Physics and Finance?

[Sir Isaac Newton]

Hey Forum

I am currently in my second year of uni and thinking about transferring to physics. I have always found physics interesting and would like to know if it has any relation with the financial world. I have found some relationships, such as the Black-Scholes (used in finance) and the Heat Diffusion equations. Would it be a good idea to take these two majors in a commerce/science degree? What would be the advantages/disadvantages of combining physics with say finance and/or actuarial? Basically, my concern is how would physics help me with employment prospects in the financial area. An employer might ask something along like, you did actuarial studies and/or finance, but why physics... but yeh I have heard that many physicists become quants... not really sure how true this is. Also, what are some employment areas for physics majors other than finance?

Thanks

[joe]

I have heard that many physicists become quants

Isaac Newton was arguably history's most successful economist, though he wasn't a quant.

So why? Physics look at a problem in the world, work out what are the important effects and quantify them. Then the look for underlying laws that govern these effects. From these they build a model. Then they solve the model to make predictions about the problem, and the whole set of problems of that nature. They then interpret the meanings of those predictions. And, if necessary, refine the model.

Replace 'world' with 'market', and you have a skill-set of interest to speculators. Physics training is broadly useful.

Would it be a good idea to take these two majors in a commerce/science degree?

Why not? If you like it and are good enough, you can become a physicist. If not, you can become a quant and get rich.

Joe

[Mini]

Why not? If you like it and are good enough, you can become a physicist. If not, you can become a quant and get rich.

That's correct, except that you wont become a physicist and an actuary (say) at the same time. This means that you will specialise in either physics or actuarial studies, but not both. So you will become better at one, rendering the other part useless for most jobs. I say "most" because it could be useful in some cases. It really depends what you want to do.

For example, you wont work as a physicist for 10 years then switch to work as an actuary. Because, if you do that then you will receive the same pay as an undergraduate actuary just out of university.

By the way, I'm sure you know, but Actuarial Studies is difficult for most people. Perhaps it isn't something you want to combine with Physics... but again, it's up to what you want to do after university.

[joe]

That reminds me. There was a medical doctor who did a PhD in astrophysics recently: he worked part-time and did his research part-time. He said that being a medical doctor was a very good PhD scholarship!

Joe