Appendix A

IT Tools for Financial Asset Management and Engineering

Lucas Bernard

New York City College of Technology


The study of finance concerns itself with both theoretical and practical issues. The relationship between the volatilities and correlations of individual securities, and the volatility of a portfolio consisting of those securities, is an example of a theoretical issue, whereas the speed with which a stop loss order can be executed once it has been triggered is an example of a practical issue. Theoretical issues and practical issues are, of course, not necessarily independent of one another, but they are typically addressed by different groups of people. The solution to theoretical problems typically leads to efforts to implement the theory and that, in itself, can pose a number of computational problems. These computational problems can often be addressed with the aid of appropriate information technology (IT) tools. In this appendix, we will consider the role these tools can play in addressing computational problems. In the process we will touch on modeling tools, mathematical/statistical tools, and data tools. Numerous books have been written on each of these types of tools and this short appendix cannot possibly do these tools justice. But we hope that the new student of financial engineering will get a sense of what is available when he or she encounters problems where these tools may have a use.

In general, we can distinguish among four classes ...

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