{"title":"Exploring Financial Burdens of Student Loan Holders in the United States","authors":"Jae Min Lee, K. Kim, Eunice Hong","doi":"10.1111/FCSR.12261","DOIUrl":"https://doi.org/10.1111/FCSR.12261","url":null,"abstract":"This study examined the profile of student loans in the U.S., identifying the determinants of three types of financial burdens attributable to student loans: (1) outstanding balance; (2) loan payment-to-income ratio, and (3) loan delinquency. The pooled dataset from the 2010 to 2013 Survey of Consumer Finances was used, and the analytic sample size was 2,161 households with outstanding student loan balances. Regression results indicated that factors associated with student loan burden varied; households with a higher educational attainment had greater student loan debt with high loan payment-to-income ratios and were less likely to be delinquent compared to those with a high school degree or less. This study provides broad aspects of student loan debt payment and potential risks, which provide opportunities for further research.","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129527744","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"How Do CoCo Bonds Impact a Bank's Shareholder Wealth?","authors":"Jian Wu","doi":"10.2139/ssrn.3186251","DOIUrl":"https://doi.org/10.2139/ssrn.3186251","url":null,"abstract":"The 2008 crisis highlighted the fragility of the banking system. To address this deficiency, the Basel committee agreed on the Basel III Accord to strengthen banks’ capital requirements. However, raising additional common equity funds is costly. Facedwith this problem, banks and regulators wonder whether capital can be raised lessexpensively. To this end, Contingent Convertible (CoCo) bonds have been designedto absorb banks’ losses in times of crisis. Might CoCo securities be an effective prevention and/or rescue solution? This article examines the impact of Debt-to-EquityCoCo bonds on a bank’s capital structure. For the first time, leverage ratios based onnon-risk-weighted-assets (NRWA) are used as equity conversion triggers instead oftraditional capital ratios based on risk-weighted-assets (RWA). We find that CoCobonds generally increase shareholder wealth by reducing their bankruptcy risk, except when the dilution effect offsets this positive effect. By boosting banks’ capacityto absorb losses while giving regulators more time to find a rescue solution, CoCobonds strengthen financial stability. We also highlight the importance of definingdifferent variables and parameters properly when designing CoCo bonds. Whenthese variables and parameters are appropriately chosen, CoCo bonds are able tofulfil their function as “going-concern” capital, while bank shareholders are capableof maximizing their wealth.","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127442657","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A Comparison of Current Academic and Industry Pedagogies for Developing Traders","authors":"J. Rubano","doi":"10.2139/ssrn.3057447","DOIUrl":"https://doi.org/10.2139/ssrn.3057447","url":null,"abstract":"There is a gap between the knowledge and skills present in graduates of top-flight finance programs and the demands of a modern trading desk. This paper compares the development methodologies common in industry and academia and proposes incremental modifications to existing finance curricula that would produce stronger graduates more able to move directly into commercial positions at financial firms. Changes to introductory finance classes, real-money portfolio management courses, and market simulation programs are discussed.","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"71 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132271182","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"S.J. Lawson, Inc.—A Performance Measurement Behavioral Audit","authors":"Mark E. Haskins","doi":"10.2139/ssrn.2974086","DOIUrl":"https://doi.org/10.2139/ssrn.2974086","url":null,"abstract":"With the encouragement of its overseas parent company, Cochran Consumer Products Inc. (CCPI), the U.S.-based executive team at S.J. Lawson, Inc. (SJLI), was nearly ready to announce the new financial performance measurement focus and economic profit (EP) for the company's product category managers. Currently, the SJLI executive team was finalizing plans for its initial announcement to the subsidiary's five product category managers. The team had received some general guidance from headquarters but it had also been told that because it knew the category managers best, it should develop its own local strategy for introducing the initiative. \u0000 \u0000Excerpt \u0000 \u0000UVA-C-2366 \u0000 \u0000Rev. Aug. 18, 2016 \u0000 \u0000S.J. Lawson, Inc.—A Performance Measurement Behavioral Audit \u0000 \u0000With the encouragement of its overseas parent company, Cochran Consumer Products Inc. (CCPI), the U.S.-based executive team at S.J. Lawson, Inc. (SJLI), was nearly ready to announce the new financial performance metric, economic profit (EP), the company was rolling out for all its product category managers. In fact, the CCPI announcement was scheduled to take place in four weeks. Currently, the SJLI executive team was finalizing plans for its initial announcement to the subsidiary's five product category managers. The team had received some general guidance from headquarters, but it had also been told that because it knew the category managers best, it should develop its own local strategy for introducing the initiative by June 30. CCPI's public announcement would immediately follow all the subsidiary announcements. \u0000 \u0000The new focus was the result of almost nine months of intensive interviews, frequent meetings, heated discussions, and detailed refinements at both the corporate and subsidiary levels. The new EP metric was intended to extend the product category managers' financial objective from a traditional earnings perspective (i.e., product category profit) to a value-created focus (Exhibit 1). The parent company's global network of subsidiaries was embarking on the very same initiative, all galvanized and coordinated out of CCPI's European corporate headquarters by the conglomerate's CFO and CMO. \u0000 \u0000Context \u0000 \u0000. . .","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134405388","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Cs Robinson–Ford Merger","authors":"L. Bourgeois, Sara Prince","doi":"10.2139/ssrn.2973923","DOIUrl":"https://doi.org/10.2139/ssrn.2973923","url":null,"abstract":"A previously employed equity trader at a prominent New York investment bank has returned as an MBA summer intern. Her primary responsibility is to assist the heads of the HR department with the integration of a recently acquired California equity research firm. The case opens and ends with the intern trying to manage an irate head of security for a perceived breach of security caused by differences in New York and California labor laws while in between other issues of varying urgency are raised. This case lets students approach real-time post-merger integration issues from both a technical and human relations point of view. Key issues addressed in the case include assembling the \"right\" integration team, resolving title- and salary-mapping differences, and managing a significant cultural shift. \u0000 \u0000Excerpt \u0000 \u0000UVA-BP-0481 \u0000 \u0000Rev. March 30, 2009 \u0000 \u0000THE CS ROBINSON–FORD MERGER \u0000 \u0000“What da hell is going on over dere? Don't you people know dat dis country is in a security crisis, and I don't need no HR person muddying up my waters? Just get da damn fingerprinting and drug testing done!” Then Donny Smith, executive director of firm security, slammed down the phone. Jacqueline Burgess sat holding the handset with Smith's Brooklyn accent ringing in her ears and wondered what to do. Burgess was a summer associate in the Human Resources department at Chaffee, Scott, and Robinson (CS Robinson), a prominent New York City investment bank. CS Robinson had recently completed the acquisition of Ford, Inc., and Burgess had been in her job for only five weeks. She wanted to hand over this security problem to her immediate supervisor, but she knew that she had inadvertently created the situation and wanted to fix it. \u0000 \u0000The Investment-Banking Industry \u0000 \u0000By 2004, the U.S. investment-banking industry had gone through significant changes. The technology boom of the 1990s had attracted the best talent coming out of universities. A wave of consolidations during the boom had left the investment-banking industry with fewer players but with larger portfolios of services. With banks able to service a much broader range of client needs, client demands increased, and the banks that had avoided growth through consolidation had to work harder to compete. \u0000 \u0000. . .","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131715920","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Micron Technology, Inc.: Riding the Wave—Refinancing Convertible Notes","authors":"Susan J. Chaplinsky, N. Nguyen","doi":"10.2139/ssrn.2974527","DOIUrl":"https://doi.org/10.2139/ssrn.2974527","url":null,"abstract":"In 2013, Micron Technology (Micron), a leading provider of advanced memory solutions, was finally having a good year after several difficult years. In July, its share price rose above $14, an increase of more than 100% since the beginning of the year. In light of the recently improved performance, Ronald C. Foster, vice president of finance and CFO, was reevaluating the firm's financing policies. Micron had historically made heavy use of convertible debt financing to fund its operations and strategic goals and, as of August 31, 2013, it had close to $3 billion of outstanding convertibles. These bonds had been issued between 2007 and 2013, when Micron's share price had been below $10 and its earnings were negative. The firm's current stock price was above the conversion price on all of its outstanding convertible bonds, and in some cases even above the provisional call triggers. Should Micron's stock price continue to rise, its capital costs would increase, and potentially greater wealth would be transferred from the firm's shareholders to bondholders.Micron's investment bankers had recommended refinancing its 2014 Notes and Series A bonds (the bonds currently eligible to be called) with new convertible notes. The new notes would most likely require a higher annual coupon rate than the retired bonds, but the conversion price would be reset to around $19, a 35%-to-40% premium over its recent stock prices. Foster needed to be convinced that the costs in time and money justified refinancing the bonds.The Micron case offers students an opportunity to consider why firms might find convertible bonds an attractive form of financing. Due to its heavy use of convertibles, Micron has carefully staggered the maturities on the bond issues and chosen different settlement options to reduce dilution. Students are asked to evaluate the terms of the new converts to see if they represent a reasonable exchange of value between the issuer and investors. In addition, they are asked to compare the capital costs associated with the new convert to the retired bonds to judge how Micron's capital costs are affected by the refinancing decision. This case has been used in Darden's \"Corporate Financing\" elective as an introductory case and would work well in any course that considers various financing options. \u0000Excerpt \u0000UVA-F-1719 \u0000Rev. Jul. 27, 2015 \u0000Micron Technology, Inc.: \u0000Riding the Wave—Refinancing Convertible Notes \u0000It had been an unusually long and hot summer in Boise, Idaho, in August 2013. It had also been a hot year for Micron Technology (Micron), a leading provider of advanced memory solutions. In July, its share price rose above $ 14, an increase of more than 100% since the beginning of the year. The company announced its first quarter of positive earnings in May 2013 after seven continuous quarters of losses. In July 2013, Micron finally completed the JPY200 billion ($ 2.2 billion) acquisition of Elpida Memory, Inc., Japan's largest dynamic random-access memory ","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115593893","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Wells Fargo Commercial Banking Scandal","authors":"Luann J. Lynch, Cameron Cutro","doi":"10.2139/ssrn.2974106","DOIUrl":"https://doi.org/10.2139/ssrn.2974106","url":null,"abstract":"On October 25, 2016, Timothy J. Sloan, the new CEO of Wells Fargo bank, apologized to 1,200 of his employees in Charlotte, North Carolina. Sloan had been named to the company's top position two weeks earlier, when then-CEO John Stumpf resigned amid fallout from the banking scandal for which Sloan apologized. In September, Wells Fargo had agreed to a $185 million settlement with the Consumer Financial Protection Bureau (CFPB) and two other regulatory bodies, admitting it had opened unauthorized accounts for millions of its consumers. At the heart of the scandal were the company's community banking sales practices, which focused relentlessly on cross-selling multiple products to existing customers. \u0000Excerpt \u0000UVA-C-2394 \u0000Rev. Oct. 27, 2017 \u0000The Wells Fargo Banking Scandal \u0000We've been called, true or not, “the king of cross-sell.” \u0000—Wells Fargo CEO John Stumpf's \u00002010 letter to shareholders \u0000. . .","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116886781","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Capital One Financial Corporation: Product Design","authors":"P. E. Pfeifer","doi":"10.2139/ssrn.2974656","DOIUrl":"https://doi.org/10.2139/ssrn.2974656","url":null,"abstract":"The case describes the beginnings of the \"product design\" process at Capital One Financial Corporation. The question at hand is which of 12 product should be offered through direct mail to which customers. A Web-based exercise accompanies this note. Student teams can plan and implement two rounds of mailings of up to 12 different product solicitations of up to 750,000 prospects. \u0000 \u0000Excerpt \u0000 \u0000UVA-M-0506 \u0000 \u0000CAPITAL ONE FINANCIAL CORPORATION: \u0000 \u0000PRODUCT DESIGN \u0000 \u0000Signet Banking Corporation, a regional bank based in Richmond, Virginia, offered its first bank card in the 1950s, making it the oldest continuously operating bank-card issuer in the United States. In 1988, the credit card division had over a million cardholders and $ 1.25 billion in outstanding loans. Shortly thereafter, the division hired Nigel W. Morris and Richard D. Fairbank, two principals of a consulting group that had devised a new strategy for marketing credit cards. Under their guidance, the division experienced explosive growth. In February of 1995, Signet spun off their card business as Capital One Financial Corporation (hereafter referred to as Capital One) with Fairbank as CEO and Morris as president. In June of 1995, Capital One was the 10th-largest credit card company in the United States with six million cardholders and $ 9 billion in outstanding loan balances. By 1996, Capital One was widely recognized as one of three “category killers” in the credit card business. \u0000 \u0000One element of Capital One's strategy was the careful attention given to the design of product offerings. The attributes of a credit card could be changed easily and rapidly. In few other industries could the direct marketer move as quickly and effortlessly to match products to the changing marketplace. Taking advantage of this flexibility was one aspect of Capital One's information-based strategy. \u0000 \u0000Bank-Card Attributes \u0000 \u0000. . .","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"100 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128141457","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Betting on Terrorism (a)","authors":"R. Freeman, Jenny Mead, G. Mattingly","doi":"10.2139/ssrn.2974163","DOIUrl":"https://doi.org/10.2139/ssrn.2974163","url":null,"abstract":"Bob Marks, an employee at the CIA's Counterterrorist Center, was intrigued by the controversy over the proposed Policy Analysis Market (PAM), which was the brainchild of the Department of Defense's Terrorism Information Awareness initiative. PAM would be a government-sponsored, real-money futures market aimed at providing insight into military activity and political instability, primarily in the Middle East. The proposal met with a furious outcry from politicians, the media, and the public, claiming that it was a way of profiting from disaster. Marks knew about the predictive power of markets and knew they were incredibly efficient aggregators of information, so he did not want to dismiss PAM outright. This case details the architecture of PAM, its relationship to the efficient market hypothesis (EMH), and basic theory about ideas futures and decision markets. \u0000Excerpt \u0000UVA-E-0356 \u0000August 26, 2010 \u0000Betting on Terrorism (A) \u0000As he sat at his desk in the CIA's Counterterrorist Center, Bob Marks listened intently to a report on NPR covering what had become Washington's “controversy du jour,” the Policy Analysis Market (PAM). The host of All Things Considered was discussing with a senior official from the Department of Defense (DoD) the comments made by Senators Ron Wyden and Byron Dorgan in a strongly worded letter made public the previous day, June 30, 2003. The letter was addressed to Vice Admiral John Poindexter (USN Ret.), whom the DoD had recently contracted to spearhead its Terrorism Information Awareness (TIA) initiative, a project of the Defense Advanced Research Projects Agency (DARPA). Wyden and Dorgan were demanding that he immediately terminate his plans to begin registering traders for participation in PAM by the end of the week. \u0000. . .","PeriodicalId":373500,"journal":{"name":"EduRN: Financial Economics Education (FEN) (Topic)","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121770360","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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