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Improving Student Learning in International Finance Using an Alternative Currency Quotation Paradigm
No full textInternational fmance textbooks assume direct term quotations as a basis for all exchange rates. All equations, including bid-ask choice, currency conversion, parity equations, options, futures hedging, and percentage change, rely on that assumption to calculate the result. This assumption is unnecessary and limits the usefulness of the above formulas. Ignoring indirect and cross-rate quotes can cause misunderstanding and confusion. This paper proposes a more general approach using a base currency vs. quote currency framework that works for all currency quotation methods. This new method generates significantly higher learning outcomes when compared to the traditional method
Understanding the Option Greeks and Option Strategies: An Example using Apple Earnings
No full textStudents often struggle with understanding option price movements involving the interaction of option “Greeks” and option values. This case study examines the option price movements driven by delta, time decay, and implied volatility following an Apple earnings announcement. The exercise involves students strategically selecting options across multiple strategies and reveals the impact of changes in implied volatility which leads to counterintuitive option price reactions. The goal of the exercise is to bring awareness to the intricacies of option pricing in an empirical setting. We find that comprehension and retention increase significantly when a case study is performed using actual data
Collusion and Stock Offerings: A Classroom Exercise for Economics and Finance Classes
No full textCollusion-based lawsuits surrounding initial and seasoned offerings have been a reoccurring phenomenon. This paper offers a classroom exercise for economics and finance courses that allows students to experience the collusion phenomenon. This is achieved through simulating how underwriters and preferred clients participate in schemes of buying and selling shares of a new stock issue in order to make exorbitant profits. Students experience the consequences when excessive investor demand is not tempered with an understanding of how earning fundamentals determine security value. Most importantly, students gain insight into the ethical responsibilities of those involved in the security issuance process
Attracting “Otherwise Bright” Women to Economics: An Administrative Strategy for Small to Medium Size Economics Departments
No full textThis paper reports on a departmental strategy that targets students in the one-semester introductory economics survey course for non-majors by (1) aggressively marketing the economics degree, and (2) allowing high achieving students to waive the macroeconomic principles requirement for an economics degree. A detailed analysis of 602 student transcripts over a period of 33 years suggests that the waiver policy has not disadvantaged students in subsequent upper-level economics courses. On the contrary, women entering the economics program through the survey course have both significantly improved gender balance and the overall academic performance of economics student
Helping Students Crack Annuity, Perpetuity, Bond, and Stock Valuation Formulas
No full textMainstream finance textbooks present valuation formulas of annuities, perpetuities, stocks, and bonds, but the texts seldom explain the story behind them, leaving students in the dark about why these formulas work. The aim of this paper is to illuminate the black box of these formulas, thus helping finance instructors and students truly understand them. Starting from the basic valuation principle, we can reach each of these seemingly daunting formulas via a few simple algebraic steps. When students reach their “Ah-ha” moment at the end of each derivation, it motivates them and subsequently boosts their interest and confidence in learning Finance
The Finance and Economics Women\u27s Network (FEW): Encouraging and Engaging Women in Undergraduate Programs
No full textWe describe a novel intercollegiate resource for engaging more undergraduate women in finance and economics programs. In response to the gender gap in undergraduate studies, we developed the Finance and Economics Women\u27s Network (FEW) to support women majoring in finance and economics through FEW clubs. These clubs provide professional skill development and visibility for women in these professions through speaker events. Students run FEW clubs, and faculty advisors and community professionals support them. We also conducted a descriptive survey of students and report the responses. Finally, we provide a constitution template to facilitate the creation of FEW clubs
Teachers\u27 Knowledge and Attitudes about the Fed
No full textA survey of teachers in the Fed\u27s twelfth district investigates knowledge about how the central bank influences the economy. Focusing on teachers from different content areas, we find that teacher knowledge, for the most part, varies as expected given different teaching disciplines. Teachers are more aware of the Fed\u27s goal of price stability than full employment and score relatively high on questions relating to current events. As well, teachers with more knowledge were more likely to have positive attitudes about the job the Fed was doing. We recommend improving Fed communications to improve economic education for teachers and the public
Metacognition and Performance: Evidence from Intermediate Corporate Finance Students
No full textWe examine whether metacognitive skills are important for finance students. We find that students with better metacognitive skills perform better in intermediate corporate finance courses. We find a statistically significant and positive relationship between students\u27 achievements and their metacognitive awareness even after controlling for performance in the introductory finance course, major, time spent on assignments, senior status, and gender. We overcome the literature\u27s concerns regarding capturing metacognitive abilities by focusing on students\u27 low stakes self-learning assignments and utilizing metacognitive data collected by the McGraw-Hill LearnSmart platform. We find evidence that teaching metacognitive skills may benefit students in higher education
An Example of a Student-Run Financial Literacy and Mentoring Program
No full textThis paper describes a student-run financial literacy program for a local middle school which is managed by students in Xavier University\u27s student investment fund. The paper\u27s purpose is to describe a program that could be implemented with minimal resources at many universities. From a hierarchy of learning progression, this program gives university students the opportunity to teach basic business and finance concepts while giving back to the community. The program has the additional benefit of providing financial literacy skills to an underserved, middle school community