Overview:

Baylor has two student-managed investment funds: A large-cap stock fund currently valued at approximately $14.2 million, and a small-cap stock fund currently valued at approximately $1.1 million. Students in the Portfolio Practicum courses are directly responsible for managing the portfolios, while learning the techniques used by professionals to analyze and select individual stocks. Each student will also learn how to use Bloomberg, FactSet, Thomson Eikon and other resources commonly used in the investment management industry.

The Classes:

Small-Cap: Mondays, 2:30-4:00pm, for a total of 16 weeks spread across both the Fall and Spring semesters
Large-Cap: Mondays, 5:00-7:30pm, for the Fall Semester only
Location: Hodges Financial Markets Center (Foster 116)
Structure: Designed after the format of an investment management firm and built around student participation.

Designed to cover two-semesters, the Small-Cap Practicum gives students experience researching, analyzing, and managing a portfolio of small capitalization (small-cap) stocks. The Fall course introduces equity research methods, including valuation, modeling, fundamental analysis, and cultivating resources. Student analysts, in teams, complete an initiation-of-coverage research report on a firm. Their research may include the team talking to company management and utilizing various information sources including financial documents, trade associations, and competitors, customers, and suppliers of the firm. In the Spring, one team will compete in the CFA Investment Research Challenge, while other student teams will continue to research and present new opportunities for the portfolio.

The Large-Cap Practicum is a one-semester course. The class structure is designed after the operational format of a funds management firm and is built around student participation. Specifically, two-person teams are assigned to cover each sector of the S&P 500. Although there are course readings, the course primarily consists of teams preparing and presenting to the class detailed reports on stocks in their sector. Every class member is involved in a discussion of each stock. Following the presentation and discussion, the team makes a recommendation on each stock. The class votes and the recommendations of the class are implemented.

For a better understanding of either course, you are welcome to attend all or part of a class session this semester! Both classes meet on Monday. The Small-Cap class begins this semester at 2:30 pm and the Large-Cap class begins at 5:00. The available Mondays this semester are March 20 (Large-Cap) and 27 (Small-Cap and Large-Cap).

Professors (Small Cap):

• David Morehead, CFA, Chief Investment Officer at Baylor University – Office of Investments.
• Renee Hanna, CFA, Managing Director of Investments at Baylor University – Office of Investments.

Professors (Large Cap):

• Brandon Troegle, CFA, CAIA, Senior Portfolio Advisor at Northern Trust Corporation.
• Taylor Finch, CFA, Managing Member at Finch Capital Management.

How to Apply:

Complete the online application at https://www.baylor.edu/business/financialmarkets/apply. The application will be open beginning at 8:00 am on Monday, March 20.

In addition to the usual grades, contact, and background information you will need to provide:

1. Statements of why you wish to take the course and your career plans/goals
2. Description(s) of any investment and/or finance-related experience
3. Uploaded copies of your current resume and current unofficial transcript

The deadline for submission is Midnight, Monday, March 27.

Each course is open to both graduate and undergraduate business students with a minimum 3.2 GPA, a strong academic record, and an interest in investments*. Applicants will be evaluated by a Finance faculty committee.

For More Information go to: http://www.baylor.edu/business/financial_markets

I just uploaded the midterm 1 grades, along with current attendance/participation, quiz, problem set, and Finance 4335 course grades, to Canvas.

As stated in the course syllabus, final numeric course grades will be determined according to the following equation:

Final Course Numeric Grade =.10(Attendance and Participation) +.10(Quizzes) +.20(Problem Sets) + Max{.20(Midterm Exam 1) +.20(Midterm Exam 2) +.20(Final Exam),.20(Midterm Exam 1) +.40(Final Exam),.20(Midterm Exam 2) +.40(Final Exam)}

As I noted in my February 25th blog posting entitled “Finance 4335 Grades on Canvas”, as the spring semester progresses and I continue to collect grades in the attendance, quiz, problem set, and exam categories, then the course grade listed on Canvas will dynamically incorporate that information on a timely basis for each student; now that we have Midterm 1 Exam grades, the equation that I am now using (until Midterm 2) is:

Course Numeric Grade after Midterm 1 = (.10(Attendance and Participation) +.10(Quizzes) +.20(Problem Sets) +.20(Midterm 1))/.6

There are n = 29 students enrolled in Finance 4335. Here are the current grade statistics, broken down by grade category:

As you can see from this table, more than half of the students enrolled in Finance 4335 have scored the mean or higher in all grade categories other than quizzes (since in all but the quiz category, the median is higher than the mean). Although actual letter grades won’t be assigned until after the final exam, hypothetically, you can determine where your course letter grade currently stands by comparing it with the course letter grade schedule that also appears in the course syllabus:

If you are disappointed by your performance to date in Finance 4335, keep in mind that the final exam grade automatically double counts in place of a lower midterm exam grade. In case both midterm exam grades are lower than the final exam grade, then the final exam grade replaces the lower of the two midterm exam grades.

If any of you would like to have a chat with me about your grades in Finance 4335, then by all means, stop by my office (Foster 320.39) 3:30-4:30 pm TR, or set up a Zoom appointment with me.

We will begin class on Tuesday by going over the solutions for the Insurance Economics Class Problem which I handed out on Thursday (also available at http://fin4335.garven.com/spring2023/Insurance_Economics_Class_Problem.pdf).

Since we didn’t get very far on Thursday’s class problem, I decided to turn it into an extra credit problem set for Finance 4335. It will be due at the beginning of class on Tuesday, and the grade you earn will replace your lowest problem set grade in Finance 4335 (that is, if your extra credit grade is higher than your lowest problem set grade).

As I promised on Thursday, I also now provide some helpful hints for the Insurance Economics Class Problem in the PDF file linked below (Insurance_Economics_Class_Problem_Solutions (Helpful Hints). This class problem is primarily based on the “Demand for Insurance: Full vs. Partial Coverage” reading that was assigned for last Thursday’s class meeting.

Insurance_Economics_Class_Problem (Helpful Hints).pdf

Here is a “heads-up” about the Finance 4335 grade book on Canvas.  There, you will find grade averages that reflect 1) attendance grades for the 12 class meetings which have occurred to date, 2) quizzes 1-5, and 3) problem sets 1-4.  Thus, your current (February 25) course numeric grade in Finance 4335 is based on the following equation:

(1) Current Course Numeric Grade = (.10(Class Attendance) +.10(Quizzes) +.20(Problem Sets))/.4

Note that equation (1) is a special case of the final course numeric grade equation (equation (2) below) which also appears in the “Grade Determination” section of the course syllabus:

(2) Final Course Numeric Grade =.10(Class Attendance) +.10(Quizzes) +.20(Problem Sets) + Max{.20(Midterm Exam 1) +.20(Midterm Exam 2) +.20(Final Exam), .20(Midterm Exam 1) +.40(Final Exam), .20(Midterm Exam 2) +.40(Final Exam)}

Going forward, my goal is for the Finance 4335 grade book to dynamically incorporate new grade information on a timely basis for each student, in a manner consistent with the final course numeric grade equation.  For example, after midterm 1 grading is complete, equation (3) will be used to determine your numeric course grade:

(3) Course Numeric Grade after Midterm 1 = (.10(Class Attendance) +.10(Quizzes) +.20(Problem Sets) +.20(Midterm 1))/.6

After midterm 2 grades are recorded, equation (4) will be used to determine your numeric course grade at that point in time:

(4) Course Numeric Grade after Midterm 2 = (.10(Class Attendance) +.10(Quizzes) +.20(Problem Sets) +.20(Midterm 1) +.20(Midterm 2))/.8

After the spring semester and the final exam period are over, all Finance 4335-related grades will have been collected, and I will use equation 2 above to calculate your final course numeric grade.  At that time, your final course letter grade will be based on the following schedule (which appears in the “Grade Determination” section of the course syllabus):

A	93-100%	C	73-77%
A-	90-93%	C-	70-73%
B+	87-90%	D+	67-70%
B	83-87%	D	63-67%
B-	80-83%	D-	60-63%
C+	77-80%	F	<60%

 

Student Query:  Hello Dr. Garven, I had a quick question regarding the upcoming exam. Will questions only be pulled from information pertaining to problem sets 3 & 4? Or will there be questions about the math and stat review portion as well?

Dr. Garven’s Response:  Students will find the study guide to be very helpful in preparing for tomorrow’s midterm exam in Finance 4335. The exam covers topics from the January 31 and February 9 assigned readings, the four-part Decision-Making under Risk and Uncertainty lecture series (see item 5 on the lecture notes page), Problem Set 3 and Problem Set 4, and the Risk Aversion and Stochastic Dominance class problems. I also recommend reviewing the various PDFs linked from the Problem Set Solutions page.

Math and stat principles also play important roles in the theory of risk aversion (e.g., the math behind the Arrow-Pratt framework helps explain differences in the degree to which decision-makers are risk averse), and the application of Taylor series math to expected utility indicates that variance is an inadequate risk measure if risks are skewed or fat-tailed.

The Midterm #1 Formula Sheet is now available at http://fin4335.garven.com/spring2023/formulas_part1.pdf.

Subject: Trepp’s 2023 Education Scholarship – Those interested in Commercial Real Estate – Apply Now!: Department of Finance Insurance and Real Estate

We are pleased to announce the opening of the application period for the inaugural Trepp Inc. Education Segment Scholarship. The scholarship period is open from February 10-April 7, 2023. Scholarship(s) up to $10,000 USD for tuition will be awarded based on merit.

Please see the application, including all eligibility criteria, learnor visiting www.trepp.com/scholarship2023. Partial or incomplete submissions will not be accepted or reviewed.

Students must have a minimum GPA of 3.4 (4.0 scale), be a citizen of the U.S., be a full-time junior, senior, or graduate student (2023 – 2024 academic year), enrolled at an accredited college or university and have the intent to pursue a career in CRE with a focus of study from one of the following commercial real estate fields. Award winner(s) will be notified via email and will be announced via Trepp social channels by May 18, 2023.

Should you have any questions regarding the application process, please feel free to contact me at (212) 329-6298.

Best,
Erin

Erin M. Liberatore-Timko | Director, Academic & Industry Relations | Trepp, Inc.
600 Fifth Avenue, 7th Floor, New York, NY 10020
Phone: +1 212 329 6298 | Email: erin_timko

Here’s a friendly reminder about assigned readings and quiz due Thursday, February 9. Be sure cover the following two readings prior to tomorrow’s class; the Quiz is based on these readings.

1. Expected Utility, Mean-Variance, and Stochastic Dominance, by James R. Garven
2. Modeling Risk Preferences Using Taylor Series Expansions of Utility Functions, by James R. Garven

In tomorrow’s recorded lecture, there is some discussion of the Risk Pooling Class Problem (located at http://fin4335.garven.com/spring2023/rpclassproblem.pdf) based on the assigned reading entitled Supply of Insurance. When you watch the video, I highly recommend that you pause at the 34:40 mark and try to complete this class problem on your own before moving on. Right after the 34:40 mark, I spend some time solving the class problem using an Excel spreadsheet. You’ll come away with a much better understanding of the risk pooling concept if you struggle a bit with it first, before viewing my explanation of this problem.

Most of the information you need about remote instruction tomorrow for Finance 4335 is listed in the "Virtual Instruction on Tuesday, January 31" email I sent via Canvas earlier this evening.

In the meantime, here are a couple of other housekeeping notes:

1. I changed the due date for Quiz 3 from tomorrow at 11 am to Thursday at 11 am.
2. Also, since I am cautiously optimistic that we’ll be back to in-person instruction by Thursday, plan to turn in Problem Set 2 at the beginning of class on Thursday.