Those who pursue masters in mathematical finance deal with the use of math techniques to solve financial problems related to economics. They cover a number of things:
* Risk management
* Financial engineering
* Mathematical finance
* Computation finance
The degree is essential in the preparation of future quantitative analysts. It involves:
Applied sciences have seen a rise in the demand for those with academic qualifications in financial engineering. This degree helps the students to evolve their analytical skills. Their improved skills are as a result of the superiority in the tools they are involved in.
Mathematical finance offers varied approaches that help in the development of the students. They are able to apply rich and innovative approaches to the financial situations in the actual world. The lecturers for this degree are experts in the financial world. Others are responsible for the smooth operation of successful financial institutions. All the teaching staff can adequately handle risk management; determine the prices of derivatives and portfolio analysis.
There are a number of disadvantages associated with this degree program. This program offers a very restricted field of diversification. Banking and other management organisations have been known to ignore some of the impressive formulations derived through the study of the principle. This can be attributed to the fact that compensation and bonuses in any industry is determined by the profit ploughed in a certain financial year. Most people concentrate on the maximization of their investments without any consideration for the risks involved.
No one has the ability to accurately predict the future. Most of the professions in this are of study do not put into consideration the various variables that can determine the overall outcome. This takes away the sensitivity aspect since they do not consider volatility. Instead, they consider the constant values and then treat those as variables thereby distorting the overall result.
Price and value are very different aspects of the market. Price is largely dependent on factors like supply and demand. Quantitative analysts take into consideration various factors to calculate the value of a product theoretically. This is the price that will dictate the work of the sales team. The profit will be calculated as the difference between the cost of production and that of the theoretical value. In the event of calculating the value of a product, the difference between price and value is distorted.