The field of finance is not what it once used to be, it has moved beyond ledger banking and has ventured deep inside a world which is incredibly dependent on computers, big data, and mathematics. This new world of financial industry gives birth to a host of problems which are complex and always new. Financial engineering is an interdisciplinary field which applies mathematical techniques to solve complex problems of the finance sector. Although it has “engineering” in its name, but still it is not a core engineering discipline.
The financial industry keeps on creating new and innovative investment tools and products for interested parties. Most of these products have been developed through techniques in the field of financial engineering. Financial engineering takes help of financial theory, methods of engineering, tools of mathematics, and the practice of programming. Financial engineers work with insurance companies, asset management firms, hedge funds, and banks. They run mathematical risk models to predict how an investment tool will perform, and whether a new offering in the financial sector would be practical and profitable in the long run.
Masters in financial engineering trains you to engineer the future of finance and transform financial theory into practice. The MS in financial engineering helps you learn foundational knowledge of financial concepts. This knowledge then acts as a gateway to specialized fields where you can apply these concepts to everything from derivative risk finance to financial IT. With masters in financial engineering, you can also go for Ph.D. in financial engineering and contribute original research to the field. Additionally Masters in financial engineering prepares students for employment as financial specialists, analysts or personal finance advisors.
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Course Structure
Masters in Financial Engineering is a full time program which requires minimum 30 credit hours. We are going to list down the list of courses commonly taught across all universities; however, it should be kept in mind that exact curriculum may vary a bit depending on your school.
Required
- Corporate Finance
- Management of Financial Risk
- Financial Engineering
- Probability for Electrical and Computer Engineers
- Stochastic Processes
- Mathematics and Tools for Financial Engineering
Electives
a) Finance, Business, Economics Area (Any two courses are to be chosen)
- Microeconomic Analysis and Policy
- Macroeconomic Analysis and Policy
- Economic and Financial Time Series
- Financial Analysis and Valuation
- Applied Finance in Fixed Income Securities
- Hedge Funds
- Forecasting and Risk Analysis
- Trading and Exchange
- Investment Analysis and Portfolio Management
- Mortgages and Mortgage-Backed Securities and Markets
- Financial Accounting Analysis for Engineers
b) Optimization, Simulations, Stochastic Systems (Any two courses are to be selected)
- Introduction to Programming Systems
- Analysis of Algorithms
- Neural Learning and Computational Intelligence
- Statistics and Data Analysis for Engineers
- Design of Experiments
- Stochastic Systems and Reinforcement Learning
- Optimization of the Information and Data Sciences
- Machine Learning from Signals: Foundations and Methods
- Linear programming and Extensions
- Stochastic Elements of Simulation
Eligibility
Masters in financial engineering is a STEM degree and you are expected to have a STEM degree in your undergrads. Other than that there are no restrictions based on your background. Those of you who do not meet prerequisites will be assigned courses to complete the deficiency.
Graduate level entry into international universities requires that you should have completed a bachelor’s degree of at least four years from an accredited university. Your academic performance is measured through your Grade Point Average (GPA) by most of the international universities. Academic eligibility should be confirmed with the “Admission Committee” of your respective schools, and you should avoid taking advice from non-official channels.
A good GRE or GMAT score is absolutely indispensable when it comes to getting admitted into a top university for the Masters in financial engineering.
Language courses like TOEFL and IELTS are required by most top schools. TOEFL test scores are accepted in the USA. while IELTS is recognized by schools from many countries such as Australia, Canada, Ireland, New Zealand, the UK.
You also need to prepare a resume, an SOP, and a recommendation letter. You can use this tool of ours to review your SOP. It is automated and hassle-free. Most candidates take the role of their resume and the recommendation letter very lightly. It is advisable to give proper attention to your resume as well as the recommendation letter. You should get your recommendation letter reviewed via professional or academic contacts, preferably by someone who knows you well.
The last obstacle to tackle would be the interview. Most of the schools will require you to go through an interview round, once your application gets accepted. Get some insight into interview questions and make a note of the answers that are expected from you beforehand.
Financial Mathematics
Financial mathematics is a field of applied mathematics and is concerned with mathematical modeling of financial markets. Financial sectors like investment banks, commercial banks, hedge funds, insurance companies, corporate treasuries and regulatory agencies apply the methods of financial mathematics to such problems as derivative securities valuation, portfolio structuring, risk management, and scenario simulation. Professionals with a specialization in this field favour mathematical consistency over compatibility with economic theory while taking financial decisions. This specialization is for you if you have a background in advanced mathematical techniques and modeling. Job prospects for financial mathematics are projected to be very good.
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Analytical Finance
Specialization in analytical finance helps you to gain a deeper and more precise knowledge of financial theories, their application to a variety of business problems, and the empirical work by which we learn how the finance industry works. You will learn how to do cutting-edge analysis as practiced in hedge funds, investment banks, risk management, and more.
Financial analysts help businesses and individuals take investment decisions. They analyze the performance of stocks, bonds, and other types of investments for this purpose. They work as portfolio managers, fund managers, rating analysts, risk analysts, etc.in financial sectors like banks, pension funds, mutual funds, securities firms, insurance companies, and other businesses. A growing range of financial products and the need for in-depth knowledge of geographic regions are expected to lead to strong employment growth. Demand for financial analysts tends to grow with overall economic activity. Demand is also projected to increase as the growth of “big data” and technological improvements allow financial analysts to access a wider range of data and conduct higher quality analysis.
Quantitative and Computational Finance
Quantitative and computational finance is a branch of applied computer science that deals with the practical problems of finance industry. It emphasizes practical numerical methods rather than mathematical theory and focuses on techniques that apply directly to economic analyses. With specialization in this you can work as a quantitative analyst. Quantitative and computational professionals create algorithms which are used within trading software. They make their employers millions of dollars on a monthly basis simply by programming algorithms that are fast and efficient enough to locate the best trades before the competition.
| College Name | Popularity Rank | Global Rank | Total Tuition Fees | Deadline | Annual RA+TA | Unsecured Loan Offer | Secured Loan Offer |
|---|---|---|---|---|---|---|---|
| Columbia University | 1 | 18 | 96864 | Log in | Log in | Log in | 1.5 Cr, Interest Rate starts @8.85% |
| University of Illinois at Urbana-Champaign | 2 | 69 | 68660 | Log in | Log in | Log in | 1.5 Cr, Interest Rate starts @8.85% |
| University of Southern California | 3 | 132 | 61805 | Log in | Log in | Log in | 1.5 Cr, Interest Rate starts @8.85% |
| The Johns Hopkins University | 4 | 17 | 107480 | Log in | Log in | Log in | 1.5 Cr, Interest Rate starts @8.85% |
| Georgia Institute of Technology | 5 | 70 | 57136 | Log in | Log in | Log in | 1.5 Cr, Interest Rate starts @8.85% |
| University of Delaware | 6 | 421-430 | 54810 | Log in | Log in | Log in | 1.5 Cr, Interest Rate starts @8.85% |
Financial Analyst
Financial analyst is one of the most sought after job profiles in the financial services industry. This sector is competitive, and it can be tough to break into this field. But a degree of masters in financial engineering can help you a lot in this regard. Financial analysts examine financial data and use their findings to help companies make financial decisions. They also often recommend a course of action such as to buy or sell a company’s stock based upon its overall performance and outlook.
According to U.S. Bureau of Labor Statistics, employment of financial analysts is projected to grow by 11 percent from 2016 to 2026 which is faster than the average for all occupations.
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Quantitative Analyst
A quantitative analyst is a professional who specializes in the application of mathematical and statistical methods to solve financial and risk management problems. They use quantitative methods to help companies make business and financial decisions. Quantitative analysts work across many industries but they are disproportionately concentrated in large banking and investment centers.
The U.S. Bureau of Labor Statistics puts quantitative analysis under the broader umbrella of financial analysis. As stated before, employment in the sector of financial analysis is expected to grow by 11 percent between 2016 to 2026.
Quantitative Developer
Quantitative developers are professionals who hold specialization in the area of computing. They tend to be highly specialized language technicians who act as a bridge between software developers and quantitative analysts. Finance industry is dependent on trading software which will never see the light of day without professionals who are skilled in both the fields of computers and quantitative finance.
As per the data given on payscale.com, a quantitative developer on average earns around 98,000 USD per annum.
Business Intelligence Analyst
Business intelligence analysts are professionals who use data to figure out market and business trends for companies to increase their profits and efficiency. Business intelligence analysts gather this data through a number of ways like mining a company’s computer data through software and looking at competitor’s data and industry trends to help develop a picture of where the company stands in the industry. They spend most of their time analyzing data on past trends, present conditions etc.
U.S. Bureau of Labor Statistics includes the job of business intelligence analyst in the broad category of management analysts. According to BLS, employment of management analysts is projected to grow 14 percent from 2016 to 2026 which is faster than the average for all occupations.
Portfolio Analysts
Portfolio can be defined simply as a range of investments held by a person or organization. Managing these investments is a task in itself and requires professional specialists called Portfolio Analysts.They help companies and individuals buy or sell investments. Portfolio analysis is a very involved and comprehensive job that requires a strong financial background through past experience and education. Degree of masters in financial engineering provides an edge to candidates who want to break into this competitive field of work as a bachelor's degree is very common nowadays.
Job Prospects
Financial engineering is a relatively new and emerging field of profession which promises rapid growth. Financial organizations are actively looking for high-level analysts who are comfortable with using statistics and quantitative analysis to solve economic problems. According to the various reports of BLS, financial engineering has a positive outlook with faster than average employment growth rate. Companies that recruit financial engineers include Goldman Sachs, Moody’s, Fitch ratings, Standards & Poor’s, etc.
| Global Rank | Employability Range | Salary Range |
|---|---|---|
| 1-10 | Log in | Log in |
| 11-25 | Log in | Log in |
| 26-50 | Log in | Log in |
| 51-100 | Log in | Log in |
| 101-200 | Log in | Log in |
| 201-500 | Log in | Log in |
| 500+ | Log in | Log in |
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