Management of uncertainty for intelligent financial systems

A fundamental function of financial intermediaries is to assess and assume risk. Financial intermediaries have to deal with risks such as credit risks, liquidity risks, interest rate changes and exchange rate changes. Some of these risks can be dealt with using techniques such as hedging, but there is always some subjective judgement involved. The relevance of the Dempster-Shafer theory of evidence to financial problems that involve subjective judgement is studied. Three specific examples are analyzed: forecasting, cross-hedging and financial group decision making.<
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