Financial Modelling

Module description

This module is intended for Financial Services Professional Degree Apprenticeship students who want to develop the knowledge and tools to implement financial models using Excel. This is an applied module that covers the implementation of quantitative financial models that are widely used in financial institutions such as investment banks, mutual funds and hedge funds, and in non-financial corporations.

The module covers a range of topics in finance drawn from investment analysis, corporate finance, fixed-income analysis, risk management and international finance. The emphasis of the module is on the practical application of finance theory, in which you will work, through real-world problems using Excel.

Full module specification

Module aims

The aim of this module is to equip you with the knowledge and tools to implement financial models using Excel. The course introduces you to the general principles of building financial models, as well as a number of specific financial modelling tools including regression analysis, statistical functions, matrix functions, optimisation and simulation. These methods are applied to a range of practical problems in finance, including financial statement modelling, yield curve modelling, risk management and exchange rate modelling. The emphasis of the course is on practical application of the theory, with lectures on each topic followed by in-depth practical sessions, in which you will work through real-world problems using Excel. The module will also introduce you to the use of VBA (Microsoft’s programming language) in financial modelling.

ILO: Module-specific skills

• 1. Explain the objectives of financial modelling and the characteristics of financial data
• 2. Download financial data from the internet for a range of securities, including stocks, bonds and currencies
• 3. Undertake a range of financial and statistical calculations in Excel
• 4. Estimate the cost of capital for a company
• 5. Build a financial statement model and use this to estimate the fair value of a company
• 6. Estimate the expected yield of a corporate bond and construct a yield curve
• 7. Evaluate the risk of an investment portfolio
• 8. Estimate the fair value of a currency
• 9. Implement currency trading strategies based on momentum, carry and fair value

ILO: Discipline-specific skills

• 10. Effectively undertake complex financial modelling and research and analysis using appropriate tools
• 11. Design a range of different trading strategies and test their effectiveness

ILO: Personal and key skills

• 12. Develop proficiency in the relevant IT skills (Excel) and Financial Service specific software/systems, as required to deliver the role outcomes
• 13. Demonstrate a good understanding of processes and project management principles and how they are utilised within their area
• 14. Develop an ability to adapt their approach positively to manage priorities as circumstances change, new tasks need to be done or when business requirements change

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Re-assessment notes

Defer – as first time

Refer – capped at 40%

Syllabus plan

• Introduction
• Financial statement modelling
• Default adjusted bond yields
• Yield curve modelling
• Risk management
• Exchange rate modelling

Indicative learning resources - Basic reading

Basic reading:

• Benninga, S. (2014) Financial Modelling, 4th edition, Massachusetts: MIT Press

Module has an active ELE page?

Yes

Origin date

28/02/2019

Last revision date

15/03/2019