FIN 4453 Financial Modeling. Course Syllabus Spring 2016 Term, Module 4

Transcription

1 FIN 4453 Financial Modeling Course Syllabus Spring 2016 Term, Module 4 COURSE INSTRUCTOR Professor John C. Banko, Ph.D., CFA Lecturer of Finance Office: David Stuzin Hall, Room 306 Office Hours: TBA Phone: (352) john.banko@warrington.ufl.edu COURSE OVERVIEW AND OBJECTIVES Purpose: The goals for this course are two-fold 1. To understand how value is created in a business. We will do this by: a. Developing pro-forma cash flow statements b. Evaluate the firm s risk to calculate its cost of capital. c. Use the pro-forma and cost of capital to value a business. 2. To be able to use and create intricate spreadsheet models. COURSE PREREQUISITE FIN3403 with a grade of B or better, or an equivalent course as approved by the College's Undergraduate Programs Office, Room 267 David Stuzin Hall, Phone: COURSE MATERIALS TO PURCHASE FROM BOOKSTORE / ONLINE The materials for the course will be: 1. You will need simulation software. You have two choices: a. Simtools by Roger Myerson. This is an older simulation package Page 1 of 5 Pages

2 developed by Nobel Laureate Roger Myerson. This can be accessed at this link. b. Crystal Ball. You can download a 30-day trial from Oracle. This can be accessed at this link. 2. Lecture Notes, available in the E-Learning course website. There is also a Coursepack from Harvard Business School Press. Instructions will be available on the course site in E-Learning. 3. Laptop/Excel. You must have and bring a Windows-based laptop to class that has Excel. Apple will not work, since you cannot run macros in Mac OS. COURSE GRADES Course grades will be calculated using the following points: Participation 100 Projects (3 at 300 pts each) Final course grades will be based on the following numeric scale: Minimum Points Course Grade 900 A 870 A- 840 B+ 800 B 770 B- 740 C+ 700 C 670 C- 640 D+ 600 D 570 D- The grade cutoffs may be adjusted down, particularly if assignments or quizzes are more difficult than expected. Grade cutoffs will never be increased. Student grade information will be maintained in the Gradebook function in E-Learning. Page 2 of 5 Pages

3 ATTENDANCE AND MAKE-UP POLICY Attendance is mandatory. Each absence will result in a 25 point penalty. An absence from class or missing a presentation is considered excused only if there is an acceptable reason according to UF guidelines, such as an unexpected medical situation, religious holidays, etc. The UF guidelines are here: According to the policy, it is the student s responsibility to notify me of an excused absence and provide documentation in a timely fashion. Given the short duration of this course, I expect to be informed of all required absences during the first day of class. After that, no planned/expected absence is excused. COURSE TEAM PROJECTS There are three team projects for the term. The projects will be completed in teams, usually of 4 or 5 members. You will be assigned to a different team for each project. Completed projects will be posted to E-Learning (which will list the exact date and time due). Part of the grading process is a peer review of the project. These projects are expected to be professional work. Presentation is important. At a minimum: All text should be typed and presented in a case-like format. Spreadsheets and graphs should fit on one page or separated in a logical manner. They should be visually appealing, easy to read and incorporated into the text. You should include a cover page with each person s name and project title. You should have subsections labeled with brief descriptions immediately preceding the spreadsheet and qualitative analysis. All spreadsheets should be labeled with a title and description. In general, I should be able to read through the project and follow the analysis easily without referencing the assignment. The project details may change before the first day of class. But, the plan right now is for the following projects: 1. Valuation model for an MBS You will be given the layout for a MBS issued by Freddie Mac. Your job is to develop a valuation of the tranches. The primary deliverable is the Excel spreadsheet. A 1-page (or so) write-up will be required to explain tranches that are complicated and deserve some discussion. This should be included in one of the tabs on the spreadsheet. Page 3 of 5 Pages

4 2. Performance reporting and risk evaluation For this project, you and your team will be given a Harvard case about a small asset management firm. Your job is to develop a 1-page (singlesided or double-sided, up to you) handout that the firm would use to summarize its investment philosophy and performance for the two funds it operates. These are known as tear sheets. You can (kind of) see examples of such 1-page documents by running a search for a sample tear sheet on any of the internet search engines. I realize this is likely the first time many of you will tackle such an assignment. You primary job is to get the numbers right calculate the various portfolio fund performance measures as outlined in the case (correctly) and think about how to present them in a meaningful way. More importantly, I want to see the performance report directly tied to the spreadsheet. If I update numbers on the spreadsheet, the performance report is updated as well. From there, develop bells and whistles to make the spreadsheet and report more usable and user-friendly. The deliverable is the spreadsheet and the report that the spreadsheet creates. If the report is a tab in the spreadsheet, make that clear. 3. Creative case development/presentation and model For the final project, your team will develop a spreadsheet model of your choice. Your team will develop the project scope and deliverables, and your team will present your project to the class. For all cases, peer evaluations are required. A 50-point penalty will be assigned for a late (by less than 24 hours) peer evaluation. A 100-point penalty will be assigned after 24 hours. Needless to say, this is a critical component of this class. STUDENTS WITH DISABILITIES Students requesting classroom accommodations for their disability, including changes to the testing environment, must first register with the Dean of Students Office. The Dean of Students Office will provide documentation/forms to the student, who must then provide the documentation/forms to Dr. Banko. Please note that the Dean of Students Office requires a 7-10 day lead time to process your request after they receive the form back from you. More information is available on the DRC website: Page 4 of 5 Pages

5 COURSE SCHEDULE Week of March 7 March 14 March 21 March 28 April 4 April 11 April 18 Units and Topics Covered Introduction Syllabus, peer eval exercise Building MBSs Freddie MBSs Building MBSs Freddie MBSs Stochastic Interest Rate Models Monte Carlo Techniques Investments Philosophy MV Analysis Investments Philosophy MV Analysis Finanicial Statement Modeling TechData Presentation Polar Sport (revisted?) Past Creative Projects Some of the best from previous semesters Creative Project Presentations Creative Project Presentations Assignments Assignment 1 due on Friday Assignment 1 Peer Monday Assignment 2 due on Friday Assignment 2 Peer Monday Assignment 3 Presentations start on Wednesday Assignment 3 Presentations continue on Monday Assignment 3 Peer Wednesday Page 5 of 5 Pages