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8.1.1 Requestor Every model is dependent on market information; for example, market rates or asset spot prices. This primary information is normally fed into the calibration routine for the model. The purpose of the calibration is to ensure that the model prices back the liquid market instruments that the trader would buy or sell on a regular basis to mitigate the risks of being long or short a more complex financia instrument. By saying pricing back, we simply mean that the model price of a market instrument matches the market price within an acceptable tolerance, usually a small fraction of the market bid offer spread. The output of the calibration is a set of model parameters or variables, termed secondary information, that normally completely specifie the model. Furnished with these model parameters we can then go on to price the complex financia instrument in question. As we have already mentioned in the introductory section, there are typically a number of approaches to pricing; however they all have one thing in common in that they will require certain transformations of the model parameters during the process of pricing. The requestor component encapsulates the need for a model pricer to gain access to both primary and secondary information: in essence a model pricer makes requests of the model for this information. In the case of the Hull White model there are only a few pieces of information required: a discount factor, a local volatility and a term volatility. In the language of Appendix C, the



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In 1997, the 188 signatory countries met at Kyoto in order to agree on a number of restricting commitments. Amongst the signatory countries, the 38 Annex 1 industrialised countries committed to reducing their CO2 emissions by 5.2% from 1990 levels between 2008 and 2012. The Kyoto Protocol only came into effect in 2005, after its rati cation by Russia. To date, 172 countries have rati ed the Protocol, excluding the USA which refused to sign. The European Union as a whole made a commitment to reduce its emissions by 8%. The efforts to be made by each country varied, with France simply having to stabilise its emissions. To reach these objectives, each country may not only use a complete range of internal measures (energy taxation, energy saving incentives, etc.) but also resort to three exibility mechanisms: The Joint Implementation (JI) mechanism establishes the possibility for an Annex 1 country to obtain CO2 emission credits by investing in





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25. John E. Fleming, Managing the Corporate Ethical Climate, in Hoffman, Moore, and Fedo,

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Since 1988 hundreds of health care ethics teachers have used the Ethical Grid to help students think in a structured way. Though not every ethics lecturer enjoys or understands the Grid,121 many have found it the best teaching option for vocational students since it demysti es ethical reasoning, grounds discussion in real-life situations, and uses jargonfree vocabulary. However, there is a massive divide between the classroom and the reality of health care practice. In educational settings there is room to think, whereas in practice staff must act quickly, there are pressures to follow the leader , and it is often impossible to challenge ingrained practice. Increasingly aware of the classroom reality gap, I began to search for a way to add greater practical power to my ideas. I tried to persuade medical schools to adopt regular in-service training centred on the book s methods; I created a wooden version of the Grid to help make ethics learning tactile and grounded; and I considered lms, conferences and training alliances with health service partners. But it was obvious that none of these initiatives was ever going to make the difference I was after. Then, towards the end of 2000, it dawned on me that the visual elements of the Rings of Uncertainty and the Ethical Grid might be converted into interactive software, which people could use at their computer stations. But though this was a move in the right direction, without a database the embryonic software was barely more than an electronic copy of the wooden Grid, and less effective for group teaching. I had a rethink. I decided I was tinkering not being passionate enough. If the tools were ever going to get off the ground, I needed to take their development seriously. So I

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