Finance2day - Building a socially friendly finance for business

HOW TO MAKE MONEY IN THE MONEY MARKET

2013-06-28T04:57:00.001-07:00

HOW TO MAKE MONEY IN THE MONEY MARKET

WHAT IS MONEY MARKET?

Money markets simply put are those markets where debts and other securities are traded in exchange for profit (Buyer) and Liquidity or cash (Seller). If you are not familiar with accounting, economics or any business language, you have nothing to worry about.

I have made this report reader friendly by trying as much as possible where necessary to break down any jargon that might make this write up unfriendly (smiles).

WHERE IS THE MARKET LOCATED?

The market is located in financial, debt, capital, money, fund, discount houses, investment management houses and banks without exception of the apex banks (e.g. Central Banks of Nigeria). This group of people makes up the seller and brokers while corporate organizations and individuals make up the buyers. However, roles could be switched depending on the investment type.

WHAT ARE THE INVESTMENT OPTIONS?

- Nigeria Treasury Bills (NTB)

- Commercial Papers (CP)

- Bankers Acceptance (BA)

- Certificate of Deposit (CoD)

- Bonds

- Call Deposit (CD)

- Commercial Papers (CP)

Nigeria Treasury Bills (NTB)

Nigeria Treasury Bills (NTB) is a government way of borrowing money from the public to increase the amount of cash available in the government pause or treasury. It is a government backed or guaranteed debt usually issued by the Apex bank/CBN. This is to say you are lending to the federal government. By guaranteed or backed, means the federal government must make payment to investors at an agreed time.

The payback or maturity period includes; 91 days, 182 days and 364 days respectively. Individuals like you and I, corporate organizations, fund managers and investment boutiques can invest in NTB.

One of the advantages of NTB is that it can be used as collateral for loan and other credit facilities and it withholding tax on it is not charged compared to other investment types. Also interest on it can be paid at any time it is realized upfront at the request of the investor. Another benefit is the fact that it is a low risk investment with high liquidity. You have little to worry on investment loss of value with changing economy as this is also lower.

To invest in treasury bills, visit your bank to get a quote of the available treasury bills which could be as low as ₦50,000.

Commercial Papers (CP)

Commercial papers are unsecured promissory note by an issuer (Corporate body) to the lender (Investor) which states that the issuer will pay the investor a higher amount than was borrowed from the investor at a particular time using a defined interest rate. This is a service offered and arranged by most banks along with overdraft so that corporate bodies that need to borrow more money publicly can do so.

However, CP unlike NTB is not backed or guaranteed by the bank as it is a direct indebtedness the issuer to the investor. So what is the advantage of bearing this much of an investment risk; CP unlike other investment has a very high interest rate that is dependent on the desperation, credit rating and volume of cash needed by the issuer. Investment maturity period ranges from 31 days, 91 days and 364 days respectively.

CP is usually offered at a discount whereby if ₦5,000,000 is issued at 30% interest rate for 364 days, you as an investor are expected to pay ₦3,500,000.

CP carries no withholding tax on interest. However, consider the credit worthiness and capacity to pay of the issuer before investing in a CP.

Bankers Acceptance (BA)

Bankers Acceptance (BA) is usually a short time investment that allows investors to buy into bank draft issued by a corporate body specifying on such that the bank should pay the investor at a particular time the full sum stated on the draft. Unlike commercial paper (CP), BA is guaranteed by the bank even when the issuer or corporate body seems unable to pay. Therefore, this is more secure and less risky when compared to CP. However, it usually carries a lower interest rate when compared to CP but higher when compared to NTB. Investment/Maturity period ranges from 31 days, 91 days, 182 days and 364 days respectively.

BA just like CP is usually paid for by the investor at a discount while he receives the full value on the maturity of the security.

However, it is more secure when compared to CP and accumulated interest can be received before the maturity of the security/investment.

Certificate of Deposit (CoD)

Certificate of deposit (CoD) simply put is an investment/security issued by the investor as a loan to the bank at an agreed interest rate. Interest and principal is only paid at full maturity and cannot be withdrawn before the maturity. However, if there’s need to withdraw investment before its maturity, then the investor will have to pay a penalty fee on the accrued interest.

Maturity period varies from 30, 60, 90, 120, 180 and 365 days. Interest at maturity is subjective to 10% withholding tax.

Bonds

Bonds are securities that are similar to an IOU or indebtedness issued by government or corporation to raise capital to finance its operations. In return for the bond, the issuer agrees to pay the investor interest accrued over the life of the investment. The principal is paid at maturity of the investment. The bond is usually a long time investment and enables the issuer to make finance long time project. There are different types of bonds based on the issuer; corporate bond is usually issued by private and public companies. Municipal and government bonds are issued by both federal and local governments respectively. Municipal bond is exempted from federal and local taxes. Foreign bonds are issued by corporate bodies outside the country in which it operates, while Asset backed bond is a bond backed by a pool of asset.

Bond is a low risk dependable form of investment. Investors include finance houses, pension funds, corporate bodies and high/low net worth individuals.

Maturity date is the date the issuer is expected to pay up the nominal amount that is the amount invested by the investor. This period ranges from;

· Short term – 5 years

· Medium term – 5 to 12 years

· Long term – 12 years

Interest rate could vary from;

· Fixed rate which is a payable at a regular interval on the basis of the investment agreement.

· Floating interest rate which is tied to some economic indicators or factors such as inflation and money market movement. The Nigeria Federal government bond is adjusted based on Minimum Rediscounted Rate (MRR)

· Zero discount rate has no interest paid out. However, it is usually sold at a discount while the face value is paid in full at maturity along with all accrued interest. Thereby giving the investor a two way income. Income tax is usually paid on accrued interest even when it has not been received by the investor.

In my opinion, I’ll consider bonds as one of the lowest risk investment with high net returns.

Call Deposit (CD)

Call deposit is another money market investment that is carried by putting a call through to the bank to place ones fund in a CD. CD is a short term investment and fund can be withdrawn on a short notice to the bank. However, only excess fund is one advisable to invest as this is tied to the banks economy as well as withholding tax deductions.

Investment Decision

Investors are advised to consult their financial adviser before embarking on any investment in money market securities. However, experience has shown that you almost can’t get it wrong with a bond while Commercial papers might be considered the most risky. However, if you go by the common dogma; ‘the higher the risk, the higher the likely returns’, then I’ll advise you to trade based on the level of risk you can take and the certainly on the amount of investment fund you have. I hope this will be of immense benefit to many as I punch my keyboard sparingly.

To your success!

Festus Adeboye.

Disclaimer: All the information contained in this text are only at the discretion of the writer and in no way serve as an investment advice or in any way brings about a contractual advice or agreement or a possible litigation on damages faced by the reader. Please consult your financial adviser before embarking on an investment.

6 key to live an excellent life | Chibenzeblog

2013-06-28T01:18:00.001-07:00

6 key to live an excellent life | Chibenzeblog

I believe this will be of immeasurable value to my readers. You can also check him out on write abouts about personal life.

To your success.
Festus A.

Why study an MBA?

2013-06-26T13:00:00.001-07:00

Why study an MBA?

Hello, I am Festus by name and you are? Alright, I am pleased to meet you. I am sure just like me at one time, you have gotten to this cross road that will mark a turning point in your life so much as it affects your net worth and network.

And then you begin to ask the very one question asked over by many people in your shoes (hypothetically); WHY STUDY FOR AN MBA?

Just before I start to give you reasons why you should study for an MBA, let’s have an executive summary of what an MBA is really about.

Master in Business Administration (MBA)

MBA is a post graduate program for business professionals to have an all-round view on business management and oversight.

TYPES OF MBA

- General MBA

- Executive MBA

- Specialist MBA

A minimum of 20hrs a week which could be either online, distance learning programme, full or part time program is expected to be awarded the MBA.

3 years’ experience is required to be admitted to study for an MBA in any business school. However you can study for the Master in Business and Management (MBM) if you lack the required skills.

HOW MUCH DOES IT COST AND HOW TO APPLY

MBA fee range from about £5,000 - £30,000 depending on business school and MBA type you put in for.

Most schools will require you to send your Curriculum Vitae(CV) and statements of results while some others might request that for a Graduate Management Admission Test (GMAT) result.

SO, WHY STUDY FOR AN MBA

1. An MBA improves your social status in your network and in the labor market.

2. It increases your network and your salary scale, thereby paying far more than the time and money you might have spent.

3. An MBA will help you get promotion at work easier than you ever thought possible, making you even more competitive.

4. An MBA gives you a better understanding of the business world.

5. An MBA gives you a more confident and professional disposition. You feel a lot more accomplished with better understanding of the business world professionally.

I hope the few listed points will help you make a better and well informed decision to determining the turn you take in your career move.

GLOBAL MBA RANKING - 2013 (FT ranking)

2013-06-26T04:40:00.000-07:00

Rank in 2013	School name	Country
1	Harvard Business School	US
2	Stanford Graduate School of Business	US
3	University of Pennsylvania: Wharton	US
4	London Business School	UK
5	Columbia Business School	US
6	Insead	France / Singapore
7	Iese Business School	Spain
8	Hong Kong UST Business School	China
9	MIT: Sloan	US
10	University of Chicago: Booth	US
11	IE Business School	Spain
12	University of California at Berkeley: Haas	US
13	Northwestern University: Kellogg	US
14	Yale School of Management	US
15	Ceibs	China
16	Dartmouth College: Tuck	US
16	University of Cambridge: Judge	UK
18	Duke University: Fuqua	US
19	IMD	Switzerland
19	New York University: Stern	US
21	HEC Paris	France
22	Esade Business School	Spain
23	UCLA: Anderson	US
24	University of Oxford: Saïd	UK
24	Cornell University: Johnson	US
26	Indian Institute of Management, Ahmedabad	India
27	CUHK Business School	China
28	Warwick Business School	UK
29	Manchester Business School	UK
30	University of Michigan: Ross	US
31	University of Hong Kong	China
32	Nanyang Business School	Singapore
33	Rotterdam School of Management, Erasmus University	Netherlands
34	Indian School of Business	India
35	University of Virginia: Darden	US
36	National University of Singapore Business School	Singapore
37	Rice University: Jones	US
38	Cranfield School of Management	UK
39	SDA Bocconi	Italy
40	City University: Cass	UK
40	Georgetown University: McDonough	US
42	Imperial College Business School	UK
43	Carnegie Mellon: Tepper	US
44	University of Illinois at Urbana-Champaign	US
45	University of North Carolina: Kenan-Flagler	US
46	University of Toronto: Rotman	Canada
46	University of Texas at Austin: McCombs	US
48	Australian School of Business (AGSM)	Australia
49	Emory University: Goizueta	US
50	University of Maryland: Smith	US
51	Sungkyunkwan University SKK GSB	South Korea
52	York University: Schulich	Canada
53	Vanderbilt University: Owen	US
54	Washington University: Olin	US
54	Indiana University: Kelley	US
54	University of California at Irvine: Merage	US
57	Hult International Business School	US / UK / UAE / China
57	University of British Columbia: Sauder	Canada
59	University of Rochester: Simon	US
59	Georgia Institute of Technology: Scheller	US
61	The Lisbon MBA	Portugal
62	Michigan State University: Broad	US
62	Melbourne Business School	Australia
64	Tilburg University, TiasNimbas	Netherlands
64	University College Dublin: Smurfit	Ireland
66	Coppead	Brazil
66	Peking University: Guanghua	China
68	Purdue University: Krannert	US
69	Mannheim Business School	Germany
69	Texas A & M University: Mays	US
71	Lancaster University Management School	UK
72	University of Bath School of Management	UK
72	Ohio State University: Fisher	US
74	University of Cape Town GSB	South Africa
74	University of Iowa: Tippie	US
76	McGill University: Desautels	Canada
77	Pennsylvania State University: Smeal	US
78	University of Western Ontario: Ivey	Canada
78	University of Washington: Foster	US
80	Babson College: Olin	US
81	Tulane University: Freeman	US
82	University of St Gallen	Switzerland
82	University of Southern California: Marshall	US
84	George Washington University	US
84	Vlerick Business School	Belgium
86	Korea University Business School	South Korea
87	Arizona State University: Carey	US
87	University of Strathclyde Business School	UK
89	Fudan University School of Management	China
90	Incae Business School	Costa Rica
91	Wisconsin School of Business	US
92	EMLyon Business School	France
93	Boston College: Carroll	US
94	Case Western Reserve University: Weatherhead	US
95	University of California, San Diego: Rady	US
95	Boston University School of Management	US
97	College of William and Mary: Mason	US
98	SMU: Cox	US
99	University of South Carolina: Moore	US
100	University of Alberta	Canada

ACCA- THE WAY THROUGH

2013-06-25T16:33:00.003-07:00

ACCA

Many a times I have been asked series of questions bordering the minds of many Nigerians who wants to choose the Association of Chartered Certified Accountants (ACCA) as their route to becoming a chartered certified accountant (CCA).
Therefore, I decided to create a blog that will be able to meet up with what I will call the frequently asked questions (FAQ).

ACCA- Association of Chartered Certified Accountant is a professional body for the registration and certification of Accountants to having a global reputation through International Accounting Standard (IAS) and it’s headquartered in the United Kingdom (UK).

To drive the nail through….I have compiled a list FAQ and provided answers too.

FAQ:

Q: What is ACCA?
ANS: Association of Chartered Certified Accountants

Q: What is ACCA about?
ANS: It is a body of professional accountants that award the chartered status to deserving individual without discrimination of any sort.

Q: Who can be a member?
ANS: Anybody that has gone through the Certified Accounting Technician (CAT), Older than 21 years or currently is studying in a tertiary Institution.

Q: What are the entry routes?
ANS: Mature student entry route (for persons 21 years above), CAT finalist route and the undergraduate or graduate applicant route.

Q: How to register?
ANS: Visit www.accaglobal.com and click ‘APPLY NOW’ on the homepage. Follow the step by step instructions that should guide you to successfully send your application. It might take three weeks or more to get you fully registered.

Q: When can or should I register?
ANS: You should register just when you are ready to start the ACCA program. If you intend to start with the June exam, ensure you register latest by February.

Q: How many stage?
ANS: There are four stages, viz-
-Foundation in accounting stage
-Skill stage
-Knowledge stage
-Professional stage

Q: How many diets in a year?
ANS: There are currently two (2) diets or what you will call sittings. The first in the year is June and the second is in December. You can write a maximum of 4 papers per diet and there is no minimum. So u can write when you feel like.

Q: How many papers in all?
ANS: There are a total of 16 papers from the skill stage to the professional stage. The skill stage has 3 papers; knowledge stage has 6 papers while the professional stage has 7 papers. However, only two papers in the professional stage is compulsory while the remaining four (4) are optional.

Q: What is the cost?
ANS: Registration fee is £79. Every ACCA student is expected to pay annual tuition fee of about £79 once every year and pay about same for each paper you intend to write.

Q: Where can I study?
ANS: If you are like me, you can study on your own by reading up study packs that usually include the study text and a revision kit. Otherwise, you can register with an accredited ACCA tuition Centre with a proven track history such as Finaquest, Synergy etc.

Q: Can I get affordable study materials in Nigeria?
ANS: Yes you can get the study pack from some book shopping outlet. However, you are only expected to study the material published in the year you intend to write your exam as text syllabus are constantly updated. Some individuals and tuition centres also sell the materials. Contact me to get it.

Q: How relevant is it in the Nigerian Labor market?
ANS: ACCA is one of the leading and most recognized accounting professional body with an international reputation.

Q: Can I work anywhere in the world?
ANS: Yes you can work in any country as a chartered accountant as long as they practice international accounting standard.

Q: Where can I sit for exams?
ANS: There are currently 3 examination regions in Nigeria, this include Abuja, Lagos and Portharcourt. So you can choose a region most convenient for you to write exam.

Q: Is there a time limit?
ANS: Yes, there is a time limit within which you must finish your ACCA or loose the opportunity to still be a student in the ACCA scheme. The 10 years period starts from when you register to the 120 month when you will no longer have the opportunity to put in for exams if you have not finish all papers.

For more information, post your comments and I’ll respond appropriately or visit: www.accaglobal.com

GOODLUCK!!!

THE STOCK EXCHANGE

2012-08-05T13:35:00.000-07:00

Open up the stock table in your newspaper like that of your Business Day or Financial Standard to take a wider look at what you might have been seemingly running flipping away from or just can’t understand. Though there are lot of figures to grapple with, those are exactly the money makers in the capital market. Once you have a clue of what to look out for, you will be able to walk your way around it.

Starting with what the Stock market is or is not (the myths). Just like the name sounds ‘Stock Market’, a market is where you buy and sell or make an exchange. A stock however is product or goods that have a price tag and is sellable. Guess you have worked it out already, the stock market is a where you buy and sell or make exchange of products or goods that have a price tag and is sellable.

The Stock market is divided into two (2) tiers, namely: the second tier securities, which includes the emerging markets (new comers into the market) and the first tier securities (the old players in the market). However, for the purposes of this wright-up, our focus will be majorly on the first tier securities. This is further divided into major sectors of the economy such as Banking, Insurance, Petroleum, Agriculture etc. Each sector is listed across rows and columns whereby the row shows the list of companies in the various sectors and the financial information that applies to it. Whereby columns denote the heading of the financial information listed across rows.

Looking at our copy of the stock table and starting from the first left column to the extreme right column; the first is the Ordinary Share which lists the names of the companies in their various sectors.

Next to that is the Public Quotation Price which is used by the Nigerian Stock Exchange (NSE) to denote the entry price of each stock which is usually around 0.50k. This figure is of little albeit of no importance to us.

Just after that is the Current Market Price. As the name implies, this is the current price of the stock as its being traded or sold on the floor of the NSE. From the table, ABC Plc. has a current market price of N26.50. A ‘+’ in front denotes that the stock is readily available on the market while ‘-‘means it is scarce.

The next column is titled Ex-, which is further divided into Div (Dividend) and Sc (Script). This indicates whether a company has been marked down for div or script (this column will be marked by an X if that is the case). Dividend is a gain for the investor; it is the amount the company is willing to pay the investor out of their profit after taxation and other deductions. Script also a gain for the investor unlike dividend is a pay in the form of extra stock added to the one the investor already owned, e.g. for every two stock owned by the investor, one will be added (Both dividend and stock are usually decided upon at the company’s Annual General Meeting, AGM).

Next is the Business Done, which is further divided into; Price (N), Date and Quantity. Price is the current asking/bid price of the stock at the given date. Quantity explains the volume of that particular stock that was traded for that day on the floor of NSE.

High and Low column indicates the highest and the lowest price commanded by the stock within the reference year e.g. ABC has been as high as N26.50 per share and as low as N20.49 per share. This shows that ABC is performing at its very high considering the small range of increase/decrease in price. Oops, an awfully wrong time to buy ABC.

Next is the column titled Ex-Div Date and Ex-Sc Date, this indicates the dates when the last dividend and script were paid.

Still on the table is the column for Dividend (Remember our friend the dividend; the amount that the company pays annually, pulled out of its earnings to encourage its shareholders). In the case of ABC, each year, the company pays shareholders 100k. This column is further divided into Date Paid, which is the date in which the dividend was paid followed by Inter (Interim) and Final. If the dividend is paid once in a year, the amount per share paid will be recorded in final column. However if the dividend was paid twice in a year showing a boom in business for that year, then the amounts will be recorded in Inter and Final columns respectively. Having a quick look at what this dividend might look like; if you had a 15,000 units of ABC shares then your dividend at payment will be N15,000(N1.00x15000). Whoop, that was quick, exactly! You will have N15,000 of dividend in cash paid to you.

Our next stop on the table is the EPS (Earning per Share) column. This is just as easy as the word go, back to our reference company ABC: assuming ABC earns Five billion Naira (N5,000,000,000) after making tax and other deductions for the year, and the total number of shares(in units) held by shareholders is Five millions units (500,000,000). Then this earning divided by the total number of shares will give us N10. So our earning per share is N10. Brilliant!

The last column but not the least on our table is the PE Ratio which is derived by dividing our current stock price by the earning per share. In the case of ABC, our current price is N26.50 and EPS is N10. Sure you got it all figured out, PE Ratio is 2.65.Cool! Now does this value really mean anything to us? This tells us that ABC is currently being traded at 2.65 times its earning. However if say Dangote plc commands a current market price of 26.50 with an EPS of 2.39, then its PE ratio will be 11.09(26.50/2.39). Meaning the market expects Dangote Plc. to grow faster than ABC. The PE ratio therefore shows what kind of growth the market expects of a particular company in its sector. Let’s look at the following companies’ PE Ratio;

ABC wax- 7.50

Standard Print- 12.40

London wax- 17.80

Next clothing- 15.60

This PE ratio values shows that the market expects London wax to grow the fastest, Standard print and next clothing to perform fairly and ABC wax to be the least performer in the Clothing sector.

However unlike the other markets such as the money market, you are placed on any form of interest but how the forces of demand and supply view the stock and sector you are trading.

There you have all you need to be a stock analyst in a way though.

Look out for my next blog on how to translate the ratios you see in the table and other noteworthy tips on analysing the stock market. Cheers and Goodluck!!!

Microsoft Excel Features For The Financially Literate

2012-05-10T03:50:00.001-07:00

Microsoft Excel Features For The Financially Literate

May 05 2012 | Filed Under » Bonds, Continuing Education, Professional Education

Microsoft Office Excel is a great computer program that is widely used throughout the financial industry. Excel is an invaluable tool for portfolio managers, traders and accountants. Billion dollar portfolios and positions can be managed and traded using Excel spreadsheets. Management reports and risk management tools can be created and run in this program. In short, Microsoft Excel has created incredible efficiencies in the finance and accounting industries.

In this article, we'll demonstrate some of Excel's functions and features that a financial professional can use to make his or her job more efficient. This article does not discuss Visual Basic for Applications (VBA), but instead focuses on Excel features that non-programmers can deploy. Only basic knowledge of Excel is needed to make use and benefit from this program, so read on to learn about how it can make your job easier.

Inserting Functions
Excel comes with a wide array of functions that can easily be inserted into a spreadsheet. In Microsoft Excel 2010, adding a function is as easy as clicking on the "Insert Function" button from Formulas > Insert Function

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Figure 1

Clicking on the "Insert Function" button allows you to search for a function by typing a brief description of what you want, or by category.

For example, if you click on the "Insert Function" icon, the following window will appear:

Figure 2: Insert Function

Adding a particular function to your spreadsheet is then as simple as following the on-screen commands, but if you are ever in doubt, press the F1 key on your keyboard to access Excel's "Help" program.

In addition to financial functions - such as present value, future value, payment and internal rate of return - that are of use to financial professionals, Excel has many functions that are useful in cleaning up and reconciling large data sets, a task frequently encountered by many in finance. Some of these functions are:

EXACT - Checks whether two strings of text are precisely the same and will return either True or False.
LEFT, RIGHT or MID - Returns the characters from a text string given a starting position and length, such as the left side, middle of the text string or the right side.
TRIM - Will remove, with the exception of single spaces in between different words, all spaces in a text string.
TRANSPOSE - This function will convert a range of cells aligned vertically to a range of cells aligned horizontally, or vice versa.

The above list is a brief example of just some of the Excel functions. The best way to discover what functions are available and what can be done to make spreadsheets and data manipulation more efficient is simply to play around with Excel's "Insert Function" feature or to take one of Microsoft's courses or tutorials. If you browse by the Text or Lookup & Reference categories, you will have a great head start on using Excel's features to their fullest potential.

Look-Up tables"Look-up" tables are usually a part of any financial spreadsheet or model. In Excel, the "Look-Up" function searches for values in a table based on a certain condition. For example, if you use on-the-run Treasury yields as a benchmark pricing for other bonds, a "Look-Up" table could be used to pull in the appropriate Treasury yield. (To help you learn this function we suggest you open up your own Excel spreadsheet and follow along.)

Figure 3: Look-up table

In the example above, Column F contains the "Look-Up" formula in each cell, and pulls the appropriate on-the-run Treasury yield from the "Look-Up" table to the left. In this example, the "Look-Up" table runs from Cell A2 to Cell B6. The first value within the "()" of the formula is a cell reference to the value in the "Look-Up" table that is searched for. This means that the value the "Vlookup" function will search for in the "Look-Up" table is a 10-year on-the-run Treasury. The second value in the "Vlookup" function is the name of the "Look-Up" table ("Look-Up" Tables must be named prior to using the "Vlookup" function and are described below). The third value in the "Vlookup" function is the column in the "Look-Up" table that is returned (there can be multiple columns in a "Look-Up" table).

Creating a "Look-Up" table is a simple, two-step process.
1. A "Look-Up" table must be sorted in ascending order by the first column.

Using the cursor, highlight the entire data table.
Click on "Data."
Click on "Sort."

2. You must give the "Look-Up" table a name.

Using the cursor, highlight the entire data table.
Click on "Insert."
Click on "Name."
Click on "Define."
Key in a name

Using this example to create your "Look-Up" table, sort cells A2:B6 using the instructions above. Now, when the same cells are highlighted, you can name the "Look-Up" table to "Benchmarks," which is the name included in the example above.

"Look-Up" tables have many uses beyond pulling in information for securities prices. However, we note that a simple securities pricing spreadsheet, as shown in the example above, can be made even more efficient by using the features offered by most pricing services, such as Bloomberg, which allow spreadsheets to link directly to live price feeds. For example, the Treasury yields in the benchmark "Look-Up" table above could be pulled directly into the table as a live link from a pricing service.

Looking Up a Value Based on Two ConditionsAs demonstrated above, a "Look-Up" table can be used to pull in values based on a certain condition. The user must identify that condition and provide the column in which to find the value that is to be returned. (In the example above, the condition was the name of an on-the-run Treasury bond, and the column was the second column, which contained that particular bond's yield). There is a way to use a "Look-Up" table to return values when the column to be returned is not constant. In other words, based on certain variables, you might want to return the second, third, fourth, etc., columns of a "Look-Up" table. To do this, you must create a "Look-Up" table function within a "Look-Up" table function.

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For example, the table below shows the value of mortgage servicing based on loan size and loan-to-value ratios (LTV). Let us call this table the "Servicing Table."

What if you wanted to pull the value of servicing into a spreadsheet for multiple loans with varying sizes and LTVs? In other words, the column number of the data you want to retrieve is not constant.

Figure 4: Spreadsheet example

You must first create a separate "Look-Up" table that identifies the column number for a given LTV. Let's create a "Look-Up" table using the following:

Figure 5: Table small

This "Look-Up" table is named "LTV" in the formula shown below. The servicing value "Look-Up" table (the original table in our example) is named "Servicing".

Now you can write a formula to find serving values based on both the variable of loan size and the variable of LTV as shown below.

Figure 6: Vlookup

As you can see from this example, the "Vlookup" function will work when using two different conditions. Keep this information handy, as we will use it in our next section.

The "Exact" StatementThe "Exact" statement (or function) is very useful in working with large sets of data, such as securities, where values within a spreadsheet vary by small amounts (for example, CUSIP numbers). You can use the "Exact" function to ensure that you are pulling in the actual value that you need, or to identify why you might not be able to find a value that you believe should be in the data set.

For example, when using the "Look-Up" function as described above, you must sort the "Look-Up" table by the first column in ascending order. The "Look-Up" function then searches for values in that first column. If a value in the "Look-Up" function cannot be found in the "Look-Up" table, the "Look-Up" function will find the next closest value - this is generally not good in financial spreadsheets, as exact figures are usually required.

For example, if the "Look-Up" function is searching for CUSIP number 912833WZ3, which is not found in the "Look-Up" table, but 912833WZ4 is in the "Look-Up" table, the "Look-Up" function will return the value in the specified column number for the 912833WZ4 CUSIP number. This is simply not the correct CUSIP number.

To avoid pulling the closest value when the actual value is not found, use the "Exact" function as shown below.

Figure 7: Exact function

The "Exact" function shown above says: If the value in Cell B2 is exactly the same as a value found in the "Look-Up" table called "Benchmark," then it will return the value in column two from the table. If there is no value in the "Look-Up" table called "Benchmark" that is exactly the same as the value in Cell B2, then it will return the words "not found".

Another common use of the "Exact" function is to figure out why you cannot find a value in a set of data when you "know" it is there. For example, you might be trying to reconcile two sets of data by CUSIP number. You know a certain CUSIP number is in both sets of data, but the formulas you have written aren't recognizing one of the CUSIP numbers as being the same as the other. Simply key the CUSIP number into both spreadsheets, and use the "Exact" function to let Excel tell you whether they are the same - there could be an unseen character in the data, such as a space before the CUSIP number that is causing the problems, which the "Exact" function will help you identify.

Figure 8: Exact function #2

As shown above, the "Exact" function is returning a "FALSE." Upon looking closer, the two CUSIPs are different. The CUSIP in A2 ends in "zero" while the CUSIP in A6 ends in "O."

Using Arrays"Arrays" is a powerful feature in Excel that allows you to make calculations within large sets of data based on multiple conditions. For example, using "Arrays," you can sum the value of integrated oil stocks with a certain market cap within a large set of data that consists of stocks from many different industries and with many different market caps, and you can calculate the weighted average price of those stocks. Creating "Arrays" is a simple process, and the first step is to name the "Arrays."
1. Name the "Arrays."

Using the cursor, highlight the entire set of data, including the column headers (the data must have column headers as they become the names of each "Array").
Click "Insert" on the tool bar.
Click "Name."
Click "Create."
Mark the "Top Row" check box only and click "OK."

Writing "Array" functions is also relatively simple. The examples below show "Array" functions that sum the market value of stocks within several industries by market capitalization and calculate the weighted average prices of those stocks based on the data set shown immediately below.

Figure 9: Array

Figure 10: Array chart

The "Array" functions are not as complex as they might look at first glance. First, we named the "Arrays" as described above, then we simply use a combination of "If" and "Sum" statements to return values based on the conditions that we set. The weighted average calculation is simply embedded in the "Array" function. The best way to gain expertise using "Arrays" is to practice. Once you master the use of "Arrays," they can be used very effectively to create many different efficiencies.

Important: The "{ }" brackets shown in the formulas are not keyed into the "Array" function, but once the "Array" function has been created, you must simultaneously hit Shift, Control and Enter on your keyboard to activate the "Array" - this creates the "{ }" brackets.

"Array" Tips:
1. "Array" names that consist of more than one word are automatically named with a "_" to separate each word. For example, market cap becomes "Market_Cap," as shown above.

2. The vertical ranges of each "Array" used in an "Array" function must be identical. In other words, one column of data in a table of "Arrays" cannot be longer than the others.

3. You are not limited to conditions as shown in the examples above. You can create up to seven conditions using the "IF" function. Each condition is separated by a "*", as shown above.

The Bottom LineMicrosoft Excel has many features and functions that can add value and be used to create great efficiencies. One of the best ways to learn about and master these features and functions is to use the "Insert Function" feature. Creating "Look-Up" tables can create efficiencies, and mastering the use of "Arrays" can create vast efficiencies. Finally, don't forget about the simple functions like "Exact" or "Trim," as they can save you hours of frustration when reconciling data.

Note: All images for this article were taken from Microsoft's Office Excel program. Microsoft holds all copyrights to these images.

By Barry Nielsen

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2012-05-09T12:23:00.001-07:00

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Nigeria – Bidding for annual Oil Contract Opened

2012-03-30T03:25:00.001-07:00

Nigeria – Bidding for annual Oil Contract Opened

If you are thinking of investing in a developing world where you will get a good high ROI ( Return On Investment), then think of Nigeria as the best country to to so now. President Goodluck Jonathan has instructed the Ministry of Trade and Investment to review trade incentives for investors willing to come to Nigeria. Perhaps this is really good for all investors because Nigeria has been tips to be one of the best investment Nation by 2012.

According to the president, Nigeria is reviewing the incentives currently being granted to investors in order to encourage international companies willing to invest in the country. Speaking to a delegation from Samsung Heavy Industries, Korea, during a courtesy call on the sidelines of the Nuclear Security Summit in Seoul, President Goodluck Jonathan said he has instructed the Ministry of Trade and Investment to review trade incentives for investors willing to come to Nigeria. He said, “We are willing to support you to establish industries in Nigeria, and I have instructed the Ministry of Trade and Investment to review the incentives available for investors coming to the country”, adding that the administration was determined to create more jobs for the teeming Nigerian youth. Jonathan stated that government was diligently implementing the local content law in order to build the capacities of Nigerians, strengthen the industrial base, and provide jobs.
The president expressed appreciation to Samsung for their “significant” contributions to the development of the country’s economy, and requested the company to consider increasing the number of Nigerians being trained, as well as the duration of the training. Earlier, In Sik Roh, president and chief executive officer of Samsung Heavy Industries, had expressed appreciation for the privilege to construct the Bonga Oil platform, adding that they were going to commence the training of 20 Nigerians next month.
At a separate audience, Jonathan told Daewoo Engineering and Construction Company that Nigeria’s gas infrastructure must be upgraded in order to meet the urgent power needs for speedy industrialisation of the country. He said, “We have abundant gas, but we need to evacuate it to the power stations, through a robust development of our gas infrastructure”, adding that bankable packages are being developed to attract international funding.
The president welcomed Daewoo’s proposal to fund infrastructural development in Nigeria at agreeable terms and assured the company of government support. Speaking earlier, Daewoo’s president and chief executive officer, Jong-Uk Seo, said the company had been operating in Nigeria since 1978, and was prepared to fund infrastructural development at agreeable terms to give back to the community and to show confidence in Nigeria’s future.

President Jonathan also granted audience to a delegation of Hyundai Heavy Industries led by I. S. Chun, senior executive vice president/chief operating officer, and a delegation of JD International led by David Lee, president/chief executive officer.

Sources: http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/35050-nigeria-to-provide-more-incentives-for-investors–jonathan

Finance 2 day: Corporate Tax

2012-03-23T15:56:00.001-07:00

Finance 2 day: Corporate Tax: Many individuals find the concept of taxation a difficult issue that seemed rather not to be toiled with. However, its one of the easiest s...

Corporate Tax

2012-03-23T15:30:00.002-07:00

Many individuals find the concept of taxation a difficult issue that seemed rather not to be toiled with. However, its one of the easiest subjects that although should be handled by licensed accountants.

However you can reach on a professional accountant for further consultancy.