Master of Finance
Encyclopedia
A Master of Finance is a Master's degree
designed to prepare graduates for career
s in financial analysis
, investment management
and corporate finance
. An alternate degree title is Master in Finance or Master of Science in Finance. The latter is abbreviated M.S.F. in North America, where it is becoming less common relative to the M.Fin., and "MSc
in Finance", in the UK. The program generally requires one to two years of study, and may be a non-thesis
degree. In the U.S. and Canada it may be positioned as a professional degree. The M.Fin. and MSc programs are generally more theoretically
oriented than the MSF.
is focused on investment analysis, corporate finance and financial management
/ managerial accounting. These topics are generally preceded by more fundamental coursework in economics
, accounting, and quantitative methods (usually time value of money
and introductory statistics
). In many programs, these are a prerequisite for admission or assumed as known, and if part of the curriculum, students with appropriate background may be exempt from (several of) these. The program usually concludes with coursework
in advanced topics — where several areas are integrated or applied — such as portfolio management
, financial modeling
, mergers and acquisitions
and real options. In general, these programs emphasize quantitative
topics, although may also offer some non-quantitative elective coursework, such as corporate governance
, business ethics
and business strategy.
The curriculum
often also includes financial economics
and financial risk management
as advanced topics, and sometimes managerial economics
and quantitative finance / computational finance
. These are areas which are usually studied as disciplines in their own right, via specialized degrees in economics
and applied mathematics
. On M.S.F. programs, the exposure will usually be limited to the generalist level: these areas of economics are taught to strengthen the theoretical underpin of the degree, however, since the emphasis is application, they are not developed; the computational topics, although practical, are too technical for a generalist finance degree. As regards the M.Fin. / MSc here, the treatment is generally substantive; see comparison below.
Programs usually require a bachelor's degree
prior to admission, but many do not require that the undergraduate major
be in finance, economics, or even general business. The usual requirement is a sufficient level of numeracy, often including exposure to probability
/ statistics
and calculus
; the M.Fin. and MSc will often require more advanced topics such as linear algebra
and differential equations. The M.Fin. may also require a greater background in Finance or Economics than the M.S.F. Some programs may require work experience (sometimes at the managerial level), particularly if the candidate lacks a relevant undergraduate degree.
topics. Thus, the program focuses on finance
and financial market
s, while an M.B.A., by contrast, is more diverse, covering general aspects of business
not dealt with in the finance program, such as human resource management
and operations management
. Note that an M.B.A. without a specialization in finance will not have covered many of the topics dealt with in the M.Fin. (breadth), and — often even where there is specialization — those areas that are covered may be in less depth. (Some M.B.A. candidates will "dual major" with an M.B.A./M.S.F.- some universities also offer this combination as a joint degree - or later pursue an M.Fin. degree, to gain specialized finance knowledge.) A Master of Commerce
/ Master of Science in Management
in finance or financial management closely correspond to the MSF. Note though, that these degrees typically place more emphasis on theory
and (sometimes) less on practice.
Some programs overlap with degrees in financial engineering, computational finance
and mathematical finance
: see Master of Quantitative Finance
(MQF). Note, however, that the treatment of any common topics — usually financial modeling
and risk management
— will differ as to level of detail and approach. The MSF deals with these topics conceptually, as opposed to technically, and the overlap is therefore slight. The M.Fin. / MSc, on the other hand, may cover these topics in a more mathematical fashion, and the treatment is often identical. Entrance requirements to the MQF are significantly more mathematical than for the MSF; for some M.Fin / MSc degrees the requirements may be identical.
A Master of Financial Economics
focuses on theoretical finance, and on developing models and theory, and may therefore differ in the weight assigned to theory. As with the MQF, the overlap with the M.Fin. / MSc is often substantial. As regards the MSF: firstly, some curricula do include a formal study of Financial Economics
; secondly, even where the theory is not studied formally, MSF programs do cover the assumptions underpinning the models studied (at least in overview); thirdly, many financial economics programs include coverage of individual financial instruments, corporate finance and portfolio management, although this treatment is usually less practical.
The Chartered Financial Analyst
(CFA) designation is sometimes compared to a Master's in Finance, and in fact, several universities have embedded a significant percentage of the CFA Program "Candidate Body of Knowledge" into their degree programs. In general though, the CFA program is focused on Portfolio management
and Investment analysis, and provides more depth in these areas than the standard M.Fin., whereas for other areas of finance the CFA coverage is in less depth. A further distinction is that many M.Fin. topics entail training
in advanced techniques such as financial modeling
—while training, per se, cannot be included in the CFA program. Similar comments apply to other certifications such as the Certified International Investment Analyst (C.I.I.A.)
; the so-called "Indian C.F.A." is, in fact, a Master's degree.
Courses
Master's degree
A master's is an academic degree granted to individuals who have undergone study demonstrating a mastery or high-order overview of a specific field of study or area of professional practice...
designed to prepare graduates for career
Career
Career is defined by the Oxford English Dictionary as a person's "course or progress through life ". It is usually considered to pertain to remunerative work ....
s in financial analysis
Financial analyst
A financial analyst, securities analyst, research analyst, equity analyst, or investment analyst is a person who performs financial analysis for external or internal clients as a core part of the job.-Job:...
, investment management
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...
and corporate finance
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
. An alternate degree title is Master in Finance or Master of Science in Finance. The latter is abbreviated M.S.F. in North America, where it is becoming less common relative to the M.Fin., and "MSc
MSC
- Computers:* Mario Strikers Charged* Microsoft Common Console Document, file for the Microsoft Management Console* Microelectronics Support Centre* Microsoft Corporation* MIDI Show Control* Message Sequence Chart...
in Finance", in the UK. The program generally requires one to two years of study, and may be a non-thesis
Thesis
A dissertation or thesis is a document submitted in support of candidature for an academic degree or professional qualification presenting the author's research and findings...
degree. In the U.S. and Canada it may be positioned as a professional degree. The M.Fin. and MSc programs are generally more theoretically
Theory
The English word theory was derived from a technical term in Ancient Greek philosophy. The word theoria, , meant "a looking at, viewing, beholding", and referring to contemplation or speculation, as opposed to action...
oriented than the MSF.
Structure
In the typical program, the core curriculumCore Curriculum
The Core Curriculum was originally developed as the main curriculum used by Columbia University's Columbia College. It began in 1919 with "Contemporary Civilization," about the origins of western civilization. It became the framework for many similar educational models throughout the United States...
is focused on investment analysis, corporate finance and financial management
Managerial finance
Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques. It is focused on assessment rather than technique....
/ managerial accounting. These topics are generally preceded by more fundamental coursework in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, accounting, and quantitative methods (usually time value of money
Time value of money
The time value of money is the value of money figuring in a given amount of interest earned over a given amount of time. The time value of money is the central concept in finance theory....
and introductory statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
). In many programs, these are a prerequisite for admission or assumed as known, and if part of the curriculum, students with appropriate background may be exempt from (several of) these. The program usually concludes with coursework
Coursework
Coursework is the name for work carried out by students at university or middle/high school that contributes towards their overall grade, but which is assessed separately from their final exams. Coursework can, for example, take the form of experimental work, or may involve research in the...
in advanced topics — where several areas are integrated or applied — such as portfolio management
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...
, financial modeling
Financial modeling
Financial modeling is the task of building an abstract representation of a financial decision making situation. This is a mathematical model designed to represent the performance of a financial asset or a portfolio, of a business, a project, or any other investment...
, mergers and acquisitions
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
and real options. In general, these programs emphasize quantitative
Quantitative property
A quantitative property is one that exists in a range of magnitudes, and can therefore be measured with a number. Measurements of any particular quantitative property are expressed as a specific quantity, referred to as a unit, multiplied by a number. Examples of physical quantities are distance,...
topics, although may also offer some non-quantitative elective coursework, such as corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
, business ethics
Business ethics
Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.Business...
and business strategy.
The curriculum
Curriculum
See also Syllabus.In formal education, a curriculum is the set of courses, and their content, offered at a school or university. As an idea, curriculum stems from the Latin word for race course, referring to the course of deeds and experiences through which children grow to become mature adults...
often also includes financial economics
Financial economics
Financial Economics is the branch of economics concerned with "the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment"....
and financial risk management
Financial risk management
Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc...
as advanced topics, and sometimes managerial economics
Managerial economics
Managerial economics as defined by Edwin Mansfield is "concerned with application of economic concepts and economic analysis to the problems of formulating rational managerial decision." It is sometimes referred to as business economics and is a branch of economics that applies microeconomic...
and quantitative finance / computational finance
Computational finance
Computational finance, also called financial engineering, is a cross-disciplinary field which relies on computational intelligence, mathematical finance, numerical methods and computer simulations to make trading, hedging and investment decisions, as well as facilitating the risk management of...
. These are areas which are usually studied as disciplines in their own right, via specialized degrees in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and applied mathematics
Applied mathematics
Applied mathematics is a branch of mathematics that concerns itself with mathematical methods that are typically used in science, engineering, business, and industry. Thus, "applied mathematics" is a mathematical science with specialized knowledge...
. On M.S.F. programs, the exposure will usually be limited to the generalist level: these areas of economics are taught to strengthen the theoretical underpin of the degree, however, since the emphasis is application, they are not developed; the computational topics, although practical, are too technical for a generalist finance degree. As regards the M.Fin. / MSc here, the treatment is generally substantive; see comparison below.
Programs usually require a bachelor's degree
Bachelor's degree
A bachelor's degree is usually an academic degree awarded for an undergraduate course or major that generally lasts for three or four years, but can range anywhere from two to six years depending on the region of the world...
prior to admission, but many do not require that the undergraduate major
Academic major
In the United States and Canada, an academic major or major concentration is the academic discipline to which an undergraduate student formally commits....
be in finance, economics, or even general business. The usual requirement is a sufficient level of numeracy, often including exposure to probability
Probability
Probability is ordinarily used to describe an attitude of mind towards some proposition of whose truth we arenot certain. The proposition of interest is usually of the form "Will a specific event occur?" The attitude of mind is of the form "How certain are we that the event will occur?" The...
/ statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
and calculus
Calculus
Calculus is a branch of mathematics focused on limits, functions, derivatives, integrals, and infinite series. This subject constitutes a major part of modern mathematics education. It has two major branches, differential calculus and integral calculus, which are related by the fundamental theorem...
; the M.Fin. and MSc will often require more advanced topics such as linear algebra
Linear algebra
Linear algebra is a branch of mathematics that studies vector spaces, also called linear spaces, along with linear functions that input one vector and output another. Such functions are called linear maps and can be represented by matrices if a basis is given. Thus matrix theory is often...
and differential equations. The M.Fin. may also require a greater background in Finance or Economics than the M.S.F. Some programs may require work experience (sometimes at the managerial level), particularly if the candidate lacks a relevant undergraduate degree.
Comparison with other qualifications
Although there is some overlap with an M.B.A., the finance Master's provides a broader and deeper exposure to finance, but more limited exposure to general managementManagement
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
topics. Thus, the program focuses on finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
and financial market
Financial market
In economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...
s, while an M.B.A., by contrast, is more diverse, covering general aspects of business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
not dealt with in the finance program, such as human resource management
Human resource management
Human Resource Management is the management of an organization's employees. While human resource management is sometimes referred to as a "soft" management skill, effective practice within an organization requires a strategic focus to ensure that people resources can facilitate the achievement of...
and operations management
Operations management
Operations management is an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as little resources as needed, and...
. Note that an M.B.A. without a specialization in finance will not have covered many of the topics dealt with in the M.Fin. (breadth), and — often even where there is specialization — those areas that are covered may be in less depth. (Some M.B.A. candidates will "dual major" with an M.B.A./M.S.F.- some universities also offer this combination as a joint degree - or later pursue an M.Fin. degree, to gain specialized finance knowledge.) A Master of Commerce
Master of Commerce
Master of Commerce is a postgraduate Masters Degree focusing on commerce-, management- and economics-related subjects. Like the undergraduate Bachelor of Commerce, the degree is offered in Commonwealth nations.-Structure:The Master of Commerce typically requires one year of full-time study...
/ Master of Science in Management
Master of Science in Management
Master of Science in Management, abbreviated MSc or MSM, is a Master of Science academic degree that is common throughout the United States and Europe. It is similar to the MBA degree, and often requires a dissertation before a graduate is admitted to it. The MSc is a research-oriented program...
in finance or financial management closely correspond to the MSF. Note though, that these degrees typically place more emphasis on theory
Theory
The English word theory was derived from a technical term in Ancient Greek philosophy. The word theoria, , meant "a looking at, viewing, beholding", and referring to contemplation or speculation, as opposed to action...
and (sometimes) less on practice.
Some programs overlap with degrees in financial engineering, computational finance
Computational finance
Computational finance, also called financial engineering, is a cross-disciplinary field which relies on computational intelligence, mathematical finance, numerical methods and computer simulations to make trading, hedging and investment decisions, as well as facilitating the risk management of...
and mathematical finance
Mathematical finance
Mathematical finance is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory. Generally, mathematical finance will derive and extend the mathematical...
: see Master of Quantitative Finance
Master of Quantitative Finance
A masters degree in quantitative finance concerns the application of mathematical methods to the solution of problems in financial economics. There are several like-titled degrees which may further focus on financial engineering, financial risk management, computational finance and/or mathematical...
(MQF). Note, however, that the treatment of any common topics — usually financial modeling
Financial modeling
Financial modeling is the task of building an abstract representation of a financial decision making situation. This is a mathematical model designed to represent the performance of a financial asset or a portfolio, of a business, a project, or any other investment...
and risk management
Financial risk management
Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc...
— will differ as to level of detail and approach. The MSF deals with these topics conceptually, as opposed to technically, and the overlap is therefore slight. The M.Fin. / MSc, on the other hand, may cover these topics in a more mathematical fashion, and the treatment is often identical. Entrance requirements to the MQF are significantly more mathematical than for the MSF; for some M.Fin / MSc degrees the requirements may be identical.
A Master of Financial Economics
Master of Financial Economics
A master’s degree in financial economics provides an understanding of theoretical finance and the underlying economic framework. The degree is postgraduate, and may incorporate a thesis or research component. Programs are often a joint offering by the business school and the economics department;...
focuses on theoretical finance, and on developing models and theory, and may therefore differ in the weight assigned to theory. As with the MQF, the overlap with the M.Fin. / MSc is often substantial. As regards the MSF: firstly, some curricula do include a formal study of Financial Economics
Financial economics
Financial Economics is the branch of economics concerned with "the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment"....
; secondly, even where the theory is not studied formally, MSF programs do cover the assumptions underpinning the models studied (at least in overview); thirdly, many financial economics programs include coverage of individual financial instruments, corporate finance and portfolio management, although this treatment is usually less practical.
The Chartered Financial Analyst
Chartered Financial Analyst
The Chartered Financial Analyst Program is a graduate level self-study program offered by the CFA Institute to investment and financial professionals...
(CFA) designation is sometimes compared to a Master's in Finance, and in fact, several universities have embedded a significant percentage of the CFA Program "Candidate Body of Knowledge" into their degree programs. In general though, the CFA program is focused on Portfolio management
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...
and Investment analysis, and provides more depth in these areas than the standard M.Fin., whereas for other areas of finance the CFA coverage is in less depth. A further distinction is that many M.Fin. topics entail training
Training
The term training refers to the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies. It forms the core of apprenticeships and provides the backbone of content at institutes of...
in advanced techniques such as financial modeling
Financial modeling
Financial modeling is the task of building an abstract representation of a financial decision making situation. This is a mathematical model designed to represent the performance of a financial asset or a portfolio, of a business, a project, or any other investment...
—while training, per se, cannot be included in the CFA program. Similar comments apply to other certifications such as the Certified International Investment Analyst (C.I.I.A.)
Certified International Investment Analyst
Certified International Investment Analyst is a global finance designation offered by the Association of Certified International Investment Analysts to financial professionals; candidates may be financial analysts, portfolio managers or investment advisors...
; the so-called "Indian C.F.A." is, in fact, a Master's degree.
See also
- Outline of financeOutline of financeThe following outline is provided as an overview of and topical guide to finance:Finance – addresses the ways in which individuals, businesses and organizations raise, allocate and use monetary resources over time, taking into account the risks entailed in their projects.- Overview :The word...
- Master of Financial EconomicsMaster of Financial EconomicsA master’s degree in financial economics provides an understanding of theoretical finance and the underlying economic framework. The degree is postgraduate, and may incorporate a thesis or research component. Programs are often a joint offering by the business school and the economics department;...
- Master of Quantitative FinanceMaster of Quantitative FinanceA masters degree in quantitative finance concerns the application of mathematical methods to the solution of problems in financial economics. There are several like-titled degrees which may further focus on financial engineering, financial risk management, computational finance and/or mathematical...
- Master of EconomicsMaster of EconomicsA Master's Degree in Economics is a postgraduate academic program, offering training in economic theory, econometrics and / or applied economics. The degree may be offered as a terminal degree or as additional preparation for doctoral study, and is sometimes offered as a professional degree...
- :Category:Professional certification in finance
External links and references
Discussion- Why should students still consider a Masters degree in a finance related subject?
- Getting an MBA vs. a Master's in Finance or Economics
- Specialized Management Masters: Master of Finance
- Should I take a Masters or MBA course?
- postgraduate subject guide: Finance
- Master in Finance Degree Website
Courses
- Masters in Finance and Management
- Masters in Finance 2011 listing
- MSF Programs at U.S. Universities
- Master of Finance Programs worldwide
- Programs outside the U.S., alternate list
- Quantitative Finance / Financial Engineering Programs: by region; Alphabetic
- Financial Economics Programs
- Degree programs based on the CFA Candidate "Body of Knowledge"
- Finance Courses on the Web