The Oxford Guide to Financial Modeling: Applications for Capital Markets, Corporate Finance, Risk…

Hardcover | February 25, 2004

byThomas S. Y. Ho, Sang Bin Lee

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The essential premise of this book is that theory and practice are equally important in describing financial modeling. In it the authors try to strike a balance in their discussions between theories that provide foundations for financial models and the institutional details that provide thecontext for applications of the models. The book presents the financial models of stock and bond options, exotic options, investment grade and high-yield bonds, convertible bonds, mortgage-backed securities, liabilities of financial institutions -- the business model and the corporate model. It alsodescribes the applications of the models to corporate finance. Furthermore, it relates the models to financial statements, risk management for an enterprise, and asset/liability management with illiquid instruments. The financial models are progressively presented from option pricing in thesecurities markets to firm valuation in corporate finance, following a format to emphasize the three aspects of a model: the set of assumptions, the model specification, and the model applications. Generally, financial modeling books segment the world of finance as "investments," "financialinstitutions," "corporate finance," and "securities analysis," and in so doing they rarely emphasize the relationships between the subjects. This unique book successfully ties the thought processes and applications of the financial models together and describes them as one process that providesbusiness solutions. Created as a companion website to the book readers can visit www.thomasho.com to gain deeper understanding of the book's financial models. Interested readers can build and test the models described in the book using Excel, and they can submit their models to the site. Readers canalso use the site's forum to discuss the models and can browse server based models to gain insights into the applications of the models. For those using the book in meetings or class settings the site provides Power Point descriptions of the chapters. Students can use available question banks on thechapters for studying.

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The essential premise of this book is that theory and practice are equally important in describing financial modeling. In it the authors try to strike a balance in their discussions between theories that provide foundations for financial models and the institutional details that provide thecontext for applications of the models. The b...

Thomas S.Y. Ho,is president of Thomas Ho Company. Previously he was Executive Vice President of BARRA, Inc. He founded GAT, a financial software company that had over 200 institutional clients globally. He served as a professor in finance at New York University's Stern School of Business. He is an associate editor of the Journal of ...

other books by Thomas S. Y. Ho

Format:HardcoverDimensions:768 pages, 7.28 × 10.12 × 1.69 inPublished:February 25, 2004Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:019516962X

ISBN - 13:9780195169621

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Table of Contents

PART 1. DERIVATIVES VALUATION1. Introduction: Discounted Cash Flow Method2. Equity Market: the Capital Asset Pricing Model3. Bond Markets: the Bond Model4. Equity Options: the Black-Scholes Model5. Interest Rate Derivatives: Interest Rate Models6. Implied Volatility Surface: Calibrating the Models7. Exotic Options: Bellman's Optimization, Filtration Model and n-Factor ModelPART 2. CORPORATE LIABILITIES8. Investment Grade Corporate Bonds: the Option Adjusted Spread9. High Yield Corporate Bonds: the Structural Models10. Convertibles, MBS/CMO, and Other Bonds: the Behavioral Models11. Financial Institutions' Liabilities: Required Option Adjusted SpreadPART 3. CORPORATE FINANCE12. Valuation of a Firm: the Business Model13. Strategic Value of a Firm: Real Option14. Optimal Corporate Financial Decisions: Corporate Model15. Risk Management16. Financial Institutions: Applications of Financial Models17. Equity Options: the Black-Scholes Model18. Concluding Thoughts19. Epilogue: Market Model and Binomial LatticesNotation

Editorial Reviews

"I strongly recommend The Oxford Guide to Financial Modeling to research minded practitioners as well as to students of finance. Ho and Lee present the essential financial models, including many freshly minted models, in a uniquely cohesive framework that exposes the fundamental link betweencapital markets and corporate finance. Moreover, it is a terrific reference source for both quants and dilequants."-- Journal of Investment Management