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Core courses

Students on the MPhil in Finance programme take the following six core courses:

Asset Pricing I

Asset Pricing examines how securities are priced. From a theoretical point of view we examine models of portfolio choice and how investors allocate their wealth across assets. From an empirical point of view, we discuss the empirical success of those models and the statistical techniques used to do so.

Topics covered include: 

  • Utility-based portfolio choice models
  • Stochastic discount factors
  • Portfolio math: correlation and diversification benefits
  • The Capital Asset Pricing Model (CAPM) and factor pricing

Asset Pricing I requires a strong prior background in microeconomics and statistics/econometrics.

Corporate Finance I

This course studies corporate investment and corporate financing policy. We analyse how firms make investment decisions and how these investments are being financed. We study how a firm's cost of capital depends on its business and financial risk. We present the main theories of corporate capital structure and discuss their empirical implications. The course gives an introduction to the valuation of options using the binomial model, and shows how option pricing can be used for the valuation of corporate liabilities and real options.

Topics covered: 

  • Capital budgeting with and without debt financing
  • The Adjusted Present Value method (APV) and The after-tax Weighted Average Cost of Capital (WACC) method
  • Corporate capital structure and corporate restructuring: theory and empirical evidence
  • Options and option pricing
  • The valuation of corporate liabilities and real options

This is a graduate-level course and some familiarity with basic concepts of finance as provided in the prerequisite reading is expected.

choice of one of the following two courses (please note, if you wish to apply to continue to the Cambridge Judge PhD after your MPhil year you're required to take both Asset Pricing II and Corporate Finance II, taking one as a core course, and one as an elective):

Asset Pricing II

This course builds on Asset Pricing I. Asset Pricing examines how securities are priced. From a theoretical point of view we examine models of portfolio choice and how investors allocate their wealth across assets. From an empirical point of view, we discuss the empirical success of those models and the statistical techniques used to do so.

Topics covered include:

  • Generalised method of moments
  • Equity premium puzzle and its explanations
  • Long-term return predictability
  • Impact of trading frictions on asset prices
  • Mutual funds and hedge funds

Corporate Finance II

This course studies a number of topics in empirical corporate finance including analysing investment decisions, raising capital, takeovers, corporate governance and other topics. It is research-based, covering the major empirical research papers on these topics.

choice of one of the following two courses:

Microeconomics I

Taught by the Faculty of Economics.

This course covers the standard economic models of individual decision-making with and without uncertainty, models of consumer behaviour and producer behaviour under perfect competition and the Arrow-Debreu general equilibrium model.

Prerequisites: A basic knowledge of economics and basic level of mathematical sophistication, particularly with respect to optimisation, will be assumed. You should be somewhat familiar with multivariable calculus, basic linear algebra and probability theory. 

If your mathematical background is weak, you'll probably want to do some reading and problems on your own. A good place to start is the mathematical appendix in Mas-Colell, Whinston, Green. Similarly, if you've not taken much economics before or want to brush up, you may want to look at an undergraduate microeconomics text. Among the good options are books by Nicholson, and by Pindyck and Rubinfeld.

Fundamentals of Competitive Markets

You are introduced to the foundations necessary to conduct research in the three areas of marketing, operations, and finance with a view to developing your own skills as researchers in these areas and in business in general. This course covers standard models of:

  • individual choice under certainty and uncertainty
  • production theory
  • general equilibrium
  • monopoly pricing, price discrimination
  • information economics
  • behavioural economics

The course will give you some fundamental knowledge of competitive markets, enabling you to leverage your course knowledge to do original research and write papers in your chosen field of research in a business school.

choice of one of the following two courses:

Econometrics I

This course introduces you to the variety of quantitative research methods available for applied research in management and economics, providing you with sufficient background to choose techniques and methods suited to different data-sources and models. The focus is on the way techniques relate to theory, and on the insights that can be drawn from their application. We are concerned with the interpretation and appraisal of results, and emphasise applied work.

Topics covered include:

  • The paradigm: underlying "structure" and "true" models of phenomena
  • Probability distributions
  • Descriptive statistics
  • Estimators and their properties
  • Testing hypothesis
  • Confidence intervals
  • Simple and multiple regression
  • Properties of regression coefficients
  • Transformation of variables
  • Linearity, nonlinearity and categorical variables
  • Simultaneous equations
  • Time series models
  • Stationary and nonstationary processes
  • Estimation

an Econometrics module taught by the Faculty of Economics

(awaiting further details)

choice of one of the following two courses:

Econometrics II

Given the extensive availability and use of individual-level data sources for applied quantitative analysis, it has become increasingly important to understand the techniques available in applied research, their relation to theory, and what insights can be drawn from the estimation of models.

Many of these methods move beyond the standard tools of econometric analysis, in order to exploit the richness or structure of large sources of either cross-section or longitudinal data, or to compensate for some partial observability of data, or to build complexities in decision-making into an empirical study.

This course provides you with sufficient background to choose techniques suited both to the data-source and the model. There is an emphasis on the interpretation and critical appraisal of estimates, as well as on applied work, exploiting the availability of computer techniques for solutions.

Topics covered include:

  • Binary choice
  • Multiple choice and ordered response models
  • Limited dependent variable techniques
  • Duration and survival models
  • Panel data estimation methods
  • Nonparametric and semiparametric regression methods
  • Count data models

You must have taken the Econometrics I course if you wish to take this course.

an Econometrics module taught by the Faculty of Economics

(awaiting further details)

Applications closed

Admissions for entry in 2017/18 have now closed.

Applications for entry in October 2018 will open in September 2017.

Scholarships

Funding available to our MPhil in Finance students includes University of Cambridge scholarships, Cambridge Judge Business School bursaries and external scholarships.

Find out more about scholarships