• University of Exeter Business School
• Module

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 widely used in financial institutions such as investment banks, mutual funds and hedge funds, and non-financial corporations.

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

Module aims - intentions of the module

This module aims 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 several 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 course’s emphasis is on the 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 using VBA (Microsoft’s programming language) in financial modelling.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

• 1. Communicating and Networking (S24) Critically analyze the objectives of financial modelling and evaluate the characteristics of different types of financial data
• 2. Innovation and Creativity (B41) Download financial data and critically evaluate the reliability and relevance of different sources for analyzing companies
• 3. Systems and Processes (K13,14) Undertake financial and statistical calculations in Excel, and analyze the outcomes to identify patterns and draw informed conclusions
• 4. Developing self and others (S31) Estimate the cost of capital among other financial ratios for a company and critically evaluate different estimation methods and their financial implications
• 5. Build a financial statement model, critically evaluate its assumptions and limitations, and use this to estimate the fair value of a company.
• 6. Estimate the expected yield of a corporate bond, construct a yield curve, and analyze the factors influencing bond yields and the implications of yield curve shapes
• 7. Critically evaluate the risk of an investment portfolio using different risk assessment models and discuss their comparative advantages.

ILO: Discipline-specific skills

On successfully completing the module you will be able to...

• 8. Products and Services (K9) Effectively undertake complex financial modelling and research, and analysis using appropriate tools.
• 9. Problem Solving and Decision Making (S22) Design a range of different strategies and test their effectiveness

ILO: Personal and key skills

On successfully completing the module you will be able to...

• 10. Systems and Processes (K13,14) Develop proficiency in the relevant IT skills (Excel) and Financial Service specific software/systems, as required to deliver the role outcomes
• 11. Demonstrate a good understanding of processes and portfolio management principles and how they are utilised within their area
• 12. Developing self and others (S31) 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.

Syllabus plan

• Introduction to Excel functions
• Financial Modelling using Balance Sheets
• Corporate finance and Valuation (computations of Enterprise Value & WACC)
• Yield Curve Modelling
•  Portfolio Models (Computing Efficient Portfolios and various statistics with the use of Monte Carlo methods)

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 a first time

Refer – capped at 40%

Indicative learning resources - Basic reading

• Benninga, S. (2014) Financial Modelling, 4th edition, Massachusetts: MIT Press.
• Hands-On Financial Modeling with Excel for Microsoft 365 - Second Edition by Shmuel
• Investment banking: Valuation, LBOs, M&A and IPOs (3rd edition), Rosenbaum, J., Perella, J. R.  

Key words search

Financial Modelling