The demand for specialists in finance and economics continues to increase in a steadily globalising world. This demand exists across a host of institutions that range from policy-making authorities such as central banks and international organisations to commercial banks and brokerages. This programme is designed to meet this demand, by combining a solid training in economic theory with a practical exposure to the field of finance through a variety of specialised options.
The programme is unique in the three-way link it creates between economic theory, quantitative methods and finance. The range of electives as well as the coverage of topics within each of the core areas consistently reflects this link. Both the programme design and its delivery draw upon the department’s expertise in the areas of economic theory, econometrics, financial theory, mathematical finance, corporate finance and regulatory economics. In particular the possibility of combining exposure to regulatory and policy aspects of finance with a thorough training in theory and quantitative methods is one of the most exciting aspects of this programme. The Economics department at City University, with a highly successful MSc in Economic Regulation and Competition already in place, is uniquely placed to provide such a combination to students of financial economics.
The programme will start by building foundations in the principles of finance along with core economic topics in microeconomics, macroeconomics and econometrics, especially in the latter's interaction with finance. It will then allow for elective study, through a choice of taught options as well as through reading and research for a supervised dissertation.
Modules: MSc Financial Economics
Students take four core modules in period one. In the second period, students take one further core and two elective modules along with a Research Methods Seminar to help with their project research on an appropriate area of financial economics. All students are required to submit a dissertation on their project of no more than 10,000 words.
Core Modules (compulsory)
ECM016 Economics of Financial Markets
ECM014 Topics in Corporate Finance
ECM012 Financial Econometrics
ECM013 Financial Derivatives
ECM018 Financial Economics Project (Dissertation)
ECM023 Asset Pricing
Elective modules (choose two from the list)
ECM011 International Money and Finance
ECM019 Numerical Methods for Financial Economic Analysis
ECM020 Financial Regulation
ECM011 International Money and Finance (20 Credits)
This module is designed to extend and deepen students' understanding of key issues relating to finance in open economy contexts. Many of the issues covered, such as the impact of financial market integration on a country's monetary autonomy are of vital importance to policy makers and an advanced exposure to these issues will help prepare students for the challenges of careers in the financial industry as well as in government and multilateral bodies.
ECM012 Financial Econometrics (20 Credits)
This module studies the statistical properties of financial time series. These properties have motivated in the last two decades the development of specific econometric models to describe and forecast the dynamics of such time series. This module reviews the various methods found in the literature stressing the use of innovative procedures to model the distribution of financial returns, dynamics of volatility and cross-dependence and the use of modern software. Applications of these techniques are found in Risk Management, Portfolio Theory and Financial Engineering.
ECM013 Financial Derivatives (20 Credits)
We introduce the students to the concepts and techniques of arbitrage pricing in discrete and continuous time. We review some basic probability concepts, and introduce the techniques of change of measure and numeraire. We discuss the risk-neutral valuation principle in multiperiod securities markets, with applications to options, futures, bonds and interest rate derivatives. We study the necessary tools of stochastic calculus including Ito's lemma and Girsanov Theorem and derive the Black-Scholes equation for vanilla options. We generalize to the case of stochastic interest rate and introduce the most popular short-rate rates models.
ECM014 Topics in Corporate Finance (20 Credits)
The aim of the module is to familiarize the students with the advanced topics in corporate finance such as cash flow analysis under uncertainty, evaluation of investment opportunities, optimal capital structure in different market environments, bankruptcy, dividend policy, conflict of interest between groups involved in decision making, and issues of asymmetric information and agency problems. The module pays special attention to the real option approach to strategic management which applies financial options theory to investment decisions under conditions of uncertainty.
ECM016 Economics of Financial Markets (20 Credits)
The module is one of the building blocks of the programme. It familiarises students with key concepts in the field of finance and provides an introduction to the functioning of financial markets. The module follows by exploring money and capital markets and explaining different investment instruments traded therein. An important part of the course entertains the role of interest rates in debt markets and the no-arbitrage valuation of bonds. The module finishes with the introduction of financial derivatives. This includes understanding no-arbitrage pricing techniques for swaps, forwards and futures derived from debt markets, and for stock options from equity markets.
ECM017 Macroeconomics (20 Credits)
Macroeconomics relates the consequences of individual decisions and actions to aggregate outcomes and this is particularly important for the conduct of finance in a globalising world. The module is designed to focus on macroeconomic issues facing central banks as they attempt to pursue macroeconomic stability.
ECM018 Financial Economics Project (40 Credits)
The aim the project is for the student to learn the skills required to undertake a piece of independent research and familiarise themselves with recent academic research in their chosen area. The student will also learn various sources of economic research and data.
ECM019 Numerical Methods for Financial Economic Analysis (20 Credits)
Many problems in Financial Economics require some calculation. Most of these can be performed with very easy input and output usuing the facilities provided by Excel, which is widley used in business. This module covers key aspects of computer and IT based methods for financial calculations. It teaches students how to use Excel, combined with and Visual Basic for practical computations which implement the basic theories of finance.
ECM020 Financial Regulation (20 Credits)
Banking, securities, and personal finance markets operate in a variety of regulatory frameworks. This module aims to develop a critical understanding of the rationale and objectives of financial regulation and its impact on the operation of markets. We consider the regulation of systemic risk exposure, financial market cleanliness, and consumer protection.
ECM022 Microeconomics (20 Credits)
This module is designed to provide students with an intermediate level of microeconomics. The topics covered are the theory of the consumer and the theory of the firm, as well the basics of the market equilibrium.
ECM023 Asset Pricing (20 Credits)
The cource provides and overview of the central topics in Asset Pricing and the Portfolio Theory, with a particular focus on the relationship between asset princing and macroeconomic issues.
ECM108 Econometrics (20 Credits)
The module is desinged to provide the students with an advanced level of applied econometrics and economet theory.
Teaching and learning
Students take four core modules in the first term. In the second term, students take one further core and two elective modules along with a Research Methods Seminar to help with their dissertation research. In the last term, students work full time on their project with the help of an assigned supervisor.
Part-time students take a total of four modules in the first year, and the remaining three modules plus the Research Methods Seminar in the second year. Work on the project starts in the second year.
The programme will be delivered through a flexible combination of lectures, class and computer lab sessions. Lectures will be used to introduce key theories, concepts and economic models. In classes the student will have the opportunity to solve financial problems and numerical exercises, to analyse case studies, to make presentations of research published in academic journals. The computer labs will provide students with the practical experience of using computer software to perform calculations and conduct realistic simulations. In addition, econometric methods will be taught in lab sessions, thus students will have the opportunity to apply econometric software to empirical research and financial market estimations. When appropriate "practitioner slots" will be incorporated into module delivery, like research seminars conducted by external financial experts, presentation by invited academics, etc. Pre-session induction courses on economic analysis will be offered for those students who need to build up their backgrounds on fundamental aspects of financial economics. In addition, a compulsory 10 hour research methods seminar will be offered in the second term to help students prepare for independent research on a dissertation topic.
Each taught module will be assessed through a combination of assigned coursework, the nature of which will vary according to the module, and one final examination.
All students are required to submit a dissertation of no more than 10,000 words on an appropriate area of financial economics. Work on the project will start in period two, with a research methods seminar which will help students develop the necessary skills for undertaking independent research. Also in period two, students will choose a topic under the guidance of their project supervisor and will write a preliminary report on their topic, consisting of a literature survey and an exegesis of a research paper (maximum 1500 words). In the summer term, students will work full time on completing the final dissertation, which will be due by the end of September.