Puzzles of Finance Six Practical Problems and Their Remarkable Solutions

by Kritzman, Mark P.

• ISBN13: 9780471246572
• ISBN10: 0471246573
• Edition: 1st
• Format: Hardcover
• Copyright: 2000-05-03
• Publisher: Wiley

Summary

This book presents six financial puzzles that continue to confound academics and professionals alike, and yet each has an inconvertible solution. Mark Kritzman leads readers through these engimas to their sometimes simple solutions, in an entertaining and accessible manner. And these are not just problems for the intellectually curious; the answers pay off in hard, practical insights that can be applied in the daily management of money.

Author Biography

<b>MARK P. KRITZMAN</b> is Managing Partner of Windham Capital Management Boston and a Senior Partner of State Street Associates. He is also the Research Director of the AIMR Research Foundation and serves on the boards of the Institute for Quantitative Research in Finance and the International Securities Exchange, and on the editorial boards of the Financial Analysts Journal, the Journal of Alternative Investments, and the Journal of Derivatives. Mr. Kritzman has written numerous articles for academic and professional journals and is the author of six books including The Portable Financial Analyst. 17 02 &quot;Mark Kritzman presents the reader with an entertaining way of learning some serious finance.&quot; &#151;Harry Markowitz Nobel Prize Recipient, 1990, Economic Sciences President, Harry Markowitz Company Six challenging questions &#133; six entertaining solutions, profound yet straightforward, and relevant to the everyday challenge of investing and investment management. Puzzles of Finance takes on today&#146;s most persistently challenging financial questions and, through clever examples and just plain logic, helps you move beyond those questions to arrive at a deeper understanding of finance and the daily management of money. From Siegel&#146;s Paradox (&quot;Is it possible to profit from asymmetry of exchange rate changes?&quot;) to questions of option value (&quot;Why is the value of an option unaffected by the underlying asset&#146;s expected return?&quot;), Puzzles of Finance goes beyond vague theoretical suppositions to supply practical, concrete solutions that investors and money managers can benefit from every day. While the intellectually curious will be drawn to Puzzles of Finance, it is the day-to-day finance professional who will derive the most benefit from this remarkable book. In clear, concise language&#151;with more than a touch of humor&#151;renowned author and financial professional Mark Kritzman simplifies six of today&#146;s most perplexing financial riddles. Along the way, he presents a finance primer as practical as it is profound, as illuminating as it is entertaining. Kritzman artfully explores the relationship of such seemingly disparate fields as botany and thermodynamics to options. These proofs propel Puzzles of Finance forward with the pace of a novel. An easy-to-understand primer on financial concepts and quantitative methods combined with a technical glossary ensures that no concept is misunderstood. The result is an unprecedented book that will change the way you view finance and investing. When you invest your time in reading Puzzles of Finance, you will uncover some of the most probing and insightful lessons in financial literature today.

Table of Contents

Siegel's Paradox	1	(22)
Likelihood of Loss	23	(24)
Time Diversification	47	(18)
Why the Expected Return Is Not to Be Expected	65	(12)
Half Stocks All the Time or All Stocks Half the Time	77	(20)
The Irrelevance of Expected Return for Option Valuation	97	(32)
Primer: Financial Concepts and Quantitative Methods	129	(34)
Glossary	163	(18)
Index	181