Sunday, December 2, 2012

Corporate Finance requires a LOT of hard work + Lessons learnt from practicing finance problems.

I am 1 week away from completing my MBA now. Am studying Corporate Finance all the time, these days. Boy, it requires a LOT of hard work. I have been spending so much time solving problems on my additional Lyryx account as well as going through the class notes and problems solved in the class. I have seen my Financial Calculator (Texas Instruments B2) way more than my cell phone in the past month, ha ha.

But the hard work does pay off. When you learn Corporate Finance, you get a sense of confidence that is unmatched. Mastery of a difficult subject makes you feel good about yourself - when you know that you have achieved something that not a lot of people out there are good at.

Especially for those students who are not from a commerce or math background, it can be a challenge in the beginning. But with time, you get more confident.

In any case, as one of my professors once told me, every MBA is expected to know Corporate Finance well. When someone meets an MBA graduate, he is EXPECTED to be good at Corporate Finance. So I am trying to do justice and am working hard - not to mention, I need to pass the subject to graduate.

Next week, I hope my exam goes well, and I can finally call myself an MBA graduate !!!

Here are some lessons learnt from solving numerous finance problems:
  • Check, recheck, cross-check your answers
  • Do not be overconfident
  • Make sure that you have plugged in the right numbers in the right formulae
  • Stay alert all the time while problem solving
  • Be paranoid about making mistakes - coz you will make plenty
  • Stay unsure, until the end
  • A lot of mistakes are made with decimals - keep the calculator decimals at least 5 to 6 places to get the complete answer. For example 0.0256 = 2.56% . If your calculator is only till 2 decimals, it will show 0.03 = 3% which is the wrong answer
  • Clear the calculator regularly to prevent errors
  • Practice makes perfect. There is NO substitute to hard work. 
  • You will NEVER learn Finance simply by reading theory. You HAVE to solve problems, and often. 
  • The best part is that once you start practicing problems regularly, you will be HOOKED! You will love it so much and enjoy it, that you will prefer it over theory
  • Finally, Corporate Finance = LIFE ! What you learn in Finance is applicable in your mortgages, credit cards, car leases, bank borrowings, your new business, and so on. This is something that CAN NOT be ignored. In fact, used well, it will get you plenty of savings and gains. 
Gerry Som.
MBA candidate 2012.
(Soon to be MBA graduate!!! ---> 1 week from now)


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