Principles of Financial Engineering (Academic Press Advanced Finance)
Principles of Financial Engineering (Academic Press Advanced Finance)
Description: Salih Neftchi selling author presents a fresh, original, informative & up-to-date introduction into financial engineering. The book features a clear link between intuition & underlying mathematics & an outstanding mixture of market insights & mathematical materials. Also included are end-of-chapter exercises & case studies.
In a market by the existence of large pools of ready cash, into go anywhere, anytime in search of a few points of advantage, characterized, there are new risks. Lack of experience with these new risks, enterprises, government agencies & other investors have been surprised by unexpected & often disastrous financial losses. Fund managers & analysts try into apply these new tools & strategies into make pricing, hedging, trading & portfolio management decisions require a mature understanding of theoretical finance & sophisticated mathematical modeling & computer skills.
important & useful because it analyzes financial assets & derivatives from the financial engineering perspective, this book features a different approach than the existing finance literature in derivative financial assets & analysis. I do never seek into introduce financial instruments, but into show the methods of synthetically creating value in static & dynamic environments & how one uses into describe it, his book complements all currently available textbooks. He stressed that the development of methods used into manage risk, taxes, regulation can be solved, & in particular quantities problems.
This perspective forms the basis of practical risk management. It will be useful for all learning about practical elements of financial engineering. *
exercises & case studies at the end of each chapter & on-line Solutions Manual
* Questions in day into day life explains the entrepreneurs concerned with language other than mathematics
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List Price: $ 111.00
Price: $ 45.13
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July 22nd, 2010 at 6:44 am
Review by Bachelier for Principles of Financial Engineering (Academic Press Advanced Finance)
Rating:
In a word: Salih N. Neftci’s `Principles of Financial Engineering’ is a triumph. Neftci’s `Principles’ joins Mason and Merton’s “Cases in Financial Engineering” as the field’s premier fundamental texts, most especially for students, but of practical use for practitioners as well. Neftci’s chief strength in this work is the same that has made his “An Introduction to the Mathematics of Financial Derivatives” deservedly famous: clarity. Where other authors get bogged down in dark obscurantism, such as Beaumont’s unsatisfying and inadequate “Financial Engineering Principles,” or Galitz’s risk management book, inappropriately titled “Financial Engineering: Tools and Techniques to Manage Financial Risk,” Neftci sheds clear sunlight on the field of constructing structured products with the building blocks of financial instruments. He is the most gifted writer in practical financial mathematics, and his legions of fans are not wrong: there is no one better than Neftci at breaking down complex concepts in clear, digestible bites and then reassembling the whole. Neftci’s `Principles’ improves upon, and indeed replaces, Cuthbertson and Nitzsche’s “Financial Engineering: Derivatives and Risk Management” for applicability and lucidity, and replaces Mashall’s “Financial Engineering: A Complete Guide to Financial Innovation” in scope. But Neftci does not sacrifice addressing difficult or complex structures through useless over simplicity, as sadly is the case with Eales’s “Financial Engineering,” rather he builds his explanations smoothly and logically, shedding light on the topics at hand by continually clearly demonstrating a replicating portfolio that mimics the instrument using other asset classes. For example, he begins by addressing the construction of cash flows with forward contracts, and then moves on to interest rate derivatives, swaps, repos, and then puts them all together for dynamic replication methods and the construction of synthetics. Each chapter builds and sheds light on the next instrument and technique. By the time Neftci addresses options and applications to bond convexity strategies and credit derivatives, we are in a position of strength. Most notable is Chapter 14, which clearly reviews volatility trading and discusses both the strengths and pitfalls, before turning to the nearly endless problem and opportunities of volatility smiles. He does not turn away from the problem of pricing in the presence of smiles, and uses the example of trading in the FX markets to shed light on strategies. For those working on synthetic and structured products desks, this will be the premier text. For those working on credit derivatives and other derivatives desks, this work assists in clarifying basic financial engineering concepts that then are more appropriately addressed in specialized texts, Schönbucher’s “Credit Derivatives Pricing Models,” for example. For those seeking a more rigorous mathematical foundation to financial engineering, Capinski & Zastawniak’s “Mathematics for Finance: An Introduction to Financial Engineering” or the works of Steven Shreve and Ioannis Karatzas are the volumes to turn to. But for a solid work for a student who wishes to be a practitioner, Neftci is always the first choice. For the instructor, this book, coupled with the above-mentioned `Cases’ will provide the exact balance between techne and arte that provides students with the best education for engineering structured products. There is a single caveat to my otherwise wholehearted praise for this book: those already deeply familiar with these topics will find little new here: this is not a groundbreaking work announcing new techniques or research. Rather, the strength of Neftci’s `Principles’ again is clarity clarity clarity. This is a most welcome volume, the one I wish I had had as a graduate student, which leaves this reviewer envious of those who will benefit and have stronger careers due to its current availability. We owe Neftci our thanks.
July 22nd, 2010 at 6:49 am
Review by Nicholas Warren for Principles of Financial Engineering (Academic Press Advanced Finance)
Rating:
As someone who teaches derivatives to practitioners and in a Masters program, I can’t praise this book too highly. It is clear, comprehensive and, most importantly, concentrates on practical applications. I was particularly pleased with the chapter on repo, which is usually underestimated in importance, without requiring a whole, specialist book.
For someone with a fundamental, but non-quantitative background in financial markets (MBA or CFA level), this is the ideal place to go next before more specialised and quantitative books. The advantage of having studied this book first will be to have a clear picture of the forest for the trees.
My only (small) criticism is that the book would have been even better if it had included a chapter (or two) on the multi-tranche asset backed security structure followed by cash and then synthetic CDOs. I do hope that might be rectified in the next edition.
Bravo!
July 22nd, 2010 at 7:45 am
Review by for Principles of Financial Engineering (Academic Press Advanced Finance)
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Principles Of Financial Engineering came as an excellent surprise to me, it will probably make a lot of people feel more intelligent about themselves as it explains fairly complex technicalities in a comprehensible way. Neftci book is a very good reference for market professionals like myself in need of a rapid answer, or anyone with a desire to understand more about fixed income and derivatives. Graphical illustrations enhance the text and should make it particularly easy for finance students to understand subjects like synthetic alterations using various financial instruments.
July 22nd, 2010 at 8:21 am
Review by Ananda Chaudhuri for Principles of Financial Engineering (Academic Press Advanced Finance)
Rating:
I am a student of Prof Neftci in the Applied Math for Finance MS program at Baruch College. He is a great teacher and has written this wonderful book. This is the text book for the Calibration course he teaches at baruch.
The best thing about it is in the practical approach it is written with. It tries to explain the finance as interpreted by practioners like traders…the engineering of finance rather than the science of it. Knowledge of basic parobability thoery, martingales, PDE and some stochastic calculus is assumed. The book itself has less emphasis on mathematical rigour but there are plenty of other references for that.
The strength of this book is in its practical utility in understanding the market and the rational behind the products that exist in it and the priciples of pricing and hedging those.
Chapter 11 on the Fundamental Asset prcing theory is a gem and is the workhorse for pricing many of the products like swaps or swaptions.
July 22nd, 2010 at 9:03 am
Review by for Principles of Financial Engineering (Academic Press Advanced Finance)
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It is such a comprehensive and reader-friendly financial engineering book! Neftci explained the complex financial concepts with plain English, simple examples and graphs. Any one with less financial background can understand the concepts with less effort. The book describes and covers the most concepts that many financial practitioners may use at daily business. From Volatility surface to Greek Letters, from Convertible bond to Synthetic CDS, it provides the most financial concepts than any other books. It is one of the best reference books that are available in the industry.
Even though the book covers the structured financial products, such as Collateralized Debt Obligation (CDO), it would become much more valuable book for financial practitioners if it describes in more details on valuations of different forms of CDO and valuation approach on MBS. Since those structured financial products are started to pick up on Wall Street and becoming fashion in the financial industry at the current stage. Still, the book will become the most comprehensive and sophisticated handbook for students, professors and indeed for financial professionals as well.
July 28th, 2010 at 5:28 pm
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