Analyzing Capital Markets Using Economic and Valuation Models Course

Lesson 1 • Capital Market Structure and Participants

Defines primary vs. secondary markets and maps key participants. Establishes the institutional framework needed for all subsequent valuation work.

Lesson 2 • Market Data and Price Mechanics

Explains how prices form, how quotes are structured, and how volume and open interest are interpreted. Grounds students in reading live and historical market data.

Lesson 3 • Core Asset Classes Overview

Surveys equities, fixed income, derivatives, and alternatives. Provides the asset-class vocabulary required for cross-market analysis throughout the course.

Lesson 1 • Global Trade, Capital Flows, and Exchange Rates

Links current account balances, capital flows, and currency movements. Equips students to assess cross-border valuation effects and carry trade dynamics.

Lesson 2 • Inflation Dynamics and Price Indices

Examines inflation measurement, drivers, and transmission to asset prices. Prepares students to adjust valuations for real vs. nominal return differences.

Lesson 3 • GDP, Growth, and Business Cycles

Breaks down national income accounting and cyclical phases. Connects expansion and contraction patterns to sector rotation and risk appetite.

Lesson 4 • Monetary Policy and Interest Rate Transmission

Analyzes central bank tools and the rate transmission mechanism. Enables students to anticipate how policy shifts reprice fixed income and equity markets.

Lesson 1 • The Yield Curve and Term Structure

Explains yield curve shapes, theories, and forecasting power. Connects term structure analysis to macroeconomic expectations and monetary policy positioning.

Lesson 2 • Bond Pricing and Yield Measures

Derives present-value bond pricing and distinguishes yield measures. Provides the quantitative foundation for all fixed income valuation and comparison tasks.

Lesson 3 • Credit Risk and Spread Analysis

Introduces credit ratings, default probability, and option-adjusted spreads. Prepares students to price credit risk and compare bonds across the quality spectrum.

Lesson 4 • Duration, Convexity, and Interest Rate Risk

Quantifies price sensitivity using Macaulay and modified duration plus convexity. Enables students to hedge and manage interest rate exposure in bond portfolios.

Lesson 1 • Weighted Average Cost of Capital

Constructs WACC using market-value weights and component costs. Demonstrates how capital mix changes alter the hurdle rate for investment decisions.

Lesson 2 • Cost of Equity Estimation

Applies CAPM, Fama-French, and build-up methods to estimate equity return requirements. Provides the discount rate inputs critical for DCF and DDM models.

Lesson 3 • Capital Structure Theory and Optimization

Contrasts Modigliani-Miller propositions with trade-off and pecking-order theories. Guides students in identifying the value-maximizing debt-equity mix for a firm.

Lesson 1 • Dividend Discount Models

Applies Gordon Growth and multi-stage DDM to dividend-paying stocks. Demonstrates how payout policy and growth assumptions drive intrinsic value estimates.

Lesson 2 • Relative Valuation and Multiples

Uses P/E, EV/EBITDA, P/B, and other multiples for peer comparison. Teaches students to select appropriate multiples and adjust for differences in growth and risk.

Lesson 3 • Discounted Cash Flow Valuation

Builds DCF models using projected free cash flows and WACC. Connects capital structure decisions to the cost of capital and enterprise value output.

Lesson 4 • Financial Statement Analysis for Equity

Extracts value-relevant data from income statements, balance sheets, and cash flow statements. Builds the analytical inputs required for all equity valuation models.

Lesson 1 • Swaps and Interest Rate Derivatives

Values plain-vanilla interest rate and currency swaps using present-value methods. Shows how swaps transform cash flow profiles and manage duration exposure.

Lesson 2 • Greeks and Options Risk Management

Quantifies delta, gamma, vega, theta, and rho for portfolio risk control. Enables students to construct delta-neutral positions and manage options books dynamically.

Lesson 3 • Volatility Surfaces and Implied Volatility

Analyzes implied volatility skew, term structure, and the VIX. Connects volatility dynamics to options pricing anomalies and market sentiment signals.

Lesson 4 • Options Pricing Fundamentals

Introduces binomial trees and Black-Scholes-Merton for option valuation. Builds intuition for how volatility, time, and moneyness drive option premiums.

Lesson 1 • Performance Attribution and Evaluation

Decomposes portfolio returns into allocation, selection, and interaction effects. Provides the analytical tools to evaluate manager skill and benchmark-relative performance.

Lesson 2 • Hedging Strategies and Overlay Management

Designs equity, currency, and duration hedges using futures, options, and swaps. Integrates derivative tools from Chapter 6 into a portfolio-level risk management framework.

Lesson 3 • Modern Portfolio Theory Essentials

Applies Markowitz mean-variance framework to construct efficient frontiers. Establishes the diversification and risk-return trade-off principles underlying all portfolio decisions.

Lesson 4 • Value at Risk and Tail Risk Measures

Calculates VaR using parametric, historical, and Monte Carlo methods. Extends to conditional VaR and stress testing to capture non-normal tail exposures.

Lesson 1 • Scenario Analysis and Stress Testing

Constructs macro scenarios and maps them to portfolio P&L impacts. Prepares students to communicate tail-risk exposures and contingency plans to investment committees.

Lesson 2 • Investment Thesis Construction and Presentation

Structures a full investment thesis from macro context through valuation to risk. Develops the communication skills needed to present recommendations to senior stakeholders.

Lesson 3 • Market Timing and Tactical Signals

Evaluates valuation, sentiment, and technical signals for tactical positioning. Teaches students to combine quantitative and qualitative inputs into short-term market calls.

Lesson 4 • Quantitative Screening and Factor Investing

Builds systematic screens using value, momentum, quality, and low-volatility factors. Connects factor theory to portfolio construction and live signal generation.