The financial crisis and recession has hit home for every American, but 10 students from Rochester Institute of Technology gained a unique perspective as their learning experience shifted from classrooms to Chicago-based corporate executive suites.
“It was a very good experience because students often don’t get the chance to interact with companies on such a senior level,” says Andrew Van Aken, a biotechnology senior in RIT’s College of Science. Van Aken is president of the university’s Financial Management Association—where 30 members manage a “real money” investment portfolio with a current market value of $100,000 and decide to invest or not invest based on their analysis.
FMA members spent October 15-16 in Chicago visiting the corporate headquarters of Boeing, the world’s leading aerospace company and largest manufacturer of commercial jetliners and military aircraft combined; the Chicago Mercantile Exchange Group, located in the former Chicago Board of Trade building, which offers futures and options products based on interest rates, equity indexes, foreign exchange, agricultural commodities, metals and alternate investment products such as weather and real estate; Crown Imports LLC, a joint venture between Grupo Modelo and Constellation Brands Inc., which imports, distributes and markets fine beer brands such as Corona Extra and Modelo Especial; and Walton Street Capital LLC, a private equity real estate investment firm.
Students Van Aken, Matthew Birnie and Abhinav Nayatee compiled a detailed company analysis of the CME Group—with Van Aken and Birnie presenting their findings to boardroom attendees. The students also had the opportunity to meet Terry Duffy, executive chairman of the CME Group, who discussed markets and products as well as proposed legislation.
According to Patricia Wollan, assistant professor of finance in RIT’s E. Philip Saunders College of Business and FMA faculty advisor, “The pace of change in today’s derivative markets is remarkable. Changes in global investing patterns, new and proposed regulations and consistent advances in technology all play a role in reshaping the industry. Customized derivative products, such as credit default swaps, which were traditionally traded off the exchanges, or over the counter, are now migrating to central exchange-based trading and clearing mechanisms.
“Recent economic events, including the global financial crisis and the run up in oil prices in 2008, have resulted in proposed regulations that could speed up the pace of change even more. Textbooks on derivatives trading are out of date before they are even printed. So having the opportunity to talk to executives from the largest futures and options exchange in the world is a valuable learning experience.”
Also accompanying the students was RIT accounting professor Daniel Tessoni from the Saunders College, and Jare Allocco Allen, assistant controller of investment accounting and debt management in RIT’s finance and administration division. Tessoni was responsible for arranging meetings with the CME Group, Boeing and Crown Imports, and Allen for Walton Street Capital.
“There’s still a lot of uncertainty in today’s economy—staff cuts, production setbacks, lack of investors—and this is something all of these companies face,” Van Aken says. “For a company like Boeing, a lot of people can’t afford to purchase a $400 million plane during a recession; Crown Imports, as a higher class beer company, is faced with consumers cutting back on consumption or purchasing less-expensive brands.”
Wollan says the trip to Chicago was a real eye opener for the FMA club, whose members major in diverse disciplines ranging from finance to biology to applied math.
“It is gratifying to see students taking advantage of the opportunities presented to them. Their extensive background research made it possible for them to gain valuable insights they would have missed if they had not been so well prepared; with this type of experience-based learning, you cannot go back to the textbook to check on your facts.”
Editor’s Note: Available for media interviews are Patricia Wollan at (585) 475-4419, and Andrew Van Aken at (845) 797-0469.