Sample Syllabi & Assignments: Accounting
Course Name: Corporate Financial Reporting
Instructor(s): Doug DeJong
Discipline: Accounting
Level: MBA
Comments: This market used contracts based on the earnings of Younkers, an Iowa based department store
chain. After having students submit these assignments, Professor DeJong invited a securities analyst
who followed Younkers to discuss Younkers earning forecasts and actual earnings.
Iowa Earnings Market (IEM Case)
Introduction
There are three purposes that I have for the IEM case. First, students should learn about, be able to access and use financial information services and data bases, both on-line and other. Second, students should gain an understanding of the role of accounting earnings and forecasts in valuation (e.g., stock prices). Third, students should gain a working knowledge of how financial markets operate.
The IEM case accomplished these objectives by having students trade "futures" contracts or securities whose payoffs are related to the actual quarterly earnings per share of a company. In particular, students are required to analyze past earnings of Yonkers, develop their own forecasts of Yonkers' third quarter earnings per share, develop trading strategies in the IEM market for buying and selling Yonkers' earnings contracts, and finally to execute transactions in the market that implement the developed trading strategies.
This case is to be done on an individual basis. It is NOT a team project.
Enclosures
You already have annual reports or sets of financial statements for Yonkers (and Carson Pirie Scott). To assist you in completing the case, I have enclosed the following items:- "The Odds in Iowa" Fortune, 1994
- List of electronic resources available through the business college library and computer networks of the college
- Earnings Forecast Assignment
- Introduction to Iowa Earnings and Returns Market
Key Dates
- October 20, 1995 -- first part of earnings forecast assignment is due.
- October 27, 1995 -- second part of earnings forecast assignment is due.
- November 2, 1995 -- two assignments are due.
- a. A trading log. This trading log will document the specific earnings per share forecast and the basis for the forecast. It will document the developed trading strategy and the implementation of the strategy. Finally, it will document the actual trades or bids and offers executed in the IEM market.
- b. Provide a list of five questions, you would like to ask Mr. John Curti, Securities Corporation of Iowa, about the role of financial analysts in financial markets and about Yonkers.
- November 8, 1995 -- Yonkers is scheduled to announce its actual third quarter earnings per share.
- November 9, 1995 -- Mr. John Curti will make a presentation in class on the role of financial analysts in financial markets and the outlook for Yonkers. He will also answer questions that you have about either topic.
Finally
I expect the case that is turned-in for grading to be well constructed and well documented. In particular, I expect you do defend your earnings forecasts, present a well articulated trading strategy based on the forecast and iem market conditions and finally to documentation the implementation of your trading strategy.
Before John Curti's visit, I expect the teams to meet and discuss what they would like to ask Mr. Curti about the role of financial analysts and past and future prospects for Yonkers.
Good Luck and Happy Trading.
