Following on from his popular book ‘Quantum Finance’ of 2004, Professor Belal E Baaquie presents, -His intriguing thesis that the economic crisis of 2008 has shown that the capital markets need new theoretical and mathematical concepts to describe and price financial instruments. Professor Baaquie uses ‘quantum’ as a metaphor to imply the use of the mathematical and theoretical concepts underpinning quantum mechanics and quantum field theory, to analyse and studying finance, clarifying that there is no Planck's constant in quantum finance. The book does not seek to re-work financial principles themselves, rather to use theoretical physics methods to address finance, with a particularly focus on debt markets, that is, interests rates, and coupon bonds.

1. Following on from his popular book ‘Quantum Finance’ of 2004, Professor Belal E Baaquie
presents, -His intriguing thesis that the economic crisis of 2008 has shown that the capital markets
need new theoretical and mathematical concepts to describe and price financial instruments.
Professor Baaquie uses ‘quantum’ as a metaphor to imply the use of the mathematical and
theoretical concepts underpinning quantum mechanics and quantum field theory, to analyse and
studying finance, clarifying that there is no Planck's constant in quantum finance.
The book does not seek to re-work financial principles themselves, rather to use theoretical
physics methods to address finance, with a particularly focus on debt markets, that is, interests
rates, and coupon bonds.
In achieving this, path integrals of Quantum Field Theory are used extensively, and indeed there is
some similarity between those used in statistical physics.
Professor Baaquie begins with a brief explanation of classical options theory, which underpins the
products discussed, quickly introducing the relevant financial theory to physics and mathematics
newcomers
Part two introduces those readers having a more financial background to the relevant modern
physics if they have not studied it.
Thus the book is appropriate to those from both subjects, helping to achieve its aim of being self
contained.
Next, the classical Black Scholes equation commonly used in finance is introduced with quantum
mechanical analogues. Well known results are derived also.
The final part presents wholly new approaches, with problems of non-linear interest structures,
using quantum field theory for interest rate models.
Interest Rates and Coupon Bonds in Quantum Finance is a thought-provoking book, laying the
ground for further discussion and development of the conceptual models suggested, with further
and additional detailed real world testing to ratify them.
Robin Ravi Gajria
IMA London Branch Chair
Twitter @robinravi @appliedmathslon
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