Statement of Purpose, by Ms Honglin Li, for master program of MS&E, Stanford University
Statement of Purpose
Planning to specialize in financial product development and aspiring to launch my own asset
management company in China, I am determinately applying for the master program of MS&E at
Stanford University, which I consider ideally suited to my purpose of acquiring the operational
methods employed in financial engineering.
As a top student of one of China’s best business schools, I developed a strong penchant for solving
real financial problems through quantitative approach: i.e. in the FMP workshop held by General
Electric, I used the real option method and valued a takeover by setting up binomial tree.
As intern investment consultant at Convoy Financial Service in Hong Kong, I was deeply
impressed by the significant role played by optimization and numerical method in quantitative
portfolio management. Moreover, through experiencing the superiority of the MAD
(Mean-Absolute Deviation) model to the Mean-Variation method taught in textbooks, I learned
that, besides theoretical soundness, feasibility of financial model also relies on easy access to data
and availability of fast real-time algorithm. Specifically speaking, the MAD model eliminates
modification when the asset pool gets larger and computation of correlated variance of stocks in
different industry; also, compared to linear programming in M-V method, the quadratic
programming in MAD model can be solved more quickly and easily by interior point algorithm.
Enlightened by this experience, I became interested in the application of operation research in
modern finance and acquired relevant methods such as programming, optimal control, Markov
chain and simulation in Mathematical Modeling Camp. My grasp of these knowledge and genuine
interest in finance consequently won me the opportunity of Bank in Action workshop held by
Citigroup, through which I became interested in the engineering in structured products. Given the
possibility of an interest rate cut in China, I structured a 1-year RMB IFRN. Since a collateral
bond can be replicated by a combination of FRN and IFRN, I derived the price of the 1-year RMB
IFRN by deducting the price of corresponding FRN from the present value of collateral, and
valued the caplets embedded in the FRN by Monte Carlo simulation.
I found myself do enjoy the process of integrating my quantitative skill, market sense and
knowledge in finance to provide lucrative strategies catering to specific needs. Therefore I made
up my mind to specialize in financial product development upon graduation.
As for long term career goal, I plan to launch my own asset management company in China. In
Chang Jiang Securities, as I assisted in determining arbitraging interval for ETFs, I found that lack
of corresponding derivatives allows little room for hedging and arbitraging. At the same time, I
saw the huge yet unsatisfactorily addressed domestic need for wealth management services. I even
have investigated available structured products provided by domestic commercial banks, finding
the products quite overlapped in nature and the pricing not standardized.
To actualize my blueprint in the field of quantitative finance, I would like to gain exposure to the
most advanced operational techniques adopted in structuring and investment management by
Statement of Purpose, by Ms Honglin Li, for master program of MS&E, Stanford University
pursuing a master degree in MS&E at Stanford University. To this end I plan to work with a
prominent commercial bank in the States, the most dynamic marketplace in the world, and then
bring the acquired expertise back to realize my ambition.
If I were admitted to the Stanford MS&E program, I would choose the concentration on
Operations Research. By taking courses such as Stochastic Calculus and Control, Optimization of
Uncertainty and Application in Finance and Approximation Algorithms, I can sharpen my
quantitative skills to explore the nowadays complicated financial structure, courses such as Credit
Risk Modeling and Management and Advanced Topics in Financial Engineering are also tailored
to my future specialization. Moreover, I would like to fully utilize recourses such as project course,
workshop and seminar to integrate my academic knowledge into real-world practice. Furthermore,
the unparalleled faculty, renowned reputation enjoyed by Stanford University and exclusive link to
the industry will all add to my advantage in job hunting upon graduation. Finally, I am looking
forward to gaining inspiration from the diversified and versatile peers.
I believe my intellectual and academic background make me a qualified candidate for your
program. Ranking 2nd among 178 and winning numerous scholarships, I am particularly strong in
quantitative-oriented subjects: with a 4.0/4.0 GPA for compulsory mathematical courses, I have
acquired PDE, stochastic process, time series analysis, and algorithms such as finite difference
method, GMM, bootstrap, and MCMC to model derivatives and achieve exact approximation. My
intellectual curiosity have also driven me to explore the mathematical world by reading books
covering numerical analysis, complex analysis, real analysis and discrete mathematics. Besides
managing the standard tools on MATLAB environment useful for financial analysis, I plan to take
courses in C++ Programming next semester to fully meet the technical requirement. Moreover, my
solid background in economics and finance also developed my ability to analyze problems from
business perspective keeping in mind the constraints and limitations of the real world.
At the same time, my diversified extracurricular activities have cultivated in me the soft skills
contributive to being a qualified working professional. Abundant experiences in business
competitions have not only enhanced my problem-solving competence and ability to work under
pressure, but also taught me about the philosophy of leadership and cooperation; thanks to my
fluency in English and confident public speaking, I got the opportunity to interact directly with
leaders from Hang Seng and Skandia Insurance, whereby I learned from their success and built up
my own network. My ability to handle emergency and conduct intercultural communication won
me the honor as “Excellent Volunteer” for 2008 Beijing Olympic Games; with a strong sense of
social responsibility, I also initiated a donation campaign for poverty-striken areas in northwestern
China and petition for governmental legislation for the protection of small animals.
To conclude, my outstanding qualification and strong potential for future success have marked a
blue chip, so put me in your portfolio and let me realize my full potential there. Thank you.