Honors Theses: Finance & Agriculture Session

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2016
Thursday, April 21st
12:00 PM

An Analysis of the Accounting and Financial Effects of Inconsistent State and Federal Laws on Growth of the Recreational Marijuana Industry

Kimberly Taylor, Murray State University

Barkley Room, Curris Center

12:00 PM - 1:00 PM

There is limited information available concerning the recreational marijuana industry due to its first state legalization occurring in only 2012. As such, much is still being discovered about the industry and the various state and federal laws addressing it. These laws can affect both the medical and recreational marijuana industries, which are often intertwined, and have raised numerous questions as to how to conduct business in an environment of legislative and legal uncertainty. In the current study, the accounting and financial effects of the inconsistent state and federal laws regarding the recreational marijuana industry are examined from the following perspectives: banking and financial institutions, marijuana dispensary business owners, and certified public accountants (CPAs). It has been argued that the lack of federal action in regards to the discrepancies between state and federal legislation is hindering growth of the emerging industry, even in states that have legalized marijuana for recreational use. The results of this study support the view that various financial and accounting aspects of legislative ambiguity are impeding the growth of the recreational marijuana industry. Marijuana businesses are facing high effective tax rates, financial institutions are hesitant to form relationships with businesses in the industry, and CPAs are faced with many uncertainties when considering to offer services to marijuana businesses.

Education in Actuarial Science and the Role of Data Analytics

Meagen L. Wagner, Murray State University

Barkley Room, Curris Center

12:00 PM - 1:00 PM

The field of actuarial science is by no means a new discipline. However, the educational content for aspiring actuaries must continue to develop alongside the advancements in the profession. The increasing prevalence of data analysis in the field of actuarial science begs for a change in the curriculum and the Society of Actuaries is responding. The question that naturally arises concerns how data analytics can be integrated into the already rigorous educational standards of the actuarial profession. To examine this idea it is necessary to research what data analytics is to an actuary and how colleges and universities have created actuarial science programs. These topics can facilitate a solution to how actuarial programs can adapt to changes in the curriculum. A literary review and analysis will provide insight to better actuarial education here at Murray State University and in the profession as a whole.

Pricing Models for Financial Options

Jesse Sautel, Murray State University

Barkley Room, Curris Center

12:00 PM - 1:00 PM

Financial options are contracts often used as tools for hedging a position on fluctuating stock prices. There is no closed form solution for the pricing of these options; however, there exist certain numerical techniques to price them. For this paper, I implemented binomial and trinomial probability models to price a total of twenty-four different types of options, using MATLAB to code the pricing algorithms. The probability-based pricing system starts with the creation of a lattice for the tree of possible stock prices, then works recursively from the far end of the tree (the end of a user-specified time period) to reach a single price value at the time of the option’s purchase. There was also an investigation into simplicity (measured in time taken for the computer to reach the option price) versus accuracy (measured in difference in price from some benchmark, more accurate value) as the number of steps of the stock tree increased.