Editor's note: New York University recently launched its MBA/MS in Mathematics in Finance. Designed for the aspiring "super quant manager," the dual-degree program is offered through a partnership of the NYU Stern School of Business and the NYU Courant Institute of Mathematical Sciences.TheStreet.com's Gregg Greenberg recently met with three of the architects of this joint program: NYU Stern Professor of Finance and Nobel Prize winner Robert Engle, NYU Courant Clinical Associate Professor of Mathematics Petter Kolm and NYU Stern Dean Thomas F. Cooley. The following is a transcript of that meeting. Gregg Greenberg: Why is now the time to create a dual degree to create a "super quant?" Professor Robert Engel: The demand for
Greenberg: Do you think the focus on quantitative studies blinds people to a certain respect to some of the
qualitative things that happen on Wall Street? For example, the case of Long-Term Capital Management : A lot of things can't be solved on that Excel spreadsheet. Engel: You know, you can say that about Long-Term Capital Management, but we see this every day in the newspapers now. We see that a lot of the turmoil in the financial markets today is actually related to derivatives products, which may not be well enough understood by the economists involved and the people who are sort of looking at the markets as a whole. So these products are being managed by quants who could use these additional skills. Greenberg: So people need to understand the theory as well as the mathematics. Kolm: It's crucial today. Maybe twenty years ago when Wall Street started hiring the first physics PhDs, it was the pure quant skills that they were looking for, but today we need something more, you need an extra edge. Greenberg: Are you getting a lot of foreign students coming in saying, "I think this is the type of degree that I really want to take over Wall Street with"? Engel: If you look at my roster of students in my volatility class, they are from all over the world -- every nationality. My student roster is a full list of international names. We don't know, of course, who is going to exactly be in this program because this is the beginning. We're very excited about the start of it, but we don't know who the students will actually be yet. Greenberg speaks with Thomas F. Cooley, the Dean of the NYU Stern School of Business: Greenberg: Mixing finance with math, do you think this trend is here to stay? Dean Thomas Cooley: I think it's definitely here to stay. Increasingly, the world of hedge funds and complex derivatives, and other complex, structured financial vehicles require this kind of in-depth, quantitative, mathematical knowledge just to understand what is going on. Greenberg: There's a strong link between NYU's alumni and the programs that go on at Stern, so what are your alumni saying about this dual program? Cooley: Because of our location, so close to Wall Street, and the "financial capital of the world" if you like, we have a lot of alumni in the field of finance and a lot of very important people who've come through our programs who have gone to the world of investment banking or hedge funds or investment management, and they think this is a magnificent program because increasingly, the kinds of people they're looking to hire have much, much deeper quantitative skills.
Greenberg: Do you expect other business schools to start rolling out programs like this? Are you going to be a trendsetter? Cooley: We're definitely a trendsetter, because what we're doing that's different from a lot of business schools is combining the general management education with the possibility of a lot of depth in the field of finance with the kind of mathematical skills that Courant brings to us. A lot of schools have created what they call M.S. degrees in quantitative finance. So
these programs are very narrowly defined master of science degrees -- somewhat like what Courant was doing, but to my knowledge, we're the trendsetter in terms of combining the mathematical training with the general management training. Greenberg: With number of quant funds blowing up on Wall Street, what do you think the view is going to be from Main Street about NYU trying to develop a super quant? Cooley: I would hope that it gives the individual investor some confidence to know that the people that are designing these financial instruments are extremely well-trained, not just in the purely quantitative aspects of it but also in the broader economic and general management aspects of it. I think there has been a lot of concern precisely because people don't understand the investment vehicles that are being created. But I would hope that it would give individual investors some comfort to know that they are being created by some really well-trained students. To learn more about this program, visit the NYU Stern and NYU Courant Web sites.