What is financial engineering?
Financial engineering is a multifaceted course which is a combination of mathematical and computational tools with financial and economic theory. This course is designed to provide the students with the knowledge and skills required for a career in the finance industry. It involves the use of mathematical tools, engineering skills and computational financial techniques in the finance industry. This course enables students to create and develop financial products, portfolio, and markets.
The master’s course in financial engineering is constructed to familiarise students in the interdisciplinary fields of engineering, computer programming and mathematics and its application in financial theory. The students are first taught the basics of financial concepts and then specialized subjects such as corporate finance, risk finance and computational and algorithmic finance are taught. The students are also exposed to different dynamic investment strategies and complex structured products which may be used for equities, fixed income, currency, commodities, and other financial markets. Through the course, the students are equipped with industry level skills and knowledge and are also given the opportunity to apply these skills. By the end of the course, the students are able to give a high – level performance in the financial industry.
Eligibility for Masters in Financial Engineering
Students aspiring to take the course should have a bachelor’s degree with a strong foundation in finance, linear algebra, vector calculus, and engineering probability. They should also have experience in computer programming (C, C++) as well as computational and management tools. It is also advised that the students enroll for a course on the stochastic process.
A good GRE score is a must for admission in financial engineering. An average GRE quant score required is ~169. However, it is important to note that some colleges do not admit the students blindly based on their grade point AVERAGE (GPA) or low test scores but, by looking at the overall application. A low-grade point score can be overcome by making up in the other areas of the application such as personal essay, recommendation letters, relevant work experience and a strong foundation in mathematical and C++ programming.
Students who graduate with a masters degree in financial engineering are equipped knowledge and practical skill in the field of risk management, money management, derivative pricing, private equity, hedge funds, data analytics and technical operational areas of corporate finance. Therefore they have great job prospects in banks, investment companies, stock exchange, insurance companies, financial consulting companies or companies with divisions of financial analysis.
Some of the job profiles that a student with masters in financial engineering can hold include:
1.Corporate finance advisor: A Corporate finance advisor deals with mergers and acquisitions of other companies. They examine the balance sheet of the company and identify favorable investments.
2. Credit Risk Manager: The role of a credit risk manager is to assist and advise management about the performance, trends, and quality of its loan portfolios. They should also monitor troubled debt restructurings and impaired loans. A person seeking such a job should be a strategic thinker.
3. Financial Regulator: A financial regulator is who oversees the financial market protects people from being exploited by deceitful trading practices. A financial regulator can acquire work in the government and may also work for the Federal Reserve.
4. Portfolio Manager: A portfolio manager helps the clients invest in the best schemes so that they may get the highest returns possible. They can also be employed in commercial banks where they help in their investments and bonds.
5. Derivatives Analyst: The role of a Derivatives analyst is to gather and analyze the market data. They should also be able to estimate the value of a stock market at any time. The role of a Derivatives analyst is very crucial as the clients depend on them to make an accurate and informed investment decision.
The average salary that a financial engineer can expect to earn would be around $ 77, 844.
Top 10 colleges for Masters in Financial Engineering
The following are the top ten colleges in the USA that offer a masters in financial engineering
- University of Washington, Seattle, Washington.
- Stevens Institute of Technology, Hoboken, New Jersey.
- Stanford University, Stanford, California.
- Rensselaer Polytechnic Institute, Troy, New York.
- New York University, New York, New York.
- Carnegie Mellon University, Pittsburgh, Pennsylvania.
- Baruch College/CUNY New York City, New York, New York.
- Cornell University, Ithaca, New York.
- Columbia University, New York, New York.
- North Carolina State University, Raleigh, North Carolina.
- Georgia Institute of Technology, Atlanta, Georgia.
- University of Minnesota, Minneapolis, Minnesota.
- University of Chicago, Chicago, Illinois.
- Illinois Institute of Technology, Chicago, Illinois.
- Rutgers University, Piscataway, New Jersey
- New York University, New York, New York.
- Stony Brook University, Stony Brook, New York
- University of California-Berkeley, Berkeley, California
- Johns Hopkins University, Baltimore, Maryland
- University of Illinois at Urbana- Champaign.
- University of California-Los Angeles, Los Angeles, California
- Fordham University, New York, New York
- Boston University, Boston, Massachusetts
- University of Notre Dame, Notre Dame, Indiana
- University of Southern California, Los Angeles, California
MS in Financial Engineering is one of the most sought-after courses by students as it can be applied to many fields. Since it is a multi-disciplinary course, this knowledge can be used in a wide range of industries such as banking and financial corporate sectors to government economic bureaus. Therefore students pursuing this course have a bright future ahead.