Course content
The course is delivered through a combination of lectures, classes, and computer lab sessions to ensure you have the right theoretical and technical skills.
Lectures introduce key theories, concepts, and economic models. In classes you will solve financial problems and numerical exercises, analyse case studies, and make presentations of research published in academic journals.
Lab work will give you hands-on experience of using software to perform finance-related calculations and conduct realistic simulations. Econometric methods are also taught in the lab, so you will learn to apply econometric software to empirical research and financial market estimations.
Core modules
- Asset Pricing
- Explore the fundamental techniques for valuing risky assets, and the skills required to study the research literature in this area. Become familiar with the basics of option pricing, and gain a detailed knowledge of basic mean-variance analysis and models such as the CAPM and APT.
- Economics of Financial Markets
- Explore the basic tools of economic analysis applied to financial markets: choice under risk and uncertainty; price and expectation formation; intertemporal asset pricing theory; auction theory and its relevance to IPOs; externalities and the carbon market; game theory and policy issues relevant to financial markets.
- Empirical Finance
- Study the theories and tools used in financial econometrics, including prediction, quantitative methods of asset allocation, volatility, risk modelling, and quantitative asset pricing.
- Foundations of Corporate Finance
- Examine the principles of corporate finance, review the basic analytical tools, and consider their applications to real-life problems.
- Quantitative Methods for Finance
- Develop your understanding of the mathematical and statistical techniques of market analysis. Get to grips with probability theory, calculus, and econometrics.
Elective modules
In previous years we have offered the following electives:
- Advanced Corporate Finance
- Understand the effects of asymmetric information on the financing decisions of the firm, the determinants of mergers and acquisitions, and the role of real options.
- Behavioural Finance
- Explore the role of psychological and social forces that apply to decision-making in financial markets.
- Derivative Securities
- Study various types of derivative instruments traded in financial markets, the concepts of no-arbitrage pricing and hedging, and the mathematics of the discrete-time binomial models used to price derivatives.
- Financial Engineering & Structured Products
- Explore recent developments in financial engineering and structuring, and consider the rationale and benefits of financial innovation to the various parties to a transaction.
- Financial Reporting & Statement Analysis
- Learn to interpret financial statements in context and apply appropriate models and techniques when addressing business issues. Explore how accounting provides data for corporate finance.
- Financial Risk Management
- Discover how financial organisations identify, quantify, manage, and control risk.
- Fixed Income & Credit Risk
- Explore the basic financial instruments for managing interest rate and credit risk before progressing to value and hedge with more complex tools.
- International Financial Management
- Extend the theories of corporate financial management to an international setting. Look specifically at operating and financial risks and the strategies used to minimise these risks.
- International Financial Markets
- Focus on exchange rates, and key aspects of the foreign exchange market, including market efficiency, modelling and forecasting exchange rates, and active currency portfolio management. Explore the links between monetary policy and exchange rate behaviour.
- Investment Management
- Review modern portfolio theory and investment analysis. Explore the issues involved in combining securities to construct an optimum investment portfolio, and the nature and role of derivatives in managing risk. Consider how to evaluate a portfolio, and adjust its composition, to ensure optimal performance.
- Judgement & Decision-making
- Explore the psychology of the decision-making processes involved in financial markets. Consider the origins of rationality and irrationality in financial decision-makers, strategists and managers, and financial markets, and gain an awareness of your own of biases and pitfalls.
Dissertation
A 10-12,000 word dissertation gives you the opportunity to develop, test, practise, and apply the techniques and theories you have gained through your studies. You will be supervised and supported throughout by one of our academic staff and will usually submit your dissertation in early September.
You may be offered the opportunity to undertake a project for an external organisation.
Recent external projects offered to students of our finance masters courses include:
- Corporate ALM project
- Relative Volatility Heatmap
- Can drivers of credit curves be parameterised?
- Is the single name CDS v index CDS basis a useful trading indicator?
- Assessing the importance of volatility estimation in portfolio design and risk management
- Assessing the role of statistical learning algorithms and directional prediction in asset allocation
- Optimisation of the NBS balance sheet
- Risk Aggregation in Nationwide
- Capital impacts of Sovereign Swap Spread Risk
- Pricing multi-asset options using PDE methods
- Review of the NAG Library
- Annual vs Quarterly reporting: timeliness vs level of detail
- What factor distributions are most effective in predicting future performance?
- Modelling Market Level Volatility
- Evaluation of a proprietary dataset of style equity flows
- Value investment strategies for sector/industry selection
- Quantitative analysis of fundamental news on the markets - Foreign Exchange
- Quantitative analysis of fundamental news on the markets - Euro & US Fixed Income
- The effect of interest rates and foreign exchange on stock index valuations across regions and in comparison to the greater world
- The effects of Libor shocks on companies profitability and stock price
- The liquidity effect of algorithmic trading
- Cyclicality of credit ratings