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DRPS : Course Catalogue : Business School : Business Studies

Undergraduate Course: Financial Modelling with Excel (BUST10025)

Course Outline
SchoolBusiness School CollegeCollege of Arts, Humanities and Social Sciences
Credit level (Normal year taken)SCQF Level 10 (Year 4 Undergraduate) AvailabilityAvailable to all students
SCQF Credits20 ECTS Credits10
SummaryThe course is aimed at students in their final year of study taking MA Business Management or Business joint degrees. The course extends the core theory introduced in Principles of Finance by emphasizing its practical application to strategic financial decisions and potential financial problems.
Course description The course covers the following main topics: construction and examination of the characteristics of distributions of returns; calculation of the variance co-variance matrix and its application to select portfolios; test of market efficiency using simple tests; developing, constructing and running event studies; estimating betas and calculating a firm's cost of capital; calculating the value of an option using the Black-Scholes model; applying Monte Carlo methods to financial problems; using and developing spreadsheet based solutions to financial problems; using Visual Basic for Applications (VBA) techniques.

Introduction - basic financial calculations in Excel;
Portfolio models;
Market efficiency;
Event studies;
Option pricing models;
Monte Carlo methods;
Corporate finance models.

Financial Modelling with Excel is intended to give students the opportunity to widen and deepen their knowledge of financial theory and practice by explaining how financial models and techniques may be implemented. Students are expected to use Excel to model a number of common applications including the construction of portfolios, tests of market efficiency, estimation of risk measures, performance measurement and the valuation of options. By the end of the course students should have a much clearer understanding of finance concepts as well as an extended knowledge of the spreadsheet package.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Students MUST have passed: Principles of Finance (BUST08003) OR ( Introduction to Financial Markets (BUST08029) AND Introduction to Corporate Finance (BUST08030))
Prohibited Combinations Other requirements None
Information for Visiting Students
Pre-requisitesVisiting students must have at least 4 Business courses at grade B or above. This MUST INCLUDE at least one Finance course at intermediate level. This course cannot be taken alongside BUST08003 Principles of Finance; BUST08029 Introduction to Financial Markets; or BUST08030 Introduction to Corporate Finance. We will only consider University/College level courses.
High Demand Course? Yes
Course Delivery Information
Academic year 2019/20, Available to all students (SV1) Quota:  45
Course Start Semester 2
Timetable Timetable
Learning and Teaching activities (Further Info) Total Hours: 200 ( Lecture Hours 20, Programme Level Learning and Teaching Hours 4, Directed Learning and Independent Learning Hours 176 )
Assessment (Further Info) Written Exam 0 %, Coursework 100 %, Practical Exam 0 %
Additional Information (Assessment) Two final individual research projects count for 100% of the grade. For each project, students are required to submit a 2,000 word report, which covers an assigned topic from the course. Project 1 will be submitted during the course on a date to be notified to students, and project 2 will be submitted at the start of the April/May exam diet.
Feedback Project marks will be posted on Learn, together with mark statistics and generic feedback on both projects, as soon as possible after the Boards of Examiners meeting (normally early-mid June). Students can also look at their manuscripts after publication of marks in the Business School Undergraduate Office (Room 1.11, Business School, 29 Buccleuch Place).

No Exam Information
Learning Outcomes
On completion of this course, the student will be able to:
  1. Construct and examine the characteristics of distributions of returns, calculate the variance co-variance matrix and use it to select optional portfolios.
  2. Develop, construct and run an event study analysis of the abnormal returns.
  3. Estimate betas and calculate a firm's cost of capital.
  4. Calculate the value of an option using Black Scholes and the binomial model, and apply Monte Carlo methods to option pricing.
  5. Develop a spreadsheet-based equity valuation model.
Reading List
Core text: Benninga, S., 2008, Financial Modeling, The MIT Press, Third Edition.

Additional recommended text: J & S: Jackson M. and Staunton M., 2001, Advanced Modelling in Finance using Excel and VBA, John Wiley and Sons Ltd.

Additional recommended text (for revision of the finance topics): B & M: Brealey R.A. and Myers S., 2003, Principles of Corporate Finance, Seventh Edition, McGraw Hill.
Additional Information
Course URL
Graduate Attributes and Skills Financial Modelling is designed to be interesting and practical. The multitude of skills that students will acquire in this course will enhance their marketability to potential employers in the field of finance. The course is intended to give students the opportunity to widen and deepen their knowledge of financial theory by explaining how financial models and techniques may be implemented.
Course organiserDr Tatiana Rodionova
Tel: (0131 6)50 3789
Course secretaryMr Matthis Hervieux
Tel: (0131 6)50 8336
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