WST's wide variety of courses build cumulatively: start from the fundamentals to build your base of knowledge and advance up to the complex topics. We treat each client separately, designing a curriculum that fits each specific group's needs.
Our live, on-site training programs can cover a very wide variety of topics. Click on a category below to view a detailed curriculum.
Our basic concepts will allow you to learn and gain the fundamental knowledge that you must master before the advanced content. We answer all the rarely answered "WHY" questions—"why do we do this, why do we do that"—instead of answering: "well, just because" or "that's the way it's always been done", we actually clearly and easily explain the logic of why and how not just the what. Whether you are an economics or liberal arts major or a business/finance major looking to summarize the critical 30 pages in that 400 page textbook, our Basic & Fundamental course modules will quickly set the proper foundation for you to excel.
Accounting & Boot Camp
Our Financial Accounting Intensive Bootcamp is specifically built as a pre-requisite for our finance, valuation, financial modeling and more complex course topics with an emphasis and focus on investment bankers. The bootcamp is structured as an interactive discussion in which we cover definitions and terminology thru examples and case studies. Oftentimes, learning and teaching accounting is associated with boring definitions; however, our approach is to tell a story, illustrate what the numbers mean through interesting examples, not by reading slides or textbooks. We stress learning through application, practice and repetition not memorization. We emphasize, hone and re-hone concepts via one large integrated case study in which the focus is not on debits/credits and t-accounts, but rather financial analysis. This is geared towards those with little to no accounting background (e.g., liberal arts majors) and is perfect as a refresher of the most important concepts for those having previously taken "Accounting 101" courses.
Intensive Accounting for Investment Bankers
Our Financial Accounting Intensive Bootcamp is specifically built as a pre-requisite for our finance, valuation, financial modeling and more complex course topics. The bootcamp is structured as an interactive discussion in which we cover definitions and terminology thru examples and case studies. Oftentimes, learning and teaching accounting is associated with boring definitions; however, our approach is to tell a story, illustrate what the numbers mean through interesting examples, not by reading slides or textbooks. We stress learning through application, practice and repetition not memorization. We emphasize, hone and re-hone concepts via one large integrated case study in which the focus is not on debits/credits and t-accounts, but rather financial analysis. This is geared towards those with little to no accounting background (e.g., liberal arts majors) and is perfect as a refresher of the most important concepts for those having previously taken "Accounting 101" courses.
Accounting & Financial Statement Integration
Similar to the Accounting Boot Camp above, this program covers the basics of financial accounting including the major financial statements (Income Statement, Balance Sheet and Cash Flow) and the most important components of each as it relates to financial analysis. Concentration is placed on the integration of the financial statements and provides a full integrated grasp of accounting from a finance perspective.
How to Analyze a 10K
"How to Analyze a 10K" builds upon basic accounting and financial statements concepts to focus on the major components of a 10K SEC filing, including the Management Discussion & Analysis, Financial Condition and Results and how to analyze the myriad of footnotes.
It's simply not enough to merely analyze the financial statements, but especially critical to plow through and understand the footnotes and the management discussion & analysis, where most of the qualitative information is contained. The challenge is that there are a myriad of footnotes and figuring out which are the important and relevant ones is no small feat. This course provides the overview and analysis for most major common footnotes and gives you a starting point to plow in deeper when we build our financial models. The irony is that in the process of crunching numbers and building numbers, reading comprehension, particularly on the 10K, is probably even more important in terms of getting the right inputs.
Introduction to Finance ("Finance 101")
Learn the basic finance concepts that are the backbone of any financial analysis. An understanding of these basic core tools is absolutely critical to mastering any Wall Street analysis. Topics covered include risk / return trade-offs, time value of money, cost of capital, Gordon growth model and basic valuation theories.
Moving beyond the accounting and 10K analysis, this course provides an introduction to the major concepts in finance that many people take for granted. Understanding financial modeling, valuation, and the capital markets in general would be difficult without a full grasp of these fundamental concepts.
Company Profiles
Company profiles are the most basic overview and descriptions of a company being analyzed. Profiles supply the most basic and fundamental, yet probably the most important aspects of a company. Gain an introduction and explanation of the major components of a profile for a publicly traded company.
Company Overview
Build very quick financial summary and trading statistics exhibit using historical results, analyst estimates & basic assumptions in Excel. This course will allow you to understand basic structure of building an analysis in Excel and navigating through and becoming efficient in Excel.
Overview of Financial Markets (+ Supplementary Exhibits)
Soft Skills: Executive Presence
When you walk into a room, do the people around you notice? To be a successful leader, you will want to command attention and establish executive presence. Not only is it enough to make a powerful first impression–you need to follow up with substance. Are you a visionary decision maker but too passive when giving presentations? Or a talented public speaker who could use some wardrobe changes? From the tangibles of how you look and sound to the intangibles of how you come off during conversation, developing executive presence is an essential step in taking leadership to the next level. While your local Toastmasters club can help you get over your public speaking jitters, this workshop will teach you the characteristics of a strong executive presence and help identify what you can do to enhance yours in a corporate setting.
Soft Skills: Research Report Writing
Performing in-depth research of an industry or company is no small feat. Writing a concise yet detailed summary of your findings is sometimes even more difficult. While you may already be familiar with the basic contents of an equity research report, it is equally important to perfect your writing style. Carefully craft your overall thesis, organize your argument into clear and concise segments, and choose your words wisely. Although there is currently no governing body dictating the proper way to format your report, you should strive to develop proficiency with both the form and function of your analysis. This is not simply a grammar class–we will cover many elements of strong, effective writing, including the use of proper syntax, diction, and argument structures.
Our core fundamental concepts in finance involve the basic financial modeling and valuation techniques that introduce model building best practices as well as getting used to working efficiently in Excel. After understanding the basic fundamental concepts, the most important building blocks of modeling are introduced as we begin to thoroughly analyze financial statements and their implications. We start to dive into the underpinnings of fundamental valuation (i.e. DCF analysis) and relative valuation (comps & multiples).
Corporate Valuation Methodologies & Corporate Finance
Learn how corporations are valued and the major analytical tools that are used. Go beyond academic theory to real-world methods as used by professionals; includes a crucial primer to Corporate Finance and its non-theoretical application. Apply learning objectives and goals immediately by analyzing a $6 billion+ transaction. Topics covered include: (i) how to value a company (trading comps, deal comps, DCF, LBO, break-up and asset valuation); (ii) importance of Enterprise Value, EBITDA, capital structure, leverage and WACC; (iii) analyze valuation multiples and ratios; why are PE ratios sub-optimal as a valuation metric?; (iv) practical, non-theoretical application of introduction to corporate finance.
Basic Financial Modeling
This course builds upon, and implements in Excel, the fundamental financial analysis and valuation topics. Create a top-down, five year income statement projection model and then construct a basic discounted cash flow analysis on top of your projection model.
** Don't get thrown off by the word "basic"—this Basic Financial Modeling serves as the fundamental basis for all of our additional Excel-based courses. Before you "graduate" onto our advanced modeling courses, we HIGHLY recommend you take this course for the full background on working efficiently in Excel the way we want you to, otherwise you may have a much steeper learning curve in our other classes. **
Basic Valuation Techniques
Build upon Corporate Valuation Methodologies with a short, hands-on exercise to hone in the core concepts in practice before diving into the more advanced valuation modeling topics. Translate the valuation concepts into real-life case study that demonstrates and shows the valuation principles.
Take everything to the next level as we build upon the basic & core concepts to cover the fundamental financial modeling concepts that one must be master in order to perform the minimum financial analysis required. We will make you "super-stars" in Excel and modeling techniques as well as understand the art of valuation. We plow deep into building robust, integrated models and ripping apart footnotes and making subjective inputs and properly analyzing the results of our models.
Advanced Financial Modeling – Core Model
Build fully integrated 5-yr financial statement projection model by projecting the Income Statement, Balance Sheet, Cash Flow Statement, the Debt Sweep to balance model and Interest Schedule to fully integrate model. This course will allow you to have a complete financial model projecting run-rate profitability which you can easily layer on valuation and merger models.
Advanced Segment Build-up Sensitivity Modeling
Learn how to build detailed revenue and segment build-ups into your larger financial model by quantifying the drivers of growth. Many financial projection models are based off simple revenue growth rate and expense margin assumptions, resulting in reduced precision in the projection model. This course teaches various approaches to true, bottoms-up, fundamental analysis for both publicly trade and listed companies as well as private companies or entities in which you have additional detail. We start by understanding the logic of channel checks and building the case for growth rates based on qualitative analysis and comprehension of industry- and company-specific drivers of growth. We then turn around and quantify our qualitative analysis by incorporating into our financial model on a business and operating segment basis. The results of the build-up analysis rolls into the Income Statement from your core integrated financial projection model. In addition, layer on sensitivity and scenario analysis to easily toggle through various cases, including base (management) case, upside and downside cases.
Advanced Financial & Valuation Modeling – Enhancements - Part I
Build upon completed core model and layer on valuation analysis. Construct DCF valuation model, detailed revenue segment build-up, project more precise depreciation schedule, calculate credit & leverage statistics and ratios, construct a reference range and football field summary valuation. This Enhancements course will allow you to have a much more detailed stand-alone financial model and valuation model!
Advanced Financial & Valuation Modeling – Enhancements - Part II
Further enhance core integrated financial model by building a detailed tax schedule incorporating NOLs (Net Operating Losses), Section 382 limitations on NOL usage and differences between book and tax depreciation. Dive deep into re-calculating depreciation for tax purposes based on accelerated depreciation – MACRS (Modified Accelerated Cost Recovery System) in the US. Incorporate and flow the accelerated tax depreciation into the larger tax schedule to account for differences in GAAP Pre-Tax Income and Taxable Income. Finish up with a quick Residual Income analysis and EVA (Economic Value Added) analysis, which complements our Enhancements Part I course.
Private Company Pro Forma Modeling
Pro Forma financial statements are a tool to recast financial results in a manner that is more representative of future performance and to remove the effects of private ownership. Pro Forma financial statements have one or more assumptions or hypothetical conditions built into the data and are often used to develop core earnings capacity (quality of earnings) when the objective is to value a company for sale to a third party or for internal perpetuation. The goal is to examine a sampling of the most common types of Pro Forma adjustments most often seen when valuing closely-held entities. Similar to analyzing one-time adjustments for public companies, the adjustments can affect both revenues and expenses, increasing or decreasing either one. However, private company pro form adjustments require a much more detailed analysis of each expense line to adjust for the effects of private ownership.
We dive deeper into the nuances of valuation by understanding the art (not science) of valuation. Build upon your core financial models by integrating and layering on hands-on valuation analysis. Construct standard full-blown DCF analysis, trading & deal comps analysis and summary football field. Dive real deep into the nuances of valuation by ripping apart footnotes and making subjective inputs while balancing objectivity.
Corporate Valuation Methodologies & Corporate Finance
Learn how corporations are valued and the major analytical tools that are used. Go beyond academic theory to real-world methods as used by professionals; includes a crucial primer to Corporate Finance and its non-theoretical application. Apply learning objectives and goals immediately by analyzing a $6 billion+ transaction. Topics covered include: (i) how to value a company (trading comps, deal comps, DCF, LBO, break-up and asset valuation); (ii) importance of Enterprise Value, EBITDA, capital structure, leverage and WACC; (iii) analyze valuation multiples and ratios; why are PE ratios sub-optimal as a valuation metric?; (iv) practical, non-theoretical application of introduction to corporate finance.
Fundamental Valuation – DCF Modeling
Layer on complete valuation analysis including discounted cash flow analysis, quick & dirty trading comps, reference range and football field. Learn the proper way to account for options in valuation context using complex treasury method.
Complex Trading Comps Analysis
Build a detailed, thorough trading comps analysis (analysis of selected publicly traded companies) and learn how to properly construct a relative valuation analysis the correct way as well as how to normalize financials for extraordinary items, non-recurring and restructuring charges. This course itself isn't terribly complex or difficult, but is very tedious, time consuming and at times frustrating as it requires a great deal of patience, attention to detail and reading comprehension. Hence, the first four letters of the title "analyst" ring true – perfection is required to get the right numbers.
Deal Comps Analysis (Precedent Transactions)
Build a deal comps analysis (analysis of selected acquisitions), similar to trading comps analysis, but from an acquisition context using historical transaction data instead of current market valuation data. This course will allow you to properly construct a deal comps analysis the correct way, uncovering some of the nuances related to calculating transaction value and purchase price. This course is not a complex course and in fact, is a relative breeze compared with our Complex Trading Comps course, but builds upon the concepts in the latter course.
Private Company Pro Forma Valuation
This course builds upon our basic Corporate Valuation course and introduces the complex nuances associated with analyzing and valuing private companies. We dive deep into the details and concepts deeply imbedded with valuation of large publicly traded and listed companies and take it to next level by applying it to companies and regions with very sparse publicly available data. Learn nuances of adjusting for DCF valuation, WACC analysis when no data exists, how to select and adjust peer comparables when no "good comp" exists. While there is certainly no magic bullet to the tough questions and lack of information, there are techniques and best practices to get us as close as possible.
Fundamental & DCF Valuation Nuances:Participating Preference Securities
When investing in earlier stage companies, whether start-up, growth or mezzanine stage investing, there is a fine balance between incentivizing the newest round of investors injecting capital and providing enough returns for earlier round investors, while still motivating management to strive for mutual alignment of economic interests. Investors desire downside protection while craving equity upside. Thus, the participating preference securities evolved from a blend of common stock with equity upside & voting rights to debt with accruing interest and priority of liquidation. In this course, learn how to structure, and model out such hybrid securities commonly used in VC and earlier stage investing.
Pension Accounting for Valuation
Pension and Other Post-Employment Benefits has had an increasing spotlight on a company's reported results and financial statements, especially given the dramatic impact on the airline and car manufacturing industries. Understand how different employer paid benefit programs, such as defined benefit pensions, manifest in and impact the firm's financial statements. Learn how and where to find benefit plan liabilities, their implications on valuation and profitability and how to analyze the information provided. This program begins with a primer on accounting and financial statements, the 10K SEC filing, a thorough review of pension accounting and terminology, the associated footnotes in a 10K filing and how to synthesize the information into a coherent analysis. Incorporate new Pension Protection Act of 2006 and SFAS 158: Accounting for Defined Benefit Plans.
Our merger modeling topics introduce critical skills required for understanding how to structure and analyze mergers & acquisitions. After modeling a company's profits / cash flow and valuing the entity, one must decide what to do with the company in the grand scheme of its strategic alternatives, including a merger or acquisition. We introduce the basics of deal structuring and implications on accretion/dilution to building more involved merger models with the complexity of complicated FASB and IFRS accounting rules.
M&A Deal Structuring
The goals of this course include: (i) understand the major steps and timelines of M&A; (ii) learn how to structure an M&A deal; (iii) explore common deal structures and determine optimal deal structures such as cash vs. stock consideration, stock vs. asset deals; and (iv) accretion / dilution and breakeven analysis. This course provides the fundamental knowledge required to understand, analyze and structure mergers & acquisitions. To hone the concepts learned in this module, be sure to follow-up with our hands-on, Excel-based Merger Modeling Basics course.
Merger Modeling Basics
This merger modeling course builds on top of our M&A Deal Structuring course in which you will build an accretion / dilution analysis, a generic "ability to pay" analysis, and a simple merger model slapping together two income statements, selected balance sheet items and cash flow sweep for debt payment. This course will allow you to quickly understand basics of merger modeling. To maximize your learning in this module, you need to absolutely understand the concepts in our M&A Deal Structuring course! This course serves as the backdrop to our super-advanced, complex merger modeling course.
Intermediate/Advanced Merger Modeling
Our Intermediate/Advanced Merger Modeling course significantly builds upon our Merger Modeling Basics course. We go beyond the simple concepts of accretion /dilution and build additional precision into estimating the correct, pro forma combined earnings. First, enhance the Sources & Uses of Funds to allow for additional clarity in deal structure. Then, dive right into the fine details of the complex FASB 141/142 and IFRS 3 purchase price allocation rules and fair market value tangible assets step-up intertwined with intangibles asset allocation. We tackle and quantify the resulting nuances in deferred tax liabilities and better quantify our synergies estimates. Participants should have mastered the merger concepts and financial modeling techniques covered in our M&A Deal Structuring and Merger Modeling Basics course.
Merger Modeling: Earnout Structuring
This Merger Modeling – Earnout Discussion module builds upon our M&A Deal Structuring and Merger Modeling Basics course by reconciling differences that arise in private middle-market transactions in which a buyer wants to be rewarded for future growth and a seller is only willing to pay for growth that has been achieved. But, the seller reckons, "why should I sell when I believe I can achieve greater growth and then sell for an even larger valuation at that future point?" The main tool to bridge this gap is for the seller to put his money where his mouth is - if you say you can achieve $1 billion of revenue, then prove it - one should be willing to accept deferred, contingent payments for such future growth that has yet to be realized. In this add-on module, we explore different ways to analyze and structure earnouts.
Super Advanced M&A Merger Modeling
The goal of this course is quite simple and yet extremely complex in implementation: build an all-out, full combination and merger analysis of target and acquirer company, integrating full projection model for both. This course will allow you to build one of the most dynamic, sophisticated and complex merger models out there, slapping together complete Income Statement, Balance Sheet, Cash Flow Statement, brand new, highly complex Debt Sweep and Interest schedule for the two companies and combined merged entity. Determine deal structure, purchase price allocation and tax deductibility, accretion / dilution and a whole host of issues.
Learning objectives include: (i) calculate Sources & Uses of Funds, post-transaction ownership, accretion / dilution; (ii) combine Target and Acquiror Income Statements and incorporate synergies into pro forma merger model; (iii) calculate pro forma, post-transaction opening Balance Sheet and project future combined Balance Sheet; (iv) derive combined Cash Flow Statement, dept sweep & interest schedule to balance and integrate model.
The core LBO model serves as the beginning model for the target company in this Complex, Super-Advanced Merger Modeling course and as such, you must have completed the Complex LBO Modeling course first to have the model!
Banker's Law: Legal Aspects of Transactions (NDA, Due Diligence, SPA)
The nondisclosure agreement (NDA) and purchase agreement are two of the most important legal documents that bankers and other finance professionals need to be proficient with during a transaction. The NDA is one of the first agreements to be signed during the negotiation phase. This document lays out the boundaries surrounding what information is confidential. In the NDA portion of this course, you will learn what major components to expect in an NDA. The purchase agreement is also a vital document outlining the legal details of an M&A transaction. The goal is to translate the financial terms of the deal into proper legal protections for both parties. We will walk you through the various sections found in almost all M&A purchase agreements, with detailed explanations of what they mean and how they are all pieced together.
One of the most, if not the most, important parts of an M&A deal is the due diligence process. You may have heard about "kicking the tires" and putting boots on the ground to see what really goes on in a business, but that is just a portion of the legwork required. Comprehensive paperwork, rigorous cross-referencing, and in-depth research are all key to understanding what exactly is being offered for sale. In this course, explore the rationale behind what the respective buyers and sellers are looking for, including the qualitative and quantitative risks associated with the potential transaction. A substantial set of checklists has developed throughout the storied history of the M&A industry, and it is the banker's job to competently meet the long list of information requests that clients make.
Our LBO modeling courses introduce critical skills required for properly understanding and quantifying capital structure changes from simple share repurchases to the extreme of a leveraged buyout. The techniques and concepts learned in building proper, robust, dynamic and flexible LBO models are highly valued given the relatively difficult nature of setting up, quantifying and articulating the complex relationships and intricacies of the LBO. We clearly convey the complexities involved in understanding the deal structure, sources & uses, refinancing options, credit ratios and the all-important debt sweep.
Leveraged Buyout Overview
This course provides a basic overview and introduction to leveraged buyouts, including discussion of rationale for 'going private', ideal LBO candidate, drivers of value. The following items are discussed, including description, importance, implications and general thoughts on: valuation, debt capacity, scenario analysis, sources & uses of funds, rollover equity, pro forma capital structure, purchase vs. recap accounting, goodwill treatment and other issues. You will gain some basic & fundamental knowledge required to understand LBO transactions. The purpose of this course is to introduce some of the terminology and concepts required for our Quick & Dirty LBO Modeling and Complex LBO Modeling courses.
Quick & Dirty Basic LBO Model
In the normal course of running a company, the CFO must balance capital requirements with capital sources of funds. Changes to the capital structure are not insignificant as each component of capital has an opportunity cost. In this course, we introduce the impact of changes in capital structure and the resulting impact on a company's decision to borrow vs. raise equity. We quantify the thought process and the logic that dictates one or the other by examining both extremes of capital structure changes: from a simple small share repurchase to the opposite spectrum, the leveraged buyout. This class examines and incorporates all the major inputs and value drivers of capital structure changes by building a short, quick and dirty LBO analysis, providing an excellent condensed overview and introduction to LBO modeling. As LBOs are risky and complex financial transactions, sometimes, building a full-out, complex LBO model is not necessary or required if one just wants to quickly gauge the feasibility of an LBO.
Learning ObjectivesIntermediate/Advanced LBO Modeling
This course builds upon our Share Repurchase and Quick & Dirty LBO modeling courses which quantifies changes to capital structure and opportunity cost and our Basic, Quick & Dirty LBO modeling course. We start off by diving deeper into the typical LBO deal structure and then expand upon the different components of the Sources & Uses analysis; projecting selected critical Balance Sheet items; constructing more detailed Cash Flow Statement estimates and robust Debt Sweep, as well as triangulating IRRs for dividends to equity sponsor. Learning objectives include: construct and sensitize an advanced leveraged buyout model with many nuances and complications of our full-blown complex LBO model; incorporate fundamental drivers including Sources & Uses, Pro Forma, post-LBO projections, available cash flow, debt sweep, credit ratios and IRR; selected Pro Forma Balance Sheet items, Debt and Shareholder Equity accounts; Debt Sweep: incorporate Term Loan mandatory amortization and integrating and sweeping additional new and existing debt tranches; sensitize core IRR to equity sponsor as well as triangulate IRR.
Complex LBO Modeling & LBO Model Enhancements
Layer a complex LBO model on top core standalone projection model and build one of the most dynamic, sophisticated and complex LBO models out there. This is a highly complex and a very advanced modeling class and requires an absolute grasp of all basic and advanced accounting and financial concepts. Your finished LBO model will be a highly versatile and functional financial model able to capture and sensitize a great deal of inputs to project a realistic and more precise outcome including the ability to toggle between status quo, standalone model vs. all-out LBO vs. partial recap. The core LBO model serves as the beginning model for the target company in our Complex, Super-Advanced Merger Modeling course.
Significantly enhance the LBO model by incorporating the following: PIKs (Paid-In-Kind), warrants and partial, less than 100% recapitalization. Further modify LBO model for mezzanine debt, non-cash interest, issue warrants and modify equity acquired. Incorporate all enhancements into end-all IRR analysis by significantly scaling out returns calculation via massive triangulation of cash flows.
In order to succeed and climb to the top, at some point, one must eventually specialize in a specific sector or industry after having enough product knowledge. Our industry specific modeling courses focus on unique industries in which generic terminology either doesn't apply or needs to be more detailed, including sectors such as banks, insurance, real estate, oil & gas and other industries.
Distressed Investing Overview
Learn how to analyze and value distressed companies and securities undergoing restructuring or bankruptcy process. First, appreciate and understand the historical perspective and context of the distressed market. Then, explore various opportunities in distressed investing from securities types to investment strategies. Properly identify and isolate the true sources and drivers of returns from supply & demand to operational changes to market rebound to recapitalizations. Quantify and comprehend the dramatic changes to a distressed firmÓ³ capital structure and the implications on the valuation process and realignment of economics. Understand the reorganization and bankruptcy process, including DIP (debtor-in-possession) financing, Section 363 sales (stalking horse), Chapter 11 reorganization, and Chapter 7 liquidation. Fully comprehend the key critical covenants required involved in distressed securities as well as the entire turnaround & restructuring process by identifying key parameters for successful business plan implementation.
Distressed Financial Modeling
Learn how to model and value distressed companies and securities undergoing restructuring or bankruptcy process. Build upon our Distressed Investing Overview course by quantifying the dramatic changes to a distressed firm's capital structure and the implications on the valuation process and realignment of economics. Build robust distressed sensitivity financial model. Learning objectives include: model out sample distressed company on a standalone basis, with and without restructuring; incorporate detailed valuation sensitivity to identify key value drivers in a distressed situation; analyze the fulcrum security based on various valuation and leverage scenarios.
Oil & Gas Industry Primer & Financial Modeling
The energy industry impacts everyone in one way or another, from commuters to bottled water consumers. Oil and natural gas are the world's leading energy supply, with gas stations in every neighborhood fueling cars and trucks that travel millions of miles a day. Supporting the entire oil & gas sector is the entire oil & gas services ecosystem.
We begin with an oil & gas services industry primer by introducing the oil & gas field development cycle and the corresponding supporting oil services, from feasibility studies to contract drilling from onshore to offshore, marine-based oil rigs. Drill into the drilling related services & equipment and understand casing and completion to infrastructure & installation and production & maintenance.
Then we focus on analyzing a leading global oil & gas services provider (Haliburton). We will build and constructing the detailed segment build-up portion of the financial model that feeds the Income Statement of your oil & gas services financial model. Understand various industry conventions for rig counts (SWACO and Baker Hughes).
Bank Industry Primer & Financial Modeling
Balance sheet based companies, such as banks, play by different rules and methodologies based on the unique nature of their business. Focus is placed on our Commercial Banks financial statements primer which dives deep into a bank's unique financial statement terminology and drivers. Understand how to analyze a bank and why the standard financial analysis and valuation methodologies that apply to most companies do not apply to industries that "use money to make money". Start with a brief overview of the main banking functions (commercial, investment, asset management) and quickly turn to the quality of book of loans and analysis of net vs gross charge-offs vs provisions, etc. Understand the critical credit ratios and capital adequacy analysis as well as Tier 1 and II definitions and Basel II impact. Crystallize the impact of Interest Rates, importance of term structure and credit spreads and implications on a bank's profitability. Examine best practices in calculating net interest income via average asset and liability balances on the income statement. Dive into an analysis of Balance Sheet assets & liabilities and articulate the drivers of EPS growth. Wrap up by analyzing valuation parameters: key banking valuation multiples (PE, PEG, Book Value, ROE).
Build a basic, streamlined bank financial model that builds upon the bank terminology in our Bank Industry Primer course. Before diving deep into the complex nuances of our Advanced Bank Financial Model, really solidify your understanding of developing the logic in loan losses and provisions and its impact on the rest of the larger bank financial statements. Perform quick back-of-the-envelope calculations for key Balance Sheet items such as Interest Earning Assets and Interest Bearing Liabilities, which yield Net Interest Income. Estimate and calculate capital adequacy ratios to wrap up your summary simplified basic bank model.
Construct a more robust bank financial model by building a bank balance sheet and derived income statement. Project gross loan balance, provisions for credit losses, gross charge-offs, recoveries, net charge-offs, net loan balance based on important key trends and ratios. Predict the critical funding requirements on the liability side of the balance sheet to support the loans and asset side. Learn the techniques and best practices to balancing the bank model. Examine different techniques to estimate the crucial interest-earning assets and interest-bearing liabilities. Estimate asset yield, funding costs and net interest spread to minimize forecasting error. Identify line items that constitute non-interest fee revenue beyond using simple percent growth rates. Incorporate and integrate provision for credit losses. Calculate compensation and overhead expenses and leave with a completed balance sheet and income statement. Make sure you master the concepts in this Intermediate class before diving into our Advanced Bank Financial Modeling course.
The standard financial analysis and valuation methodologies that apply to most companies do not apply to industries that "use money to make money". Balance Sheet based companies, such as banks, play by different rules and methodologies based on the unique nature of their businesses. First, start off with an interactive primer on commercial banks and their financial statement terminology and drivers. Then, build a fully integrated bank financial model that addresses the key drivers of profitability, cash flow, and valuation. Focus is placed on: projecting the Balance Sheet line items which drive the entire model; estimating interest-earning assets and interest-bearing liabilities which drives profitability; projecting loan portfolio growth, provisions for credit losses, and net charge-offs which determine overall impact on the financial statements. Complete the model by projecting different fee revenue sources and integrating the Cash Flow Statement. Finish the model by calculating and analyzing capital adequacy ratios, financial performance indicators and valuation metrics.
Insurance Industry Primer & Financial Modeling
Balance sheet based companies, such as insurance companies, play by different rules and methodologies based on the unique nature of their business. Focus is placed on our Insurance Industry primer which dives deep into an insurance company's unique financial statement terminology and drivers. Distinguish between P&C (Property & Casulaty) and L&H (Life & Health) insurance companies. Comprehend all the major players along the insurance spectrum from retail to wholesale brokers, to MGAs and MGUs and captive carriers and much more. Understand the different types of insurance, reinsurance and their financial statement impact. On the Income Statement, differentiate between the different types of premiums (direct, ceded, net, written, earned); comprehend loss triangles and the main differences between statutory vs GAAP accounting. On the Balance Sheet, understand key assets line items (premiums receivable, reinsurance recoverable, prepaid reinsurance premiums) as well as the liabilities (loss & lae reserve, unearned premium reserve). Understand insurance valuation parameters: key insurance multiples (PE, book value, premium/surplus).
Build a basic, streamlined insurance company financial model that builds upon the insurance financial statements terminology in our Insurance Industry Primer course. Before diving deep into the complex nuances of our Advanced Insurance Company Financial Model, really solidify your understanding of the major items on an insurance company's Income Statement and Balance Sheet. Take the time to further immerse yourself with understanding insurance.
Build a fully integrated, scalable, new insurance company model including detailed build-up by line of business from Gross Written Premiums to Net Premiums down to Underwriting Income. Consolidate the lines of business performance into a GAAP Income Statement with statutory adjustments. Integrate income statement projections with a self-balancing balance sheet, an automated cash flow statement and the balancing cash flow sweep schedule. Learning objectives include: build an integrated set of financials, including LOB, income statement, balance sheet & cash flow; project direct, ceded and net premiums and underwriting income based on assumed loss triangles; consolidate multiple lines of businesses, calculate GAAP and Stat Net Income with Tax Schedule; project self-balancing balance sheet including items such as premiums receivable and recoverables.
Real Estate Development Modeling
Evaluate the financial feasibility of a greenfield real estate development project. Determine the valuation of an empty plot of land by developing and building different lots, houses and condos. First, incorporate infrastructure costs required for a master plan development. Then dynamically differentiate among developing empty lots, building single family houses, and constructing & selling condominiums. Account for variability in construction timelines for different types of properties and sensitize the master financial model for various per unit and per square foot costs as the project is in planning, construction and post-construction phases. Learn how to quickly modify assumptions to customize the model to reflect a poor operating environment as the pace of lot sales significantly decline. In addition, learn how to determine optimal funding mix of equity vs. debt based on project cash flows and IRR.
Evaluate and analyze the acquisition, construction and renovation of a boutique hotel. Quantify hotel-specific construction costs and Sources & Uses of Funds. Perform detailed construction loan analysis that rolls into larger debt funding facility. Funnel into the core projection, estimating REVPAR (revenue per available room), various revenue streams and operating expenses. Compute management incentives and ultimately roll into Net Cash Flow and IRR.
REIT Financial Modeling
Tangential to financial modeling and valuation is credit analysis. We take the typical dry boring credit training and tweak it with perspectives from the buy-side credit point of view. This allows for a much broader and yet, simultaneously deeper, discussion and understanding of credit, a hard task to pull, but we think we've done it. As if that weren't enough, we think we've also been able to nicely blend hard core quantitative and statistics based concepts into our suite of portfolio and risk management courses.
Credit & Risk Analysis Training
Learn to analyze and understand the factors driving the risk / reward profile for a borrower and its debt securities. Many independent elements impact a borrower's creditworthiness and the value of its loans; however, true mastery of credit analysis demands an integrated perspective, weaving these disparate parts into a comprehensive, big-picture mosaic.
This program's goal is to assist you in developing a comprehensive foundation in credit analysis. Our framework for evaluating credit begins with the fundamentals; traditional and universally-accepted elements reviewed by lenders: the Character, Capital, Collateral, Capacity, and Conditions (the "Five C's") of debt and the debtor. These basics support building a stronger foundation to understand the qualitative and quantitative factors impacting a firm's ability to repay interest and principal. Learn the qualities which most impact a firm's solvency from a top-down analytical perspective, beginning with global economic trends and business cycles. Further assess a company's credit quality with a bottom-up analysis, evaluating the firm's performance relative to its peers. Finally, drill down even deeper to assess the structure of the company's debt securities and the potential value from specific attributes protecting creditors' investment.
Leverage your foundation to understand how major ratings agencies assess credit and ratings are determined. Learn which elements of credit are most relevant to the agencies and which are evaluated less rigorously. Compare the rating methodologies and contrast the meanings of the underlying credit ratings across credit ratings agencies. Understand how ratings changes can have drastic effects on a security's market pricing.
In addition to employing these academic practices and standard methodologies in evaluating a debtor's creditworthiness, you will also learn and integrate real world market dynamics into your credit analysis. Examining the impact of qualities such as market liquidity and the long-term objectives of creditors provides further visibility into the borrower's risk / reward profile. Reviewing additional considerations that impact a loan's risk / reward profile, including counterparty risk and concentration risk, adds deeper insight into a position's creditworthiness.
Recognize the actions and tools sometimes applied by lenders to mitigate credit risk, including credit derivatives and insurance, credit tightening, and portfolio diversification. Understand the costs and benefits of utilizing these tools, and the scenarios in which they are most effective. Finally, put your comprehensive foundation into practice by creating an actual credit review write-up.
The comprehensive analysis of a debtor and its securities from both the top-down and the bottom-up will allow you to judge a company's creditworthiness with a greater breadth and depth of understanding relative to many other market participants. This real world analysis, integrating established methodologies with the tools used by front-line Wall Street credit analysts, is a comprehensive foundation for credit review and analysis.
Credit Agreements and Covenants Analysis
Understand the legal aspects of issuing bank debt and corporate bonds by analyzing major sections of debt agreements and legal and financial covenants. Comprehend the major types of covenants found in credit agreements and bond indentures: affirmative, negative and financial. In addition, delve into maintenance and incurrence covenants, reps and warranties, indemnities. Learn objective of relevant credit agreement provisions and common related structural issues and thoroughly analyze senior credit agreements covenants and high-yield bond covenants. Understand implications of covenants on "events of default" and differentiate between technical defaults as well as compare and contrast "loose" vs. "tight" covenants and covenant-light and covenant-tight agreements.
13-Week Cash Flow Modeling
This program's goal is to assist you in developing a comprehensive foundation in forecasting and modeling a business' cash needs. Our framework for developing a cash flow model begins with the fundamentals; understanding the variances between traditional and near-term modeling, of which aspects of operations will have the probable largest impact on cash balances, differences the various rationales for creating a 13-Week Cash Flow (TWCF) model, and how they impact both a business in both the short and long term.
After gaining a fundamental and in-depth understanding of TWCF models, learn to build and create a business cash flow forecast. Analyze the results to determine potential pressure points on a business, review variances to comprehend short-term changes in the business, and adjust for future periods based on immediate results. Understand how to use this analysis to better manage operations and obligations, and to position a business for long-term success.
Recapitalization Modeling
This course walks through the concepts behind company recapitalizations (recaps) and quantifies the impact of the various approaches available. The first section opens with a high-level discussion of recaps and debt/equity swaps. Next is a brief primer on key credit ratios and how they can be implemented with best practices in Excel. The meat of the course then begins, reviewing multiple recapitalization strategies one by one, thoroughly explained qualitatively and executed quantitatively in a working Excel model. Afterward, these results are analyzed before wrapping up with a complicated scenario and sensitivity layer that can determine viable scenarios based on different assumptions of credit/leverage statistics. What's left is a comprehensive model capable of simulating strategies for any recap situation
Distressed Investing Overview
Learn how to analyze and value distressed companies and securities undergoing restructuring or bankruptcy process. First, appreciate and understand the historical perspective and context of the distressed market. Then, explore various opportunities in distressed investing from securities types to investment strategies. Properly identify and isolate the true sources and drivers of returns from supply & demand to operational changes to market rebound to recapitalizations. Quantify and comprehend the dramatic changes to a distressed firmÓ³ capital structure and the implications on the valuation process and realignment of economics. Understand the reorganization and bankruptcy process, including DIP (debtor-in-possession) financing, Section 363 sales (stalking horse), Chapter 11 reorganization, and Chapter 7 liquidation. Fully comprehend the key critical covenants required involved in distressed securities as well as the entire turnaround & restructuring process by identifying key parameters for successful business plan implementation.
Distressed Financial Modeling
Learn how to model and value distressed companies and securities undergoing restructuring or bankruptcy process. Build upon our Distressed Investing Overview course by quantifying the dramatic changes to a distressed firm's capital structure and the implications on the valuation process and realignment of economics. Build robust distressed sensitivity financial model. Learning objectives include: model out sample distressed company on a standalone basis, with and without restructuring; incorporate detailed valuation sensitivity to identify key value drivers in a distressed situation; analyze the fulcrum security based on various valuation and leverage scenarios.
A financial analyst won't be spending all their time on Excel building financial models, but will be crunching a fair amount of data and creating charts, tables & presentations. From due diligence of analyzing salary rosters and client lists to industry analysis and reports to creating charts and graphs, you will live and breathe Excel, Word & PowerPoint and we will teach you all the best practices of the most important tools.
Excel 2003 → 2007/2010 Transition
When Excel and Office 2007 first debuted, Excel power-users around the world collectively groaned with a massive headache. While there are certainly key enhancements to Excel 2007 that we like, navigating the new "ribbon" caused some grief as users were forced to re-learn how to use Excel. Thankfully, most of the shortcut accelerator keys are still in place. But change is never easy, so we created this short tutorial on getting you up to speed real quick - the one stop source on mastering Excel 2007. Embrace it, Excel 2007 is here to stay.
Excel Fundamentals for the Finance Professional
This course focuses on how learning the fundamental building blocks of Excel so you can begin to take advantage and leverage all of Excel's true capabilities. In order to efficiently build models and crunch large data dumps in Excel, one must master the basics before the advanced content. Learn relevant financial formulas, proper navigation, formatting of files and worksheets, creating calculations in cells, and linking between worksheets/tabs. Functions and tools covered in this course include: mathematical, financial, logic, date/time formulas; data manipulation; anchoring; data tables; and building a capstone model. Emphasis will be on using shortcut keys, simplifying steps, and manipulating data. You will leave with techniques you can use immediately, allowing you to work faster and with less effort.
Advanced Excel for Data Analysis
This course focuses on how to effectively and efficiently utilize Microsoft Excel for data analysis. A financial analyst will not only use Excel to build financial models, but also to crunch a large data dump. Learn how to minimize as much manual labor as possible, thereby saving time and performing more detailed analysis quickly. Apply commonly-used formulas in new and different ways; uncover often over-looked Excel formulas; streamline number crunching and analysis via functions and tools including pivot tables, sumif, sum+if, transpose, working with arrays, vlook-up, subtotals, and regression analysis; enhance your spreadsheets with drop-down boxes, data validation techniques, automation of alternate row shading; take Excel to the next level with an introduction to building and automating simple macros and more!
Excel Charting & Graphing Techniques & PowerPoint Integration
"A Picture is Worth a Thousand Words" - but what happens when you have the perfect image in your head but you can't get Excel to graph it the way you want? Ever get annoyed at constantly having to go back into "Source Data" whenever you add an item to your data series? Or how about getting the perfect sized bar or line without resorting to using a ruler to literally draw it on! This course builds upon our Advanced Excel for Data Analysis course and focuses advanced charting & graphing techniques and how to properly integrate with PowerPoint. A critical, must-take course especially for professionals that have to create graphs in their presentations, reports and slides. As usual, we emphasize and teach all the best practices and focuses on our core Excel learning goal: automation, automation, automation! Leave nothing to chance, there is always a way to simplify and automate your charting & graphing approach. This jam-packed session includes: waterfall charts, football fields, dymamic ranges, and much much more! Learn the best practices of integrating into PowerPoint, when to embed, link (never) and copy as picture, as well as add to our Excel macros with a couple handy PowerPoint macros.
Bridge the gap from the fundamental analysis side of finance to actionable trade strategies. After you've decided on your trade based on your fundamental analysis (financial modeling & valuation), take the next step to properly time your trade and explore options beyond simply buying stocks.
Buy-Side Series: Mechanics and Applications of Long/Short Hedge Funds
Participants will be introduced to the psyche of a hedge fund and learn how to think like a buy-side analyst. Through this course, participants will be shown how to expand their analysis beyond theory (valuations, trends, etc.) and apply the same practical techniques that hedge funds do. Specifically, learn what information is valued by funds, how and when hedge funds buy stocks, how single stock ideas are vetted through the construct of an entire portfolio, and how/why short decisions are made. Trade strategies will be detailed so conceptual ideas can be presented as actionable trades. Trading mechanics such as short interest, liquidity analysis, and ownership will also be discussed. Participants will be shown where to gain insights on funds and how to cater ideas/information to the fund's existing book of stocks, market exposure, and stated mandate. If you're a buy-side professional, you must master these fundamentals. If you're a sell-side professional, adoption of these techniques will increase the value of the presenter's ideas and result in increased and stronger buy-side relationships.
Technical Analysis & Trading
Technical analysis offers powerful, objective tools for trading stocks and securities. It's one thing to master fundamental analysis (accounting, reading and dissecting financial statements, financial modeling & valuation); however, many times, especially in extreme market dislocations, technical analysis overpowers the fundamentals and takes a life of its own. Certainly, technical analysis combined with fundamental analysis will rule the day; in either case, both sides of the equation are important.
This course provides a thorough review and primer to the fundamentals of technical analysis and trading based on technicals. We introduce the major types of technical indicators and tools and dive into the practical application in the real trading world. While the common saying "you can't time the market" certainly has merit, this course will teach how to make disciplined trades and improve your timing by identifying trends. Learn how to interpret charts and translate them into actionable trades.
We start with understanding the critical concepts of moving averages, support and resistance levels, to chart patterns such as head & shoulders, tops & bottoms, reversals and gaps, to incorporating price with volume, time, momentum and other sentiment factors, to more complex analysis such as candlesticks, Elliott waves, Bollinger bands, stochastics, relative strength, Fibonacci retracements, and much much more!
We debunk the myths and cut through the jargon to provide a straightforward, non-theoretical application—for each technical indicator, we explain: (i) the basic premise of the analysis; (ii) the information it provides; (iii) how it works; (iv) examples with graphics to clarify; (v) how to implement it; (vi) compare and contrast with other indicators.
Introduction to Options: Greeks & Option Strategies
This course is an intensive introduction to option trading strategies and the Greeks. Several examples of spreads and combinations are covered in detail; strategies that combine options with other types of assets are also explained in depth. These include covered calls, protective puts and collars. In addition to these strategies, the use of options to synthetically replicate other types of positions is also explored. Several option risk measures, known as the Greeks, are covered in detail: delta, gamma, theta, vega and rho. The properties of the Greeks are analyzed, while models for computing the Greeks are derived from the Black-Scholes model using Excel. The importance of the Greeks in trading strategies is shown with numerous examples.
Complex and Exotic Option Pricing Models & Simulation in Excel/VBA
This course introduces the Monte Carlo simulation approach to pricing derivative securities. Several different techniques for simulating random numbers are described; the risk-neutral framework for pricing derivative securities is covered in detail. The properties of Brownian Motion and Geometric Brownian Motion are explored, along with alternative stochastic processes that may be used to price derivatives. The simulation of European option prices and the Greeks is implemented in the VBA programming language. The Longstaff-Schwartz approach to pricing American options is covered in depth. The properties of several types of exotic derivatives are explained in detail. The prices of these derivatives are obtained from Monte Carlo simulation and compared with the results obtained from closed-form models. Several techniques for reducing the computational time of Monte Carlo simulation are explored, such as low-discrepancy sequences, control variates and antithetic variables.
Volatility/Correlation Modeling and Risk Management
This course provides a detailed overview of volatility and correlation models. First, estimate volatility from historical data then, implied volatility is defined and derived from option prices using root-finding methods. Dive deeper into the term structure of volatilities and volatility surface are analyzed in great detail. Learn how to price exotic options and the corresponding Greeks from the volatility surface. An overview of hedging and trading strategies using volatility derivatives is given; these include VIX options and futures and OTC derivatives, such as variance and volatility swaps. Several techniques for estimating correlation are covered, along with an overview of correlation derivatives. Trading and hedging strategies with correlation products are explored in detail. All models are implemented using Excel and the Visual Basic for Applications (VBA) programming language.
Global Macroeconomics (and Implications on Rates)
Economics – if not dismal, the "science" can certainly be frustrating. Ask yourself, do weak employment figures portend a decline in corporate profits and falling equity prices, or does it signal potential intervention from the central bank and rising equity prices? Exasperating, right?
The application of economic data to real world investment decisions often requires a secondary and even tertiary analysis of its meaning. Said differently, using economic data in the real world is more a "sentiment game" than a mathematical formula. What is a sentiment game? Keynes would describe it as a newspaper beauty contest, but more technically it's a strategic interaction between multiple players seeking to ascertain not necessarily their interpretation of a given set of information, but the interpretation and reaction of the other players in the game.
This Global Macroeconomics course examines the practice of interpreting economic information in a way that is helpful to decision makers. We address key theoretical concepts including basic macroeconomics, the business and debt cycles, monetary and fiscal policy, and international trade; but also leave the ivory tower to examine actual economic releases and discuss not what “should� happen but what does or can happen.
The course is broadly divided into two sections: Core Concepts and Key Economic Indicators & Data Series. The Core Concepts section of the course covers introductory economic theories and models that are required background information for economic analysis. This is done through an explanation of content followed by a real world example taken from a leading financial news source. The second portion of the course looks at key economic data series including among others, employment figures, price levels, monetary policy measures, and business/consumer activity measures. We use recent economic data to make it more applicable to current investment decisions and avoid the obfuscation that often accompanies older data sets.
Students should walk away with a better understanding of basic economic theory, how it translates into real world application, and knowledge about the distribution of and meaning behind important economic indicators. This is perfect for investment decision makers looking to integrate economic analysis into their decision making process or more experienced "economists" looking for a review of key concepts.
Our suite of portfolio and risk management courses takes a quantitative approach to managing diversification strategies in the portfolio context. Understanding the impact of market factors and monte carlo simulations will allow you to better sensitize and quantify risk factors on your portfolio.
Credit Risk Modeling in Excel & VBA: Default Risk and Prepayment Modeling
This course provides an in-depth introduction to credit risk. Techniques for modeling credit transition matrices are covered in great detail, while several statistical techniques for modeling default probabilities and correlations are explored in depth. Methodologies for modeling credit portfolio risk are covered, including the asset value approach and the structural approach. Prepayment models are developed for Mortgage-Backed Securities (MBS). All models are developed in Excel/VBA.
Value at Risk (VaR) Modeling for Different Asset Classes in Excel
This course provides an overview of Value at Risk (VaR) modeling for a wide array of financial assets, including stocks, bonds, forward contracts, futures contracts, swaps and options. The key statistical assumptions underlying the VaR methodology are explored; several different models for computing VaR are implemented in Excel. The Delta-Normal approach is used to compute VaR for bonds, stocks and linear derivative securities, such as forwards, futures and swaps, as well as calls and puts. The Delta-Gamma approach is introduced as an alternative to computing VaR for options; this approach can capture the non-linear behavior of an option but at the cost of greater computational complexity. Full valuation approaches to computing VaR are covered in great detail; these have the advantage of being independent of any distributional assumptions about financial assets. These approaches include Historical Simulation, Weighted Historical Simulation and Monte Carlo Simulation. Several portfolio VaR measures are demonstrated; these are designed to measure the impact of a potential trade on portfolio VaR. These measures are known as Marginal VaR, Incremental VaR and Component VaR. The course concludes with a discussion of the strengths and weaknesses of the VaR methodology, with a consideration of several alternative possible approaches.
Portfolio Optimization & Efficient Frontier Modeling
This course provides an overview of portfolio modeling. The course reviews several key components of portfolio math, such as standard deviation, correlation and covariance, as well as optimization techniques. Markowitz' formula for measuring portfolio risk is covered in detail. The equivalent matrix representation is introduced, along with Excel's matrix algebra functions. The Capital Asset Pricing Model (CAPM) framework is used to introduce several key concepts, such as beta and the efficient frontier. Excel Solver is used to derive the efficient frontier from a portfolio of stocks. Beta is estimated using linear regression analysis. The Capital Market Line and Security Market Line are derived, showing the relationship between risk and return in equity markets. The Sharpe Ratio is introduced as a measure of relative risk.
Bank Capital Adequacy Modeling and Basel III Compliance
This course presents an overview of the Basel Accords and how they have evolved since their debut in 1988. The three-pillar structure is explained in great detail, with a focus on the measurement of capital requirements under Pillar 1. The Value at Risk methodology is covered in depth as a technique for computing market risk capital requirements. The key features of the approaches to computing credit risk capital are covered: the Standardized Approach, the Foundation Internal Ratings Based Approach and the Advanced Internal Ratings Based Approach. The three approaches to computing operational risk capital are explored in detail: the Basic Indicator Approach, the Standardized Approach and the Advanced Measurement Approach. The new features of Basel III are explained, including changes to the measurement of Tier 1 and Tier 2 capital, updates to the calculation of credit risk capital and a more advanced approach to measuring liquidity risk.
Credit Derivatives Modeling in Excel & VBA
This course provides an in-depth introduction to credit derivatives modeling. Techniques for calibrating the LIBOR curve are introduced. Alternative approaches to modeling default probabilities are considered, including Merton's model, reduced-form models and the hazard rate model. The basic properties of credit derivatives are covered in detail, along with pricing models. Strategies for hedging credit risk with these derivatives are discussed in detail. Correlation products are covered, including Collateralized Debt Obligations (CDOs) and single-tranche CDOs. These are priced with Monte Carlo simulation while hedging strategies are developed. All models are implemented in Excel/VBA.
Fixed Income Modeling and Risk Management
This course is designed to provide an intensive introduction to fixed income markets and interest rate derivatives. The course presents several alternative measures of interest rates: yield to maturity, spot rates, forward rates and discount factors; techniques for pricing bonds with these measures are covered. The measurement and management of interest rate risk is then explored in depth.
Interest Rate Derivatives Modeling and Term Structure of Rates
This course provides an analysis of the term structure of interest rates and interest rate derivatives pricing models. Several different types of interest rate derivatives are covered, including interest rate futures and forwards, interest rate swaps and interest rate options. The uses of these derivatives for hedging and trading purposes is explored in depth. Black's model is applied to the pricing of European interest rate options. Equilibrium models of the term structure of interest rates are introduced and implemented in Excel. These models are used to price zero-coupon bonds and coupon bonds. The drawbacks of equilibrium term structure models are considered. No-arbitrage models of the term structure are explored in depth, including the lognormal model, Black-Derman-Toy (BDT) and Hull-White. The comparative strengths and weaknesses of these models are considered. The BDT model is implemented in VBA as a binomial interest rate tree. The model is then used to price European, American and Exotic interest rate options.
Foreign Exchange (FX) Modeling & Hedging
The course presents an overview of exchange rates, foreign exchange risk and strategies for pricing and hedging with foreign exchange derivatives. The basic features of the foreign exchange markets are introduced, along with several international parity conditions. The key properties of foreign exchanges forwards, futures, swaps and options are covered in detail; pricing models are introduced for each type of derivative along with hedging strategies. Several models are introduced for pricing foreign exchange options and are implemented in VBA. These models are used to compute the Greeks and implement sophisticated hedging strategies. The properties of exotic foreign exchange options are covered; these are priced with stochastic volatility option pricing models.
