Two finance students whisper during a mock trading session at the Dolan School of Business. Meanwhile, Finance Professor Michael Tucker is pacing the aisle among the students.
Tucker sees the students whispering and jovially quips, “no collusion.” If the laptops and the Alumni classroom were the virtual trading floor, then for that brief moment Tucker was the Securities and Exchange Commission.
The light-hearted atmosphere of jokes, fake trades and virtual money matched the attire that Saturday afternoon, as 18 students experimented with real-time trades of hypothetical bonds and equities.
In an effort to move beyond the theories of the classroom, the students applied finance theories to a fictitious market, trading virtual bonds and equities. Students had the advantage of gaining experience in trades without risking their own money.
But, there was money on the line – cash prizes for the top overall traders.
The only woman in attendance, Elizabeth Frolin, ’05, claimed the big prize, earning $100 for her first place finish in the trading session.
Frolin said that the trading session was a valuable learning experience.
“I didn’t know how trading worked before today,” she said, and added that she previously “had no idea how fast paced [trading] was.”
Tucker said that the bond trading portion of the simulation was more realistic than the equities trading. Equity trading was slow, as sellers were asking for more money than the fair value of the shares and buyers wanted cut-rate bargains.
The value, however, of the equities was set to a certain range and therefore all the investors were aware if the offer was a bargain or a rip-off. Tucker said this was one difference between the simulation and reality.
This equality of information for investors does not occur on Wall Street.
Students found the experience to be worthwhile. It was “pretty neat and interesting,” said Anthony Catino, ’04.
Tucker was pleased with the results and said that he planned to have more sessions to simulate markets and trading for students.
“[The simulation] wasn’t perfect … but people got to experience what it was like to be a trader,” Tucker said.
Dean Norm Solomon of the School of Business attended the mock trading session and said it was “not that far from what happens on a real trading floor.”
Solomon agreed with Tucker’s assessment of the simulation and added that these simulations can be a valuable learning experience.
“Experiential education is very valuable,” Solomon said.
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