Number Sense

Sophomore Myles Baker (pictured below) has discovered room for creativity in mathematics, and this has led him to uncovering a new way to look at parts of finance.

“The reason I started studying math was because it satisfies my intellectual spirit,” Baker said. “There’s a problem, and you solve it. Like in [John Forbes Nash’s] A Beautiful Mind, his problem was schizophrenia, but he saw it as just another problem to solve. Despite the fact that math is structured and analytical, that doesn’t mean there is no room for creativity.”

Baker is already engaging in research as an undergraduate and has come up with a new mathematical concept with the power to have a significant impact on the field of finance. “This started out as something any calculus student can do,” he said. “Calculus is so fundamental. There are a lot of opportunities for anyone to get interested and involved and to discover things.”

In his studies, Baker began to work on a theory that provides a different way to solve the problem presented in The Black-Schole’s equation, used to evaluate option pricing in finance. He developed three theorems that use an equation to show an error associated with applying finite differences to the equation.

“This is important because it tells us how reliable these estimates can be,” Baker said. “Before, we couldn’t use any of these estimates because of previous mathematical papers that have proved they are wrong.”

Though the equation can’t technically be solved, Baker’s theory is an important stepping stone to further discoveries.

“It requires a thorough understanding of what finite differences are,” he said. “It’s a matter of just manipulating what’s going on. You have to anticipate what the yield will be, and math can help with that.”

Originally an architecture major, Baker said he feels that his creative side has helped him in his research efforts.

“I’m a very analytical person—I like organization, but I respect creativity as well,” Baker said. “I didn’t want to detach myself from my creative side, and that’s what drew me to architecture. But the research-oriented aspect of math relies heavily on being able to think out of the box.”

Baker decided to move to the mathematics department after taking a Calculus I class taught by Dr. Tim Sheng.

“He is a devoted student, and that is encouraging not just for me, but for other students,” Sheng said. “Everyone can do something, and I think Myles is a good example to show other students they have these capabilities as well.”

Baker said he encourages other students to get involved with undergraduate research. “The opportunity given to me in Dr. Sheng’s class was huge,” Baker said. “Professors are constantly looking for students to advance their departments and to mentor. I was definitely very enriched by the experience. I owe the world to him.”

Baker presented his theory at the Texas Oklahoma Regional Undergraduate Symposium held at Abilene Christian University in February and spoke again at the Mathematical Association of America Texas Regional meeting in Denton in April. In the future, Baker said, he plans to pursue his dream of architecture or pursue a higher degree in math.