Updates from June, 2013 Toggle Comment Threads | Keyboard Shortcuts

  • Adrienne Frank 5:40 pm on June 27, 2013 Permalink  

    Eagle Tales: solved 

    Students in the Snack Bar

    We received this email from Jim Williams ’56, who spotted himself in “Eagle Tales” in the May issue of American (Jim’s the handsome guy in the letterman jacket):

    You asked for identities of the “social butterflies” shown in the picture on page 41. The picture was taken in the cafe in the lower level of Mary Graydon Hall and the gentleman standing in the center is Joe Pellegrino. To his right is Dottie Brodt and sitting at the right is Barbara Bemelmans and sitting at the center is Jim Williams. I think standing at the left is Wally Ryland. I am trying to recall the name of the young lady sitting at the left, but her name currently escapes me. GO EAGLES! GO AU!

    Look for a new, WAMU-themed “Eagle Tales” in the August issue.

     
  • Adrienne Frank 5:26 pm on June 24, 2013 Permalink  

    long time, no blog 

    I apologize for the blogging hiatus. Two weeks ago, we moved to our new office on Connecticut Avenue, off the VanNess Metro. So, the past month has been hectic with lots of parking and unpacking. The building is also the new home of WAMU and while I miss Tenleytown, it’s fun to be on bustling Conn Ave.

    In between loading and unloading boxes, we’ve been hard at work on the August issue of American magazine. A summer issue should always be colorful and fun and I think we hit the mark. I don’t want to give too much away, but the new issue is packed with lots of wonderful Washington photographs (Dupont Circle, Gravelly Point, the Newseum, and the Smithsonian’s National Zoo) and lively alumni stories.

    Look for the new magazine in your mailbox the first week in August.

     
  • Adrienne Frank 6:26 pm on June 5, 2013 Permalink  

    impulse purchases are never a good idea 

    And William Shingleton has the final word:

    The answer to the May 2013 question is that she shouldn’t buy the necklace in either location.

     
    I believe the school solution is to buy the necklace in Switzerland.  This is assuming that a 4 to 1.5 exchange rate is accurate, and there are no additional taxes or fees in either location.  Assuming both hold true, the easiest thing to do is to think about the answer in terms of the opportunity cost (in numbers of International Herald Tribunes (IHTs) you are giving up) to buy the necklace.  In Switzerland, you could have bought 25,000 IHTs (100,000 Francs / 4).  In Madrid, she’s paying the equivalent of 26,666 (40,000 / 1.5).  Meaning that the cost is higher in Madrid than in Switzerland, since you are giving up four years of the paper.
     
    The problem is that the assumptions don’t really hold.  You have to assume the cost of the IHT doesn’t really reflect current exchange rates; they are unlike to change that price more than maybe once a year, so you are dealing with a pretty sticky and dated rate (indeed, according to Google, right now 1.5 euro equals 1.86 Swiss Francs, which is a pretty big difference).  Moreover, while our friend Raffa may be shopping duty-free in Geneva, assuming he’s Spanish he’s liable to pay more taxes in Spain.   So we really still don’t have the proper data to work with, but given the exchange rate issue alone the necklace is cheaper in Spain.
     
    Which leads me to the broader point.  If the minor difference in the price of the necklace makes that big a difference to you, maybe blowing 40,000 euro, 100,000 Swiss Francs, or a similar amount on an impulse purchase at the airport is not the smartest idea.
     
  • Adrienne Frank 6:24 pm on June 5, 2013 Permalink  

    no money to be made in tennis 

    Here’s another creative response from crafty alumnus, Sean Trice, WCL/JD ’12:

    Based on the following assumptions:

    Raffa is from Spain and is on his way back to Spain where his girlfriend also is currently.  Such an assumption reduces his chance of currency fluctuations.
     
    Raffa would most likely be paying for the bracelet he sees in the Geneva airport in Euros, the currency of Spain, his presumed home and presumed form of his currency would be that of his home country.
     
    Raff likely does not have this many Swiss francs with him, particularly since he only finished playing a charity exhibition match for which he likely did not get paid (which would have likely been in Swiss francs).
     
    To make the needed quick decision, since Raffa’s plane is about to take off and there’s no time to find the exchange rate, he could estimate a rough exchange rate based on the cost of the International Herald Tribune which is 1.5 euros for 4 Swiss francs, or an exchange rate of 1 euro:2.67 Swiss francs.  Or conversely .37 euro:1 Swiss franc.  At this rough exchange rate with Raffa paying in euros, Raffa would pay roughly 37,000 euros for the bracelet in the Geneva airport versus the determined price of 40,000 euros for the bracelet in Madrid.  Based on this, the better deal would be to buy the bracelet in Geneva.  
     
    There is a financial crisis going on in Madrid, per the facts, which could cause currency valuations to fluctuate which is a risk, though the short flight from Geneva to Madrid would reduce this risk.  There’s risk in the newspaper price not being reflective of the actual exchange rate.  If Raffa will have to pay taxes on the bracelet when he gets to Madrid could also change the picture.  Without all of these facts it’s difficult to be more precise, but based on the facts given, it would be better to buy the bracelet in Geneva.
     
  • Adrienne Frank 2:40 pm on June 5, 2013 Permalink  

    money left over for tapas 

    As promised, here’s one of the wonderfully wonky “Final Exam” responses from Derek Symer, CAS/MA ’95:

    I was not an econ major, but enjoyed puzzling for the past 20 minutes or so over Prof. DuBois Final Exam Question, and in the process learning a little bit about purchasing power parity and arbitrage. My conclusion is that Raffa (why not Roger?) would be better off purchasing his girlfriend’s diamond bracelet in Geneva.

    Why?
     
    Assuming that the International Herald Tribune exchange rate is close to accurate, then the same bracelet would cost Raffa 106,400 Swiss Francs in Madrid that he paid 100,000 Swiss Francs for in Geneva. Plus he gets to enjoy the pleasure of looking at the nice gift during the flight. And that would leave him with a sweet 2,250 Euros leftover to take her out to for tapas.
     
  • Adrienne Frank 4:03 pm on June 4, 2013 Permalink  

    and the winner is… 

    Untitled-2Congratulations to Gabrielle LaVorgna, SIS/BA ’12, winner of this issue’s “Final Exam.” Gabrielle was one of 36 people who correctly answered international business professor Frank DuBois’ brain teaser. She wins a six-month subscription to Politics and Prose Bookstore’s Book-a-Month Gift Program.

    For those who need a refresher course, here’s the original question:

    You’re traveling with your friend, Raffa, a professional tennis player. He wants to buy a diamond tennis bracelet for his girlfriend in Spain. He sees a bracelet that he likes for 100,000 Swiss francs at the airport in Geneva, where he played a charity exhibition match. He’s about to buy it when you suggest that he might get a better deal in Madrid, where a financial crisis may mean better prices. You call your friend who works at the Madrid airport, and she finds the bracelet for 40,000 Euros. Raffa’s plane is about to take off and there’s no time to find the exchange rate. However, you notice a copy of the International Herald Tribune, which has a list of its prices in several currencies. A copy of the paper sells for 1.5 Euros or 4 Swiss francs. Should Raffa buy the bracelet in Geneva or wait until he gets to Madrid?

    And here’s the answer, per professor DuBois:

    The implied exchange rate from the Herald Trib is 2.67 Swiss francs per Euro (4sf divided by 1.5 Euros). So something that costs 100,000 Swiss francs is going to be the same as 100,000 divided by 2.67 or 37,453 Euros. Grab the bracelet in Geneva. It’s 2546 Euros cheaper than in Madrid.

    I love how some of you explained the answer in great, wonky detail (I’ll post some of your answers in the coming days). It’s great to know you’re having fun with this section of the magazine, and I truly wish I could give you all a prize!

    Look for another “Final Exam” (from the School of Communication) in the July issue.

     
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