There are two separate tracks within finance: one is corporate finance and the other is more quantitative. I have heard that only people going into the quantitative side, i.e. dealing with hedge funds and Asset Management, will need computer programming skills and higher end math skills (like multivariable calculus, linear algebra, etc.)
How much of a math background should a first year analyst in investment banking have? Would it be helpful to have a minor in mathematics or is that not helpful in this job title? One NYU professor said that corporate finance is more about dealing with people than numbers, especially in M&A.
Do any professionals in the banking industry have any input on this topic?
You use math all the time....however it's adding, subtracting, multiplying and dividing, with calculating compound growth rates thrown in. Understanding accounting concepts is much more important than multi-variable calculus or linear algebra, which you will not use at all. That being said, those classes won't hurt you on your resume--they'll give interviewers confidence you can pickup finance math, but they won't give you an edge either. I was an econ major at a school where econ was basically equivalent to being a math major, so took all those classes you listed above. Haven't used them once.
What Math is Most Relevant to IB? (Originally Posted: 05/20/2016)
I am starting university in September in a double degree program. The plan is to graduate with a math degree from Waterloo and a BBA (finance) from Laurier (a university that you may not have heard of but is well represented on Bay St.) and I will have 4 coop terms. Which math specialization would make me most marketable when applying to IB jobs or trading jobs on Bay St. Here are my options: actuarial science, applied math, combinatorics and optimization, operations research, stats, data science, and pure math (would rather not do pure). Thank you!
"We are not talking about brain surgery here. This is finance - add, subtract, multiply, and divide" - Stephen A. Schwarzman, CEO and Co-Founder of The Blackstone Group
Who said that? The guy that made $799 million last year?
^This is pretty much true for any job in investment banking and many trading jobs as well. So unless you are interested in being a quant, the one that will make you most marketable is the one in which you will get the highest grades.
How long have you been waiting to pull out that quote?? haha that was perfect!
For investment banking and PE you don't need anything beyond basic algebra.
For the more quantitative oriented trading desks and investing firms you'll need advanced statistics and data science skillsets.
Thanks for your responses, guys. Do you think having a strong math background will help me score more interviews than I may if I only have a finance/business degree?
For IB? Not really - unless you get like 3.9 GPA in what's perceived as a "hard" major, then maybe someone will be slightly impressed.
I do not think it will give you that much of a leg up, if any. My understanding is people love to see liberal art degrees in addition to a finance degree.
A math degree will be applicable for a quant position, but not simple finance as much.
-XSX
There's a lot of overlap in those specializations. Applied Math would include combinatorics, optimization, OR, stats, etc. The only one that really stands out is Pure.
statistics
Mental math....
add, subtract, multiply, and divide (on the Street, they disguise the last as "ratio", "multiple", "percent of X", etc.)
If you want to be a quant, then any STEM major is fine as long as you do well in your courses. Most relevant concepts are in statistics and probability.
not all stem majors are fine for quant. Its usually some combination of math physics or CS
The double degree offered by Laurier & Waterloo is a strong choice for trading and math heavy business roles. You can get to IB from there, but why would you want to if you had the option to be a trader? Investment banking is a miserable job...
Of the options you listed, I would personally choose applied math. You could always pick up a masters in stats, operations research, etc. later, and it's easier to go from applied math to something more specialized than vice versa.
You do realize that this isn't 2006 and trading isn't what it used to be? Have fun trying to get the handful of jobs that are left -- because all the senior guys are sticking around as long as they can now -- getting a shit bonus, taking no prop positions, and potentially exiting to being a button-pusher at a hedge fund.
Stochastic calculus
Applied math for sure, stats and data science you can pick up fairly easily doing short courses and self study if you have the aptitude (which you obviously do).
Actuarial science is a decent choice as well but limits your career options somewhat ( it's a comfortable, well paid pigeon hole though).
Math Used in IB? (Originally Posted: 06/24/2013)
From what I have read on this forum in the past, I was under the impression that analysts only use addition, subtraction, multiplication, and division.
Now that I am starting training and am currently doing some of the material given to me to study, it appears that I need to know a good deal of calculus, statistics, and linear algebra. Some of my friends at other shops are seeing the same. Granted the material is not hard for me (took a bunch of math classes in undergrad), but I could see a couple people getting blindsided by the amount of advanced math you need to know.
Is this commonplace at BB's and elite boutiques? How much of this will I actually be using for work?
little 2 none - they tested us two, just to make sure you understand basics
I personally believe the Corporate Wallstreet Bankers are unable to do so because, uh, some, uh...people out there in our nation don't have calculators, and, uh, I believe that our education like such as University of Pheonix and, uh, the Harvard Extension everywhere like, such as and...I believe that they should, our math education over here in the Wall Street should help the Wall Street hedge fund bankers , err, uh, should help CEO finanical bankers and should help the London corporate executives and the Asian employees, so we will be able to build up our future for our future
Could you translate this to english?
Haha this made my day.
cocaine is a helluva drug - Rick "most impersonated celebrity of the early 2000's cuz of Chapelle" James
haha, well played
Kindly throw this scholar some bananas. I'm all out.
Linear algebra like multiplying matrices? Or solving for rank and nullspace? Eigenvectors?
You need to know how to do math in your head. If someone is looking for an approximate deal value on the spot, you need to know what multiple to apply to a given EBITDA and what value it equates to. More back of the envelope.
Any math is quite easy, even if there is algebra, calc, whatever. And I'm no math genius.
I 3 peinvestor2012 clever, humble, and outspoken, all at the same time
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