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Quantitative accounting is the field of applied mathematics that is directly related to the use of existing monetary values to derive other values. Most forms of applied mathematics are used as predictive processes to analyze or understand trends in data. Quantitative accounting does not deal with any value other than that provided; it does not predict or identify trends. The field takes existing known values, for example the price of a stock at a specific time, and uses that value to derive other values associated with it. This field goes by many names: quantitative finance and mathematical finance are two of the common alternatives.
The field of quantitative accounting was in its infancy in the 1980s and became a more common area of study in the early 1990s. Speculative and money-based strategies were common in the 1980s and had a very negative overall impact on the economies of the majority. developed nations. The use of quantitative measures to determine fair and reasonable methods of investing and obtaining value has emerged as a superior method of maintaining economic stability. This served most investors well until the mid-2000s, when simple data over-analysis became a major factor in a global recession.
The main focus of this field is the analysis of existing data with the aim of finding correlated information. In simpler terms, instead of worrying about why any number is what it is, the field simply takes existing information and sends new information. The new information is related to the data provided in terms of time and scope. If the old data described something as it existed at 3:18 a.m., the new data will describe something related to 3:18 a.m.
That is the difference between quantitative accounting and quantitative economics. An economist would take the information provided and use it to look for patterns. For example, the economist can take the information together with the same information from the last few weeks and do a trend analysis. This would indicate to potential investors how likely a security is to go up or down in the coming weeks.
There are two main approaches to quantitative accounting: portfolio management and derivative pricing. In both cases, the process is the same. The accountant receives information related to the derivative or portfolio. Using the available information, the accountant determines the total value of any derivative asset or section of the portfolio at the time the original numbers existed. The source of the original data does not need to be based on reality; a speculative investor may provide probable future value to determine related information at a future point in time.