Hedging simplified!!!

Hedging a stock price
A stock trader believes that the stock price of Company A will rise over the next month, due to the company's new and efficient method of producing widgets. He wants to buy Company A shares to profit from their expected price increase. But Company A is part of the highly volatile widget industry. If the trader simply bought the shares based on his belief that the Company A shares were underpriced, the trade would be a speculation.

Since the trader is interested in the company, rather than the industry, he wants to hedge out the industry risk by short selling an equal value (number of shares × price) of the shares of Company A's direct competitor, Company B. If the trader was able to short sell an asset whose price had a mathematically defined relation with Company A's stock price (for example a call option on Company A shares) the trade might be essentially riskless. But in this case, the risk is lessened but not removed.
The first day the trader's portfolio is:
Long 1000 shares of Company A at Rs.1 each
Short 500 shares of Company B at Rs.2 each
(Notice that the trader has sold short the same value of shares.)
On the second day, a favorable news story about the widgets industry is published and the value of all widgets stock goes up. Company A, however, because it is a stronger company, goes up by 10%, while Company B goes up by just 5%:
Long 1000 shares of Company A at Rs.1.10 each: Rs.100 gain
Short 500 shares of Company B at Rs.2.10 each: Rs.50 loss
(In a short position, the investor loses money when the price goes up.)
The trader might regret the hedge on day two, since it reduced the profits on the Company A position. But on the third day, an unfavorable news story is published about the health effects of widgets, and all widgets stocks crash: 50% is wiped off the value of the widgets industry in the course of a few hours. Nevertheless, since Company A is the better company, it suffers less than Company B:
Value of long position (Company A):
Day 1: Rs.1000
Day 2: Rs.1100
Day 3: Rs.550 => (Rs.1000 – Rs.550) = Rs.450 loss
Value of short position (Company B):
Day 1: -Rs.1000
Day 2: -Rs.1050
Day 3: -Rs.525 => (Rs.1000 – Rs.525) = Rs.475 profit
Without the hedge, the trader would have to lost Rs.450 (or Rs.900 if the trader took the Rs.1000 he has used in short selling Company B's shares to buy Company A's shares as well). But the hedge - the short sale of Company B - gives a profit of Rs.475, for a net profit of Rs.25 during a dramatic market collapse.

source wiki

Hedging can be done effectively using a single company shares and its call or put option on different rates.

Independence Day 63 years back!

"Long years ago we made a tryst with destiny, and now the time comes when we will redeem our pledge, not wholly or in full measure, but very substantially. At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends and when the soul of a nation, long suppressed, finds utterance.... We end today a period of ill fortune, and India discovers herself again."

- Jawaharlal Nehru(Speech on Indian Independence Day, 1947)

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HOW to write an RFP?

Components of a Typical RFP
Organizational Overview: XYZ Company was founded in 1889 to provide insurance and investment opportunities to rural families and businesses. Currently, XYZ has 1.4 billion dollars of policies in force, with offices located in fourteen states. At the present time, XYZ has 1,243 consulting sales agents serving approximately 180,000 clients.

***THIS SECTION WOULD CONTAIN SERVICE DETAILS***
Service Description:
Requirements:
Required Deliverables:

*********************************************************
Assumptions and Agreements
The project must be completed by ___________.
A preliminary budget for this project has been approved.
Vendor bids may not exceed INR150,000.
ALL task/job/policy data will be current and approved as such by XYZ management.
Training course materials loaned to the vendor and produced by the vendor will be in standard UK English.
ALL technical illustrations, drawings, and schematics to be included in the course will be approved and provided by XYZ.
XYZ will appoint one person, with decision making authority, to serve as a project coordinator/manager. XYZ will provide appropriate support documentation for the successful completion of the project.
There will be no significant changes to the task/job/policy data during the project. The vendor will provide technical support to the XYZ support staff once the program is distributed. The tutorial and ERL will be written as intranet applications.
The vendor shall warrant that on delivery, all media containing the instructional content of the program and ERL are free of material faults and processing errors.
At the conclusion of the project, all materials developed by the project team will become the exclusive property of XYZ. In addition, any and all work sheets and other working documentation will also become the property of XYZ.
When applicable, travel and lodging will be billed at cost. Ground travel will be billed at the standard rate used by XYZ. Air travel will be by coach with an airline. Lodging and meals will not exceed Rs.5000 per day. All postage and shipping charges will be billed at cost. All telephone and data transmission charges will be billed at cost.
Billing for services and products completed will be submitted at the end of each month.
Billing for travel, lodging, meals, postage, shipping, communications, et cetera, will be invoiced separately at the end of each month.
Required Proposal Format: The proposal must contain a (1) Technical section and (2) a Time-Cost section.
Technical Proposal: In the Technical section, the vendor should include time-lines, projected required personnel, and schedules for completing the project.
Time-Cost: In the Time-Cost section, the vendor must detail the time and costs that will be required to complete the project.
Additional Documentation (optional) :Vendors must include a short demo or direct us to an internet site which demonstrates their production capabilities.
Request for References (optional):
Submission Deadline: Month Day, Year
Submit Proposal To: Decision Maker Vice President for Training and Development
For Additional Information or Clarification, Contact: Assistant Decision Maker
Basis for Award of Contract: Lowest Bid
Award Date: Month Day, Year

No Bid Offer letter

What is a No-Bid Letter?

No-Bid Letter definition
A no-bid letter is a letter to the organization that invited you to bid or submit a proposal, notifying them that you will not do so. To remain potentially involved in future opportunities, the provider should state in the no-bid notice the reasons for declining such an invitation.
Before even writing a no-bid letter, you have to decide not to bid. This decision is the result of an analytical process, the bid/no-bid analysis, also called the bid/no-bid decision process.

Bid/No-Bid Analysis

The no-bid letter is sent after having performed a bid/no-bid analysis. The bid/no-bid analysis assesses (quantitatively, qualitatively, or both) all risks inherent in submitting or not submitting an offer. The analysis process relies on building a list of relevant questions, called the bid/no-bid checklist. On the basis of this checklist, a bid/no-bid analysis matrix will be created, which will determine the worth of sending a bid. If the decision is to bid, a letter of intent will be sent to the purchasing officer. If the decision is not to bid, then a no-bid letter, explaining the reasons, will be sent.

How to stay in the Bidders List

The no-bid letter is the critical factor in remaining on the bidders list, and thus ensures future business opportunities. For the contracting officer who sent you the invitation to bid, the no-bid letter demonstrates that, while you are not interested in bidding for a particular project for specific and valid reasons, you are still interested in competing for future opportunities, and want to stay on the prospective bidder list. This is why it's important to take the time to write a professional no-bid letter.

How to write a No-Bid Letter

It is highly recommended that you read the recommendations below in order use the no-bid letter template properly and successfully. Use a formal letterhead. Do not handwrite your no-bid letter. First, your no-bid letter should thank the person who sent you the invitation, for showing interest in the solution your organization is marketing. Next, state the reasons why you are not proposing an offer or bidding. Be specific regarding these reasons. The best way to discover valid, thus acceptable reasons not to bid is to perform a bid/no-bid analysis. This step is the critical factor in remaining on the list of prospective providers. Reiterate that you are still interested in being kept informed about new business opportunities, for which your solution may be well suited, or best suited. Finally, end the letter formally (with sincerely, for example, or a similar polite expression). Sign your name and indicate your title. Be sure to provide correct and complete contact and reference information for future correspondence. Before sending it, make sure your no-bid letter is tactful, respectful, and goes straight to the point. Send the no-bid letter via registered mail. It has to be received before the bid/proposal opening date.
Since things sometimes are a little more complicated, remember to consult a lawyer for information before doing anything.

Product Management

Product management is an organizational lifecycle function within a company dealing with the planning or marketing of a product or products at all stages of the product lifecycle.
Product management (inbound focused) and product marketing (outbound focused) are different yet complementary efforts with the objective of maximizing sales revenues, market share, and profit margins. The role of product management spans many activities from strategic to tactical and varies based on the organizational structure of the company. Product management can be a function separate on its own or a member of marketing or engineering.

While involved with the entire product lifecycle, product management's main focus is on driving new product development. According to the Product Development and Management Association (PDMA), superior and differentiated new products - ones that deliver unique benefits and superior value to the customer - is the number one driver of success and product profitability.
Contents
1 Aspects of product management
1.1 Product planning
1.2 Product marketing

Aspects of product management
Depending on the company size and history, product management has a variety of functions and roles. Sometimes there is a product manager, and sometimes the role of product manager is held by others. Frequently there is Profit and Loss (P&L) responsibility as a key metric for evaluating product manager performance. In some companies, the product management function is the hub of many other activities around the product. In others, it is one of many things that need to happen to bring a product to market.

Product planning
Defining new products
Gathering market requirements
Building product roadmaps, particularly Technology roadmaps
Product Life Cycle considerations
Product differentiation
more detail on Product planning

Product marketing
Product positioning and outbound messaging
Promoting the product externally with press, customers, and partners
Bringing new products to market
Monitoring the competition

Who is more dangerous?

A million dollar question!!

Election is at the door steps and we all will have to decide our future by selecting the right ones. This was the inspiration for me to start writing something like this.
I have read some article related to Jagadish Tytler and Sajjan Kumar, who were forced to withdraw themselves from the forthcoming LS polls. I think Delhi 1984 was as much of a blot on the nation as Gujarat 2002 was. The referred article was talking about the ruthlessness of selecting these people to contest the polls.
But my take is a little bit different on this. Congress has done some corrective action even it was just a reaction to the shoe hurling at PC. They never wanted to lose out on any votes just because of some candidates. The difference is whether you want to play a hardliner or not. They could have kept the candidates to keep up the false spirit up. They haven’t done that in spite of the fact that they will still not gain anything from this decision.
Let’s check some other issues here.
BJP has never done any such actions against Gujarat riots and they still try to cash on what they have done there. And they will keep on dragging the Hinduthva issue. But I should quote one good thing about them which I found very interesting. They keep up these issues all the time just to blind the voters and not for implementation.
SP is trying to woo poor by telling them computer and English are cancer without even thinking what it does to the Indian economy. We have to remember that it’s a party run by some corporate and their plight by hearing these jokes.
CPM is trying to cheat people everywhere with their false promises. And always run with a single agenda of hate the US. But the comrades often get confused whether ‘US’ is a noun or a pronoun.
These parties try to woo people using their hardcoded ideology which is bad for our living and not worth following, as most of us know. Unfortunately the ‘most people’ I quoted do not use their right to vote properly.
I am not justifying what congress has done here, neither trying to say that they don’t play the politics of caste. (Remember it is not ‘cast your vote’, it is just ‘vote your caste’). I am trying emphasis on why is it against PC and not against Modi or Other separatists. What difference does it make when the culprit is from Congress party or their counterpart in BJP, SP or BSP. The hue and cry is more when it is congress party. So I feel that people still expect Congress party to be fair and less venomous compared to all. This stands true even when you talking about communal outfits or Ideological Idiots (No prize for guessing the party). The expectations from these parties are limited and which require no imagination. Moreover what to expect when leaders themselves want to go to Stone Age and caste based socio-economic system.

Note: If you feel that I am supporting any political party and I am biased in my blog, It is purely intentional. If you disagree with any of these points you can as well write comments against it. :)