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KEYWORDS
Bond market, Structural breakpoint, ICSS: MV
ABSTRACT
Financial engineering is the product of financial innovation in the mature development. This article analyzed the obstacles in the development of financial engineering and defined the function of financial engineering in corporate financing, investment and risk management based on the development of financial engineering both in domestic and abroad, and pointed out that the enterprises make use of the technology and instrument of financial engineering to lower the cost of corporate financing and investment, also to control the corporate financial risk and increase the income.
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1 Introduction
Since the 70s of the 20th century, Financial Engineering was favored by the finance market for its accurate and productized solution. It gained a rapid popularization and gradually became a main finance branch. Dean Finaty, being the earliest person to bring forward the concept of Financial Engineering, pointed out in Review on Financial Engineering in Corporate Finance: Financial Engineering is the participants of capital market who use the modern financial economic theory and modern mathematical analysis principles, tools and methods under the existing financial means to avoid risks, to explore new financial opportunities for investors to achieve the objective of enhancing the efficiency of financial markets and maintain financial stability of application of technical Engineering. From the definition of Financial Engineering, the scope of the study on Financial Engineering focused on the three aspects. First, the development and design of new financial tools. Second, the development and design of new financial methods to reduce transaction costs. Third, to provide a competing system of solutions for financial problems creatively.
In recent years, finance theorists put the latest basis theory and engineering technology into the financial field to create and perfect the methods of modern financial engineering. In 1952, Harry Markovits took advantage of the cutting-edge mathematics of probability theory, mathematical statistics and the relevant theory to construct an analytical framework for the price of the stock market and securities. During the late 60s and early 70s, based on the theory of Markovits, William Sharp proposed the Capital Assets Pricing Model (CPPM), the arbitrage pricing model and the same period (APT) represented the theory of modern finance and financial to mature. In 1973, Fiseher Bleak...