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Math in Quant Finance – Examples finance math



A subscriber asked about the usefulness of finance classes for a quant and for examples on how math is actually used in quantitative finance. I’ll use neural networks, time series, and the Black Scholes as examples of why knowing math is important.

Math is really the language of quantitative analysis while computer science is the language used to have a computer help us getting answers. Statistics is just the theory used to get inference about our data. When you combine math, computer science, and statistics while applying it to financial problems, we get quantitative finance.

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Math in Quant Finance - Examples

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Math in Quant Finance – Examples
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27 thoughts on “Math in Quant Finance – Examples finance math”

  1. I love your videos man! I’m in my second year undergrad studying financial mathematics and I am really enjoying learning all of the calculus, algebra, programming etc and I’m hoping to do a Masters in Quantitative Finance or Financial Engineering. Your videos are really informative and also encouraging so thank you for your contribution!

  2. hi, I am a software engineering bachelor degree student and I want to crash into finance (especially quantitative fin). Which major basic math&statistics should I cover? I am trying to find an answer for my question everywhere. Thank you!

  3. What is better a degree in computer science or Electrical engineering. I will end up in Rutgers, depending on the networking market, which major will help me the most.

  4. Hi Dimitri,
    I'm current a first year college thinking about work as a financial analyst, I'm interesting in both finance, economic, and math. I don't know what undergrad should I take. Should I do an Math/stastitic undergrad, then take a finance or econ master with an CFA, or just pursuing finance? I personally like to work at a bank or wealth management, but the entry is pretty barrier in the future.

  5. I am a mechanical engineer with 1 year work experience i would like to know if i persue a masters in quantitative finance willl i be able to get a job after i complete???please help

  6. Dimitri, I really appreciate your contents! I would be very grateful to hear your opinion about AI in quantitative finance, are we going to be obsolete in the next decades?

  7. Hi Dimitri, thanks for this video. I’m currently a CompSci background whilst trying to build my math knowledge. Would studying numerical methods (euler’s etc) be useful?

  8. Hey Dimitri, I am not sure of your journey exactly, but I am just finishing my Financial Economics undergrad, and am really interested in Quant finance since doing Advanced Econometrics as one of my 3rd year modules, whereby we used statistical models to delve into the financial world. In reviewing the quants masters courses, how necessary is it to be from a mathematics background (undergrad) and how much harder will it be for someone like myself who has done Economics BSc previously?

  9. Hey, thanks for these videos! BTW, a quick question, if punching in numbers into these default formulas in Excel, such as Black Scholes, without understanding and tweaking the underlying assumptions doesn't work in real life, why do so many 'mainstream non-quant MBA type' jobs exist in banking, financial services, insurance etc? In other words, are quant jobs eating into the mainstream finance job market as the years go by?

    I'm an ex-software engineer, will be in an MBA program in the near future, so, your insight into the industry's reality will be a major heads up!

    Thanks in advance.

  10. Hi Dimitri, I'm an undergrade student in finance and I'm planning to register in a MFE program. I'm currently looking for a book to ''update'' my math skills (Calculus, Linear algebra…) and I've found : A Primer For The Mathematics Of Financial Engineering, by Dan Stefanica. Do you happen to have read this book and/or have any other suggestion?

  11. Hello Dimitri, great video thank you for this channel, it is very informative.
    I want to get in contact with you and message you as I have a few questions about becoming a quant could you please direct me as to how I can do so thank you very much

  12. Hey Dimitri, I understand quantitative finance is a technical job. with a finance undergraduate how did you catch up in the mathematics/stats/programming considering your business degree had little of it?

  13. at an office i used to work at, they would blindly use Excel's =FORECAST() function to try and obtain the future numbers to get their NPVs, and of course it was hardly ever accurate. had to figure out and explain that the function was utilizing the Holt-Winters exponential smoothing method and most likely with fixed alpha, beta, and gamma values (i couldn't obtain the source of what Excel was using, but through experimentation it seemed like it at the time). so i wrote them my own version with modified level, trend, and seasonal formulas and actual optimized alpha, beta, gamma values. this is why you are so correct about those crappy pre-packaged "models" and actually needing to understand the technicalities underneath the hood!

  14. nice real life examples. the first time i worked with NNs i thought it was completely a CS thing but the programmer i was working with didn't know how to take partial derivatives for the gradient when generating the activation function's bias node

  15. Hi Dimitri, I love your videos and I am studying my Financial Engineering degree in Mexico.
    Right now I´m developing an Algorithmic Trading Strategy and I would like to contact you for future proyects and job opportunities.
    Can you please pass me you e-mail or FB?

    Also, great video.

  16. Another example of the use of Linear Algebra is Multivariate Statistics and Multivariate Probability, Multivariate Regression Analysis, basically ANYTHING MULTIVARIATE USES A LOT OF LINEAR ALGEBRA

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