The authors used data collected from various sections of principles of finance classes at a private university to examine the effect of utilizing a homework grade cap policy. The results indicate that the homework grade cap policy increased the homework scores and that an increase in homework scores improved performance of the students on exams. An increase in homework scores triggered by the cap policy resulted in an increase of overall exam performance by about 0.4%. The results are robust to the inclusion of demographic variables and other factors likely to affect exam outcomes.