Social and Behavioral Sciences Commons^™

Robust Analysis: An Investments Class Project On A Shoestring

Journal of Economics and Finance Education

We propose an investments class project to help students recognize ways to evaluate the robustness of an analytical result and understand the importance of performing such an evaluation. In the first part of the project, students derive basic results for naïve diversification. Then they apply four methods for evaluating the robustness of their initial conclusions: simple replication, an alternative market proxy in the single-index market model, an alternative asset pricing model (the FamaFrench Three-factor Model), and results from another historical period.

Know Math Or Take A Bath On A Finance Final Exam

Journal of Economics and Finance Education

Math is central to finance education, yet three-quarters of this sample of 159 introductory finance students lack critical quantitative skills on the first day of class, leading to overall underperformance. By utilizing criterion-referenced mathematics pretest items and matching applied finance posttest items, we find that students with substandard math skills rarely catch-up in the quantitative aspects of introductory finance. Indeed, the pretest determines a significant proportion of final exam performance, with the average student gaining a meager 5% between pretest and posttest. We discuss curricular implications of these findings and research-based approaches to facilitate course readiness.

Teaching The Economics And Convergence Of The Binomial And The Black-Scholes Option Pricing Formulas

Journal of Economics and Finance Education

This 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.

A Vba Solution To Modern Portfolio Theory

Journal of Economics and Finance Education

The purpose of this article is to provide finance instructors an example of how to teach students to integrate Visual Basic for Application (VBA) into a modern portfolio theory application. Using tactical asset allocation as an example, we show how to teach students to use Excel to (1) collect refreshable data, (2) organize the data into input, (3) construct an efficient frontier, and (4) use VBA to automate the process. Our step-bystep methodology is intuitive and can be used for teaching how to integrate VBA into other dynamic and integrative financial models.

Teaching The Quantity Theory Of Money: A Simple Classroom Game

Journal of Economics and Finance Education

This paper presents a classroom exercise that helps students understand the quantity theory of money and the implied relationship between money supply growth and inflation. In addition, the role and meaning of velocity is highlighted. The activity is easily implemented and only requires paper, pencil, and a spreadsheet to record data generated by the students. One major advantage of this game is that the outcome will almost always support the theoretical implications of the quantity equation. This is opposed to other simulations, which can sometimes differ dramatically from the model's prediction.

Evaluating An Online Capital Budgeting Simulation Game In An Mba Financial Management Course

Journal of Economics and Finance Education

In 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.

Argentina Ma Program, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes,

• Master's Program in Economic Development at Universidad Nacional de San Martín (UNSAM) [Program document]. Includes sections on the curriculum, faculty list, courses and faculty pairings, and the international advisory board, listing Anwar Shaikh, PhD, as a member.

Academic Correspondence, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Shaikh, A., PhD. (n.d.). Handwritten note regarding a review copy of Karl Marx’s theory of history [Handwritten note].

• Schroeder, S. (n.d.). Envelope addressed to Anwar Shaikh, PhD [Envelope].

• Schroeder, S. (2010, December 7). Postcard providing an update on the political economy department at the University of Sydney [Postcard].

• Kaltenberg, M. (n.d.). Thank-you note regarding a recommendation letter and acceptance to SOAS [Note].

• Ed. (2017, September 14). Postcard sent from Alberobello, Italy [Postcard].

• Champion Ward, F. (1982, July 17). Letter regarding retirement and professional relationships [Letter].

• Shaikh, A., PhD. (n.d.). Letter to Cy Gonick evaluating the work of …

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Does Math Confidence Matter? How Student Perceptions Create Barriers To Success In Economics Classes

Journal of Economics and Finance Education

One of the most common obstacles in the economics classroom is facing students’ disinclination to perform tasks requiring basic quantitative skills. Economics, relative to other disciplines, is particularly bridled by this challenge since mastery of economics requires sufficient mathematical proficiency to elicit anxiety and resistance in many students but is not widely regarded as math intensive enough to generate a selection effect of highly quantitative students. This paper attempts to measure undergraduate economics students’ perceptions of their level of “mathiness” or mathematical abilities and anxieties and then identifies the impact of those perceptions on the students’ performance in economics courses.

Clarifying The Meaning Of Noninteger N Values In Annuity Calculations

Journal of Economics and Finance Education

Time value of money problems are integral to finance. We focus attention on the issues raised when a noninteger solution results from solving for the variable N (number of periods) in a time value of money annuity problem. We show that such a numerical solution, while mathematically correct, can deviate from the narrative of the problem. This deviation from the narrative could cause misunderstandings between instructors and their students and practitioners and their clients. We demonstrate how instructors and practitioners can explain the deviation from the narrative in such cases, and how cash flows can be adjusted to avoid missing …

Interest Rate Swap Valuation Since The Financial Crisis: Theory And Practice

Journal of Economics and Finance Education

The 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 …

On The Value Of Teaching Edgeworth Boxes In Introductory Economics Courses

Journal of Economics and Finance Education

Edgeworth boxes, which illustrate the movement toward equilibrium via trade, are almost universally relegated to intermediate microeconomics courses. I argue for their inclusion in introductory courses as a natural bridge between production / consumption possibility frontiers and supply / demand curves. When presented in an intuitive, graph-based fashion, the Edgeworth box model provides a supplementary illustration (to the Ricardian model) of trade as a Pareto improvement and emphasizes production for the purpose of utility via consumption rather than for its own sake. A course which only includes production as such is, therefore, incomplete.

Face-To-Face Versus Online: A Comparison Of Student Performance In Introduction To Finance Courses

Journal of Economics and Finance Education

This 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-.

A Vanishing Gender Gap In Attitudes Toward Economics: A Pre- And Post-Course Analysis

Journal of Economics and Finance Education

This study explores the gender gap in economics. A pre- and post-survey was conducted in three introductory classes in microeconomics to measure any observable difference in attitudes between male and female students toward the discipline. The pre-survey discovered that male students had a statistically significantly more positive attitude than female students in two of the four measures of student attitude, including the overall metric. The post-survey revealed no such difference in attitudes between the genders in any of the measures. These results were consistent in online class, traditional face-to-face class, and face-to-face honors class formats.

The Topic Of Socialism In University Principles Of Economics Textbooks

Journal of Economics and Finance Education

Polls show that socialism is more accepted by the public than in many decades. University-age students are especially enthusiastic about socialism. Do economics textbooks address this important topic? This research surveys twenty university principles texts' coverage of socialism. We measure textbook coverage of socialism and characterize the coverage regarding various definitions of "socialism" and whether those definitions match current usages of the term. We also explore the coverage of the characteristics of socialism. We find that there is great variety in coverage, though scant coverage of the type of socialism that 49% of young people today view favorably.

Using R Programming In A Financial Derivatives Course

Journal of Economics and Finance Education

R is a popular and free programming language and software environment for statistical computing and graphics. We use a class project in an undergraduate financial derivatives course to introduce students to R programming. Specifically, through pricing options using the Black­ Scholes model and the multi-period binomial option pricing model, students learn to import and manipulate data in R, use R to do calculations, construct user-defined functions, and apply third-party packages in R. The inclusion of relevant technology through this project also serves to maintain our curriculum currency, and we obtain overwhelmingly positive student responses to the project.

The Culture And Performance Of The International Graduate Student In The Finance Classroom

Journal of Economics and Finance Education

We examine the success of international finance graduate students using various academic metrics and starting salaries as proxies for "success." Developing a unique data set, we measure outcomes for a coterie of students from across the globe, considering such prosaic factors as age, gender, marital status, and undergraduate major. We employ Hofstede's cultural dimensions to frame results, suggesting dimensions of "cultural values" influence outcomes. We find graduate GPAs most powerfully anticipated by undergraduate GP As, likelihood of thesis completion predicted by GP A and Hofstede dimensions - Power Distance and Individualism. We find women, higher GPAs and GMATs earn higher …

The Finance And Economics Women's Network (Few): Encouraging And Engaging Women In Undergraduate Programs

Journal of Economics and Finance Education

We 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's 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.

The Interaction Of Gender And Incentives In Active Learning: An Experimental Investigation

Journal of Economics and Finance Education

The economics and finance education literature includes a growing collection of active learning exercises that are an increasingly important part of the educator's toolkit. At the core of many exercises are incentives that either encourage competition or foster cooperation. Significant research in the educational psychology literature demonstrates that female students are more receptive to a collaborative learning environment. This paper presents results from an experiment investigating the learning implications of cooperative and competitive active learning exercises in the economics classroom. Findings suggest a gendered performance response to incentives in classroom activities and encourage further study on the topic.

The Impact Of Teaching Financial Literacy To College Students

Journal of Economics and Finance Education

This 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 $30,198 in one 15-week semester. The average savings per student was $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.

Increase Interest In Compound Interest: Economic Growth And Personal Finance

Journal of Economics and Finance Education

Compound interest is in the center of both economic growth and personal finance, but treated as independent topics in most economics textbooks. This educational note first defines economic growth and the main factors behind it. Then, figures and tables are applied to show the power of compounding growth (inflation and purchasing power adjusted) for select countries over the last centuries. Right after, growth future value calculation practice problems follow. After mastering four distinct variants of the compound interest formula, the paper’s focus moves to students and personal finance. The earlier formulas are now used to highlight the significance of long-term …

Teaching Corporate Finance Using A Stock Trading Simulation: Student Expectations, Engagement, Performance, And Satisfaction

Journal of Economics and Finance Education

This paper presents a stock trading simulation designed to be implemented in a Corporate Finance class. We survey students regarding their expectations for the class, engagement and motivation, and assessment of the game. We match the survey responses with student performance in the trading game and performance in the class overall. The survey results show that the stock trading game has a positive effect on student engagement. Furthermore, the participation in the stock trading game leads to a higher level of interest in future finance classes and careers in finance.

Incorporating The Bloomberg Professional Terminal Into An Introductory Finance Course

Journal of Economics and Finance Education

This paper addresses a gap in the financial education literature regarding the use of the Bloomberg Professional Terminal in the classroom. As more and more Bloomberg Terminals find their way into colleges and universities, finance academics have responded by highlighting how the Bloomberg Terminals can be incorporated into upper level finance and economics courses. Unfortunately, a gap has been created as these papers do not address the use of the Bloomberg Terminal in introductory finance courses. This paper will provide a series of examples that provide the scaffolding needed to incorporate the Bloomberg Terminal into an introductory finance course.

Duration And Convexity Using Polynomial Least Squares –Some Educational Aspects

Journal of Economics and Finance Education

We apply polynomial least squares (PLS) techniques to the calculation of risk indicators for bonds and fixed income portfolios such as duration and convexity. These indicators can be easily obtained with few observations —three in the quadratic case, four for the cubic specification. PLS procedures can be calculated with matrix functions or with regression procedures readily available in spreadsheets. In this study we stress the educational advantages of the methodology. At the practical level, PLS procedures allow investors and analysts to calculate most important fixed income data indicators straightforwardly by simply collecting observations of market values for a bond or …

Instructional Videos In An Online Mba Finance Course

Journal of Economics and Finance Education

We examine student viewing behavior of videos in a 100 percent online class. We find that on average students in the class only watch approximately 42 percent of the videos assigned. We find that students that spend more time viewing the videos for the course have higher final exam scores. Student perception of the usefulness of the videos also enhances their final exam score, indicating that students should be advised on the appropriateness of online course work given their learning style.

An Excel-Based Approach For Teaching Markowitz’S Portfolio Optimization Theory

Journal of Economics and Finance Education

This paper presents a simple method for teaching the Markowitz Portfolio Optimization topic. The use of Microsoft Excel or Corel Quattro Pro enables students and investors who do not possess a great deal of mathematical and programming expertise to identify meanvariance efficient portfolios which consist of more than two assets. Through this hands-on learning experience, students achieve a deeper understanding of the theory. The exercise also gives the students an eye opening lesson on the practical usability of spreadsheets.

Through The Lens Of Life: Teaching Principles Of Economics With Humans Of New York

Journal of Economics and Finance Education

Stories create a direct and powerful connection between students and the course material, increasing their level of attention, bringing abstract economic concepts to life, and refining critical thinking skills. Humans of New York is a project that chronicles stories of ordinary New Yorkers. It provides an opportunity to connect students with illustrations and personal accounts of economics in the real world. This can reduce the abstract nature of theory and give students concrete examples of economic terms and concepts; in a way that reflects their own environment, culture, or experiences. We highlight these stories and show how to incorporate them …

Keynesbiscuit, Marketariat, And The Fool In The Shower: Metaphors For Teaching Policy Lags In Macroeconomics Principles

Journal of Economics and Finance Education

Principles of macroeconomics textbooks devote a great deal of space to countercyclical fiscal policy, but generally provide only scant coverage to factors that make its application difficult in the real world. In fact economists are generally skeptical of the ability of fiscal policy to smooth the business cycle because of the policy-lag problem. This paper provides a metaphor—a horserace between active policy and the selfcorrecting mechanism—that can help students move into the higher levels of Bloom’s taxonomy of learning (analyzing, synthesizing, and evaluating) with respect to fiscal policy. The metaphor can be extended to include discretionary monetary policy as well.

Beyond Grades: Using Incentives To Motivate Students

Journal of Economics and Finance Education

Economists study how incentives motivate human behavior. However, besides grades, professors do not frequently employ incentives to motivate students in the classroom. This may be because expenses associated with classroom incentives often remain unreimbursed or because other implementation costs are high. In this paper, we demonstrate methods educators can use to motivate student behavior while minimizing costs. We identify a range of options that include: incentives appropriate for large sections, an effective monetary incentive system suitable for smaller classes, tips for using an assortment of non-monetary incentives, and methods for leveraging social capital to motivate student learning and engagement.

A Pedagogical Note On The Dynamics Of Capital Market Efficiency For The Introductory Finance Course

Journal of Economics and Finance Education

Introductory finance textbooks commonly address capital market efficiency from a largely static perspective with little or no attention to the dynamics that bring the price of a security into equality with its intrinsic value. This note offers a simple pedagogy to illustrate the process by which capital market efficiency will return a stock’s price to equal its true value and simultaneously bring the expected rate of return on the stock into equality with the market’s required return.