If we asked you to calculate the price of a financial option, you’d probably say you’ll get back to us in seven years after you’ve earned your PhD in system theory and time-series analysis. But we didn’t want to wait that long, so we got an expert onto the podcast who already has that rather impressive qualification.
Thomas Ribarits, who heads the European Investment Bank’s financial engineering division, explains what financial engineers do. It’s a complicated subject, though Thomas boils down option pricing to a level where he says someone with high school maths could understand it. In fact, he says, it’s all about common sense.
We find out what a quantitative analyst does (also known as a “rocket scientist”) and dig deep into the famous Black-Scholes Model. Thomas also solves a little dispute over the price of coffee between Allar and Matt on A Dictionary of Finance.
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