Correct Modelling

Start with a simple model and expand it ! Significance coefficient Simpler model is of more practical use than a complex model unless the complex model gives significantly better results. Log Likelihood ratio test : only applied with different degree of freedom.

Reasons for change in Interest Rate

Banks may change Interest Rate to slow down or speed up the economy. Lowering Interest Rate implies or might lead to short run boost in the economy. If economy is strong the interest rate is high and vice versa.

Computational Finance | Financial engineering

Computational Finance is branch of Applied Computer Science that deals with problems of practical interest in Finance. It puts emphasis on practical numerical methods rather than mathematical proofs of Applied Science. Focuses on techniques directly applied to economic analysis. Its interdisciplinary between mathematical finance and numerical methods.