Learning Through Equity Trading Simulation

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Timothy Moffit
Charles Stull
Hannah McKinney


Simulation, Equity Trading, Experiential Learning


Over the past several decades, colleges and universities have moved away from the traditional chalk-and-talk lecture.  Professors have experimented with a myriad of methods to engage students more fully.  Some of the innovations that have been used have succeeded in improving student performance and satisfaction.  In this paper we report the learning results of using an equity trading simulation across three different classes at a small Midwestern liberal arts college.  Sixty-one students participate in a nine-week equity trading simulation exercise. All class levels are represented, and students with a range of prior courses in business and economics are included. Assessment tools include a pre-simulation survey, a pre-simulation investments test, a post-simulation survey, a post-simulation investments test, and simulation performance.  The simulation allows trades in all U.S. equities including ADRs.  Trades use actual delayed market prices with a 20-minute delay in order execution.  No actual investments are made.  The students are given a test before the simulation began to assess their incoming knowledge of investment fundamentals.  None of the three classes covers this material in lecture.  The students have access to online investments resources and information during the simulation via the simulation service provider.  A test is given on the same investment fundamentals after the simulation is completed.  The students are also surveyed as to their motivation, interest and satisfaction.  Initial results show an average 14-point difference (out of 100) between the pre and post-simulation test scores.  This is significantly different from zero at better than the 99 percent level.  The gains in performance are higher for the students with the lower pre-simulation test scores. Pre-simulation test scores are significantly higher for students who have taken more business and economics classes.  Interestingly, post-test scores show no significant relationship to the number of prior courses in business and economics suggesting that the simulation effectively delivers content to students with limited backgrounds.  Survey results show that 64 percent of students regularly use the online education resources provided as part of the simulation, while 97 percent report using outside resources to inform their decisions.  Sixty-six percent report the simulation is effective or very effective at increasing their knowledge of investments.  Most students, 86 percent, indicate that the simulation increased their interest (a little or greatly) in investments and equity markets.      


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