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The Masters in Financial Economics is an accredited programme offered at NQF level 7
by the Department of Economics and Econometrics within the Faculty of Economic and
Financial Sciences at the University of Johannesburg. The programme is consonant with
the vision and mission of the University, in providing relevant and value-adding
education and training.

The programme aims to address an important and ever-growing need in the market place,
i.e. the need for informed and efficient decision makers in a dynamic and fast-paced
global financial environment. It is presented within the context of economics, covering a
range of microeconomic aspects including economic uncertainty and risk. It aims to give
students a competitive edge in discipline-related developments in relevant fields and to
equip them with the necessary research skills and techniques in order to make rational
decisions in a very uncertain financial environment.

The ultimate goal of the programme is therefore, to develop intellectual competencies
and practical skills required for the analysis, interpretation and application of advanced
financial principles in the context of the global economy. It addresses the need for
knowledge, competencies and skills associated with managerial and financial decisions.
Upon successful completion of the programme, students may pursue a doctoral degree in
Economics on an NQF level 8.

Given the programme’s focus on financial decision-making, it aims to serve a particular
niche market. Suitable candidates for the programme include: Financial practitioners
wanting to formalize their studies; those that have a particular interest in this branch of
economics for academic reasons; and students who have just completed their honours
studies and would like to pursue further studies that have a balance of theory and practice
in the field of financial economics. The programme is also appropriate for those who
want to become acquainted with the functioning and behaviour of financial markets and
at the same time wish to acquire the skills necessary for financial market analysis and


3.1    Background

Financial Economics has made steady progress towards achieving the major aims of a
hard science (internal consistency and predictive power) since the 1950s. The awarding
of the Nobel Prize to Franco Modigliani in 1985 finally established Financial Economics
as a serious branch of economic studies.

In dealing with the analysis, understanding, structuring and modeling of financial
markets, economists need to take cognizance of the uncertainty inherent in such
environments. Consequent theories of financial markets involve the constant management
of the subtle balance between scientific rigor in the models they present and the
behavioural complexities inherent within the environments that they seek to understand.
Although markets deliver an abundance of data, leading to the application of advanced
statistical methods, the underpinnings of such environments are essentially human in
nature. Financial Economics, and this Programme in particular, is for this reason
embedded in the principles of microeconomic theory and guided by sophisticated
statistical methods that are supported by the development of information technology and
the availability of massive databases.
The conventional paradigm initially covered in the Financial Economics Programme
comprises Expected Utility Theory and the Efficient Market Hypothesis, which assumes
rational sophisticated market investors. The valuing and pricing by rational maximising
investors are founded in objective/subjective beliefs that are based on perfect information
about fundamental values.

An opposing paradigm, starting with Knight and Keynes’s ideas on fundamental
uncertainty, developed over time. The idea that asset prices efficiently incorporate
information about discounted future asset values and that prices only change because of
news on fundamental information, is challenged by research anomalies that do not square
with efficient market theory. The Prospect/Regret Theory and Noise-trader Hypothesis
underlie this paradigm of less sophisticated and inefficient noise trader markets.

The two opposing paradigms form the basis of the programme. To be in a position to
make calculated decisions on the financial markets it is necessary to understand the
economic behaviour that underlies decision-making under conditions of uncertainty.
Armed with this in-depth theoretical knowledge of micro-finance, and using the statistical
techniques and information technology covered in the programme, it becomes possible
for the students as practitioners to analyze, evaluate, price and transform uncertainty.

3.2    Modules

Financial Economics

The purpose of this module is to equip the student with an in-depth knowledge of
financial economics to understand how the prices of financial instruments are determined
under different scenarios of decision-making and how the nature of his/her environment
and risk specific are affected.

Quantitative Analysis
   The student will be exposed to a variety of topics and analytical techniques pertinent to
   the field of Financial Economics. The module covers the identification of characteristics
   of a wide variety of problems; the correct application of appropriate economic and
   statistical techniques; and the making of relevant statistical and economic inferences from
   the results. Students will also be exposed to the versatility and power of MS Excel and
   the E-Views package.

   Research Design

   The purpose of this module is to introduce the student to economic research and to train
   him/her on how to approach economic problems, design a research program, do
   individual research, take responsibility for his/her own research and to efficiently
   communicate and represent findings and results.

   Research Article

   The purpose of the research article is to give the student a managed opportunity to
   undertake independent and advanced research in the field of Financial Economics. This
   implies the designing of research by utilizing the relevant research principles, as well as
   the gathering, analyzing, synthesizing and interpretation of information by utilizing the
   knowledge obtained on financial theory and statistical techniques.

   4.     Presentation of modules and Assessment (subject to ongoing changes)

MODULES      THEMES                              EXPECTED NO.           ASSESSMENT
                                                 OF 90 MINUTE
Financial        The nature of uncertainty        4                     2 written examinations of 4
Economics        Decision analysis                10                    hours each in July
                 Economics of markets and         40
                 instruments                                            2 written examinations of 4
                 Risk analysis                    6                     hours each in November

Quantitative     Econometrics in finance          7                     1 written examination in
Analysis         Advanced time series             8                     June and 3 compulsory
                 Portfolio risk analysis          9                     assignments
Research         Research methodology             6
                 Research proposal                Supervision           June of the 1st year and
                                                                        formally assessed
                 Research/working paper           Independent work      January of the 2nd year
                                                                        and formally assessed

Research         Research                         Supervision           May of the 2nd year and
Article                                                                 externally assessed

      5.       Admission Requirements

      Candidates must possess an honours qualification in Economics or Econometrics or any
      other equivalent four-year qualification with honours status on NQF level 7 and related
      experience which is considered relevant and sufficient by the Department of Economics
      and Econometrics.
Prospective students are also required to pass a compulsory bridging course on
mathematics, statistics and econometrics. The course runs from the middle of January for
three weeks each year. The objective of this course is twofold: Firstly to ensure that the
students are equipped with the minimum basic quantitative competencies needed to start
with the quantitative part of the Masters programme and secondly, to ensure that all
learners commence the Masters programme from an equal base in terms of basic
quantitative competencies. Admission to the bridging course is preceded by a selection
process based on existing academic qualifications and results and prior market

6.     Contact Information

                      Program coordinator / Contact person:
                                Dr Christie Schoeman
                  Department of Economics and Econometrics (APK)
                                 Office: D Ring 210
                                Phone: 011 559 2062
                                 Fax: 011 559 3039
                    Email: or