Grading Standards

MEMORANDUM

TO: Finance Faculty (regular, visiting, and adjunct faculty, and instructors)

FROM: David Yermack, Finance Dept. Chair; Manjiree Jog, Finance Dept. Deputy Chair, and Anothony Lynch, Finance Dept. Undergraduate Program Coordinator

DATE: April 15, 2022

SUBJECT: Suggested Undergraduate Grading Standards for the Department of Finance

This memo lays out the Department of Finance policy on suggested grading standards in
the undergraduate program that have been in place for more than 20 years, with certain
refinements and clarifications.

Our reputation depends in part on the ability of prospective employers to quickly ascertain that a student really understands financial theory and practice, and has the technical capability to use the tools learned in finance courses. It is part of your responsibility as a faculty member at New York University to evaluate student understanding of the materials in your course with examinations or written assignments that are sufficiently demanding to reveal differential performance.

For the core course, Foundations of Finance, for sections with enrollments of more than 25 students, we expect that approximately 35% of students will receive an A or A- grade. This policy is identical to the Stern School guidelines for grading in undergraduate core courses.

For elective courses, the Stern faculty has agreed that the individual instructor or department is responsible for determining reasonable grading guidelines. The Department of Finance guidelines are that instructors should award grades of A or A- to approximately 35% of students in these courses as well.

Within the “A range” of 35% for both core courses and elective courses, we would expect the number of A- grades to be at least equal to if not more than the number of straight A grades, in a proportion such as 15% A’s and 20% A-’s, with the understanding that instructors will be attentive to the “bunching” of grades so that students with nearly identical performance will receive the same letter grades. At times, student performance, small course enrollments, or bunching of grades may warrant some variation in the fraction of A/A- grades awarded. However, they should never exceed 50%. We expect that those cases in which faculty exercise discretion to award more A/A- grades than usual will be offset by other cases in which they award fewer than usual.

The remaining grades should be awarded mostly in the “B range,” with an expectation
that approximately 60% of the students will receive some type of B. Grades should be
distributed fairly equally between the B+, B, and B- subgroups, with the straight B grades
ordinarily being the most numerous.

For students who perform significantly below most of the class, grades of C+, C, C-, D,
and F are appropriate. We would expect approximately 5% of the grades in larger
sections to fall into this range and encourage instructors to take account of noticeable
separations in performance when differentiating the grades awarded to individual
students.