Westminster students compete in bond-rating competition
new wilmington, pa.
Twelve Westminster College financial economics students competed in a mock bond- rating competition.
The students were from a class taught by Daniel Fischmar, Westminster professor of economics and business.
The students were divided into teams and presented with the case of a fictitious local terrestrial radio company that decided to sell some stations. The teams were asked to evaluate the consequences for the company’s existing debt.
Acting as analysts of a bond-rating agency, each team researched the key drivers of the industry, the local economy and the company’s financial motivations and constraints. They then used their research to forecast two years of financial ratios that could influence the radio company’s ability to meet its debt obligations.
The $800 prize was won and shared by a team comprised of Harry Bittle of Sicklerville, N.J., Jeffrey Miller of Sharpsville, Amber Ferrari of New Wilmington and Rebecca Stitt of Hermitage.
The panel of judges included Fischmar, Ben Nelson, a lead credit analyst at Moody’s Corporation in New York City who suggested the competition; Christie Nelson, a mathematics major who is now employed by Rutgers University; Tom Nelson, a senior financial adviser with Ameriprise Financial; and Kenneth Romig, Westminster vice president for finance and management services.
“The bond-rating competition is a great program that links course material with methods used by professional analysts,” Nelson said. “I was very impressed by the student analyst teams.”
The financial economics course presents the Black- Scholes theory of options, future markets, the time value of money, the rate of return on investment, cash-flow sequence, utility functions, expected utility maximization, mean-variance analysis, value at risk, optimal portfolios and the capital asset pricing model.
“The competition gave students the opportunity to directly interact with professional bond analysts and experience the real-life, ambiguous nature of business and financial decisions,” Fischmar said.