University of Arkansas at Little Rock

Contact Person

Mark Funk

mffunk@ualr.edu

501-569-8877

Program Goals:

The primary goal is to prepare graduates to think like and function as economists. The potential applications of economic analysis are almost without limit. There are, however, four analytical areas to be considered. First, there is the analysis of competing ends which may all be of merit. Second, there is the analysis of scarce resources which may be used to accomplish the competing ends. Third, there is the analysis of the choice process to be utilized. And, fourth, there is the application of marginal analysis which considers the increase in the accomplishment of the competing ends for each increment of resources expended.

Program Objectives:

1. Demonstrated understanding of how market works with respect to the determination of prices, quantities, and allocation of resources.

4. Demonstrated understanding of basic macroeconomic aggregates such as inflation, unemployment, output, and growth and their causes/determinants.

2. Ability to collect, organize, analyze and present economic data as it pertains to course-specific topics and to forecast economic activity.

5. Demonstrated understanding of different market structures and their implications for pricing, output and efficiency issues.

Brief Statement of Methods

We assess the Economics Major in each of the three required upper level courses (Intermediate Macroeconomic Theory, Intermediate Microeconomic Theory, Business Forecasting) as well as other upper-level Economics course (International Economics and Environmental Economics). We assess in each of these classes by taking questions from tests (and possibly adding additional specific questions) that specifically relate to the Course Objectives and Major Objectives. The data are presented in the following manner for each of the courses. Each question is related to a Course Objective and Major Objective, and then the percent of the entire class that correctly answered each question is reported. Changes, in terms of class time spent on each topic will be adjusted based on which objectives students did “well” and “poor” on. In 2005, we continued testing course objectives in International Economics in order to compare with results in the previous year and started to collect data in Intermediate Macroeconomic Theory in order to assess different objectives than we have in the past.

Furthermore, in 2003, we began sequencing the principles classes with Principles of Microeconomics as a prerequisite for Principles of Macroeconomics. We are in the process of gathering data to study how this affects student performance.

This year, we will begin administering a standardized test in our Intermediate Macroeconomic Theory class that was developed by the National Council on Economic Education to assess potential deficiencies of our economics majors relative to the body of knowledge that a national organization believes are important concepts. The results will be used to start assessing student performance.

Furthermore, based on discussion with students, finance faculty, and an outside stakeholder, it was suggested that more data collection and analysis would help to better prepare our students. To accomplish this, 2 projects were given in the International Economics class and the students in the Intermediate Macroeconomic Theory class in 2005 had to prepare a mock Federal Reserve meeting where they analyzed macroeconomic data and prepared a policy recommendation.

This year, as with last year, we collected data on specific course objectives in the International Economics and Intermediate Macroeconomics classes. The results this year and last year are as follows:

Results and Use for Program Building

2004 Results for International Economics

Course Objective tested - 2; Major Objective - 1
Free trade: average = 85%; 7 (A’s), 4(B’s), 1(C’s), 3 (D’s), 0 (F’s)
Trade barriers: average = 78%; 4 (A’s), 8 (B’s), 1 (C’s), 1 (D’s), 1 (F’s)

Course Objective tested - 3; Major Objective - 1
Effective and real exchange rates: average = 82%; 5 (A’s), 4 (B’s), 5 (C’s), 1 (D’s), 0 (F’s)

Course Objective tested - 5; Major Objective - 4
Convert currencies: average = 93%; 10 (A’s), 3 (B’s), 2 (C’s), 0 (D’s), 0 (F’s)
Bid and offer: average = 75%; 3 (A’s), 7 (B’s), 2 (C’s), 2 (D’s), 1 (F’s)
Interest rate parity: average = 93%; 9 (A’s), 3 (B’s), 3 (C’s), 1 (D’s), 1 (F’s)

Course Objective tested – 4; Major Objective – 4
Balance of Payments: average = 82; 6 (A’s), 5 (B’s), 2 (C’s), 2 (D’s), 0 (F’s)
Course Objective tested – 1; Major Objective – 1
Trade Theories (this is new this year): average = 74; 2 (A’s), 5 (B’s), 4 (C’s), 4 (D’s), 0 (F’s)

As can be seen from the above results, in 2004 the weakest areas were TRADE THEORIES and BID AND OFFER. In 2005, these areas were emphasized a bit more with more in-class discussion and examples. The 2005 Results for International Economics are as follows:

2005 Results for International Economics

Course Objective tested - 2; Major Objective - 1
Free trade: average = 78%; 4 (A’s), 4(B’s), 6(C’s), 3 (D’s), 1 (F’s)
Trade barriers: average = 74%; 4 (A’s), 6 (B’s), 5 (C’s), 3 (D’s), 0 (F’s)

Course Objective tested - 3; Major Objective - 1
Effective and real exchange rates: average = 88%; 10 (A’s), 5 (B’s), 3 (C’s), 0 (D’s), 0 (F’s)

Course Objective tested - 5; Major Objective - 4
Convert currencies: average = 92%; 10 (A’s), 7 (B’s), 1 (C’s), 0 (D’s), 0 (F’s)
Bid and offer: average = 78%; 3 (A’s), 8 (B’s), 6 (C’s), 0 (D’s), 1 (F’s)
Interest rate parity: average = 90%; 9 (A’s), 5 (B’s), 4 (C’s), 0 (D’s), 0 (F’s)

Course Objective tested – 4; Major Objective – 4
Balance of Payments: average = 86; 7 (A’s), 7 (B’s), 3 (C’s), 1 (D’s), 0 (F’s)

Course Objective tested – 1; Major Objective – 1
Trade Theories (this is new this year): average = 70; 3 (A’s), 6 (B’s), 3 (C’s), 5 (D’s), 1 (F’s)

As can be seen from the results, the results for FREE TRADE, TRADE BARRIERS, and TRADE THEORIES decreased from the previous year. We believe that this is primarily attributable to having a new professor teach the class. Prior to 2005, International Economics was solely taught by Dr. Elder, but in 2005 and for the foreseeable future, the class was team taught by Dr. Funk and Dr. Elder with Dr. Funk teaching the trade material. This was the first time that Dr. Funk taught this material at UALR.

2004 Results for Intermediate Macroeconomic Theory

From the report submitted in 2005, the following results were collected in 2004 for a comparison with 2005 in order to start changing the areas we assess.

Course Objective tested - 1; Major Objective - 3
IS-LM model: average = 72%; 2 (A’s), 4(B’s), 3(C’s), 3 (D’s), 1 (F’s)

Course Objective tested - 5; Major Objective – 3
Effects of Monetary Policy: average = 86%; 4 (A’s), 4 (B’s), 3 (C’s), 0 (D’s), 0 (F’s)
Effects of Fiscal Policy: average = 82%; 6 (A’s), 3 (B’s), 4 (C’s), 0 (D’s), 0 (F’s)
Monetary and Fiscal policy within open economy: average = 75%; 3 (A’s), 4 (B’s), 4 (C’s), 1 (D’s), 1 (F’s)

Course Objective tested - 6; Major Objective - 4
Solow Growth Model: average = 72%; 3 (A’s), 2 (B’s), 5 (C’s), 2 (D’s), 1 (F’s)

2005 Results for Intermediate Macroeconomic Theory

The following results were collected in 2005

Course Objective tested - 1; Major Objective – 3IS-LM model: average = 90%; 8 (A’s), 8(B’s), 0(C’s), 0 (D’s), 0 (F’s)

Course Objective tested - 5; Major Objective – 3
Effects of Monetary Policy: average = 73%; 4 (A’s), 3 (B’s), 8 (C’s), 0 (D’s), 1 (F’s)
Effects of Fiscal Policy: average = 82%; 1 (A’s), 8 (B’s), 6 (C’s), 0 (D’s), 1 (F’s)
Monetary and Fiscal policy within open economy: average = 85%; 12 (A’s), 3 (B’s), 1 (C’s), 0 (D’s), 0 (F’s)

Course Objective tested - 6; Major Objective - 4
Solow Growth Model: average = 78%; 4 (A’s), 6 (B’s), 4 (C’s), 2 (D’s), 0 (F’s)

As can be seen from a comparison of the 2004 and 2005 results, the students did significantly better on the IS-LM and Monetary and Fiscal policy within an open economy material, and much worse on the Effects of Monetary and Fiscal Policy material. We believe that this is primarily attributable to the fact that a higher than usual number of students in the Intermediate Macroeconomic Theory class had also taken the International Economics class where the Monetary and Fiscal Policy Within an Open Economy material was briefly discussed. It may seem odd that students did so well on Monetary and Fiscal policy within an Open Economy while doing so poorly on the Effects of Monetary and Fiscal policy material, but the latter involves much more subtle argument and more sophisticated topics. In the Intermediate Macroeconomic Theory class in 2006, much more attention will be devoted to the Effects of Monetary and Fiscal policy as it is believed that this material is central to the course. In addition, more attention will be devoted to developing and discussing the issues students have surrounding their FOMC project as this will presumably increase their understanding of Monetary policy.

Furthermore, in discussions with the Finance faculty, a couple of issues have been raised concerning the material that students should be learning in the Principles of Economics courses. Two such issues are the distinction between economic profit and accounting profit and the implications of competitive markets on economic profit. Although all the Economics faculty cover these topics, obviously the students are not retaining the information so it has been decided that these topics will be emphasized more in the Principles courses by all the Economics faculty. Related to this, it has been decided that we should have more regular and more formal meetings between the faculty to raise issues in the future that the College faculty need students to know so a more concerted effort will be made in the future to continue with these meetings.

The degree to which students have a “demonstrated ability/understanding” is measured by the percent of students correctly answering specific questions that are specifically tied to Course Objectives and Major Objectives (by the matrix relating Course Objectives to Major Objectives). As a major, we believe that a “demonstrated ability/understanding” exists if at least 70% correctly answer a question.

Faculty and Stakeholder Involvement

As mentioned above we believe we have two groups of stakeholders - Economics majors and the other disciplines of the College of Business (since we serve as a service department to a large extent teaching the core courses and as upper-level electives for other majors). In 2005, we had a departmental meeting where the Finance faculty commented on our program and the preparedness of our students with respect to Economics issues that the Finance faculty need students to retain. As mentioned above, the Finance faculty had a variety of comments that helped to redirect some efforts in the Principles of Economics courses.

In terms of communicating our assessment results with students, we make an effort at the beginning of each relevant class to discuss a basic outline of the topics that will be covered throughout the term and in so doing, emphasize how each particular term will be slightly different, in terms of coverage and time devoted to each topic, relative to the previous term

BBA Finance

The Finance curriculum provides a theoretical framework of the environment in which financial institutions operate. Individual courses deal with financial institutions, the financial management of business firms, investments, and particular areas of banking, real estate, and insurance. Emphasis is on the decision making, or analytical aspects of the subject areas.

The department offers three degree options. Option I (General Finance) provides training in business finance, financial decision making within the firm, and the financial and banking systems. Option II (Real Estate) provides a broad background in real estate analysis, investment, and financial decision making. Option III (Insurance) provides a background in finance with emphasis on insurance and risk management. Minors are offered in General Finance and Real Estate.

Program Goals:

The Finance degree program is designed to provide students with a broad understanding of a common body of knowledge within the field of Finance and apply this knowledge, individually and as part of a team, to everyday corporate and personal financial problems. We want students to be able to collect and analyze data relating to such financial problems, and then communicate the results of this analysis effectively in both oral and written form.

1. Demonstrate a thorough understanding of time value of money concepts by solving representative problems. This includes calculating present values, future values and rates of return.

3. Be able to value financial assets. This involves being able to explain risk-return tradeoffs, asset pricing models, market efficiency, and international valuation. The student should be exposed to Modern Portfolio Theory and Option Pricing Theory.

2. Be able to identify and explain the role and functioning of financial markets. Students should be able to explain the determination of interest rates, the role of financial intermediaries, the impact of risk and the connections across international markets.

4. Be able to identify and explain the investment and financing decisions of the firm, and how those decisions affect value. Students should be exposed to estimating the cost of capital, should be able to identify factors affecting capital structure and financing alternatives (domestic and international), and be exposed to firm valuation.

5. Demonstrate understanding of the ethical issues involved in finance. In particular, the student should be exposed to agency theory and its implications for financial managers. This includes exposure to fiduciary issues.

In addition, students specializing in general finance, real estate, insurance or financial planning should:

6. Demonstrate an understanding of the theoretical concepts and principles of each.

7. Be able to apply the principles to real problems.

8. Be exposed to the professional and institutional aspects of each.

Brief Statement of Methods

For the last few years, the finance major has been assessed by administering an objective test in the capstone Advanced Financial Management (Finc 4395) class. Although the test has been revised periodically over the last several semesters, the basic nature of the examination has remained the same. The test is required of all students in the class, and they are informed of the importance of doing well on it.

In developing this test, the finance faculty realized that it was first important to define a ‘common body’ of knowledge in the finance area that students should know upon receiving their finance degrees from UALR. This in turn led to a ‘Concept Grid’ which contains a list of the specific concepts that the faculty felt that finance majors should know upon getting their degrees. The concepts are listed down the left side of the matrix. The finance courses containing the concepts are listed across the top of the matrix. Within the matrix we have subjectively assigned a number from 1 to 3 that indicates the extent to which the concept is covered in a specific class. The assessment test is designed to see to what extent finance majors have learned these concepts. The test is available from the department.

This test has worked well so far in assessing the finance program, and, thus, there is no need to revise this methodology. However, the test was revised in spring, 2004 in light of comments made at a meeting where we shared our results with our stakeholders. This is discussed below.

Results and Use for Program Building

The following table shows the results of giving the assessment test in Finc 4395 (Advanced Financial Management) for the past several years. Finc 4395 is a capstone course which finance students take in their senior year.

The first column in the table (#) shows the number of students who took the test while the second column (Mean) shows the mean percentage of correct answers on the test. The next two columns (High, Low) show the highest and lowest percentages made by students on each of the exams. The very last column in the table (% ≥ 50%) shows the percentage of students making over 50% on the test.

Dr. Beard gave the test in his Advanced Financial Management night class in fall, 2005. The test was required of everyone in the class. To induce students to do their best, Dr. Beard thoroughly discussed the reason for the test (to improve the program) and the importance of students doing their best.

Analysis

The results of the assessment tests from previous years have been used to understand the strengths and weaknesses of the finance program. The main findings from the previous tests are that students are able to answer 50% to 55% of the assessment questions correctly. These results have given the finance faculty an idea of students’ strengths and weaknesses with respect to certain finance topics. The results have also led to a serious discussion among the finance faculty about the need for an Intermediate Finance course between the introductory and advanced finance classes. The goal of the department is to raise the mean percentage of correct answers on the assessment test to at least 60%.

The most recent test results show that the mean percentage of correct answers on the 2005 test (56.5%) was at the highest level since the department began administering the test. This higher percentage may be due to the changes in the finance major that are discussed below. In addition, 70% of the students made 50% or more on the test which is a marked improvement over previous semesters. Test results for the fall, 2005 semester are given at the end of this report.

Changes in the Finance Program in 2004

As a result of assessment results that have been gathered over the years, the department in 2003 decided to try to improve the quality of its finance majors by instituting several new requirements for students deciding to major in finance after March 1, 2004. One new requirement is that students must now have a “C” or better in Finc 3310 (Business Finance) to major in finance. It is hoped that this will strengthen many students’ overall background in finance, and will lead to an improvement in the quality of our finance majors. The second new requirement is that students majoring in finance, in order to graduate, will now have to have a “C” or better in all the courses that constitute the major. The improved scores on the assessment test noted above may be a result of these changes.

Faculty and Stakeholder Involvement

In a meeting on March 2, 2004 the economics and finance faculty met with Mr. Scott Settelmyer (Alltel Corp), Mr. Cory Pratt (Arkansas Capital Corp. Group, and a former student), and Ms. Natalie Doyel (also a former student) to gather input from some of our stakeholders regarding our most recent assessment test results, and to discuss the program in general. Assessment test results (as well as results from the most recent administration of the ETS test) were shared with the faculty and the guests present. There was much discussion as to why finance majors were able to answer only approximately 50% of the assessment test questions. After reviewing some of the assessment test questions, it was decided that many of the questions were confusing and should be revised. In a follow up meeting, the finance faculty made various changes to the test to make sure that all questions were clear and unambiguous. Some other suggestions made by our former students during the meeting were that:

We should have better continuity (or more coordination) between our finance classes to insure that there is as little duplication as possible, and that there are no gaps in coverage.

We should consider introducing another class that would serve as a bridge between Finc 3310 and the our case course (Finc 4395).

We should consider more sequencing of courses in the major rather than letting students take courses in any order. This would allow better coordination among the courses in the finance major.

Problem solving should be emphasized more heavily in some of the finance courses.

Professors should insure that they explain the ‘why’ of something rather than just stating a result or putting a formula on the board. Many students are afraid to ask questions.

No meeting similar to that described above was held in 2005. The reason is that the department felt that a meeting so soon after the meeting in 2004 would have produced essentially the same comments and suggestions (as at the 2004 meeting).