Have you ever wondered how weather forecasts and complex financial models are connected? Well, they are, thanks to some heavy-duty math! We're talking about weather derivatives, Black-Scholes equation, Feynman-Kac theorem, and the Fokker-Planck equation. These might sound like a mouthful, but they'r
Imagine if our pension system worked differently. Instead of today's pay-as-you-go (PAYG) method, what if pensions were funded by human capital investments? The PAYG system has a major flaw—it ignores who contributes to raising the next generation and even whether they do at all. This study suggests
Belarusian banks are making a big change by switching to international financial reporting standards, known as IFRS. This shift isn't easy, and one of the trickiest parts is figuring out how to handle loans and conditional obligations. These are rules set by the International Financial Reporting Sta
In investment, the Sharpe Ratio is used to measure the performance of a strategy. But how do you know if your strategy is the best among many options? Enter the Intersection-Union Test. This test is like a competition where you compare the Sharpe Ratio of your benchmark strategy with others. The coo
Ever thought about how traders keep their trades going without adding extra money? Welcome to the world of self-financing trading! This concept is a big deal in Quantitative Finance. It was first introduced by Harrison and Kreps in 1979 and expanded by Harrison and Pliska in 1981. In simple terms, s
Supply Chain Finance plays a key role in boosting competition within the supply chain and helps to move money around efficiently. It often involves services like financing accounts receivable, managing risks, and optimizing supply chain operations. Over the past decade, Blockchain technology has gai
Imagine you're exploring the world of finance, but this time, you're not dealing with probabilities. We're talking about a new approach called causal functional calculus. This method focuses on the paths taken by financial assets, not just their possible outcomes. One key idea here is something cal
Artificial Intelligence (AI) has been transforming the finance world for years, using both classic and modern techniques. Let's dive into the challenges, methods, and opportunities that AI brings to finance. First, let's look at the landscape of finance and the data it deals with. Finance businesse
Ever since the Middle Ages, international trade finance has been a key part of global business. It all started with local merchants and bankers creating their own unique financial assets. Over time, this system became more centralized, with leading trading centers like Antwerp, Amsterdam, and London
Behavioral finance, which studies how human psychology affects financial markets, has long pointed out three puzzles that seem to defy the theory of rational finance. These puzzles are the predictability of asset prices, the equity premium puzzle, and the volatility puzzle. In simple terms, these pu
