Financial Modelling (2225.YR.003934.1)
General information
Type: |
OBL |
Curs: |
1 |
Period: |
S semester |
ECTS Credits: |
4 ECTS |
Teaching Staff:
| Group |
Teacher |
Department |
Language |
| Year 1 |
André Brandao de Mello Souza |
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 their 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.
CONTENT
1. Statistical Analysis - Data Structure
- Distribution of Data: Histograms
- Descriptive Statistics
- Confidence Intervals
- Hypothesis Testing
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2. Regression Analysis - Correlation and Regression: Measuring and Predicting Relationships
- Simple and Multiple Regression
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3. Capital Budgeting and Risk - Building a financial model
- Standard analysis of uncertainty
- Sensitivity analysis
- Break-even analysis
- Scenario analysis
- Monte Carlo Simulation
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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
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5. Modern Portfolio Theory - Capital Market Line
- Estimating betas and the security market line
- Calculating the cost of capital
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Relation between Activities and Contents
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5 |
| Home Assignments |
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| Class participation |
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| Final Exam |
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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 (4th Edition), Stock and Watson.
Corporate Finance (12th Edition), Ross, Westerfield and Jaffe.
Investments (8th edition), Bodie, Kane and Marcus.
Financial Modeling (4th edition), Benninga.
Data, Statistics and Decision Models with Excel (1998), Harnett and Horell,
A selected set of 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. The software is available for each student through a Remote Desktop connection. Details on how to connect to the Remote Desktop will be provided the first day of class.
Timetable and sections
| Group |
Teacher |
Department |
| Year 1 |
André Brandao de Mello Souza |
Economía, Finanzas y Contabilidad |
Timetable Year 1
From 2022/9/19 to 2022/9/22:
Monday and Thursday from 14:15 to 15:45.
Monday and Thursday from 16:00 to 17:30.
From 2022/10/3 to 2022/11/28:
Each Monday from 10:30 to 12:00. (Except: 2022/10/24)
Each Monday from 14:15 to 15:45. (Except: 2022/10/24)
Each Monday from 16:00 to 17:30. (Except: 2022/10/24)
Each Monday from 8:45 to 10:15. (Except: 2022/10/24)
Wednesday 2022/12/7 from 12:15 to 14:45.
