Financial Engineering

Financial Engineering is a multidisciplinary field involving financial theory, the methods of engineering, the tools of mathematics and the practice of programming. Financial engineering draws on tools from applied mathematics, computer science, statistics, and economic theory. EXIN Consultancy brings for you the importance of financial engineering in a business.

Also known by the name of financial mathematics, mathematical finance, and computational finance, final engineering is basically the application of mathematical methods to the solution of problems in finance. Investment banks, commercial banks, hedge funds, insurance companies, corporate treasuries, and regulatory agencies employ financial engineers. These businesses apply the methods of financial engineering to such problems as new product development, derivative securities valuation, portfolio structuring, risk management, and scenario simulation.

Financial engineering has led to the explosion of derivative trading that we see today. Since the Chicago Board Exchange was formed in 1973 and two of the first financial engineers, Fischer Black and Myron Scholes, published their option pricing model, trading in options and other derivatives has grown dramatically. 

Computational finance and mathematical finance are both subfields of financial engineering. Computational finance is a field in computer science and deals with the data which algorithms that arises in financial modeling whereas,  Mathematical finance is the application of theoretical mathematics to finance.

Despite its name, financial engineering does not belong to any of the fields in traditional engineering. Anyone who uses technical tools in finance could be called a financial engineer, for example any computer programmer in a bank or any statistician in a government economic bureau can be called a financial engineer.