Reflective paper Financial Modelling and Business Forecasting
The financial modelling and forecast course which had three main areas covered including the introduction to forecasting, time series modelling, vector autoregressive models and vector auto-correction models was of importance in building my knowledge and skills in the financial modelling and forecasting specialization. My experience of the course was an engaging, noting the practical nature of the lecturer to allow for actual modelling and forecasting using the stata software which was well expounded.
The financial modelling and forecasting course introduction gave a general view its importance in the financial field including asset allocation, portfolio construction and portfolio risk management process. The introductory part of the course made it innovative in the sense that as a financial analyst, I was interested to know more on making accurate decisions in financial and investment analysis through the financial modelling process. The introduction of stata as the modelling and forecasting software which I had not used before was interesting to learn.
In general the course was of value addition in the following ways;
The financial modelling and forecasting course was practical in nature which is an added value as I will have an easy time during my research project after I am through with the coursework. The practical nature of the course also adds value in the financial modelling and forecasting especially in the value of stocks when calculating the expected value of return. The use of stata which is simple to use can hold a large number of values.
The course instructor allowed for independence of the financial modelling and forecasting class where through the practical nature of assignment and term paper, there is room to learn more and apply the learned skills in class. This is important for independent data analysis and interpretation which is an important skill when conducting research project later in the course. A special note is on interpretation of linear regression model using the stata summary.
The financial modelling and forecasting class changed my way of thinking of data analysis and interpretation. This was mainly on understanding the process of financial modelling through model identification, model specification and estimation and diagnostic testing. On interpretation of the fitted values of a model a major note is that if the model gives a different view of the theory the latter is supposed to hold. For example the course instructor indicated if “money supply has a positive relationship with gross domestic product based on theory”, however if the model gives a negative relationship, the theory should hold and refute the model. The importance to this is for students to conduct enough reading literature of the theory before fitting variables in a linear regression model among other models as this gives a chance to understand more about the variables and their relationships. This is essential for a research project.
However the course had some limitations in the following ways;
Along the way, the course was interested and eager to learn however, the University through the School of Business should find a way of arranging the course. The reason being that as a new student who joined in the current semester I ought a challenge of connecting the financial modelling and forecasting class as some of the terms to have been taught before in the Econometrics I and Econometrics II classes that are a precedence of the financial modelling and forecasting. For example terms like “homoscedasticity” and “heteroscedascticity” were a challenge as I had not had the same before.
The time period to cover the financial modelling and forecasting class is limited. With the practical nature of the course, there is need for more time for students to have more learning time and acquire enough knowledge and skills to utilize in data analysis and interpretation of the research projects to be done later in the course.
The wide coverage of the financial modelling and forecasting class in a period of three months is not conclusive considering the skills and knowledge I meant to gain in improving my research skills. The data analysis and interpretation process is a tedious process that requires ample time. This means well researched papers that avoids many corrections from the course instructors when reviewing the research projects, dissertations, and thesis papers.
The financial modelling and forecasting class met my expectations since I will be in a position to apply the knowledge and gained skills in my preceding units. The lesson increased my knowledge of the research process noting its wide nature and how I should handle my data in case of variances that are not corresponding with financial modelling and forecasting process. Time was limited as I was eager to learn more since the financial modelling and forecasting matches my professional career as a financial analyst in the Kenyan financial markets.