INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

1. Name of the Academic Unit: Humanities and Social Sciences

2. Subject Name: Financial Modelling L-T-P: 3-0-0

Credits: 3

3. Pre-requisites: Financial Management and Financial Institutions and Markets

4. Syllabus and reference books:

Syllabus:
1. Overview and Introduction to Financial Modeling
Nature and Uses and Financial Model; Building a Financial Model, Types of Financial
Models; Model Specifications; The Stages of Modelling; Backward Thinking and
Forward Calculation Processes; Using Models in Decision Support; Defining Sensitivity
and Flexibility Requirements; Database Versus Formulae-driven Approaches
2. Modeling Corporate Finance
Analysing the Financial Statements; Financial Statements Forecasting; Simulate The
Corporate Income Statement and Balance Sheets; Analysing the Cash Flow
Statements; Sensitivity and Scenario Analysis; Capital Budgeting and Estimating Cash
Flows on Capital Budgeting Projects; Estimating Cost of Capital, Modeling Capital
Structure Decision; Financial Planning and Investments
3. Modeling Financial Markets
Modeling the Term Structure; Calculating Default-Adjusted Expected Bond Returns;
Volatility in Financial Markets; Testing CAPM Models; Testing APM Model; Simulating
Stock Prices; Bond Pricing and Duration; Portfolio Models; Calculating Efficient
Portfolios; Calculating the Variance-Covariance Matrix; Estimating Betas and the
Security Market Line; Efficient Portfolios without Short Sales Portfolio Optimization;
Value at Risk (VaR); The Modelling of Risk and Uncertainty, and Using Simulation;
Monte Carlo Methods

Reference Books:
1) Benninga, S. (2014). Financial Modeling, The MIT Press, Cambridge.
2) Sengupta, C. (2011). Financial Analysis and Modeling using Excel and VBA, John
Wiley & Sons, Inc, New Jersey.
3) Morris, J. R., and Daley, J. P. (2017). Introduction to Financial Models for Management
and Planning, Taylor & Francis Group, New York.
4) Day, A. L. (2011). Mastering Financial Modelling: A practitioner’s guide to applied
corporate finance, Pearson Education, London.
 5. Lecture-wise break-up:

Sl. No. Topic No. of lectures

1. Overview and Introduction to Financial Modeling 8
2. Modeling Corporate Finance 16
3. Modeling Financial Markets 16
Total number of hours 40