The concept of financial engineering is as follows:
1. The creation of new financial instruments, such as the creation of the first zero-coupon bond, the first swap contract, etc.
2. The development and application of existing tools, such as applying futures trading to new fields and developing numerous options and swap varieties.
3. Use combination and decomposition technology to combine existing financial instruments and means to create new financial products, such as forward swaps, futures options, and the construction of new financial structures.
Financial engineering includes the design, development and implementation of innovative financial instruments and means, as well as creative solutions to financial problems. The concept of financial engineering has two kinds: narrow sense and broad sense. Financial engineering in a narrow sense mainly refers to the use of advanced mathematics and communication tools to carry out different forms of combination and decomposition based on various existing basic financial products.
To design new financial products that meet customer needs and have specific P/L properties. Financial engineering in a broad sense refers to all technological development that uses engineering means to solve financial problems. It includes not only financial product design, but also financial product pricing, trading strategy design, financial risk management and other aspects. This article adopts the broad concept of financial engineering.
Employment prospects of financial engineering:
The financial engineering major mainly uses computers to implement mathematical models to solve financial-related problems. Therefore, financial engineering is different from MBA and MSP. It mainly trains technical workers in the financial field, also known as financial engineers-quant. Quant positions are concentrated in investment banks, hedge funds, commercial banks and financial institutions.
The main tasks they are responsible for vary greatly depending on their positions. The more representative ones include pricing, model validation, research, development and risk management, which are respectively responsible for the establishment and application of derivatives pricing models, model validation, Model research, program development and risk management.