Finance & economics
10 topics
Finance & economics
Quant finance
Quantitative finance uses mathematical models to price derivatives, manage risk, and construct portfolios. Built on stochastic calculus, partial differential equations, and probability theory, it connects deeply to physics, statistics, and optimisation.
Topics in this field
Black–Scholes Model
The foundational option pricing model. Derives a fair price from stochastic calculus and no-arbitrage.
Bond Pricing & Duration
Valuing fixed-income securities and measuring their interest rate sensitivity. Duration and convexity are the core risk metrics.
Copulas
Functions that model the dependence structure between random variables independently of their marginal distributions.
Geometric Brownian Motion
The stochastic process driving the Black-Scholes model. Ensures prices stay positive and returns are log-normally distributed.
Interest Rate Models
Stochastic models for the yield curve. Used to price bonds, swaps, caps, and swaptions.
Monte Carlo Methods in Finance
Simulating asset paths to price exotic derivatives and compute risk measures. The workhorse of quantitative trading desks.
Portfolio Optimization
Finding the allocation of capital across assets that maximises return for a given risk level. Markowitz's mean-variance framework is the foundation.
Risk-Neutral Pricing
The no-arbitrage framework for pricing derivatives. Any derivative price equals the discounted expectation under the risk-neutral measure.
Stochastic Volatility
Models where volatility itself is random. The Heston model gives closed-form option prices and captures the implied volatility smile.
Value at Risk
The loss level not exceeded with a given probability over a given horizon. The industry-standard risk measure for regulatory capital.