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Guide to Financial Models

  • Models are arranged from the basic to the complicated. Click on the model that you would like to use.
  • Each model provides its own instructions. In general, the input date should be pasted in the marked area and the output data is provided in the marked area.
  • Open a work book from our local system. Save the Excel model spreadsheet(s) from the site to your local drive. Do not use the models on the site to do calculations, because the results cannot be saved in your local system for future use.
  • Basic Excel functions are used and some tips are given below
    • Dragging is useful to increase the model size. For practical use, you may want to increase the number of periods of the model and you should be able to drag the model to fit your needs.
    • Solver can be found in tool. Solver is used to solve for minimum or maximum output of a function or solving a set of equations. Enter the changing variable and specify the target cell to determine the solution. Make sure that you have loaded the solver in your tool section.
    • Work book can save several Excel model spreadsheets, so that you can do a portfolio analysis of different securities or derivatives. You can also develop macros on the work book to automate your portfolio analysis.
  • To assist the authors in developing the models and us in providing a better library, please provide us comments and suggestions to the site or to each model.

Definitions of the fields in the database of an excel model

  1. reference number: a unique integer assigned to each excel model when the model is published in the Financial Model Library. Therefore the reference number is more related to the publication date.
  2. model name: a short name given to the model by the author or the editor. Try to be less than 5 words
  3. Classification number XXXXXX. The number assigned by the editor to denote the type of models and the sequence (in ascending order) would roughly shows that flow of logic of the financial models in the library. The last 2 XX denotes the ordering of the financial models within the model type and the financial market class (see below how the number is assigned to each financial market class). The next XX denotes the model type, and the last XX or X is the financial market class. This ordering allows the user to search for any models in a particular area of finance
  4. Level: This denotes the complexity of the models using a classification used in academia. There are 4 major types: basic denotes the models for the undergraduates; intermediate for the MBA level; advanced for the PhD level; Operational denotes models that can be used in practice.
  5. version: the Library encourages the authors to revise their models in updating, extending, and responding to users' requests. Therefore, the version number provides the information of the version used. Only the latest version is published
  6. Publication date: the date of the publication of the model in the library. This way, user can see the age of the model in the site
  7. author: identifies the author, who is responsible for the model. All models must have authors so that users can see the persons responsible of the models
  8. Affiliation: the institution of the author to further identify the author
  9. email address: the information enable users to contact the authors for suggestions and comments. Another channel of communication is the use of the Forum
  10. last revised date: shows the most recent date of the last version
  11. financial model class: models are grouped into broad classifications according somewhat to the flow of logic. The corresponding number is used in the Classification number. They are:
    1. 1. Discounted cashflow method
    2. 2. Equity market
    3. 3. Bond market
    4. 4. Equity option
    5. 5. Interest rate derivatives
    6. 6. Implied volatility surface
    7. 7. Exotic options
    8. 8. investment grade bonds
    9. 9. high yield bonds
    10. 10. convertible bonds, MBS/CMO
    11. 11. Financial institution products
    12. 12. Firm valuation
    13. 13. Real options
    14. 14. corporate model
    15. 15. risk management
    16. 16. Financial institutions
    17. 17. Foreign Exchange
    18. 90. data
  12. Issuer/ modeler: the user of the model type in practice
  13. model type: a subclass in each financial model class
  14. risk sources: type of the risks as inputs to the model
  15. risk distribution: specification of the risk profile
  16. economic assumption: the key assumption made in the model
  17. size: the size of the file to alert the user before downloading the model
  18. used frequency: a measure of the frequency of the use of the model
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