Friendly reminder: Optional problem set 10 due tomorrow

As we wind down the spring semester in Finance 4335, here’s a friendly reminder for Finance 4335.

There is one more problem set left for Finance 4335, which is Problem Set 10 (Corporate Risk Management), and it is due via Canvas before the start of tomorrow’s class meeting. However, completing this problem set is optional. If you choose to complete and turn it in via Canvas, the grade you earn on it will replace your lowest problem set grade for the semester, provided its grade is higher than your lowest grade received on Problem Sets 1-9.

Extension of Problem Set 9 deadline and plans for tomorrow’s Finance 4335 class meeting

I have extended the deadline for Problem Set 9 from tomorrow (Thursday, April 25) to Tuesday, April 30. This decision was inspired by a question from a Finance 4335 student, which also led me to publish a related blog post earlier today titled "Pricing Credit Risk Class Problem and Solutions…".

In tomorrow’s Finance 4335 class, we will begin by reviewing the solutions for the first part of the class problem included in the above-referenced blog post (also previously covered during last Thursday’s class meeting). We will complete our discussion of the credit risk topic by covering the second part of the class problem. The rest of the class tomorrow will be devoted to further discussing the topic of corporate risk management, which began in yesterday’s Finance 4335 class meeting.

ICYMI: 5 Things You Need to Know About the Total Solar Eclipse and Diadeloso

5 Things You Need to Know About the Total Solar Eclipse and Diadeloso

The Total Solar Eclipse and Diadeloso on the Baylor University Waco campus are less than one week away on Monday, April 8. Here are five important things to know about the events.

1. Eclipse Over Texas is at McLane Stadium, Diadeloso is on campus.

The Eclipse Over Texas: Live From Waco events at McLane Stadium’s Touchdown Alley require a ticket to enter. General Admission tickets may be purchased online at eclipseovertexas2024.com. There are numerous educational and experiential opportunities, presentations and activities for the entire family to learn about the eclipse, including from Baylor’s own astrophysics faculty. A clear bag policy is in effect and participants will pass through magnetometers. Once you pass through security, you may not leave and then re-enter the event.

Diadeloso will be held on campus – Fountain Mall, Bear Park, Bill Daniel Student Center – with activities from 11 a.m. to 4 p.m. Diadeloso events for Baylor students, faculty and staff require a wrist band to participate. To help you safely view the eclipse, each wrist band will come with approved solar eclipse glasses.

  • Faculty and staff can pick up wrist bands with their Baylor ID from 11 a.m. to 2 p.m. April 3-5 in Bill Daniel Student Center.
  • On Monday, students can pick up wrist bands with their Baylor ID at two campus locations: 5th Street between the Bill Daniel Student Center and Marrs McLean Gym between 11 a.m. to 4 p.m.

A wrist band will be required for Dia’s traditional campuswide Noon Meal, which will be served in Penland Crossroads and East Village Dining Commons from 11 a.m. to 1 p.m. Wrist bands will also be available at these locations during the mealtime. Remember, you must show your Baylor ID to receive a wrist band. All other dining halls will be closed for lunch that day. The SUB food court will be open. Food trucks with specialty drinks, desserts and snacks for purchase will be available beginning at 11 a.m. in the parking lot behind Morrison Hall.

Diadeloso WILL include an Eclipse Watch with information and interesting facts about the total solar eclipse provided by Dr. Jared Fier from Baylor’s Department of Physics, from 1:15 p.m. to 1:45 p.m. on Fountain Mall, weather permitting.

Find the full schedule of Dia events and attractions at diadeloso.web.baylor.edu.

2. Weather may impact planned events.

City of Waco and Baylor officials are monitoring the weather forecast, which can evolve and change over the week. Plan ahead and be prepared for the weather to possibly impact these events. Eclipse Over Texas: Live from Waco will proceed rain or shine, unless the weather conditions become dangerous. Any updates will be posted at eclipseovertexas2024.com and communicated directly with ticketholders.

Diadeloso events also may be impacted by the weather. Please check diadeloso.web.baylor.edu and Student Life social media channels for updates. If weather turns severe, the University will communicate with campus via the Baylor Alert emergency notification system.

3. Traffic will be heavy in the area.

Waco is one of the largest cities in the solar eclipse path of totality, and that makes it a very popular location for thousands of visitors who want to see the event. Expect heavier than normal traffic and congestion in the Waco area from April 5-8 as events around the eclipse are planned in Waco through the weekend. Most roads in and around campus will be open but be prepared for traffic delays. We anticipate traffic around the Baylor campus on the day of the Eclipse will be similar to a football game day.

On April 8, we anticipate a significant number of visitors to the area who may not be familiar with University parking guidelines may park on campus.

Students without parking permits may park in designated student parking areas on campus on April 8.

Important note: The University is officially open on April 8. Staff are asked to coordinate their time away for the Eclipse Over Waco event or Diadeloso with their supervisors.

4. Special solar eclipse glasses are required for your safety.

IMPORTANT: You must use special solar eclipse glasses to safely view any portion of the eclipse. Traditional sunglasses or multiple pairs of sunglasses WILL NOT protect your eyes from damage.

NASA provides important information on how to protect your eyes during a Total Solar Eclipse:

  • View the Sun through eclipse glasses or a handheld solar viewer during the partial eclipse phases before and after totality.
  • You can view the eclipse directly without proper eye protection only when the Moon completely obscures the Sun’s bright face – during the brief and spectacular period known as totality.
  • As soon as you see even a little bit of the bright Sun reappear after totality, immediately put your eclipse glasses back on or use a handheld solar viewer to look at the Sun.

If you are watching an entire eclipse, you may be in direct sunlight for hours. Remember to wear sunscreen, a hat and protective clothing to prevent skin damage.

You also can watch the Total Solar Eclipse via Discovery and Science Channel livestreaming:

5. Eclipse academic and arts events are planned throughout the weekend.

There are many events across Waco and on campus to enjoy in the days preceding the eclipse and on the day of the eclipse. The city of Waco will celebrate with a weekend filled with concerts and activities. For a complete schedule of city events, visit the City of Waco website.

Baylor University also will offer several campus academic lectures, museum events and performances related to the Total Solar Eclipse, including a concert premiering music from new musical “American Eclipse,” a lecture with an Apollo 17 astronaut and panel discussion on the future of lunar exploration, and events at the Martin Museum of Art and Mayborn Museum. For a complete schedule of Eclipse events, visit the Baylor News website.

For additional questions, please check the Diadeloso and the Solar Eclipse FAQ.

Due date change for Quiz 8 (from 11 am on April 2 to 11 am on April 3)

Due to the delay in posting Quiz 8 today, the deadline for submission has been extended to 11 am on Wednesday, April 3. This quiz draws on the material outlined in the readings for April 2, which can be found on the course website’s Readings Page at http://fin4335.garven.com/readings:

1. "Derivatives and Options" from Doherty, Chapter 6

2. "Teaching the Economics and Convergence of the Binomial and Black-Scholes Option Pricing Formulas" by James R. Garven and James I. Hilliard

Midterm 2 and Current Course Grades in Finance 4335

The grades for Midterm 2, along with the latest updates for attendance, quizzes, problem sets, and overall course grades for Finance 4335, are now available on Canvas.

As indicated 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)}

Given our progress through the spring semester and the ongoing evaluation in various categories (attendance/participation, quizzes, problem sets, and exams), each student’s Canvas course grade is dynamically updated. With the inclusion of Midterm 2 Exam grades, the current formula for calculating course grades is:

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

Here are the current grade statistics for the 31 students enrolled this semester in Finance 4335:

The distribution of grades in all categories provides a benchmark for comparing individual performance with the class average. Additionally, you can gauge your potential letter grade in Finance 4335 by comparing your current course grade against the grading scale provided in the syllabus.

If you are disappointed by your performance in Finance 4335, remember that the final exam grade automatically double counts instead of a lower midterm exam grade. If both midterm exam grades are lower than the final exam grade, the final exam grade replaces the lower of the two midterm exam grades.

For those wishing to discuss their grades or any aspect of the course, I encourage you to stop by during office hours (in Foster 320.39, 3:30-4:30 pm TR), or set up a Zoom appointment with me (on Monday and Wednesday afternoons).

Moral Hazard and Adverse Selection Class Problem Videos

Finance 4335 will not meet in person on Thursday, March 21, due to ongoing health-related issues in my family.  For Thursday, I am cycling back to the asymmetric information topic and asynchronously presenting, in two separate videos, class problems pertaining to moral hazard and adverse selection. As in past asynchronous lectures, class participation credit will be awarded to students who write and upload a synopsis to Canvas covering both videos; the deadline for which is Friday, March 22, by 5 pm.

On Thursday, March 21, I plan to be available for office hours via Zoom from 3:30-5 if any students would like to come by.

Link for the Moral Hazard Class Problem Video: https://mediaspace.baylor.edu/media/Moral+Hazard+Class+Problem/1_egz1sqdn

Link for the Adverse Selection Class Problem Video: https://mediaspace.baylor.edu/media/Dynamic+Adverse+Selection+Class+Problem/1_kcxltiml

Capital Markets Theory asynchronous lecture

Finance 4335 will not meet in person tomorrow, Tuesday, March 19, due to ongoing health-related issues in my family.  Therefore, tomorrow’s “Capital Markets Theory” lecture will be delivered asynchronously.  This lecture explores capital market theory, transitioning from our previous (Thursday, March 14) portfolio theory lecture.  As in last week’s asynchronous lectures, class participation credit will be awarded to students who write and upload a lecture synopsis to Canvas.

Capital market theory examines the equilibrium pricing of individual securities, a concept better known as the capital asset pricing model (CAPM). This session mainly draws upon the lecture note  “Portfolio and Capital Market Theory,” the linked for which also appears under item 10 on the course website’s lecture notes page. Toward the lecture’s end, I discuss the Capital Market Theory Class Problem, available at http://fin4335.garven.com/spring2024/capmktproblem.pdf.

This lecture is available for viewing at https://mediaspace.baylor.edu/media/Capital+Market+Theory+Lecture+%28March+19%2C+2024%29/1_pkvgnk98.

Video Lecture Synopsis

A couple of students from Finance 4335 have reached out inquiring about the contents of a synopsis. A synopsis should encapsulate a condensed overview of the lecture. Within your overview, enumerate the subjects discussed and outline the significant principles connected to these subjects, which you learned from the video lecture. It should also be concise; no more than a page or two.

I have decided to extend the deadline for this particular assignment from 5 pm to 11:59 pm today. Additionally, you have the option to resubmit your synopsis once if you choose to do so.

This week, Finance 4335 will proceed asynchronously!

Because of health-related issues in my family, our Finance 4335 class will not meet in person next week and will proceed asynchronously on March 12th and 14th. We will continue as planned, concluding our discussion of the Asymmetric Information topic on March 12th and beginning the Portfolio Theory topic on March 14th.

I’ve uploaded lectures for both of these dates: “Asymmetric Information and Adverse Selection” on March 12th and “Portfolio Theory” on March 14th. Since Finance 4335 will not meet in person this week, I expect everyone to watch and report on both lectures online. To earn attendance and participation credits, watch both lectures and submit synopses for each in PDF format via Canvas. The synopsis for the March 12th lecture is due at 5 pm on March 13th, and the synopsis for the March 14th lecture is due at 5 pm on March 15th. I have created two separate assignments for your lecture synopses that can be found on the course Assignments page on Canvas.

I will also be available for virtual (Zoom) office hours on Tuesday, March 12, and Thursday, March 14, from 3:30-4:30 p.m. To meet with me, type “officehours.garven.com” in the address field of your device’s web browser.  If you like, you can also make an appointment on MW by typing “appointment.garven.com” in the address field of your device’s web browser.

Here are the links for the March 12 and March 14 lectures:

March 12 (Asymmetric Information and Adverse Selection): https://mediaspace.baylor.edu/media/Finance+4335+-+Asymmetric+Information+and+Adverse+Selection+lecture/1_d8mdxvhh

March 14 (Portfolio Theory): https://mediaspace.baylor.edu/media/Portfolio+Theory+Lecture%2C+March+14%2C+2024/1_gbm0vhlg