Journal of
Financial Education

Volume 27                                               CONTENTS                                               SPRING 2000

#1 - Financial Education In An Integrated, Undergraduate Curriculum

Richard Bliss, Kathy Hevert, Michael Ho, Mark Potter and Linda Stoller

Porter and McKibbin [1988] criticizes the lack of integration in business school curriculum. In recent years, most top MBA programs have modified their curriculum to address this issue, but integration at the undergraduate level is less common. This paper documents the development and introduction of an integrated undergraduate curriculum at Babson College. The new curriculum is described in detail, with particular emphasis on the role of finance. A comparison is made between the new curriculum and a more traditional introductory finance course. Finally, the pros and cons of an integrated program for both students and faculty are highlighted.

Pages 1-14

#2 - From Beanie Babies To Baseball Cards: A Financial Application Of Collectibles Markets

James H. Gilkeson and Reinhold P. Lamb

This paper offers an alternative to the conventional textbook approach for introducing studnets to financial markets. We find that the baseball card and Beanie Baby collectibles markets exhibit many of the characteristics of the more organized and traditional financial markets. These include the valuation process, the determination of risk classifications, the emergence of professional advisors, fraud and regulations, automation, pricing and price performance. Presenting these markets as proxies for eqity and emerging markets stimulates students interest and discussion, and provides famalier examples of financial applications.

Pages 14-21

#3 - A Simple Approach To Risk-Adjusted Performance

Kartono Liano

This note shows that the risk-Adjusted performance measure developed by Modigliani and Modigliani [1977] can be derived by using a simple concept from geometry

Pages 22-24

#4 - A Primer On Mutual To Stock Conversions By Thrifts

Austin H. Spencer

A significant amount of regulatory and academic literature has accumulated over the last fifteen years on mutual to stock conversions of thrifts. To date there has been no published attempted to bring this literature together. This survey is divided into two parts. In part one, the author brings together the regulatory literature and places it in context of the rapid pace of institutional change in the thrift industry. In the second part of the survey, the academic literature on mutual to stock conversions is organized around major issues and interpreted in light of the regulatory literature provided in part one.

Pages 25-39

#5 - To What Journals In Financial Research Should Your Library Subscribe?

Kam C. Chan, Robert C. W. Fok and Ming-Shiun Pan

This study examines the relationship between the quality of a finance journal (as measured by the impact factor), its subscription cost, and the nature of the journal publishers (commercially published or non-profit groups published journals). Our empirical results show that both journal subscription costs and the nature of the publisher cannot explain the quality of a finance journal. On the other hand, the nature of the publishers does significantly affect the journal subscription cost. IN addition, we employ an integer programming analysis to provide an optimal journal subscription solution for a library.

Pages 40-49

#6 - Project Selection And Flexibility: A Simple Application Of Option Theory

Iftekhar Hasan and Sudipto Sarkar

It is increasingly recognized in the academic literature that the standard Discounted Cash Flow (DCF) model is inadequate for many capital budgeting decisions because it cannot account for managerial flexibility. Models based on option theory have the ability to incorporate thsi flexibility in the capital budgeting decision. However, a recent survey by Bierman [1993] found that 99% of the largest industrial corporations still use the DCF model of capital budgeting decisions. There seems to be a gap between theoretical developments and practical applications in the corporate world. This paper is an attempt to bridge the gap by offering a simple illustration ofhte potential pitfalls in teh traditional approach to capital budgeting. It shows how the DCF model can lead to bad )value-reducing) decisions and presents a simple approach to deal with a specific instance of managerial flexibility. We also examine the value of this flexibility and the economic factors affecting its significance.

Pages 50-59

#7 - A Relevant Financial Principles Assignment Using Credit Card Purchase-Payment Variations

Michael A. Newsome, Bonnie F. Van Ness and Robert A. Van Ness

Often, students beginning a course in principles of finance have had few financial markets experiences. They have not had the opportunity to develop an intuitive understanding of interest rates and the importance of time in financial decisions. However, many college students are familiar with the various purchase and payment options available to credit card users. This paper presents an intuitively appealing spreadsheet assignment, with many variations, that draws on students' personal experiences with credit card purchases to lend relevance to early discussions of financial topics.

Pages 60-67

#8 - A Project Using Contemporary Data To Illustrate Interest Rate Parity

Robert L. Conn

This teaching note provides a project for out-of-class usage that introduces the concepts, terminology and financial issues surrounding interest rate parity. The unique feature of the project is it uses contemporary exchange rate data from the Wall Street Journal and interest rates from the Economist that allow students to observe, measure and analyze principle relationships between currency and eurocurrency deposit markets. Students measure interest rate parity between the US and Britain, Switzerland, Canada, and Japan, simulating practices commonly engaged in by global investors and arbitrageurs. The dynamics of the global markets are stress through the powerful concept of interest rate parity.

Pages 68-77

#9 - A Commercial Bank Management Spreadsheet Model

Terry L. Ziveny

This paper derives alternative formulations of degree of operating leverage, degree of financial leverage, and degree of combined leverage. These alternative formulations start with operating income instead of starting with sales as do the common used economists' elasticity-based measures and the accountants' textbook measures. The alternative formulations give the same answers but have a common format, making interpretation and computation easier for the business analyst.

Pages 77-81

#10 - Teaching About the Asian Financial Crisis

Noah P. Barsky and Jay C. Thibodeau

This teaching exercise offers an introduction to assessing the financial viability of a firm, highlighting important concepts such as liquidity, profitability, and leverage. In this exercise, students help an entrepreneur who is seeking to partner with a major corporate retailer. The analysis helps the entrepreneur to better understand the relative performance and financial position of well-known retailers. The context is designed to illustrate how to conduct a financial viability analysis

Pages 82-90

#11 - A General Model For EPS And Firm Growth

Lori Bonapart, Robert R. Cangemi, Raymond H. Lopez and Clairemarie Pierantoni

In a 1992 interview with Business Week, Donna Karan state "my astrologist sees me doing something in 1997 that is very, very different from what I'm doing now. It has nothing to do with fashion. I'm dying to know what it is." Ignorance is bliss. In the early months of 1996, Donna Karan found herself contemplating a major financing decision. The implications of this decision could produce the event forecasted by her astrologist

Pages 91-111