Careers in Financial Mathematics

A graduate degree in Financial Mathematics gives you many employment opportunities in the business world. You may use econometric skills to assess and track risks for a bank, or you may advise traders and portfolio managers on investment selection. You also may engage in teaching at a university, or you could be a consultant for government entities, regulators and business entities.

  1. Risk Managers

    • As a risk manager, you use mathematics and statistical skills to appraise, price and track risks inherent in a financial institution's transactions. Your knowledge of capital markets products helps you work with traders, portfolio managers and clients, and allows you to provide risk-hedging strategies. You focus on two types of risk: market and credit. Market risk originates from fluctuations in securities prices. Methods such as VaR (Value at Risk) and Monte Carlo Simulation track such a risk. Credit risk arises from counter-party--or business partner--defaults, and is measured by internal models.

    Traders

    • Traders buy, hold or sell securities on financial markets, and make profits from price variations. As a trader, you may use a financial institution's own funds to select securities or you may trade on behalf of clients. Trading with corporate funds is called proprietary trading. Gains made or losses incurred in such transactions are recorded in a firm's profit and loss statement. Traders' assistants help you become profitable by applying math tools to price securities and providing you with real-time investment advice.

    Traders' Assistants

    • As a trader's assistant, you use statistical expertise to build computer programs and algorithms to value and track financial instruments in which portfolio managers, proprietary traders and clients are interested. You provide real-time advice, and you may work with risk managers to evaluate risk-hedging strategies. For example, you could signal an undervalued Swedish corporate bond to the European bonds trading desk and recommend a "buy" because you believe such a bond will increase in value in the next six months.

    Teachers and Researchers

    • With a graduate degree in financial mathematics, you could engage in teaching and conduct research at universities or other institutions of advanced learning--such as think tanks, research institutes or expert panels. You could specialize in a variety of fields, including econometrics, international taxation, quantitative finance, statistics or applied mathematics. Financial institutions, regulators and government bodies will seek your expertise on various topics. For instance, if you focus on international taxation, a U.S. Senate commission on tax and banking could ask you to aid in drafting new legislation.

    Consultants

    • As a consultant, you advise a variety of clients on investment decisions and risk-hedging strategies. These clients could include high-net-worth individuals, university endowments or philanthropic institutions. Hedging a risk means reducing or eliminating it. You use quantitative skills to review clients' financial data, you review short- and long-term investment goals, and you appraise risk tolerance. Risk tolerance indicates how much loss an investor can incur before selling positions. You may work for an advisory firm or practice independently.

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