They tried to outsmart the Wall Street

I came across an interesting article where the downfall has been analyzed. Almost everyone is blaming the Quants, and how the whole motivation of Quants was nothing more than the greed!

Read the article here : They tried to Outsmart the Wall Street

Whats Financial Engineering?

While I am aspiring for a Finance degree in the years to come, I started to enquire about the term called Financial Engineering (also known as Computational Finance or the Quants in US lingo). Like any other Indian MBA aspirant, the first stop while searching for the same was PaGalGuy. But PaGalGuy didn't help me much in explaining the term, but was helpful in providing some useful pointers. And hence began my journey of Financial Engineering with the links that are given at the end of this page.

I have been able to understand by now that Financial Engineering is all about employing theoritical finance and computer modelling skills to make pricing, hedging, trading and portfolio management decisions. It utilizes various derivative securities and other methods, financial engineering aims to precisely control the financial risk that an entity takes on. Methods can be employed to take on unlimited risks under certain events, or completely elimintae other risks by utilizing combinations of derivatives and other securities.

The areas where Financial Engineering techniques are employes are:
- Investment Banking
- Corporate Strategic Planning
- Risk Management
- Primary and Derivatives trading or dealing
- Financial Information System Management
- Portfolio Management
- Securities Trading

This is a field of knowledge that is drawing the attention of computer science graduates with good mathematical background.

Basic Information about Financial Engineering :

- Wiki Page
- And this is what answers.com is saying about Financial Engineering
- A nice page for Financial Engineering by Kim Snider
- Financial Mathematics
- Defining Financial Engineering - @ Wilmott
- Dani Rodrik's weblog : Financial Innovation


More Information & Discussion and Further Reading on Financial Engineering

- This thread tries to answer a lot of questions based on Financial Engineering and it even tries to put a distinct line between the Financial Engineering and CFA
- This page acts as a pointer in the Financial Engineering, and this one acts as a updated and news for the same.
- A thread from WallStreetOasis for discussing Financial Engineering
- Also read this thread from Yahoo Answers where a lot of smoke is cleared from Financial Engineering
- Cause of Bubble : Investment vs Financial Engineering (must read this article if you are planning to for a career in Finance)
- A nice list of pointers for the Finance here
- The List of Finance Topics