It all ended so quickly. Finals are over and Lucky is on vacation.
Three exams in two days; P2 was more difficult, but memory is fallible.
Negotiation Analysis
The Negotiation Analysis exam was beautiful - short, concise, and zero bullshit. This last condition is only notable because most other exams have significant bullshit requirements, ranging from a little to a lot. I'll not name names, but let's just say that there are courses where answers are provably correct and courses where there is no such distinction.
Back to Nego. Nine questions that could have been answered in one sentence each; one friend walked out in less than 30 minutes (you were allotted two hours). Topics covered:
- Why is there such a high incidence of no-deals when arbitration is an option?
- When is it OK to use point estimates of value? When is it not OK?
- What do you say when the seller of the land you'd like to purchase asks "How much did you pay for the other lots?"
- Why are there so many no-deals in a single-issue negotiation when a ZOPA (zone of potential agreement) exists?
- Give four characteristics of a Boulwarian negotiator.
Finance 2
This exam was one of the most difficult exams I have taken. In my life. Top 5, sans doute. The exam itself was 24 pages - a veritable doorstop. You had to be slightly intimidated just turning it over at the start of the exam, and those that weren't changed their minds as they went through it. Several friends went through the six questions to get a feel for the difficulty level and pick out the easy ones; one lass said, "I stopped and went back to the first question because I was getting overwhelmed!"
I must admit that it was a masterpiece, and I had fun doing it. It was the first time that we were really made to think all term, and I sat there wondering how much more I would have learned had I been challenged five weeks ago. This was a three-hour exam, so each question was tentatively allotted thirty minutes. All questions were multipart, (a), (b), (c)... one question went to (g) and a few subsections were marked with asterisks, essentially saying "I dare you". I don't know a single student who completed the exam.
Topics covered:
- RCB - Reverse Convertible Bonds, bonds which are repaid at face value given that the underlying security is over the strike price, and which are converted into equity otherwise.
- Executive stock options and the associated incentive structure. If you agree that your compensation should fall by $X given a $1 drop in share price below a predetermined strike price, what have you done? Sold a short put. When you make a compensation package with call options (long) at high strike prices, and put options (short) at low prices, you have solved some of the incentive problems associated with option grants. But why don't you just give stock grants and be done with it? Topics for advanced finance, I suppose.
- Real options
- Currency futures and option hedging - when should you use one, and when the other?
- Capital structure and the agency costs of debt. Is there a way to solve the agency problems using different combinations of short- and long-term debt?
- Project value given changing debt structures over time - use of Adjusted Present Value as a valuation method.
Strategy
The strategy final exam had three questions following a short (10 page) case, an early version of which I have managed to locate online:
- Why did Webvan fail? (50 points)
- Not everything that Webvan did was wrong. What did they do that was right from a strategic perspective? (20 points)
- If you were advising brick-and-mortar grocery chains in 1999, what would you advise them to do? (20 points)
Since you have the case and the questions, you can play along from home. You have three hours. Vous pouvez commencer.
Too easy, I know. I handed in 13 pages, and threw in 3 models for good measure (a Five Forces industry analysis, WTP decomposition, and a Strategy Canvas). The fact that I could do this without much effort and after studying for only one hour suggests that either I have learned something at school or that strategy really is bullshit. I think you know which is the more credible argument.
8:23:43 PM 
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