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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
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
Why use the IEM in Classes?
Broader learning experience Improves pedagogy Applies class concepts Involves students in integrated learning
along the information super-highway
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
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
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
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
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: [email protected]
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
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: [email protected]
I Want to Close My Account; Do I Have to Liquidate the Contracts I'm Holding?– Yes
