COURSE OUTLINE

Course Name FINANCIAL MODELLING Prepared February

Course Code On 2020
Credit Hours 3
Course Prereq. Financial Risk Management, Business Finance, Revised September
Code Financial Management On 2020
Course Type Elective
Program MBA
Semester 2nd / 3rd
Instructor: Professor Dr Taqadus Bashir
Course Description
Financial Modeling is an advanced finance course stressing the combination of modeling/Excel
skills and a deeper understanding of the underlying financial models. The course is very different
and include much instructor specific input. The aim of this course is to present some important
financial models and to show how they can be solved numerically and/or simulated using Excel.
In this sense this is a finance “Cookbook Course” like any cookbook, it gives recipes with a list
of ingredients and instructions for making and baking i.e. implementing common financial
models in Excel. As any cook knows, a recipe is just a starting point; having followed the recipe
a number of times, students can think of own variations and make the results suit their tastes and
needs. Financial Modeling covers standard financial models in the areas of corporate finance,
financial statement simulation, portfolio problems, options, portfolio insurance, duration, and
immunization. The aim in each case is to explain clearly and concisely the implementation of the
models using Excel. Very little theory is offered except where necessary to understand the
numerical implementations. While Excel is often not the tool to use for high-level, industrial-
strength calculations (portfolios are an example), it is an excellent tool for understanding the
computational intricacies involved in financial modeling. It is often the case that the fullest
understanding of the models comes by calculating them, and Excel is one of the most accessible
and powerful tools available for this purpose.

Course Learning Outcomes Program Goal

Sr. No Students will develop knowhow about and PG1 PG2 PG3 PG4 PG5
application about:
CLO1 Understanding and using key functions in      
Excel Create a sensitivity analysis model
CLO2 Analyse financial statements using     
modelling
CLO3 Create a Budget and to make changes to     
different scenarios Prepare a cash flow
budget/ forecast
CLO4 Carry out a variance and breakeven     

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 analysis for decision making Develop a
model for investment decision
CLO5 Manage existing financial proposals to     
deliver the best returns
CLO6 Develop Excel models independently for     
specific tasks Explore and evaluate capital
budgeting situations

Teaching & Learning Methodology

 Hands-on application & practise on excel in computer lab
 Hand outs/ reading material/ exercises
 Independent challenging tasks for performing & excecuting commands
 Real time data based numericals & problems to solve their problems

Textbook(s)
Financial Modelling by Simon Beninga, 4th Edition
Reference Book(s)
 Financial Markets & Institutions by Saunders & Cornette for formula & theory guidance &
understanding

Research Journals /Papers

Magazine Articles/ Published Material

Grading Policy
Assessment Instruments Percentage
Quizzes 15%
Assignments + project 20%
Mid Term Exam 25%
Final Exam 40%

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Week-wise Course Outline

Activities( Critical Thinking) Learning

Week/ Contents Case Studies, Roleplays, Movie Clips, Assignments, Objectives
Session Research Papers, Addressed
Presentations
1 Introduction to course, introduction to excel and Assignment based on numerical related to the topics 1, 2, 3, 4
various utilities and functions in it, workbook, taught
pages, cells and how to execute commands, TVM,
2 Excel Functions : Dates and Time Functions: Numericals for Assignment from exercise 1, 2, 3, 4, 5 , 6
Now, Today, Date, Weekday, Month, DatedIf (All
variants), random numbers,
3 Financial Functions: NPV, PV, IRR, PMT, XIRR Assignment based on real time stock market data 1, 2, 3, 4, 5, 6
& XNPV (Time dated cashflows), FV,

4 Payment schedules, Retirement & Pension Assignment 1, 2, 3, 4, 5, 6

Problems by developing Loan tables
5 Statistical Functions: Average, Var, Varp, Stdev, Reading assignment & quiz 1, 2, 3, 4, 5, 6
Stdevp, Correl, Covar
6 Continuous compounding & continuous Assignment based on real time stock market data 1, 2, 3, 4, 5, 6
discounting, Accretion
7 Calculating WACC, FCFs, CAPM, Risk Adjusted Assignment based on real time stock market data & quiz 1, 2, 3, 4, 5, 6
Discount Rate (RADR)
8 Regression Functions: Slope, Intercept, Rsq, Assignment based on real time stock market data 1, 2, 3, 4, 5, 6
Linest, Sensitivity Analysis by using Data Tables:
one-dimensional & two-dimensional tables
Mid-Term 1, 2, 3, 4, 5, 6
10 Array Functions, Matrices, Addition, Subtraction, Assignment based on real time stock market data 1, 2, 3, 4, 5, 6
multiplication & Transpose, Inverse of Matrices
11 Portfolio introduction in excel, returns Assignment based on real time stock market data 1, 2, 3, 4, 5, 6
calculations of assets, stock returns, covariance of
cashflow series, variance, SD, covariance,
correlation of returns, slope & intercept, Forming
portfolio & efficient frontier, case of N assets,

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 envelope portfolio
12 Solution of simultaneous equations using Assignment based on real time market data 1, 2, 3, 4, 5, 6
matrices, computing covariance between two
portfolios, 4-asset portfolio problem, portfolio
mean & variance, Portfolio Optimization
13 User Defined functions: visual basic editor based on real time market data 1, 2, 3, 4, 5, 6
environment, developer tab, ribbon & Add-ins,
parts & syntax of user defined functions, declaring
a variable
14 Error fixing in VBA, One-Line If Statement, If- based on real time market data 1, 2, 3, 4, 5, 6
else-if statement, Block if, Nested-If,
15 Loops handling in VBA, Do-Loop-while, Do- based on real time market data 1, 2, 3, 4, 5, 6
Loop-Until, use of combin,
16 Revision & problem solving 1, 2, 3, 4, 5, 6
Final
Guidelines – Final Group Projects

MBA Program Goals

PG 1: Ethical Consideration and Behavior

PLO1: Develop professional and ethical behavior of students through team work along with ensuring contribution of the individual team
members working on diverse business projects.

PLO2: Demonstrate professional behavior including the ability to communicate and lead in ways that are ethically and socially responsible.

PG2: Leadership skills

PLO 3: Depict Leadership skills for analyzing business opportunities and prioritizing tasks to effectively achieve organizational goals.

PLO 4: To efficiently manage teams in the organization and develop innovative ways of problem solving in business.

PG3: Effective Communication

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PLO 5: Emphasize on verbal and non-verbal communication and presentation skills for professional connection in a Business Environment.

PLO6: Develop skills for effective written communication along with official documentation and correspondence in organizations.

PG4: Experiential Learning

PLO7: Demonstrate understanding and analysis of specialized business issues or problems by making recommendations for improvements based
on the application of concepts, skills, knowledge and techniques acquired in various business areas.

PLO 8: Demonstrate the efficient integration of various advanced quantitative and qualitative tools for problem evaluation and solving using the
latest available technology and technology based instructional design.

PLO 9: Demonstrate self-grooming through curricular, co-curricular, and extra-curricular activities embedded in the program design.

PG 5: Critical thinking

PLO 10: develop skills that can be used to critically analyze, and evaluate theoretical and practical issues in a range of applied business situations.

PLO 11: Demonstrate effective decision making in strategic business scenarios.