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Marquis Scholar Carrie Abildgaard ’04 (North Haven, Conn.) hopes her research will brighten futures for investors who need to rebalance their portfolios, and will present her findings at a national conference early next year.
A varsity swimming captain, Abildgaard is pursuing a B.S. degree in mathematics and an A.B. degree with majors in economics & business and Spanish. In her yearlong independent research project, she is using mathematics to investigate the optimal frequency with which to rebalance an investment portfolio.
“One of the questions investors face is how often should they rebalance their portfolio,” she explains. “I’m trying to address this by creating a hypothetical portfolio comprised of 60% stocks and 40% bonds.”
“I am currently doing background research on utility functions, which is what I will use to determine the frequency. Because the value of stocks increases at a faster rate than that of bonds, one will periodically have to sell off some stock and buy more bonds to maintain the desired ratio. I will be using the historical returns from stock and bond indices over the past 15 years as the data for my project.”
Abildgaard’s thesis adviser is Derek Smith, assistant professor of mathematics. Donald Chambers, Walter E. Hanson/KPMG Professor of Economics and Business, is also providing guidance.
“Carrie is a very well-rounded student,” says Smith, coauthor of a recently published book that has received acclaim from the American Mathematical Society, the Mathematical Association of America, and the International Union of Crystallography. “She chose the hardest path by tackling the mathematical underpinnings of economics.”
Adds Chambers, “This project is a nice blend of the pragmatic and theoretical approaches to finance.”
Chambers has published five books and over 30 journal articles about investments, corporate finance, and capital markets. He recently published the fourth edition of a textbook on finance. He serves as a consultant to The Bank of New York and a senior portfolio strategist with Karpus Investment Management of Pittsford, N.Y., and is often called upon as an expert witness in litigation regarding investments.
Abildgaard finds the collaborative spirit between students and professors at Lafayette conducive to projects of this scope.
“I am fortunate to be doing my thesis at Lafayette, because I have the opportunity to collaborate with more than one professor on my project. Lafayette’s small, undergraduate environment allows professors to devote so much time and energy to the students,” she says.
Abildgaard will present some of her findings at the Conference for Undergraduate Women in Mathematics in Nebraska this February.
“I’m looking forward to presenting at the conference and meeting other students,” she says.
Abildgaard became interested in the project after an internship last summer at the Yale Investments Office.
“I was interested because there was so much math involved,” she says. “This thesis allows me to delve into a specific aspect of investments as well as incorporate a great deal of the mathematics and economics I have studied at Lafayette.”
Abildgaard, who intends to pursue a career in finance, is pleased to have had the chance to indulge her wide range of interests through three majors.
“I entered Lafayette intending to major in mathematics, minor in economics, and continue taking Spanish courses to maintain my knowledge of the language. Over the course of my four years here, these interests developed into additional majors,” she says.
She cites the strengths of each department and academic discipline.
“The math faculty is amazing! I have found those professors to have the most flexible office hours; they are almost always in their offices with their doors open. They are determined to see that each one of their students succeeds and will put in whatever time is needed to do so,” she says. “The Spanish department offers a wide variety of courses. There are history, cultural, and literature classes that cover both Spain and Latin America. The professors are very knowledgeable and passionate about their work.”
Abildgaard adds, “While Lafayette is not a business school, it has a strong economics department. Many of the courses are designed for students wishing to pursue the investment banking career path.”
She is a member of the student chapters of Pi Mu Epsilon, the mathematics honor society, Sigma Delta Pi, the Spanish honor society, and Omicron Delta Epsilon, the economics honor society. She has taken advantage of many of the trips offered to Marquis Scholars, including an interim trip to South America last winter. She is a peer mentor for first-year student athletes and a four-year member of the varsity swimming and diving team. She has also been a volunteer coach for a group of swimmers with Down Syndrome training for the Special Olympics.
She is a graduate of North Haven High School.
Honors theses are among several major opportunities at Lafayette that make the College a national leader in undergraduate research. Lafayette sends one of the largest contingents to the National Conference on Undergraduate Research each year. Over the past five years, more than 130 Lafayette students have presented results from research with faculty mentors, or under their guidance, at the conference.