Friday, June 03, 2005

why MFE

As an engineering consultant, I have been working on Risk analysis problems - involving various industries - Insurance, Chemicals, Utilities, Product development, etc. I have dealt with probabilistic analyses using Monte Carlo simulations, fault trees and Markov chain models.

However, it is interesting to note that it is the financial world that is using risk management more rigorously. In fact, some major innovations are taking place in the financial sector in regards to risk management and risk transfer. For exmaple, note the convergence of Insurance and finance sectors:

One of the hottest areas of finance today, alternative risk transfer, or ART, refers to the use of various insurance products to manage market, credit, operational, legal, environmental, and other forms of risk. As the capital and insurance markets continue to converge, the number and complexity of new risk-defraying insurance products available to corporations, brokerages, money managers and other financial professionals will continue to grow.

After reading books like "When Genius Fails" and "Liar's poker", and the book on derivatives by Hull, I am hooked. I want to get into quantitative finance and financial engineering. With my background in risk analysis, and computational prowess in VBA and MATLAB, I feel like MFE is the right course for my needs. Quant finance is the future and as computational resources increase in magnitude, so will innovation in this area.

MFE program at Berkeley is very appealing to me. The reasons are:
  1. The first Business school program to offer course in financial engineering.
  2. 1st in rankings of FE programs (global derivatives magazine)
  3. Bay area location
  4. Top notch faculty and other academic resources
  5. One year program with internship period


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