The Hindu Business Line : `Inquisitiveness is key to financial engineering'

A sound knowledge of financial instruments, their applications, thorough knowledge of economic theory and theory of finance, mathematics, econometrics and statistics are the required ingredients for a financial engineer, says Dr B.S.R. Rao, Dean of International Institute for Insurance and Finance.

Addressing a workshop on `Financial Re-engineering' organised by the Confederation of Indian Industry (CII), he said financial engineers need to have advanced knowledge of theory in narrowly focussed areas. "For one, those involved in portfolio design will require advanced study in investment analysis, portfolio management and asset allocation. And those involved in mergers and acquisitions will need extensive study in capital budgeting techniques, agency costs and accounting and tax rules," he said.

Explaining the birth and growth of financial engineering, he said the financial markets, since 1960s, had witnessed huge movements in prices on financial markets, increased volatility and heightened uncertainty.

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