Wharton Business and Financial Modeling Capstone

Go to Course: https://www.coursera.org/learn/wharton-business-financial-modeling-capstone

Introduction

**Course Review: Wharton Business and Financial Modeling Capstone on Coursera** In today's data-driven world, the importance of financial modeling and data analysis cannot be overstated. The "Wharton Business and Financial Modeling Capstone" on Coursera provides an immersive and practical experience for those looking to hone their financial modeling skills while making informed business decisions. This capstone project is a culmination of knowledge gained from previous courses in the Wharton Business and Financial Modeling Specialization, and it offers learners an opportunity to apply theoretical concepts to real-world scenarios. ### Overview The capstone project revolves around recommending a business strategy based on a data model you construct using historical financial data. Powered by data sourced from Wharton Research Data Services (WRDS), this course allows participants to develop quantitative models in spreadsheets that identify the best opportunities for success while minimizing risks. By the end of the course, learners are expected to present their findings in a professional-quality PowerPoint presentation showcasing their analysis and recommendations. ### Content Breakdown 1. **Getting Started**: The course begins with an informative introduction to the objectives and expectations of the capstone project. Here, learners familiarize themselves with the historical financial data they will be working with, taking their first steps toward calculating individual returns and summary statistics. 2. **Steps 1 and 2: Yahoo Finance**: This segment focuses on data collection and foundational calculations. Students engage with a historical dataset to calculate daily returns and summary statistics—essential skills for any financial analyst. The hands-on quizzes after each calculation bolster understanding, ensuring learners effectively derive performance metrics required for portfolio creation. 3. **Step 3: Creating an Optimal Risky Portfolio**: As the course progresses, students delve into more advanced concepts like finding the minimum variance and optimal risky portfolio weights. This part of the course challenges participants to apply their skills to create a portfolio that efficiently balances risk and return, with practical quizzes that enhance comprehension and application. 4. **Step 4: Optional Exercise using CAPM Tables**: Though optional, this segment provides a valuable exploration into the Capital Asset Pricing Model (CAPM). It offers an integrated view of investment risks and returns, reinforcing concepts through quizzes that ensure mastery of regression and risk assessment. 5. **Step 5: Creating Your Asset Allocation & Final Presentation**: The course culminates in a comprehensive analysis and presentation of a diversified investment portfolio. Here, students are tasked with allocating a fictional $5 million investment into selected funds while comparing performance against a single security (AAPL). This final task effectively ties together the skills learned throughout the course as students prepare peer-reviewed presentations demonstrating the significance of diversification. ### Learning Experience The course's structure is well-organized, making it easy to follow from one module to the next. Each step builds on the previous one, offering a logical progression from foundational concepts to more complex analyses. The integration of quizzes ensures active participation, helping to cement the learning material. Moreover, the use of real-world financial data adds an authenticity to the experience, making it relatable and practical. ### Recommendations The Wharton Business and Financial Modeling Capstone is highly recommended for aspiring financial analysts, investment managers, or business strategists. If you are looking to deepen your understanding of financial modeling and strengthen your ability to make informed business decisions, this course is an excellent choice. The skills acquired here not only enhance your current role but also significantly improve your marketability in the job market. ### Conclusion In summary, the Wharton Business and Financial Modeling Capstone offers a rigorous and comprehensive learning experience. Whether you are a seasoned professional or a beginner in financial modeling, the insights gained from this course will undoubtedly bolster your data analysis skills and expand your strategic decision-making capabilities. Enroll now on Coursera and start unlocking your potential in the world of business and finance!

Syllabus

Getting Started

Welcome! This opening module was designed to give you an overview of the Business and Financial Modeling Capstone, in which you will be working with historical financial data to calculate individual returns and summary statistics on those returns. The project has multiple steps, which are outlined below in the "Project Prompt", and culminates in a recommendation for portfolio allocation that you will prepare a presentation on. You will draw on elements from all courses to complete this project, and you can use your final presentation as a work sample to improve your current job or even find a new one. Before moving on, complete the "Project Scope Quiz." The work you do this week enables you to understand the steps needed to successfully complete your final project.

In this module, which correlates to Steps 1 and 2 in the Project Prompt, you'll be working with a historical data set to calculate performance data and to provide summary statistics on that data. These calculations will allow you to practice using Spreadsheets for financial calculations, and provides the foundational skills and numbers for the next steps of the project. First, you'll use the set to calculate daily returns on a set of securities. You'll then use your Spreadsheet skills to calculate summary statistics. You'll be given the opportunity to test your knowledge with a sample return to see if your calculations are correct. And you may want to refresh your recollection of the content from the Specialization with the lectures included here. The work you complete this week allows you to form the basis for comparing stock performance, which you will use in creating the investment portfolio for your final project as well as the comparison to the performance of a single stock.

In this module, you'll go beyond calculating simple returns to tackle the more advanced task of finding the minimum variance and "optimal risk portfolio" weights for a portfolio of selected securities (note, the "optimal risky portfolio" is also known as an "optimal portfolio" or "tangent portfolio"). You'll follow the tasks in Step 3 in the Project Prompt and use the resources below to calculate the portfolio weights for two securities that results in the portfolio with the minimum variance; then, you'll calculate the "optimal risky portfolio" on the efficient frontier for these same two securities, then for all 10 stocks in the pool. You'll be quizzed on your calculations and other insights that emerge from this exercise. The work you complete this week gives you practice in creating an optimal risky portfolio, which is a key component of your final project. Note: There are a number of resources available on the internet providing step-by-step instructions on how to use Excel to create an "optimal risky portfolio" on the efficient frontier given a certain set of available assets. We encourage you to attempt to use the skills you gained during the Specialization to work through these steps independently; you are, however, permitted to utilize third-party resources if you find it necessary. We've included some lectures from the underlying Specialization courses concerning Solver, optimization, and other relevant topics.

The Capital Asset Pricing Model, or CAPM, is another tool used by investors to weigh the risks and rewards of potential investments. In this optional module covering Step 4 in the Project Prompt, you can use CAPM as a vehicle to further strengthen your financial modeling skills, including using regression concepts. You may revisit the Specialization lectures below touching on regression. To test whether you've grasped the concepts in the CAPM model, this module includes a short quiz. This assessment is formative, meaning your score will not count towards your final grade. The work you do this week may inform how you build the mixed asset portfolio of your final project, but it is not necessary to complete the final project.

In this final module you are asked to move beyond a stock-only portfolio to one utilizing more diversified assets and to prepare a short presentation summarizing your findings. As explained in Step 5 of the Project Prompt, you have $5 million to invest in the Vanguard Total Bond Market Index Fund (ticker: VBTLX) and Vanguard 500 Index (ticker: VFIAX) investment vehicles. There are two assessments in this module. First, you'll complete a short quiz on the characteristics of your optimal risky portfolio. Then, in the peer review component of this Capstone, you are tasked with preparing a short presentation that (i) explores how your portfolio of mixed asset class of funds compares to a single security (AAPL) and (ii) uses that comparison to discuss the importance of portfolio diversification.