Course Outline

FINA 695/BB
Financial Modeling using MS Excel
Fall 2024
Class Time & Location: Thursdays, 5:45 PM – 8:15 PM,. MB S2-445
Some meetings will also take place (to be announced) in the John Dobson - Formula Growth
Investment Room, MB 12.254
Instructor: Lorne N. Switzer
Office: MB 11-369; Office Hours: by Zoom appointment
Telephone: 848-2424, x2960
E-mail: lorne.switzer@concordia.ca

COURSE OBJECTIVES

This course provides students with the opportunity to develop the skills needed to build financial
models using Microsoft Excel. Topics covered include time value of money, portfolio theory, security
valuation, and cost of capital. The course integrates financial, accounting, and statistical concepts and
techniques to construct financial models and to perform analyses using spreadsheets. The course is
designed to be a hands-on course where students implement and extend their theoretical knowledge
from previous courses. The course should serve to bridge the gap between financial theory and its
implementation.

Pre-requisites:
MBA 646 is a prerequisite for Financial Modeling. Additional finance courses (such as Investments
and Corporate Finance) are helpful, but are not prerequisites. A basic working knowledge of Excel
is assumed, although advanced functions in Excel will be covered.

LEARNING OUTCOMES

The objective of this course is to teach you how to implement these models using Microsoft Excel.
“Learning by doing” is a highly effective way of gaining deeper insights into financial models and
their meanings and that is what we are going to do in this class.
By the end of this course, you will have:

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  A working knowledge of an electronic spreadsheet (Microsoft Excel).
 An understanding of the principles of Spreadsheet Design and the ability to create
spreadsheet models of financial problems.
 The skills needed to analyze financial problems and identify solutions through the use of
an electronic spreadsheet.

COURSE MATERIALS

Laptop (Required):

You are required to bring a laptop with Microsoft Excel installed on it, to every class. You will also
need MS Excel add-Ins such as “Data Analysis” and “Solver”.

Software (Required):
We will make extensive use of Excel statistical software. You should have a basic working knowledge
of Excel, although the finer points of Excel (advanced functions) will be explained along the way.

Other Materials:
We will have detailed slides in class. Computer instructions for using Excel will also be provided as
extra notes. Slides, assignments, extra notes will be posted on Moodle. The following required texts
will be useful in following and excelling in this course:
We will have detailed slides in class. Computer instructions for using Excel will also be provided as
extra notes. Slides, assignments, extra notes will be posted on Moodle. The following required texts
will be useful in following and excelling in this course:
Z. Bodie, A. Kane, A.J. Marcus, L.N. Switzer et al, Investments, 10th Canadian Edition, McGraw
Hill, 2022 (BKMS)
S. Benninga and T. Mofkadi, Financial Modeling, 5th Edition, MIT Press, 2021. (SBTM)
Each student should download the Moodle course material and review the assigned chapters before
each class.

Each student should download the moodle course material and review the assigned chapters before
each class.
Marking Allocation:
Assignments - 40%
Class Participation - 20%
Final Exam or Research paper** 40%
____
100%

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There will be 5 assignments each worth 8% (40%) and a final examination (40%). In special cases I
will allow you to replace the final examination with an individual or group project. Assignments are
individual submissions, and must be submitted at the scheduled times.
Students can earn a 2.5% % bonus mark to be added to their final marks if they complete the
Bloomberg learning module: “A New BMC Module.” You will need to sign up forr the BMC using
the school domain in your email (i.e. An email ending in @concordia.ca, @live.concordia.ca, or
@mail.concordia.ca), You will then receive free access to the BMC by logging onto the portal via
https://portal.bloombergforeducation.com.The deadline for completion of the BMC Module is:
April 30, 2024. The Class title for the module is FINANCE 695 BB. The Class Code is:is
RVQF9B4DKM .Please input this code when you sign up for BMC.

GRADING
The objective of this course is to broaden your knowledge and skills in the area of Financial
Modeling. Working through the cases will enable you to develop a better understanding of the
building, testing and implementation of Financial analysis tools.
Graduate level grades are based on performance not effort. There are no “A” students and “B”
students, rather there is “A” work and “B” work.
 Marks in the “A” range are reserved for exceptional work that exceeds course expectations.
Achieving that level of scholarship is your responsibility.
 Marks in the “B” range are allocated to work that fulfills course expectations.
 Marks in the “C” range are assigned to work that is complete but weak.
Letter and Number Grades
The following list provides the equivalent letter and number grades for this course:
A+  90% B+ 77 – 79% C 60 – 69%
A 85 – 89% B 73 – 76% F < 60%
A- 80 – 84% B- 70 – 72%

STUDENT RESPONSIBILITIES

Coming to class prepared is essential for success in this, and all classes. You are expected to
participate fully in discussion of the materials in class. You are responsible for what is covered
in class and any absence on your part leaves you responsible for finding out what was presented
in class. Class participation will account for 20% of your grade.

ACADEMIC INTEGRITY AND THE ACADEMIC CODE OF CONDUCT

The Academic Code of Conduct states that “Concordia University places the principle of academic
integrity, that is, honesty, responsibility and fairness in all aspects of academic life as one of its
highest values. This understanding of academic integrity directs our conduct in all academic
matters, especially to the submission of work for academic evaluation and to student-professor and

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 student-staff relationships. Instructors, students and administrators are expected to be honest and
responsible in their academic conduct and fair in their assessment of academic matters.”
All students enrolled at Concordia are expected to familiarize themselves with the contents of this
Code. You are strongly encouraged to read the pertinent section in the Concordia Graduate
Calendar available at http://www.concordia.ca/academics/graduate/calendar/current.html and visit
the following web address: http://www.concordia.ca/students/academic-integrity.html , both of
which provide useful information about proper academic conduct.

POLICY ON COPYRIGHT COMPLIANCE

As in all Canadian universities, members of the Concordia community are users of copyrighted
materials and, as such, are subject to copyright legislation. The necessity of complying with the
Copyright Act is not open to question.
This Policy deals with the responsible use of copyrighted materials by members of the University.
Its objective is to ensure copyright compliance in accordance with federal legislation, thus
protecting the rights of creators and the interests of the University’s faculty members, staff and
students.
This Policy applies to all members of the University (faculty, staff and students). Compliance with
the Copyright Act and this Policy is the responsibility of each member of the University. Failure
to comply with the Copyright Act is a violation of federal legislation. In addition to any action
that may be taken by any copyright owner, its licensing agent or the police authorities, the
University reserves the right to take disciplinary or other action against a member with respect to
any breaches of this Policy.

DISCLAIMER

The instructor reserves the right to change or update this course outline, and any other course
related materials, as required. The student will be informed in a timely manner through Moodle
and/or announcements during class. In the event that the University is unable to provide services
or that courses are interrupted due to events beyond the reasonable control of the University,
including classroom disruptions, the University reserves the right to modify any element contained
in the course outline including but not limited to the grading scheme and the weight accorded to
exams or assignments.

LEARNING PLAN (TENTATIVE)

Session Topics Readings

Introduction to the course
1. Jan. 18 Introduction to Excel SBTM Ch. 30-32

2. Jan. 25 Financial Data bases in the JMSB Course material on Moodle

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 Discounted cash flows (DCF), Complete
a DCF model to value a firm SBTM Ch 1, 2
3. Feb. t.
Efficient Markets and Valuation BKMS, Ch. 11
Assignment 1 distributed
Assignment 1 due at beginning of class
SBTM Ch. 3, 4
4. Feb. 8 Weighted Average Cost of Capital and
BKMS Ch 18
Free Cash Flows
Pro Forma Financial Modeling
5. Feb. 15 SBTM Ch, 5,6
Assignment 2
Portfolio Models: Portfolio mean &
SBTM Ch. 8
6. Feb. 22 Variance
BKMS, Ch.5,6
Assignment 3 distributed

7. Feb. 29 Mid Term Break

Assignment 3 due at beginning of class SBTM Ch. 9, 10

8. Mar. 7
Efficient Portfolios BKMS Ch 7,8
Estimating beta & SML
9. Mar. 14 SBTM Ch. 11
Assignment 4 distributed
Assignment 4 due at beginning of class
SB Ch. 15
10. Mar. 21 Introduction to Options
BKMS Ch. 20

Binomial Option Pricing Model

11. Mar. 28 Ch. 16
Assignment 5 distributed
Ch. 17
12. Apr. 4 The Black-Scholes Model
BKMS Ch. 21
Assignment 5 due at beginning of class Ch. 19
13. Apr. 11
Real Optioons

April 8 Take home Final Exam distributed,

Final Exam Due April 25