In your first term from October to December, you will take the following core modules.

  • Principles of Financial Intermediation

    This module familiarises students with ten fundamental questions in financial intermediation to conceptualise the role of banks for the economy and understand how bankborrower relationships and regulation affect bank performance using research papers. The objective of this module is to equip students with the skills to deploy econometric techniques in the context of research questions applied to the banking industry. This module assumes that students comprehend the foundations of corporate finance, monetary policy, and applied econometrics.

  • Foundations of Financial Markets

    This module will initially introduce students to core concepts in finance like time value of money, net present value analysis and alternative investment rules to assess investment decisions taken by firms and then moves on to the introduction of basic concepts related to financial markets, including definitions of key assets and market types as well as an understanding of the economics of financial markets with a focus on their functions, participants and organisational forms.

    This module will then provide students with a good understanding of fundamental theories and techniques in finance that are of concern to all financial market participants, such as bond markets and term structure of interest rates, economics of derivatives markets, forward and future contracts, swap agreements. The module will place a particular emphasis on understanding how quantitative methods and techniques are used in financial markets.

  • Macroeconomics for Money, Banking and Finance

    The course introduces state-of-the-art methods in macroeconomic analysis with a particular focus upon issues that matter for economic and financial stabilization. We will use these techniques to examine the role of central banks and governments, as well as contemporary issues such as restrictions imposed by the zero lower bound, and the effectiveness of monetary and fiscal policies in a liquidity trap. We will also investigate optimal stabilization policies along the business cycle, including the role of unconventional fiscal and monetary policies such as temporary tax measures, forward guidance and negative interest rates.

    Upon completion of this course students should be able to understand: (a) the basis of micro-foundations to macroeconomic analysis; (b) the foundations of modern monetary policy theory and the role of central banks and governments in periods of economic uncertainty; (c) the workhorse New Keynesian model augmented for financial frictions and the zero lower bound; (d) the role of monetary, fiscal and financial policies in a liquidity trap. At a more hands on level, students will be introduced to methods of computer programming required to solve macroeconomic models, giving them an additional skillset to apply their theoretical understanding

  • Applied Econometrics

    The purpose of this 15-credit module is to provide students with an introduction to (1) multiple regression techniques using Ordinary Least Squares (OLS) estimation and (2) the principal microeconometric techniques used for analysing cross-sectional and panel data, with emphasis placed on those techniques that are instrumental in the rigorous analysis of banking data.

  • Topics in Banking Regulation and Financial Stability

    This module introduces students to key concepts in banking regulation and supervision so as to enable them to understand the effects of changes in regulation and supervision for banks, business activities and, ultimately, the real economy. The module draws extensively on publications by central banks and regulators. The objective of this module is to equip students with the skills to comprehend and analyse sources of instabilities in the financial system and evaluate their effect on other agents in the financial system.

During your second term from January to March, you will take the three core modules below.

  • Microeconomics for Money, Banking and Finance

    This module introduces students to those aspects of microeconomics upon which the modern understanding of financial markets, asset-price determination, and financial intermediation is built.

  • International Money and Banking

    The first four sessions aim to establish an understanding of banks' behaviour and balance sheets, including capital structure, lending decisions and attitudes to risk. These sessions also study the banks’ role in transmitting the monetary policy decisions of the central bank, ie the choice of official interest rates and ‘quantitative easing’. This enables a discussion of the effects of monetary and fiscal policy on the main macroeconomic variables. Session four looks at the origins of the financial crisis and the policy responses.

    Sessions five to seven cover developments in international banking regulation before and since the crisis. This includes the regulation of capital and liquidity under the Basel accords, the attempts to address the moral hazard and the ‘too-large-to fail’ problems, and the influence of regulation on the shadow banking industry.

    The final three sessions study banking and monetary policy in the international context, with a particular focus on problems in the eurozone and the operation of the Eurosystem of central banks.

    In this course, the treatment will generally be non-technical and will be based on developing an understanding of institutional practices and their implications.

  • Market Risk Forecasting and Control

    The aim of the module is to provide students with the hands-on time-series skills to competently estimate, test and interpret market-risk forecasting and control models & techniques which are required in the current regulatory environment: Value-at-Risk, Expected Shortfall, backtesting, extreme-value distributions, and copula models.

You will also take a further two modules from the optional modules below.

  • Advanced Corporate Finance

    This module builds on and extends the concepts covered in the core financial management module in the first term. The major topics covered include capital budgeting, capital structure, corporate valuation, corporate restructuring, merger and acquisitions, dividend policies, and application of real options in corporate finance. The analytical tools and financial theories discussed in the module are brought together through in an assessed report for which you work in groups to undertake comprehensive corporate finance analyses on a real company.

    In lectures we will use cases based on real companies to demonstrate the links between the various areas of corporate finance. A key objective of the module is to help you explore how the financing and investment policies of firms interact with each other and how the decisions have implications for corporate valuation.

    This module contributes to the following CFA syllabus areas:

    • Corporate Finance (CFA levels I and II)

  • Advanced Investment Management

    The aim of this course is to equip students with the tools necessary to enable them to make the core investment management decisions that managers face on a daily basis as well as the knowledge as to where they can find the information necessary to apply those tools. This course covers fundamental concepts and key issues in asset pricing; modern portfolio theory and its applications; equilibrium theories of asset pricing; portfolio performance evaluation; mutual funds and hedge funds.

    By the end of the course you should be able to:

    • Discuss the theory and applications of the modern portfolio analysis and understand their strengths and limitations.
    • Trace the efficient frontier under different conditions.
    • Construct the optimal portfolio for an individual or for funds with specific goals.
    • Solve real-world problems with asset pricing models.
    • Develop techniques to evaluate the performance of money managers.
    • Understand the debate questioning the efficient market hypothesis.
    • Comprehend the structure and objectives of mutual funds, closed-end funds and ETFs and identify when they are appropriate.
    • Understand the characteristics of hedge funds, and the variety of hedge fund strategies and styles.

  • Derivatives Pricing

    This module provides extensive coverage of methods used for valuing derivative securities in the investment banking industry, and includes an introduction to stochastic calculus.

    Topics covered include:

    • Discrete-time vs. continuous-time finance

    • Arbitrage pricing

    • Continuous processes

    • Stochastic calculus and Itô’s lemma

    • Hedging issues

    • Investment in derivatives

    • Continuous dividends

    • Black and Scholes model

    • Interest rate derivatives

    • Exotic derivatives

    This module contributes to the following CFA syllabus areas:

    • Derivative Investments (CFA levels I and II)

  • Fixed Income Markets

    Designed to develop your understanding of the principles governing the valuation of fixed income securities and their derivatives, this module examines the main problems and selected issues relevant in the management of interest rate risk, and the organisations and structure of debt markets. Topics covered include debt securities and markets, the measurement of interest rate risk, and embedded options and interest rate derivatives.

    This module contributes to the following CFA syllabus areas:

    • Debt Investments (CFA levels I, II and III)

  • Financial Econometrics

    This module explains how econometric methods can be used to learn about the future behaviour of the prices of financial assets by using the information in the history of asset prices and in the prices of derivative securities. It also gives you practical experience of analysing market prices.

    It will help you to understand the important features of time series of market prices, appreciate the relevance of efficient market theory to predicting prices, and make you familiar with appropriate methods for forecasting price volatility. You will also learn how to use option prices to make statements about the distributions of future asset prices, gain experience of applying computational methods in Excel to stock market and currency prices, and develop your knowledge of a broad range of econometric methods that are applied in finance research.

  • Financial Markets and Investment Management

    The financial markets and the world of investment management has undergone significant change since the global financial crisis. Investment managers need to keep abreast of these developments and take advantage of such changes. This module introduces the key changes in market condition, including high frequency trading, dark pools and the move to bring off exchange instruments such as credit derivatives, on exchange. Within the world of investment management we look at developments in liability-driven investment, alternative investments and new approaches to diversification.

    The key objectives are to

    • Endow students with an understanding of today’s financial markets, trading processes and decision making (also on a high-frequency level)

    • Endow students with the concepts and ideas of advanced portfolio analysis

    • Endow students with an understanding of the subtleties of investment decisions and dealing with clients

    • Endow students with the relevant quantitative skills in this area for further advanced studies

  • Investment Research Methods

    The purpose of this module is to give students a very solid grounding in the quantitative empirical research skills that are necessary in producing high quality research, both in the academic as well as in the applied context, in the areas of empirical asset pricing and portfolio allocation.

  • Behavioural Finance

    This module looks at what can happen to the asset pricing in situations where market imperfections coincide with imperfections in investor rationality. It therefore explores the boundary between mispricing which can be exploited and that which cannot be exploited profitably.

    The module lays foundations for arbitrage, investment and wealth management, investment banking, and corporate finance. The material covered is at the frontier of academic and industry research, forming a conceptually advanced body of knowledge (CFA level III) which is of relevance for theory, research and practice.

    Topics covered include:

    • The efficient markets hypothesis and competing theories

    • Limits to arbitrage

    • Heuristics, biases and prospect theory: mental accounts and evidence in market prices

    • Myopic loss aversion, disposition effect and overtrading

    • Professional investors and analysts: over- and under-reaction

    • Bubbles: observational and experimental, rational and non-rational

    • Closed-end fund discounts, co-movement and sentiment

    • The equity premium puzzle and the volatility puzzle

    • Herding

    • Behavioural portfolio theory

From May to July you work solely on your Masters dissertation, with support from your dissertation supervisor. You will submit it at the start of September, at the end of your Masters programme.

  • Dissertation

    The final element of the MSc is the dissertation, a substantial piece of independent work conducted over the summer months through to September. The dissertation gives you the opportunity to apply research techniques and relevant economic theory to a research topic.