VOL. 26 CONTENTS FALL 2000
#1 - Finance in an Integrated Undergraduate
Joseph J. Geiger, Mario G. Reyes, and C. Randall Byers
This paper reports on an integrated, cross-disciplinary, undergraduate program known as the Integrated Business Curriculum (IBC) and the role of finance in the curriculum. Developed and implemented at the University of Idaho College of Business and Economics, the IBC reconfigured the entire junior-level common body of knowledge into six, team-taught modules, each based upon a key business process (e.g., product and process planning). This approach parallels the current business reengineering trend where tasks are grouped around processes. We compare topical finance coverage in the IBC and the traditional finance class. We also raise several issues that institutions must address should they attempt to implement an integrated business curriculum.
#2 - Selecting Courseware Feedback To
Motivation And Performance
Dean L. Johnson and Sonia M. Goltz
Recently developed courseware, including tutorials, simulations, presentations, electronic textbooks and computer-based exams and assignments, often contain features that provide feedback to students. Feedback has consistently been shown to have a positive impact on performance and motivation; however, the effectiveness of feedback in improving performance depends on a number of factors. When evaluating courseware for adoption or designing their own courseware, educators should consider these feedback features and their impact on the studentís learning experience. Thus, we discuss guidelines for the proper use of this technology to improve the performance of students. In addition, an example is provided of actual courseware that contains feedback that follows these guidelines.
#3 - What Determines Comparability
Valuing Firms With Multiples?
Benjamin C. Esty
One of the most common ways to value a firm is through the use of pricing multiples based on earnings, book value, cash flow, or sales. This approach, however, requires a set of "comparable" firms, where comparability is typically determined based on size and industry. In this paper, I decompose the Gordon growth model to illustrate the determinants of comparability and show that these variables provide additional explanatory power in explaining P/E ratios beyond size and industry. From a pedagogical perspective, this approach not only clarifies the concept of comparability but also provides a way to review important concepts covered in most introductory finance classes.
#4 - A Comparison Of Own Group, Peer And Instructor Evaluation Scores For Group Oral Presentations
Kent T. Saunders
The purpose of this study is to determine if there is a bias in the scoring of students own group work relative to the scoring assessed by other students and their instructor of the same group work. One hundred seventy-five students in six classes over two semesters rated their own group and other group's oral presentations. Students gave their own group presentation an average score of 95 percent compared to a peer average score of 90 percent and an instructor average of 89 percent. Because of this apparent bias, it is recommended that peer evaluation alone and not the combination of peer and self evaluation be used to determine group oral presentation scores.
#5 - Teaching The
Strong-Form Efficient Market Hypothesis And Making The Case For Insider Trading:
A Classroom Experiment
Steven P. Feinstein
Though there is widespread, though not universal, acceptance of the weak- and semistrong-forms of the Efficient Market Hypothesis, there is pervasive skepticism and a general lack of understanding of the strong-form. This classroom experiment imparts an appreciation for the strong-form EMH, and conveys a deeper understanding of the weak- and semistrong-forms as well. Students observe first-hand how inside information can be conveyed to uninformed bidders in an auction. They also see how informational efficiency of prices can be impeded by prohibiting insider trading. Unlike some classroom experiments, this one is simple and quick to run. Moreover, it is fun and always elicits lively discussion.
#6 - Takeover Experiments For The Classroom
Robert J. Liebler
In this paper I present two takeover experiments intended for a principles of finance class. The experiments take about twenty minutes of class time to conduct and need not be accompanied by material on takeovers. The purpose is not to study takeovers; the purpose is to help give students the idea that finance is about people making decisions, not just abstract theory.
#7 - Real-Time Finance Cases
Claudia S. Kocher and John A. Helmuth
Real-time finance cases are a form of experiential learning. Teams of students analyze a real case presented to them by finance executives. Students communicate their analyses and the resulting recommendations to the executives at the end of the semester. The real-time case facilitates and encourages higher levels of learning such as analysis, synthesis and evaluation while demonstrating to students the relevance of previous course work. This paper includes a timetable for developing a real-time case. It also compares student reactions to traditional cases versus real-time cases. The findings suggest that real-time case studies are an effective innovation in finance pedagogy.
#8 - Meeting Fixed Income Learning
An Efficient Tool
For Teaching Bond Price And Duration Calculations
Leonard L. Lundstrum, Jack W. Wilson and Charles P. Jones
In this paper we illustrate a much simpler, cleaner approach to calculating bond prices and duration than is typically seen in textbooks. Such an approach enables students to make these calculations quickly and with minimum frustration with formulas, while allowing instructors to concentrate on the intuitive nature of the calculations. This approach eliminates the need for approximation formulas and present value tables (still seen in textbooks today), while demonstrating to students the ease with which they can calculate a present value factor and the importance of having done so.
This approach allows instructors to focus on the role of a perpetuity in explaining all bond prices, which normally is not done in these discussions. Variations of the basic calculation involving stripped principal bonds or zero coupon bonds can be efficiently presented . Finally, students can easily see how the duration calculation follows from the bond price calculation. Students should be more receptive to learning the meaning and uses of duration once they are not intimidated by a complex-looking formula.
#9 - An Intuitive Volatility Estimator
The paper proposes an intuitive estimator for annualized volatility. This estimator is roughly equal to twenty times the average absolute daily return. That is, if the average daily jump in the price of the stock is 1%, then volatility is roughly 20%. This estimator may be used as a tool to give us an intuitive feeling on the relationship between observed returns and their volatility, without doing any computations.
A Case Study
#10 - The Procter & Gamble Company: Value Based Performance Measurement
Kasim Alli and Charlie Colman
In early May 1998,Terry Pardue, Director of Corporate Financial Analysis at the Procter &Gamble Company (P&G) was considering several issues associated with the implementation of the Total Shareholder Return (TSR) metric that was recently introduced at P&G.