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Mathematics major Lindsay Bryant ’07 (Clinton Corners, N.Y.) has spent the summer comparing and contrasting different pricing methods for convertible bonds under the guidance of Qin Lu, assistant professor of mathematics.
They are collaborating through Lafayette’s distinctive EXCEL Scholars program, where students conduct research with faculty while earning a stipend. The program has helped make Lafayette a national leader in undergraduate research. Many of the more than 160 students who participate each year share their work through articles in academic journals and/or conference presentations.
A convertible bond is a type of bond that can be converted into shares of stock from the issuing company. Bryant has studied how these bonds can be converted into a predetermined amount of the company’s equity at certain times during its life.
“This is a complicated process because convertible bonds include both debt and equity attributes,” says Bryant. “I have read books and several papers that discuss different factors and complications of pricing convertible bonds.”
Bryant says she has spent most of her research time comparing and contrasting different pricing methods.
“The main goal is to study pricing convertible bonds in depth; comparing the different methods and models used to price convertible bonds and discover which prices fit convertible bonds best,” she says. “By the end, Qin and I hope to be able to write a comparison paper incorporating all that we have learned throughout the project, including the pros and cons of each model.”
Lu said the project is important because “we can buy the undervalued bonds and sell the overvalued bonds if we can identify the ‘correct’ price.”
“Unfortunately, ‘we’ means investment companies, not individual investors like us,” Lu jokes.
Bryant says that while the project has been extensive and difficult, she is happy to work with Lu and is confident with the project’s outcome.
“Professor Lu is an excellent advisor,” she says. “I enjoy working with her and have already learned a great deal. Her knowledge within this field has driven me to pursue a career in financial mathematics.”
Bryant is a member of the cross-country and track teams. She was named on the Patriot League Fall 2005 Academic Honor Roll.
Lu regularly includes students in her research and has mentored numerous students in honors thesis research. She has guided Lindsey Carifi ’02and Katharine Wolchik ’05, both mathematics and economics & business graduates; Usman Khan ’05, anelectrical and computer engineering and mathematics-economics graduate; and Mark Coslett ’01, a mathematics graduate, in various projects.
As a national leader in undergraduate research, Lafayette sends one of the largest contingents to the National Conference on Undergraduate Research each year. Forty students were accepted to present their research at this year’s conference.