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Financial Modelling (CF30002)

General information

Type:

 OB

Curs:

 1

Period:

 S semester

ECTS Credits:

 4 ECTS

Teaching Staff:

Group Teacher Department Language
Sec: A Luca Del Viva Economía, Finanzas y Contabilidad ENG

Group Teacher Department Language
Sec: B Luca Del Viva Economía, Finanzas y Contabilidad ENG

Group Teacher Department Language
Sec: C Luca Del Viva Economía, Finanzas y Contabilidad ENG

Prerequisites

Students must bring their own laptop in class. All needed software will be available through a remote desktop connection.

Previous Knowledge

Students should have basic knowledge of Excel, Statistics and Linear Algebra.

Workload distribution

Class attendance: 20%
Class participation: 30%
Independent Study: 50%

Course Learning Objectives

Financial Modelling introduces concepts and analytical techniques to identify and solve financial management problems. It serves as the basis for all other courses in the area of finance as well as providing the basic tools that every business student will need to be successful in her/his chosen career. The course guides you through various intermediate methods and techniques of financial modelling. The financial models can be tailored to different scenarios according to the specific set of issues to be dealt with.

Competences

2. Application of knowledge to achieve results (CB7)
10. Tenacity, persistence, constancy

Relation between Activities and Competences

2 10
Home Assignments    
Class participation    
Final Exam    

CONTENT

1. Statistical Analysis

- Data Structure
- Distribution of Data: Histograms
- Descriptive Statistics
- Confidence Intervals
- Hypothesis Testing

2. Regression Analysis

- Correlation and Regression: Measuring and Predicting Relationships
- Simple and Multiple Regression

3. Capital Budgeting and Risk

- Building a financial model
- Standard analysis of uncertainty
- Sensitivity analysis
- Break-even analysis
- Scenario analysis
- Monte Carlo Simulation

4. Statistics for portfolio theory

- Measures of Risk and Return
- Stock Returns
- Return Mean, variance and standard deviation for an asset
- Return Mean, variance for a portfolio of two assets
- Efficient frontier and the Minimum Variance Portfolio

5. Capital Market Line and Security Market Line

- Capital Market Line
- Estimating betas and the security market line
- Calculating the cost of capital

Relation between Activities and Contents

1 2 3 4 5
Home Assignments          
Class participation          
Final Exam          

Methodology

The course is structured in theoretical and practical parts. Each theoretical topic is followed by a practical application that will help students to understand the involved concepts.

ASSESSMENT

ASSESSMENT BREAKDOWN

Description %
Home Assignments 30
Class participation 10
Final Exam 60

Assessment criteria

The final grade will be a weighted average of the home assignment, class participation and final exam with weights 30%, 10% and 60%, respectively.

Students will have to solve two group assignments over the entire course. Groups are composed of a maximum of 3 students and will be decided in class. Additional details regarding the assignments will be provided in class.

Class participation will be monitored by a teaching assistant. For class participation we intend a constructive/active participation of students during classes. Class participation will be evaluated taking into consideration the technical nature of the course, in particular at the end of the course students are classified in quantiles based on the total number of constructive interventions. The grade is thus proportionally calculated considering the overall class participation.

The final exam consists in an individual work at the end of the course.

Important clarification:

1.To pass the course, a minimum grade of 50% is required on both the final exam and the weighted average of all three components listed above. Specifically, if both the final exam mark and the weighted average are above 50%, then the weighted average becomes the final grade for the course. Otherwise, the final grade for the course will be the lower mark of the two.

2.In case a retake exam is needed, the final course grade will be 100% determined by the retake exam mark.

Bibliography

Bibliography:

Introduction to Econometrics (Third Edition), James Stock y Mark Watson.
Corporate Finance (Tenth Edition) Ross, Westerfield y Jaffe.
Brealey, R.; Myers, S. Principles of Corporate Finance. 7.th edition, McGraw Hill, 2002.
Bodie, Z.; Kane, A.; Marcus, A. Investments. 8th edition, McGraw Hill, 2009
Benning, S. Financial Modeling. 3rd edition. MIT Press, 2008

Harnett, D.; Horelli, J. Fecha, Statistics and Decision Models with Excel. 1998, John Wiley & Sons.

A selected set of PowerPoint slides, excel files, exercises and solutions that may prove to be useful for to complement the lectures, are available on the course website.

Software used: Microsoft Excel and PALISADE Excel add-in software @RISK.
and Decision Models with Excel by Donald Harnett, James Horell, 1998, John Wiley & Sons.
A selected set of PowerPoint slides, excel files, exercises and solutions most useful for following the lectures, are available on the course material website.
Software used: Microsoft Excel and PALISADE Excel add-in software @RISK.

Timetable and sections

Group Teacher Department
Sec: A Luca Del Viva Economía, Finanzas y Contabilidad

Timetable Sec: A

From 2018/9/28 to 2018/10/8:
Each Friday from 16:30 to 19:30. (Except: 2018/10/5)
Each Monday from 9:00 to 12:00.
Each Friday from 13:00 to 16:00. (Except: 2018/10/5)
Each Monday from 14:00 to 17:00.

From 2018/10/22 to 2018/11/26:
Each Monday from 9:00 to 12:00.
Each Monday from 14:00 to 17:00.

Friday 2018/12/14 from 9:00 to 12:00.

Group Teacher Department
Sec: B Luca Del Viva Economía, Finanzas y Contabilidad

Timetable Sec: B

From 2018/9/25 to 2018/10/9:
Each Tuesday from 15:30 to 18:30.
Each Tuesday from 8:45 to 11:45.

From 2018/10/30 to 2018/11/27:
Each Friday from 9:00 to 12:00. (Except: 2018/11/9, 2018/11/16 and 2018/11/23)
Each Tuesday from 15:30 to 18:30.
Each Tuesday from 8:45 to 11:45.

Friday 2018/11/2 from 17:30 to 20:30.

Friday 2018/12/14 from 9:00 to 12:00.

Group Teacher Department
Sec: C Luca Del Viva Economía, Finanzas y Contabilidad

Timetable Sec: C

From 2018/9/26 to 2018/10/17:
Monday and Wednesday from 9:00 to 12:00. (Except: 2018/10/1, 2018/10/8 and 2018/10/10)
Each Wednesday from 14:00 to 17:00. (Except: 2018/10/10)

Monday 2018/10/15 from 14:00 to 17:00.

From 2018/10/31 to 2018/11/28:
Each Wednesday from 9:00 to 12:00.
Each Wednesday from 13:00 to 16:00. (Except: 2018/11/7, 2018/11/14, 2018/11/21 and 2018/11/28)
Each Wednesday from 14:00 to 17:00. (Except: 2018/10/31)

Friday 2018/12/14 from 9:00 to 12:00.