**The Difference between quantitative finance and financial engineering ?**

**Basic Answer : Financial Engineering is profession where engineers creating products to help a given company and quantitative finance is profession where experts use math and statistics to measure risk, or invest money for a fund.**

The difference between these two names gives us some idea about what we should be looking for, but there is a lot more for us to think about whenever we look at these words.

Developing applications with Mathematical theory that is related to Measure theory, Applied Walks, Continuous Stochastic Processes, Ito Calculus, Stochastic Differential Equations, Martingales, more akin to the Sciences, such as Physics, Mathematics (a more rigorous level of Mathematics) are all seen as Mathematical Finance.

**Financial engineering** involves option pricing, Secularization, Products of Structured Finance, more akin to Electrical Engineering, it measures interrelationships with Copulas. It is not as rigorous as Mathematical Finance and is more focused on a specific problem on financing the complex structure

Financial engineering involves the practice of programming, financial theory, tools of mathematics and methods of engineering:

{1} Persons have seen as the application of technical methods, more computational finance and mathematical finance, in the financing practice.

{2} Even though a number of financial engineers have studied engineering before and there are Universities that offers postgraduate degrees in this field have requested that applicants should have an engineering background, even though financial engineering does not fit in with traditional professional engineering.

{3} In America, the Accreditation Board for Engineering and Technology (ABET) offers no accreditation for financial engineering degrees.

{4} The International Association of Quantitative Finance offers accreditation for the financial accreditation program.

{5} Tools from applied mathematics, statistics and economic theory, computer science are used in Financial engineering.

{6} Persons who use technical tools in finance, such as computer programmers in banks or statisticians who work in government economic bureau, are seen as financial engineers.

{7} Even though, there are many practitioners who restrict the term to persons who are educated in the full range of tools in modern finance and there work has to be informed by financial theory.

{8} Persons have even applied more restrictions, and only consider those who originate new financial strategies and products.

{9} Financial engineering is very important for persons who are involved in the customer-driven derivative businesses

{10} This includes programming and quantitative modelling, risk managing derivative products and trading that will comply with regulations and Basel Capital/liquidity requirements.

{11} **Quantitative analyst or Quant** covers all persons who work with math for practical purposes, such as financial engineers Quant also refferred to as „financial quant.“ They are also similar to the financial engineers.

{12} A theoretical quant, or a quant in only one special niche in finance is different from financial engineers who are practitioners with broad expertise.

{13} The first generation Financial quants to arrive on Wall Street in late 1970’s to early 1980’s adapted the names Rocket Scientists or aerospace engineers an older term which was first used when rockets were developed in Werner Van Braun or WWII and more recently, the NASA space program.

{14} Disruptive innovation which includes fondness and adventurousness are synonymous with financial engineers.

{15} There were Financial ’Rocket scientists“ trained in statistics or finance, applied mathematics, they spent their whole careers doing risk-taking. They applied mathematical techniques to financial jobs or worked for themselves, because they were not hired for their mathematical abilities.

However, more recently the financial engineers of this generation are equipped with their PhDs in physics and mathematics and they start their careers in non-financial fields or academics.

**Quantitative finance or Mathematical finance**, is applied mathematics in one place, if you are only interested in mathematical modeling of financial markets overall, mathematical finance will change and widen the numerical or mathematical models without connecting with financial theory, observed market prices will be taken as input Mathematical consistency is needed, not like economic theory, therefore a financial economist may study the structural reasons behind trhe share price of a certain company, while a financial mathematician would settle for the price they are given without checking anything, or they would use stochastic calculus to find the equal value of derivatives of the stock (see: Financial modelling; Asset Pricing; Valuation of options) In mathematical finance the fundamental theorem of arbitrage-free pricing is a key theorem. However, for the Black-Scholes formula and equation are found in the key results.

In the early 1990s the first degree programs were set up for Financial Engineering, but over the years the number of programs has increased very fast. Persons now refer to those who have a degree in the field as ’financial engineers“.

The term ’aggressive restructuring of corporate balance sheets“ is sometimes seen as a disparaging term; persons use it when they are speaking out against persons who they think are profiting from paper games that will cost employees and investors as well. However, the term financial engineering is more widely used in recent times.

The fields of Computational finance and financial engineering has been overlapped heavily by Mathematical finance. Financial engineering focuses on modeling and application, stochastic asset models often assist here. While Mathematical finance focuses on building tools of implementation for the models generally and analysis. Advanced quantitative techniques are required for both branches of finance: derivative pricing on one side and risk- and portfolio management on the other side.

Louis Bachelier a French mathematician is seen as the author of the first scholarly work on mathematical finance, Mathematical finance became a discipline in the 1970s even though the work was published in 1900. It followed the work of Robert Merton, Fischer Black and Myron Robert on option pricing theory.

Many degrees and research programs are being offered today for Mathematical financing.