Last time when I had this feeling I was in eighth standard and I shouted in the hollow halls of my mind, “et tu Newton”. I had seen his pictures sitting under a tree with an apple and thought of him as a nice lad; little did I know that he would turn out to be one of my tormentors later. His three laws were like three Japanese anime women, very innocent and pretty upfront but as you live with them and dig deeper they reveal their nastiness. Anyhow, with false self-confidence I wasted my few years trying to master it.
They say “history repeats itself”, never expected my history cycle to be so short. Coming back to the present, last week I had a blind date with this old forgotten feeling. “Et tu Lintner and Sharpe”, I cried yet again in misery. The two noble men as in Nobel winning men one fine day decided that it was up to them to give this world a standard method for measuring risky investments and expected returns. The length of the previous sentence is too short to justify the complexity of the method and too long considering my answers in the exam sheet. After a lot of work and toil they named it after their favourite after-high snacks as CAPM. Capital Asset Pricing Method.
My MBA was going great, I made ardent notes in the classes of Organizational behaviour and applied all my intellect learnt while preparing for IITs in the HRM lectures. The customer decision journeys were way easier than my own and I could relate to the trinity point (it was impossible to keep all three women happy at the same time). To foolishly extend the point as a habit, I would say that I even conquered the Bernaullis and the Poissons, it was tough but I did it and I was all Alexander till I met the Financial Management of Managementshire.
I was told that it was a thin stream of fresh water which will provide me with fresh perspective and widen my horizon like never before. That tiny stream turned out to be a salt water lake shored up by quick sand and had crocodiles as its natural habitat. I faced it bravely for the first couple of lectures but sadly in the growing perpetual pain I had to sit up without discounting the hazards of failing end term. I clenched the rope when I heard that only two lectures were left, and I was smiling all too happily. Then someone in his usual tone shouted, “guys!, guys! …we have our midterm in the next class and after the two left classes we will be having the end term, and Oh yes, you will have to submit the projects by the end of month.” Undeniably it gave me fresh perspective and it did widen up my horizons.
It was during the midterm that I realized that I had a very peculiar disease called SETD(specifically exam time dyslexic). I had my first stroke while giving the financial management midterm and my God that was horrible. I could not even construct the words and read them because of which I could not perform my level best otherwise I was well prepared. I still think it was my competitors’ plan; they must have brushed my exam paper with LSD powder. That time I thanked God that the exam paper had alternatives and we had to tick mark.
After that amazingly horrific experience I just waited for the course to get over and then…I met my blind date. Her name was ‘Beta’ and it represented the risk sensitivity. True to its name, it played a major role in the end term. While I was ball dancing with CAPM, Modigliani and Miller played the Music in the background trying their best to make my life hell. Finally, the course was over with Mr. Miller who ended party with a toast to the Unlisted firms and bankruptcy, and I said to myself, “what an Irony?”
The end term is over now and I am yet to calculate the cost of capital involved here, but I have learnt one law (nature’s or otherwise) that “higher the risk, higher the gain” so let us see, the risk is definitely on the higher side, I expect the returns to follow too.
– Animesh Bajpai
PGPM Class of 2015