FINANCIAL ENGINEERING

Computer Engineering electronics Engineering Civil Engineering

Financial engineering is a multidisciplinary field relating to the creation of new financial instruments and strategies, typically exotic options and specialized interest rate derivatives. The field applies engineering methodologies to problems in finance, and employs financial theory and applied mathematics, as well as computation and the practice of programming; see computational finance.Despite its name, financial engineering does not belong to any of the fields in traditional engineering. In the United States, the Accreditation Board for Engineering and Technology (ABET) does not accredit financial engineering degrees.Financial engineering is also the process of creating new securities or processes, and designing new financial instruments, especially derivative securities. More importantly financial engineering is the process of employing mathematical, finance and computer modeling skills to make pricing, hedging, trading and portfolio management decisions. Utilizing various derivative securities and othethods, financial engineering aims to precisely control the financial risk that an entity takes on. Methods can be employed to take on unlimited risks under certain events,or completely eliminate other risks by utilizing combinations of derivative and other securities. Financial engineering can be applied to many different types of currencies and pricing options. These include equity, fixed income such as bonds, commodities such as oil or gold, as well as derivatives, swaps, futures, forwards, options, and embedded options. With financial engineering comes many risks. Risks are divided into market risk and credit risk. Market risks can be managed using risk identification, risk measurements, and risk management. Credit risks can be managed using credit modeling and credit pricing. To become a financial engineer, one must have a strong understanding of financial economics, mathematical tools such as probability and statistics and differential equations, as well as loading..