TL;DR
Generating Functions: Encode a sequence as coefficients of a power series to solve recurrences and counting problems. This concept is essential for quantitative trading interviews and is frequently tested at top firms.
By Valenke Exam Prep Team·Last updated 2026-06-01
Algebra
Generating Functions
Encode a sequence as coefficients of a power series to solve recurrences and counting problems.
A generating function encodes a sequence as:
Key operations:
- Addition: adds sequences term-by-term
- Multiplication: gives the convolution
- Differentiation: shifts and weights
- Substitution: picks out even-indexed terms
Common generating functions:
- (geometric series)
-
- (exponential g.f.)
- generates Catalan numbers
When to use: Solving linear recurrences with constant coefficients. Counting problems where you need to track a parameter. Proving combinatorial identities.
This is a fundamental technique for combinatorics and probability. Many "narrow" identities (Vandermonde, Catalan formula) can be derived via generating functions.
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