I am giving this 3 stars because it does have value for a certain population of readers. Just not for students, or professionals.
Any comparison to a book like Netfci is just not valid.
First, as a book on math, it is terrible. Even as a quantative finance book it is not that great, but at least it does provide useful techniques for the layman.
The math used in financial engineering is very complex, it is an intersection of both theoretical and applied math. Which is why Wall Street hires math types like engineers and physics people.
Though any good undergraduate program should provide most of the math, and if a student is going into Financial Engineer a few additional advanced math course will fill the gaps. Which is where Netfci and other textbooks are for students.
Now on to this book. This book really is helpful to the layperson who does not understand the math to even read Hull or other books which present the theories. An Adult who had the math x years ago will find this of value, and a person who wants to understand how to actually approach a number of the methods.
The book does provide step by step so you can actually solve equations which baffled you before. You will understand what the various parameters and the odd notation enough to use the equation.
So it gets 3 stars because it has a value.
The problem is that the authors avoid alot of topics, and they explain it away by saying it is a finance book when they minimize the math. And they use the excuse it is a math book when they minimize the finance topics.
The authors take the easy way out and simply avoid difficult material. The math is just absurd. Median, Mode, and Mean get 4 pages, yet Partial Derivatives get a paragraph. Most of the math is devoted to overexplaining basic statistics and probability which you can get from any basic book on stats. And they don't miss important little details.
They assume the reader is sophsiticated enough to understand differential calculus with litle depth, but the same reader needs chapter after chapter of basic statistics. The authors make great leaps when it comes to the theoretical math which is probably the biggest stumbling block for most readers. They provide enough so you will understand their step by step for using the equation and to understand the equation when you see it in other books.
It is just amazing how much detail they provide on basic math, yet jump over anything complex. They avoid this in the finance part as well, and some topics are given very limited coverage. APT is one that disappointed me the most.
This is a great overview of many of the mathematical techniques in finance. The writing is very clear, as are the examples. Compared to the usual academic material, this book is a gem.
A few of the topics are a bit too difficult to cover with a short review. The book covers basic calculus well, but for the coverage of partial differential equations I'd want a bit more depth to make sure I understood the issue.
If you're studying finance, this book is a great resource.
This book is pretty bad. It goes into a lot of details on very simple calculations and manages to make them seem more complex than they actually are. This is sepecially true in the first chapter on interest rates.
When it comes into advanced topics, there is a lot of hand waving and pulling of critical results from nothing. Worse is the fact that when these handwaving occurs, the reader is not informed.
The authors also tend to over simplify advanced topics and do not ensure a consistent notation. People should not depend on this book to build their foundation in financial maths as you would pick up a lot of misconceptions that will hinder understanding of more advanced topics later. This book serves best as a collection of formulae in basic financial maths that you can refer to when you can't remember a formula.
Both the CFA notes and IOA notes on quant do a much better job of explaining financila maths compared to this book
This book actually can be read by non-math majors.
Watsham really makes the effort needed to make
the book "readable" to non-quants.
Unlike Neftci and Wilmott, who jump to more advanced material
without really explaining most of the details,
Watsham explains all the needed details.
However, Watsham's book covers much fewer topics
than Neftci's or Wilmott's (Quant finance) book covers.
I hope Mr. Watsham next edition includes more of the
topics that are found in Netfci's book.
This book actually can be read by non-math majors.
Watsham really makes the effort needed to make
the book "readable" to non-quants.
Unlike Neftci and Wilmott, who jump to more advanced material
without really explaining most of the details,
Watsham explains all the needed details.
However, Watsham's book covers much fewer topics
than Neftci's or Wilmott's (Quant finance) book covers.
I hope Mr. Watsham next edition includes more of the
topics that are found in Netfci's book.
This book targets readers who have little or no familiarity with statistics and calculus (or who, like me, has forgotten much of these two disciplines. The authors do a great job of explaning why we use the methods they explain. Clear examples are provided. Complex subjects are built up from simpler principles. I highly recommend this bood to students seeking a thorough grounding in the quantitative methods underlying the pricing of assets and derivatives, portfolio management, risk management, etc.
This book is totally focused at the real world and is aimed at practioners. Wanting to get a handle on Quantitative Finance I initially started with Neftci's "Intorduction to Financial Mathematics" - which of course is an 'introduction' more suited to theoretical physicists.
But Quantitative Methods in Finance is aimed at the practioner and concentrates on the application, not pure math. Yet it gives the tools to step into the more sophisticated stuff and covers all the key topics needed for practioners.
This book and the companion "Futures and Options in Risk Management" should be hailed as classics. Thanks for finally getting to the point for all us practioners out there who actually do these calculations as opposed to reading tons of equations about them.
I eagerly await the next edition.
Product Details :
Paperback: 408 pages
Publisher: Cengage Learning EMEA; 1 edition (December 19, 1996)
Language: English
ISBN-10: 186152367X
ISBN-13: 978-1861523679
Product Dimensions: 7.4 x 0.8 x 9.7 inches
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