I always find interesting when business major students claim they do not need to learn algebra or any mathematics course for their career because it only involves basic arithmetic. Well, I hope they read this interesting article from Plus Magazine about "Financial Mathematics." Click the link below to read the full article.

What is financial mathematics? I was drawn into financial maths not because I was interested in finance, but because I was interested in making good decisions in the face of uncertainty. Cardano, famously, commented that knowing that the chance of a fair dice coming up with a six is one in six is of no use to the gambler since probability does not predict the future. But it is of interest if you are trying to establish whether a gamble is fair or not; it helps in making good decisions. Financial mathematicians investigate markets on the basis of a simple premise; when you price an asset it should be impossible to make money without the risk of losing money, and by symmetry, it should be impossible to lose money without the chance of making money. Financial mathematics needs to tell not only what people ought to do, but also what people actually do. Banks need high level maths skills because that is how the bank makes money. |