Master’s Degree in Finance – Everything You Need to Know

What’s in this guide?

By financejobs.net Staff Writer

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Overview

A Master’s degree in Finance is a graduate-level program typically completed in one to two years, designed to deepen and expand the knowledge and skills gained from an undergraduate finance or related degree.

This advanced degree focuses on more complex topics such as advanced financial management, quantitative finance, global finance, financial theory, and financial engineering. Students also explore specialized areas like mergers and acquisitions, hedge funds, financial derivatives, and private equity. These courses help enhance critical skills in strategic thinking, quantitative analysis, and financial decision-making, enabling graduates to tackle challenging and high-stakes environments.

Graduates with a Master’s degree in Finance are highly sought after in more senior roles within the finance sector, including positions in high-level financial analysis, portfolio management, risk management, investment banking, and financial consulting. The degree also prepares students for advanced professional certifications that require a deep understanding of finance, such as the Chartered Financial Analyst (CFA) level II and III.

By offering both theoretical insights and practical applications through case studies and projects, a Master’s degree in Finance provides a comprehensive platform for advancing careers in the competitive finance industry.

A Master’s in Finance is a deep dive into the analytical and practical application of financial concepts. It’s challenging, but it equips you with the tools to dissect complex financial situations and make sound investment decisions.
Leslie Polk Smith, CFA, Former President of the CFA Institute

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Why Study for a Master’s in Finance?

Increased Earning Potential

There is a positive correlation between a Master’s in Finance and a higher starting salary. A 2023 report by the Graduate Management Admission Council (GMAC) found that Master’s in Finance graduates reported an average median salary of $115,000 three years after graduation, significantly higher than the national average.

Enhanced Career Options and Specialization

A Master’s allows for specialization in specific areas of finance like corporate finance, investment banking, or financial risk management.

The CFA Institute reports that Master’s graduates are more likely to secure positions in coveted areas like investment management or hedge funds compared to Bachelor’s degree holders.

Networking and Career Advancement

Master’s programs often attract experienced professionals seeking career transitions or promotions. This creates valuable networking opportunities and exposure to senior-level finance professionals who can provide career guidance and open doors to new opportunities.

Deeper Knowledge and Advanced Skill Development:

Master’s programs delve deeper into complex financial theory and quantitative techniques like financial modeling, portfolio optimization, and risk analysis.

These advanced skills are increasingly sought after by employers in a data-driven financial landscape.

A Master’s in Finance provides the advanced training and specialized knowledge needed to navigate the complexities of the modern financial world. It equips you to tackle sophisticated financial challenges, make data-driven decisions, and position yourself for leadership roles in the industry.
Steven Kaplan, Professor of Finance at the University of Chicago Booth School of Business

What is Covered?

A Master’s degree in Finance is designed to provide students with an advanced understanding of financial concepts, quantitative and qualitative analysis and strategic thinking. Here are some of the topics typically covered:

  • Advanced Financial Management – This course builds on the principles of corporate finance, focusing on sophisticated techniques for capital budgeting, corporate valuation, and financial decision-making. Students learn to apply theoretical models to real-world scenarios, managing corporate finance activities like mergers, acquisitions, and corporate restructuring.
  • Quantitative Finance – quantitative methods used in finance, including statistical techniques, financial modeling, and risk analysis. The use of software and programming languages, such as Python or R, is often integral, preparing students for roles that require heavy data analysis and forecasting.
  • Global Financial Markets and Institutions – This area explores the structure and functioning of global financial markets and institutions such as banks, insurance companies, and international financial entities. Topics often include the impact of global economic policies on financial markets, currency exchange mechanisms, and international risk management.
  • Investment Analysis – This course covers the theories and tools used in the evaluation and selection of investment vehicles, with an emphasis on portfolio management and performance measurement. Students learn about different types of investments, including stocks, bonds, and derivatives, and strategies for asset allocation and diversification.
  • Risk Management –  the strategies and tools used to identify, assess, and mitigate financial risk. The course typically covers various types of risk, such as market, credit, and operational risks, and teaches methods for using derivatives and other financial instruments to manage exposure.
  • Ethical and Legal Aspects of Finance – ethical and regulatory environment of the financial industry. Topics include corporate governance, compliance, and the ethical implications of financial decisions.

Here is a sample curriculum:

Year 1 

Fall Semester

  1. Advanced Corporate Finance – Detailed study of corporate financial strategy, including investment decisions, capital structure, and dividend policy.
  2. Quantitative Methods in Finance – Introduction to quantitative techniques such as statistical analysis, econometrics, and optimization methods used in financial decision-making.
  3. Global Financial Markets and Institutions – Examination of global financial markets, including the role of international financial institutions, market dynamics, and regulatory environments.
  4. Ethics in Finance – Study of ethical considerations in finance, focusing on corporate governance, corporate social responsibility, and regulatory compliance.

Spring Semester

  1. Investments and Portfolio Management – Techniques for managing investment portfolios, including security analysis, asset allocation, and risk management.
  2. Financial Statement Analysis – Techniques for interpreting and analyzing financial statements to assess an organization’s financial health.
  3. Derivatives and Risk Management – In-depth look at derivative securities (options, futures, swaps) and their use in risk management and investment strategies.
  4. Elective Course – Students might choose an elective such as Real Estate Finance, Private Equity, or Financial Modeling.

Year 2

Fall Semester

  1. Fixed Income Securities – Analysis of debt securities, interest rate processes, and the management of interest rate risk.
  2. Financial Regulation and Compliance – Overview of the regulatory landscape in finance, including major laws and regulations affecting financial institutions and markets.
  3. Elective Course – Possible electives include Hedge Fund Management, Fintech Innovations, or Advanced Financial Econometrics.
  4. Elective Course – Additional elective focused on personal career interests.

Spring Semester

  1. Capstone Project or Thesis – A significant research project or thesis that applies theoretical knowledge to a practical problem in finance.
  2. Advanced Topics in Finance – Covers recent developments and advanced topics in finance which may include behavioral finance, international finance, or crisis management.
  3. Elective Course – Another elective, potentially in a specialized area such as insurance finance, corporate restructuring, or asset pricing.
  4. Elective Course – Continuation of specialization or a new area relevant to emerging market trends.

Common Questions about Master’s Degree in Finance

Our career coaches frequently hear from professionals considering a master’s degree, here are some of the questions they commonly get asked:

 “I have a bachelor’s degree in economics, will a Master’s in Finance be a good fit for me?”

Absolutely! While a finance background is ideal, economics provides a strong foundation in economic theory and quantitative analysis, both highly valuable in finance. Many Master’s programs cater to students from diverse academic backgrounds and offer bridge courses to ensure everyone reaches the required level.

“I’m interested in a career in investment banking, but I’m not sure which Master’s in Finance specialization to choose.”

Focus on core courses that build a strong foundation in financial modeling, valuation, and investment analysis. Additionally, consider specializations in areas relevant to investment banking, like corporate finance or mergers & acquisitions. Look for programs with strong alumni networks in investment banking and internship opportunities within the industry.

“I’m worried about the cost of a Master’s degree. How can I justify the investment?”

A Master’s in Finance can significantly increase your earning potential. Studies show graduates often command higher starting salaries compared to bachelor’s degree holders. Additionally, the program opens doors to more specialized and lucrative career paths. Consider scholarships, financial aid options, and the potential for a higher return on investment over your career.

“Is a Master’s in Finance necessary to succeed in finance?”

While not always mandatory, a Master’s degree can give you a significant edge in the job market. The program equips you with advanced skills, specialized knowledge, and a deeper understanding of the financial world. This can make you a more competitive candidate for senior positions and leadership roles.

“I work full-time, would a Master’s in Finance program be manageable?”

Many schools offer flexible Master’s programs with evening or online options to cater to working professionals. These programs often require strong time management skills and dedication, but they allow you to pursue your academic goals while continuing your career. Consider your learning style and workload to see if a flexible program aligns with your needs.

What Are the Entry Requirements?

  1. Bachelor’s Degree – Applicants must have a bachelor’s degree from an accredited institution. While a degree in finance, economics, business, or a related field is often preferred, many programs accept candidates from a variety of academic backgrounds, particularly if they demonstrate strong quantitative and analytical skills.
  2. GPA – A competitive GPA is crucial, typically a minimum of 3.0 on a 4.0 scale, although more prestigious programs may require higher GPAs.
  3. Professional Experience – Although not always mandatory, relevant professional experience in finance or a related field can enhance an application. Some programs, especially those aimed at professionals (like Executive Master’s programs), might require several years of work experience.
  4. Letters of Recommendation – Typically, programs ask for two or three letters of recommendation. These should ideally come from academic advisors or professors familiar with the applicant’s academic performance and professional references who can speak to the applicant’s work ethic and experience in finance.
  5. Statement of Purpose – A well-crafted statement of purpose that outlines the applicant’s academic interests, professional goals, and reasons for pursuing a Master’s in Finance at the specific institution.
  6. English Proficiency Tests – International applicants whose first language is not English must often prove English proficiency through tests like TOEFL or IELTS, with specific score requirements varying by program.
  7. Interviews – many programs may require interviews (either in person or via video conferencing) to assess the candidate’s suitability for the program, their communication skills, and their understanding of the finance field.

How Much Does it Cost?

The cost will vary considerably depending upon the institution, the program offered and where you choose to study. Here are some ranges to give you an idea of costs:

  • Public, In-State: $35,000 – $55,000 total cost for a 1-2 year program
  • Public, Out-of-State: $45,000 – $70,000 total cost for a 1-2 year program
  • Private Nonprofit: $50,000 – $80,000+ total cost for a 1-2 year program

How Much Can You Earn?

Similar to a Bachelor’s degree, pinpointing an exact average salary for Master’s in Finance graduates is challenging due to the diverse career paths available. However, the degree significantly boosts your earning potential compared to a Bachelor’s alone.

Studies by organizations like the Graduate Management Admission Council (GMAC) consistently report Master’s in Finance graduates commanding higher starting salaries than Bachelor’s degree holders. The median salary can range from $80,000 to $115,000 three years after graduation, depending on factors like location, industry, and specific job title.

A Master’s allows you to specialize in lucrative areas like investment banking, hedge funds, or financial risk management. These specialized roles typically offer even higher salaries compared to general finance positions.

The advanced skills and knowledge gained through the program can accelerate your climb to senior and leadership positions, which come with significantly higher salaries.

A Master’s degree in Finance can significantly increase your lifetime earning potential. Burning Glass Technologies reports suggest a Master’s degree can translate to 25-30% higher lifetime earnings compared to a Bachelor’s alone within the finance field.

What Jobs Can You Do with a Master’s in Finance?

If you are just starting your career in finance then a Master’s in Finance degree alone opens the door to similar positions as a Bachelor’s degree (e.g. financial analyst and other entry level positions). That being said a master’s degree will likely significantly increase the pace at which you can move through the ranks.

Here are some of the positions commonly held by those with a Master’s in Finance:

  1. CPA
  2. Financial Controller
  3. Finance Manager
  4. FP&A Manager
  5. VP of Finance
  6. Director of Finance
  7. CFO

*It is important to note that many of these positions are not automatically open to holders of master’s degrees but this advanced degree does open the door to a career path to these positions.