A quantitative analyst is one of the investment banking specialists who uses mathematical and statistical techniques to help a bank to determine the value of its assets. The job duties of a quantitative analyst are varied, depending on the investment bank in question. However, there are some standard duties that apply to all. These include analyzing data to determine how much the bank can expect to make on a certain asset in the future; and developing a model to allow the bank to assess the risk of keeping that particular asset.
In order to become a quantitative analyst, an individual must be a graduate of a four-year college with a major in mathematics or engineering. Prior to entering the profession, individuals must undergo a rigorous nine-month internship at an investment bank. During this time, they will be given an intensive training program in mathematical techniques as well as business mathematics. This training program can take up to three years, depending on the bank in question. Upon completion, an individual can pursue a bachelor's degree in mathematics or engineering, or they can continue on with their studies and get a master's or PhD in mathematics or related fields.
A quantitative analyst is usually involved in two separate but interconnected parts of the financial world: bond and equities. The jobs that quantitative analysts perform for an investment bank revolve around the study of both of these financial products. Their primary focus is to understand how interest rates affect the performance of both securities. They are also expected to have an understanding of how varying rates of taxation affects the profitability of different securities.
To become an effective quantitative analyst, it is necessary to possess analytical skills and a rigorous training regime. Most investment banks require potential candidates to pass a series of tests, including one that tests of mathematical reasoning. Other tests might be designed to measure one's writing and analytical skills. These tests and exams are used in deciding if an individual has the intelligence and skills required to become a quantitative analyst. Additionally, prospective candidates must complete an extensive curriculum and be trained in finance, statistics, and accounting in depth.
The primary function of a quantitative analyst within an investment bank is to analyze the financial documents of an investment institution. They often examine the financial statements of the institution as well as related documentation to determine the over-all health of the institution. This requires knowledge of multiple languages and the ability to read and understand financial reports in all of the various languages. Additionally, they must be proficient with spreadsheet applications. Quantitative analysts can work in a variety of departments within an investment bank such as risk management, global economics, or research. In some cases, they may be required to manage a small team of financial analysts as part of a larger team of investment bankers.
The primary responsibility of a quantitative analyst is to create financial analyses using mathematical, statistical, and economic principles. The goals of a quantitative analyst in an investment bank are to create and manage risk assessments, formulate methods of minimizing losses and maximizing profits, and develop analytical models and tools to support internal controls. In addition to their work in an investment bank, many quantitative specialists are also employed by large government agencies such as the Federal Reserve.