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Is there any relationship between finance and physics?

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Question added by Nuha Ali , writer , freelance
Date Posted: 2014/04/13
Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Yes there is a relation between finance and physics.

Managing money, just like a physics experiment, means dealing with numbers and varying quantities. And the connection goes deeper. Physics is actually about developing general descriptions - mathematical models - of the world around us. The banks now recognize that they have real practical use - for instance, in pricing financial deals by modeling the markets as 'almost random' processes and then calculating probabilities of future market movements; or in identifying patterns or trends in the market which may be used to develop profitable trading strategies.

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