MOTIVATION LETTER

Dear Sir/Madam

I am writing to introduce myself and present the reasons why I would like to participate in the
Stochastic Volatility Model in collaboration with Banco Invest.

My name is Tomás Tavares and I am in my penultimate semester in the Finance Master’s program.
My interest in this project is due to it being more scientific and mathematical than other finance
projects. The Black-Scholes assumes that volatility is constant over the course of the options life,
which isn’t true, as evidenced by the volatility smile. Stochastic volatility models fix this by assuming
that volatility itself is random resulting in more accurate prices for derivatives. This is a subject I wish
to delve further into. I believe I would be a good candidate due to my experience and demonstrated
interest in this subject. For the past three years I have been a part of Portfolio Management Club at
Nova. We manage a long only portfolio of private assets, mostly of former members of the club. We
research companies and buy the ones we believe will outperform our benchmark (S&P 500). While
this experience isn’t directly applicable to the project I am applying to, I will have you know that this
year I have been directly involved in a project for a client to create an algorithm that incorporates
options trading. In addition, I have also been taking the more mathematical courses at Nova. Those
include Futures & Options, Fixed Income and Derivatives. I believe the above provides with enough
experience for the project in question.

Lastly, I expect to learn about myself and gain expertise and confidence in this subject which will
enable me to become self sufficient and a productive employee for a firm that deals in these
matters, though I would predict those skills would be transferable to other areas. I hope that there
is a possibility of being accepted for the project.

Looking forward to hearing from you.

Thank you,

Tomás Tavares