Chartered Financial Economist®(Ch.E® – Finance)
Specialist Designation in Financial Economics [Course Outline]
The demand for highly skilled experts in financial economics continues to increase rapidly in the modern economy. This demand exists in the public sector (central banks, international organizations, academic institutions) and especially in the private sector (commercial banks and insurance companies). This course is designed to meet this demand for those students who seek a quantitative degree in financial economics, by combining a solid training in microeconomic and macroeconomic principles, as well as the quantitative methods and theory needed for the analysis of financial markets
Financial economics concentrates on decision making when two considerations are particularly important: first, some of the outcomes are risky; second, both the decisions and the outcomes may occur at different times. The subject is usually applied to investment decisions, particularly in financial markets such as the stock market, but it also has close links to the parts of microeconomics connected with insurance and saving.
Financial Economics is a fascinating area, having a history marked by outstanding achievements. A remarkable feature of this discipline is that its theoretical highlights (such as the Black-Scholes formula) turned out to be extremely important in practice. Fundamental ideas and tools of Financial Economics that were developed at the interface between Mathematical Economics and Finance created new markets essentially based on concepts suggested by academics.
A central goal of the course is to demonstrate the use of these ideas and tools in contexts where they are indispensable and widely exploited. The course will expose students to quantitative techniques and theory that will be useful to anyone in the financial industry – a portfolio manager, risk management consultant, or financial analyst.
Finance Industry Overview
The financial services sector in India, which accounts for 6 percent of the nation’s GDP, is growing rapidly. Although the sector consists of commercial banks, development finance institutions, nonbanking financial companies, insurance companies, cooperatives, mutual funds, and the new “payment banks,” it is dominated by banks, which holds over 60 percent share
According to a report by KPMG-CII, India’s banking sector is on the way to becoming the fifth largest in the world by 2020. The country’s life insurance sector is the biggest in the world, and the market size is expected to touch about $400 billion by 2020.
The assets of the mutual fund industry are worth $190 billion. The pension corpus fund is projected to record $1 trillion by 2025. Reforms to put the financial services industry and the economy on the fast track include measures to make finance available to medium, small, and micro industries.
The financial services industry encompasses many types of businesses involved in managing money, and it plays a vital intermediary role in the world’s economy. The industry as a whole is vast and includes companies engaged in activities such as investing, lending, insuring, securities trading and issuance, asset management, advising, accounting, foreign exchange, and more. Because of its large and diverse landscape, the financial services industry offers a wide range of career options. This course explores economic issues regarding the financial markets and their participants.
Program Objectives
The certification program of Chartered Financial Economist from AAFM, candidates benefit from a broad and well-rounded education, coupled with in-depth exposure to specific academic disciplines. The Certificate Program builds on this strong academic foundation: Students develop advanced skills in qualitative and quantitative reasoning; gain exposure to real-world corporate scenarios; understand the nuances of solving challenging business problems. This certification program produces highly skilled graduates who stand out from their peers in the marketplace.The program’s curriculum allows students to develop critical thinking skills, gain exposure to business applications and analytical models, and understand the qualitative analysis that underlies all strategic business decisions.
With this certification candidates are prepared for careers in areas such as asset management, investment banking; corporate financial management, mergers and acquisitions, and many more. More generally, candidate learns from the Certificate Program to work in groups and develop an appreciation for collaboration in academic and real-world settings.
Role of a Financial Economist
What do Financial Economists do?
- The financial economist helps to understand the various job duties undertaken by a financial economist. The financial economist is responsible for carrying out various researches and preparing reports and further formulating the plans that would help the company to solve any economic problems.
- The financial economist is responsible for the production and distribution of goods and services. They are also responsible for collecting and processing the economical and statistical data using various sampling and econometric techniques.
- The financial economists are generally hired to study, predict, and design the financial market for uplifting the company’s economy.
- The financial economics is a vast field and is categorized into various other subfields. Some of the common subfields of financial economics are as follows:
- Asset Management
- Investment Banking
- Commercial Banking and Management
- Financial Engineering
- Corporate Financial Management
- Consulting
- Private Equity
Financial Economists should:
Financial Economist analyzes the data and identifies the underlying principles, facts, and reasons. The financial economist is also responsible for undertaking other job duties as follows:- Receiving information from all the relevant sources and observing them
- Compiling and analyzing the data to explain the economic phenomena and calculating the market trends for applying statistical and mathematical techniques
- Undertaking researches on economic issues and circulating the findings through technical reports
- Consulting and assisting companies, organizations, and individuals on economic relationships
- Providing litigation support by documenting expert testimony or testifying as an expert witness
- Developing the economic guidelines and standards and suggesting points of view for formulating economic policy
- Studying economic and statistical data in the area of specialization such as finance, agriculture and/ or labor
- Contribute to strategic discussions/market access planning processes to enhance the effectiveness of implementation of corporate strategies
- Communicate financial assessment results to appropriate internal audiences
Apart from the above role of a Financial Economist; they are integral part of ongoing financial projects as they help in the following:
- Cash-flow analysis and building financial models
- Devising financing and capital structure strategies
- Analysis of mergers and acquisitions
- Researching capital budgets and other investment decisions
- Analyzing portfolio investments and asset management choices
- Developing and evaluating risk-management strategies
- Generating cash flow forecasts and valuation estimates
- Facilitating and preparing for client meetings
- Economic analysis, cash flow, risk analysis and valuation of the industry
- How cash flow analysis can be adjusted for risk and uncertainty?
- Prepare sensitivity/risk analysis reports.
Benefits of Program
- Financial economics builds heavily on microeconomics and basic accounting concepts. In addition, it requires familiarity with basic probability and statistics, since these are the standard tools used to measure and evaluate risk.
- This course is designed to provide both a self-contained study of the principles of financial economics, and a bridge to higher level courses in economics and finance. It includes a critical discussion of the efficient markets theory, an overview of quantitative methods in finance, considers risk aversion in the context of utility theory, examines portfolio theory, the Capital Asset Pricing Model and multi-factor asset pricing models, covers bond pricing, duration and convexity, behavioural finance theory, an introduction to the economics of financial crises, and introduces the top down approach to investment decisions.
- The emphasis is on a thorough coverage of modern finance theory as applied to investment analysis, balanced with a consideration of new developments in the discipline, and of the application of both old and new theoretical perspectives to understand the current environment for financial investment decisions.
Key Benefits of the Program
The course will give you better insight into the working of the economic sector of the country.
- Introduce some economics principles and applications that are crucial to managerial decision making
- Enhance critical thinking ability by considering the aspects of cost and benefit
- Develop a sound analytical and logical approach
- Develop an understanding of how different market structures work and how a company’s strategic decisions could depend on the particular market structure in which it operates
- Discuss and analyze a wide range of stylized business situations and real-world problems
- Develop some of the skills in demand for a successful career in business strategy
- Design sound policy using principles of behavioral economics
Why you should attend the program
Having this certification program, a candidate will be able to:
- Understand the primary functions of the Financial System
- Understand the structure of the Financial Markets
- Understand time value of money
- Understand how to value bonds & stocks
- Explain the Financial Market Instruments
- Understand time value of money and Valuation of Financial assets
- Explain the Functions of Financial Intermediaries
- Explain the types of Financial Intermediaries
- Explain Regulation of Financial Markets
- Explain the role of financial regulatory authorities
- Explain the role of central banking
Program Ideal For:
This program is designed for professionals who work in the finance industry, especially those with a background in finance and economics. The programme is designed for a wide range of professional skill sets, including:- Retail Bankers
- Corporate Bankers
- Investment Bankers
- Financial Traders
- Business and Banking Analysts
- Insurance Professional
- Financial Consultants
- Credit and Risk Analysts
- Wealth and Fund Managers
Educational Requirements
Minimum Qualification required to pursue the program:- For Graduates (Any Stream): Pass Level 1 – Chartered Economist Exam.
- For Post Graduates and above in Economics: Directly pursue the “Chartered Financial Economist” Designation.
Career Opportunities
A degree in economics with a specialization like – “Chartered Financial Economist” in finance, it will open the doors of opportunities in finance to you. Employment opportunities for students in Financial Economics are traditionally very good.
The high reputation of the “Chartered Financial Economist” having rich historical traditions, will serve as an excellent recommendation for job applicants. The high-quality training obtained in the course of the study within the Chartered Financial Economics programme will facilitate the future career of those who have got this degree. Here are some of the top career paths for financial economists:
- Asset Management
- Budget Analysts
- Commercial Banking
- Corporate Financial Management
- Financial Analysts
- Financial Engineering
- Investment Banking
- Investment or Portfolio Management
- Management of Financial Institutions
- Market Research Analysts
- Operation Research Analysts
- Private Equity Fund
- Research Economist
- Venture Capital Firms
Important skills required for Financial Economist
Key Skills and Proficiencies of a Financial Economist
- Analytical Skills: Economists must be able to review data in detail, observe patterns, perform advanced calculations, and draw logical conclusions. For example, labor economists analyze the effects of labor policies on employment.
- Critical-thinking Skills: Economists must be able to use logic and reasoning to solve complex problems. For instance, they might identify how economic trends may affect an organization.
- Speaking Skills: Economists must be able to explain their work to others and they often give presentations and explain reports to clients who may not have a background in economics.
- Writing Skills: Economists must be able to present their findings clearly. Many economists prepare reports for colleagues or clients; others write for publication in journals or for news media.
- Expert knowledge about economics and accounting with proficiency in accounting principles, financial markets, reporting of financial data, and banking analysis
- Expert in mathematical knowledge of algebra, geometry, statistics, calculus, and their applications
- Excellent verbal as well as written communication skills
- Ability to undertake researches and effectively identifying the problems
- Experienced in managing and organizing the overall financial department
- Prepare and maintain all the reports, documents, and statistics
- Knowledge about using various computer applications required for maintaining the financial records
- Knowledge about laws, government regulations, executive orders, and court procedures
Salary Prospect of Financial Economist
The median annual salary of a financial economist is about $99,000. The salary of a financial economist generally depends upon the field the economist is working in. According to various surveys, the average annual salary of a financial economist working in the investment sectors is about $150,000 while that of the economist working in the manufacturing sector is about $152,000. The salary of the financial economist, however, also depends upon the educational qualification, skills, and experience of the economist. The median annual wages for economists in the top industries in which they work are as follows:| Sector | Salary |
|---|---|
| Finance and Insurance | $124,660 |
| Government (excluding Postal Services) | $111,310 |
| Management and Scientific Technical Consulting Services | $110,900 |
| Scientific Research and Development Services | $102,000 |
| State Government | $69,170 |
Curriculum of Chartered Financial Economist
The curriculum of Chartered Financial Economist consists of in-depth study of financial economics, which is based on the core concepts of the finance; accounting and economics of the industry. Investigate & explore the moral and individual dimensions of financial economics and ethical viewpoint of financial industry and understand the moral responsibilities as a Chartered Financial Economist.
Principles of Finance
For a professional like a Chartered Financial Economist; an understanding of concepts of principles of fiancé and financial economics is of prime importance. This part of course content would enable the Chartered Financial Economist to get a basic understanding of the concepts of the financial market & institutions. This part of course would also cover the allocation of resources; household savings & investment decisions; analysis of investment projects and financial structure of the firm and corporate finance. The part of course would enable the Economics professionals in acquainting with the fundamental of time & uncertainty on value; discounted cash flows; equity & debt valuation; and term structure of interest rates of financial services. The objective of this part is to enable a Chartered Financial Economist to understand the portfolio theory; asset pricing theory; efficient market theory; financing decisions; and capital budgeting and structure.Investments
For a professional like a Chartered Financial Economist; an understanding of the investment market and portfolio management is the crucial aspect of the study. This part of course content would enable the Chartered Financial Economist to get a better understanding about the investment strategies; performance evaluation; risk management; liquidity and models of risk & return. This part of course would also cover the risk aversion and optimal portfolio. The part of course would enable the Economics professionals in acquainting with the fundamentals of capital asset pricing model. The objective of this part is to enable a Chartered Financial Economist to understand the market efficiency and hypothesis and market analysis.Derivatives
For a Chartered Financial Economist; know-how of the derivatives in the financial sector is the crucial aspect of the study. This part of course would enable the Chartered Financial Economist to get a better understanding about the pricing of forwards, futures, swaps and options; strategies for speculation and risk management. This part of course would also cover the no-arbitrage pricing; binomial option pricing models; Black-Scholes option pricing models of derivatives in investment. The part of course would enable the Economics professionals in foundation of derivatives pricing and modern risk management practice. The objective of this part is to enable a Chartered Financial Economist to understand the Delta-Hedging; Monte Carlo valuation; the Black-Scholes equation and exotic options. It also enables Economist to assess the fixed income derivatives and risk.Security Markets
For a Chartered Financial Economist; know-how of the multidate security markets is the crucial aspect of the study. This part of course would enable the Chartered Financial Economist to get a better understanding about the equilibrium in multidate security markets and multidate arbitrage and positivity. This part of course would also cover the dynamically complete markets and valuation. The part of course would enable the Economics professionals in martingale property of security prices. The objective of this part is to enable a Chartered Financial Economist to understand the importance of event price, risk-neutral probabilities and the pricing kernel and the security gains as martingales. It also enables Economist to understand the conditional consumption-based security pricing and conditional Beta pricing.Deposit Contracts and Banking
For a Chartered Financial Economist; understanding of the debt contract and credit rationing and banking is the crucial aspect of the study. This part of course would enable the Chartered Financial Economist to get a better understanding about the adverse selection in insurance markets; standard debt contract and credit rationing. This part of course would also cover the money as a means of payment; liquid & illiquid assets and the optimal contract. The part of course would enable the Economics professionals to understand the banks as deposit taking institutions; problems of deposit contracts and the adverse information, bank failure and bank runs. The objective of this part is to enable a Chartered Financial Economist to understand the bank regulation; reverse requirements; suspension of convertibility; deposit insurance and the capital adequacy requirements.Theory of Firm and the Financial Intermediaries
For a Chartered Financial Economist it is crucial to understand the basic model of theory of firm and the financial market and their intermediaries. This part of course would enable to get a better understanding about the Modigliani – Miller Theorem; firm’s decision rule. This part of course would also cover the financial market and financial intermediaries in theoretical context and evolutionary context.Time – Continuous Model of Financial Market
For a Chartered Financial Economist it is crucial to understand the time-continuous model of market. This part of course would enable to get a better understanding about the Black – Scholes formula and Brownian-motion. This part of course would also cover the time continuity and the mutual fund theorem and market equilibrium in continuous time.Finance-Informatics
For a Chartered Financial Economist it is important to know about the advancement & emerging technology used in the financial industry. This part of course would enable to get a better understanding about the information revealed by prices and information revealed by trade. This part of course would also cover the moral hazard and adverse effect of the information asymmetry of financial market. Apart from the above mentioned course content, AAFM suggest candidate/students to go beyond the course and study the following topics for better understandings of the certification course. These topics are:- Micro-economics
- Macro-economics
- Industrial Economics
- Introduction to Mathematical Economics
- Econometrics
Fee for Chartered Financial Economist
| Head | Resident Student | Overseas Student |
|---|---|---|
| Registration Fees$ | Rs.29,000 + GST | USD1000 |
| Registration Renewal | Rs.10,000 + GST | USD100 |
| Examination Fee–Chartered Economist®% | Rs.3,000 + GST | USD100 |
| Examination Fee–Chartered Health Economist® | Rs.10,000 + GST | USD100 |
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