Thursday, December 08, 2005
Exam Time Class Meeting Hour
8:00 AM-10:30 AM MWF 10:30 AM
10:35 AM- 1:05 PM MWF 8:30 AM
1:10 PM- 3:40 PM TTH 1:00 PM
3:45 PM- 6:15 PM OPEN
14 Wed............................ Undergraduate Final Examinations
Exam Time Class Meeting Hour
8:00 AM-10:30 AM MWF 9:30 AM
10:35 AM- 1:05 PM OPEN
1:10 PM- 3:40 PM TTH 2:30 PM
3:45 PM- 6:15 PM OPEN
15 Thur............................ Undergraduate Final Examinations
Exam Time Class Meeting Hour
8:00 AM-10:30 AM MWF 3:30 PM
10:35 AM- 1:05 PM MWF 11:30 AM
1:10 PM- 3:40 PM TTH 10:00 AM
3:45 PM- 6:15 PM OPEN"
Tuesday, November 29, 2005
Wednesday, November 16, 2005
From Business Week:
Heather Densmore: Landing That Internship: "My main goal for the summer was to learn as much as possible about the real-estate investment industry and, fortunately for me, it seemed that Invesco was equally intent on this and provided numerous learning opportunities"
Monday, November 14, 2005
The test for Fin 401 is Monday Nov. 21, 2005 in Plassman 200 at 6:30 PM
* Office hours will be canceled On Wednesday.
* Please come to class with questions for the review session.
New Podcasts of class notes (not review, full length) are now online.
Tuesday, October 25, 2005
Monday, October 24, 2005
Saturday, October 22, 2005
Monday, October 17, 2005
"On-campus Recruiting Orientation
Sunday, October 16, 2005
So you will need to project out earnings, expenses, savings, and investments over the rest of your life.
This is not a project you want to wait until the last minute! It is Due Nov. 11th. I put an example (not a particularly explemary one, but an example none the less) on the 301 mainpage.
As a starting point, you will have to project out your earnings. Be sure to document where your numbers come from. This will involve some outside research.
For instance, why you think your stating salary is whatever you state it to be. Roberthalf.com may be a starting point in this. Similarly, for all expense items. For instance, if you plan on living in San Francisco or NYC do not tell me you think you will live on $400 a month rent.
Social Security income and expenses can be found online, but expect the taxs to go up and teh income to go down.
For investments, you will need to break it down into taxable and non taxable retirement accounts. And also realize your return is dependent on allocation, so Iwill need to see both. And again, do not make unrealistic assumptions such as I will invest in CDs and earn 7% above inflation.
The project is about 2/3rds excel. You will also have to give a write up of key assumptions, what could go right or wrong (i.e. what you should be worrying about financially) and what you can do to protect yourself. Finally it should contain a section on what you learned from the project. Total write up should be less than 4 pages (double spaced) plus one page of sources.
Again, it is due November 11th. Submission on both paper and electronically.
I will be submitting your Midterm grades this week (by Wednesday).
Just as a reminder, participation counts. So to those of you who find Friday classes optional or who just sit there and do not take notes etc, your grade will likely be lower than you expect. I guess that is why we have mid term grades: they allow us time to address our problem areas.
I will email you the excel portion of your grade AFTER class on Monday.
Also you will get your tests back in class on Monday
There is a 75% chance of getting test back on Tuesday.
Monday, October 03, 2005
Quiz questions are good (and should be fairly easy) Pay pareticular attention to 1,2,7,8,10,12
Practice problems: 1,3,4,7
Quiz questions 1-4
Practice questions 1,3, 5
Quiz questions: 1, 5, 7
Practice questions: 16, 17, 19
Quiz questions: 1-4
Problems: 1, 2, 10
Friday, September 30, 2005
Five students who recently interned will be sharing their thoughts and ideas about their experiences on Tuesday, Oct. 4 at 6:30 p.m. in the Murphy Auditorium (sections A&B). Each student will briefly discuss his/her internship experiences and provide essential information about internships. There will also be a question and answer period. Refreshments will be served.Defnitely a good use of your time!
Thursday, September 29, 2005
CollegeJournal | News & Trends:
"Financial-services and management-consulting companies, the traditional drivers of M.B.A. hiring, flocked back to campuses during the 2004-2005 school year, dangling richer paychecks and signing bonuses. And companies that hadn't retrenched as much as banks and consultants also stepped up hiring, leading to the most robust recruiting season since the severe downturn began in 2001.
'The recovery seems to be solid,' says Maury Hanigan, a New York consultant who works with companies on their campus recruiting programs. 'Companies are no longer as tentative as they set up fall interview schedules at business schools; they feel confident they will need more people by the time students graduate.'"
Tuesday, September 27, 2005
Free Money Finance: College Majors that Boost Your Paycheck:
"Masaniello said engineering, technology and financial services will continue to be hot field"
Tuesday, September 20, 2005
To answer some of the questions, I just put together a podcast that should answer your questions. (think of it as "office hours to go").
I would also suggest that you follow the examples that are provided on the 301 page. These examples include using multiple tabs on the excel file. Something which you probably want to do. Moreover, be sure that everything is in equation form, and and just typed in.
Remember we want to be able to quickly and easily change assumptions.
Specific questions people have had:
* assume all sales for Nike are credit sales
* it is OK to use "sales" and "revenue" as the same thing
* failure to do any sensitivity analysis will probably be a letter grade difference
* think about how realistic your assumptions are. Why?
Good luck! and RELAX :)
Monday, September 19, 2005
He was working with HandsonUSA.
Also here are some more pictures from Dana
If you are on the fence, take a look. I am sure you will want to go!
Saturday, September 17, 2005
* Similarly, the animation for ROE comparison and the Dupont ROE analysis are both good and recommended.
* Remember the assignment is due this coming Friday (not Monday as it was originally scheduled.
*And as a reminder, this class does meet on Friday. Rest assured, there will DEFINITELY be test coverage from today's class. For the parts that were not in the book (particularly Adelphia, I would suggest this Powerpoint presentation that Carol Fischer and I made a few years ago.
* I will try to have the podcast available to you by Sunday evening. Unfortunately I have to go to a wedding tomorrow afternoon (Saturday)and I doubt I will have an opportunity to do the podcast prior to leaving for the wedding.
Thursday, September 15, 2005
* I had a couple of questions on internships. I would HIGHLY recommend them I am not saying they are required (and they only count for finance majors as a general business elective) BUT from the standpoint of getting a job and gaining experience, they are invaluable.
* Now that I know most of your first names, I realize there is a great temptation to leave name tags down, but I still think they help class flow and if there are multiple people with the same first name, and you are actively participating, you want to make sure I get the right one :) so short version? please continue to use name tags. (as an aside, if you do not, I will know who is not reading this blog ;) )
* It looks like there will be room for the finance club gulf coast trip. If you were unable to attend the meeting last night and still want to go, see me or one of the club officers.
Tuesday, September 13, 2005
for the 1:00 pm class: M14040A425
for the 2:30 pm class" L14043L461
to register go to einstruction.com's student login
if you want to learn more about the system itself, it can be found at einstruction.com
Monday, September 12, 2005
Wednesday, September 07, 2005
For chapters 3---A great chapter for practice problems
Practice Questions page 31--#2, 3, 4, 5 (good but long), 8
questions P 32--#1, (2 is probably good, but so long I doubt it is worth
Questions: 1 (really easy), 2 good for understanding,
3 and 4 are much
5 is very similar to some test questions I have
8—again a former test question
22—past test question (with different
23—challenging but this is my 301 second project...don't tell them
1.a almost always useful
2-if you want tables
for the test, here is your
3—again similar to a past test question
Monday, September 05, 2005
For Finance 301 students:
A few quick comments that may make your lives easier
For Finance 301, there are several topics in chapter one (specifically section 1.3 on the legal forms of business organization) that were not covered in class. You should read these sections. We will cover them in a later context during the semester (for instance 1.3 will be covered in our Entrepreneurial Finance day in November.
You are responsible for the videos mentioned from the text (see class notes). The ethics videos (on Intel will be good introduction to why ethics matter.
Suggested problems from Chapter 1---you should know the questions and problems
As for the problems, know how to do 1.1 but I doubt I will ask one, but the idea will be important in entrepreneurial section in November.
Questions and problems: pay particular attention to Q2-1, Q2-4, and Q2-6 to Q 2-9
problems: P2.2 is excellent and the animated solution is available on the text's web site.
P2-11 is much like a test question I may ask.
Hope this helped
Saturday, September 03, 2005
While most of the three hours is very good, pay particular attention to:
- the first 12 minutes
- 17:00 minute mark: on Indian school system
- 52:30 on the EU and the challenges facing them
- 1:00 on globalization
- 1:28 On importance of studying and working hard
- 1:46 on Wal Mart and our Nexus of Contracts
- 2:00 on Globalization
- 2:27 on multinational corporations and the power they have
- 2:30 on Creative Destruction
- 2:53 on Globalization and rising standard of living (creation of middle class)
Friday, September 02, 2005
Original email (name removed)
It seems that things around the world are continually getting worse. And the more I read about the latest issues, the more shocked I become.
I’ve always been somewhat of a conspiracy theorist so it does not take much to get me to buy into things easily, however, after everything I have learned in school and experienced in life, there just seems to be many things that just don’t equate. Living through the DotCom bubble and seeing fortunes won and lost and investment banks floating some of the most questionable IPOs, watching wars planned and executed on the some of the thinnest justification, and watching our economy being run recklessly.
The list of issues and topics is extensive. Global economics, CEO pay, record low interest rates, housing prices, energy prices, etc. It’s difficult to put so many of these topics into context. It just seems that a group of wealthy & powerful people are playing Monopoly on a global scale and they are playing to win. The middle class is become extinct. Now we have energy prices skyrocketing. Is the government telling us everything they know about the energy situation? How will people afford to commute to work if gas goes up to $4/gallon? How can they move closer to the cities they work in if they can’t afford to live there?
Here are some doom and gloom web sites I’ve been reading lately. Have you read any of this? Is it plausible? Hope you are doing well
And my response:
What a nice surprise. I have not heard from you in a long time. Thanks for the update. It sounds like things are going well for you.
As for your questions on the gloom and doom that you feel pervade the world. Please do not take this personally, but totally disagree. In fact that is why I waited a while before responding. I wanted to be sure I had read your mood correctly and not just reply off the cuff.
Writing this in the aftermath of Hurricane Katrina with its amazing suffering, destruction, egregious looting, and apparent lack of recovery planning, it is easy to get caught up in the idea that things are not good, that the world is doomed, and that people are inherently evil. I disagree. Of course things are not perfect, but they are much better for most people than they ever have been.
“Things” are by and large good. Indeed arguably things are better than they have ever been. Yes that is a massively large statement, but I do believe it to be true.
(Indeed, I would suggest that you read the first half (the second half of the book is very political IMO and not nearly as good) of The Progress Paradox by Gregg Easterbrook. In the book he brings up the very interesting point, if you could pick a time, ANY TIME, to go back in history on the condition you had to stay there for the rest of your live, would you? I would not. Sure we have problems, but so did everyone else who has ever lived.
If I could, I would like to address some of the points in your email:
DotCom bubble and accompanied market volatility: yes prices were too high and yes people lost millions of dollars. But I would add to this is not the first, and is unlikely to be the last, so-called bubble. In these bubbles, people lose money. It has happened going back to the time of the middle ages. That so many ordinary investor lost money in stocks this time is or of an indication that more were investing than ever before. Sad for the individuals (who should have been better diversified etc., but definitely not evidence of a conspiracy theory.)
In my classes we cover the bubble and subsequent corporate governance crisis in some detail. We go back and remind students that people are REMMs (see my site for description if you forget from class ;) ) and that they look out for their own best interests and respond to changes in the environment. During the period leading up to the governance crises (post bubble burst period where fraud and corruption were exposed at Enron, Adelphia, Tyco etc.), much in the environment changed. In sort of a “perfect storm” these changes allowed, and even encouraged, the problems of fraud and risk taking to occur. I think understanding how the problem developed is important to lower the fear that can accompany the volatility as well as to prevent future problems.
I will not deny that these were (and to some degree continue to be) problems, but they are not so severe as many believe. Moreover, a few “bad apples” does not mean that all (or even the majority) of apples are bad. In fact, that these events were news at all suggest that they are atypical.
On to another topic that you bring up: global economics. I do not know exactly what you mean in this regard. If you are suggesting that global economics is a bad thing, I again have to disagree. In fact, there may be nothing we can do to lift the world’s poor more than to engage in free trade. One needs only to look at the success of nations that embrace free trade to see that this does work. As some evidence I give you two Alan Greenspan speeches:
Note, this is not saying that there are not many very very very poor people in these developing countries, but it is to say there are fewer of the poor because of free trade than there would be in its absence.
Now free trade does lead to many changes and there are losers involved. However, these losses tend to be short-term and fairly isolated. A problem however is in what is isolated from a global economic perspective is very concentrated for those who are the losers. (indeed in The World is Flat Thomas Friedman writes something to the effect of “for the unemployed worker, the jobless rate is not 5%, but 100%).
As for your next topic, energy prices, sure they are rising, but until this week most of the rise seems to be demand driven. A relatively simple rule of thumb is that when economies pick up, so too does energy demand. Yes there is talk of “peak oil” and at some point we will run out of oil. But whether that is now or 100 years from now we really do not know. However, that said, the best way to prepare for that eventuality is to allow market forces to work. As the price of energy rises, more and more so-called alternative energies will be developed.
If we were to somehow keep prices low (be it through caps, subsidies to producers, etc), then we would fail to develop the alternative energies needed. Indeed, a few years ago, the Saudi oil officials argued that high prices were a threat to the oil business for exactly this reason.
Again the rising costs of energy do cause problems and are inconvenient, but in the big picture, these costs and inconveniences are that not necessarily that harrowing. Moreover, imagine a previous age where people had to reply on wood for power. Not only was this MUCH more expensive, but the energy produced was both dirtier and less powerful. It is likely that at some point in the future humans look back and laugh at our use of oil and gas.
To your question of how people can afford to commute if prices continue to rise, it is likely that this is one of the “inconveniences” I mentioned above. It might mean they need to take mass transit or car pool, or work from home, or maybe it means they live in a smaller home nearer to work (thus slowing suburban sprawl). However, it is worthy to point out that most of these are longer term fixes. As the tried and true economics’ adage holds that things tend to be fixed in the short term but variable in the longer term.
Your email reminds me of missionary who came to the door shortly after 9-11. She claimed that we lived in the most violent time ever. I am sure she meant well, but I refused to believe her argument. Instead I explained to her that that while every violent death is one too many, the number of people dying violently today is arguably much lower than at any point in our history and definitely so if you measure it on a per capita basis. What is different is that technology now allows us to experience the violence: we see the explosions, we hear the cries, we see the bodies. That is vastly different than in previous ages where thousands, indeed millions, of people could be killed without the world knowing about it for years.
In finance classes we often discuss the idea that transparency is good. The same can be said about this technological change that has increased transparency in all aspects of life. This transparency can help prevent crimes from occurring. (One exception of course is terrorism, the advocates of which crave the attention.) However, this transparency comes with a cost: it plays on the mental health of all.
To make matters worse for our mental sanity, bad news sells better than good news. When was the last time you heard about the person who did not get robbed? The house that did not burn? Or even in the current case of
This is almost always the case. For instance, currently I am watching TV on the aftermath of Katrina. The VAST majority of stories are on looting, fires, and suffering. Not about how a neighbor helped someone, or the strangers who are sharing what little food they have.
Thus, we are constantly hit with bad news. It makes it seem like things are really bad elsewhere. Indeed, I thought it interesting that you say you are doing well but are worried about others suffering in the economy. Your concern for others is natural but many of those you are worrying about would say that they are doing fine but that they are worried about you.
The websites you mention are a by product of this. Indeed they are part of a larger attempt by certain people to convince others of the “gloom and doom” facing the world. This message is not new. It has been around for hundreds (and probably thousands) of years. Indeed, Economics has gotten the nickname of the “Dismal Science” for that reason.
Added to the mix is the fact that we do live in a time where change is occurring at a faster rate than ever before. And since change is always scary, the times have leant themselves to many fear-mongers who want to stop change or to revert back to some supposed idyllic past era. These proponents live in all areas, across all time periods, and hold many beliefs. And to make matters worse, they generally mean well and almost always have convinced themselves and their followers that they are doing the right thing. However, I feel they are merely making themselves, their followers, and others miserable.
What they are missing is that things are good and getting better. The average standard of living is higher than it has ever been, people are living longer than ever, and people are healthier than ever. This is true not only in the
So to wrap up, I would say that Chicken Little has it wrong, the sky is not falling, in fact it looks mostly sunny!I realize this answer was way too long, but the tone of your email sounded so negative and so many people have the same view (you are the third person this week who has mentioned a similar sentiment to me) that I felt that a thorough response was necessary.
keep in touch,
St. Bonaventure is offering free room and board and one-half tuition scholarships to students from higher education institutions in areas affected by the hurricane so those students can continue their studies here at St. Bonaventure on a temporary basis.
“Our doors — and our hearts — are open,” said Sr. Margaret Carney, O.S.F., S.T.D, University president. “We have put into motion every effort to accommodate students from higher education institutions affected by the hurricane and invite them to contact us. Our goal is to help these students continue their education without interruption.”
We're asking all faculty, staff and students to help us by sharing this information with any professional or social organizations you're affiliated with.
"We expect students to return to their home institutions at the earliest possible moment and will make every effort to help them with that transition," said Mary Piccioli, dean of enrollment. "Our classes began August 29, so it’s important that students contact us as soon as possible if they’re interested in attending classes at St. Bonaventure."
Interested students can contact St. Bonaventure via Mary Piccioli at (800) 462-5050, or via e-mail at firstname.lastname@example.org. For full information on St. Bonaventure’s response to Hurricane Katrina, please visit the University’s Web site.
Wednesday, August 24, 2005
Expectations matter. I am always concerned when undergraduates feel they will be making $100,000 right out of school. Therefore I highly recommend that you take a look at what the class of 2004 at SBU did.
There are of course many caveats (responder biases galore and these are for all majors not just finance or even just business) but it is a starting point to establish expectations. (and yes I realize the link says 2003, so it may be a year off, but either way you have some idea of what to expect.
From the report:
Less than $15,000 3.36%
$55,000 and higher 0 0%
Monday, August 22, 2005
I expect to use them to review what was covered in class and to give a few clarifications of challenging and important topics.
Right now I have a few recordings done. I will have these linked on our class pages as well, but since some past students may want to see how these work, I will also post these here.
Thursday, August 18, 2005
EconLog, The Economics and Philosophy of Pity Grades, Bryan Caplan: Library of Economics and Liberty
EconLog, The Economics and Philosophy of Pity Grades, Bryan Caplan: Library of Economics and Liberty: "students should get the grade they earned. And this has nothing to do with how much higher grades would benefit them. Students who demonstrate their knowledge of the material deserve high grades, and students who demonstrate their lack of knowledge deserve low grades, and that's all there is to it. In short, morally correct grading is about merit, not need."
I do not give away grades, you earn them :) Or at least that is my goal!
Tuesday, August 16, 2005
Fidelity's National Financial said its study, released in the form of an index, showed the overall satisfaction level of brokers to be 5.4 on a scale of 1 to 7, with the highest number indicating 'fully satisfied.'"
Wednesday, July 20, 2005
One of WNYs premier Private Equity Firms is looking for a Financial Analyst. This firm provides capital to owners, entrepreneurs and businesses for growth financing, management buy-outs, buy-outs of family businesses and corporate divestitures, recapitalizations and private IPOs and ownership transitions. Critical thinking, strong Excel software modeling skills, understanding of financial statements, excellent work ethic, high energy, organization, and strong people skills required. The ideal candidate will have a BS degree is Finance or Accounting and 2-3 years work experience in the area of finance. Salary range $60,000 - 80,000.
Past students, contact me in interested...
Sunday, July 10, 2005
CollegeJournal | Resumes/Interviewing: "If you like to take risks, don't send a thank-you note to an employer following an interview. You might still get hired. But be aware that if the choice boils down to you and another equally qualified candidate, the one who sends a well-crafted note is more likely to get the nod."
Wednesday, June 22, 2005
Thursday, June 09, 2005
Wanna know the hottest item in China?- The Economic Times: "The hottest selling item on Chinese shop shelves isn’t the latest electronic gizmo or any fashion item. It’s the old favourite — the Oxford English Dictionary. "
Friday, June 03, 2005
I will not post my advice yet on the FinanceProfessor blog, but since this blog is so much smaller and mainly just for students, I am sure he will not mind me sharing my response:
"The best financial advice I can give is to think long-term. While it seems simple, it is often very difficult. It means to save more than you think you need to save and spend less than you want to spend. The best way that I have found to do this is with automatic investment plans. These plans, which are available through all major mutual funds and through most employers, take money out of your checking accounts on a regular basis. This forces you to invest regularly and has the added benefit of making it easier to cut back on spending since if you do not see the money, you are much less likely to spend the money. "
Wednesday, June 01, 2005
MBADepot points us to the following articleInformationWeek > I.T. Careers > Is An MBA Worth It? > November 1, 2004
"Business-savvy tech execs are in demand and their compensation reflects that. In the last few years, business-technology executives who have MBAs have seen their compensation soar beyond that of execs who can only boast of years of experience toiling in IT.
That's the finding of a new study titled "The Effect Of MBA Education On Total Compensation Of IT Professionals," conducted by the Ross School of Business at the University of Michigan. "
So the answer at least for those is IT seems to be a strong yes!
BTW cannot recommend MBADepot strongly enough! Good Site and great newsletter!
Sunday, May 29, 2005
Nike says just do it yourself - Yahoo! News: "he world's largest athletic shoemaker has relaunched a Web site where shoppers design their own shoes, choosing everything from the color of the famous Nike swoosh to personalizing the tongue with a word or phrase."
Saturday, May 28, 2005
It is a good cause so if you would like to learn more about the ride (or a ride near you--it is a national series that I HIGHLY recommend!!!---or if you want to donate to them, why not do it through this link. :)
thanks in advance!!
Friday, May 27, 2005
It is Free Money Finance.
Free Money Finance
It is not an academic finance site, but it is excellent for those of you looking for solid information about your personal finances.
The advice is dead-on! I especially suggest you all read the Best Financial Advice series.
A quick taste:
From Lesson 2:
"Spend less than you earn. Successful financial planning really stems from that simple statement. If you retain a portion of your current income, youÂ'll soon ask yourself a question: what should you do with that money? And that question is the beginning of wealth creation."
Great stuff!!! In fact I am going to cross post this on the FinanceClass blog as well.
Thursday, May 19, 2005
I want to apologize for being so late on this. I usually give a "graduation speech" the last day of classes, but with the case presentations in 610 and the Business First Interview for 422, it never happened.
I do want to congratulate you all and to wish you the best of luck in the future and to ask you to stay in touch.
Also here is much of what I would have said, had I had time ;) this is from the fall of 2004.
Congratulations. You have made it. Ok, so maybe it is not graduation time yet, but you are getting there. And minimally you have made it through all but the final from this class.
So I started out with the intent to write about what finance teaches us about life in general. But then I decided to open it up even further. So this entry is what have we learned in the business classes and how can that be incorporated into our every day lives? Consider it your first graduation address.
Accounting: In accounting classes we learned the importance of having checks and balances. We learned how to read a balance sheet and that every event has positive and negative aspects (i.e. you debit some accounts, while crediting others).
Statistics: From Stats classes we learn that few things in life are certain. Therefore, the best we can do is to “play the percentages.” We also learn to make informed decisions.
Economics: Arguably economics is the most all encompassing of any of the classes we have taken. Indeed Finance is just applied economics. So to list everything we learned would take a long time, but a few of the key things we learned: Specialization makes society better off. Free trade makes both sides better off. People maximize their own utility. Things at the margin matter!
Management: Management classes tend to fall into one of two camps. One stresses the interpersonal skills necessary to be a manager. The other camp is more number based—the so-called management science. We learn much from each. From the former we are reminded that leaders are important and that how we interact matters. From the latter, we learn to be efficient, to look for ways to continually improve, and that by basing decisions on quantifiable things we can do things much better.
Marketing: We learned that it is not just what you know, but how you come across. We learned that reputation matters and that psychology is important.
Business Information Systems: In BIS we learned that you have to be technologically competent. We learned that systems are only as good as what you put into them and that systems are only as good as their weakest link.
Finance: Finance is in many ways the key holding all of this together. Finance, in the terminology of economists, finance helps to aggregate all that we have learned in other classes. But finance is even more than that. In finance, we learned
- that compounding is very powerful. Let it work for you and not against you. This means to save early, save often, and save regularly.
- that taxes and transaction costs matter. Therefore take advantage of tax advantaged investment accounts and watch excessive fees and trading costs.
- that markets are pretty efficient (although maybe not perfectly so). This means that there is no free lunch so when things sound too good to be true, be skeptical.
- that too much debt is a bad thing. Financial distress does not just happen to firms. Be careful about borrowing. Used correctly, debt is a great tool. Used incorrectly, it leads to many problems.
- that governance matters. Just like by structuring contracts differently can influence a firms’ market value, so too our own governance influences our returns.
- that luck sometimes is good and sometimes bad. Plan for the worse, but hope for the best!
- that investment is important. So invest in your assets—all of your assets. Your assets include your investments (stocks, bonds, mutual funds, etc), tangible assets (real estate, baseball cards, car, etc), and intangible (reputation, goodwill, your friends, your health, your mind). What does this mean? It means that while you care for your bank balance, your real property, don’t forget your friends, your family, your health, and your reputation. Sure it may not always be fun—(driving to see a sick friend never is), but do it anyways! (see next item)
- to think long term. Not only is most of a stock’s value derived from long term growth, so too is our value. The Enrons, the Worldcoms, and others forgot this. Sure you may have to pass up some things you want, but in the long run you will be glad you did! (indeed, drug addicts have some of the lowest discount rates known: they discount the future for short-term gains.)
- Both diversification and specialization have their places. On one hand specialization allows us to be very good at something. However, in a constantly changing world, too much specialization can be very risky. Moreover, too much of anything will lead to staleness (and often is bad for your health too). So have varied interests, be willing to learn new things, and never stop learning.
- that there are many ways increase utility. Money is not the only thing that makes people happy. People are REMMs and care about all things. More money is good, but so too are more free time, a better standard of living, and a clean conscience. How you draw your indifference curves is a personal decision.
To these, I would also add the importance of
- staying confident—many of you sell yourselves short. Both collectively and individually. I am not sure if it is a function of going to a small school, or not. But you should not sell yourself short!!! IF YOU WANT IT TO BE, the education you get here is every bit as good as you could get at any school in the world. Too many of you use “it is too hard” or “no one else is doing it” or “I can’t do it” as an excuse. You can do it. You just have to want to do it!
- never get too worried about money. Yes, it is money. Yes, it matters, but only to a degree. I’ve seen too many people destroy themselves (physically and mentally) over money. Do not let it happen to you. This may mean some advanced planning and might mean you do not have the fanciest car, or the largest TV. But who cares? Along these lines, the best definition of wealth I have ever heard is Wealth = monetary wealth / wants.
- staying active. Both physically and mentally. It is way too easy to stop. Don’t stop! Learn something new every day. Read, risten, take classes. Do some physical activity every day. Run, bike, walk, you name it! But to quote Nike, JUST DO IT! You will be glad in the long run!
- having fun! Life is too short to not have fun! Find hobbies that you like doing. But also at work. Remember: Work should be enjoyable, not something you have to do!!! as Anthony Annuziado said in our class: find a job you love and you'll never have to work a day in yout life!
See, I told you finance was everything :) Good luck and keep in touch!!! jim
Wednesday, May 18, 2005
Too Stressed To Think?: "Chronic stress can be harmful - to your health and also to your brain, according to researchers at the Douglas Hospital Research Center. Their findings, published in a recent issue of Psychoneuroendocrinology, show increased stress hormones lead to memory impairment in the elderly and learning difficulties in young adults."
Friday, May 13, 2005
Dodson, Stone named to ESPN The Magazine/CoSIDA Academic All-District softball team :: Both are now eligible for Academic All-America� honors
Dodson, Stone named to ESPN The Magazine/CoSIDA Academic All-District softball team :: Both are now eligible for Academic All-America� honors
Monday, May 09, 2005
That said, I would warn you, that the test will be challenging and Iwould anticipate that you may not have enough time to read over all of the notes during the exam ;)
The test is cumulative. I am not done making it yet, but anticipate several in depth problems.
Friday, May 06, 2005
Tuesday, May 03, 2005
The test for Monday's 610 class will be at 6pm on Monday in MURPHY AUD C.
The test for Thursday's 610 class will be at 6pm TUESDAY in Murphy AUD C.
For the 610 exams (including the Five Week version), you are allowed a cheat sheet (front and back--8.5 by 11 inches). You can (if you so desire) also bring present and Future value tables.
The test for Fin 422 will also be offered at 6pm Tuesday in Murphy Aud C---It is open book.
For those of you taking it in the auds, Be sure to spread out as far as possible . Given what happened last time, I want no one in near proximity of anyone else. Use all rows and expect me to move you again (nothing personal, but I am not going through that again!)
Also for the extra credit I have only recieved a few questions, you have until Wed afternoon to email me your questions. You will have a minimum of 1% added to your exam for each MC that makes the test. (note that is about 3 points).
Sunday, May 01, 2005
Job hunters who network only because they need a job are the worst kind of networkers, says Ms. Nierenberg. She calls them 'hit-and-run networkers.'
'People who say they tried networking and it isn't working make me laugh, because they expect something overnight,' she says. 'But it's a process of relationship building, becoming an advocate for other people and creating trust"
It is the project for Fin422. I will let people know again (and put it on the FP blog) when it is complete.
St. Bonaventure University Finance WNY STock Index
please let me (or any of the contacts listed below) of any comments or errors that you see. Thanks!
....as for derivatives, they are not easy to grasp...think of options like coupons for a product...when is the coupon valuable?
Consider the various variables that might affect the value of the coupon:
- time to expiration--the longer, the more valuable
- price on coupon--the lower, the more valuable
- price of the product you are buying (technically, the difference between the coupon price and the market price)--the higher, the more valuable
- the price variation of the product--the higher the variation, the more valuable the coupon
This last one (variation--or in finance-speak volatility) needs more development...
Suppose I give you two coupons each having a three month life. One is to buy tofu at 2.39 at any point in the next three months, the second coupon is to buy a gallon of gas at $2.39.
terminology: the tofu and gas are the underlying assets.
Q. Supposing you buy both gas and tofu equally often--(I do!)--which coupon is more valuable?
A. The gas coupon. Why? Since the price of gas is very volatile whereas tofu's price is very stable.
Think about it, I never remember seeing tofu selling for more than $2.39, whereas there is a pretty good chance that at some point over the next three months Gas will sell for more than $2.39.
What our option pricing models (for example Black Scholes) do is to calculate the valuation of the "coupon", really a call option--giving you the right, but not the obligation" to buy the underlying asset at an agreed price (the price on the coupon or the STRIKE price).
I hope this helps! I know it is a sort of stupid example, but I am a big believer is understanding things intuitively, and coupons are something we all have experience with, so ???
Saturday, April 30, 2005
read what Cramer says....sort of what we talked about in class. Except thatthey were not good. I disagree.
Friday, April 29, 2005
Wednesday, April 27, 2005
While some of the talk will be more geared towards sports marketing, I know he has also worked on investor presentations, financing, and acquisitions so finance will be well represented.
Jim is a 2004 MBA (you may know him as "Kentucky").
Monday, April 25, 2005
AOL Find a Job--7 Salary Myths for the Classs of 2005
Just to make sure we are on the same page. This Friday we will do BOTH Springfield Power and Adelphia. On Saturday we will do LTCM. Then on Next Friday we will the Nat West Case.
Also here is the link I promised to the Shake Sound Board.
have a good week!
Thursday, May 5th and Sunday, May 8th are designated “Reading” (or “non-exam”) Days. No undergraduate exams, classes, or other mandatory activities are to take place on these days (optional review sessions are fine).
I know that you will be considerate of our students’ needs if they come to you with legitimate exam conflicts, particularly if the conflict was caused by a change in the time of your exam (including, but not limited to, it being scheduled at a “special” final exam time). It is our long-standing practice that students should not have to take more than two final exams in a given day. I hope that you will be understanding if a student comes to you with such a situation and asks for relief from having three exams in a day.
Final grades for degree candidates (undergraduate and graduate) are due to be submitted not later than 10:00 AM on Thursday, May 12th. Final grades for all other students (undergraduate and graduate) are due to be submitted not later than 10 AM on Monday, May 16th. It is imperative that we comply with these deadlines.
An Incomplete Grade Record form must be submitted to the Registrar’s office for each student for whom an “I” grade is submitted. Janet and Barb have copies of this form, if you need them. Please note, also, that the “I” grades must be made up before the beginning of the third week prior to the end of the following academic semester. The use of an “IP” grade is not a substitute for an “I” grade. The “IP” grade is reserved for research and other situations where the course work is planned to extend for more than one semester (e.g., a scheduled 2-semester course)."
Tuesday, April 19, 2005
submit multiple choice problems (must have a through e as potential answers with correct answer marked and a quick explanation given).
If your problem is selected for the test, you
- Get it right--or at least hopefully get it right ;)
- Get 2 points added to your test.
You can submit as many questions as you want. (never cap an incentive based package :) )
Monday, April 18, 2005
It is too short for a FinanceProfessorblog entry, but given we just were talking about conditions for market efficiency this weekend,I figured I could put it here.
From an upcoming JFQA (Journal of Financial and Quantitative Analysis).
"Short Sale Constraints, Differences of Opinion, and Overvaluation
Rodney D. Boehme, Bartley R. Danielsen, and Sorin M. Sorescu
Miller (1977) hypothesizes that dispersion of investor opinion in the presence of short-sale constraints leads to stock price overvaluation. However, previous empirical tests of Miller’s hypothesis have examined the valuation effects of only one of these two necessary conditions. We examine the valuation effects of the interaction between differences of opinion and short sale constraints. We find robust evidence of significant overvaluation for stocks that are subject to both conditions simultaneously. Stocks are not systematically overvalued when either one of these two conditions is not met."
Tuesday, April 12, 2005
The final for the Monday class is Monday May 9th. The final for the Thursday class is TUESDAY May 10th.
Both tests are at normal class time.
The Hilbert final is the last Saturday starting at noon.
From this also come up with the theoretical price for puts.
Once this is done, graph the various "greeks" (that is how the call price changes with the various variables.)
Due April 26, 2005
Monday, March 21, 2005
Now that other issues have been settled (a post will follow tonight), I would like to make teh teams known.
The cases will done in week 14. Details are on the class website.
Rust, Brodhead, Carucac, Fitzpatrick, Purdy
Brtko, Brecht, DeVay, Krishnaswamy, DeHaven
Gray, Walsh, Patenella, Arcangeli, Spaulding
Cullen, Domboski, Neri, Phillips, Brown, Lucas
Castenada, O’Rourke, Erickson, Tingley, Harper
Bovee, Bradley, Fletcher, McElligot, Szymcanicz
Zimmer, Kistner, Monteleone, Stavish
Overs, Benedict, Bilotta, Hollebeke
Auteritano, Plants, Johnson, Reagan
Haggerman, Shufran, Kapersky, Buttles
Lulas, Bubbs, Gilmartin, Castro
Warning, Denine, Tandle, Elliott
Thursday, March 17, 2005
Unfortunately the issue has not resolved itself. The parties did not come forward. So after further attempts to figure out how this could possibly have happened at random failed, I decided to fall back on statistics.
This afternoon we entered all of the multiple choice answers for everyone who took the same form as the questionable tests (and gee that was fun!--NOT). Once this was done, a correlation matrix was calculated. Because the scores are not normally distributed I will report the median rather than the mean. The median correlation was about a .27 with a standard error of about .07. The highest? Above a .96 on the exams in question. This more or less convinced me there is a problem.
After these calculations, I notified Dr. Peterson and Dean Fischer. We will meet soon to discuss the next steps in the process.
I will keep you informed.
Thanks for your patience on this important matter. Remember it is more important to get it right than to act quickly.
Monday, March 14, 2005
I will give you all of the details in class, but overall they were pretty good :)
I do have a few concerns however. Namely it was suggested to me that there may have been cheating on the exam.
Thus, a few comments:
1. I will "up the bounty" on evidence. There will now be a 200 point reward.
2. I am entering the actual answers of students to look for extremely high correlations of answers. However, just eyeballing it, it appears that there may be a problem with a couple of students.
3. If you turn yourself in, the punishment will be much less severe.
You have to understand, I do not want to believe that anyone cheated. My prior belief is that you are innocent. However, if I am able to prove that cheating occurred, then I will be left with no choice but to take it to the Dean and the VP of academic affairs. This will force you to retake the class (which will really screw up some of your job plans!).
So, if you did cheat, please come forward. I will be much less harsh on those who self-report.
(I learned that from the NCAA ;) )
Wednesday, February 23, 2005
BUT before you all panic and there is an option!!! I will also offer the exam on Friday March 11th (as in 311) . This optional exam will be in Murphy Aud C from 12:31 to 3:11 (hey it must be a sign or something!).
This later time will be available for the Thursday and Monday class, HOWEVER, I will need a count before hand. Thus, if you plan on taking the test on the Friday, please notify me by noon on Monday 3/7/05. Otherwise I will assume you will be taking the exam with your class.
Also some students have requested more suggested problems to help prepare for the test following spring break:
13.6, 13.17, 13.20, 13.22
14.8, 14.4, 14.11
15.1, 15.10, 15.14, 15.17 15.21, 15.22
16.13, 16.6, 16.4, 16.8, 16.9
Also, take a look at the test page on financeprofessor.com:
Finally it was suggested to me that I offer a review session prior to break. Not wanting to stand in the way of students trying to learn more, I agreed. It will be at 12:30 to 1:30 on this FRIDAY (2/25/05) in Murphy C. If you are coming and are willing to take notes to put online, I am sure some of your classmates would appreciate it!
Monday, February 21, 2005
Whew. It appears the last blog entry did get people’s attention. While I will try to address several topics in this entry, the largest thing I want to stress is that I realize the majority of you are doing the work. Thus the last blog entry was not really aimed at you. This one is.
From the second I left class last Monday I began to think of how to say what I wanted to the class. I had much of the plan constructed before arriving home, but I wanted to sleep on it so as to not sound too harsh. Moreover, I then wanted to respond sooner but opted to wait until the whole class had a chance to see the original entry untempered by further explanation.
Why was I upset? It was not that the grades were poor. Sure I felt that you should have done better but I can live with an occasional poor performance. (and I do realize that it was Valentine’s Day and a Monday after Alumni Weekend neither of which should matter but both do). I was not even upset about people complaining about the workload. I know it is heavy. It is supposed to be. I have thick enough skin to take the criticism.
What did upset me was the fact that during the class more and more people seemed to be giving up. Essentially saying that they could not do it. This is totally false! I continue to have no doubt that you can all do this! And in fact many of you are doing it.
As you all know I love sports, so let’s talk sports for a second. The talent difference between a good team and a bad team is often very minor. What does separate the good from the bad is often attitude. It is the coach’s job to make sure that the athletes have a good attitude and are working towards a common goal.
Both good and bad attitudes are contagious. That is why some athletes with great potential are seen as “cancers” to teams. These players detract from the performances of those around them.
Classes are much like teams. When a few people give up it makes it easier and easier for others to do so as well. When one person develops the attitude that “we don’t want to do the readings”, others quickly adopt that attitude. That is why I was so upset when I saw the “I don’t care” attitude.
To those of you who think my standards (or demands) are too high, I respectfully disagree. Yes I understand that you are busy and have many demands on your time. I also realize that I might ask for more from you than other teachers, but that is because I am convinced that people who attend SBU deserve the best education that money can buy and I am equally convinced that with a bit more effort you can all amaze yourself with how much you can learn.
Many of you have paid in the vicinity of $120,000 for your SBU education. This is roughly the price of a house. Stop and think about that for a second If you were to buy a house, you would want everything to be perfect.
The same holds in the class room. You deserve the best possible education and to be held to the highest possible standards. For me to ignore the problems that were developing in class last Monday would have been paramount to me saying I don’t care and that you can not do the work.
Yes, my standards are challenging: I ask you to read a great deal; my tests are “not easy”; you have to read journal articles (at least at some level). Why? Because that is what top schools do and that is our competition.
Consider for a moment our text. We use the same text book as classes at many of the top schools in the nations. A list that includes Ohio State, Penn State, Dartmouth, Georgetown, Texas, and NYU to name a few. That is intentional. In the job market we will be held to the same standards as graduates of these fine programs. To hold you to lower standards in class is negligent.
A final thought: a coach/teacher is paid to get more out of the athlete/student than the person could alone. Almost by definition this means that I have to push you harder than you want to be pushed. In the short-run this is not much fun, but in the longer run it pays large dividends.
Ok? Let’s put last week’s class behind us (like a bad loss to a sports team) and take it as a learning experience. Going forward I ask that you work as hard as I know you can. And for my part, I will try to remember that even great teams lose an occasional game :) and this class has the potential to be a great team!
BTW I would like to thank the majority of you who took time to write. I will have more on that in a later post.
Tuesday, February 15, 2005
I will take the blame. Obviously I am not getting the point across to you that you have to do the readings and that it is not a blow off course. 12 of the 13 questions on the quiz were verbatim from the end of chapter ONLINE quizzes for the readings from this week and last. So you had access to all of the questions and answers prior to the quiz! And the performance was still that poor. I presume that the complaining (let us out of class, I do not want to do that much reading, etc) were just venting after a poor quiz, but I would appreciate you make any complaints to me priviately. Complaining in class is a quick way to turn others off to the topic as well.
However, my real concern is the quiz and not the complaints. I have a tough time concluding that you all are really doing the readings. (Well it is either that or that you really are part of a giant sandbag cartel ;) ).
Ok, so we chalk yesterday's class up to being the first time you used the clickers and the Monday after alumni weekend, and several of you were sick, tired, etc. However, what can we do moving forward? I do not want to cause panic, but I do want to warn you again that if the quizzes give you trouble, a test (which is much longer, covers MUCH more material, and has some questions that are more challenging) is going to be a bit more troubling.
I understand that all students want less work, but that is really not fair to those that do know the material to “dumb down” the class. Indeed it is not even fair to those of you who are asking for it. You deserve to be challenged. In the long run you want to be challenged.
Moreover, I am positive that you can all do this. It is not rocket science. You can do it! I mean it. I wish I could convince you of that. When I look out at the class, there are about 10 of you who are sitting with totally blank expressions, not taking notes, just sitting as if you have given up. That is totally the wrong attitude. You can do this! Indeed, many of you have done more than this in Finance 401. Or even Finance 301! And they are undergrad classes. So I know you can do it!
You are all paying a great deal for your MBA. It is my job to make that degree worth something and not just a repeat of what you had in 604 or undergrad classes. Obviously as an graduate course, it has to be more challenging than an undergrad course and as the final finance class this has to be more thorough than a introductory (604) class.
For my part went back and tried to clarify what you have to do for each class. I also want to remind you for the upteenth time that you do not have to read every word of every paper but that you only need to get the top two or three ideas from any paper. For that matter, right now I would be ecstatic if you get the top point from each reading!
Also a note to those of you are banking on "making it by" on the class curve, remember that the curve is not guaranteed. Indeed the syllabus says you need a 90% for an A. So, if I feel that you are not holding up your end of the bargain up--which will be in part evidenced by quiz grades, there will be no curve. You might want to reread that last sentence!
Wednesday, February 09, 2005
done in Excel using PMT and PV functions.
looking at buying a car…four choices to pay for it
1. $500 rebate
2. 1.9% for 3 years
3. 2.9% for 4 years
4. 3.9% for 5 years
Analysis assumes a 6.22% interest rate is the opportunity cost of capital
this comes from the median rate for a new car, 20% down. (Not quite right, but close)
choice 1 500
for all other choices, I assume a 20% downpayment of selling price (about 18,000)
that is borrow 14,400
downpymt of 3,600
choice 2: monthly rate = .019/12, 36 payments
$13,492.84 PV of payments
PV of savings =14440-13,492.84 = 907.16
$13,486.73 PV of 48 payments
$913.27 PV of savings
$13,611.78 PV of 60 payments
$788.22 PV of savings
So assuming the above is correct, it is choice 3...but given at least some positive Transaction Costs and desire to pay it earlier, I would probably recommend choice 2.
Tuesday, February 08, 2005
I just found this. It is from a math professor at McMaster University. The paper is an excellent description of how to create a MVE frontier using Excel.
It may be a bit beyond what you are used to, but if you read it a few times, I am sure you can handle it.
Tuesday, February 01, 2005
Thursday (2/3/05) –We will also cover Chapter 6 and 7, so not as much time devoted to Index
- Preliminary “prospectus” criteria for inclusion in index due, name of index, how it differs from other available indices
- Website space needed—upload prospectus and excel file
Next Tuesday (2/8/05)—
- list of all publicly traded WNY firms due. In class we will make group decision on questionable firms as to whether they meet criteria for inclusion.
- List of what to include on website as well as how to design the page, ideas, FrontPage?, name etc.
By Thursday 2/10/05:
- List of newspapers, business publications, radio stations with business shows—might want to keep the same county by county approach
- Next version of “prospectus” due—should include a discussion of actual computation of the index, firms included, how often it will be updated, where it is available online etc.
- Preliminary Web site
- Complete index—available only to class
- Addresses and letter to be mailed to publications above
- preliminary press release to PR dept.
- Check backed data index to 2000 (further back if possible--but I have doubts)
- Comparison of index to Business First index, any other local index, S&P, Dow, Nasdaq
- directions as to how to update the index
- Press release announcing index to faculty
Thursday 2/24/05—invite Drs. Peterson, Horan, Fischer, Sister Margaret? (OTH?, Buffalo News?) etc to class to show them??? Totally your call on this one. I really do not feel like getting dressed up, but if you want the recognition, we will schedule it.
—final version ready for mailing out to newspapers etc.
Friday, January 28, 2005
From personal experience I would suggest that this works even if it is only mentally. For instance, while going home from class, try to remember a few things that you learned in class (time commitment near zero). I think you will be amazed at how well it works!
Thursday, January 27, 2005
Yes folks, Rich Miller has found a useful site for our project.
the link is a list of every chamber of commerce in WNY...
can you forward it to everyone in class?
Wednesday, January 26, 2005
A representative from Kaplan will be offering free practice GRE, GMAT and LSAT exams on the evening of Tuesday, February 15. The GMAT test will begin at 6:00 p.m., the LSAT at 6:15 p.m, and the GRE at 6:30 p.m. Tests will be about three hours in length. Interested individuals must pre-resgister with the Career Center by Friday, February 11.
Connie Whitcomb, DirectorThe Career Center
Tuesday, January 25, 2005
I love summary articles. They help make sense of the world and let us see the forest through the trees. Some of my favorites include the Harris and Raviv summary article on capital structure, Fama's paper that responds to Behavioral Finance Theories, and Cliff Smith's introduction to his book of readings in Corporate Finance. And now I have a favorite on the CAPM and other pricing models. While still officially a working paper, Fama and French give us an excellent recap of both current and past work in the field. My favorite line (and totally coincidentally the conclusion): "The CAPM, Like Markowitz' (1952, 1959) portfolio model on which it is built, is nevertheless a theoretical tour de force. We continue to teach the CAPM….but we also warn students that despite its seductive simplicity, the CAPM's empirical problems probably invalidate its use in applications." WOW! Well said. http://gsbwww.uchicago.edu/fac/finance/papers/capm%202004.pdf
Confused about the differing assumptions of pricing models? More than likely you know that the assumptions don't hold very well and you probably know much research has looked at how the assumptions matter. Fama and French now provide a framework to hopefully make sense of some of this confusion. In a working paper they show that investor tastes and expectations matter. For instance, when discussing the CAPM, they conclude that with differing expectations, there is little a priori reason to expect that the market portfolio is the tangency portfolio (and hence the market portfolio may or may not be mean variance efficient, which is a central tenant of CAPM). Additionally the authors use the concept of investor disagreement (and its impact on the market portfolio) to discuss a range of topics ranging from value investing, to stock picking, and mutual fund performance. Very interesting. Not sure how they do it. Great paper after Great paper! http://gsbwww.uchicago.edu/fac/finance/papers/assetprices2004b.pdf
Friday, January 21, 2005
If you are looking for extra problems etc, I would highly recommend it.
Especially the quizzes that are there. Most of the material is also online, so you can get to it there, but the CD is much faster.
Wednesday, January 19, 2005
The Revolution in Corporate Finance ISBN 1-40510-781-2
Amazon has it listed new for $61, used for $40. I owuld also suggest sharing :)
Tuesday, January 18, 2005
Wednesday night (1/19/05) at 7 pm in the SIMM room in the Reily Center (the old student weight room below the Post Office) to discuss the trip to Chicago.
If you want to go to Chicago but can not attend the meeting please Rich Miller (MILLERRA@sbu.edu) know as soon as possible.
If you are not a member of the club you really should join. It is open to all majors and I think it is one of the best clubs on campus. Just some of the activities we have planned for this semester include:
- the aforementioned Chicago Trip
- a fund raiser for a local boy who has a brain tumor (Tyler)
- working on a web site to teach business/economics/finance to those in the Middle East (largely Syria, Iran, and Iraq)
- a finance tutoring program
- a resume book