The Science of Finance

With Sylvain Raynes

How to Eliminate Ponzi Schemes FOREVER

October 16, 2022
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commentary
Sylvain Raynes

Despite vigilant oversight, new Ponzi schemes frequently surface during macroeconomic shocks, with notable instances ranging from Charles Ponzi's deception in 1919 to Bernie Madoff's in 2009. Commercial banks have opaque operations that resemble Ponzi schemes, and a fundamental change in accounting rules using complex variables could address the main problem: the mischaracterization of principal as interest.

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Duration, Average Life, And All That

October 16, 2022
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commentary
Sylvain Raynes

Dr. Raynes aims to clarify the widespread confusion among practitioners regarding the concepts of duration and average life in bond analysis, emphasizing their mathematical differences: duration measures a bond’s sensitivity to interest rate changes, focusing on total cash flow, whereas average life calculates the average time of principal repayments, treating time as an essential variable, but the two are indeed connected through mathematical formulations.

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The State of Financial Engineering 2006

October 1, 2006
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Sylvain Raynes

A Critical examination of financial engineering (FE) programs, stating that they largely focus on quantitative techniques out of context, failing to teach the practical aspects of finance, and often attract students with the promise of lucrative Wall Street jobs, despite graduates often being relegated to marginalized roles. These programs, even at prestigious institutions, are commercialized, teaching standard techniques that are not exclusive to finance and ignoring key foundational elements of numerical analysis, leaving students ill-equipped to face the practical and rapidly changing field of finance.

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