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Financial Modelling

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Financial Modelling Workshop, (Two Days)

Spreadsheets are the tools of choice for many working in treasury and financial markets. That's because you can find solutions to problems without waiting. It's no surprise that some firms are more reliant on spreadsheets today than at any time. But does that mean you run more risk than you think? Could things be improved? In this practical workshop you will learn how to:

  • Design accurate and robust financial models
  • Apply efficiently a standard design methodology and spreadsheet best practice
  • Reduce model development time
  • Test and audit models effectively
  • Develop models that can be used by others
  • Add more advanced Excel and financial techniques
  • Model portfolio asset allocation and value at risk
  • Add risk and sensitivity
  • Design clear management reports

This in-house two day workshop has demonstrations and exercises. You will develop models in stages in order to understand the theory and learn from practice. An intermediate knowledge of Excel is assumed.

The full outline is below:

Day One    

Session 1
Spreadsheet Best Practice

  • Typical modelling errors
  • Systematic Design Method
  • Model design and structure – key steps
  • Case outline - introduction
  • Exercise: defining a model plan for a portfolio model and reformatting an existing model

Session 2
Asset Allocation Model

  • Required inputs and outputs
  • Model calculations
  • Excel methods and techniques
  • Calculating returns, variance, correlation and covariance
  • Calculating the efficient frontier
  • Reviewing sensitivities
  • Practical case: building a portfolio model

Session 3
Simulation Modelling

  • Elements of a simulation model
  • Building blocks in Excel
  • Monte Carlo simulation methods
  • Example: using simulation in the portfolio model to gain more understanding of the potential variance

Session 4
Auditing and Testing

  • Examples of spreadsheet errors
  • Essential testing and auditing techniques
  • Example: testing financial analysis model with cash flows and ratios
  • Exercise: debugging and checking a financial model

Day Two

Session 5
Building a VaR Model

  • VaR theory and techniques
  • Model planning
  • Risk and return
  • Delta-Normal method
  • Useful Excel functions and methods
  • Exercise: building a single asset model

Session 6
Multiple Asset Models and Optimisation

  • Two and three asset models
  • Credit VaR
  • Correlation and covariance
  • Targeting and optimisation
  • Exercise: producing a portfolio VaR

Session 7
Risk Techniques

  • Risk and multiple answers
  • Scenario techniques
  • Simulation methods
  • Advanced financial functions
  • Case exercise: Producing values and testing the results

Session 8

  • Model summary and presentation
  • Chart types
  • Specialist charts e.g. box plots and tornado charts

End of workshop and review

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