Spreadsheet Modeling in Finance and Investment Courses

Abstract:     

Finance is an inherently quantitative subject, and educators at both the undergraduate and graduate levels often struggle with finding the optimal approach that maximizes understanding and retention for their students, especially for students who are mathematically challenged.

In this column, we offer and encourage an approach we label "Spreadsheet Modeling" that has been quite successful in our classes and is growing in popularity. Obviously, spreadsheet modeling is not new. Academics and practitioners have benefited from it since the early 80's. Nor is our recommended approach completely new or the definitive final word on the subject. Our primary conviction is simply that the optimal use of spreadsheets for teaching finance and investments has been only modestly explored, and the benefits of using them is strictly "positive NPV" for initial student learning and concept retention.

In this column, we first summarize the pedagogical issues of why "Spreadsheet Modeling" as an overall approach works so well, and the value of differing sub-approaches. Then we offer several examples from our own classes and a survey of available resources (including textbook supplements) especially for investments-type courses.

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