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Oxford MSc Financial Economics

Oxford MSc Financial Economics

Electives

The wide range of electives available enables you to gain a deeper knowledge of areas of special interest. You will be expected to complete five elective modules. Electives on offer are subject to change from year to year depending on demand.

Corporate valuation

Managers of firms have many responsibilities. A critical one is to ensure that the firm makes appropriate investment and financial decisions. This module focuses on how to make good decisions. While it will also focus to some extent on the mechanics of corporate valuation, it is more directly a module on how to create (and destroy) corporate value. As such, we are more interested in the decisions you make after you have conducted the valuation analysis.

Who should take this class? Consultants, entrepreneurs, general managers, marketers, investment bankers, and other finance professionals — basically, if you are interested in business, you should take this class. 

Entrepreneurial finance

The entrepreneurial finance elective aims to help future executives, facing financing and investment decisions in a broad range of entrepreneurial environments, to make better decisions and achieve better outcomes. The module covers all stages of the financing process from initial financial planning to harvesting value. 

While the module will inevitably involve looking at a number of technology driven businesses, the emphasis is on gaining insights into the entrepreneurial financing process rather than looking at the financing of technology businesses per se.

Entrepreneurial environments considered will include not just young, growing, independent businesses but also those around the buy-outs and spin-outs of units from more established businesses, as well as entrepreneurial joint ventures, that are established with a view to their becoming independently viable entrepreneurial businesses in their own right.

One of the eight sessions will also be devoted to looking at the venture capital industry with a view to providing candidates with a broad understanding of current developments in this area and the likely future impact on the range of financing options and alternatives available from these sources going forward.

The module requires candidates to be very comfortable with and confident in using basic financial concepts. It is designed to focus on the numbers and analytic techniques for gaining insight, although continual attention will also be paid to the incentives facing each of the parties in the financing process.

The module will be highly relevant for future executives who may be involved in an entrepreneurial venture at some point in their careers, whether in a turnaround, a management buy-out, a young company or a start-up. It will also be highly applicable for future private equity and venture capital decision makers.

Fixed income and derivatives

This elective will develop the analytical tools necessary to understand and price fixed income and derivatives financial instruments. The properties of these financial instruments will be analysed and related to risk management, portfolio diversification, systemic risk, financial fragility and contagion. Emphasis will be put on applying these techniques on problems emerging in the marketplace.

Topics to be covered include: bond valuation, properties and trading; swaps; risky debt; fixed income and hedging applications; the yield curve; derivatives markets; properties and trading; derivatives pricing and hedging applications; Black-Scholes Model; real options, credit derivatives and securitisation, credit derivatives and financial stability.

Mergers, acquisitions and restructuring

The market for corporate ownership is one of the hallmarks of capitalism. Within that market, vast amounts of corporate wealth have been created – and destroyed. The objective of this module is to understand the market, the institutions that were created in order to execute these complicated transactions, and the strategies that are employed by the major players. We are interested in what makes for success in M&As and how past failures can be avoided in the future.

Private equity

Throughout the year there are many different seminars, events and conferences involving private equity professionals and those faculty researching in the area. These provide a useful introduction to the sector, and essential background knowledge for students taking the private equity course.

There are three main objectives of the private equity course:

  • to develop an understanding of the roles played by the various participants involved in private equity. The module will consider the attractions of private equity as an investment class. The organisation and incentive structures of private equity funds, and the complex relationship with the companies in which they invest are also analysed.
  • to apply many of the ideas and theories developed in the core finance modules to a particular sector of the financial industry. The private equity sector – involving both venture capital and buy-outs – is a particularly interesting sector to analyse. Private equity is used to finance many companies where the generic problems encountered when financing companies – such as uncertainty or asymmetric information – are especially acute and complex.
  • to critically evaluate the valuation techniques employed in private equity transactions. By their very nature, private equity investments (which lack market valuations provided by public equity markets) are those where valuation is often difficult, being highly sensitive to assumptions and methodology. This module reviews a variety of valuation techniques in the context of real private equity transactions.

The textbook for the course offers a feel for the style, tone and content of the course.

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