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Introduction to the IEM

Introduction to the IEM. The University of Iowa College of Business Administration. History. Inception in 1988 Run for elections around the world Markets designed specifically for classroom use since 1993 Used in many classes and fields accounting economics finance political science.

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Introduction to the IEM

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  1. Introduction to the IEM The University of Iowa College of Business Administration

  2. History • Inception in 1988 • Run for elections around the world • Markets designed specifically for classroom use since 1993 • Used in many classes and fields • accounting • economics • finance • political science

  3. Introduction • Electronic futures market • Three primary sub-markets: • Iowa Political Market • Iowa Earnings and Returns Market • Iowa Economic Indicator Market • Students have real incentives to learn about markets and follow economic, financial and political news

  4. Why use the IEM in Classes? • Broader learning experience • Improves pedagogy • Applies class concepts • Involves students in integrated learning along the information super-highway

  5. How the IEM Works • “Contracts” are traded on the IEM • Contracts have “liquidation values” determined by some future event • Contracts are listed in bundles called “unit portfolios” • Contracts are created when traders purchase unit portfolios from the exchange

  6. An Example: The Computer Industry Returns Market • Contracts for July • AAPLg, IBMg, MSFTg, & SP500g • Liquidation values determined by returns • Highest return over horizon pays $1 • Bundle • 1 of each contract

  7. An Example: The MSFT (Microsoft) Price Level Market • Contracts for July • MSxxxgH & MSxxxgL • Liquidation values determined by prices • MSxxxgH pays of MSFT NASDAQ price closes above $xxx • MSxxxgL pays of MSFT NASDAQ price closes below or equal to $xxx • Bundle: • One of each contract

  8. Frequently Asked Questions • Who Can Participate in the IEM? • Anyone can trade in political markets • Academically affiliated individuals can trade in all markets • I Live in Europe, Can I Still Trade in the US Political Markets? • Yes • Are the Participants Playing with Real Money? • Yes • Why Would Anyone Operate a Not‑for‑profit Real‑money Market? • For research and educational purposes • Is it Legal? • Yes

  9. Frequently Asked Questions • How Do I Sign Up? How Do I Sign up My Class? • Through the web: http://www.mhhe.com/irwin/iem • How Do I Access the IEM? • Through the web: http://www.biz.uiowa.edu/iem • Trading through telnet: iemi.biz.uiowa.edu • What If I Am Having Trouble Logging In? • Wrong ID or password? • Have we received payment and signature form? • System trouble? • What If I Changed My Password, and I Can't Remember What it Was? • E-mail: iem@uiowa.edu

  10. Frequently Asked Questions • How Do Participants Make Money? • Capital gains and losses • Liquidation values • How Do I Trade? • Through telnet: iemi.biz.uiowa.edu • Menu driven system • I Made Mistake When Trading, Can I Undo this Mistake? • You can withdraw outstanding bids and asks • You cannot “undo” executed orders

  11. Frequently Asked Questions • How Does the IEM Safeguard My Money? • Your money will remain on account at the University of Iowa • How Do I Get My Trading Account Funds Back? • Fill out webform at http://www.biz.uiowa.edu/iem/ • Or e-mail: iem@uiowa.edu • I Want to Close My Account; Do I Have to Liquidate the Contracts I'm Holding? • Yes

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