Derivative-security

I am afraid that the 3 reviewrs before me are the same person.
Amazon makes it quite easy for promotional wizards to do that so sales can be increased.
So far there is not even one review that tackes or critisizes this book. Are we all that perfect or should we become a victims of made up book?

Most textbooks on financial modeling are devoted to describing specific models, such as those for stocks, bonds, or options, or to their specific applications such as arbitrage trading and portfolio management. Few books describe the financial principles behind the models and tie the models to business solutions.

The Oxford Guide to Financial Modeling by Thomas S.Y. Ho and Sang Bin Lee (yes, the authors of the Ho-Lee model, the first arbitrage-free interest rate model) successfully ties the thought processes and applications of the financial models together and describes them as one process which provides business solutions. The authors very ably explain all the models used in finance, take the financial theory and modeling to the next level and develop a business model framework that integrate the fields of corporate finance, fixed income, derivatives, and Asset & Liability management.

Each chapter begins by introducing a practical problem. The financial models that provide solutions to the problem are then described. The chapter concludes with how the models can be applied. Because of the nature of the material on financial models, the book presents many results as mathematical formulations, yet the text is very enjoyable as the more rigorous mathematical derivations are deferred to the appendices and to the epilogue.

What really makes The Oxford Guide to Financial Modeling a brilliant educational project and just not another excellent textbook is the companion web site that serves as an interactive workbook designed specifically for the book. The site is designed to further enhance understanding of the use and applications of the models referred to in the book and it is accessible free of charge.

This book can very well open the next page of the financial engineering revolution. In additional to all the information provided by Hall's book, this book systematically discusses financial modeling procedures for existing financial instruments, and develops a framework to extend current research to accommodate future scenarios. I think the most impressive part of the book is the discussion about how equities (like SUBX and JDSU) can be valued as embedded bond options given their debt structures and earning powers. The industry-standard literatures use much more crude and subjective methodologies such as WAC and discounted cashflow.

The authors of this book are also the creator of Ho-Lee model. Therefore it is not surprising to find extremely detailed explanations on virtually all the interest rate and bond models. If your career aspirations is to become a bond trader or a quant in general, this book is a must read!

Learn continuous time finance from this book: you won't be disappointed. I have read almost all the most famous finance books and I must say that this is by far the best one of them. Although somewhat limited in scope, it is masterfully written: everything is explained clearly and carefully. All statements are rigorously proved. I would say it is suitable both for beginners, having a minimum exposure to measure-theoretic probability and willing to spend some time on it, and for advanced students. Personally, I first read the book as a beginner and found it extremely useful, but even now, that I understand and know most of the material, I find it to be an invaluable reference. The level of mathematical sophistication is quite high, so don't expect anything like Neftci, Baxter and Rennie, Mikosch or Bjork. The level is the same of Duffie, but, while Duffie presents a lot of material and most of the time he doesn't provide proofs and explanations (which, personally, I find irritating), this book is limited to few selected topics, but they are explained at length.
Unfortunately, the perfect finance book has not yet been written (finance professionals seem to be too busy and well paid to write good books), but this one is almost perfect. If you really want to understand quantitative finance, I strongly recommend that you invest a good amount of hours in studying this book. Two good books to acompany this one might be Resnick's book on probability and Steele's book on stochastic calculus.

Nielsen has written a virtually self-contained treatise on the subject. Reading this book was a beautiful learning experience: The author's clarity of thought was striking; the examples made particular points transparent; and the exercises made invaluable contributions to understanding.
The three appendices (on measure and probability, the Lebesque integral, and the heat equation), and the first three chapters make the book as self-contained as is possible.
Synopsis: I do not know of a better book on this subject.

This is an excellent textbook on financial mathematics. It is quite mathematical, but self contained, clearly and carefully written. The appendices are very well written condensed reviews of basic technical facts. The book also contains discussions of a topics that I've never seen anywhere else, such as "Arbitrage and Admissibility" and "The doubling strategy". As mentioned in the preface, the book is based on a doctoral-level course, and the author clearly had the benefit of a large amount of feedback from students. Reading it, one can't help notice the presence of a very large number of extra remarks and hints, inserted on every page in order to clarify what must have been a denser original text. Finally, I have to mention the excellent editorial work done by Oxford University Press in producing this book, as compared to similar books published by Wiley.

This is not as good as Wilmott's earlier work, and even that could have benefited from better definition of terms. Wilmott needs to brush up on the latest techniques and talk to some practitioners to learn how to apply math to real world examples. It seems there is a lack of depth of understanding evidenced by the writing. The sections of self-expose are an embarrassment.

This is recycled Wilmott, but not even as good as earlier work. His first book was better, probably because his co-authors talked some sense into him. His personal anecdotes demonstrate a low emotional IQ. It is as if Wilmott thinks that if readers agree with the finance they must agree with his incessant and juvenile self-regard. My reaction to the inappropriate self-expose was: "Who cares? Get some friends, they might help on the financial aspects of this book".

Wilmott's financial IQ is only average, if this book is to be the evidence. It seems Wilmott isn't up on the latest techniques, or can't be bothered to research them. Stochastic calculus for example. Lack of real world practical examples demonstrates lack of knowledge of how financial instruments work in practice.

Who should buy this book? The real question is who shouldn't buy this book. For the Phd Quant this book is a tour de force in how to explain technical topics clearly and concisely. For the newbie, this is simply the lowest barrier to entry available.

Interestingly, QF does not "replace" a bookshelf of quant books -- rather it nicely compliments many that you're likely to have such as Taleb, Neftci etc. As sales of QF increase, it is likely that readers will be less likely to buy a derivatives book that is over their head.

Volume 1 covers 37 chapters of the equities/currency derivatives world, While Volume 2 covers the Fixed Income World, Risk Measurement , Miscellaneous Topics and Numerical Methods.

Chapter 10 has an excellent and all too rare discussion of Probability Density Functions and First Exit Times, whilst Chapter 14 has an outstanding Trading Game invented by one of Paul Wilmott's former students.

Chapters 16 through 21 cover the Path Dependent world while the balance of the chapters cover extensions to Black Scholes.

Its in these sections that Wilmott delivers some surprising thoughts and insights into Stochastic Volatility Surfaces that are currently the rage.

Throughout both volumes I continue to be astonished at how clear, concise and effective his explanations are. The icons are not annoying at all -- rather I found myself skimming the icons to find out what was required to be committed to memory in each section versus what was background.

As obvious as it sounds, a glaring weakness in Derivatives texts is the inability of authors to elucidate what must be memorized as rote for the student to make further progress. Paul's easy to follow icons lay out a precise plan of study.

I can't say enough about what a leap this is over competing texts.

In Volume 2, Chapters 38 through 50 cover models that Wilmott likes as well as ones that he doesn't [again, a rather novel approach]

Some surprises in Chapters 51 and 52 are an excellent overview of Portfolio Management and a survey of Robert Merton's Asset Allocation in Continuous Time.

Sprinkle in outstanding chapters on Derivatives Fiascos, Real Options, Energy Derivatives and 5 chapters on Numerical Methods and an astonishing survey of Quantitative Finance is complete.

Throughout the books Paul's practical use of Term Sheets and quick and dirty VB code and spreadsheet tricks [you just have to see his Excel shortcut for approximating the Normal distribution] leave the reader constantly wanting to rev ahead.

To round out a tremendous effort, Wilmott also pays homage to authors that he's found helpful and he's generous with suggestions on further reading. This builds sorely needed confidence when attempting new material.

The comparison with Richard Feynman is apt but misses an important detail...Feynman was not noted for turning out hordes of talented understudies. Paul Wilmott has turned out enough talented graduate students that maybe he will be a bona fide cult leader someday.

As Harvard B-Schools's Tufano notes in his Foreword, this really is an excellent book for business managers and finance professionals, and their lawyers. It explains what all derivatives have in common and helps you understand how and why they work -- when used properly, as the book and today's markets constantly remind us. The book should have lasting value because it relies on the stable functions of derivatives and of their regulation. And through its functional approach to fiduciary duties, disclosure issues, and exchange regulation, the book also throws a lot of light on derivatives' legal and regulatory systems. (I'm not a lawyer but I do manage my firm's regulatory compliance.) I have seen the book's building block approach used to simplify technical discussions of individual products. But I don't recall ever having seen it woven as it is here into a discussion of law and regulation that makes sense to business and legal audiences. Tufano says that to work together confidently, managers and lawyers need a heightened appreciation of each other's expertise and a common language. I agree that this book makes an an important contribution to both. The book should also be a useful to teachers and students in business and law schools. Definitely worth reading, a must for the library of any law firm and the desk of any senior manager or market professional.