Dear Colleagues,

A branch of applied mathematics focused on the mathematical modeling of financial markets; mathematical finance is sometimes referred to as quantitative finance and financial mathematics. Generally speaking, risk and portfolio management and the pricing of derivatives are the two distinct areas of finance that need advanced quantitative methodologies. Computational finance and financial engineering share a lot of ground with mathematical finance. The latter focuses on modeling and applications, frequently using stochastic asset models, whereas the former focuses on creating models' implementation tools in addition to their analysis. Quantitative investing is also linked, using statistical and numerical models (and, more recently, machine learning) to manage portfolios rather than the more conventional fundamental analysis.

The field of financial economics, which is interested in much of the underlying theory involved in financial mathematics, has a tight connection to the topic. Comparatively, mathematical finance analysis will derive and extend the mathematical or numerical models without necessarily establishing a link to financial theory, taking observed market prices as input. Trained economists use complex economic models that are based on observed empirical relationships. See also asset pricing, financial modeling, and option valuation. One of the most important theorems in mathematical finance is the fundamental theorem of arbitrage-free pricing.

The main areas of study in financial mathematics are market modeling, data analysis, and applying mathematical concepts and equations to financial problems. Financial experts can better comprehend corporate performance with this method, including profitability and future growth possibilities. Learning more about this subject will assist you in acquiring the abilities required to succeed in various professions if you are interested in using mathematical techniques to make business decisions. Mathematical finance can be used in the following areas.

Risk Management

Risk management is one use of financial mathematics. Professionals can detect and manage financial risks by using this method. Financial analysts frequently use mathematics to examine market data, spot trends in data, and identify hazards. Several types of financial dangers can be encountered:

i. Market risk

ii. Operational risk

iii. Credit risk

iv. Liquidity risk

Data mining

Another use of financial mathematics is in data mining. Data mining is finding patterns and irregularities in data to make predictions. Data mining has several applications, including reducing costs, controlling financial risks, and more. Experts can employ data mining in several sectors, including insurance, manufacturing, banking, technology, and retail.

Stock trading

The study of financial mathematics is relevant to stock trading. The act of purchasing and selling stocks to profit from shifting market conditions is known as stock trading. By analyzing financial data to generate predictions and select the best stocks to purchase and sell, traders can benefit from an understanding of financial mathematics.

Econometrics

Econometrics can also be used to apply financial mathematics. To predict future market patterns, econometrics includes studying and interpreting economic data. Econometrics can aid businesses in making plans, such as how to set and allocate their budgets. Generally, econometrics focuses on the connections between variables and financial data.

Forecasting

For predicting, having a solid understanding of financial mathematics is essential. Forecasting is making forecasts about future events, such as sales, demand, and other market variables. Forecasting comes in a variety of forms, including both qualitative and quantitative forecasting. Proper forecasting can assist businesses in making wise financial choices that can enhance their overall success.

Marketing

A company's marketing plans can benefit from financial mathematics. You may choose which items to sell the most and when to start marketing campaigns by forecasting market demand. As a result, you may be able to develop marketing plans that are as impactful as feasible.

Inventory management

Inventory management benefits from the use of financial mathematics. By forecasting market demand, you may decide how much inventory to keep on hand and when to raise your list. Inventory managers may make wise business decisions about inventory by understanding financial mathematics, which can be applied to various inventory management techniques.

Investing strategies

Investment methods can benefit from the use of financial mathematics. You can make wise investments by examining data and creating forecasts. Investment bankers frequently employ financial mathematics when managing portfolios and making investments.

We look forward to receiving your contributions.

Prof. Dr. Kifayat Ullah
Prof. Dr. Jules Sadefo Kamdem
Prof. Dr. Sanjib Kumar Datta
Prof. Dr. Madjid Eshaghi Gordji
Section Editors

Financial Management; Risk Management; Risk Analysis; Investment Strategies; Project Evaluation; Financial Policies; Decision Making; Group Decision Making; Information Analysis; Evaluation of Financial Policies; Financial Calculations; Stochastic Processes; Portfolio Optimization; Black-Scholes Model; Monte Carlo Simulation; Interest Rates; Hedging Strategies; Option Pricing.