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AI and quantitative finance

AI and quantitative finance

- [Instructor] We've already talked about generative AI a little bit, but I want to drill down and talk about how this works in practice, and more broadly, the applications and opportunities for quantitative finance based on AI. So I'm going to use ChatGPT, and I've simply come in and I'm going to ask it, straight from the horse's mouth, how does a large language model like ChatGPT work? Well, it's going to tell me, hey, the large language model, like something like ChatGPT, it's going to essentially take an input, a sentence like the one above, and it's going to break this down into a series of words. We used to call this textual analysis, but it's basically going to take these words and then convert them into a series of cues that the LLM is going to interpret. And based on that, it's going to go through and take essentially the key parts of that input and say, all right, how do I want to respond to this over time, right? These input tokens, the model is going to analyze them and…

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