8 Questions
What is the purpose of using derivatives in finance when trying to find maxima for a finance problem?
Derivatives are used in finance to find the maximum value of a function, such as the profit or the return on investment, by finding the critical points of the function and determining whether they are maximum points.
How can derivatives help in optimizing financial decision-making?
Derivatives can help in optimizing financial decision-making by providing information about the rate of change of a function, allowing financial analysts to determine the optimal values for variables that maximize profits or minimize risks.
Give an example of a finance problem where derivatives can be used to find the maximum value.
An example of a finance problem where derivatives can be used to find the maximum value is in portfolio management, where derivatives can help determine the optimal allocation of assets to maximize the return on investment while minimizing risks.
What are the two separate branches of finance that require advanced quantitative techniques?
derivatives pricing and risk and portfolio management
What are the fields that mathematical finance overlaps heavily with?
computational finance and financial engineering
What does the field of financial engineering focus on?
applications and modeling, often by help of stochastic asset models
What is quantitative investing based on?
statistical and numerical models (and lately machine learning)
Who is considered to have written the first scholarly work on mathematical finance?
Louis Bachelier
Test your knowledge on using derivatives to find maxima in finance problems. Learn how derivatives can optimize financial decision-making and explore an example where derivatives are used to find the maximum value.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
