Journal of
Financial Education

Volume 31                                               CONTENTS                                      Winter 2005


#1 - University Trading Centres and Their Role in Business Education

John J. Siam

The AACSB, the global accreditation body for business education, expects business schools to prepare their students for future careers, by providing a total educational experience that emphasizes conceptual reasoning, problem-solving skills, and preparation for life-long learning. Achieving this "total educational experience" entails the development and acquisition of basic and discipline-specific core competencies along with traditional university education that prepares "students to enter useful professional and societal lives". The paper focuses on the ability of University Trading Centers (UTCs) to successfully deliver needed core and professional managerial competencies. A skill-building model that merges lab technology, pedagogy, simulations, and experiential learning leading to managerial competencies is offered.

Pages 1-23


#2 - An Examination of Finance Department Chair Roles, Perceptions and Attitudes

Delbert C. Goff and Donald A. Nast

This paper reports the results of a survey sent to finance department chairs at colleges and universities throughout the United States. The purpose of the survey was to gather information from chairs about their duties, responsibilities, work loads, contracts, compensation, challenges, attitudes and perceptions. The information in this study is valuable to prospective department chairs allowing them to compare their strengths and weaknesses with the challenges and responsibilities of the position. This study is also useful to existing chairs by providing comparative information concerning similar positions at other business schools. Finally, this information will help faculty members better understand the role, responsibilities, and challenges facing department chairs.

Pages 24-49

#3 - The Performance of Transfer Versus ‘Native’ Students in Principles of Finance

Kam C. Chan, Connie Shum and Indudeep Chhachhi

We examine the possible differential performance between "native" students and students who transfer from community colleges in principles of finance course. While it is perceived that transfer students perform relatively poorer in junior and senior level courses at four-year universities, the empirical evidence is mixed in accounting and economics. Our empirical results suggest that transfer students do not exhibit statistically different performance relative to "native" students. Our findings are robust to different estimation methods.

Pages 50-63


#4 - The Real-Time Restructuring Project: Maximizing Student Learning with Minimal Professor Effort

Steven P. Rich

This article examines a real-time project in which students propose the financial restructuring of a firm currently experiencing difficulties. Such a project breathes life into the theories and analytical tools discussed in class while giving students practice at collecting and analyzing real-time information and at defending their analysis and proposals for the firm. This paper includes recommendations on finding a good project firm, on helping students find relevant information, on helping students come up with better recommendations, on laying out requirements for the student’s written report, and on conducting the end-of-semester round-table discussion in which students defend their recommendations to their peers.

Pages 64-75

#5 - A Real-Life Case Approach: Diagnosis and Recommendations for Companies at the Crossroads

Patricia Clarke

This paper focuses on a real-life case approach that provides an opportunity, across business disciplines, for a forward-looking analysis of actual company problems and their historical context. The project is based on identification and diagnosis of a compelling, multi-faceted, and currently evolving business problem at a publicly-traded firm—a company "at the crossroads" due to bankruptcy, merger, or a major management change. While this student-centered assignment has been developed for a corporate finance elective at undergraduate and MBA levels, the analysis crosses other business disciplines and can be used as an integrative case assignment. Results from student surveys—especially for MBAs—indicate that the real-life case project, though demanding, is engaging, enjoyable, and useful in recognizing and analyzing complex business issues.

Pages 76-88

#6 - An Excel-Based Method to Determine Investible Mean-Variance Efficient Portfolios with Short Sales

Larry J. Johnson and Yaru G. Liu

This article presents several refinements of previously published Excel-based models for determining mean-variance efficient portfolios. The refined model does not use matrix algebra, it allows investors to short sale stocks, and it creates portfolios that are fully investable. By using real data in a spreadsheet format, the model clarifies how efficient portfolios are constructed and enhances the understanding of the mathematics behind mean-variance efficiency. In addition, the model provides students with a very practical application of portfolio theory.

Pages 89-99

#7 - Discrete Probability Analysis with the BAII Plus Professional Calculator

Richard W. Taylor

This paper shows how to do discrete probability analysis with the new BA II PLUS Professional financial calculator. Textbooks in Business Finance do an excellent job illustrating how to do basic time value of money on a financial calculator. However, Business Finance textbooks do not discuss how to do discrete probability analysis with a financial calculator. The calculation of expected value, standard deviation, and beta for an asset will be given. In addition, the calculation of covariance and correlation is presented. A two asset portfolio beta calculation is also given.

Pages 100-106


#8 - Amazon Rainforest Properties Ltda: Monte Carlo Analysis in an International Capital Budgeting Decision

James C. Brau and Matthew R. Watters

Jonathan Galvant is the President of Amazon Rainforest Properties. The company owns over one million acres of rainforest land in the Amazon Basin of Brazil. Jonathan is considering an environmentally friendly logging operation in an effort to employ local workers and prevent as much slash-and-burn farming as possible. He has obtained data on the costs and revenues of the proposed project and now needs to determine if the logging operation can meet its philanthropic potential while at the same time paying for itself.

Pages 107-117

#9 - Sulfur Dioxide Allowances: The Price of Pollution

Susan White and Ramesh K. S. Rao

This case discusses a method for enforcing the Clean Air Act's acid rain provisions. Utilities may purchase sulfur dioxide allowances, which give them permission to emit a certain amount of the pollutant, or they may install pollution control equipment or use low sulfur fuel. Which alternative is more cost-effective for a utility at a given point in time? This case gives students the opportunity to apply option pricing principles to a company’s decision to purchase clean air equipment versus buying the right to pollute.

Pages 118-126