Applied Finance Lab Manual


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Applied Finance Lab Manual

  2. 2. I. FINANCE LAB RULES AND PROCEDURES 1. Only lab interns, VU staff, and professors are permitted in the back office room unless authorized in advance by Profs. Nawrocki, Pagano, or Jablonski. 2. Visiting students are not permitted to use the printers for personal or non-lab related materials. 3. E-mail is restricted on the lab computers. 4. Electronic trading web-sites are strictly forbidden to be accessed by anyone in the lab without prior approval from Profs. Nawrocki, Pagano, and Jablonski. Visiting students seen accessing any personal trading web-site will be informed of the rule and asked to stop immediately. Second time offenders wil be banned from the room. 5. Cellular phone use in the lab is not permitted by any visiting student, intern, VU staff, or Professor, without approval from Professors Jablonski, Nawrocki, or Pagano. II. AUDIO VISUAL (AV) EQUIPMENT The flat panel monitor labeled ‘Creston’ on the right-hand side of the central podium controls the vast majority of all audio and visual components in the finance lab. There are other abbreviated procedures that will be covered later in the manual. To begin operation of the control monitor, tap the screen twice. The user will then be greeted with a set of controls, intuitively designed to allow the user to present desired material to the rest of the classroom. A. Presets On the left hand side of the control panel, a set of six instructor presets are available to alter the default display settings. For the most part, this feature will be restricted to professors using the lab to teach their courses. A student who runs into a technical issue can use the preset number ONE to restore the panel to its default setting. In order to store a new preset, the user must engage the store button below the listed presets and arrange the display functions to their preference. Again, this function should not be used by students as they should not be saving over saved instructor presets. B. Monitor Controls Below the presets, are a set of monitor controls that allow the user some functionality in display capabilities. From here, the user can clear the two large plasma screens to the right and left of the central podium if they are currently being used to show 2 screens simultaneously. More specifically, if the split monitor function is engaged so the one screen is divided into 2 images, then the monitor controls here can be used to clear the split plasma screen. In addition, the user is able to use the ‘All On’ and ‘All Off’ buttons in the monitor control portion of the panel. This feature can be particularly useful when the user would like to cancel any display session and return the classroom’s attendance to the central podium and/or marker board.
  3. 3. C. Outputs The main outputs that the majority of users will be most concerned with are: left wall plasma, right wall plasma, left near LCD, left far LCD, right near LCD, and right far LCD. These are controlled from the central panel of the control screen. When the user selects the appropriate output, they are then able to designate which input they would like to display. The main inputs are as follows: PC left, PC right (podium), laptop docking station, alternative laptop docking station, Bloomberg left, right and center, VCR/DVD (television) and the room’s security camera. D. Inputs In order to display a particular screen on the desired output, the user must first select the output by pressing the button with their finger. This will prompt them whether they are using the Scene A (blue) or Scene B (yellow) inputs. From here, the user simply selects which input they would like to use on either the upper or lower portion of the screen. For example, if the user wanted to display the center console of the Bloomberg terminal on the right plasma at the front of the room, then all they would have to do is press the ‘Right wall’ output button then press the ‘Bloom center’ button. E. Program & Speech Volume The audio can be controlled as well from the control panel on the right hand side of the podium. In the upper right hand portion of the screen, the user has the ability to control the program volume. They can use the arrow buttons to toggle up or down or use the mute button to shut off the volume immediately. Below the program volume is the speech volume control which allows the user to control the volume level that is produced from the microphone to the left of the Crestron control monitor. F. Other Ways to Use Display An alternative method to using the control monitor on the podium is to use the smaller control panels located next to each particular output. For example, for the large wall plasmas, these control panels are immediately to the side. By simply pressing the appropriate button you can send a particular input to that desired output. The control panels for the 30” Dells are located on top of the individual pods. If the user wanted to display the left PC on the left near LCD, then they would simply press the ‘PC L’ button on the leftmost pod. G. Displaying TV on Dell 30” LCD’s The large plasmas can display the television through the Crestron monitor; however, the Dell LCD’s settings need to be changed to display the television. In order to change the LCD’s settings, press the leftmost button on the bottom of the Dell television. The default setting is for PC analog. We need to cycle through and select Composite. Use the Channel Up/Down arrows to cycle through until Composite is reached. Then hit the second button from the right to select your choice. Once Composite is selected, the television can now be viewed from the Dell LCD’s.
  4. 4. H. Locking Output Controls It is important to utilize the lock function on the output portion of the control monitor. If you press a particular output three times, then the output itself will lock and cannot be overridden by a change in the ordering of the output. For example, if you want to display different inputs on both the left near and left far monitors, you have to display your input of choice on the left near monitor, lock it, then repeat for the left far monitor. III. BLOOMBERG Bloomberg is a host to thousands of sources of information. It is split generally into the twelve categories that can be seen on keys F1 through F12. By pressing one of these keys and then GO (the enter key), it takes the user to a general screen for that category (Equity or Corporate Bonds, etc). Users are able to click through the different options to try and find what they are looking for. There is always a search function at the top of the category in the red area that allows a more specific search within that category. At the very top of the screen is an entry space for a Bloomberg wide search that will encompass all categories. If at any time the user wishes to go back to previous pages, typing LAST and then GO will bring up the last 8 functions performed. Some of the more common functions will probably relate to the finding of non-equity securities (bonds, commodities, etc). If the user does not know the ticker or symbol for a specific security then pressing the category key and then GO is the best option. A. Searching Every category has a finding security option (usually the #1). Using Commodities as an example: Once the user goes into finding securities, there is the ability to do a straight ticker look up or to browse via a contract table menu as well as 10 other search functions. By choosing the search function best suited to the user, it will enable him/her to customize the best search. B. Price Graph In order to display a price graph directly from the introduction screen, the user needs to know the ticker. If the ticker was acquired through a search process then there is probably a host of menus available to the user that will enable them to click through what is best. Example: By searching for Sugar in the Commodity category, I have clicked on and brought up the general options for that security. This means that I can click on different options such as Today’s Markets, Historical Prices, Intraday Graphs, etc. Thus, the user does not have to know the quick key to get to a specific graph. If the ticker is known then to bring up a graph type: the TICKER the CATEGORY and GPO then GO.
  5. 5. Example: IBM EQUITY GO will bring up a historical price graph of IBM common stock. The user can then pick which type of graph at the bottom is best suited for the analysis. There is always the ability to customize screens in Bloomberg and users can click on the Graph Template tab to utilize this ability. When Users are on the Security Page (he/she has either typed in or searched for a security and he/she is at the main option page) the last option will allow the user to view a list of all the functions available alphabetically. To view which exchanges we have real time data for, type EXCH and press the GO key To get to the main menu at any point type MAIN and press the GO key C. Stocks To display the top news headlines relating to stocks type TOP STK and press the GO key If you are looking for information on a specific stock: 1. Type the stock symbol or the company name 2. Press the EQUITY (F8) key 3. Press the GO key Once the information is up you can use any of the following shortcuts by typing the letters and pressing the GO key or you can use the menu on the current page to navigate by typing the number of the section you want and pressing the GO key: • DES background information and financial data • RELS comprehensive overview of the company • BQ key price and trade data • ERN earnings-per-share summaries • DVD  dividend history • EE  earnings projections • FA  financial analysis • ANR  list of analyst’s recommendations D. Equity Futures and Options Type CEPR to display a menu of futures and options exchanges or CTM for a list of contracts and then press the GO key. E. Interest Rate and Credit Swap Type IRSM followed by the GO key to display a menu of functions used for analyzing interest rate swaps and derivatives.
  6. 6. Typing USSW followed by the GO key will allow you to monitor current interest rate swap data. F. IMF Information and Trade Balances In order to find IMF information as well as trade balances and current account balances type the letters ECST and then hit the <GO> key. A screen with a list of countries and their corresponding flags will appear. Once the user clicks on a country another menu will appear. Each menu is different because each country has different information; however, they are all pretty self- explanatory. Most countries have a section for trade balances. Through this display the user is able to retrieve different economical statistics for the country including GDP, BOP, CPI etc. IV. REUTERS A market data provider with an emphasis on news. A. Feed Status Indicator, located on top right-hand corner of screen: Green Circle: Indicates a live feed on incoming data. Red/Yellow Circle: Indicates feed is down. Contact administrator. B. Personal Navigator Tool Tabs • Color coordinated and located horizontally along the top portion of the screen (i.e. News, Equities, etc…) • Scroll down menu for each. • Able to get news for different sectors. • Scrolling Ticker at Top of screen, just below Navigator Tool bar. C. Market Statistics Display Box • Double-click each ticker to obtain more information. • Double-click box to switch between point change and percentage change. D. Athena Expert Right Click- Clear Chart Then just type in symbol to bring up chart. Or Drag a ticker symbol to feature in order to chart Lower right hand corner right click to change time frequency (i.e. tick, 5 minute, 1 month) Double Click lower right hand corner to change time period displayed (i.e. 1 year, 5 year) User has the ability to scroll through multiple listings using page up and page down. This feature can be accessed by separating ticker symbols with a caret ^ in the white input box. (For example msft^IBM^c.) + [ticker] adds a second company to the chart. To add an index to data screen, press the plus sign and the code (DJI- the Dow).
  7. 7. +spx adds S&P 500 To get both tickers to appear in similar screen right click on axis- Properties – Price Axis. Then click on Plot tab, and move one data set to the other side. Or if you want to show percentage changes Right click on axis – Properties – Price Axis. General tab click percentage.
  8. 8. To add in different panes use “/ “, to add in a second pane use “//” and to add in a third pane use “///”. Panes can be added using the right click menu and click on add pane. Right click-tools-copy to clipboard Chart Image as Bitmap Will copy actual chart to Excel Data Content as Text Copies only the data in Table form
  9. 9. data.high data.low data.close data2.high data2.low data2.close 2/28/2005 0:00 26.1 26.12 26.01 26.06 49.3 49.99 48.75 49.37 1/31/2005 0:00 26.8 27.1 25.64 26.28 49 49.3 47.25 49.05 12/31/2004 0:00 26.95 27.44 26.679 26.72 45.03 49.06 44.93 48.18 11/30/2004 0:00 28.15 30.2 24.86 26.81 44.45 47.1 44.21 44.75 10/31/2004 1:00 27.81 28.89 27.55 27.97 44.47 45.18 42.1 44.37 9/30/2004 0:00 27.24 27.79 26.74 27.65 46.57 47.47 43.54 44.12 8/31/2004 0:00 28.29 28.55 26.85 27.3 43.55 46.81 42.99 46.58 7/31/2004 0:00 28.68 29.65 27.25 28.49 46.5 46.75 43.55 44.09 6/30/2004 0:00 26.11 28.8 25.86 28.56 46.46 47.62 46.06 46.5 Right click- add analysis Adds in studies. Use help if you don’t know what they are. Right click – Help Athena Help is very good. E. News Screen Left column tells user the news source. Double click the article and separate window appears where each article can be read. To look at a category of news articles, right click “symbolist,” click LOAD, then chose. F. Time & Sales Screen Gives an overview of trades as they occur. G. Market Watch • Provides user with real time prices of securities. • To add, right click, go to templates, and add (volume). o Green: Up Tick o Red: Down Tick o White: Flat • Double click on grey bar able to change template of Market Watch • To create individual market watch list: o Right click  Symbol List  New o Start typing symbols. • To find an index or a pre-formulated template: o Right click symbolist, then load o Browse through. • To see more tickers:
  10. 10. o Right click  Properties  Market Watch o Make rows & column numbers higher. • News stories for individual stocks can be brought up by clicking on the N next to each stock. • Use the space bar to add a space in the market watch list. • “Control C” and “Control V” to allow user to copy and paste into Excel. • Right click in market watch screen, click symbolist, & click Save in order to save. H. Dyna Q1 • ZoomDynaQ shows market depth and order book information for order book stocks. • Shows how a stock is trading, shows best bid price and best ask price. I. Look-Up Able to look up companies symbols using the look up box J. Excel Updates Able to update excel spreadsheets with live information. • Add in Statistics you want (hi, lo, close, beta, div) • Always keep top left cell blank (i.e.- A1) hi lo close beta div BFus;AA 29.58 29.34 29.55 1.4 0.15 BFus;AIG 70.96 69.39 70.96 1.24 0.125 BFus;AXP 55.05 54.79 54.98 1.1 0.12 BFus;BA 54.4 54 54.36 1.11 0.25 BFus;C 49.5 49.18 49.36 1.15 0.44 BFus;CAT 91.35 90.91 91.24 1.15 0.41 BFus;DD 50.01 49.64 49.99 0.96 0.35 BFus;DIS 29.57 29.32 29.43 1.32 0.24 BFus;GE 36.23 36.07 36.22 1.09 0.22 BFus;GM 36.92 36.62 36.75 1.08 0.5 BFus;HD 42.03 41.86 41.99 1.13 0.085 BFus;HON 38.1 37.79 38.09 1.23 0.2063 BFus;HPQ 21.43 21.04 21.34 1.37 0.08 BFus;IBM 93.1 92.7 92.92 0.94 0.18 • Click the blank cell above the first quote and then click Reuters tools. • A drop down menu appears click on the symbol table option and the chart will be updated • Companies may also be dragged in from the market watch lists K. Portfolio • Reuters has a portfolio feature, which allows the user to input a number of stocks • Able to save entire workbook using the save workbook function. L. Calculating and Researching Beta 1. Double click on background of Reuters window bringing up the display screen.
  11. 11. 2. Choose Analytics and click OK. 3. To display beta for stock with symbol (sym), type sym[beta at bottom of screen. 4. Other commands: Examples us;MSFT[BETA Beta analysis of an American stock to S&P500 jp;7235[BETA Beta analysis of a Japanese stock to TOPIX MSFT[BETA;5 Uses 5-day price change instead of the default 1-day price change MSFT[BETA;2]/WK Uses 2-week price change M. Correlation of Two Stocks Click on Sectors tab on the top (colored tabs) – Correlation to Industry Then change tickers: us;spx/sc/sym:us!0/se2/ti/ts SPX change to [company ticker] us!0 change to [company ticker] hit enter N. Bond Duration Bond Analytics-type in corporation, choose an offering and look under Vals Example: Ford Ford Motor Co F-7.73-0905 Under Hist Tab: Choose Frequency and Date Range, click Display Click save to save as .CSV
  12. 12. V. FIS Five Common Tasks for the FIS database 1. Print out (or save to an Excel file via the CSV format) a Financial Profile for an individual bank holding company (BHC). 2. Compare and contrast the BHC obtained in task #1 above with its relevant peer group over the past 3-5 years (based on asset size and / or geographic region). 3. Perform a hypothetical merger analysis by merging two BHCs and then generating a financial analysis of the combined entity. 4. Compare and contrast the top 10 BHCs in the U.S. (or within a specific state) over the past 3-5 years. 5. Aggregate relevant financial performance data (by peer group or state) and perform trend / ratio analysis with these data. (For example, you can look at the trend in average ROE and ROA for all banks with assets greater than $50 billion.) Holding Company Analyst HTTP download: Holding Company Analyst FTTP download: VI. SDC PLATINUM
  13. 13. 1. Click Login 2. Enter: iraft 3. Enter whatever project description you want For Capital Issues (Raising Money) 1. Select Global New Issues tab 2. Select relevant markets to search 3. Again select relevant types of securities (Click Select All Items to choose everything) 4. Depending on your company choose a date range. (Most recent date must be 1 month prior to current date) 5. To select by company, select top selection of Issuer/Borrower & Subsidiaries 6. Type in company name not symbol 7. Select relevant company from list by double clicking on company and hit OK 8. If that is the only company to search hit Close 9. To get the most comprehensive report for issuance details select League from the top 10. Select Managing Underwriters by double clicking 11. Enter titles if you wish and hit OK 12. Click Execute and wait for the information to be retrieved 13. To see deal specifics, click on any manager or go to bottom and click on subtotal to get a list of all deals with information 14. To see specific information, double click on deal itself All of these are printable