ABSTRACT

This chapter surveys the following financial services that form the backbone of modern economies around the world: Payment systems, banking, trading, and derivatives. In order to provide good customer service, it is desirable to minimize waiting time at teller queues. Bank management needs to carefully consider investing in new facilities in order to ensure they are profitable and provide good customer service to ensure competitiveness. Many companies, such as hedge funds, are employing high-speed networks and powerful computers to analyze large volumes of market data and use algorithms to execute trade in fractions of seconds without any human intervention, called algorithmic trading. There are a few major factors that affect the price of the options, namely, the stock price, the exercise price, the intrinsic value, the volatility, time to expiration, the interest rate, and the dividend rate of the stock.