Quantitative Methods in Finance
Introduction to Financial Modeling
Topic Outline
I. What is Planning?
A. Planning is deciding what you are going to do to get where you want to go.
B. We plan in order to achieve a goal. Without first stating the goal there
The University of Texas at Dallas
Quantitative Methods in Finance
Financial Modeling Lab Exercise
Anderson Corporation
Anderson Corporation is a retail firm that sells consumer products in small stores located
in shopping malls nationwide. The companys pr
The University of Texas at Dallas
Quantitative Methods in Finance
Assignment 7 Financial Planning Model
This assignment is provided for practice only and is not to be turned in for grading. Solutions to
the following problems will be posted on the class e
The University of Texas at Dallas
Quantitative Methods in Finance
Performing Table Lookups in Excel Spreadsheets
The construction of financial models often requires that a value be obtained from some specified
column of a table based on a value in the fir
The University of Texas at Dallas
Quantitative Methods in Finance
Financial Statements Lab Exercise
Longhorn Corporation
Longhorn Corporation is a small retail firm that manufactures and installs kitchen
cabinets. A spreadsheet containing the companys inc
Quantitative Methods in Finance
Financial Statements and Cash Flow
Topic Outline
I. Financial Statements
A. Balance sheet
Assets = Liabilities + Owners equity
or
Investments = Investments paid for with debt +
Investments paid for with equity
B. Income sta
Comet Corporation
Balance Sheet ($ Millions)
As of December 31, 20XX
2010
2009
Assets
Current Assets
Cash and Equivalents
Net Receivables
Inventories
Other Current Assets
Total Current Assets
$160.0
198.1
138.2
203.6
699.9
$150.4
167.5
127.3
189.5
634.7
G
The University of Texas at Dallas
Quantitative Methods in Finance
Financial Ratios
I. Profitability Ratios
Profitability ratios are probably the best known and most widely used of all financial ratios
because they are ultimately the most important. If a f
The University of Texas at Dallas
Quantitative Methods in Finance
Assignment 6 Financial Statements
This assignment is provided for practice only and is not to be turned in for grading. Solutions to
the following problems will be posted on the class eLear
The University of Texas at Dallas
Quantitative Methods in Finance Spring 2010
Solution to Assignment 5 Part A
Part A Written Assignment
1. You have been given the following data for the small-cap stock index and the government
bond index.
Expected return
The University of Texas at Dallas
Quantitative Methods in Finance
Growth Rates
There is a direct link between growth and external financing. There are two growth rates that are
particularly useful in long-range planning.
1. Internal Growth Rate
The first
The University of Texas at Dallas
Quantitative Methods in Finance
Assignment 8 Linear Regression and Time Trend Forecasting
This assignment is provided for practice only and is not to be turned in for grading. Solutions to
the following problems will be p
Quantitative Methods in Finance
Sampling, Estimation and Hypothesis Testing
Topic Outline
I. Sampling
A. Simple random sample: a subset of a larger population created in such a way that
each element of the population has an equal probability of being sele
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The University of Texas at Dallas
Quantitative Methods in Finance
Hypothesis Testing: Example Problems for Lab Exercise
I. Confidence Interval Around a Single Mean
A. Assume that you have taken a sample of returns from 25 companies and found the sample
me
Quantitative Methods in Finance
Multiple Linear Regression and Econometric Forecasting
Topic Outline
I. Developing an Econometric Model
A. State the hypotheses about the linkages between our company and the economic
variables that influence it.
B. Have as
The University of Texas at Dallas
Quantitative Methods in Finance
Time Trend Forecasting Lab Exercise
Comet Corporation
The Comet Corporation imports widgets from Japan and markets them in the United
States. Its widgets are of the highest quality, but the
The University of Texas at Dallas
Quantitative Methods in Finance
Linear Regression in Excel Spreadsheets
I. Estimating Parameters for Linear Regression Models
A. Using the Excel regression tool
1. The Excel regression tool can be used to estimate paramet
Quantitative Methods in Finance
Linear Regression and Time Trend Forecasting
Topic Outline
Linear regression allows us to use one variable to make predictions about another, to test
hypotheses about the relationship between two variables, and to quantify
Quantitative Methods in Finance
Portfolio Concepts
Topic Outline
I. Mean-Variance Analysis: Assumptions
A. All investors are risk averse.
B. Expected returns for all assets are known.
C. Variance and covariances of all asset returns are known.
II. Minimum
The University of Texas at Dallas
Quantitative Methods in Finance
Optimizing a Portfolio Using Arrays in Excel
A two-asset or even a three-asset portfolio optimization is easy to setup using formulas and
standard Excel functions. However, the simple algeb
The University of Texas at Dallas
Quantitative Methods in Finance
Assignment 5 Portfolio Concepts
This assignment is provided for practice only and is not to be turned in for grading. Solutions to
the following problems will be posted on the class eLearni
Lab quiz 6
Given the following returns over the past 10 years for fund XYZ :
1)Compute a point estimate of the mean return
2) Compute the sample standard deviation
3) Construct a 95% confidence interval for the estimated population mean
4) Calculate the i
Lab quiz 4 - Bonds
As an investor, you are considering an investment in the bonds of the Conigar Company. The bonds, which pay interest
semiannually. will mature in eight years, and have a coupon rate of 7.5% on a face value of $1,000.
1) If your required
Practice Problems - Bonds
Use Jan 1, 2000 as settlement date and Jan 1 as maturity date
1.
Find the price of a semiannual coupon bond given that the coupon rate is 10%, the
face value is $1,000, the required return is 7%, and there are 25 years remaining