Success in todays sophisticated financial markets increasingly depends on a firm understanding of key financial concepts and mathematical techniques. This book explains them in a clear and comprehensive way for a wide audience.
Mastering Financial Calculations starts by introducing the fundamentals of financial market arithmetic, including the core concepts of discounting, net present value, effective yields and cashflow analysis and then shows you step-by-step how to master the essential calculations and financial techniques for using the full range of products in the markets. The links between the different instruments and the resulting arbitrage opportunities are fully explored, together with the practical difficulties.
Making use of many worked examples and practical exercises, the book goes on to explain concepts such as forward pricing, duration analysis, the different approaches to bond yield calculations, zero-coupon and yield curve analysis, swap valuation and option pricing in a clear and accessible way, at each stage illustrating their application using a programmable calculator.
Whether you are a trader, fund manager, corporate treasurer, programmer, accountant, risk manager or market student, this book will give you the ability to manipulate and apply the relevant techniques with speed and confidence in your marketplace.
PART 1: THE BASICS.
1. Financial Arithmetic Basics.
PART 2: INTEREST RATE INSTRUMENTS.
2. The Money Market.
3. Forward-Forwards And Forward Rate Agreements (Fras).
4. Interest Rate Futures.
5. Bond Market Calculations.
6. Zero-Coupon Rates And Yield Curves.
PART 3: FOREIGN EXCHANGE.
7. Foreign Exchange.
PART 4: SWAPS AND OPTIONS.
8. Interest Rate And Currency Swaps.
PART 5: FURTHER EXERCISES, HINTS AND ANSWERS.
10. Further Exercises.
11. Hints And Answers To Exercises. Appendices.