ANDREW KALOTAY, Andrew Kalotay & Assoc.
Email: AKALOTAY@PHOTON.POLY.EDU
QI FU, Andrew Kalotay & Assoc.
Email: qifu@kalotay.com

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.

NICOLAS RETSINAS, affiliation not provided to SSRN
Email: nicolas_retsinas@harvard.edu
JUSTIN SETH GINSBURGH, Harvard Business School
Email: jginsburgh@hbs.edu

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.

HAROLD BIERMAN, Cornell University - Johnson Graduate School of Management
Email: hb29@cornell.edu

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.

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

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.

ROBERT B. SCOTT, Schroder Investment Management
Email: robert.scott@schroders.com

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.

CONSTANTIN GURDGIEV, Trinity College, Dublin, NCB Stockbrokers Limited
Email: gurdgic@tcd.ie

Lecture notes set 3 for International Financial Management course.

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.

RAPHAEL KAHAN, affiliation not provided to SSRN
Email: raphael.kahan@gmail.com

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.

VISHWANATH RAMANNA, Institute of Management Technology
Email: srvishy@gmail.com

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.

PATRICK J. BAYER, Duke University - Department of Economics, National Bureau of Economic Research (NBER)
Email: patrick.bayer@duke.edu
B. DOUGLAS BERNHEIM, Stanford University - Department of Economics, National Bureau of Economic Research (NBER)
Email: bernheim@stanford.edu
JOHN KARL SCHOLZ, University of Wisconsin - Madison - Department of Economics, National Bureau of Economic Research (NBER)
Email: Jkscholz@wisc.edu

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.

BRETT FREUDENBERG, Griffith University
Email: b.freudenberg@griffith.edu.au
MARK BRIMBLE, Griffith University - School of Accounting, Banking and Finance - Nathan and Logan Campuses, Centre for Financial Independence and Education
Email: M.Brimble@griffith.edu.au
VICTORIA VYVYAN, Griffith University - Griffith Business School
Email: v.vyvyan@griffith.edu.au
DAVID CORBY, Griffith University
Email: d.corby@griffith.edu.au

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.

WING CHEUNG, Nomura
Email: wing.cheung01@gmail.com
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.