Thursday, September 23, 1999
Bonds? Roll the dice
Board game teaches about risk and return
BY AMY HIGGINS
The Cincinnati Enquirer
Monopoly and Risk, look out. Scenarios is on the scene. But instead of teaching capitalism or strategy, the lesson here is comparative risk of government bonds given fluctuations in interest rates.
Confused? That's exactly what Stuart Crickmer of Bartlett & Co., a downtown Cincinnati money management firm, wanted to combat in inventing the board game.
Those of us in the business understand it and always assumed everybody else did, Mr. Crickmer said of the bond market. The intent was to try to create a game to be used as a tool to teach people about bonds.
RULES OF THE GAME
Those playing Scenarios: The Bond Market game learn how interest rate fluctuations affect the return for various government bonds. The outcome helps investment decision-makers better compare the risk and return of two bonds.|
Players randomly pick two cards, each representing a bond.
They roll a six-sided die to determine the given time horizon, one through six years.
They then bet on which security will be riskiest (have the broadest range of returns) over the time span.
Players roll a specially designed eight-sided die to determine whether interest rates will go up, down or stay the same during that time.
Bets are made on which type of bond will have the greatest return over the time frame.
Answers are based on charts included with the game.
A correct guess moves game tokens along the board. Wrong guessers move backward.
Steps 4-7 are repeated five times.
Players compare the five rates of return to determine which security was riskiest.
Win or lose, players have learned how bonds work.
You win the game by most often correctly predicting which bonds have greater risk and return. The game thus far is limited to U.S. Treasury and U.S. agency bonds. Add-on versions dealing with corporate, high-yield and municipal bonds are in the works.
Another version of the game teaching about portfolio management, including stocks, is planned. But the people Mr. Crickmer targets typically aren't the individual investors who would buy the game at Toys R Us. Mr. Crickmer said his target audience is educators and industry professionals, such as institutional fund managers. The game sells for about $250.
Showing graphical depictions of the different bond vehicles have helped even Wall Street traders better understand the math behind their transactions, he said.
Robert Klemkosky has taught a fixed-income class as part of Indiana University's MBA program for more than 20 years, and he says he's never seen anything like Scenarios. No other teaching tool is as unique, innovative or plain old fun, he said.
The students enjoyed it, Mr. Klemkosky said. It does do a good job of teaching what interest rate risk is.
The premise of the game is that it presents its players scenarios comparing the risks and rates of return of two different government bonds. Players try to predict how the bonds will perform within a given time frame based on which direction interest rates move.
Within a round, there are just under 2 million outcomes. The player who makes the most right predictions moves his or her token around the board the fastest and wins.
People make a variety of bets on risk and return and learn through simulated experience, Mr. Crickmer said. I do believe that if you can make something visual, you affect the way of making someone understand a complex thing.
Orvell Johns also has used the game to teach. He is director of the Ohio Treasurer's Center for Public Investment Management and is responsible for coordinating the education of anyone responsible for investing tax money, such as county, library board and school board treasurers.
Mr. Johns said the game's strength lies in its reality.
It simulates the cycles and environment of the bond market, of doing business out there in the bond market, he said. It gives players a chance to try a number of scenarios in the investment realm in a safe environment it's not your money on the line at that time. It also gives you a chance to look into the future and say, "What if?'
@tag:Effective Monday, the game can be ordered by calling
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