Certificate Programs: Physics and Finance
If you are interested in finance and in physics, you can get into finance through physics.
Either a straight physics education or a major in physics combined with a certificate in finance (http://www.princeton.edu/~bcf/certificate.htm) may open many career opportunities.
Physics education and the physicist's mindset in finance
The field of finance focuses on the pricing of financial assets, including equities, bonds, currencies, and derivative securities; portfolio management and the evaluation of financial risks; banking and financial intermediation; the financing of corporations; corporate governance; financial-market and banking regulation; and many other topics. The need for quantitative methods in the financial world has led an increasing number of physicists to join finance and investment banking. This is because a physics education is a very quantitative and rigorous education, which provides the skills to think analytically, to formulate problems in rigorous mathematical terms, and to solve them. Most large and small financial institutions now employ physicists, either with a graduate or an undergraduate degree. The Princeton University physics department routinely receives requests by financial firms to advertise job openings among its students, both graduate and undergraduate students.
Application of physics to finance
Physics techniques and concepts also are now finding their way into finance. The partial differential equation that describes the value of a stock option is the heat diffusion equation from thermodynamics. Path integral techniques are used to compute the value of financial derivatives. Path integral descriptions of various stock option formulas have been proposed, and their quantum mechanics version has recently been developed. It looks like the interaction between physics and finances is just beginning. Below you will find precise examples.
There are various physicists in the Princeton area actively working in finance who are interested in supervising junior and senior papers at the interface of physics and finance. A recent example is the senior thesis of Julian Rachlin. Another example is the 2005 junior paper, Extreme Value Theory: Bright Cluster Galaxies and the Stock Market, by Cecilia Muldoon. Both papers, written under the supervision of Gyan Bhanot (IBM and IAS), use extreme value theory to find unusual stocks. The physics connection is that similar ideas are used to separate binary galaxies from normal galaxies using sampling theory on luminosity measurements in galactic clusters.
A long list of reading material could be suggested on applications of statistical mechanics, percolation theory, gauge theories, quantum mechanics, etc.. to the stock market. Some references are: