Students at Cornell University's Dyson School Use @RISK to Evaluate Capital Budgeting, Investments, Random Walks, Derivatives Pricing and Real Options

Offered by the Charles H. Dyson School of Applied Economics and Management at Cornell University, Dr. Calum Turvey’s Risk Simulation and Optimization course introduces students to @RISK to evaluate problems of finance, including capital budgeting, investments, random walks, derivatives pricing and real options.

Calum Turvey, W.I. Myers Professor of Agricultural Finance, uses @RISK in his Risk Simulation and Optimization course. Offered by the Charles H. Dyson School of Applied Economics and Management at Cornell University, Risk Simulation and Optimization is in its second year and has now become a regular course offering, with roughly 45 students per semester. @RISK is used to evaluate problems of finance, including capital budgeting, investments, random walks, derivatives pricing and real options. Dr. Turvey was first exposed to Lumivero’s (previously Palisade) tools when they were in their infancy: “If I recall, I was customer number 100 in 1987 when @RISK was introduced as a Lotus 1-2-3 application, and have used it ever since.”

On the importance of exposing his students to @RISK, Dr. Turvey explains, “Students of finance are largely taught finance from the view of certainty. Adjustments are made in the standard investment model to adjust for risk, but these are generally not insightful. Risk assessment using probabilities is confined to simple decision trees. What we do in this course is take the standard textbook in finance, and chapter by chapter we convert everything to a probability model, starting with coordinated financial statements to investigate cash flow risk and on to NPV applications. On the derivatives side, I show how Monte Carlo simulation can be used to replicate options prices, and how Monte Carlo simulation can be used to price exotic options.”

Calum Turvey received his PhD from Purdue University in 1988, after which he joined the faculty of Agricultural Economics and Business at the University of Guelph, obtaining the rank of professor, until 2002. In 2002, he joined the faculty of Cornell’s Department of Agricultural, Food and Resource Economics as professor and director of the Food Policy Institute and Chair from 2003-2005. In 2005, he joined the Department of Applied Economics and Management as the W.I. Myers Professor of Agricultural Finance. He is the editor of “Agricultural Finance Review” and conducts research in the area of agricultural finance, risk management and agricultural policy.

Originally published: Dec. 6, 2021
Updated: June 7, 2024

Offered by the Charles H. Dyson School of Applied Economics and Management at Cornell University, Dr. Calum Turvey’s Risk Simulation and Optimization course introduces students to @RISK to evaluate problems of finance, including capital budgeting, investments, random walks, derivatives pricing and real options.

Calum Turvey, W.I. Myers Professor of Agricultural Finance, uses @RISK in his Risk Simulation and Optimization course. Offered by the Charles H. Dyson School of Applied Economics and Management at Cornell University, Risk Simulation and Optimization is in its second year and has now become a regular course offering, with roughly 45 students per semester. @RISK is used to evaluate problems of finance, including capital budgeting, investments, random walks, derivatives pricing and real options. Dr. Turvey was first exposed to Lumivero’s (previously Palisade) tools when they were in their infancy: “If I recall, I was customer number 100 in 1987 when @RISK was introduced as a Lotus 1-2-3 application, and have used it ever since.”

On the importance of exposing his students to @RISK, Dr. Turvey explains, “Students of finance are largely taught finance from the view of certainty. Adjustments are made in the standard investment model to adjust for risk, but these are generally not insightful. Risk assessment using probabilities is confined to simple decision trees. What we do in this course is take the standard textbook in finance, and chapter by chapter we convert everything to a probability model, starting with coordinated financial statements to investigate cash flow risk and on to NPV applications. On the derivatives side, I show how Monte Carlo simulation can be used to replicate options prices, and how Monte Carlo simulation can be used to price exotic options.”

Calum Turvey received his PhD from Purdue University in 1988, after which he joined the faculty of Agricultural Economics and Business at the University of Guelph, obtaining the rank of professor, until 2002. In 2002, he joined the faculty of Cornell’s Department of Agricultural, Food and Resource Economics as professor and director of the Food Policy Institute and Chair from 2003-2005. In 2005, he joined the Department of Applied Economics and Management as the W.I. Myers Professor of Agricultural Finance. He is the editor of “Agricultural Finance Review” and conducts research in the area of agricultural finance, risk management and agricultural policy.

Originally published: Dec. 6, 2021
Updated: June 7, 2024