The objective of the specialization in Finance at SSE is to give the students a thorough understanding of corporate financial policies, the pricing and use of financial instruments, and financial markets.
The specialization in Finance combines a rigorous theoretical approach with extensive real-world applications. The overall ambition is to prepare the students for taking an active part in strategic corporate discussions and in the development of new products and trading practices. It will provide students with a solid academic and analytical foundation for practical decision making. The courses are designed to teach students how to apply a theoretical framework to real life finance problems. This entails making them understand how the financial markets function, why different instruments and institutions exist as well as the basis and consequences of corporate financial decisions.Students will learn how to use financial theory and methods in solving complex problems in all areas of finance. This will be accomplished through a structured learning environment where a solid theoretical understanding will be acquired during the first part of the program, and where a practically oriented problem-solving ability will be the focus of the second part of the program.
Curriculum Year 1
The mandatory first year courses of the finance specialization within the MSc Program in Business and Economics were:
- Theory of Investments (7.5 ECTS). The course deals with techniques for solving portfolio choice and asset pricing problems in a dynamic setting. After completing this course, students should be able to solve complex optimization problems with multiple assets and analyze the structure of asset returns using multifactor models.
- Corporate Finance Theory (7.5 ECTS). The course covers capital structure theory in perfect and imperfect markets, the principal/agency problem, ownership and control issues and optimal financial contracts. After completing this course, students should be able to analyze the effects of typical corporate financial decisions on the value of the firm and to suggest actions in a given setting in order to improve the decision-making process.
- Advanced Derivatives (7.5 ECTS). The course gives students an in-depth knowledge of the theory of derivatives pricing, ranging from standard equity options to complex path-dependent options and interest-rate derivatives. The course is mathematically demanding with a relatively high degree of formalism. After completing the course students should be familiar with the construction, valuation and practical use of a range of complex derivative instruments. They should also be able to apply the important concept of no-arbitrage to other areas of finance.
- Valuation and Capital Budgeting (7.5 ECTS). The course focuses on “firm valuation,” i.e., understanding how firm managers make investment and financing decisions, and the value implications of such decisions on firms, shareholders and bondholders.
- Empirical Methods in Corporate Finance (7.5 ECTS). The purpose of this course is to take Corporate Finance theory to the data. This will require a rigorous introduction to modern econometric techniques designed to distinguish causal relationships from simple correlations. In the process, the current state of the empirical debate on major issues in Corporate Finance will be presented.
- Banking and Financial Intermediation (7.5 ECTS). The course deals with key issues in banking and the role of banks and other financial intermediaries in the financial system. After completing this course the students should understand how optimal lending contracts are designed, how typical risks facing banks are managed and how systemic risks facing the banking system are analyzed and monitored by government regulators.
- Econometric Modeling of Asset Prices (7.5 ECTS). The course provides students with a toolbox of advanced empirical techniques to use in evaluating financial theories and models. The course includes topics such as time series analysis, panel data studies and ARCH/GARCH models. After completing this course, students should be able to implement well-designed empirical studies in a range of situations, and also be able to read and understand modern empirically oriented research articles.
- Debt Instruments and Markets (7.5 ECTS). The course deals with both theoretical and practical aspects of fixed income securities and their derivatives, and aims at providing an understanding of how debt instruments are constructed, valued and used in practice. After completing this course students should be able to value fixed income instruments and to suggest solutions to typical portfolio management problems in the fixed income market.
Due to the implementation of the MSc Program in Finance & Accounting starting from fall 2012, the first year courses of the finance specialization within the MSc Program in Business and Economics will not be given within the realm of this program. Students who have not yet passed one or several of these courses will be given the opportunity to retake the exam(s).
Curriculum Year 2
During the third and fourth semester, a number of elective courses are available. Finance electives are currently:
- Investment Management 4309 (7.5 ECTS). This course covers important theoretical concepts in the field of investment management, examines whether these concepts are supported by empirical evidence, and identifies the practical implications for investment professionals. After completing this course, students should be able to digest innovations built on investment theory and apply research results in practical investment situations.
- Mergers and Acquisitions: Financial Aspects 4312 (7.5 ECTS). The course will focus on the financial aspects of merger and acquisition opportunities. Topics will include the valuation of acquisitions using discounted cash flow and comparable multiple methods; how to finance an acquisition and what effects this has on corporate capital structure; corporate governance and the market for corporate control; private equity funds and leveraged buyouts; cross-border acquisitions and currency risk management; reversing mergers through spin-offs; valuation of banks and bank mergers; and joint ventures.
- Venture Capital and Private Equity 4310 (7.5 ECTS). This course will use the case method to study private equity finance.The course will cover a broad spectrum of the PE market, from early-stage funding of start-ups to leveraged buyouts of large, mature corporations. It will explore PE from different perspectives, from the entrepreneur, private equity fund, and finishing with investors in private equity funds.
- Behavioural Finance 4314 (7.5 ECTS). The course studies the behavior of individuals, firms, institutions, and financial markets while relaxing some of the baseline assumptions behind the efficient market paradigm. After completing the course students should be able to understand different approaches to the definition and test of market efficiency and contrast them to empirical results; identify, describe, and explain different behavioral traits and their implication for the decision process, as well as their relevance for financial economics; understand and explain likely outcomes when different behavioral and institutional mechanisms interact; analyze markets using behavioral finance concepts to identify problems and propose possible solutions
- Financial Stability and Regulation 4316 (7.5 ECTS). The purpose of the course is to analyze the underlying causes of stability problems in the financial sector and to discuss how these can be controlled by various forms of regulation. Financial crises have occurred repeatedly through history. The recent crisis has demonstrated that the current set of regulations are not sufficient to guarantee financial stability. After this course, students should have a broad historical knowledge of financial crises, understand the basic stability problems of modern financial systems work and understand the role of regulations and the central bank in the financial system.
You may also choos from a wide range of elective courses from other departments. Please see the course web for more information about currently available courses
Finally, finance-specialization students must write their Master's Thesis in the area of finance. The goal of the thesis is to formulate a research question and to analyze it using the knowledge, methods and skills gained during the course work.
The specialization in Finance prepares students for careers in all areas of finance, including investment banking, corporate financial management, asset management, risk management, commercial banking and venture capital and private equity firms. It gives a solid foundation for qualified international positions as financial executives, dealers, traders, financial analysts, asset managers, investment bankers, management consultants, risk managers as well as for jobs in central banks and financial regulatory bodies.
For questions concerning the content of the specialization, please contact Prof. Mike Burkart at the Finance Department.