Program in Finance
Director
Yacine Aït-Sahalia
Executive Committee
Dilip J. Abreu, Economics
Yacine Aït-Sahalia, Economics
Alan S. Blinder, Economics, Woodrow Wilson School
Markus K. Brunnermeier, Economics
René A. Carmona, Operations Research and Financial Engineering
Patrick Cheridito, Operations Research and Financial Engineering
Erhan Çinlar, Operations Research and Financial Engineering
Alexandre W. d’Aspremont, Operations Research and Financial Engineering
Savas Dayanik, Operations Research and Financial Engineering
Jianqing Fan, Operations Research and Financial Engineering
Harrison Hong, Economics
Harold James, History, Woodrow Wilson School
Paul R. Krugman, Woodrow Wilson School, Economics
Burton G. Malkiel, Economics
Stephen E. Morris, Economics
Ulrich K. Mueller, Economics
John M. Mulvey, Operations Research and Financial Engineering
Birgit Rudloff, Operations Research and Financial Engineering
José A. Scheinkman, Economics
Hyun S. Shin, Economics
Christopher A. Sims, Economics
K. Ronnie Sircar, Operations Research and Financial Engineering
Kenneth Steiglitz, Computer Science
Lars E. O. Svensson, Economics
Robert J. Vanderbei, Operations Research and Financial Engineering
Erik H. VanMarcke, Civil and Environmental Engineering
Mark W. Watson, Economics, Woodrow Wilson School
Wei Xiong, Economics
Under the auspices of the Bendheim Center for Finance (see page 183), undergraduates may earn a certificate that attests to their proficiency in the discipline of finance. The rapidly developing field of finance focuses on the pricing of financial and real assets, including equities, bonds, currencies, derivative securities, and investment projects; portfolio management and the evaluation of financial risks; banking and financial intermediation; the financing of corporations; corporate governance; financial institutions, markets, and regulation; and many other topics. In addition to the obvious practical relevance of finance, the field contains both challenging intellectual problems and a distinctive formal framework within which those problems can be addressed. Knowledge of modern finance is also essential to the proper understanding of many other topics in economics and public policy, including the determination of exchange rates and international capital flows; the making of monetary and fiscal policy; the role of financial reform in developing and transition economies; the regulation and taxation of financial markets and financial instruments; and antitrust policy, to give but a few examples. Finally, modern finance is remarkably eclectic, drawing from many disciplines besides economics, including mathematics, operations research, engineering, computer science, psychology, politics, and history. See www.princeton.edu/bcf/undergraduate for details.
Admission Requirements
Students normally enter the certificate program at the beginning of their junior year. Interested students must submit a completed application form by May 31 of their sophomore year to the program representative. The application should include a brief description of the student’s plan to fulfill the independent work requirement (see below) and a short essay explaining the student’s interest in the finance certificate. Criteria for admission include the overall academic record of the student in the freshman and sophomore years, the plan to complete the independent work, and an essay. See the Program in Finance website for more details.
Since economic theory, mathematics, and probability and statistics are pervasive in modern financial analysis, the following foundation courses, or their equivalent, are required for admission into the program and must be completed before the beginning of the junior year. ECO and ORF majors require a higher level of proficiency in the prerequisite courses to ensure that the independent work is sufficiently quantitative. Consequently, ECO and ORF majors must have an average grade of B+, calculated across all prerequisites, with no grade lower than B. All students must take these prerequisite courses for a letter grade (pass/D/fail not allowed).
1. Mathematics: MAT 200 (Linear Algebra and Multivariable Calculus for Economists), or MAT 201 (Multivariable Calculus) and MAT 202 (Linear Algebra with Applications), MAT 203 (Advanced Multivariable Calculus), and MAT 204 (Advanced Linear Algebra with Applications)
2. Economics: ECO 310 (Microeconomic Theory: A Mathematical Approach)
3. Probability and Statistics: ORF 245 (Fundamentals of Engineering Statistics), or ECO 202 (Statistics and Data Analysis for Economics), or PSY 251 (Quantitative Methods), or SOC 301 (Sociological Research Methods), or WWS 303/POL 345 (Quantitative Analysis and Public Policy), or PHY 301 (Thermal Physics) and PHY 312 (Experimental Physics), or MAT 222 (Introduction to Statistics)
Certificate Requirements
1. A total of five courses, at level 300 or higher. All students must have a minimum grade of B, averaged over the core courses, the elective courses, and the independent work.
a) The two core courses, ECO 362 (Financial Investments) and ECO 363 (Corporate Finance and Financial Institutions), typically completed during the junior year.
b) Three electives chosen from the two lists of elective courses given below. ECO and ORF majors must take at least two of their three elective courses from List 1. All other concentrators must take at least one of their three elective courses from List 1. The program representative can approve a coherent plan of study that involves elective courses outside the preapproved list.
2. A senior thesis in the major department (or other form of independent work required by their concentration) with significant finance content (subject to approval of the program representative). “Significant finance content” means that a substantial component of the thesis will involve issues or methods drawn from finance. Faculty affiliated with the Bendheim Center can provide secondary thesis advising as the need arises. If there is no possibility of finance content in the senior thesis, a separate, shorter piece of independent work is required; please consult with the program representative.
Elective Courses
List 1: Financial Applications
*EAP 402 The Japanese Financial System
*ECO 207 Introduction to Financial and Management Accounting
ECO 342 Money and Banking
ECO 353 International Monetary Economics
ECO 414 Introduction to Economic Dynamics
ECO 461 Trading and Securities Markets
ECO 462 Portfolio Theory and Asset Management
ECO 463 International Financial Markets
ECO 464 Corporate Restructuring
ECO 465 Options, Futures, and Financial Derivatives
ECO 466 Fixed Income: Models and Applications
*ECO 467 Institutional Finance
*ECO 468 Behavioral Finance and Economics
*ECO 469 Valuation and Security Analysis
ORF 335 Introduction to Financial Engineering
ORF 435 Financial Risk Management
POL 348 Politics and Finance
WWS 312 The Psychology of Decision Making and Judgment
*WWS 451 Special Topics in Public Affairs: Regulation of International Financial Markets
*WWS 460 Special Topics in Public Affairs: History of Financial Crises
List 2: General Methodology for Finance
APC 350 Introduction to Differential Equations
CEE 460 Risk Assessment and Management
COS 318 Operating Systems
COS 323 Computing for the Physical and Social Sciences
COS 333 Advanced Programming Techniques
COS 423 Theory of Algorithms
COS 425 Database and Information Management Systems
COS 432 Information Security
COS 436 Human-Computer Interface Technology
COS 444 Internet Auctions: Theory and Practice
COS 461 Computer Networks
ECO 311 Macroeconomics: A Mathematical Approach
ECO 312 Econometrics: A Mathematical Approach
ECO 313 Econometric Applications
ECO 315 Topics in Macroeconomics
ECO 317 The Economics of Uncertainty
ECO 321 Industrial Organization
ECO 322 Theory of Contracts and the Firm
ECO 341 Public Finance
ECO 370 American Economic History
ECO 385 Ethics and Economics
ECO 418 Strategy and Information
ELE 391 The Wireless Revolution: Telecommunications for the 21st Century
ELE 491 High-Tech Entrepreneurship
HIS 364 International Economic History in the 20th Century
MAT 301 Mathematics in Engineering I
MAT 302 Mathematics in Engineering II
MAT 304 Introduction to Partial Differential Equations
MAT 305 Mathematical Programming
MAT 317 Complex Analysis with Applications
MAT 330 Analysis I: Fourier Series and Partial Differential Equations
MAT 331 Analysis II: Complex Analysis
MAT 341 Numerical Analysis
MAT 390 Probability Theory
MAT 391 Random Processes
ORF 307 Optimization
ORF 309 Probability and Stochastic Systems
ORF 311 Optimization under Uncertainty
ORF 374 Special Topics in Operations Research and Financial Engineering
ORF 401 Electronic Commerce
ORF 405 Regression and Applied Time Series
ORF 409 Introduction to Monte Carlo Simulation
ORF 474 Special Topics in Operations Research and Financial Engineering
Check the program’s Web page for updates on new finance courses that may be used as electives. Not all courses are offered every year. Please check with the relevant departments to confirm their offerings.
Sample Elective Selection
Elective courses may be selected either according to individual needs and preferences, or to conform to one of five suggested tracks, listed below. These tracks are intended to be illustrative of coherent courses of study that students might choose. It is not necessary for a student to designate or complete a particular track to satisfy the certificate requirements.
1. Mathematical Finance Track. Students in this track study the mathematics of financial price theory, including stochastic calculus and its applications to arbitrage and equilibrium in dynamic economies. Relevant courses include ECO 317, 414, 465, 466; MAT 305, 390, 391; ORF 309, 311, 515.
2. Corporate Finance Track. Students in this track study issues such as the choice and financing of investment projects, firms’ determination of dividend policy, optimal capital structure, financial reorganization, mergers and acquisitions, and the management and regulation of banks and other financial institutions. Relevant courses include ECO 317, 322, 342, 361, 464; ELE 491.
3. Derivatives Pricing and Risk Management Track. Students in this track focus on the determination of the prices of options, futures, and other derivative securities, and on the management of their risks. Relevant courses include APC 350; CEE 460; COS 323; ECO 302, 312, 463, 465, 466; MAT 304, 331; ORF 309, 335, 374, 405, 435, 474, 515.
4. Investment Management Track. Students in this track study the design and functioning of asset markets around the world, the theory of optimal portfolios, the behavior and determinants of asset returns, and techniques of portfolio management. Relevant courses include COS 323; ECO 311, 342, 353, 461, 462, 463, 464, 465, 466; ELE 382; HIS 364; MAT 305; ORF 307, 311, 405, 435; WWS 312.
5. Information Technologies for Finance Track. Students in this track study the computer-based technologies that are becoming increasingly important in finance, such as the design of efficient trading systems, algorithms, interfaces and large databases, and the security of computer networks. Relevant courses include COS 318, 323, 333, 423, 425, 432, 436, 461, 496; ECO 461; MAT 305.
Certificate of Proficiency
Students who fulfill all the requirements will receive a certificate upon graduation.
*One-time-only course or topic