Financial engineering
Financial engineering is also termed as financial mathematics and refers to the use of mathematical, statistical as well as scientific tools to come up with solutions for financial issues. With the tools mentioned above, experts in the field of financial engineering refer to various economic and fiscal theories and policies to give a comprehensive solution.
It is worthwhile to note that financial engineering is not taught in any engineering institute, they are in fact taught by accredited financial institutions.
Utilities by Financial Engineering
- It helps in the decision making process related to pricing, hedging and trading.
- It aids in designing one’s investment portfolio.
- The various tools helps in maximizing profits by maintaining optimum ratios of different products like equities, debts, futures, etc
- It facilitates bundling and unbundling of securities.
- It provides a standardized platform for decision making.
- It takes into account a number of parameters that contribute to the decision making and inter-relates the parameters to get a holistic picture.
Financial engineering is an innovative tool that has changed the process flow of financial institutions. They play an important role in risk management, conversion of long term obligations into short term, etc.
