Book description
A whole is worth the sum of its parts. Even the most complex structured
bond, credit arbitrage strategy or hedge trade can be broken down into
its component parts, and if we understand the elemental components, we
can then value the whole as the sum of its parts. We can quantify the
risk that is hedged and the risk that is left as the residual exposure.
If we learn to view all financial trades and securities as engineered
packages of building blocks, then we can analyze in which structures
some parts may be cheap and some may be rich. It is this relative value
arbitrage principle that drives all modern trading and investment.
This book is an easy-to-understand guide to the complex world of
today's financial markets teaching you what money and capital markets
are about through a sequence of arbitrage-based numerical
illustrations and exercises enriched with institutional detail. Filled
with insights and real life examples from the trading floor, it is
essential reading for anyone starting out in trading.
Using a unique structural approach to teaching the mechanics of
financial markets, the book dissects markets into their common
building blocks: spot (cash), forward/futures, and contingent
(options) transactions. After explaining how each of these is valued
and settled, it exploits the structural uniformity across all markets
to introduce the difficult subjects of financially engineered products
and complex derivatives.
The book avoids stochastic calculus in favour of numeric cash flow
calculations, present value tables, and diagrams, explaining options,
swaps and credit derivatives without any use of differential equations.
ROBERT DUBIL has been an Associate Professor in
the finance department at the University of Utah since 2005. Prior to
this he was Chief Strategist at HedgeStreet where he also wrote a blog
as Dr Bob, and has held positions at UBS as Head of Quantitative
Research and Fixed Income Options Trading; Chase Manhattan as Head of
Exotics; Merrill Lynch as a Fixed Income Derivatives Trader, and
latter as Director of Analytics in the Corporate Risk Management
Group; Nomura; and J. P. Morgan. Professor Dubil holds a PhD and MBA
from the University of Connecticut and an MA from Wharton. He
published An Arbitrage Guide to Financial Markets (John Wiley
& Sons, Ltd) in 2004 and has written a number of book chapters and
articles on liquidity, derivatives and personal finance that have
appeared in the Journal of Applied Finance, Financial
Services Review, Journal of Wealth Management, Journal
of Investing, and the Journal of Financial Planning. In
Robert's spare time he enjoys piano, skiing the greatest snow on earth
and tennis. His second serve could use a lot of improvement though.
