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Trade Talk Blog: 5 Questions with Professor Bill Hrusa of Carnegie Mellon University

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Carnegie Mellon Students Trading Competition

Dr. Bill Hrusa is a professor of mathematical sciences at Carnegie Mellon University (CMU) who teaches Fixed Income in the university’s Master of Science in Computational Finance (MSCF) program. This interdisciplinary program, which has been ranked #1 in the U.S. since 2011 by QuantNet, is a unique collaborative effort between the Tepper School of Business, the Department of Mathematical Sciences, the Department of Statistics, and the Heinz College of Information Systems and Public Policy. He also teaches several courses and supervises undergraduate research projects in CMU’s Bachelor of Science in Computational Finance (BSCF) program, which is an interdisciplinary program that is a collaborative effort between the Department of Mathematical Sciences, the Tepper School and the Heinz School College. Through the TT CampusConnect® program, Dr. Hrusa uses the TT® platform to help his students understand how the markets operate and how to apply math to trading. He spoke with us about his background and his approach to teaching the next generation of capital markets professionals.

– Brian Mehta, CMO

Your formal training and your Ph.D. thesis were in the area of partial differential equations and applications to continuum mechanics. What drew you into computational finance, and why do you think students should consider this path of study?

Bill: I came to Carnegie Mellon in 1982, right after I received my Ph.D., because of their strong presence in partial differential mechanics and continuum mechanics (a presence that is still flourishing today). Computational finance was not recognized as a discipline then. CMU had several pioneers, including Steve Shreve and John Lehoczky, who helped develop the field. Our MSCF program began in 1994 and became extremely successful very quickly. We hired David Heath, one of the co-inventors of the Heath-Jarrow-Morton (HJM) model, in 1997. Shortly thereafter, at the urging of some investment bankers, the BSCF program was launched. We needed more faculty members who could teach math finance classes. I decided that this presented a wonderful opportunity for me to learn math finance and then start teaching it. I took my first math finance class from David Heath in 2001. I became hooked immediately, and I started taking more classes in the math department, the MSCF program and the MBA program. I taught my first BSCF class in 2005. In 2007, shortly after David Heath retired, I started teaching in the MSCF program as well. After a few years, I started visiting former students at investment banks to try to understand how real markets work and what we should be teaching our students. Math finance combines so many interesting ideas from different disciplines, continues to provide new challenges, has applications to extremely important problems–and it is FUN!

One of the things that makes CMU’s computational finance program stand out is its multidisciplinary approach. Why is it so important for today’s students to be skilled in multiple disciplines?

Bill: I tell students that you should not view something such as an option-pricing calculator as simply a “black box.” You need to understand why it works. There will be new financial contracts in the future, and you will need to analyze them before a suitable “black box” exists. In fact, you may need to build a “black box” from scratch yourself. I will quote one of my colleagues, Duane Seppi, from the Tepper School of Business, who teaches in MSCF: “The more tools that you have in your toolbox, the better prepared you will be to solve the complex problems that arise in today’s finance industry.”

Technology has changed the classroom and the way students learn. How has it impacted you directly as an educator?

Bill: We make heavy use of technology in teaching, especially in MSCF. There are two MSCF locations–one in Pittsburgh and one at 55 Broad Street near the NY Stock Exchange in Manhattan. Lectures are given in one location and broadcast live to the other. Students in the remote location can participate fully in the class. When a student in the remote location asks a question, their face pops on a screen–it is almost like they are in the same room. Another way that technology has impacted my teaching is through undergraduate research projects. Even by the end of their freshman year, students can use technology to make discoveries that are of interest to experts. This is a big change from when I started at CMU.

How has the relationship with Trading Technologies benefitted you and your students?

Bill: I first became acquainted with the TT CampusConnect program in 2009, and I was really struck by TT’s devotion to helping students. I have tried to work with some other electronic trading firms and found that to be a very frustrating experience. I learned a lot myself from using the TT platforms, and I have learned a lot from talking to TT, too. I believe that the best way to learn about real markets is to do some actual trading. TT has been extremely helpful to my students, and the students and I are really grateful! TT’s most recent visit to CMU was in April 2017. Students in my Introduction to Math Finance class saw a demo and received some great advice. Over the years, TT has organized several trading competitions for BSCF and MSCF students. These have been great.

What advice do you have for students today?

Bill: There is not enough space for me to fully answer this question, so here are just a few of my quick thoughts.

  1. Study computational finance because it is fun! Making a lot of money is nice, but it is more important to have a career that you really enjoy and find exciting.
  2. Try to learn from your mistakes. When one of my students gets unhappy because they have made a mistake, I tell them that they should view this as an opportunity to learn something and that they should be happy that the mistake was made now, rather than when they are on the job.
  3. The thought process is more important than the answer. Much of the specific technical knowledge that you accrue now will be obsolete in a few years, but the ability to think clearly and logically and analyze new problems from scratch will always be valuable.
  4. The ability to communicate clearly is extremely important and so is the ability to work as part of a team.
  5. One of the things that I am most proud of with my current students is that they have realized at a very early age that cooperating with and helping their classmates improves things for everyone. When people work together the outcome can truly be greater than the sum of the inputs.

Visit the TT CampusConnect website to learn more about the program.