1FINANCIAL BUSINESS ANALYTICS (FBA)Course Code: SLBA605Session NoTitle of the Topics DiscussedPage NoModule 1: Introduction to Financial Analytics1Definition, relevance of Financial Analytics2-62Recent trends in Financial Analytics7-17Module 2: Financial Time Series and TheirCharacteristics3Asset Returns18-234Distributional properties of Returns24-295Review of Statistical Return30-346Properties of Financial Time Series35- 367Time Series Analysis with ARIMA37-448Forecasting and Box-Jenkins ARIMA Model45-51Module 3: The Capital Asset Pricing Model9Basics of Portfolio Construction52-5510Diversification and Portfolio Optimization56-64
Session -1- Introduction to Financial AnalyticsDefinition, relevance of Financial Analytics IntroductionThere is an increasing use of analytics in many organizations these days. Today’s businessesneeds timely information that helps the business people to take important decisions in business.Finance plays an important role in increasing the value of your business. Finance is finding itsway as an important business function and it overlaps with analytics in many areas. Financialexecutives are finding out new ways in the field of finance to increase the value of theirorganization.What is Financial AnalyticsFinancial analytics is a field that gives different views of a company’s financial data. It helps togain in depth knowledge and take action against it to improve the performance of yourbusiness. Financial analytics has its effect on all parts of your business. Financial analyticsplays a very important role in calculating the profit of a business. Financial analytics helps youto answer all your business questions related to your business and also lets you to forecast thefuture of your business.Financial analytics used in two different contexts:Analytics within the finance functionAnalytics related to financial markets – This is where majority of the FBA syllabusis covered.Financial analytics in the finance function has to do with analysing the 3 big financial statements(the balance sheet, income statement, and statement of cash flows) within a company.Management accountants and financial analysts also go into detail in terms of tracking thefinancial health of the business in a much more granular manner, flagging deviations frombudget and other areas worth looking into.In the financial markets, the focus is on financial assets such as stocks, bonds andcommodity prices (among many others). The work is similarly quantitative, but with aheavy dose of theoretical models (CAPM pricing, portfolio theory, factor analysis etc)and statistical models (time series modelling and forecasting techniques).
Why Financial Analytics is important•Today’s businesses needs timely information that helps the business people to take important decisions in business.