Information for Finance MicroMasters Program Learners

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Course Overviews and Prerequisites

Foundations of Modern Finance I

This master’s level course provides learners a rigorous introduction to the fundamentals of modern finance and their applications to business challenges in valuation, investment and risk management, and corporate financial decisions. This course focuses on four topics:

  1. Introduction to corporate finance and capital budgeting;
  2. Valuation of fixed income securities and common stocks;
  3. Risk analysis, the Arbitrage Pricing Theory (APT), and the Efficient Market Hypothesis (EMH);
  4. The financial challenges firms and households face and the principles of modern finance in tackling these challenges.

Recommended Textbooks:

  • Brealey, Myers, and Allen, Principles of Corporate Finance (13e), Irwin/McGraw Hill.
  • Bodie, Kane, and Marcus, Investments (11e), Irwin/McGraw Hill.

Prerequisites: Calculus (required), linear algebra (required), probability and statistics (recommended).

Recommended Free Online Courses to Prepare for Foundations of Modern Finance I:

Foundations of Modern Finance II

This course provides a rigorous and comprehensive introduction to the fundamentals of modern finance and their applications to business challenges in valuation, investments, and corporate financial decisions under a unified framework. Following on Foundations of Modern Finance I, this course focuses on the following topics:

  1. Portfolio theory;
  2. Capital Asset Pricing Model (CAPM);
  3. Valuation of derivative securities; and
  4. Corporate financial decisions, including real options, capital structure, payout policy, corporate bonds, and interaction between investment and financing decisions.

Recommended Textbooks:

  • Brealey, Myers, and Allen, Principles of Corporate Finance (13e), Irwin/McGraw Hill.
  • Bodie, Kane, and Marcus, Investments (11e), Irwin/McGraw Hill.

Prerequisites: Foundations of Modern Finance I; calculus (required), linear algebra (required), probability and statistics (recommended).

Financial Accounting

This course provides a rigorous introduction to the principles of financial accounting. We will focus on the preparation and analysis of financial statements, and on why financial statements take the form they do. We will cover the basic structure of financial reports and the process of recording transactions. We will also learn how investors, creditors, and other users analyze financial statements to assess corporate performance. This course will focus on using the financial statements to gather inputs to valuation models and for corporate finance decisions.

What you'll learn (at a glance):

  • Understand accounting terms
  • Understand how financial statements are constructed
  • Learn to read financial statements
  • Gather inputs to valuation models and for corporate finance decisions

Recommended Textbooks

  • Hanlon, Magee, Pfeiffer, Dyckman, Financial Accounting (6e), Cambridge Business Publishers.

Prerequisites: None.

Mathematical Methods for Quantitative Finance

This course develops the tools needed to describe financial markets, make predictions in the face of uncertainty, and find optimal solutions to business and investment decisions. This course will help anyone seeking to confidently model risky or uncertain outcomes. Its topics are essential knowledge for applying the theory of modern finance to real-world settings. Quants, traders, risk managers, investment managers, investment advisors, developers, and engineers will all be able to apply these tools and techniques.

What you'll learn (at a glance):

  • Probability distributions in finance
  • Time-series models: random walks, ARMA, and GARCH
  • Continuous-time stochastic processes
  • Optimization
  • Linear algebra of asset pricing
  • Statistical and econometric analysis
  • Monte Carlo simulation
  • Applied computational techniques

Recommended Textbooks:

  • Tsay, Analysis of Financial Time Series (3e), Wiley.
  • Capinski and Zastawniak, Mathematics for Finance, Springer.

Prerequisites: Calculus (multivariable), probability and statistics, linear algebra, basic programming skills.

Derivatives Markets: Advanced Modeling and Strategies

Derivative securities, and the sophisticated analytical methods that have been developed to understand and deploy them, are powerful tools for managing and pricing risk. As part of the MicroMasters® Program in Finance, students in this capstone course will develop a sophisticated and durable understanding of derivative modeling, valuation and hedging methods, a basic familiarity with major markets, instruments and strategies, and insights into current market developments.

The skills acquired are relevant to all financial market practitioners, but will be most useful for those planning a career in sales and trading, portfolio management, commercial banking, investment banking, insurance, hedge funds, financial advising, or in a public sector financial institution or central bank.

Recommended Textbook:

  • Hull, Options Futures and Other Derivatives (10e), Pearson.

Prerequisites: Foundations of Modern Finance I and II (required); calculus (required); Mathematical Methods for Quantitative Finance (recommended); basic programming skills (recommended).

Future Courses Dates

Foundations of Modern Finance I: starts Sept. 22, 2021
Foundations of Modern Finance II: starts Jan. 5, 2022
Financial Accounting: starts April 6, 2022
Derivatives Markets Advanced Modeling and Strategy: starts June 29, 2022
Mathematical Methods for Quantitative Finance: starts Sept. 21, 2022

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