This is an industry-independent exploration of financial engineering_an area sweeping the world of corporate, bank, and investment finance. From reviewing the basic building blocks of financial engineering to examining the many processes involved in creating innovative financial instruments, this lucid text provides professional advice to custom-tailor the solutions to any organization’s risk-management problems. The text provides illustrative charts, tables, diagrams and fully worked-out examples.
Table of Contents
Forewords
Preface
SECTION I: OVERVIEW OF FINANCIAL ENGINEERING
* An Introduction to Financial Engineering
* Factors Contributing to the Growth of Financial Engineering
* The Knowledge Base of the Financial Engineer
SECTION II: THE CONCEPTUAL TOOLS OF THE FINANCIAL ENGINEER
* Valuation Relationships and Applications
* Measuring Return
* Risk: Portfolio Considerations, Investment Horizons, Leverage
* Measuring Risk: Advanced Topics
* Understanding Interest Rates and Exchange Rates
* Speculation, Arbitrage and Market Efficiency
* The Corporate Treasurer’s Perspective: Reading Between the Lines
SECTION III: THE PHYSICAL TOOLS OF THE FINANCIAL ENGINEER
* Product Development
* Futures and Forwards Swaps
* Single Period Options: Calls and Putsbv
* Multiperiod Options: Caps, Floors, Collars, Captions, Swaptions, and Compound Options
* Fixed Income Securities
* Recent Debt Market Innovations
* Equity and Equity-Related Instruments
* Hybrid Securities
SECTION IV: FINANCIAL ENGINEERING PROCESSES AND STRATEGIES
* Asset/Liability Management
* Hedging and Related Risk Management Techniques
* Corporate Restructuring and the LBO
* Arbitrage and Synthetic Instruments
* Tax-Driven Deals
* Miscellaneous Equity-Based Strategies
SECTION V: FUTURE DIRECTIONS IN FINANCIAL ENGINEERING
* Future Trends: Globalization and Technology
* Legal Protections for Innovative Financial Products and Services
* Index
