Financial Modeling, second edition
Too often, finance courses stop short of making a connection between textbook finance and the problems of real-world business. Financial Modeling bridges this gap between theory and practice by providing a nuts-and-bolts guide to solving common financial models with spreadsheets. Simon Benninga takes the reader step by step through each model, showing how it can be solved using Microsoft Excel®. In this sense, this is a finance "cookbook," providing recipes with lists of ingredients and instructions. Areas covered include computation of corporate finance problems, standard portfolio problems, option pricing and applications, and duration and immunization. The second edition contains six new chapters covering financial calculations, cost of capital, value at risk (VaR), real options, early exercise boundaries, and term structure modeling. A new technical chapter contains a potpourri of tips for using Excel®. Although the reader should know enough about Excel™ to set up a simple spreadsheet, the author explains advanced Excel® techniques used in the book. The book includes chapters dealing with random number generation, data tables, matrix manipulation, and VBA programming. It also comes with a CD-ROM containing Excel® worksheets and solutions to end-of-chapter exercises.
After reading this book one no longer wants to wait with implementing the tools of latest finance theory in real-world problems. This book will have a tremendous impact on spreading the techniques of financial modeling among practicioners.
Rolf Tschernig, Research Associate, Institute of Statistics and Econometrics, Department of Economics and Business Administration, Humboldt University, Berlin
I think this book will be an invaluable resource to both students and practitioners of finance. It is rich with real world examples and its breadth is remarkable. The clearly written text allows the reader to quickly implement even the most compex modeling strategy with clearly written programs. It is a great way to bridge the gap between theory and implementation.
Ananth Madhavan, Professor of Finanace and Business Econoics, University of Souther California
This book with its accompanying software allows the reader to rapidly learn the art of financial modeling. As such, it serves to bridge the gap between financial theory and its implementation. Not only does Simon Benninga provide us with the foundations in the financial model developing process, but he accomplishes this in a very direct, transparent way that makes delightful reading.
Peter Ritchken, Professor of Banking and Finance, and Operations Research, Weatherhead School of Management, Case Western Reserve University
Simon Benninga's Financial Modeling exploits the power of Excel to teach some very advanced concepts. The book begins with the calculation of pro forma financial statements, an approach which allows the students to deleve into the workings of Excel in an easy way. The following chapters cover increasingly difficult subjects: options, portfolios theory and the calculation of default-adjusted expected returns for bonds. By the end of the book, the student will have a hands-on understanding of these concepts. This text makes learning fun.
Marshall E. Blume, Howard Butcher Professor of Finance, The Wharton School, University of Pennsylvania
In guiding the reader patiently but surely to build programs in Microsoft Excel and solve a wide range of real-world financial problems, Professor Benninga helps the reader gain insights in the financial concepts and appreciate the wide range of their application. Written by an expert in the field, Financial Modeling is an excellent companion textbook in courses on cooperate finance, investments and derivatives, and an effective stand-alone textbook on financial applications.
George M. Constantinides, Leo Melamed Professor of Finance, Graduate School of Business, University of Chicago
Financial Modeling belongs on the desk of every finance professional. Its no-nonsense, hands-on approach makes it an indispensible tool.
Hal R.Varian, Dean, School of Information Management and Systems, University of California, Berkely
Simon Benninga's first book - Numerical Techiques in Finance -must have increased the sales of Lotus 2.0. Noe he is doing the same for Microsoft's Excel. A first classquide for the finance professional.
Vitkas Nath, Global Strategist, Emerging Equity Markets, Union Bank of Switzerland
Simon Benninga's book is the best resource on the market for people interested in DOING finance.The spreadsheet examples are easily used, state-of-the-art and uniqque. The use of VBA is particularly useful, given that it is rapidly becoming the programming language of choice on the Street. I would recomment this book to both academics and practitioners interested in constructing finance models.
Tim Opler, Liability Managment, Deutsche Morgan Grenfell Department of Finance, Ohio State University