"It is not possible to make judgments about one’s own medical care without some understanding of probability, and certainly the financial crisis speaks to the consequences of the failure to appreciate “black swan events” and their significance. In an earlier era, when many people were involved in surveying land, it made sense to require that almost every student entering a top college know something of trigonometry. Today, a basic grounding in probability statistics and decision analysis makes far more sense."
As a decision analysis professional and teacher, that's good to see.
]]>Here's a workshop description:
This two-hour workshop will build on the pre-work coverage of finance and accounting basics to develop insight into the ongoing credit market crisis. Rather than do a broad but shallow survey of quant skills needed in the MBA first year, I've picked a few tools and a relevant topic from the current business press. We'll dig into the basics of bond valuation and balance sheet leverage with two goals in mind:
- Whet your appetite for your upcoming MBA coursework
- Provide a status check on your quantitative proficiency.
To learn more about the broader conference, visit the Forté conference site. As of this posting, the site has information about last year's event. Information about this year's event will appear as the event planning comes together. If this link becomes obsolete, then you can start at the Forté events page.
To learn more about the workshop or to take a look at the pre-work material on finance and accounting as an example of the MBA Math lecture material, visit the MBA Math workshop site.
]]>You can learn more about the MBA Math workshop at www.mbamath.com/events/forte.htm
Below is the overview for the full conference:
As future business leaders, women like you will have the power and influence to move business forward in a positive way. What's your vision for better business leadership? What impact will you make? Discover the possibilities at the Forté Foundation 2010 MBA Women's Conference.
At this two-day, yearly event for MBA women attending Forté sponsor schools—you'll see how today's top business women are redefining what's worth working for by leveraging their influence and stature to bring about constructive change. We invite you to join us for this informative, inspiring event examining social responsibility and the significant impact you can make as a woman in business.
Who Can Attend: Forté Fellows and MBA women that are attending Forté sponsor schools (in the 2010, 2011, and 2012 classes).
Registration Fee: $50 before May 28. The fee will increase to $75 after May 28.
Location: Chicago, Illinois, McCormick Place
Learn more and register at: http://www.fortefoundation.org/mbaconf
Interested in a career in financial services? Get on the fast track and gain valuable insight into this exciting industry. This exclusive conference will provide an overview of specific industry tracks and connect you to senior professionals currently working in the challenging and rewarding world of Financial Services.
Who Can Attend: Forté Fellows and MBA women that are attending Forté sponsor schools (in the 2012 class).
Registration Fee: Complimentary. Please note: Participants will be given a stipend (maximum of $250) to help cover travel and lodging.
Location: NYU Kimmel Center, New York City
Learn more and register at: http://www.fortefoundation.org/fsft
]]>I've devoted years to teaching and designing learning materials. If you come to my classroom or online course motivated to learn then I can help you. But creating the motivation? I don't focus on that because it's already there for my students.
The brilliance of this video is that it has the capacity to generate the motivation to learn about economics in a very broad, and potentially young, general audience. I hope that the video's creators John Papola and Prof. Russ Roberts do more.
Learn more at www.econstories.tv
]]>The normal distribution is essentially the familiar symmetrical bell curve that characterizes many phenomena. Even when distributions of interest are asymmetrical, the normal distribution is central to sampling and confidence intervals that help guide efforts to make sense of massive data sets by working with representative data samples. Working with the normal distribution highlights the importance of thinking about intervals measured by units of standard deviations away from the mean.
Hal Varian, Chief Economist at Google, was recently quoted in the New York Times from a McKinsey Quarterly interview as saying "that the sexy job in the next 10 years will be statisticians." Perhaps more on point for MBAs, Tom Davenport and Jeanne Harris are releasing "Analytics at Work: Smarter Decisions, Better Results" this month as a follow up to their influential 2007 book Competing on Analytics. Understanding normal distributions is a core skill in developing the statistical numeracy required to apply analytics to strategy.
Exercise:
Suppose the daily customer volume at a call center has a normal distribution with mean 4,600 and standard deviation 950. What is the probability that the call center will get fewer than 3,400 calls in a day?
Click here to view a standard normal (z-score) table, if you know how to use it.
Solution (with audio commentary): click here
Prof. Peter Regan created the self-paced, online MBA Math quantitative skills course and teaches live MBA courses at Dartmouth (Tuck), Duke (Fuqua), and Cornell (Johnson).
]]>The market interaction of supply and demand is one of the classic business concepts that people encounter from school snack swaps to shopping at the mall, from start ups to too-big-too-fail banks, and from subprime real estate to U.S. Treasury bond auctions.
The concepts can be used qualitatively and quantitatively. Like much in economics, supply and demand can be introduced equivalently in pictures or with equations.
Here, we use equations for a situation involving a perishable agricultural commodity market.
Exercise:
Assume that the demand curve D(p) given below is the market demand for apples:
Q = D(p) = 270 - 15p, p > 0
Let the market supply of apples by given by:
Q = S(p) = 42 + 15p, p > 0
where p is the price (in dollars) and Q is the quantity. The functions D(p) and S(p) give the number of bushels (in thousands) demanded and supplied.
What is the consumer surplus at the equilibrium price and quantity?
Solution (with audio commentary): click here
Prof. Peter Regan created the self-paced, online MBA Math quantitative skills course and teaches live MBA courses at Dartmouth (Tuck), Duke (Fuqua), and Cornell (Johnson).
]]>The first MBA Math accounting exercise explained that balance sheets provide a snapshot of a firm's financial condition at a moment in time, with "balance" referring to the equality between the left side's assets and the right side's combination of liabilities and equity. The second accounting exercise introduced transactions as the means by which the balance sheet changes over time. As long as the balance sheet equation (assets = liabilities + equity) is maintained for each transaction then the new balance sheet that results from a large sequence of transactions will remain in balance.
This exercise introduces journals and t-accounts as recording systems to handle the volume of transactions that companies generate. Modern accounting recording systems are automated, of course, but putting pencil to paper with journals and t-accounts helps beginning students to internalize the logic of accounting.
Spending time in the accounting trenches working with transactions is critical to developing an informed understanding of the financial statements that MBAs will analyze in their classes and careers.
Exercise:
| Ruston Company Balance Sheet As of January 4, 2009 (amounts in thousands) |
|||
| Cash | 9,300 | Accounts Payable | 2,500 |
| Accounts Receivable | 5,000 | Debt | 2,300 |
| Inventory | 5,500 | Other Liabilities | 6,500 |
| Property Plant & Equipment | 15,900 | Total Liabilities | 11,300 |
| Other Assets | 1,400 | Paid-In Capital | 5,700 |
| Retained Earnings | 20,100 | ||
| Total Equity | 25,800 | ||
| Total Assets | 37,100 | Total Liabilities & Equity | 37,100 |
Transfer the journal entries to T-accounts for the transactions below, compute closing amounts for the T-accounts, and construct a final balance sheet to answer the question.
Journal amounts in thousands
| Date | Account and Explanation | Debit | Credit |
| Jan 4 | Accounts Payable | 8 | |
| Cash | 8 | ||
| Paid money owed to supplier | |||
| Jan 5 | Property, Plant & Equipment | 49 | |
| Cash | 49 | ||
| Paid cash for machine | |||
| Jan 6 | Cash | 70 | |
| Paid-In Capital | 70 | ||
| Issued stock | |||
| Jan 7 | Cash | 20 | |
| Inventory | 16 | ||
| Retained Earnings | 4 | ||
| Sold and delivered product to customer | |||
| Jan 8 | Cash | 51 | |
| Debt | 51 | ||
| Borrowed money from bank | |||
| Jan 9 | Inventory | 14 | |
| Accounts Payable | 14 | ||
| Bought manufacturing supplies on credit | |||
| Jan 10 | Cash | 10 | |
| Accounts Receivable | 10 | ||
| Received customer payment |
What is the final amount in Total Assets?
Solution (with audio commentary): click here
Prof. Peter Regan created the self-paced, online MBA Math quantitative skills course and teaches live MBA courses at Dartmouth (Tuck), Duke (Fuqua), and Cornell (Johnson).
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