Wednesday, October 22, 2014

Practical Work on Corporate Finance (Helpful for BAT / CFA L1 Exam Prep/VBA for finance)

Advisory on Corporate Finance Matters:

  • Peers in the same sector (Sectors Industry). 
  • MLR - Some Return/Leverage effects multiple.
  • Projecting balance sheet 4-5 years.

Top 3 Banks in USA - JP Morgan, Goldman & BOA.

Important Topics:

  1. Interest Rate Movements - Fixed vs. Floating.
  2. Convertible dept.
  3. Tactical Share Repo.

Balancing Complexity with Simplicity:

Advisory - Keeping things simple is most Important.

  •   What we want to run (not using C# or R):
  1. MLR – Linest &
  2. MC – 1000 paths.
  3. Rank Correlation.
  4. Choskley – Eigen values.
  • Financials of a company?
  • Options? Excel vs VBA vs R – Everyone should be able to decript?
  • What adds complexity in Excel? Mastery of data tables – support from VBA and not running it from VBA.
  • What are we dealing with? Scale 50 data tables, 20 MB file, 1000 paths of many fundamental process
Sell Side Investment Banking US - Quant Corporate Finance:   
  •   Functions:
  1. Advisory on Optimal Leverage – levered repo.
  2. Forecasting companies financials.
  3. Sensitivity analysis – forecasting with fixed Multiple.
  4. MLR and regression with non stationary elements.
Monte Carlo Simulation - How to use Monte Carlo Simulation in quant corporate finance environment:
  • Use data tables.
  • Do in excel validate through R – Install R packages.
  • Pull automated values using formulas of CIQ or Fact set.
  • VBA toolkit for MC engine in Excel – Join split – Indexing – Choskley transform. 
Interest Rate Dynamics for QCF:

  •  LIBOR & 3ML & 10 UST.
  • Trend and modeling perspective.
  • Fixed vs. floating – why balance sheet projections become important here?
  • Swap rates – where to pull – bloomberg / CIQ / compustat. 

Contributions in Sectors:

  •   Does contribution of growth differs? Why tech has max contribution of growth and defense least – why return has most contribution in return in defense?
  • EV/EBITDA for sectors how much things contribute in them.
  • List of EV/EBITDA multiple for all companies – what does trend show.
  • Regimes to regress EV/EBITDA and what are indicators of regime change.

Areas of Discussion:

  •   REGRESSION ANALYSIS – Coeff – contribution – p value - r-sq.
  • SURPLUS CASH – projections – cost - utilization.
  • TRANSFORM during Regression. 

VBA Toolkit:

  •   VBA programs to make it work in Excel.
  •  Shutting and reactivating data tables.
  • 3rd dimension to data tables by split join.
  • Segregating risk or risk attributions.

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