The Chinese firm Alibaba Group Holding Ltd., recently sold Alipay.com Co. Ltd. Alipay is China’s largest online payment processor, and was 100% owned by Alibaba. The sale went through without the knowledge or approval of the board of directors or shareholders.

Yahoo, who owns a staggering 43% of Alibaba, saw its share price drop almost 12% since the announcement of the sale. Alibaba stated “That in order for it to get the Chinese governments approval for an operating license for Alipay, its shares must be owned 100% by Chinese citizens.”

Doing business in China kinds of reminds one of the wild, wild, west, where anything goes, at anytime. The first question that comes up when you read these kinds of statements is, “Since Alipay already had an operating license, why did it need to spin off from its parent company?”

Of course, they didn’t, but the people behind this extremely shady deal, could have not made the kind of money they did, without some kind of excuse.

The following article is a review of the book, “Frequently Asked Questions in Quantitative Finance”, which is published by (Wiley Series in Financial Engineering) (Paperback), and written by Paul Wilmott.

This book is certainly not for the novice, who is new to the quantitative finance arena. It is for the professional that possesses exceptional mathematic skills, who really needs to understand everything there is about this industry at the highest possible level.

The people that will find it most useful are individuals whose work is concentrated on fixed income or derivatives. Other people who certainly should read this book are the ones looking for the first job in this discipline, or professionals that are already in it, who want to refresh and enhance their knowledge.

It is written in an unusual format, because it first asks a question, and then answers the question, and this configuration is repeated throughout the book. The book provides both a long and short answer to each question. Following each answer to a question, the book also provides references for you to review further if you require more detail information about that particular topic.

Counterparty risk has been increasingly popular largely due to the recent credit crisis (a crisis timeline was shared at an older post credit crisis timeline), however, most of valuing, hedging and securitizing counterparty credit risk involves Monte Carlo simulations, we have to be careful to make sure those simulated measures are arbitrage free. Below is a great paper talking about Mathematics and the software architecture of a risk system that includes counterparty risk and guarantees the measures are coherent.



A working paper is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1844711.

This is a Sponsored post written by me on behalf of Flat World Knowledge. All opinions are 100% mine.

  Flatworld Knowledge is a company that has developed a software package that allows for the editing, inserting of data, and rearranging of digital textbooks. The principle beneficiaries of this creation will be the professors who will now be able to take a standard textbook, and customize it to meet exactly what they intend on teaching in a class.

  Most of us that have taken college level courses know that the professors sometimes skip chapters completely, teach them out of order, leave out sections of a chapter, or require other material outside of the textbook to be read and studied as part of the class.

  Flatworld Knowledge’s new software package will now allow them to put all of the information they intend on instructing in the precise order that it will be presented to the students. The student will be able to access their new textbook’s using the iPad, Kindle, other digital media readers, or computers.

  The textbook customization will be available in a multitude of formats, including an html textbook, pdf files, epub., and mobi. These formats will allow the students to insert notes when necessary, print out the textbook, or view different types of multimedia.

  The firm behind this highly imaginative approach to learning, Flatworld Knowledge has risen over $27 million in venture capital from investors like BDMI and Bessemer. The textbooks themselves will need to be licensed from the firms holding the copy-writes to them, and Flatworld Knowledge will then pay them a fee based on negotiations done in the future.

  The US textbook market alone is worth over $8.5 billion each year, and presently there is not a consensus on what effect this type of system will have on it. They intend on offering books that can be read online for free, formats that can be printed out will be $35, and all other formats will be sold for $25.

  It is pretty easy to see that Flatworld Knowledge’s present business plan is going to face a major uphill battle from the leading publishers in the textbook industry. College students are for the most part, are always broke, and extremely computer savvy. It will not be too long before one of them figures out how to purchase a book, and then circulate it around the entire classroom for free.

  There are quite a few more problems and questions surrounding this approach that will need to be solved before Flatworld Knowledge business model will become a financial success. Some of them are the following. First, why would a large textbook publisher ever license their products to them?

  Second, someway must be devised that ensures each student is required to purchase a textbook for each class. Third, will the present textbook publishers license the software from Flatworld Knowledge, instead of allowing them to license their books?

  Fourth, will the present textbook publishers just develop their own software systems? Fifth, will Flatworld Knowledge be forced to have textbooks written for them? Sixth, if Flatworld Knowledge is forced to have textbooks written for them, are they so far behind presently in the area, that they will never be able to catch up?

  There is no questioning the fact that Flat World Knowledge has an excellent idea, which will reduce student’s textbook expense in the future. However, that being said, having an excellent idea, and being able to turn it into a financial success, are two completely different scenarios all together.

This article is a short review of the book “Quantitative Trading Strategies: Harnessing the Power of Quantitative Techniques to Create a Winning Trading Program”, which is published by McGraw-Hill Trader's Edge Series, and was written by Lars Kestner.

This book is more for the person who is just beginning their career in quantitative trading, as opposed to the old-time experienced professionals. It is not too technical, therefore most people should find it is quite easy to read and understand.

In it you will learn some of the following, MACD under price oscillators, channel breakouts, dual moving average crossover, relative strength index stochastics, volatility breakout, and momentum trading.

Many of these approach’s where heavily used in the industry twenty years ago, and may not be viable options today. That being said, understanding the fundamentals of any discipline is extremely important, and learning a little bit of history never hurt anybody.

If you are using a software package like TradeStation, the book will teach you methods that you can utilize to develop your own computer code and trading system with. However, the book itself does not supply any code. In the book you will learn how to start with a simple straightforward concept, which later you can use to create a tool based on your own individual philosophies and personality.

There is very little, if any mathematical examples discussed in the book. Instead, the author attempts to supply you techniques or theories that you can utilize to cultivate your own models with. Probably the most important strategy you will learn in the book are “Money Management” skills, which are instructed based on the writers pass experience in this industry.

The final review of “Quantitative Trading Strategies: Harnessing the Power of Quantitative Techniques to Create a Winning Trading Program”, is neither positive or negative, since the value you receive from it will largely depend on what stage in your career you are at presently. If you are a hedge fund manager that has been doing quantitative trading for many years now, you will probably not get too much from it. If you are just starting to take an interest in this subject, you should probably acquire the book, since it will teach you a great deal of background information you will need to advance yourself in this industry.