Scientific computing is a multidisciplinary field, with its applications spanning across disciplines such as numerical analysis, computational finance, and bioinformatics.
Let's consider a case for financial markets. When you think about financial markets, there is a huge interconnected web of interactions. Governments, banks, investment funds, insurance companies, pensions, individual investors, and others are involved in this exchange of financial instruments. You can't simply model all the interactions between market participants because everyone who is involved in financial transactions has different motives and different risk/return objectives. There are also other factors which affect the prices of financial assets. Even modeling one asset price requires you to do a tremendous amount of work, and your success is not guaranteed. In mathematical terms, this doesn't have a closed-form solution and this makes a great case for utilizing scientific computing where you can use advanced computing techniques to attack such problems.
By writing computer programs, you will have the power to better understand the system you are working on. Usually, the computer program you will be writing will be some sort of simulation, such as the Monte Carlo simulation. By using a simulation such as Monte Carlo, you can model the price of option contracts. Pricing financial assets is a good material for simulations, simply because of the complexity of financial markets. All of these mathematical computations need a powerful, scalable and convenient structure for your data (which is mostly in matrix form) when you do your computation. In other words, you need a more compact structure than a list in order to simplify your task. NumPy is a perfect candidate for performant vector/matrix operations and its extensive library of mathematical operations makes numeric computing easy and efficient.
In this chapter, we will cover the following topics:
- The importance of NumPy
- Theoretical and practical information about vectors and matrices
- NumPy array operations and their usage in multidimensional arrays
The question is, where should we start practicing coding skills? In this book, you will be using Python because of its huge adoption in the scientific community, and you will mainly work with a specific library called NumPy, which stands for numerical Python.
