Computers in Finance

2 February 2017

Computers help the finance industry accomplish analysis unheard of years ago. Computers have revolutionized the financial industry and the way finance works by automating complex calculations and providing instant communication and news. The sophisticated way we do business and economics today would have been impossible only a few decades ago, due largely to the impact of computer technology on our ability to make financial decisions.

Communication o One of the primary uses of computing power is for communicating remotely and instantly among people and computer networks. This system allows producers of goods to instantly access price information in faraway places and make decisions about where and when to sell. Financial traders, such as stock brokers, can also keep abreast of the stock prices and trade volumes around the world, from the London to the Tokyo exchanges, and to make their own trades based on that information.

Simulation o Specialized simulation software packages allow financial analysts to model many possible outcomes in the economy and in business.

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For instance, an analyst might describe a 20% probability of an investment making $100,000, a 10% probability of losing $20,000, and the most likely scenario of making between $40,000 and $60,000. The simulation software can then calculate all the most likely scenarios, and make a recommendation as to how much to spend on that investment. Automation Computers can perform automatic calculations, and even automatically retrieve information needed to perform those calculations. For example, Quickbooks or Peachtree accounting software can automatically obtain bank account information and transaction records from a bank, and then perform calculations to show a business owner their current cash, accounts payable, profit and loss, etc. Excel templates automatically perform mathematical calculations and create graphs and charts, allowing financial professionals to understand meaningful data at a glance.

Record-Keeping o Before the advent of computers, all financial records were handwritten on paper, or even carved on tablets in ancient times. Having financial records is essential for determining who is in debt to whom, how much is owed in taxes, how much money is on deposit at a bank, and so on. Computers can store millions of documents in a very small space, allowing us to keep more in-depth records about more transactions, without taking up nearly so much physical space. http://www. ehow. com/list_5977247_roles-computer-finance. html

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