CdLM Business Administration

The course is composed of three modules. The first module provides an introduction to fundamental concepts in Financial Mathematics. It is intended to equip the students with some basic mathematical tools that can be usefully applied both in financial theory and in corporate finance. The second module delivers an introduction to quantitative mathematical models for performance evaluation which have been used in various contexts including management, economics, and business. The third module is intended to familiarize the student with the use of MS Excel in data analysis and financial application.

 The purpose of the first module is to provide the ability to analyze standard behaviors of brokers on the financial market by understanding the relationship between performance and remunerations. The ability to build models referring to financial applications and to develop new models. The second module increases the level of ability of students to practically utilize optimization problems (linear programming models) as a useful tool for decision making. The ability to (i) find out which organization is efficient in using its valuable resources, (ii) discriminate efficient and inefficient organizations, (iii) identify sources and amounts of inefficiency in each factor for each organization. The purpose of the third module is to provide the ability of analyze simple and complex databases in MS Excel, by means of formula manipulation, statistical and graphical tools, data analysis and query tools. 

 

PROGRAM OF THE FIRST MODULE: 

• Financial calculus

Common financial laws. One-variable and two-variable financial laws. Inflation and the real rate of interest. Rolling over and buy and hold strategies. Annuities and amortization plans. Construction of leasing contracts.

• Financial choices

Financial objectives. The Net Present Value (NPV) and NPV of levered investments (APV). IRR criterium. 

PROGRAM OF THE SECOND MODULE:

The nature of econometrics and economic data

The simple linear regression model

Multiple linear regression model in vector and matrix notation 

Multiple regression analysis: estimation

Statistical inference in the linear regression model

Multiple regression analysis: inference

Multiple regression analysis: further issues

Multiple regression analysis with qualitative information: binary (or dummy) variables

Multiple regression analysis: OLS asymptotics

Introduction to non-standard linear regression models: Relaxing the assumptions

Heteroskedasticity

Further issues in using OLS with time series data.

Instrumental variables estimation and two-stage least squares

PROGRAM OF THE THIRD MODULE:

Tools for an efficient use of MS Excel (autofill, formulas, functions, addressing, text manipulation, charts, descriptive statistics, frequency distributions)

Financial functions in MS Excel (net present value, internal rate of return, annuity functions, amortization tables, accounting depreciation functions)

Simple and advanced data analysis tools (sorting, filters, data forms, grouping, subtotals, pivot tables, multi-page systems, lookups, what-if analysis, sensitivity analysis)

Power Query (search the web, modify queries, merge tables, combine and append data, grouping and summarizing)

The exam consists of a compulsory written test (lasting about 1 hour and 30 minutes) and it is aimed at ascertaining the students' ability to:

1)      briefly introduce the main concepts and tools developed in the course;

2)      use these tools to solve practical financial exercises.

 

This aim is achieved through:

1)      the formulation of three open answer questions, of a theoretical nature, with the purpose of illustrating one or more concepts developed during lessons

2)      the formulation of twelve multiple choice questions, with the purpose of carrying out short numerical exercises that require the application of the acquired competences.

The answers are to be crossed on the question paper. In addition, it is mandatory to give on a white sheet a detailed report about the given answers.

 

 The course is organized into 70 hours of lectures (1^st module: 14 hours - 2^nd module: 24,5 hours - 3^rd module: 31,5 hours)

 

Suggested readings and bibliography for the first module:

CASTAGNOLI E., CIGOLA M., PECCATI L. (2013). Financial Calculus with Applications, Milano, EGEA.

TIBILETTI L., UBERTI M. (2018). Quantitative Methods for Management, Lulu Press, Inc., 3101 Hillsborough St. Raleigh, NC 27607 USA, pages 175 ISBN 978-0-244-38685-6

Introductory reading:

MATTALIA C., TIBILETTI L., UBERTI M. (2014). Basic Finance for Business, McGraw-Hill Education (Italy) ISBN 9788838674549 print; ISBN 9788838693359 ebook

Suggested readings and bibliography for the second module:

WOOLDRIDGE Jeffrey M. (2014), Introduction to Econometrics. A Modern Approach, Cengage Learning