 2013

    […] I find myself with 2 courses. One of them, Finance, I was starting to like because of my fun professor last module but now I’m dreading because I don’t know where my current professor is leading us. The […]

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