Modern-portfolio-theory

This book provide a visual approach to me to understand more what is the text talking about. It is very clear to me to learn and see the result of a portfolio. Very useful.

I bought this book for a finance course, i audited.Book covers in detail about various option pricing models(CAPM,Single Index, Multiple Index). Portfolio analysis is covered in detail plus seperate chapter on International Diversification.Arbitrage Pricing Model(APT) is compared against CAPM, this might be essential in chosing efficient portfolio.

Also includes selecting efficient portfolio. Bond pricing with detail explanation of Black-Scholes model is the best chapter .

The authors have given a detail explanation of all financial terms, which doesnot make this book daunting for novices. Best part is the various references at the end of which chapter which provide for additional information.

This is a must have book for anybody intersted in finance.

the capital assets &the relation between the er&the bet

I very much enjoyed this book, but could only give it four stars because it is a bit out of date regarding some of the instruments of the capital markets. For instance, credit derivatives and total return swaps are used to round out and diversiry bond portfolios especially in structured finance. Tavakoli has written an excellent book on these products: "Credit Derivatives" (Second Edition). These are off balance-sheet products that are a form of financing. Tavakoli also talks about other types of financing which reduce portfolio concentration risk.

For a textbook, this is written in a reader-friendly style. You can almost see the author at the blackboard explaining the concepts AND math in plain English. And yet, very little handwaving at all. On the other hand, this may also present special readability challenges: you may find yourself constantly flipping between text and tables to follow the discussion.

From a pedagogical point-of-view, some of the developments might have been more intuitively presented. For example, the chapter on option-pricing theory should mention the expected-value interpretation. Over all, however, this text does very well on this score.

I particularly liked the survey of empirical studies at the end of each major concept, that discusses the imperfections that other researchers have looked into, and their findings.

This is one of the core reference texts I keep on my desk.

This was one of the texts I had to read for one of my MBA classes. It provides an excellent theoretical background in finance and the theories that link finance to macro and micro economics. It is not very practical however. Not much in the book can be applied. It is a must, however, for any serious student of finance. The coverage of option models is a little light, however. I highly recommend that people have a background in calculus, differential equations, probability theory, and linear algebra before reading this book.

The publisher has added a lot of graphs and diagrams to aid understanding. It is a very user-friendly book and suitable for undergraduates and beginner postgraduates courses. The only room for improvement is that the depth of material is not enough for more advanced course.

Nicely written from a journalistic perspective but rather old fashioned. Many mistakes and deliberate false claims in order to suit product interests of Goldman Sachs. Examples:

In the chapter on asset liability management there is always an analytical case for equities. However the only reason is that GS does not allow duration as a choice variable. Otherwise beta (in their formula) would become one and the optimal equity allocation is zero. Accidental? I doubt it.

They also claim to have found (earlier) a better method than Stambaugh on dealing with missing data. However either you publish or you shut up.

Waste of time for serious quants

My highest commendations to the asset management team at Goldman Sachs. They have come together and created a highly comprehensive tome that covers all the bases within the realm of modern investment theory. Their solid equilibrium approach is applied to all areas, from traditional investments to alternative asset classes, from institutional funds to private wealth, using analysis and real world applications. Incredibly thorough, extremely recommended.