University of Mumbai

MSc Finance
Programme Structure and Syllabus
Programme Structure

Code Course Title Contact Hours Credits

Per Week
Foundation Course
PSFN-0T01 Basic Economics 6 Hours …
PSFN-0T02 Basic Quantitative Methods 6 Hours …
PSFN-0T03 Basic Accounting 6 Hours …
PSFN-0T04 Basic Computing 6 Hours …

Semester I
PSFN-1T01 Economics 6 Hours 4 credits
PSFN-1T02 Quantitative Methods 6 Hours 4 credits
PSFN-1T03 Accounting and Financial Reporting 6 Hours 4 credits
PSFN-1T04 Financial Management 6 Hours 4 credits
PSFN-1P01 Practical 1: Quantitative Methods 3 Hours 4 credits
PSFN-1P02 Practical 2: Accounting and Financial Reporting 3 Hours 4 credits

Semester II
PSFN-2T05 Corporate Governance & Regulatory Environment 6 Hours 4 credits
PSFN-2T06 Corporate Finance 6 Hours 4 credits
PSFN-2T07 Econometrics and Financial Modeling 6 Hours 4 credits
PSFN-2T08 Financial Markets and Institutions 6 Hours 4 credits
PSFN-2T09 Fixed Income Securities 6 Hours 4 credits
PSFN-2P03 Practical 3: Econometrics and Financial Modeling 3 Hours 2 credits
PSFN-2P04 Practical 4: Fixed Income Securities 3 Hours 2 credits

Semester III
PSFN-3T10 Technical Analysis 6 Hours 4 credits
PSFN-3T11 Portfolio Analysis and Management 6 Hours 4 credits
PSFN-3T12 Derivatives 6 Hours 4 credits
PSFN-3P05 Practical 5: Technical Analysis 3 Hours 4 credits
PSFN-3P06 Practical 6: Portfolio Analysis and Management 3 Hours 4 credits
PSFN-3P07 Summer Project … 4 credits

Semester IV
PSFN-4T13 Mergers, Acquisitions and Corporate Restructuring 6 Hours 4 credits
PSFN-4T14 Structured Finance 6 Hours 4 credits
PSFN-4T15 Risk Management 6 Hours 4 credits
PSFN-4T16 International Finance 6 Hours 4 credits
PSFN-4P08 Dissertation … 8 credits

Total Credits 96 credits

Foundation Course
Foundation Course PSFN-0T01

Basic Economics
1 Nature, scope and methods of economics
2 Markets and Resource Allocation: Wants, limited resources and choice; Demand curves and
functions; Supply curves and functions; Price determination; Changes in market price and
quantity; Resource allocation in different economic systems.
3 Demand, Revenue and Consumer Behaviour: Price elasticity of demand; Price elasticity of
demand (PED) and revenue; Total, average and marginal revenue; Elasticity and tax
incidence; Other elasticity of demand; Veblen effect and consumer behaviour; Consumer
surplus; consumer choice, utility, diminishing marginal utility, consumer choice and
equilibrium, consumer surplus, indifference curve analysis.
4 Supply, Production and Cost: Factors of production; Combining factors of production: the
laws of returns; Costs of production: short run; Costs of production: long run; Deciding
whether to produce in the short run and the long run; Price elasticity of supply (PES);
Outsourcing and cost; Governments, location and cost; Producer surplus.
5 Market Structures: Perfect competition; Contestable market theory; Monopoly;
Monopolistic competition; Oligopoly.
6 Market Failure, Regulation and Competition: Types of market failure; Correcting market
failures; Deregulation and privatisation; competition policy, overview of competition laws in
India.
7 Money and Banking: The Origins of Money; Money Supply; Money Creation Process; Central
Bank Tools for Changing the Money Supply.
8 Measuring Economic Performance: National Income Accounting; National income:
definitions and measurement; National income data: international comparisons;
Components of the circular flow; Equilibrium in the circular flow; Changes in national
income; National income multiplier; Inflationary and deflationary gaps; Measuring Price
Changes and the Unemployment Rate.
9 Economic Changes and Cycles: Inflation and Deflation; Business Cycles; Economic Growth;
National Income Determination.

Required Text
Economics for Business and Management 3e by Griffiths and Wall, Pearson (2011).

Reference Test
Economics by N. Gregory Mankiw and Mark P. Taylor (2006), Thompson Learning.
Foundation Course PSFN-0T02

Basic Quantitative Methods

1 Introductory Algebra
(a) Properties and Principles of Equations - Addition and Subtraction Properties of
Equations; Multiplication and Division Properties of Equations; Using the Properties
to Simplify Terms in Equations, including Variables; Transformation Principles;
Solving Problems using Equations and Inequalities.
(b) Exponents and Roots - Bases, Factors, and Exponents; Expressing Exponents in
Words; Negative Exponents and Negative Bases; Adding and Subtracting Numbers
with Exponents; Multiplying and Dividing Numbers with Exponents.
(c) Polynomials - Adding and Subtracting Polynomials; Multiplying and Dividing
Polynomials; The Product of Powers and the Power of a Product; Uses of
Polynomials – Area and Volume Problems.
2 Linear Equations: Graphs of linear equations; Algebraic solution of simultaneous linear
equations; Supply and demand analysis; Algebraic solution of simultaneous equations;
Transposition of formulae; National income determination using linear equations.
3 Non-linear Equations: Quadratic functions; Revenue, cost and profit; Indices and logarithms;
Exponential and natural logarithm functions.
4 Differentiation and Integration: The derivative of a function; Rules of differentiation;
Marginal functions; Optimization of economic functions; derivative of the exponential and
natural logarithm functions; Indefinite integration; Definite integration.
5 Combinatorial Problems: The Addition Principle; Tree Diagrams and the Multiplication
Principle; Permutations and Combinations; Permutations with Repetitions.
6 Descriptive Statistics: Meaning and nature of statistics; sampling and data collection;
presenting and describing small data sets; presenting and describing large data sets;
measures of location; measures of variation; index numbers.
7 Probabilities: Relative Frequency and the Axioms of Probabilities; Probability Assignments by
Combinatorial Methods; Independence; Conditional Probabilities; Theorem of Total
Probability and the Theorem of Bayes. Probability Distributions: The binomial distribution;
Poisson distribution; exponential distribution; normal distribution.
8 Modelling simple relationships
Relationships, functions and equations; Linear functions; Least-squares linear regression;
appropriateness and correlation.

Required Texts
 Mathematics for Economics and Business 5e by Ian Jacques, FT Prentice Hall (2006).
 Statistics for Business and Economics by David R. Anderson, Dennis J. Sweeney, Thomas A.
Williams, South Western Cengage Learning (2008).

Reference Text
Mathematics for Finance : An Introduction to Financial Engineering by Marek Capinski and Tomasz
Zastawniak, published by Springer (2003).
Foundation Course PSFN-0T03

Basic Accounting
1 Context and Purpose of Financial Accounting: Nature of financial and managerial accounting
information; accounting profession and accounting careers; accounting equation; Core
financial statements.
2 The Use of Double-Entry and accounting systems: Accounts, debits and credits; The journal;
The general ledger; Trial balance; Computerized processing systems; T-Accounts; Double-
entry book-keeping principles including the maintenance of records and sources of
information; Recording Transactions and events - Sales and purchases; cash; stock; tangible
fixed assets; depreciation; intangible fixed assets and amortisation; accruals and
prepayments; debtors and creditors; provisions and contingencies; capital structure and
finance costs.
3 Income Measurement: Measurement transactions and events; periodicity assumption and
its accounting implications; Basic elements of revenue recognition; Basic elements of
expense recognition; adjusting process and related entries; Accrual versus cash-basis
accounting.
4 The Reporting Cycle: The easo s fo a d o je ti es of fi a ial epo ti g; use s’ a d
stakeholde s’ eeds; the ai ele e ts of fi a ial epo ti g; Preparation of financial
statements; accounting cycle and closing process; importance of business liquidity and the
concept of an operating cycle.
5 Qualitative Characteristics of Financial Information: Define, understand, and apply
accounting concepts, including concept of true and fair view, going concern, accruals,
consistency, materiality, relevance, reliability, substance over form, neutrality, prudence,
completeness, comparability, understandability, and business entity concept.
6 Managerial Accounting: Distinguishing characteristics of managerial accounting; Managerial
accounting's role in planning, directing, and controlling; Key production components: direct
materials, direct labor, and factory overhead; Product costs versus period costs; Categories
of inventory for manufacturers and related financial statement implications.
6 Cost-Volume-Profit and Business Scalability: Cost behavior patterns and implications for
managing a business; Methods of cost behavior analysis; Break-even and target income
analysis; Cost and profit sensitivity analysis; Cost-volume-profit analysis for multiple
products; Critical assumptions of cost-volume-profit modeling.

Required Texts
Financial and Management Accounting: An Introduction by Pauline Weetman, Pearson (2010).

Reference Text
Financial and Managerial Accounting by Charles Horngren & Walter Harrison (Prentice-Hall).
Foundation Course PSFN-0T04

Basic Computing
1 Introduction to Computer Programming: Introduction to computers, programming and
algorithms, Overview of Software Development; Phases in the Execution of a Computer
Programme; Overview of Problem-Solving Techniques; Overview of Programme Types;
Identifying the phases in the execution of a computer programme; Computer programmes
and programming languages; Problem-solving techniques.
2 Using Data and Variables: Fundamental concepts of variables and data types; Using
Variables; Using Operators; Using Programming Syntax.
3 Using Programme Logic: Common programming constructs; Control programme flow;
Implementing conditional expressions and looping statements; Using Branching; Using
Loops; Identifying Logic Errors.
4 Using Procedures and Functions: Use of procedures and functions to create more modular
computer programmes; Arguments and parameters; Identifying Functions; Passing
Arguments to a Procedure.
5 Developing a User Interface: Designing user interfaces for software applications; Best
practices for user interface design; Identify the features of a good user interface; Build
Windows-based and Web-based user interfaces.
6 Programming Approaches: Common programming methodologies; procedural programming;
object-oriented programming; Using the Procedural Programming Approach; Using the
Object-Oriented Programming Approach; Examining Classes; Features and advantages of
object-oriented programming.
7 Software Development Process: Phases of the software development lifec; Introduction to
the Unified Modeling Language; Developing Use-Case Diagrams; Examining Other UML
Diagrams; Introduction to object oriented programming (OOP) Taxonomies, inheritance,
modularity and reusability; Introduction to advanced data structures and classes methods
and attributes, public, private and protected.
8 Introduction to C/C++ ; Basic I/O, variables, conditional statements; loops;and functions,
scope, header files, break, continue, Exception handling; Function variables: scope, visibility
and lifetime Call by value/call by reference; Arrays, strings and pointers Static versus
dynamic memory allocation, multidimensional arrays.

Required Text
Concepts, Techniques, and Models of Computer Programming by Peter Van Roy and Seif Haridi, MIT
Press (2004).

Reference Text
Problem Solving and Programming Concepts by Maureen Sprankle, Jim Hubbard (Prentice Hall)
2008.
Semester I
Semester I PSFN-1T01

Economics

1 Microeconomics
Consumer Theory: Choice, Preferences, Utility; Demand, Revealed Preferences, Comparative
Statics; Consumer Surplus, Aggregation; Variations to the Basic Choice Model (Time,
Uncertainty). Producer Theory: Technology, Profit Maximization, Cost Minimization; Supply,
Aggregation Markets; Monopoly; Oligopoly and Game Theory; Walrasian Equilibrium.
Market Failures: Externalities; Public Goods; Small Number of Agents, Nash Bargaining.
Asymmetric Information: Adverse Selection, Moral Hazard, Principal-Agent Model; Auction
Design; Voting and Other Applications.
2 Macroeconomics
An overview of the modern market economy as a system for dealing with the problem of
scarcity. The analysis of relationships among such variables as national income, employment,
inflation and the quantity of money.
Managing aggregate demand; fiscal policy; money and the banking system; monetary policy;
the debate over monetary and fiscal policy; budget deficits in the short and long run; trade-
off between inflation and unemployment.
4 International Economics
Trade Theories: Ricardian Trade Model; Modern Trade Theory; Trade and Income
Distribution; Alternative Trade Theories. Trade Policy: Commercial Policy: Tariffs and
Nontariff Trade Barriers; Political Economy of Trade Policy; Economic Integration (Free Trade
Agreements); International Factor Movements and Multinational Enterprises; Balance of
Payments; Foreign Exchange Market; Exchange Rate Determination; Modern Exchange Rate
System and Policies.
5 Financial Economics
Fundamental Theory of Finance: Absence of Arbitrage and Efficient Markets; Existence of
Positive Linear Pricing Rule; Risk Neutral (Martingale) Probabilities and State Pricing.
Preferences and Uncertainty: Expected Utility Theory; Linear Risk Tolerance Preferences;
Je se ’s I e ualit a d Risk A e sio ; O de i g P efe e es Risk Aversion; Stochastic
Dominance; Insurance and Certainty Equivalence; Alternative Psychological and Behavioral
Approaches.

Required Texts
Economics by N. Gregory Mankiw and Mark P. Taylor (2006), Thompson Learning.

Reference Test
 Intermediate Microeconomics 7e by Varian, Hal R., W.W. Norton (2005).
 Macroeconomics 6e by Abel, Bernanke, and Croushore, Prentice Hall (2007).
 International Economics 13e by Robert J. Carbaugh ITP (2010).
 Financial Economics 2e by Z. Bodie (2008), Pearson Education India.
Semester I PSFN-1T02

Quantitative Methods
1 Review of basic probability models; combinatorics; random variables; discrete and
continuous probability distributions.
2 Generating Functions: Discrete Distributions; Branching Processes; Continuous Densities.
3 Markov Chains: Introduction; Absorbing Markov Chains; Ergodic Markov Chains;
Fundamental Limit Theorem; Mean First Passage Time.
4 Random Walks: Random Walks in Euclidean Space; Gambler's Ruin; Arc Sine Laws
5 Inferential Statistics: Estimating and Confidence intervals; Hypothesis testing; Non-
parametric tests.
6 Financial Calculus: Taylor series; Ordinary differential equations; Similarity solutions;
B o ia otio ; “to hasti diffe e tial e uatio s; Itô’s le a; Co ti uous-time stochastic
differential equations as discrete-ti e p o esses; Co elated a do alks; Usi g Itô’s
lemma to manipulate stochastic differential equations.
7 Mathematical Programming: Linear Programming; Solving Linear Programs graphically;
Simplex Method; An introduction to non-linear programming.

Required Texts
 Probability and Random Processes by Grimmett and Stirzaker, Oxford University Press (1997).
 Time Series Analysis by J.D. Hamilton, Princeton University Press (1994).
 Quantitative Finance 2e by Paul Wilmott, John Wiley (2007)
 Mathematics for Finance Ma ek Capi ski a d To asz Zastawniak, Springer (2003).

Reference Text
Methods of Mathematical Finance by Ioannis Karatzas, Steven E. Shreve (Springer) 2011.
Semester I PSFN-1T03

Accounting, Financial Reporting &

Analysis
1 Context and Purpose of Financial Reporting: The reasons for and objectives of financial
epo ti g; use s’ a d stakeholde s’ eeds; the ai ele e ts of fi a ial epo ti g.
2 The qualitative characteristics of financial information: Define, understand, and apply
accounting concepts, including concept of true and fair view, going concern, accruals,
consistency, materiality, relevance, reliability, substance over form, neutrality, prudence,
completeness, comparability, understandability, and business entity concept.
3 Regulatory Framework of Accounting: Reasons for existence of a regulatory framework; legal
provisions relating to accounting; setting Indian accounting standards, convergence of
international accounting standards, International Financial Reporting Standards (IFRS).
4 Principles of Taxation: Principles of taxation, concepts of tax evasion, tax avoidance, and tax
planning, tax havens, overview of income tax, accounting for income tax, deferred tax
assets, and deferred tax liability.
5 Accounting and Analysis of Asset: Historical cost and conservatism, asset reporting
challenges, common misconceptions about asset accounting.
6 Accounting and Analysis of Liability and Equity: Liability definition and reporting challenges;
common misconceptions about liability accounting; equity definition and reporting
challenges.
8 Revenue Analysis: Revenue recognition rule, revenue recognition challenges
9 Expense Analysis: Matching and conservatism, expense reporting challenges.
10 Credit Analysis and Distress Prediction: Credit analysis process, prediction of distress and
turnaround.
11 Business Combinations: The concept and principles of a group; concept of consolidated
financial statements; preparation of consolidated financial statements.
12 Interpretations of financial statements: Ratio analysis; cash flow analysis; funds flow
analysis; value added statements; limitations of financial statements; Calculation and
i te p etatio of a ou ti g atios a d t e ds to add ess use s’ a d stakeholde s’ eeds;
limitations of interpretation techniques.

Required Texts
Financial Reporting and Analysis by Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred
Mittelstaedt McGraw-Hill (2011).

Reference Text
International Financial Reporting and Analysis by Alexander, Britton, Jorissen Thomson (2007).
Semester I PSFN-1T04

Financial Management
1 Introduction: Role of the corporate financial manager (CFO); corporate finance decisions;
goals of firm - profit maximization v. shareholders' wealth maximization; basic
responsibilities of financial managers; social responsibility of the firm; agency relationships
and conflicts.
2 Environment of finance: Financial markets – capital markets (equity markets, debt market),
money markets, foreign exchange market, and derivatives markets; term loans and leases;
accounting treatment of leases; convertibles, and warrants.
3 Valuation Concepts: Future values and compound interest; present values; level cash flows:
perpetuities and annuities; valuation of long-term securities; risk and return; measuring
portfolio risk.
4 Financial Planning: Introduction to financial planning; financial planning models;
components of a financial planning model; pitfalls in model design; role of financial planning
models; external financing and growth; deferred taxes and financial analysis; sustainable
growth modeling.
5 Working Capital Management and Short-Term Planning: Components of working capital,
working capital and the cash conversion cycle, working capital trade-off; links between long-
term and short-term financing; tracing changes in cash and working capital; cash budgeting,
forecast sources of cash, forecast uses of cash, a short-term financing plan, options for
short-term financing, evaluating the plan, sources of short-term financing; cash
management, management of account receivables.
6 Investment in Capital Assets: Capital budgeting and estimating cash flows; capital budgeting
techniques; multiple internal rates of return; replacement chain analysis; risk and
managerial options in capital budgeting.
7 Cost of Capital, Capital Structure, and Dividend Policy: Required returns and the cost of
capital; operating and financial leverage; capital structure determination; theories of capital
structure; dividend policy; theories of relevance and irrelevance of dividend policy.

Required Text
Fundamentals of Financial Management by Eugene F. Brigham, Joel F. Houston (2011), South
Western (Cengage Learning)

Reference Text
Fundamentals of Financial Management by James C. Van Horne, John M. Wachowicz (2008),
Prentice Hall.
Semester I PSFN-1P01

Practicals : Quantitative Methods

The application of the following topics to real world issues in Finance:

1 Generating Functions: Discrete Distributions; Branching Processes; Continuous Densities.

2 Markov Chains: Introduction; Absorbing Markov Chains; Ergodic Markov Chains;
Fundamental Limit Theorem; Mean First Passage Time.
3 Random Walks: Random Walks in Euclidean Space; Gambler's Ruin; Arc Sine Laws
4 Inferential Statistics: Estimating and Confidence intervals; Hypothesis testing; Non-
parametric tests.
5 Financial Calculus: Taylor series; Ordinary differential equations; Similarity solutions;
B o ia otio ; “to hasti diffe e tial e uatio s; Itô’s le a; Co ti uous-time stochastic
differential equations as discrete-ti e p o esses; Co elated a do alks; Usi g Itô’s
lemma to manipulate stochastic differential equations.
6 Mathematical Programming: Linear Programming; Solving Linear Programs graphically;
Simplex Method; An introduction to non-linear programming.
Semester I PSFN-1P02

Practicals : Accounting and Financial

Reporting
1 Analysis of an annual report of a listed company.
2 Analysis of a prospectus issued by a company launching an initial public offering (IPO)
3 Analysis of an industry report prepared by a major brokerage house.