Math for Quantitative Finance
# Confidence and Estimation

A Fermi estimate is one done using back-of-the-envelope calculations and rough generalizations to estimate values which would require extensive analysis or experimentation to determine exactly.

This is an important skill because what often matters is order of magnitude, rather than an exact value. This is especially useful in quantitative finance (so that you can quickly approximate various values that might appear in a trading situation), and also comes up in interviews.

Which value is the most reasonable estimate for how many candies are in the jar?

What is the best estimate for how many times a human heart beats in a day?

What is the approximate value of the United States gross domestic product (GDP), in dollars?

Approximately how many different stocks are listed on the New York Stock Exchange (NYSE)?

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