Monte Carlo Simulations on IBM’s Qubits; Financial Applications
One possible application of quantum computers is that of calculating the result of computation with voluminous and complicated financial data sets. Take the largest investment firms, for example. From a collection of mutual funds and the accompanying historical data, it is conceivable a quantum computer could produce highly probabilistic future results. More clearly, it’s possible a quantum computer could tell you if a financial investment will turn out ok. Whether or not that ever comes to be, well, we’ll have to wait. Because quantum is coming. Quibt.
Why Big Banks Could Soon Jump on the Quantum Bandwagon
+ With great stacks of cash comes great responsibility. To satisfy government regulations and hedge their own losses, financial institutions devote substantial resources to predicting how much their assets will be worth in the future. “It’s not gambling,” says Oosterlee, who, as an academic, has worked with both banks and their regulators. “That’s a common misconception. If financial institutions were gambling, they would not make so much profit.”
Researchers at IBM have recently figured out how to run a simplified risk calculation on an actual quantum computer.
+ Currently, many banks use what’s called the Monte Carlo method to simulate prices of all sorts of financial instruments, including options. In essence, the Monte Carlo method models the future as a series of forks in the road.
+ Woerner and his colleagues ran their Monte Carlo calculations using three of the 20 qubits available on their machine. The experiment was too simplistic to be useful for banks, but it’s a promising proof of concept; once bigger and smoother-running quantum computers are available, the researchers say, they hope to execute the algorithm faster than conventional machines.
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