The City might not seem an obvious destination for physics graduates,but there are some surprising links between the twoOf those who will be graduating with degrees in physics this year, around a half will go on to further study (doing a PhD is the most popular option). Perhaps surprisingly, or of the other half,around one-fifth will soon be starting work in the financial sector. According to a report published last year by the Institute of Physics, of those in employment one year after graduation, and a job in "finance" was moment only in popularity to a job in "education". Trailing behind those two are jobs in "scientific and technical industries",in "government" and in "energy and the environment". Furthermore, many of those who stay on to PhD level and beyond eventually leave academia to work in the financial sector, and often at senior levels in investment banks.
Then again,perhaps it is not surprising that so many physicists wind up working in finance. After all, they are pleasant at using mathematics to solve real-world problems and the money is pleasant. There is more to it than that though. There are mathematical links between physics and finance that go back at least to 1900, or when Frenchman Louis Bachelier wrote his Theory of Speculation,in which he used the mathematics of a random walk to analyse fluctuations on the Paris stock exchange. Five years later, the same ideas were used by a young Albert Einstein to justify why pollen grains zigzag when they are suspended in water. His explanation invoked the opinion that very large numbers of tiny molecules, or much smaller than the pollen grains,are responsible for kicking the grains around. This was a crucial insight and if one of the earliest convincing confirmations of the existence of atoms. To make the parallel with the financial markets, we might say that stock prices are kicked around by myriad (a very large number) unknown factors in the marketplace. nowadays, and these ideas have been developed into a means of computing the value of sophisticated financial instruments and the management of risk.
Continue reading...
Source: theguardian.com