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2015/2016  BA-BHAAI1011U  Undergraduate Financial Modeling

English Title
Undergraduate Financial Modeling

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 120
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Course instructor: Dr. Hassan Tanha, Hassan.tanha@vu.edu.au
    Sven Bislev - Department of Intercultural Communication and Management (ICM)
In case of any academic questions related to the course, please contact the course instructor or the academic director, Sven Bislev at sb.ikl@cbs.dk
Main academic disciplines
  • Finance
  • Statistics and quantitative methods
  • Economics
Last updated on 09-06-2016
Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Learn Excel financial functions: PV, NPV, IRR, XIRR, XNPV, PMT, FV, RATE, and many more.
  • Master Data Tables to do sensitivity analysis. Learn enough basic VBA to be advanced-Excel-literature.
  • Learn to value a company by building a financial model. We will build two kinds of financial models—a short-form model and an extensive accounting-based proforma model.
  • Do financial analysis of portfolios, including mastering the capital asset pricing model and the security market line.
  • Learn to download data for complex portfolios and master portfolio statistics so you can understand investment performance.
  • Compute the weighted average cost of capital (WACC). We will use both the CAPM/SML and the Gordon dividend model, and learn how to implement these models using actual market data.
  • Integrate corporate financial model building, cost of capital, and valuation.
Course prerequisites
At least one introductory course in finance (It is essential to be familiar with time value of money - NPV, IRR and also the basics of the capital asset pricing model - CAPM, SML, beta) plus an introductory course in financial accounting and a basic knowledge of Excel (advanced concepts covered in class).
Examination
Undergraduate financial modeling:
Exam ECTS 7,5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer, Ordinary exam: 1-5 August 2016
Retake exam: Within two months from the ordinary exam.
Aids allowed to bring to the exam Open book: all written and electronic aids, including internet access
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
4 hour written sit-in exam with a new exam question
Course content and structure

In this class you will learn to implement in Excel the financial concepts learned in an introductory financial analysis course. These concepts include:
- Excel content: Data Tables, using VBA to extend the power of Excel, many Excel financial functions
- Capital budgeting and time value of money
- Corporate valuation models:
- Portfolio analysis, capital asset pricing model (CAPM) and the security market line (SML)
- Using portfolio data downloaded from the Web
- Measuring investment performance
The combination of Excel and finance is a necessity for students wishing to enter the finance job market! This course combines the basic theory of finance with intensive implementation of all concepts in Excel. The result is that you will better understand the financial theory and (of course) will come out equipped with advanced
Excel skills.

 

For the Preliminary Assignment in Class 1 students will read one chapter from the course textbook (PFE Chapter 27) on how to do Data Tables in Excel. This reading will be thoroughly discussed in the first class.
For the Feedback activity in Class 6, students will have a short quiz. 

 

Class 1: Preliminary Assignment: In-class discussion of Data Tables, very basic VBA, and Excel’s personal notebook (PFE, Chapter 27 and teaching note). Time value of money (PFE, Chapter 2)


Class 2: Time value of money (PFE, Chapters 2, 3)


Class 3: Capital budgeting (PFE, Chapters 4, 5)


Class 4: Free cash flows, simplified valuation model, financial modeling - valuing a company with Yahoo data (handout)


Class 5: Building a proforma model for valuation (PFE, Chapter 7); Valuation case using proforma (handouts)


Class 6: Feedback activity 

 

Class 7: Introduction to risk and portfolio mathematics (PFE, Chapters 8, 9)


Class 8: Practical aspects of building portfolios and measuring performance (handout)


Class 9: Capital asset pricing model (CAPM) (PFE, Chapter 11)


Class 10: Measuring investment performance (SML) (PFE, Chapter 12)


Class 11: Choosing a discount rate (PFE, Chapters 6, 13): Comprehensive Review

 
Teaching methods
I teach interactively—a combination of lecture, theory of finance, Excel. I expect students to follow along with my lectures, implementing in Excel the models that are explained in class. Homeworks are an important part of this process—the student must learn to independently implement the financial models.
Student workload
Preliminary assignment 10 hours
Classroom attendance 33 hours
Preparation 144 hours
Feedback activity 7 hours
Examination 12 hours
Further Information

 

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 1 in order to 'jump-start' the learning process.

 

Feedback Activity: A feedback activitity defined by the course instructor will take place app. half-way through the course. 
 

 

The timetable is available on  http://www.cbs.dk/files/cbs.dk/isup_timetable_2016_updated.pdf
Expected literature

PRIMARY LITERATURE (MUST-HAVE-BOOKS):

 

Simon Benninga

Principle of finance with Excel

ISBN 0199755477

Oxford University Press

Edition/year 2011

 
Last updated on 09-06-2016