None of the other 18 public universities came close to TTU's performance that earned the school a $15,000 cash prize; Western Kentucky University came in second with a 60 percent return and the University of Tennessee at Martin was third with a 51 percent gain. Collectively, participating universities had a 36 percent return, raising $720, 071 for TVA's nuclear decommissioning fund.
"The students were in charge of the investments and seized opportunities when the market was going up," said finance professor Deryl Martin, who leads the class. "They now know how the market works and what it takes to make sound decisions. They opened up doors to new job opportunities with the success they've shown."
Who are these wiz kids of investments? They are senior and graduate students, some working toward MBA degrees, who have high grade point averages and are polishing their skills before they hit the job market. They take the course for credit, adding to the pressure of making successful decisions.
"Each student is put in charge of a sector of stocks, allowing each to become an expert in 30-40 different stocks," said Martin. "They make selections that include big-name companies and little-known companies that they've researched."
The class is also an exercise in collaboration where final investment decisions are made by consensus. If a clear consensus on an investment selection isn't reached on a vote, students shore up their choices with more research or make a new selection.
TVA created the program in 1998, distributing $100,000 per school from a trust fund that will be needed in 20 years to start closing nuclear power plants. TVA estimates the fund, now at $850 million, will need a 9 percent annual growth rate to reach the needed $2 billion by 2017, when TVA's first nuclear power plant is schedule to end its useful life.
Compared to the students' 36 percent growth rate, Standard & Poor's 500 index gained 21 percent in 1999. TTU and 12 other universities beat the S&P 500 -- a measure by which TVA gauges its own investment experts. That kind of success looks good on a resume, and companies, including TVA itself, are racing to hire Investment Challenge participants.
"Our students have improved their job prospects by showing they've faced real-life situations and made decisions with real-life consequences," said Martin.TVA turned down private colleges wanting to join the program because the federal utility said it would make the program too big to manage. Participating universities include Middle Tennessee State University, Austin Peay State University and Tennessee State University, as well as the University of Tennessee at Knoxville, University of Mississippi and University of Kentucky.