MBA in Finance
In layman terms, Finance is simply the handling of money. Of course, in modern times, this has gained importance with the multiple transactions happening every millisecond around the world. From low valued locality-based transactions that you make with your local grocer to the high valued transactions ranging from millions to billions that happen at the multinational level between banks and corporations, Finance covers all. With growing technology, the frequency of these transactions has only multiplied exponentially in the recent years. Along with this, the growth of Financial Engineering and the innovations of various financial instruments and derivatives as a means of investment and hedging have only made Finance a glamourous path for many. Needless to say, an MBA in Finance as a study stream is highly in demand due to these reasons.
The first step of any degree would be to cover the bases of the students, and hence the first few subjects that will form the foundation of an MBA in Finance will be:
- Accountancy and Financial Statement Analysis:- This teaches the student how to understand the language of the businesses, that is, their balance sheets and financial statements. Understanding these is the key to recognizing a healthy firm and finding the weak spots of a sick firm. Deeper knowledge of this allows the students to deduce and strategize accurately once they start practising professionally.
- Microeconomics, and Macroeconomics:- These two subjects are the most important, as it teaches the student how to deal with the external factors that affect businesses, whether it be the domestic or global economy. Macroeconomics focuses on the 'external factors' part, such as inflation or the shocks that an economy is subjected to, while Microeconomics focuses on the decision-making aspect of firms. Combine these two and you get the perfect combination of how to insulate and operate a business reasonably.
- Statistics:- The understanding of this subject is almost necessary in the field of Finance as statistical analysis has called shotgun. Statistical analysis allows for better prediction and market valuation and takes a leading role when it comes to the development of the new financial instruments we mentioned earlier.
Once the bases of a student are covered, they are introduced to more challenging subjects that deal with the finer details of Finance. Some of them are as follows:
- Security Analysis & Portfolio Management:- Security valuation and the analysis of its performance in the stock market form the fundamental part of a degree in Finance. Identifying the price and return patterns of a stock through technical analysis after carrying out a fundamental analysis on it reveals a lot about the operating of the firm and the people’s perception of it. Portfolio Management deals with the efficient handling of the various kinds of investments that an entity holds in a portfolio and minimizing the risk while simultaneously maximising the return for the firm.
- Corporate Finance:- This course aims to teach students capital budgeting techniques, such as using Net Present Value versus Internal Rate of Return as a valuation method for selecting prospective projects, calculating cashflows from investments made and projects undertaken by a firm, and thereby determine the profitability of the financing decision. Its knowledge allows the students to manage the smooth functioning of the firm, as short-term and long-term financing techniques along with forecasting and planning of working capital form the core of the subject.
- Financial Institutions, Markets, & Regulations:- In order to work in the field of Finance professionally, one needs to be aware of the environment in which major financing activities take place. Knowing the rules and regulations that govern the markets allows one to work ethically and prevent any ill consequences. This will also allow students to develop critical skills to assess the relevance of principles of finance to real world situations. This is an essential background for security analysis and decision making.
- Financial Instruments:- The financial instruments are the objects which are exchanged during financial transaction. While the other courses focused on the meaning and consequences of these transactions and the environment in which these transactions take place, a course on financial instruments (which can be divided into several other courses as there are many different kinds of instruments such as financial derivatives, equity, etc.) focuses on the items that yield the returns. A good knowledge of how various instruments operate is the key to portfolio management, hedge fund management, and investment management. This usually covers instruments such as forward contracts, futures contracts, swaps, options, commodity derivatives amongst others.
- International Finance:- With the rise of globalization, multinational entities are involved in the same transaction. With regulations varying from country to country, there are international bodies which manage the rules and regulations of such international transactions and coordinate them. An understanding of the key features of the foreign exchange market, the market through which most of these transactions take place, is almost necessary if one wishes to work in the corporate world. This subject gives the key understanding of foreign exchange markets, and the risks associated to it, along with methods of how to mitigate those risks using the financial instruments we discussed above.
Following this, there are various optional courses that a student may choose in accordance with the trajectory they wish to undertake in their professional lives.
Some of these optional courses provided by the top Colleges in India are:-
- Commercial Banking
- Financial Risk Management
- Behavioural Finance
- Global Marketing
- Business Economics
This list of elective subjects is non-exhaustive and varies from institute to institute. One must always go through the syllabus of the institute they wish to study at and decide for themselves whether the course structure fits well with their requirements or not.
MBA IN FINANCE: CAREER OPPORTUNITIES
A degree of MBA in Finance opens the golden gate for promising careers and handsome pay packet. Some even bag high profile positions and make a good use of the career to build a social status which is very important in today’s world. Career with an MBA in Finance gives you wings to fly high in the market and bag any opportunity you desire because you will be getting a lot of good chances.
Here are career options that MBA in Finance graduates can look at to start : :
- Hedge Fund Manager
- Investment Manager
- Risk Analyst
- Stock Market Expert
I hope this article gives you a clear view about an MBA in Finance and the dealings of it. Before taking any step, weigh in all the pros and cons of it and then go for it as a career option.