From the Heat equation to Financial security AMS conference on Education October 12, 2018 Sonin Kwon Ph.D., FSA, CFA, CAIA Managing Director, Derivative Portfolio Manager

Introduction CONTENTS PAGE As an employer and a colleague of mathematicians in the financial industry, I will try to address the following points: · Why mathematics education matters in the financial industry · What specific skills (math students have) are readily applicable at work · What other general skills math (or any) students need in order to thrive. CONTENTS PAGE Educational Requirements 3-4 Value of Mathematical thinking 5 Particular Equations 6 Other necessary skills 7

Educational requirements to join the workforce Actuaries require certification Actuaries as a risk management professional, develop protection products (insurance) and manage financials of providers Insurance companies are state regulated entities and Actuaries are certified professionals Path to the Fellowship of the Society of Actuaries includes passing exams on: Probability Financial Mathematics Actuarial Mathematics Statistics Predictive Analysis Economics, Investment, Accounting and Finance Quantify time value of money with uncertainty of events

Educational requirements to join the workforce Financial analysts require certification Financial analysts are involved in various investment related functions Chartered Financial Analysts work at wall street banks, brokerage firms and any other secondary financial firms Path to the Chartered Financial Analyst includes passing exams on: Statistics Financial Mathematics Economics Accounting Investments Portfolio management Risk management Estimate the value of the tangible and intangible objects

Value of Mathematical thinking Critical thinking skill Logical thesis of storyline Understanding of hypothesis Boundary conditions “#N/A” Evidence/Proof based debate Formulating conjectures Collecting and creating a model to check one’s understanding Code computer programs and have machine do the calculation

Particular Formulas Black-Sholes Time Value of money Crypto Currency Need to understand concepts and derivation of formulas

Quantitative Skills Large data New data Time series Regression Optimization Systematic investing/trading Statistics, Computer programing, Data science, AI & Machine learning

Day to day work Insurance liability estimation via cash flow models Scenario models to forecast economic conditions, risk management, option pricing Investment instrument valuation Developing derivative products Asset allocations Portfolio optimizations Mathematical Commonsense

Other important skills Written and verbal communication skills Presentation skills Collaboration Diversity and Inclusion Strategical Letting it go: 80/20 Negotiation What matters are People