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Importance of artificial intelligence
Importance of artificial intelligence
Importance of artificial intelligence
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Artificial Intelligence and Investing INTRODUCTION Artificial intelligence can be defined as the ability of a computer to perform activities normally considered to require human intelligence. The techniques of this intelligence include knowledge-based, machine learning, and natural language processing techniques. Investing can be defined as the act of committing money to an endeavour with the exception of obtaining profit. Investing activities require data identification, asset valuation (the process of determining the worth of something), and risk management (the process of managing the uncertainty in investment decision-making). Artificial intelligence techniques can be applied to financial investing, especially in the areas of credit risk assessment and stock valuation. In the future, we can expect that the techniques of artificial intelligence will be integrated into systems that simultaneously address investing activities. WHAT IS ARTIFICIAL INTELLIGENCE? Technology is an important factor in investing activities. For example, stock trading is computer-based and can automatically execute the trading of large volumes of shares. This has become an extremely frequent activity on stock exchanges in our advanced world. Artificial intelligence is allowing humans to have a “cutting edge” by using computers when investing. Years ago, a usual activity for a computer program was a simple, or even a complex, numerical calculation. An example of this could be a forensic officer’s ability to compute the path and pattern of a bullet. Today, computers are more advanced. It is no problem for a computer program to assist humans in their decision making processes. Humans have access to huge databases across the world over the interne... ... middle of paper ... ...ollection, asset valuation, and portfolio management). These systems will interact with humans and humans will be able to specify their preferences and make difficult decisions. SUMMARIZER’S CRITIQUE In general, the article “Artificial Intelligence and Investing” offered a lot of valuable information regarding the both the current, and future, paths of artificial intelligence systems. The article was broken down into simple sections that helped the article come together. The author’s intent of relating artificial intelligence to investing was successful in explaining that artificial intelligence is of great assistance to investors across the globe. On the other hand, I believe the article contained some examples and terms which were not really explained in enough detail to the average user. Basically, some terms were not presented at an average reader’s level.
This idea of a computer doing the ‘technical’ work can be useful to us, due to living in an age of technology which is something that can be useful to us, as our own brains are our ‘built in computer. It is also crucial in processing our thoughts about each of our own moral decisions of what is right and wrong.
“One of the very nice things about investing in the stock market is that you learn about all different aspects of the economy. It's your window into a very large world,” Ron Chernow once said. The stock market is undoubtedly an incredibly important economic feature, one that our modern world depends on. Indeed, the stock market is so integral to our life today that it can serve as a valuable tool where financial literacy is concerned. Two of the most important financial lessons that the stock market teaches are financial literacy terminology as well as a historical understanding of stock market institutions. The Stock Market Game simulation serves to teach these lessons in a secure environment, and
We live in a world that can’t live without binary code anymore. Computers have pervaded so deep in our lives that they are now being called ubiquitous. With phenomenal increase in users, has come a phenomenal increase in data. We generate a vast amount of data through activities on our computing devices making it necessary to employ intelligent algorithms which enable the system to learn from and analyze this vast dataset. Fortunately, the advent of Distributed Computing has created avenues to access virtually limitless computing power even through mobile devices thus, allowing us to use highly complex and large scale algorithms. However, with all this power under the hood, it is important to make the computers as usable and receptive to users as possible. I believe this interdisciplinary paradigm will have far reaching impact on industries, governments as well as our daily lives which is why I am so interested in research concerning Information Management and Analytics, Artificial Intelligence, Human Computer Interaction, and Mobile and Internet Computing.
This assignment is concerned with your understanding of the key issues relative to portfolio analysis and investment. In completing this assignment you are to limit your scope to the US stock markets only. Use the Cybrary, the Internet, and course resources to write a 2-page essay which you will use with new clients of your financial planning business which addresses the following issues and/or practices:
To maximize optimum performance of our investment portfolio, we placed a certain percentage of equity in different sectors of the stock market.
According to Investopedia (Asset Allocation Definition, 2013), asset allocation is an investment strategy that aims to balance risk and reward by distributing a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon. There are three main asset classes: equities, fixed-income, cash and cash equivalents; but they all have different levels of risk and return. A prudent investor should be careful in allocating each asset class to his portfolio. Proper asset allocation is a highly debatable subject and is not designed equally for everybody, but is rather based on the desires and needs of the individual investor. This paper discusses the importance of asset allocation, the differences and the proper diversification within the portfolio.
There is a sense of complexity today that has led many to believe the individual investor has little chance of competing with professional brokers and investment firms. However, Malkiel states this is a major misconception as he explains in his book “A Random Walk Down Wall Street”. What does a random walk mean? The random walk means in terms of the stock market that, “short term changes in stock prices cannot be predicted”. So how does a rational investor determine which stocks to purchase to maximize returns? Chapter 1 begins by defining and determining the difference in investing and speculating. Investing defined by Malkiel is the method of “purchasing assets to gain profit in the form of reasonably predictable income or appreciation over the long term”. Speculating in a sense is predicting, but without sufficient data to support any kind of conclusion. What is investing? Investing in its simplest form is the expectation to receive greater value in the future than you have today by saving income rather than spending. For example a savings account will earn a particular interest rate as will a corporate bond. Investment returns therefore depend on the allocation of funds and future events. Traditionally there have been two approaches used by the investment community to determine asset valuation: “the firm-foundation theory” and the “castle in the air theory”. The firm foundation theory argues that each investment instrument has something called intrinsic value, which can be determined analyzing securities present conditions and future growth. The basis of this theory is to buy securities when they are temporarily undervalued and sell them when they are temporarily overvalued in comparison to there intrinsic value One of the main variables used in this theory is dividend income. A stocks intrinsic value is said to be “equal to the present value of all its future dividends”. This is done using a method called discounting. Another variable to consider is the growth rate of the dividends. The greater the growth rate the more valuable the stock. However it is difficult to determine how long growth rates will last. Other factors are risk and interest rates, which will be discussed later. Warren Buffet, the great investor of our time, used this technique in making his fortune.
Most of the day the human mind is taking in information, analyzing it, storing it accordingly, and recalling past knowledge to solve problems logically. This is similar to the life of any computer. Humans gain information through the senses. Computers gain similar information through a video camera, a microphone, a touch pad or screen, and it is even possible for computers to analyze scent and chemicals. Humans also gain information through books, other people, and even computers, all of which computers can access through software, interfacing, and modems. For the past year speech recognition software products have become mainstream(Lyons,176). All of the ways that humans gain information are mimicked by computers. Humans then proceed to analyze and store the information accordingly. This is a computer's main function in today's society. Humans then take all of this information and solve problems logically. This is where things get complex. There are expert systems that can solve complex problems that humans train their whole lives for. In 1997, IBM's Deep Blue defeated the world champion in a game of chess(Karlgaard, p43). Expert systems design buildings, configure airplanes, and diagnose breathing problems. NASA's Deep Space One probe left with software that lets the probe diagnose problems and fix itself(Lyons).
I became an enthusiast of finance ever since I was at high school. At the political economy class, my teacher asked us: if you have a million RMB, how would you use it? She then introduced us the concept of investment, and I was intrigued specifically by the stock. For the latter two years of my high school, I have been reading books and articles regarding the stock market in the U.S. and in China. As one of the outstanding students ranked top 1% in College Entrance Exam in Hainan Province, China, I was accepted by the City University of Hong Kong with a full scholarship. With the strong interest in finance, I chose quantitative finance and risk management as my major.
In order to see how artificial intelligence plays a role on today’s society, I believe it is important to dispel any misconceptions about what artificial intelligence is. Artificial intelligence has been defined many different ways, but the commonality between all of them is that artificial intelligence theory and development of computer systems that are able to perform tasks that would normally require a human intelligence such as decision making, visual recognition, or speech recognition. However, human intelligence is a very ambiguous term. I believe there are three main attributes an artificial intelligence system has that makes it representative of human intelligence (Source 1). The first is problem solving, the ability to look ahead several steps in the decision making process and being able to choose the best solution (Source 1). The second is the representation of knowledge (Source 1). While knowledge is usually gained through experience or education, intelligent agents could very well possibly have a different form of knowledge. Access to the internet, the la...
Our understanding and the concept of investment in behavioural finance combines economics and psychology to analyse how and why investors make final decision. As an investor one’s decision to invest is fully influence by different type of attitudes of behavioural and psychological ( Ricciardi & Simon, 2000). Yet, in order to maximize their financial goal, investors must have a good investment planning. Furthermore , to gain a good investment planning , there must be a good decision making among investors. They have to choose the right investment plan I order to manage the resources for different type of investments not only to gain profit wise but also to avoid the risk that occur from investment.
Over the years, man has come up with countless inventions, each more resourceful than the last. However, as the computer age continues, mankind is threatened. Ridiculous, some may say, but I say look around! The computer has already begun to control so many of the vital functions that man has prided himself upon before. Our lives are now dependent on a computer and what it tells you. Even now, I type this essay on a computer, trusting that it will produce a result far superior to what I can do with my own to hands.
Have you ever invested in the stock market? If so, do you know where your money is really going? The stock market is a risky business and it can make or break people’s lives. The stock market is used daily to keep America on its trembling feet; it’s also being used at this very moment to cheat people out of money for personal gain. This happens every day in the stock market and its evolving rapidly, super computers that can trade faster than a blink of an eye, social media trends that can predict share values, and intricate stock market schemes that are getting harder and harder to find and take down.
Artificial intelligence is defined as developing computer programs to solve complex problems by applications of processes that are analogous to human reasoning processes. Roughly speaking, a computer is intelligent
This paper will define and discuss five financial theories and how they impact business decisions made by financial managers. The theories will be the Modern Portfolio Theory, Tobin Separation Theorem, Equilibrium Theory, Arbitrage Pricing Theory (APT), and the Efficient Markets Hypothesis.