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LN1 Financial Modeling with Python and Excel

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37 views

LN1 Financial Modeling with Python and Excel

Uploaded by

vanshsingla079
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Modeling with Python and Excel

Nick DeRobertis
June 9, 2021

1 About Me
• I am currently a Finance Ph.D. student at UF focusing on market intervention, alternative assets, and
behavioral finance
• This is my third time teaching Financial Modeling and I taught Debt and Money Markets twice previously
• Undergraduate and master’s degrees in Finance from Virginia Commonwealth University (VCU)

• Worked as the only commercial loan portfolio analyst at a small bank (about $1B in assets, 15 branches).
During my time there, saved the bank $4.5 million dollars
• Represented VCU in the Chartered Financial Analyst (CFA) Equity Research Challenge, our team got in the
top 12 out of 800 university teams from around the world

• I am a strong supporter of open-source software. I develop packages as part of my research and also as part
of this class.

2 Syllabus
• Get the textbook if you’re someone who learns well from reading, and doesn’t have a lot of Excel experience.
Otherwise it probably won’t be very helpful

• Mac and Windows are both fine, though I don’t have much experience on Mac so I won’t be as helpful with
OS-specific issues
• This class is hard. Those who don’t have good technical skills already should prepare to put a lot of work in
or consider another course.

• We focus on the modeling process and skills, not as much on the finance, so you need to have a good knowledge
of finance first.
• If you don’t have any of the required Excel skills, take a look at the resources provided on the syllabus and
ask me any questions
• The lab sessions are perhaps the most valuable part of the course because you can get lots of hands on
feedback
• I have consistently heard that these are the hardest (and most rewarding) projects in the finance program at
UF. Start early and ask questions.
• I would highly encourage those who don’t have Python experience to work through some of the resources
in the syllabus. This will greatly enhance your learning and allow you to focus on the models rather than
struggling with programming basics.
• Please review the syllabus document for the grading structure

1
3 What is a Financial Model?
• A model is simply a repeatable process which converts inputs to outputs
• The process might be as simple as a single calculation or as complicated as trying to value a large multinational
company
• There can be one or many inputs and outputs

• A model is a logical and mathematical construct, it has nothing to do with Excel or Python. These are just
tools we can use to implement the model

4 Tools and Skills


• We will implement models in both Excel and Python in this class

• It is necessary to learn programming to build real-world custom models


• Out of programming languages, people love Python for its short(er) learning curve, readability, power, and
flexibility.
• Learning programming and Python has many applications outside financial modeling and proves technical
competency on a resume
• Python, like (nearly) any other programming language, is text-based and lives in a terminal
• While it does get much easier to learn more languages after your first, if you’re going to pick just one, it
should definitely be Python over VBA

• Excel is not going anywhere. It has its problems, some of which are major, but it is so widespread and people
are used to dealing with these problems

5 Installing Python
• Watch this process to learn how to install Python

• You will only need to complete this once on a given computer


• The "Add Anaconda to my PATH environment variable" is very important, it will warn you that it could
cause issues but it won’t for our purposes, and if you leave it unchecked you may have to reinstall Python
later in the course
• Be sure to test your installation is working

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