Introductory Applied Finance

FIN10 Introductory Applied Finance

  • Topics

    Topics

    1. Introduction to financial modelling in Excel
    2. Financial statement modelling
    3. Portfolio analysis
    4. Portfolio style analysis and performance evaluation
    5. Risk measurement
    6. Bond portfolio management
    7. Modelling the term structure
    8. Option pricing

  • Learning outcome

    Learning outcome

    Introductory Applied Finance is a semi-intensive course that equips students with the knowledge and tools to implement financial models using Excel. The course covers a range of topics in finance, including both standard material and more advanced topics, with the emphasis on practical application. Lectures on each topic are followed by in-depth practical classes, in which students work through real world problems using Excel. The course also introduces students to the use of VBA in financial modelling.

     

    On successful completion of this module, students should be able to:

     

    Module Specific Skills:

     

    1. understand the principles of financial modelling and the characteristics of financial data

    2. download financial data from the internet for a range of securities, including stocks, bonds, derivatives and currencies

    3. undertake a range of financial and statistical calculations in Excel

    4. use matrix functions in Excel and estimate the variance-covariance matrix of returns

    5. use Excel¿s solver function and derive the optimal passively managed portfolio of securities, with and without investment constraints

    6. use Excel¿s regression analysis tool, linear estimation function and regression functions, and undertake a style analysis of a portfolio

    7. conduct an event study in Excel

    8. understand the principles of VBA and write a simple VBA function to find the fair price of an option

     

    Discipline Specific Skills:

     

    9. understand the relationship between risk and return

    10. understand the principles of passive portfolio management

    11. understand the principles of option pricing

    12. use the event study methodology to test hypotheses about market efficiency

    13. understand the principles of duration, convexity and immunisation

     

    Personal and Key Skills:

    14. develop their writing skills

    15. work in groups

    16. download and manipulate complex data

    17. solve applied problems using Excel and VBA

    18. plan and undertake independent research projects

     

  • Teaching

    Teaching

    Lectures and group-based computer classes

    The course is taught semi-intensively.

  • Required prerequisites

    Required prerequisites

    Students are expected to have completed one or more courses in finance theory at the undergraduate level.

  • Credit reduction due to overlap

    Credit reduction due to overlap

    Overlap with VOA024

  • Requirements for course approval

    Requirements for course approval

    For course approval, each student is required to attend lectures and tutorials, and to submit a short report (of no more than one side of single spaced A4) for each of the practical sessions. This report should summarise the motivation, method used and results obtained, and offer a critical assessment of the limitations of the practical exercise.

  • Assessment

    Assessment

    Group-based project. The exam in this course must be answered in English.

  • Grading Scale

    Grading Scale

    Grading scale A - F

  • Computer tools

    Computer tools

    The course will make extensive use of Excel and will introduce students to VBA. Students should have at least a basic understanding of Excel, but do not need to be especially familiar with financial functions in Excel.

  • Semester

    Semester

    Spring.

  • Literature

    Literature

    Benninga, S., 2008, Financial Modeling third edition, MIT Press, 2008.

Overview

ECTS Credits
7.5
Teaching language
English
Semester
Spring

Course responsible

Evarist Stoja, Department of Finance