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Job Cover Letter

Essay by   •  July 10, 2011  •  1,229 Words (5 Pages)  •  1,505 Views

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I am writing this letter to outline some of the valuble skills I have learned at San Francisco State University that would make me a great asset to this company.In the following several pages I will explain how through my studies of Finance at San Francisco State University, I have acquired the skills necessary in order to become a valuable employee of this corporation. I will outline several important financial concepts that I am familiar with and provide proof of how my knowledge and application of these concepts will be instrumental in helping this organization make future profits. Through my knowledge of various hedging and immunization concepts, I will show how I will be able to serve well established multinational corporations through various hedging and investment solutions. Furthermore, I will show how my knowledge of the financial markets, institutions and various investment theories will help potential clients realize their investment goals through careful application of these concepts.In addition, I will explain how in a difficult market I will be able to diagnose, react and turn a profit for my clientele by implementing stratagies that are suited for virtually all market conditions.

Since corporations represent a vast section of the economy, I will begin by explaining how, as an investment banker, I can attract their business through the use of Swaps and other various hedging instruments to help them save vast amounts of money. Since interest and debt expenses are frequently a corporation’s biggest expense, it only makes sense to be able to figure out how to help corporations reduce that liability though the use of swaps. There are many types of swaps but the most common are, fixed-for-fixed, fixed-for-floating or floating-for-floating. Although exact details vary depending on which type of swap one is performing, the general idea still remains the same. The basic concept of a swap involves the agreement of two independent companies to swap either interest rates, liabilities, currency or any other similar product that both of them need exchanged. Through the use of the Swap, both company A and company B receive a lower rate than they would have been able to acquire on their own thus reducing their overall interest expense. Through a fixed for floating swap, one company would agree to pay a fixed interest rate while another would agree to take the variable rate, usually pegged to an index such as the LIBOR, both companies would then agree to pay each other a predetermined amount of money on a monthly basis to help offset the cost of the loan program they originally accepted. Since in a fixed for floating swap one company has a lower credit rating than the other, the company with the lower rating would be paying the company with the higher rating a premium for the use of its good credit standing. That premium would then go to offset company A’s interest expense, therefore lowering their overall rate below what they could obtain on their own. In turn, company A gives company B the lower interest rate they were able to obtain based on their exemplary credit. Since both companies are now paying less than they would on their own, the swap is a complete success and the investment bank receives a healthy profit for arranging the entire transaction.

Another way I could help drive profits to the firm is by helping both multinational corporations and individuals hedge against price volatility through the use of various derivatives. By utilizing concepts such as price caps, price floors, collars and box spreads I will be able to help clients plan their future investments, hedge against commodity price increases and survive both stagnant and volatile markets. One great example of my ability is to explain how an individual or a corporation can create a price cap on a specific commodity. For this example I will use the price of oil. Let’s assume one of our clients; a package delivery company wants to hedge against the ever increasing costs of fuel. I would recommend that the company purchase a long call option on oil. Through this simple act, the company would be able to guarantee that it would not pay more for oil than the strike price agreed to upon with the purchase of the option plus the price of the option itself. For example, if oil strike price on the option was trading at $125



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