Finance - Theory vs Practice

Finance: Theory vs Practice
Asif Khan, CFA
Deputy Head of Research
BRAC EPL Stock Brokerage
Venue: NSU
Date: March 21st, 2015

2
“Theory is when you know
everything but nothing works.
Practice is when everything
works but no one knows why.
In our lab, theory and practice
are combined: nothing works
and no one knows why.”

4
In Finance, theory is important

5
In Finance, theory is important
Classrooms are like windows

9
Non Financial - Sectors
 Unilever
 Marico
 Nestle
GSK
FMCG Industrials Services
 Lafarge
 Heidelberg
 BSRM
 Grameenphone
 Robi
 Accenture
Others
 Square Pharma
 Viyellatex

10
Non Financial - Roles
Finance and Accounts Strategy and Planning
Treasury Business Analyst

11
Financial - Sectors
Banks NBFIs
Insurance
Brokers
Investment
Banks
AMC
Credit Rating
Agencies
CONTRACTUAL INSTITUTION
DEPOSITORY INSTITUTION
INVESTMENT INSTITUTION

12
Financial - Roles
Front Office Back OfficeMid Office
 RM
 Sales
 Trading
 Advisory
 M&A
 Equity Research
 Risk
 Treasury
 IT
 Finance
 Admin
 HR
 Operations

13
Flight back to theoretical world

14
Basics
Topics
Financial Statement Analysis
 Interest Rate
 Risk and Return
Time Value of Money
Who needs it?
Everybody including non-finance major students

15
Corporate Finance
Topics
Cost of Capital
NPV, IRR, Payback etc
Capital Budgeting
Capital Structure
Dividends
Leasing
Mergers and Acquisitions
Who needs it?
Non-Financial sector (strategy, business analyst)
Investment Institutions

16
Investment Analysis
Topics
Financial Instruments
Portfolio Theory and CAPM
Term Structure of Interest Rates
 Duration and Convexity - Fixed Income
Bond and Stock Valuation
Who needs it?
Investment Institutions
 Fund managers for banks, NBFIs and Insurance

17
Risk Management
Topics
Uncertainty and Risk
 Mathematics of risk
Hedging, Derivatives and Insurance
Credit Risk Management
Who needs it?
 Credit Risk Analysts (Banks and NBFIs)
 Treasury (Banks, NBFIs and non-financial sectors)

18
Bank Management
Topics
Bank Capital Structure and Regulation
Analyzing bank performance
Recent trends in Banking
Bank failures
Who needs it?
 Bankers
 Credit and Equity Analysts

Finance - Theory vs Practice

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