Students Hold Mock Bond Rating Competition
Posted on Monday, December 6, 2010
Thirteen Westminster College financial economics students competed in a mock bond rating competition Nov. 22.
The students were from a class taught by Dr. Daniel Fischmar, Westminster professor of economics and business, and were divided into four teams for the contest.
The $500 prize was shared by a team of three economics majors: juniors Shawn Lehocky and Stephanie Tracey and senior Jarred Smeltzer.
"We were presented a fictitious company," Lehocky said. "We had to determine what type of bond rating they'd receive based on their financial and historical data."
The fictitious company wanted to buy 22 radio stations and needed to issue corporate bonds to make the purchase. The teams were required to conduct research, consider external factors, and make a 30-minute presentation of the conclusions to a panel of judges. Each team's work was evaluated on the accuracy of the analysis, the clarity of the written paper, and the persuasiveness of the oral presentation.
"It is an attempt to duplicate how bond rating companies go about rating the bonds issued by corporations," Fischmar said. "The judges represented senior analysts, with the competitors in the role of junior analysts working for the bond rating company."
The competition was suggested by Ben Nelson, a 2006 Westminster graduate who is an associate analyst with a major corporate finance group in New York City. "I thought this would be very helpful, both in terms of learning and career path," Nelson said.
The panel of judges included Fischmar and Nelson; Dr. David Goldberg, Westminster associate professor of philosophy; Christie Nelson, a 2006 Westminster graduate and doctoral candidate in operations research at Rutgers University; Tom Nelson, an investment adviser; and Dr. James Perkins, Westminster professor of English and public relations emeritus.
Fischmar feels that all of the competitors benefitted from the experience, as it replicated the way actual analysts would conduct their research and analysis to arrive at a rating. Lehocky agreed that the experience provided an opportunity to go beyond the study of the process and actually go through it.
"It's a chance to see how the real world actually goes about doing this, get some real-world experience with it, and come in contact with some professional analysts," Fischmar said.
Fischmar, who has been with Westminster since 1975, earned undergraduate and master's degrees from Roosevelt University and Ph.D. from Southern Illinois University, Carbondale.
Contact Fischmar at (724) 946-7162 or e-mail fischmde@westminster.edu for additional information.
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