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From the Heat equation to Financial s ecurity

From the Heat equation to Financial s ecurity. AMS conference on Education October 12, 2018 Sonin Kwon Ph.D., FSA, CFA, CAIA Managing Director, Derivative Portfolio Manager. Introduction.

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From the Heat equation to Financial s ecurity

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  1. From the Heat equation to Financial security AMS conference on Education October 12, 2018 Sonin Kwon Ph.D., FSA, CFA, CAIA Managing Director, Derivative Portfolio Manager

  2. Introduction As an employer and a colleague of mathematicians in the financial industry, I will try to address the following points: ·         Why mathematics education matters in the financial industry ·         What specific skills (math students have) are readily applicable at work  ·         What other general skills math (or any) students need in order to thrive. • CONTENTSPAGE • Educational Requirements 3-4 • Value of Mathematical thinking5 Particular Equations 6 • Other necessary skills 7

  3. Educational requirements to join the workforceActuaries require certification Actuaries as a risk management professional, develop protection products (insurance) and manage financials of providers Insurance companies are state regulated entities and Actuaries are certified professionals Path to the Fellowship of the Society of Actuaries includes passing exams on: • Probability • Financial Mathematics • Actuarial Mathematics • Statistics • Predictive Analysis • Economics, Investment, Accounting and Finance Quantify time value of money with uncertainty of events

  4. Educational requirements to join the workforceFinancial analysts require certification Financial analysts are involved in various investment related functions Chartered Financial Analysts work at wall street banks, brokerage firms and any other secondary financial firms Path to the Chartered Financial Analyst includes passing exams on: • Statistics • Financial Mathematics • Economics • Accounting • Investments • Portfolio management • Risk management Estimate the value of the tangible and intangible objects

  5. Value of Mathematical thinking • Critical thinking skill • Logical thesis of storyline • Understanding of hypothesis • Boundary conditions • “#N/A” • Evidence/Proof based debate • Formulating conjectures • Collecting and creating a model to check one’s understanding Code computer programs and have machine do the calculation

  6. Particular Formulas • Black-Sholes • Time Value of money • Crypto Currency • Need to understand concepts and derivation of formulas

  7. Quantitative Skills • Large data • New data • Time series • Regression • Optimization • Systematic investing/trading Statistics, Computer programing, Data science, AI & Machine learning

  8. Day to day work • Insurance liability estimation via cash flow models • Scenario models to forecast economic conditions, risk management, option pricing • Investment instrument valuation • Developing derivative products • Asset allocations • Portfolio optimizations Mathematical Commonsense

  9. Other important skills • Written and verbal communication skills • Presentation skills • Collaboration • Diversity and Inclusion • Strategical • Letting it go: 80/20 • Negotiation What matters are People

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