THE ADVANCED mathematics that now drives the world’s financial markets is here to stay. It is not possible to return to a simpler time and markets will continue to evolve rapidly as a result.
These innovative “financial science” models were also much better, however, at risk calculation, stated Nobel prize winner Prof Robert Merton, distinguished professor of finance at the Massachusetts Institute of Technology.
Prof Merton is in Dublin to deliver the annual Hamilton Lecture this evening. In a talk entitled " Observations on Mathematical Finance in the Practice of Finance", he will talk about the current world economic crisis and also about the future beyond today's difficulties.
Financial innovation has been a feature of the world’s markets for more than 40 years, Prof Merton said yesterday after his arrival in Dublin.
It came out of a need that arose during the severe financial instability of the 1970s and new financial responses continue to be developed as a fresh need arises, he said.
Certainly the use of scientific finance had changed the market, allowing a high degree of “customisation” of financial products “at assembly line prices”. But it had also helped to identify and measure areas of risk associated with new products, he said.
All places at Prof Merton’s lecture are booked but seats may open before the lecture begins at 7pm. It takes place in the Edmund Burke Theatre, Arts Building, Trinity College Dublin.
The Hamilton Lecture is organised by the Royal Irish Academy, The Irish Times and Invest Northern Ireland.
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