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Westminster College Students Hold Mock Bond Rating Competition

Posted on Friday, December 7, 2012

NEW WILMINGTON, Pa. - Twelve Westminster College financial economics students competed in a mock bond rating competition Nov. 9. The students were from a class taught by Dr. 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 of its 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, Amber Ferrari, Jeffrey Miller, and Rebecca Stitt.

The panel of judges included Fischmar, Ben Nelson `06, a lead credit analyst at Moody's Corporation in New York City who suggested the competition; Christie Nelson `06, 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. I was very impressed by the student analyst teams," Ben Nelson said.

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. "Unlike traditional textbook learning experiences, the competition requires students to sort through conflicting data in search of a defensible, though inevitably imperfect solution." 

Contact Fischmar at (724) 946-7162 or email for additional information.

Winners of mock bond rating competition: (l-r) Harry Bittle, Amber Ferrari, Rebecca Stitt, and Jeffrey Miller.