Forecast Competition Overview Meeting April 4 th 2007 Chad Moore - FMA Director, Finance

1. Financial Management Association California State University, Sacramento Forecast CompetitionOverview MeetingApril 4th 2007Chad Moore - FMA Director, Finance

2. Divide and Conquer

3. The Best of the Best Get it right about 52% of the time

4. As Team Leader My Duties are • Provide an example on how to analyze • Coordinate and support the 6 different forecast teams • Centralize the final application process

5. The Indices We are Predicting • The Euro (in US dollars) • NASDAQ composite • MSCI EAFE (prelim) • Oil (Nymex Crude Future) • 10 year Treasury Note Yield • S & P 500

6. Euro (in U.S. dollars) • The Euro is the currency that is distributed by the European Union to the countries who join the EU and wish to use it. The United Kingdom is not one of these. The European Union (EU) is a union of twenty-seven independent states based on the European Communities and founded to enhance political, economic and social co-operation. Those who work on this prediction will predict what one euro will be equal to in U.S. dollars on May 11th, 2007. As of 4/3/2007 (1 Euro = 1.3356 U.S. dollars). • Possible Key Indicators: Strength of the U.S. Dollar, British pound, U.S. Federal Reserve interest rate, home prices, political turmoil. • Websites: http://euobserver.com/ , http://www.gocurrency.com/outlook-eur-usd.htm , www.marketwatch.com , www.smartmoney.com

7. NASDAQ Composite • The NASDAQ is an electronic exchange where stocks are traded through an automated network. It stands for National Association of Securities Dealers Automated Quotations System. To tell if a company is listed on the NASDAQ check the ticker symbol... those made up of four letters are listed here (e.g. Microsoft = MSFT, Dell Computers = DELL). About 5000 stocks are traded on the NASDAQ, Mutual funds and Option Contracts are also traded. Those who work on this prediction will predict what the closing price of the NASDAQ composite will be on May 11th, 2007. As of 4/3/2007 NASDAQ = 2450.33. • Possible Key Indicators: U.S. Dollar, S & P 500, U.S. Federal Reserve interest rate, Gas Prices, Economic condition. • Websites: http://www.nasdaq.com/ , www.marketwatch.com , www.smartmoney.com

8. MSCI EAFE (Prelim.) • The MSCI as an Index is recognized as the pre-eminent benchmark in the United States to measure international equity performance. It comprises 21 MSCI indices, representing the developed markets outside North America: Europe, Australia, and Asia. Those who work on this prediction will predict the closing price, i.e. the price at which shares were last traded on May 11th 2007. As of 4/3/2007 MSCI EAFE = 77.14. • Possible Key Indicators: U.S. Dollar, Japanese Yen, British Pound, political turmoil, the S&P 500, NASDAQ • Websites:www.marketwatch.com , www.smartmoney.com , http://finance.google.com/finance?q=EFA , http://www.mscibarra.com/products/indices/stdindex/performance.jsp

9. Oil (Nymex crude future) • The Crude Oil future is a futures contract on Crude Oil. This means people are buying the future delivery of crude oil marked by the price in the contract. These futures contracts themselves can be re-sold at the owner’s discretion in the open market. Those who work on this prediction will predict the closing price, i.e. the price at which the futures contract was last traded on May 11th 2007. As of 4/3/2007 Crude Oil May 07 (CLK07.NYM)= 66.48. • Possible Key Indicators: U.S. Dollar, political turmoil, ecologic disaster • Websites:http://www.wtrg.com/daily/crudeoilprice.html , www.cnn.com , www.bloomberg.com

10. 10 – Year Treasury Note Yield • The 10 year treasury Note is an intermediate term debt obligation of the US government that has a maturity from one to ten years. They are issued in $1,000 denominations and pay interest semiannually. Treasury notes are commonly abbreviated as "T-notes". Those who work on this prediction will predict the closing yield, i.e. the yield on the note that was last traded on May 11th 2007. As of 4/3/2007 10-YEAR TREASURY NOTE (^TNX) = 4.66 • Possible Key Indicators: U.S. Dollar, U.S. Federal reserve Interest Rates, Economic condition (national and global), GDP • Websites:www.bloomberg.com , http://useconomy.about.com/od/economicindicators/p/Treasuries.htm , www.marketwatch.com

11. S&P 500 • The S&P 500 is the index of the 500 largest companies in the United States. Although the Dow Jones Industrial Average is the more popular indicator, the S&P 500 is believed to be more representative of the entire market. Those who work on this prediction will predict the closing total price of the index on May 11th 2007. As of 4/3/2007 S&P 500 INDEX,RTH (^GSPC) = 1437.77 • Possible Key Indicators: U.S. Dollar, U.S. Federal reserve Interest Rates, Economic condition (national and global), GDP • Websites:www.bloomberg.com , www.marketwatch.com, http://finance.yahoo.com/q?s=%5EGSPC .

12. Choosing your Index … • Since I am learning about interest rates and there affect on the market, I chose to work on the 10 – Year Treasury Note Yield. • Everbody will only work on 1 index, and they will get to choose what and how to predict for it

13. How do you Predict? • I have come up with a basic model that will predict the monthly price increase and allow the incorporation of market research. • You can make your own model.

14. Things we need from you • Your prediction of the price as of May 11th, 2007 • The Spread (Whether it is a Confidence Interval or one of your own intuition)

15. Learning Experience • No matter what you end up doing after college, you will benefit from this experience. • There is not a recruiter or potential employer out there that would not be impressed by this. • REMEMBER …

16. The Best of the Best Get it right about 52% of the time

17. Any Questions? FMAchapter@csus.edu