98655 - Models and Methods for Finance

Learning outcomes

On the completion of the course, students will be equipped with the basics of financial theory, and they will be able to combine financial concepts with model design. This includes the ability to deal with basic financial arithmetics, investment opportunities, loans and amortization tables, fixed-income products and their risk. The course is applied in nature, as financial concepts will be systematically presented using spreadsheet examples. At the end of the course, students will be able to combine the understanding of financial theory with spreadsheet modelling.

Course contents

- Introduction to finance.
- The time value of money.
- Measures for evaluation of investment opportunities.
- Loans and amortization tables.
- Effective interest rates.
- Bond valuation.
- Yield curve and interest rate risk.

Readings/Bibliography

Selected chapters from the following text:
- BENNINGA, S. AND T. MOFKADI, Principles of Finance with Excel, 3/Ed., 2017, Oxford University Press.
Other relevant materials (slides, templates, papers, etc.) will be posted on the class website, available through the Virtuale learning platform.

Teaching methods

Lectures and seminars. There will typically be two classes per week.

Assessment methods

Students’ assessment will be based on two individual partial exams and a group problem set.

- First Partial Exam: A closed-book, individual test administered after the first five weeks of classes. The exam will consist of 8 multiple-choice questions (1 point each) and 4 problems (2 points each), to be completed within 45 minutes.

- Second Partial Exam: A closed-book, individual test administered after the second five weeks of classes. The format will be identical to the first partial exam: 8 multiple-choice questions (1 point each) and 4 problems (2 points each), to be completed within 45 minutes.

- Problem Set: A 120-minute open-book session in the computer lab, completed in groups of 2-3 students, depending on the class size. Students will collaboratively solve finance-related problems using a spreadsheet, demonstrating their understanding of financial theory and proficiency in spreadsheet modeling. Each group will receive a single grade, which will be assigned to all members of the group.

A student’s final grade will be based on the following weights:
- sum of the grades in the two partial exams: 60%;
- problem set: 40%.

Students who are unable to participate in the problem set due to a justified and documented reason will have their final grade based entirely on the two partial exams, which will then account for 100% of the grade.

Grading scale:
- Less than 18: Fail
- 18-23: Sufficient
- 24-27: Average/Good
- 28-30: Very good
- 30 cum laude: Excellent/Outstanding

Teaching tools

Slides, spreadsheets. (Teaching materials will be available on the Virtuale learning platform.)

Office hours

See the website of Massimiliano Barbi