Here are the best methods I’ve tried to engage my students. You don’t have to use all methods in one course, but can pick and choose what works for you.

Flip the classroom

As I described in my post Flipping the finance classroom, assigning readings for students to do at home and using class time to apply and practice the new knowledge improves learning outcomes and makes class time more interactive and fun. Students solve problems in groups of two or three, e.g., calculating a present value or an effective annual rate, questioning and coaching each other and thus being much more engaged.

Give students an incentive to ask for help in class

Typically, 20-30% of the grade in my courses is based on participation. To encourage students to make best use of class time, I give bonus points to the whole class if they collectively ask for help with the in-class problems more than 10 times in each of first two or three class meetings. The collective requirement makes students more likely to ask for help, as the risk of appearing stupid is offset by the extra points they earn for the entire class. These special points increase each student’s point balance (the numerator in the participation ratio), but do not affect the number of available points (the denominator), and are thus pure bonus points.

Have students present

My students have to give an individual presentation about financial news in each course. This is pretty informal and nearly everyone gets the maximum points. The only requirements are that the news item is relevant to the course and that students present the gist of the article within one or two minutes.

In my security markets class, a group of 3 to 4 students also has to give a 5-10 minute presentation about a financial asset, market or institution, which is graded according to this grading sheet.

Use clickers to engage all students

It is common for only a handful of students to speak up regularly in class. I use clickers (a student response system) to engage all students two to five times per class. I’ve tried products from two companies, iClicker and Top Hat. Top Hat only offers an app for $24. The iClicker product has the advantage that students can buy either a smartphone app for $10 or a physical remote. The remote is more reliable, doesn’t require a smartphone and is cheaper if the student buys it used and sells it after the course.

I use clickers for three purposes:

1. Reading quizzes: These are simple questions to test if students have done the assigned readings for the day. Students get 1 point for each answer (participation point) plus 1 point for each correct answer.
2. Make-you-think questions: Students get 1 point for each answer, whether right or wrong. Students are encouraged to talk to each other when deciding. Examples:
   1. Which bond should have a higher coupon rate, all else equal?
      1. Callable bond
      2. Non-callable bond
   2. If g > r in the DDM, the intrinsic value is
      1. infinity
      2. zero
      3. negative
      4. undefined
3. Mini quizzes: Test numerical problem solving after students had an opportunity to practice and ask for help in class. Students get 1 point for each answer plus 1 point for each correct answer (see “Have many low-stake quizzes” below).

Use real-life examples

I try to make finance more interesting by using many real-life examples that students can relate to. Here are some examples:

• Practicing Excel by having students calculate their grade
• Calculate student loan debt and number of payments
• Valuing a real bond (TBC)
• Valuing a real stock (TBC)
• Capital budgeting role play (TBC)

Use in-class essays to teach financial concepts

While I found that online homework systems like Accepi are excellent for letting students practice numerical questions (e.g., calculating a stock price or a present value), many students still struggle to understand financial concepts. To give students more practice with conceptual questions, I’ve started giving them several conceptual questions during each class and have them write an in-class essay about one or two of the questions. Students can talk to each other during the exercise, and the concept questions on the final exam are drawn from these questions. Examples include:

• Why do we discount when calculating a present value?
• Why can diversification eliminate some risk, but not all risk?
• If the stock price rises at the rate g, and g=ROE * b, is it always better to increase b?

Have many low-stake quizzes

In my most recent finance course, I got rid of the midterm exams and replaced them with graded (clicker) questions for numerical questions. Students read the material at home (see Flipping the finance classroom), then I talk some more about the material, before having them work on a problem in a group of two or three. During that time, I walk around and offer help. I then discuss the correct solution approach.

Finally, the students have to solve a very similar problem, but with different numbers, for credit, i.e., they get an extra participation point if they figure out the right answer. These are not bonus points, i.e., getting the answer wrong lowers a student’s total score. The advantage is that students have to pay attention and ask questions if they don’t fully understand a problem or solution approach.

Use simulations or games

My corporate finance students play a capital budgeting simulation and a working capital management simulation in and out of class. Access to each simulation costs $15 if you make them part of a coursepack on the HBS website. Some students say that this is the best part of the course.

For my investments course, I used to have my student trade on a virtual stock exchange, such as the Market Watch game. However, I no longer do this, as it encourages students to trade and contradicts my teachings about efficient markets and the superiority of investing in index funds.

Need more details?

Please feel free to email me at kai@accepi.com if you have questions about any of these methods.