Master of Financial Economics

Masters in Financial Economics

[https://www.aeaweb.org/resources/students/schools Alphabetical list of US graduate programs in economics]

are usually one to one and a half years in duration, and typically include a thesis or research component.

The nature of the degree differs by university. Generally, the degree is largely theoretical, and prepares graduates for research positions, for doctoral study in economics, or for roles in applied economics.

[http://business.slu.edu/programs-of-study/graduate-business-programs/ms-in-applied-financial-economics/ MS in Applied Financial Economics], John Cook School of Business, Saint Louis University

Some are positioned as professional degrees, preparing graduates for careers

Georgina Torbet (2021). [https://inomics.com/advice/top-career-paths-financial-economics-1162590 Top Career Paths: Financial Economics], INOMICS

in investment banking and finance,

{{cite web |url=http://web.ysu.edu/gen/class/Graduate_Program_m51.html |title=Economics Department, College of Liberal Arts and Social Sciences, Youngstown State University |publisher=As.ysu.edu |date= |accessdate=2010-10-19 |archive-url=https://web.archive.org/web/20111224055215/http://web.ysu.edu/gen/class/Graduate_Program_m51.html |archive-date=2011-12-24 |url-status=dead }}[https://le.ac.uk/courses/financial-economics-msc Financial Economics MSc], University of Leicester

and are comparable to the Master of Science in Finance, though with an increased weighting towards economic theory. In some cases, programs are substantially quantitative

{{cite web |url=http://spears.okstate.edu/finance/degrees/msqfe |title=MS in Quantitative Financial Economics |publisher=Spears.okstate.edu |date= |accessdate=2010-10-19 |archive-url=https://web.archive.org/web/20090315095354/http://spears.okstate.edu/finance/degrees/msqfe |archive-date=2009-03-15 |url-status=dead }}

and are largely akin to a Master of Quantitative Finance.

The curriculum is distributed between theory, applications, and modelling, with the emphasis on each differing by university and program, as outlined.

• The theory component centres on decision making under uncertainty in the context of the financial markets, and the resultant economic and financial models.[https://web.archive.org/web/20110719120650/http://mit.econ.au.dk/vip_htm/akoch/outlineEC5010.pdf Outline for ‘Financial Economics’], Royal Holloway, University of London The degree essentially explores how rational investors would apply decision theory to the problem of investment. Investment under "certainty" is initially considered (Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem). "Choice under uncertainty" is then introduced, and the twin assumptions of rationality and market efficiency lead to modern portfolio theory and the CAPM, and to the Black–Scholes theory for option pricing. Where the program emphasizes economics, the curriculum is extended: it explores phenomena where these assumptions do not hold (market microstructure, behavioural finance) and it discusses models which are further generalised (arbitrage pricing theory, continuous time finance / Martingale pricing) or extended (Multi-factor models, models of the short rate, intertemporal CAPM, Black–Litterman model). Coursework here is often titled "Asset pricing" and "Corporate finance theory". Economics focused programs (often) separately cover microeconomics and /or decision theory as foundational topics.

• Application of the economic principles includes asset allocation and valuation, and covers specific financial instruments — such as fixed income, equities, derivatives, foreign exchange — and their portfolios. The aim here is twofold: firstly, to complement the theory; secondly, providing graduates with practical market knowledge. In the economics-focused degrees, this coverage may (will) be of secondary importance, while in the professional degrees it is a major component, and often includes separate course work in (practical) corporate finance, portfolio management and financial risk management. Macroeconomics is also usually included; often though, as opposed to covering macroeconomic theory in general, the topics are applied and / or finance related with a focus on modelling and forecasting the relationships between asset classes and their expected returns.See for example: [http://www.ucc.ie/modules/descriptions/EC.html#EC6001 Macroeconomics for Financial Markets], University College Cork; [http://www.sbs.ox.ac.uk/degrees/mfe/Documents/MFE%20Programme%20Specification%20(updated%20September%202010).pdf MSc in Financial Economics], Oxford University; [http://business.cf.ac.uk/degree-programmes/economics/msc-financial-economics MSc in Financial Economics] {{webarchive|url=https://web.archive.org/web/20120229194557/http://business.cf.ac.uk/degree-programmes/economics/msc-financial-economics |date=2012-02-29 }}, Cardiff University.

• The modelling curriculum complements both of the above. The theory is augmented via the study of econometrics, financial time series and statistical modelling, with a focus on the empirical and statistical testing of economic theory,[http://www.bbk.ac.uk/study/pg/economics/TMSECFIN.html Birkbeck Financial Economics (MSc)]{{cite web|url=http://www.uj.ac.za/EN/Faculties/ecofin/economics/coursesandprogrammes/postgraduate/Masters/Pages/MComFinancialEconomics.aspx|title=MCom (Financial Economics), University of Johannesburg|publisher=uj.ac.za|date=|accessdate=2010-10-19|archive-url=https://web.archive.org/web/20141122141204/http://www.uj.ac.za/EN/Faculties/ecofin/economics/coursesandprogrammes/postgraduate/Masters/Pages/MComFinancialEconomics.aspx|archive-date=2014-11-22|url-status=dead}} and on developing and documenting new econometric models. Students are taught to model using statistical packages such as SAS and EViews - and increasingly Python and R. The applications are reinforced through the computer based implementation of the more complex problems (often including numeric methods for option pricing, Value at risk, portfolio optimization and yield curve modeling).{{cite web|url=http://www.city.ac.uk/economics/finance/modules.html |title=City University, London - Modules: MSc Financial Economics |publisher=city.ac.uk|accessdate=2010-11-05}} Here, though, the focus is typically on the concept as opposed to the modelling, per se, and may therefore be limited to the spreadsheet environment: Computational finance is the domain of specialized degrees, although some Financial Economics programs{{cite web|url=https://www.gla.ac.uk/postgraduate/taught/financialeconomics/ |title=Financial Economics MSc - University of Glasgow |publisher=gla.ac.uk |date=2018-01-25 |accessdate=2018-01-25}} do emphasize mathematical modelling and programming.

The programs require a bachelor's degree prior to admission, but do not (usually) require an undergraduate major in finance or economics; a typical requirement is exposure to (multivariable) calculus and differential equations, statistics and probability theory, and linear algebra. Many programs include a review of these topics as an admission- or preliminary course.[http://www.socialsciences.manchester.ac.uk/disciplines/economics/postgraduate/psmaths/ Manchester's "Pre-Session" Mathematics & Statistics] {{webarchive|url=https://web.archive.org/web/20121127195449/http://www.socialsciences.manchester.ac.uk/disciplines/economics/postgraduate/psmaths/ |date=2012-11-27 }}[https://www.runi.ac.il/en/schools/rris/graduate/ma-financial-economics/ MA in Financial Economics, IDC Herzliya]

[https://www.economics.utoronto.ca/index.php/index/graduate/courseDetails/4282 Mathematics and Statistics for MA and MFE Students], University of Toronto

{{See also|Master of Finance#Comparison with other qualifications}}

There is some overlap with programs in financial engineering, computational finance and mathematical finance; see Master of Quantitative Finance (MQF). These degrees aim to train practitioners and "quants" — i.e. specialists in derivatives, fixed income and risk analysis — as opposed to economists, and their curricula are therefore weighted toward stochastic calculus, numerical methods, simulation techniques and programming, and are quantitative (well) beyond the level of the Financial Economics degree. Entrance requirements are similarly more mathematical. On the other hand, coverage of financial and economic theory, and econometrics, while significant, is comparatively secondary.[http://www.columbia.edu/cu/senate/archives/resolutions_archives/resolutions/09-10/financial_economics_res.html Resolution to Establish a Program Leading to the Master of Science In Financial Economics], Columbia University Senate As mentioned, some Financial Economics programs are substantially quantitative; these differ little from the MQF.

The overlap with general finance degrees, such as a Master of Science in Finance (MSF) or an M.B.A. in finance, is further limited, particularly where the Financial Economics program is theory oriented. These degrees are focused on financial management, corporate finance and investment management, and are practice oriented with limited exposure to the underlying economic theory. However, since these courses train graduates in the use of the models developed in Financial Economics, the theory is (sometimes) covered [https://www.usnews.com/education/best-graduate-schools/top-business-schools/articles/2015/02/09/determine-if-a-masters-in-finance-is-the-right-move Determine If a Master's in Finance Is the Right Move], usnews.com, Feb. 9, 2015. in the context of a (basic) understanding of model assumptions. Similar comments apply to professional certifications such as the Chartered Financial Analyst (CFA) designation. The Master of Finance (M.Fin.) and M.Sc. Finance, as opposed to the MSF, have a significant theory component (as well as quantitative component),{{cite web|url=https://bcf.princeton.edu/master-in-finance/|title=Master in Finance - Bendheim Center for Finance - Princeton University |publisher=Princeton.edu |date=2018-01-25 |accessdate=2018-01-25}} and largely overlap with the Masters in Financial Economics.

• Master of Finance
• Master of Economics
• Master of Quantitative Finance
• QEM
• {{section link|Outline of finance#Education}}

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Category:Financial economics

Finance

Category:Economics education