Classroom Tools by WRDS is a teaching and learning toolkit designed specifically for faculty who are introducing finance and business concepts in the classroom.

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Getting Started

This teaching tool guides your students through their first use of the WRDS website. With it, you can:

  • Introduce new users to WRDS
  • Provide an overview of how queries are organized
  • Demonstrate a sample query to retrieve pricing data

What Data is in WRDS?

Learn about WRDS' data offerings and how to navigate them effectively. Acquaint students with the breadth of data sets in WRDS, including:

  • Financial
  • Economic
  • Marketing
  • Public

Finding the Data You Want

WRDS contains a tremendous variety of data. This exercise covers the following:

  • How data is categorized
  • Techniques to locate data
  • Resources that index WRDS' data

Understanding Identifiers

This exercise describes the major descriptors used to identify both companies and securities in WRDS, along with examples of each. Students will be introduced to the following:

  • Difference between header and historical identifiers
  • Issues vs. companies
  • Dates of applicability

Using the CRSP/Compustat Merged (CCM) Database

The CRSP/Compustat Merged database provides a convenient way to link CRSP market data with Compustat fundamentals.

  • Navigate challenges to linking CRSP and Compustat data
  • Use a web query to access Compustat data using CRSP’s PERMNO/PERMCO identifiers

Using the IBES CRSP Linking Table

Researchers can easily merge IBES estimates with CRSP stock return data using a proprietary linking table that matches entities between the two. Researchers will learn:

  • The methodology behind the IBES CRSP Linking Table
  • How to run a web query to match CRSP PERMNOS with IBES Tickers

Using SAS Studio

SAS Studio is a revolutionary tool which gives students the power of interactive SAS, but within a browser window. With this teaching tool students will:

  • Launch SAS studio from the WRDS web interface
  • Write and read a basic data step in SAS Studio
  • Export a table in SAS Studio

Using PC-SAS on Windows

Show students how to access WRDS through PC-SAS on Windows for the first time by showing them how to do the following:

  • Connect to WRDS via PC-SAS on Windows with their WRDS username and password
  • Create and submit an example query to the WRDS cloud
  • Export data to Excel

SAS Visual Analytics

SAS Visual Analytics provides a complete platform for information visualization, enabling users to identify patterns and relationships in complex data sets.

  • Interactive, self-service business intelligence reporting
  • Quickly derive insights from business data
  • Customize your own reports

Introduction to Financial Statements

Review the complete financial statements of a company for multiple years.

  • Execute web queries to download financial statements
  • Validate elements of the balance sheet, income statement, and statement of cash flows

Income Statement

Understand the structure of a company's profit and loss accounting using the income statement. Students will become acquainted with the following income statement components:

  • Sales
  • Operating Income
  • Net Income
  • Earnings Per Share

Balance Sheet

Students learn the balance of assets and liabilities/equity. On-screen output includes such items as:

  • Cash and Short-Term Investments
  • Depreciation and Amortization
  • Accounts Payable
  • Total Shareholders' Equity

Statement of Cash Flows

Students learn the components of a company's statement of cash flows. Includes data such as:

  • Cash from Operating Activities
  • Cash from Investing Activities
  • Cash from Financing Activities
  • Net Change in Cash

Linking Financial Statements

Students will learn how the balance sheet, income statement, and cash flow statement are interrelated.

  • Visualize links with simple illustrations
  • Work with a real-world company

Financial Ratios Visualization

Students become acquainted with a broad range of financial ratios using this sophisticated and intuitive visualization tool.

  • Over 70 different ratios organized by category
  • Compare to industry averages
  • Fully interactive visualizations

Firm Liquidity Ratios

How to do managers and investors determine a company's liquidity? The Firm Liquidity Ratios tool teaches students about different ratios commonly used to determine a company's ability to meet its financial obligations.

  • Visually engaging format
  • Firm and industry-level comparisons

Accounting and Accountability

This teaching tool illustrates the nature of financial disclosure and accountability. Students will learn about corporate 10-Q and 10-K filings and the role of third-party auditing.

  • Use proprietary WRDS SEC Analytics Suite
  • Search over 3.5 million SEC filings
  • Understand the role of the auditor

Three Levers of Performance

Students learn the methods that financial managers use to increase ROE.

  • Understand how managers deliver financial value to shareholders
  • Learn about the return on equity (ROE) performance metric
  • How Profit Margin, Asset Turnover, and Financial Leverage affect ROE

Beta Visualization

WRDS' proprietary Beta Visualization application teaches students about beta, R2, and how the two metrics represent stock risk.

  • Select stocks individually or by industry
  • Compare to industry averages
  • Fully interactive and integrated charting of risk measures

Market and Firm-Specific Risk

Use the Beta Visualization application to learn about alpha and beta, and how they relate to firm-specific and market risk. Gain exposure to:

  • Alpha, beta, and measures of risk
  • R2 and beta reliability
  • Sophisticated visualization of metrics

Porfolio Risk Over Time

Looking at descriptive statistics of stock returns, students evaluate the impact of diversification.

  • Download and graph time series of stock returns
  • Estimate and understand portfolio risk by calculating return variances

Mechanics of Diversification

How does diversification work? Developed in conjunction with Wharton Professor, Donald Keim, this application introduces the mechanics of diversification in an engaging format using three interactive tools:

  • Variance-covariance matrix
  • Two-asset opportunity set
  • Limits of diversification graph

Portfolio Diversification

Using a series of visualizations, students will see the progressive impact of diversification on portfolio return and volatility.

  • Understand the effects of diversification
  • Generate and interpret graphs of the efficient frontier
  • Understand concepts of returns, standard deviations and correlations

CAPM Equity Valuation

Students will learn to calculate cost of equity and evaluate the relationship between risk and expected return.

  • Understand the capital asset pricing model
  • Download and evaluate company returns
  • Compute the cost of equity

Fama-French Three-Factor Analysis

In this teaching tool, students are introduced to the Fama-French three-factor model. Extending the CAPM, Fama-French adds both size and value factors in this sophisticated asset pricing model.

  • Fama-French factors explained
  • Step-by-step multiple regression
  • Practical Excel skills

Estimating Volatility

Using MATLAB, students will learn about volatility clustering in stock prices and test the predictive power of the GARCH model.

  • Identify volatility clustering
  • Apply economic methods (GARCH)
  • Interpret statistical output and test model fit

Mutual Fund Turnover

Duplicate market returns or try to exceed them? Students evaluate the impact of management styles on mutual funds.

  • Understand effects of trading activity in mutual funds
  • Buy-and-hold vs. actively managed funds

Efficient Frontier

Students will learn important concepts in diversification and portfolio optimization using a rich, interactive application.

  • Visualize the efficient frontier
  • Adjustable parameters
  • Stocks from the Dow 30

Backtester

Developed in collaboration with award-winning Wharton Professor of Finance Robert Stambaugh, this application enables students to design and test their own investment strategies.

  • Set up a backtest to test an investment strategy
  • Run tests against a wealth of archived data
  • Review and assess the outcome

OTIS Trading Simulator

Teach students the nuances of portfolio management and the impact of fluctuations on a large portfolio. 

  • Manage a virtual portfolio of tradeable securities
  • Trade domestic and international stocks, bonds, ETFs, options, futures, and more
  • Review portfolio analytics

Event Study

Event studies are a useful tool in financial research.

  • Understand how events affect the value of a firm
  • Generate metrics that assess the impact of events such as M&As, earnings announcements, etc.
  • Analyze and interpret the output of an event study

Futures Contracts

What are futures contracts and how do they work? Learn the mechanics of futures trading, including how profits and losses are calculated.

  • Review futures contract specifications
  • Understand the mark to market process
  • Determine P&L for hypothetical futures trades

Time Value of Money: Compound Interest

Students learn basic time value of money concepts and visualize growth of investments using an interactive compound interest graph.

  • Change key parameters such as interest rate and compounding frequency
  • Plot results on an interactive graph

Time Value of Money: Present and Future Value

Use the interactive computational tool to familiarize students with the variables found in basic time value of money problems. Students learn techniques of:

  • Compounding
  • Discounting

Bond Valuation

Determine the fair price of a bond using the following parameters:

  • Coupon rate
  • Par value
  • Yield to maturity
  • Time to maturity & frequency of payments

Reinvestment Risk: Bonds

What happens when the cash flows from an investment cannot be reinvested at the original rate of return? Callable bonds and fluctuating interest rates, for example, both present potential reinvestment risk.

  • Compare yield to maturity with realized compound yield
  • Investigate exposure to reinvestment risk

Aggregate Demand and Aggregate Supply

Using this introductory aggregate demand and aggregate supply model, students learn how macroeconomic events impact economic output and price levels.

  • Interactive AD/AS graph
  • Visualize impact of economic fluctuations

IS-LM Model

Learn how the IS (Investment Savings) and LM (Liquidity Preference/Money Supply) curves intersect to show the short-run equilibrium between interest rates and real GDP.

  • Interactive IS-LM graph
  • Visualize impact of fiscal and monetary policy actions

Purchasing Power Parity (PPP) GDP

How do we compare economies across countries? Students are introduced to the concept of purchasing power parity (PPP) and will complete a graphing activity using Penn World Table (7.1) data.

  • GDP per capita for 189 countries
  • 60 years of data

Fiscal Policy: Multiplier Effect

Using this multiplier calculation tool, students learn how fiscal policy – both government spending and tax policies – can impact aggregate demand.

  • Visual representation of multiple rounds of spending
  • Allows users to input custom values for initial demand and MPC

Treasury Yield Curve

Students learn what the U.S. Treasury curve is, how it is plotted, and how it can be viewed as an indicator of economic health.

  • 3-D model of U.S. Treasury yield curve, 1975-2015
  • Introduction to federal funds rate as a tool of monetary policy

Foreign Exchange Rates

What are the factors that affect a currency’s exchange rate? Students learn some important concepts and then apply their knowledge in an exercise using foreign exchange charts.

  • Select and chart rates from over 30 countries
  • Includes trade-weighted indices

SEC Analytics Suite

Researchers will gain an overview of WRDS' powerful SEC research platform. Some key features they will learn about include:

  • Access to 15 million filings from a single index
  • Full-text searching over 3.5 million filings
  • Sentiment analysis

SEC Filings Search Forward Looking Statements

Mine for forward-looking statements using Filings Search.

  • Predict the release of the Coke Zero product
  • Gain a working knowledge of forward-looking statements

Introduction to Text Analysis

This teaching tool presents an overview of natural language processing (NLP), concentrating on techniques used to prepare text data for analysis, including:

  • Tokenization
  • Lemmatization
  • Stop words
  • Word frequency

Introduction to Sentiment Analysis

Students learn some basics of sentiment analysis, including:

  • How text can be classified as positive, negative, or neutral
  • Sentiment lexicon vs. machine learning approaches

Sentiment Analysis Lexicons

Many sentiment analysis tools rely on sentiment lexicons—lists of words scored for positive and negative connotations. Students learn different approaches to creating these lexicons.

  • Demonstrates six sample sentiment lexicons
  • Introduces domain-specific sentiment analyses of financial statements

Named-Entity Recognition

Named-entity recognition (NER)—the process of finding and classifying named entities such as people, locations, and organizations in text—is central to many other natural language processing tasks. Students learn basic concepts and evaluate three approaches to NER:

  • Rule-based
  • Machine learning
  • Neural network

Machine Learning: Text Classification

In this supervised machine learning assignment, students are asked to adjust the training/testing parameters on a text classification tool and review results, learning:

  • Basic theory underlying machine learning
  • Naive Bayes text classification

Unsupervised Machine Learning: Clustering

Learn about clustering as an unsupervised machine learning task and become familiar with how the k-means algorithm works for text classification.

  • Customize input parameters, such as number of clusters
  • Compare k-means cluster results with human-annotated results

Getting Started

In this exercise, students will log into WRDS for the first time, and run a very simple data query. They will use the CRSP Monthly Stock file to retrieve one year of monthly prices for three securities. Assignment instructions for students are found in the accompanying PowerPoint deck.

Requires a CRSP subscription.

What Data is in WRDS?

Students are re-introduced to WRDS, taught how information is organized, and then shown a full list of available data sets in WRDS. Explore how data is categorized in WRDS and introduce students to the most commonly used databases.

Finding the Data You Want

The objective of this case is to be able to locate specific data on the WRDS platform. Students should be able to differentiate between data vendors and categories, and understand specific vendor products and update frequency. They should also be able to locate documentation and find specific data items.

Understanding Identifiers

Students will learn about the different types of identifiers, including header and historical identifiers, issue and company specific identifiers, as well as relevant date ranges for certain identifiers. Additionally, students will gain knowledge of and understand the distinction between universal and proprietary identifiers.

Using the CRSP/Compustat Merged (CCM) Database

When conducting financial research, it is often necessary to match security-level data in the CRSP database with company-level data in the Compustat database. The CRSP/Compustat Merged Database is a CRSP product that contains Compustat data items. The database is structured so that Compustat items can be accessed using CRSP's PERMNO/PERMCO identifiers and Compustat's GVKEY identifiers. After being introduced to CCM, students complete an assignment using CRSP PERMNOs to access Compustat data—specifically, earnings per share.

Requires a subscription to CRSP and Compustat.

Using the IBES CRSP Linking Table

When conducting financial research, you may be required to combine estimates information from IBES with equity returns from CRSP. This lesson is designed for researchers who wish to link data between the IBES and CRSP databases using WRDS’ familiar web query format.

The IBES CRSP Linking Table requires subscriptions to both the IBES and CRSP databases.

Using SAS Studio

Students will be introduced to SAS and SAS Studio and will learn the following upon completion of the exercise:

• Accessing WRDS data through SAS Studio
• Using the table view to filter data
• Write and read a basic data step in SAS Studio
• Export a table in SAS Studio

Using PC-SAS on Windows

The objective of this exercise is to introduce students to the basics of connecting to WRDS using PC-SAS for Windows. Students will learn how to sign on to SAS remotely and build a query to download stock price data. After being taught the details of the SAS data step within the query, students will export the newly retrieved data to Excel.

SAS Visual Analytics

Using source data from CRSP, WRDS has prepared an interactive demonstration using SAS Visual Analytics. Students are introduced to features of SAS Visual Analytics and taught how to edit a report by replacing variables and reviewing interactions across data objects. Students also learn how to create hierarchies to add drill-down functionality to reports.

Requires a CRSP annual stock subscription.

Introduction to Financial Statements

Students will become conversant in executing web queries to download financial data. They will also validate important components of the balance sheet, income statement, and statement of cash flows for a company of their choosing.

Income Statement

Students will become conversant in executing web queries to download financial data. They will also become familiar with the basic components of a company's income statement.

Balance Sheet

Students will become conversant in executing web queries to download financial data. They will also validate the balance of assets and liabilities/equity in a company's balance sheet.

Statement of Cash Flows

Students will become conversant in executing web queries to download financial data. They will also become familiar with key components of a company's statement of cash flows.

Linking Financial Statements

Publicly traded companies disclose their financial information in the form of a balance sheet, income statement, and statement of cash flows. How exactly are these financial statements related to each other? This teaching tool guides students through a basic exercise with a real company to discover just how the statements are interrelated.

Financial Ratios Visualization

Using the interactive application, students will learn how to generate and compare financial ratios to one another and to baseline industry measures. They will be introduced to ratios in the following categories: valuation, profitability, capitalization, financial soundness, solvency, liquidity, and efficiency. Students can select individual companies or entire industries from the S&P 500 universe.

Firm Liquidity Ratios

Students will learn about four financial ratios used to determine liquidity: (1) the cash conversion cycle; (2) cash ratio; (3) current ratio; and (4) quick ratio (acid-test). While comparing ratios between companies from different industry sectors, students consider how different factors influence the analysis. The tool makes visual comparisons easy, as students use detailed graphs to consider ratios in the context of relevant industry sectors.

Accounting and Accountability

Companies whose stocks trade on U.S. exchanges are required to disclose their financial condition via 10-Q and 10-K filings. To help ensure accuracy and integrity, financial statements are audited by professional firms. This teaching tool introduces students to the concept of financial accountability and guides them through an exercise in detecting an issue related to proper disclosure.

Requires a subscription to the WRDS SEC Analytics Suite.

Three Levers of Performance

This exercise will acquaint students with the different methods that companies use to deliver financial performance to their shareholders. One of the most popular metrics for performance is ROE, which is a measure of how much the company earns per share invested.

Beta Visualization

Two important and related measures that arise from the Capital Asset Pricing Model are beta and R2. In this teaching tool, students conduct an exercise using the Beta Visualization application to examine, compare, and interpret these important measures of equity risk.

Watch the video for a guided tour.

Market and Firm-Specific Risk

This teaching tool extends the Beta Visualization tool by focusing on alpha as defined in the Capital Asset Pricing Model. Students will learn how to interpret alpha and beta in the context of firm-specific and market risk. They will also become acquainted with R2 and the importance of model fit. The assignment guides students through the process of locating stocks with high/low alphas, and then interpreting the results.

Porfolio Risk Over Time

Students will learn how to use returns and a measure of risk such as standard deviation to execute a stock-selection strategy. They will become conversant in building and executing WRDS web queries, and validating the output. Excel skills are also developed, as students are challenged to manage their data from a raw format to a more structured and presentable one.

Mechanics of Diversification

This teaching tool includes three different activities designed to teach students about asset variance, covariance and the significance of positive and negative correlation. For example, students visualize a stock portfolio's total risk as they increase the number of stocks.

Portfolio Diversification

Students will understand how diversification works and the necessary steps required for achieving a diversified portfolio. They will learn concepts such as return, variance, standard deviation, and correlation. Students will also develop knowledge of the portfolio efficient frontier. Finally, they will develop skills in handling data, writing basic functions, and producing graphs in Excel.

CAPM Equity Valuation

Students will gain a working knowledge and understanding of the Capital Asset Pricing Model (CAPM). They will also develop intermediate Excel skills by building a regression model in the software. Students can select to use either stock or Exchange-Traded Fund (ETF) returns. Both slide decks provide step-by-step instructions for running the regression using Excel.

Fama-French Three-Factor Analysis

Students learn how to perform a multiple linear regression using exchange-traded fund (ETF) returns and the Fama-French market, size, and value factors. Detailed instructions are provided to guide students through the process in Excel. Examining the data, students analyze how well fund excess returns are explained by the Fama-French factors.

Estimating Volatility

In this exercise, students will learn to do the following:

  • Identify volatility clustering using appropriate measures and graphs.
  • Estimate the econometric model using MATLAB.
  • Interpret model coefficients and graphs.
  • Run statistical tests on the return series to investigate how well the model fits the data.

Mutual Fund Turnover

The objective of this exercise is to understand mutual fund turnover and its tax implications by conducting an Excel-based assignment.

Efficient Frontier

Using the interactive platform, students will learn how risk and return characteristics change as stocks are added and removed from a hypothetical portfolio. They will be introduced to such concepts as the efficient frontier, capital market line, and indifference curve.

Backtester

Depending on a course’s pedagogical goals, students have the ability to control different aspects of their backtests, including start and end dates, number of securities per portfolio, investment style, weights and rebalancing frequency.

  • Multiple graphs and tables for deciphering results
  • Summary recaps the test’s parameters, displaying investment performance 

Requires a subscription to CRSP.

OTIS Trading Simulator

OTIS is a multifaceted trading simulation platform used to apply the concepts of investments and portfolio management. Teach students the nuances of portfolio management by experiencing the impact of market fluctuations on a virtual portfolio. 

Created by faculty of The Wharton School, OTIS offers invaluable practice for students learning about investments. Packed with features to enhance the instructor's syllabus, OTIS introduces students to the competitive world of investing.

Additional subscription required.

Event Study

Students will learn how to identify an event and create the necessary input file. They will then configure the input parameters and execute the query. Finally, students will be tasked with analyzing and interpreting the event study output.

Requires a subscription to the WRDS Event Study Suite.

Futures Contracts

Students are introduced to important futures trading concepts, such as contract size, tick size, contract value, and margin requirements. In the assignment, students use the interactive tool to calculate their potential profit or loss on a futures trade after specifying the necessary parameters.

Time Value of Money: Compound Interest

Students will understand the distinction between simple and compound interest, as well as how time, rates, and compounding frequency affect the future value of an investment.

Time Value of Money: Present and Future Value

Students understand the relationship between present value and future value and learn to compare cash flows at different points in time.

Bond Valuation

This introduction to bond valuation begins by describing the features of fixed rate coupon bonds, and provides step-by-step instructions for computing the fair price of a bond. Students complete an assignment using an interactive tool that enables them to change key input variables and examine their effect upon the bond’s price. The tool also introduces the concept of Macaulay duration.

Reinvestment Risk: Bonds

When a significant portion of a bond investor’s revenue is dependent upon reinvesting coupon payments, it becomes essential to understand and assess reinvestment risk. Students explore the difference between yield to maturity and realized compound yield in this introduction to reinvestment risk.

Aggregate Demand and Aggregate Supply

Given a list of possible scenarios, students learn how each macroeconomic event shifts the aggregate-demand and aggregate-supply curves. Students are also asked to consider the effects of the changing equilibrium.

IS-LM Model

In this introduction to Keynesian macroeconomic dynamics, students use the IS-LM model to recognize how macroeconomic events impact GDP and real interest rate levels. The interactive assignment allows students to visualize how different factors—including consumer spending, income tax rate, money supply―shift the position of the IS and LM curves.

Purchasing Power Parity (PPP) GDP

Students will learn the theory of purchasing power parity (PPP) and why economists use PPP GDP to compare GDP across countries. After completion of an assignment, they will also become familiar with some of the macroeconomic data available in the Penn World Table.

Fiscal Policy: Multiplier Effect

The Multiplier Effect tool depicts how the government-induced chain of spending accumulates and results in an amplified change in GDP. Students will learn how the multiplier is calculated and how it works over time. They will also understand how the marginal propensity to consume (MPC) relates to the multiplier, and how the government spending multiplier differs from the tax multiplier.

Treasury Yield Curve

How is the U.S. Treasury yield curve used as a benchmarking and forecasting tool? Through the course of this assignment, students will learn to recognize different yield curve shapes and how these shapes may be viewed as indicators of macroeconomic conditions.

Foreign Exchange Rates

Upon completing the assignment, students will:

  • Understand factors that can affect the value of a currency’s exchange rate
  • Learn how to interpret foreign exchange charts to better understand the mechanics of currency exchange rates

SEC Analytics Suite

WRDS' proprietary SEC research platform is used in such disciplines as corporate due diligence, forensic accounting, disclosure research, and investment management. After completing the slide deck, researchers will have an understanding of the different components of the Suite.

Requires a subscription to the WRDS SEC Analytics Suite.

SEC Filings Search Forward Looking Statements

In this case students execute a keyword search to identify forward-looking statements that anticipate the release of an economically significant product release from the Coca-Cola Company.

Requires a subscription to the WRDS SEC Analytics Suite.

Introduction to Text Analysis

Designed to introduce basic concepts of text analysis, this teaching tool generates a word cloud as a visualization of word frequency distribution. Students learn about commonly used methods for preparing digital text for analysis by selecting different options on the interactive tool and seeing what happens to the word cloud as different text processing methods are applied.

Introduction to Sentiment Analysis

How does sentiment analysis work? What criteria are used to determine text polarity? In an engaging exercise using song lyrics, students participate in a demonstration of how text can be classified as positive, negative or neutral.

Sentiment Analysis Lexicons

While there are many advanced approaches to sentiment analysis, a basic understanding of the creation and use of sentiment lexicons is important foundational knowledge in the field. Students are asked to use an interactive application to investigate how selecting different sentiment lexicons changes the sentiment analysis of the sample text.

Named-Entity Recognition

In this teaching tool, students learn what NER is, as well as some of its applications. Students will be introduced to some of the features that NER systems use in the decision making process, such as wordshape, part-of-speech (POS) tagging, and the use of neighboring words. Students will also be asked to consider some of the challenges faced in the NER process.

Machine Learning: Text Classification

An overview of supervised machine learning is presented, followed by a step-by-step explanation of how a naïve Bayes classifier works for text classification. Topics covered include some of the parameters used for evaluating classifiers, as well as the tf-idf weighting strategy commonly used in text analysis.

Unsupervised Machine Learning: Clustering

The k-means clustering algorithm is one of the most popular methods used today in unsupervised machine learning. Students are taken through a step-by-step explanation of how the k-means clustering algorithm works. Then, using an interactive tool, students investigate how well the k-means clustering algorithm performs in a text classification task using business articles.