ObjectivesThe aims of this course are: -to provide advanced instruction and rigorous training in financial and economic theory and the relevant methods of empirical research in those areas; -add to existing knowledge and understanding and to build on your practical experience and training; -equip you with the tools and technical skills in finance and economics via core, optional and generic training course units; provide the opportunity to explore specific areas of the disciplines; -offer specialisation in both finance and economics and ensure that you appreciate and understand the interconnections between both disciplines; -and provide advanced knowledge and understanding in finance and economics at both a conceptual and practical level. The course is offered jointly by the Economics Division in the School of Social Sciences, The University of Manchester, and the Accounting and Finance Division in Manchester Business School.
Entry requirementsEntry requirements: To gain a place on the course you must have top ranking academic results. We are looking for a UK bachelor degree with first or upper second class honours (overall average 65+), or the overseas equivalent , with excellent results in finance and economics subjects (accounting is not considered to be finance). When assessing your academic record, we take into account your grade average, position in class, references and the standing of the institution where you studied your qualification. We particularly welcome applications from institutions of high ranking and repute. You need to have studied or be studying a degree in economics, finance or maths. This course teaches a very high level of economics and advanced econometrics. It is therefore essential that you have taken or are studying a significant number of economics courses and importantly a high level of econometrics, and macroeconomics or microeconomics in the FINAL year of your degree and achieve excellent results in these subjects. Please note: There are two MSc courses offered in the areas of economics and finance - MSc Finance and Economics and MSc Finance and Business Economics. It is important that you are aware of, and understand, the similarities and differences between these degree courses, so that you apply to the programme that is best suited to your qualifications and aspirations. Further details here.
Academic titleFinance and Economics MSc
Course descriptionAll taught course units are 15 credits.
Semester one
• Essentials of finance
This course unit provides the basic theoretical foundations of theories of asset pricing. The
course focuses on the structure of the main theories of asset pricing that are most used in
empirical and applied finance, such as Portfolio Theory, the Capital Asset Pricing Model and
Arbitrage Pricing Theory, as well as providing an understanding of the formal construction of
asset-pricing models.
Either
• Microeconomic theory
This course unit introduces the core model of perfect competition, the nature and
significance of externalities, public goods, uncertainty, information asymmetries, bounded
rationality, incomplete markets and the potential role of the state.
or
• Macroeconomic theory
This course unit provides students with an understanding of the macroeconomic
environment, and an appreciation of the strengths and limitations of macroeconomic
policy. The course is oriented to examination of current macroeconomic issues and their
implications for policy makers, economists and forecasters.
Either
• Introduction to econometrics
This course unit provides an introduction to econometric methods. It includes estimation
of the multiple regression model, hypothesis testing and diagnostic testing, and also
instruction in how to use a statistical computer package. At the end of the course
students should be able to: demonstrate their understanding of the appropriate
econometric methods for analysing data, demonstrate familiarity with the estimation and
testing of econometric relationships using appropriate software, and interpret and discuss
results.
or
• Time series analysis
This course unit examines both linear and non-linear techniques, with empirical linear
analysis using computer packages. Topics include: stationary and non-stationary
processes, testing for unit roots, VAR models and impulse response analysis, topics in
financial econometrics, non-linear regime-switching models of the business cycle,
applications of Markov-switching and smooth transition models.
One course unit from:
• Foundations of finance theory
This course unit provides a foundation in the most important models in finance: general
no-arbitrage relationships (forward parity, put-call parity, MM theorem, the law of one
price), stock valuation models (APT, CAPM, TSP) and option pricing models.
• Portfolio Investment
This course unit provides an advanced coverage of the principles of investment analysis
and of a wide range of topics in portfolio management. It aims to bring state-of-the-art
practices in the finance industry to the classroom and supplement it with theories and
recent empirical findings in the area.
• Derivative securities
This course unit covers the valuation and application of financial derivatives instruments,
and the use of no-arbitrage arguments and risk neutral valuation for the relative pricing of
financial derivatives.
• International macroeconomics & global capital markets
This course unit aims to examine major issues in the macroeconomic relations between
countries. These include: evidence of globalisation in capital markets from parity
conditions; the inter-temporal approach to current account dynamics; the fundamental
determinants of the real exchange rate; the sustainability of current account deficits, with
special reference to the US experience; capital account liberalisation; alternative
measures of international capital mobility, and the Feldstein-Horioka puzzle; economic
growth, theory and policy.
Semester two
• Corporate finance
This course unit covers theoretical and empirical aspects of corporate financing, capital
structure and dividend policy, and more advanced topics in agency theory, signalling,
incomplete contracting, incomplete information games, corporate control and governance,
and executive compensation.
Either
• Further econometrics
This course unit covers the use of categorical data, estimation of differentials and binary
choice models, and time series techniques including unit root tests, dynamics regression
models and vector autoregressive (VAR) models.
Or
• Cross section econometrics¹
This course unit introduces basic modelling techniques in the analysis of cross-section
data and develops these techniques to an advanced level in preparation for a dissertation
that analyses cross-section data.
One course unit from:
• Financial econometrics²
This course unit covers OLS, ML and GMM estimation methods, univariate time series
analysis and various topical issues such as ARCH, Vector Autoregressive Models, unit
roots, error correction, co-integration and non-linear time series models.
• Financial Statement Analysis
This course unit provides an understanding of the role of financial statement information
in the decisions taken by current and prospective stakeholders in a company.
• International finance
This course unit covers the developments in international financial markets and theories
of exchange rate determination. In particular it focuses on the theoretical and applied
aspects of the causes of financial/exchange rate crises, the relationship between
international capital flows investor behaviour (including sentiment) and international asset
pricing, and the potential for international financial market contagion of financial crises.
• International Mergers and Acquisitions
This course unit provides you with a conceptual framework for the understanding of
mergers and acquisitions. Using both economic and financial analysis, the course
investigates how the basic principles arising from an extensive theoretical tradition can
give meaning to a raft of empirical findings about the phenomenon.
• Real options in corporate finance
This course evaluates strategy and management value in property, power, resources,
R&D, football, dot.coms, telcos, banking and consulting; the course surveys the real
options that practitioners have identified in these industries.
• Research methods and methodology in finance
This course introduces you to basic research techniques in finance covering both theory
and practice.
Plus, one approved economics course unit.
¹Conditional on taking Time series analysis in semester one
²Available to those who do not take Time series analysis in semester one
Summer research period
Research dissertation (60 credits)
The dissertation normally consists of a survey of the literature in an applied or empirical area
of finance and economics followed by a piece of empirical work.