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Utilizing Fantasy Sports to Enhance Student Learning
No full textOver the past 20 years, participation in fantasy football has increased dramatically. During this timeframe, many universities have encouraged instructors to diminish the importance of the traditional lecture format in the classroom. Many institutions have begun to insist that the most effective teaching involves active student participation rather than one-way communication (Rocca 2010). This paper discusses the implementation of a semester-long fantasy football exercise that is primarily designed to require students to demonstrate their understanding of strategic management and basic economic principles by mandating they apply those principles to situations such as an auction draft and labor disputes
Simulation of Binomial Trees for Exotic Option Pricing Using Excel
No full textOption pricing can be presented in a variety of ways to students learning the subject for the first time, ranging from solution of the Black Scholes formula to approximations using Binomial trees. This article shows how an Excel spreadsheet may be used to illustrate the principle of risk neutral pricing through the simulation of random share price paths through the nodes of Binomial trees. By observing such random path prices through a binomial tree, the particular features of different types of options may be more readily appreciated. The method is illustrated with an application to plain vanilla calls and puts, and extended to an analysis of barrier options
Predictors of Success in an Online Undergraduate Core Course in Finance
No full textBecause finance is a technically oriented business subject where competence in math and accounting plays a role in student success, we posit that technical knowledge, as proxied by math and accounting pre-tests, may predict success in an online undergraduate finance course. Since little or no lecture support is generally offered while taking an online course, students that struggle with math or accounting may have a greater challenge with the online format for a finance course. Accordingly, the purpose of this study is to evaluate the key determinants of success in an online core course in finance
Presenting Economic Sanctions in the Classroom: The Case of Iran
No full textThe Iran Deal’ ended long standing sanctions levied against Iran by the United States, European Union and United Nations in 2015 for dismantling its nuclear program. This paper presents an approach to teaching economic models of sanctions, and applies it in the context of lifting Iranian sanctions. We start with a simple production possibilities frontier approach to analyzing sanctions, followed by welfare analysis of import and export restrictions on US and Iranian economies. The paper provides a presentation and links to useful resources that can be used by instructors teaching undergraduate courses in introductory economics, intermediate microeconomics and international economics
The Impact of Teaching Financial Literacy to College Students
No full textThis study measures the learning outcomes and reported behavioral changes of students enrolled in a financial literacy course at a metropolitan university. A notable positive outcome is that 42 college students saved an aggregate of 719. Many students began to save regularly, planned to start investing at a younger age, began to budget regularly, and decided that they would avoid the pitfalls of credit cards. The study results provide positive evidence for a possible solution to decrease the nation’s student loan debt, prevent money problems, and increase student retention
Face-to-Face Versus Online: A Comparison of Student Performance in Introduction to Finance Courses
No full textThis study compares the performance of students taking Introduction to Finance classes in an online versus a face-to-face setting. The study included 995 students. The analysis compared dropout rates, exam scores, final grades, and case study scores. The dropout rates of students in the online classes was more than twice that of students in the face-toface classes. Students in the face-to-face classes received higher scores on their exams, case studies, and higher final grades, but the difference was small, less than the difference between the grade of a B and a B-
Interest Rate Swap Valuation Since the Financial Crisis: Theory and Practice
No full textThe financial crisis of 2007-09 revealed the importance of counterparty credit risk in the valuation of non-collateralized interest rate swaps. In theory, these valuations rest on assumed default probabilities and recovery rates. These assumptions, however, should be reflected in the risk-adjusted discount rates of the counterparties. Thus, in practice, swap valuations can be generated by discounting prospective swap settlements using risk-adjusted discount rates, cash flow by cash flow. This article demonstrates this method, discerning risk-adjusted discount rates from data that are readily available on the Bloomberg information system. Critically, if the inputs for the two methodologies are mutually consistent, theory and practice should yield identical valuations
Evaluating an Online Capital Budgeting Simulation Game in an MBA Financial Management Course
No full textIn this paper, the instructor introduces and evaluates an online capital budgeting simulation game in an MBA financial management course at an AACSB accredited school. A survey method is utilized to assess students’ opinions about the game. The survey results indicate that the majority of students felt that the simulation game helped them learn financial management knowledge better, preferred this game approach, and would recommend it for future finance courses. A statistical analysis is conducted to assess the effectiveness of the simulation game on students’ learning. The statistical result indicates that the simulation game significantly improved students’ learning outcomes
Teaching the Economics and Convergence of the Binomial and the Black-Scholes Option Pricing Formulas
No full textThis paper simplifies the economics of option pricing formulas by clarifying how the no-arbitrage principle ensures that a risk-neutral valuation relationship (based on risk-neutral probabilities) exists between an option and its underlying asset. A spreadsheet exercise shows how binomial probabilities and prices numerically converge to Black-Scholes probabilities and prices, and further numerical analysis reveals how the histogram of terminal stock returns in the multi-period binomial tree converges in probability to the normal distribution. Recommendations for teaching option pricing and convergence include the use of a hypothetical case study of a graduating student’s comparison of competing salary offers
Priming Effects of Instructor-Expressed Judgments of the Difficulty of Quantitative Material on Student Performance and Perceptions
No full textWe investigate whether instructors teaching quantitative material can influence student performance through priming, a psychological phenomenon wherein exposure to a stimulus can influence memory and behavior. We first examine whether instructors can influence performance by priming students with statements stating that a quantitative problem has “Advanced” or “Basic” difficulty. We then investigate effects of priming on perceived difficulty. Priming does not affect performance but does affect perceptions. Compared to no priming, Basic priming reduces perceived difficulty, while Advanced priming increases female students’ perceived difficulty. Male students view Basic problems to be easier, but do not see Advanced problems as harder