Innovations in Savings Schemes: The Bonus Bonds Trust in New Zealand
(pp. 73-81) DOWNLOAD FULL-TEXT ARTICLE
Jenny Ridge, Martin Young

ABSTRACT
Bonus Bonds were introduced into New Zealand in March 1970 based on the Premium Bond savings scheme operating in the United Kingdom. A Bonus Bond is a unit in the Bonus Bonds Trust with all income from the trust's conservative investments being balloted for on a monthly basis by the bond holders. This paper looks at the history and operation of the Bonus Bonds savings scheme in New Zealand and examines why it has such wide appeal for New Zealanders. The paper also addresses the following aspects of the scheme. Performance of the Bonds; their level of success as a savings vehicle; factors contributing to their relative success over time; the risk profile of the bond holders. The major findings of the paper are that investors in Bonus Bonds have little appreciation of real values and they view the bonds as an appropriate investment for risk averse investors.

Closed End Investment Companies: Historic Returns and Investment Strategies
(pp. 83-93) DOWNLOAD FULL-TEXT ARTICLE
Carolyn Reichert, Ph.D., J. Douglas Timmons, Ph.D.

ABSTRACT
Studies conducted in the past have identified inefficiencies in the market for Closed End Investment Company (CEIC) shares. In addition, studies have demonstrated the potential for trading strategies to exploit these inefficiencies. The purpose of this paper is to investigate the possibility of achieving excess returns through the utilization of relatively simple strategies not requiring continuous monitoring of discount(s) or frequent trading. Our investigation demonstrates that realizing excess returns through the use of simple mechanical trading strategies will not be possible.

The International Diversification Fallacy of Exchange-Listed Securities
(pp. 95-106) DOWNLOAD FULL-TEXT ARTICLE
Judson W. Russell

ABSTRACT
This paper reviews various investment vehicles and examines their international diversification potential. The primary focus is on the ability of U.S. exchange-listed investments such as closed-end country funds, American depository receipts (ADR's), and multinational corporations (MNC's) to provide a diversification effect similar to direct investment in foreign equity. The results show that the U.S. exchange-listed securities included in this study behave more like the host exchange than their home exchange. This result suggests that these U.S. exchange-listed securities, on average, do not perform an international diversification role for U.S. investors.

An Analysis of Personal Financial Literacy Among College Students
(pp. 107-128) DOWNLOAD FULL-TEXT ARTICLE
Haiyang Chen, Ronald P. Volpe

ABSTRACT
This study surveyed 924 students to examine their personal financial literacy; the relationship between the literacy and students' characteristics; and impact of the literacy on students' opinions and decisions. Results show that participants answer about 53% of questions correctly. Non-business majors, women, students in the lower class ranks, under age 30, and with little work experience have lower levels of knowledge. Less knowledgeable students tend to hold wrong opinions and make incorrect decisions. It is concluded that college students are not knowledgeable about personal finance. The low level of knowledge will limit their ability to make informed decisions.

Putting Your Money Where Your Mouth Is' A Profile of Ethical Investors
(pp. 129-143) DOWNLOAD FULL-TEXT ARTICLE
Diana Beal, Michelle Goyen

ABSTRACT
This research sought to determine why people chose to invest in Earth Sanctuaries Limited (ESL), which conserves ecosystems and breeds endangered species as its corporate mission, an unequivocally ethical objective. Investors were surveyed to assess the relative importance of financial versus ecological considerations. Demographic and investor behavior attributes of ESL shareholders were compared with those of Australian shareholders as reported by an Australian Stock Exchange survey. The results showed that the environmental mission of ESL took pre-eminence over financial considerations for these investors. Comparison of the two groups revealed significant differences in most variables.