Boston College Finance Academy

Weekly Update
September 13-24, 2010

this issue
This Week in Markets
Term of the Week
This Week in Business
What to Watch For

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This Week in Business
Web Start-Up Values Soar
Despite the Nasdaq Composite Index being
relatively flat for the year, the valuations for
closely held web firms are rapidly rising, as
venture capitalists have been competing with
each other to invest in web start-ups, and
therefore bidding up their valuations to levels
reminiscent of the 1990s dot-com boom. Many
of the companies they are targeting have no
revenue and are in the early stage of product
development. Consequently, the valuations for
these companies are often abstract. For
example, the mobile technology company
Foursquare has had its valuation increased from
$6mm last year to $95mm recently, as it
completed a $20mm round of financing. Upstart
web companies are not new, but the speed at
which they are reaching the market is rapidly
increasing, as many companies are quickly able
to attract consumers.
However, this type of guesswork valuation is
dangerous, and these lofty numbers can
possibly create false hope for positive company
performance, which can put an undue burden
on the web start-ups to live up to their high
expectations. Moreover, the threat of
another dot-com bubble also looms large,
which can potentially have a significant
impact on the economy.
-Parin Shah
Read This Article
Gold Settles at Record High
Amid a weakening dollar, gold futures posted
record highs on the New York Mercantile
Exchange. Gold is often purchased as a "safe
asset" or hedge against economic uncertainty
and volatile markets.
-Patrick Ryan
Read This Article
THIS WEEK IN MARKETS
Crude Oil Futures Increase
The price of crude oil futures increased
to its highest level in two weeks due to
the drop of the dollar against the
Euro. German business confidence
reached a three year high recently as
the dollar has reached $1.3485 per
year, the lowest value since April. Com-
modities rallied as the dollar
dropped. Gold reached a record high
and silver a 30 year high.
-Andrew Steichen
Southwest Airlines to
Read This Article
Acquire AirTran
Southwest Airlines, the largest U.S. carrier
of domestic passengers, announced THIS WEEK IN MARKETS
Monday that it plans to buy rival discount US Stocks Rally
Airline AirTran Holdings for $1.4 billion.
This deal is the first between major U.S. With todays success in the Dow Jones
low-cost carriers. As of the announcement and Nasdaq, its a great sign to see the
on Monday, AirTran shares were up 60% at U.S. stocks reach the fourth consecutive
$7.28, Southwest was up 9.5% at $13.44 week in the green. Its also good to see
and rival discount carrier delta was down
that the Dow is up by 8.9% this month,
2.5% at $11.41. Southwest claims the
making it contend for the best earnings
merger will allow it to expand to new
for a month since September 1939. This
areas around the country, such as Atlanta,
where AirTran currently competes with article talks about some contributing
Delta Airlines. The integration is expected factors for the recent gains, such as
to take two years, in order to gain Germany's IFO index increasing and
shareholder and regulatory approval, as
sending positive signs for the recovery
well as work out issues such as union
of the EU, along with the rise of the
contracts.
value of the dollar.
- Charlie Witmer
-Riley Wilson
Read This Article
Read This Article
Terms of the Week
Investment Bank
A financial institution that deals chiefly with the underwrit-
ing of new securities.
Underwriting
The process by which investment banks raise capital for cor-
porations, such as in a company’s Initial Public Offering. The
underwriter generally assumes a portion of the risk involved
in marketing the securities.
 This Week in Markets
September 13-17; September 20-24
Over the 2 week trading period starting Sep-
tember 13th and ending September 24th, both
the DOW Industrial Average and NASDAQ
Composite indices posted modest gains. Prom-
ising tech earnings helped offset investor wari-
ness amid news of the Federal Reserve belief
that inflation is too low. Gold soared as the
U.S. dollar weakened against its rivals.
DOW Gains 328.92 (3.1%)
»Weekly Gain: [10,531.38 to 10,860.26]
NASDAQ Gains 112.99 (4.9%)
»Weekly Gain: [2,268.23 to 2,381.22]
Indian Firms Scramble for IPO’s
Ahead of Jumbo Offers
A significant number of Indian companies are
looking to pull the trigger on backlogged IPOs.
In addition to markets trading at 32-month
highs, jumbo state-run IPOs, which are ex-
pected to price in the next few months, are
working as a catalyst to pressure smaller com-
panies to issue shares now. If markets remain
strong, it is predicted that another 20 -25 In-
dian IPOs valued near $15b could hit the mar-
kets by year end.
-Steven Schmitt
Read this Article
Ryan Crowe
 Summer Newsletter
Available Online
Please see bc.edu/bcfa
for new updates and ad-
ditional resources added
weekly.

More This Week—Credit Unions Bailed Out Freshman Board

Two years after the peak of the financial crisis, regulators have announced a rescue of the nation's
Positions — Apply
wholesale credit unions. This includes seizing Three unions. Officials say it won't cost taxpayers any Online, Due Friday, Oct 1
money. The government plans to reign in risk taking at America's wholesale credit unions as Five of
twenty-seven have had to close their doors since March of 2009. Debbie Matz, chairman of the
National Credit Union Administration went as far as to call the move, "resolving the problem".

Read This Article Weekly Newsletter

September 2010
Upcoming Events
Intro to Finance Night with Professor Barry

On Monday, October 4th from 7:00-8:30 in McGuinn 121, Professor Barry will be discussing a number of topics of interest to
those pursuing finance—from career opportunities to academic preparation. This is the first of the BCFA faculty speaker series.

Wall Street Trek Sign-Ups Available Now

The Graduate Finance Academy of Boston College is leading a trip to Wall Street on Friday, October 29th, during which they’ll
be visiting with Goldman Sachs and JP Morgan. Sign-ups are available through the BCFA website and are due on Sunday, Octo-
ber 3rd. Juniors and seniors especially are encouraged to attend.

Investment Strategies Workshop — Tuesday, October 12

SNS Financial Group SNS Financial Group LLC will be holding an investment strategies work-
shop in Merkert 130 on October 12 at 7:30pm. The event will give students an overview of
modern portfolio theory, market timing strategies, average returns vs. geometric returns,
and an explanation of how options can be used to hedge
risk. This is a great way to brush up before full-time and
summer internship interviews.

Upcoming Information Sessions Boston College Finance Academy

Linda Vitale
Secretary

www.bc.edu/bcfa