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Quantitative analysts (or 'quants') are individuals in the financial services industry that combine skills across several disciplines to help quantify the effects of numerous economic and financial factors on the performance of various financial instruments.
A quantitative analyst typically combines information and techniques from economic theory, accounting, statistics, computer programming, and information technology in order to identify the proper value for a financial instrument such as a stock, bond, derivative, or other security. Quantitative analysts are typically employed by investment banks and money managers such as hedge funds and mutual funds.
A quantitative analyst could work for a hedge fund manager that specialises in trading mortgage-backed securities and other bond-like instruments. This analyst of a mortgage-backed security would use financial models and large amounts of data on trends in housing prices, interest rates, borrowers’ income and debt loads, the growth in the overall economy, and any other salient factors to estimate the riskiness and magnitude of the cash flows that are expected to be generated by this security. This analysis will then lead to an estimated value for the security which can provide useful information that the hedge fund manager can use to decide whether or not to buy, sell, or avoid this security.