Quantitative Finance Fundamentals

Quants use math, data, and AI to make predictions, while most investors pick stocks based on hunches or recommendations Quants only care about making money, while most investors want the market to go up Quants use complex derivatives like options and futures, while most investors stick to stocks and bonds Quants are more risk-averse than most investors

Stock returns follow a random, unpredictable pattern Stock returns follow a normal distribution Stock returns are always positive Stock returns are always negative

Mean and variance Mean and standard deviation Median and mode Skewness and kurtosis

True

False

Mean Standard deviation Correlation Skewness

True

False

Estimating a large number of means, standard deviations, and correlations Dealing with limited historical data Accounting for non-normal distributions of stock returns Optimizing the portfolio for maximum return

Betting on the relative performance of two related assets Buying and selling the same asset at different times Diversifying a portfolio by investing in two unrelated assets Shorting an asset and using the proceeds to buy another asset