Very insightful book. Carefully and well written. One of my longtime favorites. See my Foundations for Scientific Investment, above, for worked examples to help you understand Grinold and Kahn's masterpiece.
If you want to know how to become a millionaire, ask more than 10, millionaires to answer a series of survey questions. Chris Hogan's book summarizes the results of his survey of more than 10, millionaires. I have used this book in teaching my investments course for several years. What do millionaires do that leads to them being millionaires? What do they not do? The answers to the survey questions are consistent common sense solutions to becoming a millionaire.
They grab the attention of my students every time. Originally published in and still selling like hot cakes.
It contains drawings by Arno or New Yorker fame. You would be hard pressed to find a more skeptical investments book then Schwed's. Schwed went to work on Wall Street in , and he has much to say about misguided guidance. His book contains no equations, tables, figures, or graphs.
Instead, it is a very approachable collection of tales about the pitfalls of being a speculator or an investor. Williams is responsible for many seminal concepts that appear in a basic introductory finance class. He gives the basic bond valuation model as the PV of an annuity of coupons plus the PV of the lump sum final repayment of principal.
He discusses the DDM mdel versus a discounted earnings model. He discusses the theoretical irrelevance of capital structure for firm valuation long before Modigliani and Miller thought about it.
Go on to find multiple-growth rate DDMs discussed in some detail 40 years before Fuller , a discussion of options, warrants and convertibles, then inflation and government bonds, then determinants of interest rates and "the future of interest rates", concluding with case studies of major US corporations.
I use 25 years of experience teaching this material to explain carefully the stumbling blocks that have consistently tripped up students year after year. This gives every student every opportunity to master the material. I also present safe strategies I have developed to help you solve numerical problems. Although these strategies take only an extra minute to implement, they frame each numerical problem so as to increase the likelihood that you detect and fix any errors, while reducing the likelihood that you make any errors in the first place.
These techniques also increase the likelihood that you earn partial credit. Although this book is aimed primarily at students, the fact that I focus on essential knowledge and techniques also makes this book useful to instructors.
The presentation does not go far beyond basic Black-Scholes for three reasons: First, a novice need not go far beyond Black-Scholes to make money in the options markets; Second, all high-level option pricing theory is simply an extension of Black-Scholes; and Third, there already exist many books that look far beyond Black-Scholes without first laying the firm foundation given here.
The trading advice does not go far beyond elementary call and put positions because more complex trades are simply combinations of these. The following topics make this book special or unique roughly in order of increasing complexity : It contains the basic intuition you need to trade options for the first time, or interview for an options job.
Price momentum in the New Zealand stock market: A proper accounting for transactions costs and risk. Valuing real options using implied binomial trees and commodity futures options. Journal of Futures Markets , 27 3 , Implied binomial trees in Excel without VBA.
Journal of Financial Education , 32 , The information content of short interest: A natural experiment. Journal of Business , 78 4 , Butler, A. The academic job market in finance: A rookie's guide. Financial Decisions , 17 2. Using the WACC to value real options. Financial Analysts Journal , 60 6 , Impact: What influences finance research? Journal of Business , 76 2 , Common misunderstandings concerning duration and convexity. Journal of Applied Finance , 11 1 , Interest rate sensitivities of bond risk measures.
Financial Analysts Journal , 56 1 , Proceedings of the New Zealand Finance Colloquium. Whigham, P. Evolving trading strategies for a limit-order book generator.
Characterizing abnormal behaviors in stock markets. Proceedings of the Information Science Postgraduate Day. COVID information. Find out more Future student? Current Students Close. For Otago Staff Close. About University of Otago Close. Research and Enterprise at Otago Close. Learning and teaching Close. International at Otago Close. Alumni and Friends Close. Contact Otago Close. Pacific at Otago Close.
Search the University of Otago Search. The original book of quantitative finance job interview questions. In its revised 18th edition. With over 50, copies in print, this book is relied upon by job candidates and interviewers alike.
Foundations for Scientific Investing 6th Ed. A firm foundation for thinking about and conducting investment. This special mixture of learning, teaching, and trading is reflected in every page.
What is in this book that makes it special or unique: Basic intuition you need if you are trading options for the first time, or interviewing for an options job. Honest advice about trading: there is no simple way to beat the markets, but if you have skill my advice can help make you money, and if you have no skill but still choose to trade, my advice can reduce your losses.
Full immersion treatment of transactions costs T-costs : e. Passwords for two downloadable spreadsheets. The first spreadsheet allows the user with a view on a stock to forecast profits and transactions costs for option positions using simple models that allow for bid-ask spreads, commissions, and the volatility smile. The second spreadsheet allows the user to explore option sensitivities including the Greeks.
Careful treatment of how to apply European-style Black-Scholes pricing to the trading of American-style options on equities. Special attention to intuitive explanations for terms in the Black-Scholes formula. Comparison of leverage through margin trading on stocks to leverage through trading options. Intuitive discussion of continuously-compounded returns. Introduction of the notion of "paratrading" trading stocks side-by-side with options to generate additional profit.
Unique "regrets" treatment of early exercise decisions and trade-offs for American-style calls and puts. How to calculate Black-Scholes in your head in 10 seconds. Special treatment of arithmetic Brownian motion, including general pricing formulae and comparison to Bachelier and Black-Scholes.
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