FT Guide to Understanding Finance A no-nonsense companion to financial tools and techniques

by Estrada, Javier

• ISBN13: 9780273738022
• ISBN10: 027373802X
• Edition: 2nd
• Format: Paperback
• Copyright: 2011-05-12
• Publisher: FT Press

Summary

the perfect business finance desktop companion: quick, easy, accessible, and now fully updated for today's techniques and realities. Fast-paced, easy-to-understand, and accessible insight into finance theory, applications, And The connections between them. Covers new financial products and instruments, utilizes newer data, and presents more detailed coverage. Contains new Q and As, with answers provided on the companion web site.the FT Guide to Understanding Finance, Second Edition is the essential book for all financial professionals and students who want to broaden and deepen their knowledge of both financial concepts and applications. Easy to read and use, it tightly links theory and practice, and guides readers in quickly applying the techniques it presents. This new edition has been thoroughly updated to reflect the latest financial products and instruments, As well as new data. it contains more detailed coverage, plus new Q and as (with answers provided on a companion web site). Coverage includes all these topics, and much more: Basic risk and return concepts. Mean returns, total risk, portfolios, diversification, and systematic risk. CAPM, cost of capital, and three-factor models. Downside risk, risk-adjusted returns, and portfolio optimization. Valuation via dividend discounting, WACC, and other DCF models. Reverse and relative valuation. Bond prices, yields, default risk, market risk, duration, and convexity. NPV and IRR. Real options and corporate value creation. Options, futures, forwards, and currencies. Essential statistical techniques, including normality, non-normality, and regression analysis.

Author Biography

Javier Estrada holds an M.S. in Finance and a Ph.D. in Economics both from the University of Illinois at Urbana-Champaign. He is currently an associate professor at the IESE Business School in Barcelona, Spain; the co-editor of the Emerging Markets Review; and a wealth management advisor at Sports Global Consulting. He has published extensively in international journals, written many cases for class discussion, and lectured throughout the world.

Table of Contents

Publisher's acknowledgments	p. vii
Preface to the second edition	p. ix
Preface to the first edition	p. xiii
Risk and return
Returns I: Basic concepts	p. 3
Returns II: Mean returns	p. 11
Risk I: Total risk	p. 23
Risk and return I: Portfolios	p. 33
Risk II: Diversification	p. 43
Risk III: Systematic risk	p. 55
Risk and return II: CAPM and the cost of capital	p. 65
Risk and return III: The three-factor model	p. 81
Risk IV: Downside risk	p. 95
Risk and return IV: Risk-adjusted returns	p. 109
Risk and return V: Portfolio optimization	p. 123
Risk and return VI: The long term	p. 137
Valuation
Stocks I: The dividend discount model	p. 155
Stocks II: The WACC model	p. 169
Stocks III: Other DCF models	p. 183
Stocks IV: Reverse valuation	p. 197
Stocks V: Relative valuation	p. 207
Bonds I: Prices and yields	p. 219
Bonds II: Default risk and market risk	p. 235
Bonds III: Duration and convexity	p. 247
Other important topics
NPV and IRR	p. 261
Real options	p. 277
Corporate value creation	p. 289
Options	p. 299
Futures and forwards	p. 311
Currencies	p. 325
Statistical background
Stats I: Summary statistics	p. 341
Stats II: Normality	p. 355
Stats III: Non-normality	p. 369
Stats IV: Regression analysis	p. 383
Index	p. 397
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