Financial engineering involves the creation of financial products that are aimed specifically at the needs of investors, rather than the conventional approach of defining assets on the basis of borrowers’ requirements. Central to Financial Engineering are relative value (sometimes called arbitrage) trading strategies and the structuring of financial products, and the closely associated process of securitisation. Structuring involves the transformation of cash flows derived from an asset and improving the risk profile of the structured product. The contemporary derivative markets are driven by the process structuring, both in terms of transforming cash flows through “swaps” and credit enhancement through credit derivatives.
The programme aims to develop the skills and knowledge required by the modern investment and asset management industry where relative value trading strategies and structuring dominate. The emphasis is on developing a range of practical skills rather than develop an abstract “theory of everything”. This reflects the need for practitioners to be able to employ different techniques in the ever changing world of contemporary finance.
The material is based substantially on the PRIMIA syllabus for risk management and the Actuarial Profession’s Specialist Technical (ST) syllabus to value and manage the risks associated with a portfolios of derivatives.
This full-time MSc programme lasts for 12 months.View Heriot-Watt University, Department of Actuarial Mathematics and Statistics's Website