Program in Finance
Markus K. Brunnermeier
Dilip J. Abreu, Economics
Mark A. Aguiar, Economics
Yacine Aït-Sahalia, Economics
Alan S. Blinder, Economics, Woodrow Wilson School
Markus K. Brunnermeier, Economics
René A. Carmona, Operations Research and Financial Engineering
Sylvain Chassang, Woodrow Wilson School, Economics
Patrick Cheridito, Operations Research and Financial Engineering
Jianqing Fan, Operations Research and Financial Engineering
Maryam Farboodi, Economics
Mikhail Golosov, Economics
Valentin Haddad, Economics
Harrison G. Hong, Economics
Harold James, History, Woodrow Wilson School
Jakub Kastl, Economics
Alan B. Krueger, Woodrow Wilson School
Atif R. Mian, Woodrow Wilson School, Economics
Stephen E. Morris, Economics
Ulrich K. Mueller, Economics
John M. Mulvey, Operations Research and Financial Engineering
Yuliy V. Sannikov, Economics
Hyun S. Shin, Economics
Christopher A. Sims, Economics
K. Ronnie Sircar, Operations Research and Financial Engineering
Robert J. Vanderbei, Operations Research and Financial Engineering
Mark W. Watson, Economics, Woodrow Wilson School
Wei Xiong, Economics
Motohiro Yogo, Economics
Under the auspices of the Bendheim Center for Finance, Princeton undergraduates concentrating in any department 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 assets, including equities, bonds, currencies, and derivative securities; portfolio management and the evaluation of financial risks; banking and financial intermediation; the financing of corporations; corporate governance; financial-market and banking 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. Finally, modern finance is remarkably eclectic, drawing from many disciplines besides economics, including mathematics, operations research, engineering, computer science, psychology, politics, and history.
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.
As economic theory, mathematics, and probability and statistics are pervasive in modern financial analysis, completion of the certificate in finance requires mathematical ability and preparation. The following foundation courses, or their equivalent, are required for admission into the program and (except as noted) must be completed by the end of the sophomore 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 a minimum average grade of B- calculated across all prerequisites. All courses require a letter grade (pass/fail not allowed).
1. Mathematics: MAT 175 (Mathematics for Economics/Life Sciences), or MAT 201 (Multivariable Calculus) and MAT 202 (Linear Algebra with Applications), MAT 203 (Advanced Vector 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 POL 345 (Quantitative Analysis and Politics), WWS 200 (Statistics for Social Science) or WWS 332 (Quantitative Analysis for Public Policy), or PHY 301 (Thermal Physics) and PHY 312 (Experimental Physics), or a score of 5 in AP Statistics.
1. A total of five courses, at level 300 or higher. All students must have a minimum grade of C+ 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 found on the program's website. List 1: Financial Applications, and List 2: General Methodology for Finance. 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 lists.
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.
Students who fulfill all the requirements will receive a certificate upon graduation.
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, 391, 392; 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, 490, 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, 491; 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, 462, 463, 464, 465, 466, 492, 493; HIS 364; ORF 307, 311, 405, 435; WWS 340.
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.
6. Behavioral Finance Track. Students in this track study how human psychology, including many documented behavioral biases, influence financial decision-making and ultimately asset prices. Relevant courses include ECO 462, 467, 468; WWS 340/PSY 321; NEU/PSY 425.
7. Finance and Public Policy Track. Students in this track study the interaction between finance and policy, including public finance, response to financial crisis, central banking, and securities law. Relevant courses include ECO 361, 491, 492, 493; WWS 340/PSY 321, WWS 466, 594N, 582F.