Are the terms quantitative methods, modeling, and financial engineering used interchangeably?
No. The term quantitative methods refers in general to methods based on quantitative measurements as opposed to judgment. Example: selecting a firm based on the positive trend of its earnings as opposed to a qualitative judgment on its management. Modeling refers to mathematical and statistical relationships, typically embodied in computer programs, that describe the behavior of prices, returns, rates, and other financial quantities. Financial engineering is the model-based construction of products (i.e., contracts or portfolios) that satisfy specific financial objectives. Most financial engineering problems can be represented as optimization problems.
