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Money & Banking and Financial Modeling

I have had to opportunity to learn a lot this semester related to what I would enjoy to do with my life. At times I wish the courses here were more open so I could take even more classes focused on science. However i’ve been happy with the learning progress I have made this semester. Three things I want to highlight on is my better understanding of bonds, futures, and other derivatives. This coming from the current Money & Banking course I am taking online with Daniel Lee. Another course I have fund very interesting is my Financial Modeling course which is also taught by Daniel Lee. I though the course would be a breeze because I am very effective when it comes to financial modeling already. However Prof. Lee introduced me to an entirely new aspect of financial modeling using R code. Some of the information may be hard to provide citation for as most of what i have learned is from just directly solving problems related to these topics.

Money & Banking introduced me to the idea of futures and forward contracts and their effect on the economy. Companies and countries can enter into these contracts to hedge their positions or protect themselves from foreign exchange rates. Before taking my Money & Banking course I had little to no understanding of futures and their role in the bigger picture. Aside from that I have an even better understanding of bond valuation. Mostly focused on the Gordon Growth Model. Even outside of that through homework’s and exams I’d been asked questions I’ve never been asked before as far as bond valuation goes. The process you have to take to solve these is completely different than any other way I have before. It has made me that much more of an expert in excel.

Financial Modeling has provided me with the most information I’ve found important and useful this semester. I had some understanding of coding using java and HTML. After this course though I have a very good understand of R to a point when I can actually apply it to real world scenarios. Using what I learned in class and the resources Prof. Lee has provided outside of class (datacamp.com) I’ve been able to apply these skills to begin creating my own website. To not get into too much detail yet as it is a work in progress I plan on making a database probably through SQL in which I can store income statement data. Than using R I can manipulate this data to find present value, show growth, forecast future cash. Something I never really thought I’d be doing. I’ve considered taking even more computer science classes since taking the course. However there are a lot of resources outside of school that can probably teach me just as well.

Both of these classes integrate together well because they both focus on finding intrinsic value in some way. Even more so as I want to add bond valuations, futures, and other derivative valuations to the website I am trying to create. As I’ve started to base work I have found that this may take much longer than I have thought. With 2,800 securities on the NYSE I have to gather about 5 things of data from each already giving me 14,000 things I have to individually select. The code I want to use to manipulate data for these is not done yet however I am getting closer to 100 lines of code meaning I may have to write  1 million plus lines of code even though most of them will be identical for the most part. I’m excited and to see how this progresses and even more excited for the coming semesters and what else is new that I may learn

2 Comments

  • Robin DeRosa

    Well, I was totally with you until the last two paragraphs. You have definitely exhausted the full range of my comprehension in financial modeling. I am so looking forward to your research paper and project, and will look forward to sharing them with people in your fields, too, since the work seems promising and exciting, and you should have good mentors with you as you go forward with your studies!

  • Daniel Lee

    Sean, you certainly sound like a student with a purpose. I see a bright future ahead of you. And it’s also good to hear that I’ve been able to you progress. I’ll be happy to chat more with you to see how I can help you further.

    Lastly, a comment on your last two paragraphs. It doesn’t have to be a million plus lines of code. Using a function, you could apply the same 100 lines of code to multiple securities. There is a great course in datacamp on this topic. Let me know if you’re interested.

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