Tuesday, May 7, 2013

Paul Wilmott Introduces Quantitative Finance 2nd edition, Paul Wilmott



An "Introduction" to anything is going to alienate half the readers. Why? Well, of necessity it is going to compress large topics, simply summarize complex topics, and leave whole swaths of material untouched. Most complaint reviews here fall roughly in to one or more of those buckets.

Let' face some facts: finance is a huge field of inquiry; mathematics is a huge field of inquiry; practical execution is a huge topic in itself (see the offerings of excellent books on Excel (Walkenbach, Benninga) and C++ (Joshi) and VBA (pick one)). An introduction of the intersections of these topics is no small area of inquiry. I stress using AMAZON's "look inside" feature for a table of contents rather than repeat the litany of topics, but major issues like risk, random, returns, and standard methods are all covered in a fine first approximation.

So how well does Paul Wilmott do? The answer is not bad. This is a great first book to use with folks crossing over to quantitative finance from other areas (Theology in my case), or for folks who will work and talk with quants but not be one themselves. It will probably appear frustratingly simple to math or engineering majors, but this is an *introduction* and believe me, the heavy lifting comes latter.

As a teaching text, the lack of exercises is a frustrating, but the CDROM has lots of fun spreadsheets with simple built in macros that make practical lecturing a breeze.

Wilmott's style is light, and he does make some logical leaps that can look sloppy but are transparently obvious to folks like him (trained in math), but it is often difficult to know what others don't know and explain without over explaining. Any author has to pick where to compress explanations and no one is going to be completely pleased with all of where Wilmott squeezes. Still, with a minimum bit of extra effort (you are sitting at a computer reading this, and Google Scholar is about two clicks away) anything that isn't clear can be found in an expanded technical address at Wolfram or other helpful sites.

This book is also a great filter. My students who complain it is too easy I move quickly along. Those who still don't get it I steer towards careers in financial sales, those that are lulled into a false sense of power I hand them Shreve to invoke humble silence.

In short, this is an admirable work for its purpose: an *introduction* to a vast, complex, and growing field. The perfect book to discover the field while drinking a beer. Just don't let the beer talk you into thinking you've mastered the subject with this book alone, and you'll be fine.

This book is really a light reference. You won't find much of details about many topics. Gives often just one formula and few sentences. It is not clear to me who is supposed to be using it. Amount of topics is way larger than what someone entering qf supposed to know. On the other hand if you have some experience it becomes useless - no details. Another thing is that PDEs are less intuitive that expectation/MC, Paul is well known for his PDE approach. There are some good topics though I have to say and I do find it useful from time to time. But there are better books available (Joshi, Hull).

For someone who wants to learn more about quantitative finance, this is a good entry book. It contains most of the main theories behind the basic pricing models used for different products, and manages to do this whilst keeping the mathematical side fairly simple, unlike many books where the reader gets totally lost in equations.

Wilmott seems to clearly explain all the symbols used in any equations, which I can say is not always the case in other books I have read.

For those who want to progress further, there is the "Wilmott On Quantitative Finance" 3-book volume.

The only downside is that it appears impossible to find solutions to the exercises, so anyone who is using the book for self-teaching will not be able to simply look up whether they have answered correctly.

I have gone through this book to try to get a better understanding of derivative pricing. Math is kept easy but often the author leaves out steps in his reasoning. In fact, I have find Hull's book more explanatory and easy to follow on topics like stochastic processes and the creation of Ito's lemma than Wilmott's. This is disappointing as Hull gets pretty detailed in his explanations. I am not an Einstein so I will not and do take out pencil and paper to derive results to make sure I understand. I have not been successful in several instances with this book. However i would still recommend this book to be read as reference for certain topics that are better explained in this book relative to the other similar ones .

The book disapoints in presenting very few mathematical details. Perphaps this is
popular for some students but in order to learn quantitative finance there are no
highway options and math cannot be avoided to the degree as presented here. It provides a good understanding of how the market actually works, but there are other books such as John Hulls that provide a similar practical understanding and a better level of math.

Reading the back flap of the book, the author is presented as a cult writer not caring about academic prestige etc., implying that the rest of the books in the area are accused of being written only for academic reasons trying to impress colleages. I have a great respect for many of the books and authors in the area and I honestly think that the statement is false and quite pathetic.

We are living in the times where things must be "light", anything from food to classical music, and increasingly so also academic books. This book is very light, which may please some student, but it will be inadequate for teaching purposes.
Read it as a complement to other more rigorous textbooks to get knowledge about how the financial markets operate.

One of the few books for which I think I wasted my money. It is poorly written, often I would say it seems as material is even poorly understood or (most probably) there is a very limited capability in writing/explaining/organizing concepts. If you're looking for an understandable and intuitive intro to finance (or quantitative finance) this is the wrong book. If you're looking for something more deeper, precise and technical, this is *definetely* the wrong book.

This book is far from being intuitive: even simple concepts such as VaR (value at Risk) are treated poorly and in an extremely complicated manner. Hull does a far better job in providing an intuitive approach to stochastic calculus, for instance. Often subjects are incomplete and almost always they lag intuitive and substantiated arguments; after one reads he/she will not understand much on the subject, unless they already know the subject matter very well and then would realized what little attention and competence has been put into this book.

I bought it because of the somewhat good reviews and I the title and I am really surprise anybody can say this is a good book. Do not rely on this book. Keep looking elsewhere. These are my 2 cents.


Product Details :
Paperback: 728 pages
Publisher: Wiley; 2 edition (August 6, 2007)
Language: English
ISBN-10: 0470319585
ISBN-13: 978-0470319581
Product Dimensions: 7.5 x 1.6 x 9.7 inches

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