Financial Engineering deals with using mathematical techniques to solve financial problems by using tools and knowledge from the fields of computer science, statistics, economics, and applied mathematics. Large financial banks and brokerage houses are faced with the need to develop customized solutions and complex models to tackle severe client problems with the fast-changing global scenario and increasing competition.
It was thus leading to the creation of a new discipline called Financial Engineering that opened the door of opportunities for students pursuing such courses.
Have you ever heard about financial engineering before? If no, this article will help you understand its meaning and importance in brief.
Financial Engineering Overview
- Financial Engineering Admission
- Financial Engineering Eligibility Criteria
- Financial Engineering courses
- MS Financial Engineering
- Financial Engineering Books and Study Material
- System Engineer FAQS
Financial Engineering Eligibility
Eligibility criteria for admission are as such students must have passed XII examination from any recognized board with Chemistry/Mathematics/Physics as the primary subjects, with minimum aggregate marks of 50 percent.
Candidates willing to pursue a Master's degree in system engineering should have completed their bachelor in a related discipline with a minimum of 50% aggregate marks.
Financial Engineering Admission
For admissions to under-graduation courses, candidates must go through a rigorous process of clearing national-level and state-level entrance tests for obtaining admission into different colleges/universities/institutes.
Entrance Exams are
- JEE Main
- JEE Advanced
Fees of B.Tech Financial Engineering courses vary institute-wise. The course ranges from Rs 3,00,000 to Rs 6,00,000 Lakhs .
For admissions to M.E/M.Tech courses in the top engineering colleges in India aspirants must clear the GATE examination. However, some colleges/universities/institutes have their separate entrance exams followed by personal interview and counseling for the admission process.
GATE is an All-India examination conducted jointly by the Indian Institute of Science (IISc). It is an online test based on multiple-choice questions divided into three sections, namely General Aptitude, Engineering Mathematics, and the specialty subject.
Fees of M.Tech Financial Engineering course vary institute-wise. The course ranges from Rs 4,00,000 to Rs 10,00,000.
Importance of Financial Engineering:
- Helps us reduce risk in investments by assessing the total risk of a portfolio
- Assist in making markets more efficient by matching the needs and wants
- Provide financial analysis of the company's product and assets
- Aids in advancing the company's corporate strategy
- Creates real-time economic simulations to predict the future behavior of the market
What is Financial engineering as a career option?
Financial Engineering In India is a newly introduced field. The duration of such a course is for two years empowering students to succeed as dynamic finance professionals.
The study area includes product structuring, risk management, quantitative research, quantitative trading, and financial information technology. The minimum educational qualification for becoming a Financial Engineer is a Bachelor's Degree in Engineering with a specialization in Electrical, Computer Science or Mechanical, Operations Research, from a recognized university.
The objective of such a course is to develop students to become active managers and leaders. On completing such a course, a student is equipped to create a detailed understanding of various theories and models of finance and apply them to analyze and evaluate investment decisions.
Financial Engineering Courses In India
Financial Engineering Bachelor Courses:
- BTech Financial Engineering
Financial Engineering Master Courses:
- MTech Financial Engineering
- MS Financial Engineering
Financial Engineering Ph.D. Courses:
- Financial Engineering
Financial Engineering Certification Courses:
- Risk management assurance
- Information system auditor
- Certification in quantitative finance
MS Financial Engineering
The MS in Financial Engineering’s main objective is providing graduate students with knowledge of engineering, applied mathematics in the application of mathematical and engineering tools to finance.
Engineering, mathematics, and statistics to address problems such as derivative securities valuation, strategic planning, finance and economics, and dynamic investment strategies, risk management is the tools of financial engineering.
Graduates with these skills are of interest to:
- Investment and commercial banks
- Trading companies
- Hedge funds
- Insurance companies
- Corporate risk managers
- Regulatory agencies
Masters In Financial Engineering Syllabus
- Financial Markets
- Computational Finance
- Portfolio Theory and Asset Pricing
- Case studies in Risk Management
- Valuation of Financial Engineering
- Quantitative Methods in Finance
Certification courses for Financial Engineers
Apart from the classroom certification courses, online courses have gained much popularity like:
- Machine learning for trading
- Interest rate models
- Reinforcement learning in finance
In reinforcement learning certification courses, students learn to solve classical finance problems such as portfolio optimization, optimal trading, option pricing, and risk management. On completing machine learning for trading, students will be able to create quantitative trading strategies that you can train, test, and implement in live markets.
Top Colleges To Pursue Financial Engineering.
- Indian Institute of Technology, Kharagpur
- GD Goenka University
What Is Financial Engineering And Risk Management?
Using financial instruments to manage exposure to risk: operational risk, credit risk, and market risk, foreign exchange risk, inflation risk, business risk, legal risk, reputational risk, sector risk, etc of protecting economic value in a firm is termed as Financial Engineering Risk Management.
Financial risk management requires, Identifying risk sources, measuring and plans to address them
Financial Engineering Books And Study Material
Financial Engineering: The Evolution of Profession:
Financial engineering aims to provide a comprehensive understanding of this vital discipline by examining its fundamental financial products and disseminating cutting-edge research. Further details about the different participants, development, and product of various markets from equity derivatives to foreign exchange.
Financially Engineering a complete guide to financial innovation:
This book helps students explore the growing field of financial engineering by providing conceptual knowledge regarding tools, product instrument process strategies, and future direction. Considered a fundamental building block of financial engineering, the book aims to provide both conceptual and theoretical frameworks for understanding the field.
Introduction to C ++ for Financial Engineers An Object-Oriented Approach:
The book introduces readers to the C++ programming language and how to use it to write applications in quantitative finance. Adopts an incremental approach to introducing basic principles and moving to an advanced, sophisticated technique and real-life applications. The book has five major parts: the fundamentals of C++ programming language, advanced object-oriented features such as inheritance and polymorphism, template programming, and application of quantitative finance applications.
Financial engineering selected works of Alexander Lipton:
A textbook consists of a collection of Lipton's essential and personal papers on financial engineering written over his 20 years of career while working in financial institutions across New York, Chicago, and London. Topic's like volatility smile problem, credit risk, macroeconomics, and monetary circuit, etc.
Robert Kiyosaki and Sahil N Neftci’s Principles of financial engineering:
Principles of financial engineering and much importance to engineering aspects are discussed. Emphasizes students on how to create financial tools and how it works together to achieve specific goals by explaining illustrating applications, which are real-world examples. The topics discussed in the book range from a competitive market to financial engineering applications in hedge fund strategies, capital structure arbitrage, contingent convertibles, etc. Highly recommended book for graduate students in financial engineering and mathematics programs.
GRE Syllabus for Financial engineering
GRE syllabus divided into three sections, namely analytical Writing, verbal reasoning, and quantitative reasoning. The time for this paper-based exam is three hours and thirty minutes. For the paper-based for the computer-based exam, it is 3 hours and forty minutes.
The GRE is considered the eligibility criteria for students willing to pursue masters in the United States and Canada. Analytical Writing tests a candidate's skills and ability to tackle complex ideas with logic and clarity.
The verbal reasoning section checks a candidate's analyzing skills and ability to conclude, summarizing, breaking down word meaning.
- Basic Sentence structure: Nouns, Pronouns, Adjectives
- Verb Tense
- Idioms & Idiomatic Expressions
- Pronoun Agreement
- Subject-Verb Agreement
- Parallelism, etc.
The quantitative reasoning section tests the ability of a student to understand quantitative information, analyze and interpret quantitative data, and apply mathematical concepts of geometry, algebra, statistics, etc., solving mathematical problems.
Topics covered under GRE are:
- Number properties
- Profit and loss
- Order of operations
- Ratio and proportion
- Linear equations
- Lines and angles
- Probability Statistics: Average, Median, Mode, Range, Standard deviation
- Coordinate geometry
- Quadratic equations
- Speed, distance and time
- Simple and compound interest
- Circles, Triangles, etc.
Best Masters In Financial Engineering Colleges Around the World:
- Princeton University
- NewYork University
- University of California
- Stevens Institute of Technology
- Columbia University
Financial Engineering Career Scope
A few years from now, financial engineering is the next big thing because of its immense potential as a career.
On completing such a master's program, financial engineering graduates are ready to work in the finance and analytics industries. Career Avenues for financial engineers include in various sectors such as Quantitative analysis, risk management, investment analysis, trading, and banking. The salary scope of financial engineers varies between 6 lakhs to 15 lakhs.
Here are top career options for students pursuing financial engineering:
- Corporate financial advisor
- Portfolio manager
- Credit risk manager
- Financial regulator
- Derivatives Analyst
- Data scientist
- Investment analyst
Investment analysts have the responsibility to fundamentally analyze securities to provide buying and selling recommendations for their clients. Business analysts utilize data and analytical models for organizational information purposes to provide insight into making an informed business decision.
The credit risk manager identifies and manages strategic, operational, and other regulatory risks. It also develops and maintains risk management policies, procedures, and frameworks.
Financial Engineering FAQ's
- Who should opt for a financial engineering course?
Students who incline the World of finance possess good scientific and mathematical knowledge.
- What are the subjects included in the curriculum of financial engineering?
Core subjects include financial analysis, financial markets, models and methods for financial engineering, financial economics, mathematics for finance and computer programming.
- What is the job profile of a derivative analyst?
The derivative analyst gathers and analyses market data, thus helping clients to make an informed investment decision.
- What are the must-know computer program skills?
A student should master these programs along the course like java, python, data mining, C++, etc.