Gary Joseph Gray

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Teaching Professor in Finance

Department Finance
Office Address 330 Business Building
Phone Number 814-863-3564
Email Address

Before joining the Smeal College, Dr. Gray was an investment banker/financial engineer specializing in municipal derivative products and new financing techniques and programs. He was the principal architect of a number of financial products including: tax-exempt zero-coupon bonds, capital appreciation bonds, agricultural revenue bonds, tender option crossover refunding bonds, RIBS/SAVRS, Bond Payment Obligations (BPOs), Premium Municipal Bond Receipts, Government Development Receipts, municipal call options (MuniCHOPs), secondary market versions of RIBS/SAVRS and tax-exempt bond and preferred stock programs using various custody and trust arrangements. He assisted in the sale of derivative products to large institutional investors and presented Lehman's programs at municipal and derivatives conferences.


Stock and Bond Valuation. Investment Banking. Financial Institutions. Municipal Finance.


Ph D, Finance, The Pennsylvania State University, 1984

MBA, The Pennsylvania State University, 1977

BS, Electrical Engineering, The Pennsylvania State University, 1972

Courses Taught

This course provides a basic understanding and framework of how firms acquire, allocate, and control their financial resources. It covers the acquisition and management of corporate capital; analysis of operations, forecasting capital requirements, raising capital, and planning profits. This is a core finance course focusing on basic financial principles and practices essential to managing a business. In addition, this course also covers financial markets, institutions, organizational forms and investments. It relies heavily on accounting and economic principles with a strong emphasis on problem solving and decision making. One objective of this course is to be able to assess the past and present performance of the firm. This can be achieved through vertical and horizontal analysis of the financial statements as well as ratio analysis. Another aspect of this course is the financial planning process. This includes concepts such as pro forma statements, developing the statement of cash flows, as well as the budgeting process through the preparation of the cash budget. Another facet of this class is to understand how financing and investment decisions are made. Students will learn about the time value of money as well as fundamental techniques for valuing financial assets such as stocks and bonds. Additionally, capital budgeting techniques such as the net present value and internal rate of return are explained. Other important objectives include the management of working capital, the determination of the cost of capital, operating and financial leverage, and risk and return. The concepts and tools covered in this class allow the student to gain a fundamental understanding of how the finance function works within the business environment. The course promotes critical thinking and will enable the student to better integrate the individual functions of a business in order to make good business decisions. A student may receive credit toward graduation for only one of the following; BA 301, FIN 100, FIN 301, or FIN 301H.

FIN 301H – Honors Finance (3)
FIN 301H honors course provides insight into real world issues that are needed to effectively run a business. Students will utilize the fundamental concepts learned in finance (integrated with accounting, marketing, management, logistics, operations, and business law/ethics) as a foundation for running a business in the classroom. The "product" in this business will be a comprehensive strategic business plan for a real, live local, state, national, or international business that will serve not only as an articulation of understanding of core course concepts, but also as a supplement to the existing core package of introductory business courses. The honor students in this course will be building their strategic business plan products in electronic format in closely-knit, high performance teams. The strategic plan product development process in this course inherently involves integration across the functional areas of business: marketing, logistics, finance, and management. There is also inclusion and integration of courses in accounting, business law, management information systems, and statistics as applicable. Each student team will allocate product development responsibilities according to areas of expertise and interest. An appropriate balance of students from several majors will be assigned to each group. Class time will involve exchanging information within and across groups and coordinating activities between groups where necessary. Students will periodically meet with individual and team-based corporate mentors who will provide one-on-one advice on an as-needed basis. Students will also receive specialized training in team-based processes, leadership, and technology tools required to implement the products under development. Select members of the Penn State faculty and Smeal College alumni will be on hand at times to provide this specialized training and consulting expertise. Company owners and principals will provide periodic (monthly) reviews of honor students' work to assist them in the development of a first-class, professional business plan product.

FIN 408 – Financial Markets and Institutions (3)
Functional analysis of major credit institutions; sources and uses of funds; impact of government regulation.

FIN 496 – Independent Studies (variable)
Creative projects, including research and design, which are supervised on an individual basis and which fall outside the scope of formal courses.

B A 301 – Finance (2)
This course provides an overview of finance. The primary focus is on financial decision making in organizations - also known as corporate finance. In addition to corporate finance, the course also covers the two other primary areas of finance: financial m

Selected Publications

Woolridge J. R., Gray G. J., "Basic Principles of Finance: An Introductory Text." (Kendall Hunt), 2011, pp. 501
Woolridge J. R., Gray G. J., "Applied Principles of Finance." (Kendall Hunt), 2006, pp. 486
Woolridge J. R., Gray G. J., "The New Corporate Finance, Capital Markets, and Valuation: An Introductory Text." (Kendall Hunt), 2003, pp. 505
Gray G. J., Woolridge J. R., Cusatis P. J., "Streetsmart Guide to Valuing a Stock." (McGraw-Hill), 1999, pp. 234
Gray G. J., Cusatis P. J., "Municipal Derivative Securities: Uses and Valuation." (Dow Jones Irwin), 1995, pp. 285
Engebretson K., Gray G. J., "An Introduction to Municipal Derivative Products." Government Finance Review, vol. 9, no. 1, 1993, pp. 21-25
Engebretson K., Gray G. J., "An Introduction to Municipal Derivative Products: Part II." Government Finance Review, vol. 9, no. 2, 1993, pp. 17-20
Gray G. J., Cusatis P., "Understanding and Valuing Municipal Derivative Securities." Municipal Finance Journal, vol. 14, no. 2, 1993, pp. 1-41
Gray G. J., Engebretson K., "Residual Interest Bonds (RIBS)." Municipal Finance Journal, vol. 13, no. 1, 1992, pp. 1-29
Gray G. J., "SEC Rule 415: Benefits and Costs for Equity Issuers." Securities Industry Trends-Securities Industry Association, vol. X, no. 5, 1984, pp. 1-15
Woolridge J. R., Gray G. J., "Are Original Issue Discount Bonds Here to Stay?." Harvard Business Review, 1982, pp. 54-56
Gray G. J., Woolridge J. R., Ferrara S., "Competition in Agricultural Lending: Some Recent Developments." Journal of Commercial Bank Lending, vol. 64, no. 12, 1982, pp. 2-17
Gray G. J., Woolridge J. R., "IDBs - Opportunities and Challenges for Commercial Banks." Municipal Finance Journal, vol. 2, no. 4, 1981, pp. 277-284
Gouldey B. K., Gray G. J., "Implementing Mean Variance Theory in the Selection of U.S. Government Bond Portfolios." Journal of Bank Research, vol. 2, no. 4, 1981, pp. 161-173
Gray G. J., Woolridge J. R., "Industrial Development Bonds - Opportunities and Challenges." The Bankers Magazine, vol. 164, no. 4, 1981, pp. 82-87
Woolridge J. R., Gray G. J., "The CBO Study on Small Issue IRBs: Fact or Fiction?." Municipal Finance Journal, vol. 2, no. 2, 1981, pp. 83-89