Table of Contents

A Financial Analysis of Consumer Mortgage Decisions

Andrew Kalotay, Andrew Kalotay & Assoc.
Qi Fu, Andrew Kalotay & Assoc.

One South: Investing in Emerging Markets (A)

Nicolas Retsinas, affiliation not provided to SSRN
Justin Seth Ginsburgh, Harvard Business School

Preface to 'The Bare Essentials of Investment: Teaching the Horse to Talk'

Harold Bierman, Cornell University - Johnson Graduate School of Management

Return to Basics: Are You Properly Calculating Tax Shields?

Ignacio Velez-Pareja, Universidad Tecnologica de Bolivar - Department of Finance and International Business - Instituto de Estudios para el Desarrollo (IDE)

A Real-Time Zero-Coupon Yield Curve Cubic Spline in Excel

Robert B. Scott, Schroder Investment Management

Lecture 3; International Financial Management

Constantin Gurdgiev, Trinity College, Dublin, NCB Stockbrokers Limited

Learning Problems in Transnational Business Education and Training: The Case of the MBA in Thailand

Nattavud Pimpa, affiliation not provided to SSRN

Reconciliation of Residual Income and Free Cash-Flow Valuation Models

Raphael Kahan, affiliation not provided to SSRN

Hindustan Unilever Ltd

Vishwanath Ramanna, Institute of Management Technology

The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers

Patrick J. Bayer, Duke University - Department of Economics, National Bureau of Economic Research (NBER)
B. Douglas Bernheim, Stanford University - Department of Economics, National Bureau of Economic Research (NBER)
John Karl Scholz, University of Wisconsin - Madison - Department of Economics, National Bureau of Economic Research (NBER)

A Penny for Your Thoughts: Can Participation in a Student-Industry Conference Improve Students’ Presentation Self-Efficacy and More?

Brett Freudenberg, Griffith University
Mark Brimble, Griffith University - School of Accounting, Banking and Finance - Nathan and Logan Campuses, Centre for Financial Independence and Education
Victoria Vyvyan, Griffith University - Griffith Business School
David Corby, Griffith University

Efficient Bayesian Factor Mimicking: Methodology, Tests and Comparison

Wing Cheung, Nomura
Nikhil Mittal, affiliation not provided to SSRN


FINANCE EDUCATOR: COURSES, CASES & TEACHING ABSTRACTS

"A Financial Analysis of Consumer Mortgage Decisions" Free Download
Research Institute for Housing America Research Paper No. 09-01

ANDREW KALOTAY, Andrew Kalotay & Assoc.
Email:
QI FU, Andrew Kalotay & Assoc.
Email:

Buying a home is the single biggest investment decision for most Americans. Because most buyers do not have the cash to pay the purchase price upfront, they are obliged to take out mortgage loans. The result has been demand for a wide range of mortgage products to suit borrowers’ varied cash flow and risk preferences.

Increased choice, however, introduces complexity - choosing the right mortgage and managing it can be a challenge. Fortunately, there are well-understood tools that corporate and municipal treasurers use to manage debt and these can be adapted for homeowners managing their mortgages. Corporate treasurers are responsible for managing their firms’ borrowing profiles and strategy. Just like a homebuyer, they need to decide when to borrow, how to structure debt, when to refinance debt and when to pay off debt. If they do this well, they can save their firm a lot of money; if not, the costs could be considerable. Homeowners face similar challenges in managing their home loans, and they can apply the same techniques used by corporate treasurers.

"One South: Investing in Emerging Markets (A)" 
HBS Case No. 210-024
Harvard Business School Finance Unit

NICOLAS RETSINAS, affiliation not provided to SSRN
Email:
JUSTIN SETH GINSBURGH, Harvard Business School
Email:

A United States private equity fund, The Saboput Group, must decide whether to invest in a new technology park development in Chennai, India. The case provides the reader with a detailed investment memorandum from the local Indian operating partner, and the reader must review the memo and financial model to make an investment recommendation to Saboput's investment committee.

"Preface to 'The Bare Essentials of Investment: Teaching the Horse to Talk'" Free Download
H. Bierman, THE BARE ESSENTIALS OF INVESTMENT: TEACHING THE HORSE TO TALK, World Scientific, 2007
Johnson School Research Paper Series No. #44-09

HAROLD BIERMAN, Cornell University - Johnson Graduate School of Management
Email:

The objective of this book is to help an individual (or a family) design a personal investment strategy. It explains how stock markets can be used to make a large fortune from a small investment. It also recommends an approach to increase a reasonable return on investment and explains the importance of investment alternatives.

The book is based on the premise that the US stock market is not too high compared to the long-term value of its securities. It further assumes that readers are interested both in return likely to be earned on investment and the risk of not earning the return target.

The focus on this book is on “personal� investing. It begins with three basic rules of investing and concludes with ten subordinate rules and other suggestions for investing.

"Return to Basics: Are You Properly Calculating Tax Shields?" Free Download

IGNACIO VELEZ-PAREJA, Universidad Tecnologica de Bolivar - Department of Finance and International Business - Instituto de Estudios para el Desarrollo (IDE)
Email:

Everybody uses tax shields when calculating the Weighted Average Cost of Capital (WACC). The textbook formula includes the tax shield with the (1-T) factor affecting the contribution of debt to the WACC. Tax shields are a strange mix of accounting and accrual related to WACC that relies on market values.

In this short work we show some limitations and care that have to be taken into account when using tax shields. We illustrate these ideas with simple examples.

"A Real-Time Zero-Coupon Yield Curve Cubic Spline in Excel" Free Download

ROBERT B. SCOTT, Schroder Investment Management
Email:

This paper details a method for estimating a zero-coupon yield curve using a set of securities data. The approach uses a McCullough cubic spline and can be estimated using restricted least squares in Excel which provides a considerable advantage over other more advanced, but not necessarily more accurate models.

"Lecture 3; International Financial Management" Free Download

CONSTANTIN GURDGIEV, Trinity College, Dublin, NCB Stockbrokers Limited
Email:

Lecture notes set 3 for International Financial Management course.

"Learning Problems in Transnational Business Education and Training: The Case of the MBA in Thailand" Fee Download
International Journal of Training and Development, Vol. 13, Issue 4, pp. 262-279, December 2009

NATTAVUD PIMPA, affiliation not provided to SSRN

The transnational Master of Business Administration (MBA) programme has been one of the most popular official business training programmes amongst Thai business practitioners. Although the numbers of transnational business schools and MBA programmes are rapidly increasing, the programmes face numerous challenges from both local and global factors. This empirical study discusses the concept of learning in transnational MBA programmes in the Thai business training and cultural context. By investigating experiences from various key stakeholders, the study highlights various problems related to learning style and culture, learning and languages, the transferability of the Western managerial concept to the Thai context, and the value of Western learning resources for Thai business learners. The implication of the results of this study for the management of transnational programmes is that such management needs to respond to local conditions, regional forces and global factors rather than being locked into a standard model.

"Reconciliation of Residual Income and Free Cash-Flow Valuation Models" Free Download

RAPHAEL KAHAN, affiliation not provided to SSRN
Email:

Ohlson & Juettner-Naworth (2005) show, using a “scheme� developed in Ohlson 1998, 2000, that one can derive the residual income model from the discounted dividend model. However, their method involves the condition that an infinite sum (book value per share) divided by the infinite sum of discount factors will converge towards zero (“mild transversality condition�). Mathematically this needs not be the case as infinity divided by infinity is indeterminate. The following presents two reconciliation methods which are free from the convergence assumption.

"Hindustan Unilever Ltd" Free Download

VISHWANATH RAMANNA, Institute of Management Technology
Email:

The case documents the dividend policy of a well known multinational firm in India. Students are asked to make inter firm comparisons and estimate the optimal pay out for the company.

"The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers" Fee Download
Economic Inquiry, Vol. 47, No. 4, pp. 605-624, October 2009

PATRICK J. BAYER, Duke University - Department of Economics, National Bureau of Economic Research (NBER)
Email:
B. DOUGLAS BERNHEIM, Stanford University - Department of Economics, National Bureau of Economic Research (NBER)
Email:
JOHN KARL SCHOLZ, University of Wisconsin - Madison - Department of Economics, National Bureau of Economic Research (NBER)
Email:

We examine the effects of education on financial decision-making skills by identifying an interesting source of variation in pertinent training. During the 1990s, an increasing number of individuals were exposed to programs of financial education provided by their employers. If, as some have argued, low saving frequently results from a failure to appreciate economic vulnerabilities, then education of this form could prove to have a powerful effect on behavior. The current article undertakes an analysis of these programs using a previously unexploited survey of employers. We find that both participation in and contributions to voluntary savings plans are significantly higher when employers offer retirement seminars. The effect is typically much stronger for nonhighly compensated employees than for highly compensated employees. The frequency of seminars emerges as a particularly important correlate of behavior. We are unable to detect any effects of written materials, such as newsletters and summary plan descriptions, regardless of frequency. We also present evidence on other determinants of plan activity.

"A Penny for Your Thoughts: Can Participation in a Student-Industry Conference Improve Students’ Presentation Self-Efficacy and More?" 
The International Journal of Learning, Vol. 15, No. 5, pp. 188-200, 2008

BRETT FREUDENBERG, Griffith University
Email:
MARK BRIMBLE, Griffith University - School of Accounting, Banking and Finance - Nathan and Logan Campuses, Centre for Financial Independence and Education
Email:
VICTORIA VYVYAN, Griffith University - Griffith Business School
Email:
DAVID CORBY, Griffith University
Email:

Success in a modern world requires more than just technical skills, with employers requiring graduates with arange of skills which can be critical for job performance and career advancement (Cohen, 1999; Tucker & McCarthy, 2001). An important graduate attribute is good communication skills (Usoff & Feldmann, 1998), with self confidence a key in its development (Reinsch & Shelby, 1996). The literature also demonstrates that the use of professionals and industry representatives can enhance students’ confidence and their self-belief (Subramaniam & Freudenberg, 2007). It is on the basis of these findings that a full day Student-Industry Conference involving first to third year students in a number of related undergraduate financial planning courses was developed. The conference provided opportunities for these students to come together and present research papers that they had worked on in their courses. These student presentations were attended by not only other students, but also industry representatives who were involved in the assessment process.

Furthermore, students had the opportunity to listen to a number of relevant industry speakers on current topics and research in the field. This also included discussions about the overall direction of the industry and the graduate recruitment process. Through this and other mechanisms, the Student-Industry Conference was designed to allow for the improvement of students’ selfefficacy through mastery, modelling and verbal persuasion. This paper details the empirical evidence as to whether students’ participation in this Student-Industry Conference improved their self-efficacy, particularly in terms of their communication skills. Data from a questionnaire of participating students indicates that the students perceived greater self-efficacy as a result of this initiative. With such improved self-efficacy students may be able to enhance their careers in the future.

"Efficient Bayesian Factor Mimicking: Methodology, Tests and Comparison" Free Download

WING CHEUNG, Nomura
Email:
NIKHIL MITTAL, affiliation not provided to SSRN

When investment or hedging views are generated on a factor which is not directly investible, creating a quality factor proxy or mimicking portfolio becomes a basic implementation requirement. For fundamental factors, traditional factor-mimicking techniques include the Fama-French (FF) factor-ranking approach (Fama-French, 1993), and constrained optimisation that controls portfolio exposure to factors. In a seemingly different connection, Cheung (2009B) shows how to construct factor portfolios in the Augmented Black-Litterman (ABL) framework, which makes its intrinsic choice of factor-mimicking technique. In this paper, we test the performance of this technique, along with traditional techniques. Our results show that the ABL factor-mimicking technique is more efficient.

This article features: -
- A brief review of two families of traditional and the new ABL FM techniques;
- A simulation-based testing methodology that isolates the FM quality issue from peripheral risk model and view quality issues, thereby avoiding unnecessary joint tests; and
- Numerical comparison between these techniques, leading to concrete evidence that the ABL technique is more efficient.

^top

Solicitation of Abstracts

Statement of Editorial Policy

1. FINANCE EDUCATOR: COURSES, CASES AND TEACHING.
As researchers and practitioners continue to expand our knowledge of finance, Finance Educator seeks to help educators find effective ways to communicate ideas and evidence to students in undergraduate, MBA, Ph.D. and Executive Education programs. Our goal is to serve as a nexus where the newest ideas in teaching materials, approaches and methods can be shared throughout the profession. Specifically, we hope to publish abstracts of teaching materials (cases, course designs, reading lists, on-line resources, simulations, multi-media tools, and texts), surveys of teaching approaches, round-table discussions, and occasional columns by the editors and others. We have two main goals: first, that through the exchange of teaching materials, the overall level of finance education will improve; and second, that through the dissemination of excellent teaching materials, contributions made by outstanding educators will be recognized. As our mandate is large, we actively solicit advice, suggestions and support from the community, broadly defined.

2. We will announce the work of developers of teaching materials irrespective of their affiliation with any particular company, publisher or university. Editorial screening will be concerned with the completeness of the work, its availability to the public, and technical or capacity limitations.

3. Criteria for publishing a case study abstract and course abstract include:
- case and teaching note or detailed course description and reading list provided in hard copy or electronic form to one of the editors.
- acknowledgment that the work of the author is original.
- professional quality attribution of sources, excerpts, and quotations. Casewriters are expected to follow the same citation practices used in academic/journal articles.
- the material is available without restriction to the public (except for reasonable charge).
- we will also post electronic versions of the material when the author and publisher are willing to deliver copies electronically.

To submit your research to SSRN, log in to the SSRN User HeadQuarters, and click on the My Papers link on the left menu, and then click on Start New Submission at the top of the page.

Distribution Services

If your organization is interested in increasing readership for its research by starting a Research Paper Series, or sponsoring a Subject Matter eJournal, please email: RPS@SSRN.com

Distributed by:

Financial Economics Network (FEN), a division of Social Science Electronic Publishing (SSEP) and Social Science Research Network (SSRN)

Directors

FEN SUBJECT MATTER EJOURNALS

MICHAEL C. JENSEN
Harvard Business School, Social Science Electronic Publishing (SSEP), Inc.
Email: mjensen@hbs.edu

Please contact us at the above addresses with your comments, questions or suggestions for FEN-Sub.

Advisory Board

Finance Educator: Courses, Cases & Teaching

FRANKLIN ALLEN
Nippon Life Professor of Finance and Economics, University of Pennsylvania - Finance Department, Fellow, European Corporate Governance Institute (ECGI)

MICHAEL J. BARCLAY
Alumni Distinguished Professor of Business Administration - Finance Area Coordinator, University of Rochester - Simon School (Deceased)

GEERT BEKAERT
Leon Cooperman Professor of Finance and Economics, Columbia University - Columbia Business School, Economics Department, National Bureau of Economic Research (NBER)

MICHAEL BRADLEY
F.M. Kirby Professor of Investment Banking and Professor of Law, Duke University - Fuqua School of Business

SUSAN CHAPLINSKY
University of Virginia - Darden Graduate School of Business Administration

HARRY DEANGELO
Professor, University of Southern California - Marshall School of Business - Finance and Business Economics Department

LINDA DEANGELO
Professor, University of Southern California - Marshall School of Business - Finance and Business Economics Department

EUGENE F. FAMA
Robert R. McCormick Distinguished Service Professor of Finance, University of Chicago - Booth School of Business

STEPHEN R. FOERSTER
Professor of Finance, University of Western Ontario - Richard Ivey School of Business

JULIAN R. FRANKS
Professor of Finance, London Business School, Fellow, Centre for Economic Policy Research (CEPR), Fellow, European Corporate Governance Institute (ECGI)

ROBERT GERTNER
University of Chicago - Booth School of Business, National Bureau of Economic Research (NBER)

CAMPBELL R. HARVEY
J. Paul Sticht Professor of International Business, Duke University - Fuqua School of Business, National Bureau of Economic Research (NBER)

LAURIE SIMON HODRICK
A. Barton Hepburn Professor of Economics in the Faculty of Business, Columbia University - Columbia Business School

STEVEN N. KAPLAN
Neubauer Family Professor of Entrepreneurship and Finance, University of Chicago - Booth School of Business, National Bureau of Economic Research (NBER)

DENNIS E. LOGUE
The Brattle Group

TIMOTHY LUEHRMAN
Harvard Business School

KEVIN J. MURPHY
Kenneth L. Trefftzs Chair in Finance, University of Southern California - Marshall School of Business, University of Southern California - Department of Economics, USC Gould School of Law

WILLIAM F. SHARPE
STANCO 25 Professor of Finance, Emeritus, Stanford University - Graduate School of Business, National Bureau of Economic Research (NBER)

JEREMY C. STEIN
Professor, Harvard University - Department of Economics, National Bureau of Economic Research (NBER)

THEO VERMAELEN
The Schroders Chaired Professor of International Finance and Asset Management, INSEAD - Finance

INGO WALTER
Setmour Milstein Professor of Finance, New York University - Stern School of Business

KAREN HOPPER WRUCK
Professor/Associate Dean, Ohio State University - Fisher College of Business, Department of Finance