Key Topics in an Online Master's in Finance Curriculum: Investment Analysis, Risk Management and Financial Modeling

Business and finance professionals help clients and organizations strategically manage resources and achieve financial goals. All industries need employees with expertise in these areas, so the demand for people with relevant skills is high. According to the United States Bureau of Labor Statistics (BLS), approximately 911,000 new business and finance jobs will open between 2022 and 2032.¹ An online master's program with a well-rounded curriculum of finance courses can help students jumpstart or advance a career in the financial sector.

The specific classes offered by online finance programs vary by school. However, many online programs cover key topics such as financial modeling, investment analysis and risk management. These courses instill the expertise and skills that accomplished professionals need for successful business and finance careers.

An online Master of Science in Finance (MSF) program typically covers advanced topics such as investment analysis, managerial economics and quantitative research methods. These courses require students to expand their knowledge of financial markets, models and theories. People who earn this degree often use their expertise to pursue senior roles in the finance industry and other sectors.²

MSF programs set their own curricula, but a comprehensive program covers these essential subjects:

Investment analysis uses financial econometrics, or statistical methods, and software to assess a project or purchase's potential benefits and risks. Businesses use this approach to evaluate investment opportunities and make strategic financial decisions.³

In a finance degree program, students learn how to use fundamental investment analysis techniques such as:³

• Discounting: The process of calculating the present value of future investments
• Decision trees: The visualization of potential future outcomes as a graphic with branching pathways
• Monte Carlo techniques: Simulations that use random variables to assess possible outcomes of investments

For example, assume a hospital has the opportunity to purchase an expensive surgical robot. Financial experts can use investment analysis techniques to determine if the possible financial benefits of the technology, like a reduced risk of malpractice lawsuits, outweigh the hefty price tag.

Risk refers to the uncertain outcomes that may cause an investment to make or lose money. However, businesses can use risk analysis and management techniques to minimize potential losses when building investment portfolios and making financial decisions.⁴

Risk management strategies include:⁵

• Asset allocation: Investing in different asset classes with varying levels of risk, such as real estate and stocks
• Diversification: Making multiple investments in the same asset class, such as stocks from companies in different industries

These techniques distribute risk across multiple investments, limiting potential losses if one of several financial assets performs poorly.

Businesses use financial modeling to analyze a broad range of financial data and explore the possible outcomes of decisions. Professionals can use mathematical software to build financial models based on expenses, revenue and other data.⁶

Graduate students can learn many modeling approaches, including:⁷

• Discounted cash flow: Calculate the value of an asset by estimating the amount of revenue it may produce in the future
• Scenario analysis: Assess how a business or investment may perform in various scenarios, such as a recession or economic boom

Financial modeling has many practical applications, including creating budgets, measuring risk and evaluating business strategies.⁸

Corporate finance refers to financial principles used to optimize a business’s performance and manage resources effectively.⁹ Professionals use many approaches to achieve business goals, such as:

• Capital budgeting: The use of financial modeling techniques and software to estimate the costs and benefits of major investments and make decisions about which projects to fund⁹
• Financial statement analysis: The process of studying financial records for key performance metrics, such as liquidity and profitability, to assess a company’s financial performance and make strategic decisions¹⁰

A derivative is a financial instrument that gets its value from a specific underlying asset. Two parties can enter into a contract where they promise to buy or sell the derivative in the future for an agreed-upon price.¹¹ For example, a company could agree to sell a derivative contract based on the future price of gold to another party.

Businesses use derivatives to manage risk and speculate on financial markets. They can mitigate risk by entering into a variety of contracts, such as:¹¹

• Options: One party can trade the contract to another party for a different derivative
• Futures: The two parties both agree to complete the contract at a specific date in the future

Financial managers can use portfolio management theory to help individuals and organizations optimize the performance of their investments. Portfolio management theory uses forecasting and other techniques to model the future performance of different combinations of investments.¹²

Portfolio managers use many strategies to mitigate portfolio risk and maximize returns, including:¹³

• Asset allocation: Incorporating a variety of high- and low-risk assets into the portfolio based on overall risk tolerance
• Rebalancing: Adjusting the portfolio back to its original asset allocation ratio as investments fluctuate

Globalization has led many businesses to engage in international trade and investments. Finance professionals must consider many factors when engaging in global capital markets, such as:¹⁴

• Exchange rates: Currency values can fluctuate over time, which can significantly affect the value of investments
• International factors: Geopolitical conflicts, economic instability, financial crises and other forms of foreign exchange risk can affect investments
• Taxes: Investors may need to pay foreign taxes on international investments

Cutting-edge financial technology (fintech) has reshaped many aspects of the industry. Students of asset management should familiarize themselves with emerging fintech trends, including:¹⁶

• Artificial intelligence (AI): Applications that simulate human thought can automate many operations, such as detecting fraud or processing mortgages
• Blockchain: This tool creates a decentralized and unchangeable record of financial transactions, preventing fraud

According to the Association for Financial Professionals (AFP), experts in the financial industry should adhere to strict ethical codes and legal regulations. The AFP’s Standards of Ethical Conduct recommends that professionals follow these practices:¹⁵

• Maintain client confidentiality
• Avoid abusing financial systems
• Disclose potential conflicts of interest to employers and clients

William & Mary’s Online Master of Science in Finance program develops the comprehensive knowledge and skills you need to become a trusted finance leader. Led by world-class faculty, our robust curriculum blends in-class instruction with immersive learning experiences to prepare you for positions in upper-level leadership. You’ll take essential finance courses including financial statement analysis, financial econometrics, forecasting and scenario analysis.

Gain the expertise to lead confidently in business and modern finance. As a specialized credential, the William & Mary’s Online MSF can make you more competitive in your career in as little as 15 months.

To get started, schedule a call with an admissions outreach advisor today.