What Is Financial Engineering?

According to Wikipedia, “Financial Engineering is a multidisciplinary field involving financial theory, methods of engineering , tools of mathematics and the practice of programming’’. It involves the use of practical methods using computational finance and mathematical finance to solve financial problems.

It involves the use of tools in the field of computer science, applied mathematics, statistics and economic theory. As a result, anyone who uses these tools in finance qualifies to be called a “Financial Engineer”.

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It can be used or is applicable in the following fields;

  • Financial regulation
  • Corporate finance
  • Arbitrage trading
  • Risk management
  • Valuation of options
  • Portfolio management
  • Trading
  • Etc

Financial engineering is used by financial engineers in risk management by running a measurable risk prototypes to foresee how an investment tool will perform.

One might be tempted to think that it falls under a traditional professional engineering due to its name. However, that is not the case although most financial engineers have studied engineering in the past.


Below are answers to some frequently asked questions

Q1. Who is a Financial Engineer?

A Financial Engineer advises customers on investment strategies and risk management grounded on quantitative analysis of the stock market and make the necessary recommendations to avoid any risky investments.

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Q2. Where does Financial Engineers work?

Financial Engineers work in insurance companies, investment banks, hedge funds, commercial banks, etc.

Q3. How do I become a financial engineer?

To become an F. Engineer, one must have obtained a Master’s Degree in Financial Engineering. Here in the United States, such certification must be from a University with accreditation from the International Association of Quantitative Finance.

However, some people address graduate in the field also as financial engineers. New York University Polytechnic School of Engineering’s financial engineering program was the first to be certified by the International Association of Financial Engineers.

Q4. What jobs can I do with a Degree in Financial Engineering?

There are several careers you can do with a degree in F. engineering. Jobs you can do with this degree include;

  • Financial analyst
  • Financial specialist
  • Market analyst
  • Data analyst
  • Risk analyst
  • Portfolio analyst
  • Data scientist
  • Portfolio manager
  • Risk manager
  • Sales engineer
  • Financial adviser, etc.


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