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In the last 25 years, the venture-capital industry has grown from a less than $1 billion to an over $60 billion business--growth that has far surpassed any other class of investment products. Today, the industry consists of several thousand professionals working at about 500 funds concentrated in California, Massachusetts, and a handful of other states. Despite the industry's size, there are many misconceptions about the nature and role of venture capitalists; their trade remains shrouded in mystery.

Paul Gompers and Josh Lerner's Venture Capital Cycle is an illuminating academic examination of the form and function of venture-capital funds. Gompers and Lerner are Harvard Business School professors who have researched extensive original data to analyze venture-capital fundraising, investing, and exiting methods. Beginning with a historical overview of entrepreneurial finance, the book examines how venture partnerships are structured, how venture capitalists are compensated, the staging of investments in operating companies, and the relative performance of venture-capital-backed offerings. There's also an interesting comparison of corporate venture organizations, such as Xerox PARC, with those of independent and other venture groups. Venture capitalists use industry knowledge and monitoring skills to finance projects with significant uncertainty, typically concentrating investments in early-stage companies and high-tech industries. Large information gaps between entrepreneurs and investors create conflicted interests, and the book looks at some of the novel checks and balances most often employed.

One of the book's themes is that the whole venture-capital process is best understood as a cycle: from the raising of a fund; to investing in, monitoring, and adding value to firms; then exiting deals; returning capital to investors; and finally renewing itself by raising additional funds. The need to exit an investment successfully shapes all aspects of the venture-capital cycle, from the ability to raise capital to the types of investments made. Another theme is that because venture funds must make long-term illiquid investments, they need to secure funds from their investors for periods of 10 years or more. The supply of venture capital consequently cannot adjust quickly to changes in the investment environment.

The authors conclude that increasing familiarity with the venture-capital process has made the long-term prospects for venture investment more attractive than ever. Entrepreneurs, venture capitalists, and investors will find this book a scholarly, well-documented examination of the industry. --Scott Harrison ... Read more

Reviews (12)

A Solid Effort!
The Venture Capital Cycle is a thorough overview of the venture capital market that will be edifying to those who know little about the mysterious methods of private equity financiers, but self-evident to those with a background in corporate finance. Readers who have worked in or studied finance already are familiar with the tidal cycles that govern the flow of capital into early-stage companies, as well as the process through which money moves from institutions and individuals to fledgling enterprises. But we [...] strongly recommend that entrepreneurs read this book, which provides an exhaustive tour that will answer many - if not all - of your questions about where venture capital comes from, how you can get a hold of some, and how your life and business will change after you do. And if, along the way, you think that the authors sound too much like professors with their dense, academic prose, you're right.

Valuable and clear info for both sides of the vc process
We used this book in an MBA course on Venture Capital here at the University of Michigan b-school. I think this is an excellent book.

First, do NOT expect to be a book full of venture capital anecdotes. While that is always intersting, this book is a serious treatment of what the venture capital business is about: how funds are raised, how venture capitalists arrange deals to ensure adequate compensation for their risk, how investments are staged, how the investments are managed, exit strategies and methods, and more.

This is a lot to cover in a book of approximately 350 pages, but it is all covered very well. The writing is quite clear and readable. Though this is not a book for the general reader, it is not difficult to read if you have some background understanding of business theory and a touch of finance.

What is so helpful about reading this book is that people seeking venture capital will understand more about why things are structured they way they are. It isn't just arbitrary greed and control. It is a business deal that requires an expected positive return - you know - making money (which does concern self-interest (greed) and structure (control) - but with slightly more reasoning).

While people seeking to make venture investments will immediately understand why they need something like this book and a whole lot more, I believe it is essential for people seeking investment money to also have a significant understanding of this process. Why? Because the venture capitalists understand this process completely and the people seeking investments usually don't do enough of these deals to really know what is going on. And if they are too blind they will be sheared like sheep. They need to understand all the interests involved so they can argue on their own behalf and make the deal as favorable as they can.

In any case, while this isn't the only book you should read on the subject it is certainly a good one. It is of manageable length with a great deal of clear and helpful information. I find this topic fascinating.

thorough but Not Practical
Very important content, but of limited use for actual VC investors or entrepreneur. It is very good with its findings, but they are all known to investors, and are of less interest to entrepreneur. that being said, I enjoyed reading the book, which shows the "proofs" to many of the things we in the industry are doing almost intuitively. The books suffers from the fact it is not sufficiently detailed to be useful in practice, while at the same time is providing good information for students learning investments. I guess it is just addressing a different audience than myself, an entrepreneru and investor.

GOOD But not very appropriate for evrybody
This bokk is...ok! I mean it is good but a little bit boring. It presents a lot of studies made obviously by these two authors. However, that sounds really too much sometimes. You can skip 50percent of the book. Read the introduction, the conclusion, some begining of each paragraph and that's enough.
If you are used to very academic publication with a detailed overview of the conducted research, that is really a book for you.
For entrepreneurs, that might add some new insights about this industry but you can honeslty find other books more appropriate and more pragmatic.
Conclusion: a serious book (that sounds sometimes like bullship...sorry for the spelling..I am a foreigner), good ideas, good presentation but...too long!
Still, buy it if you have some free time.

A Must Read!
This book is an awesome read for those who want to enter the world of Venture Capital. It explains more than what VC's do, it elaborates on the "how,when,why" of the entire process. From mathematical and data support (which is a bit complex for the average reader), its value in the book substantiates it's position on everything from timing funding, to VC experience (or lack of), and even firm or entreprenuerial behavior. Great first book in my opinion! ... Read more

Book Description

Managing Bank Capital explains proven techniques available in the management of bank capital that will help maximize shareholder value. This second edition has been fully updated to incorporate significant developments, such as the modeling of credit risk, and includes new sections with more technical information and advanced analysis. ... Read more

Reviews (4)

Helpful Concepts, Lacking Implementatin Steps
With all the attention paid to bank capital management, this book is helpful in describing the concepts.However, it is not quantitative enough.The step-by-step of capital allocation for a given asset class of varying risk levels is lacking.For example, how should the bank treat the sub-prime portion of its credit card or auto loans in the capital allocation?I wish it were more specific.Could Providian or Capital One have directed the capital away from high risk loans, had they followed the advice of the book?

A Must-Read Book for Shareholder Value Management
Chris Matten provides a comprehensive guide to applications of RAROC and shareholder value for managing bank capital and compensating bank executives and traders. The author provides particularly good sections onhow EVA, shareholder value, and other earnings based measures can bemanipulated and abused. This is not the sort of book which the corporatefinance shareholder value crowd would likely read, but is one which theyneed to read.

Excellent only book on the economic allocation of capital.
Mr. Matten's insightful work highlights how rigid appliction of the Basle Accords can lead to capital misallocation. He then provides insightful suggestions, with good examples, on how to better allocate bank capital by discriminating between borrowers on the basis of risk, all the while remaining within the basle guidelines. Mr. Matten points to the need for sophisticated mathematical-statistical analysis but does not dwell on the technicalities, making the book accessible to non-rocket scientists. All in all, a highly recommended book.

Great book,but watch out for typos
For a comprehensive approach that brings the reader from Cooke through RAROC,this book is very good and has no competition .What basicexplanations of statistics theoryyou need in orderto follow the main'story' is included discreetly,so advanced readers shouldn't be bothered by them.This being said, beware the errors -- they exist throughout:for the pricethat Wiley Press is able to get in light of the lack of competition from another good RAROC capital allocation book ($69 last year, $95 now),ithopefully has caught and corrected them.Caveat emptor. ... Read more

Book Description

An Arbitrage Guide to Financial Markets is the first book to explicitly show the linkages of markets for equities, currencies, fixed income and commodities. Using a unique structural approach, it dissects all markets the same way: into spot, forward and contingent dimensions, bringing out the simplicity and the commonalities of all markets. The book shuns stochastic calculus in favor of cash flow details of arbitrage trades. All math is simple, but there is lots of it. The book reflects the relative value mentality of an institutional trader seeking profit from misalignments of various market segments.

The book is aimed at entrants into investment banking and dealing businesses, existing personnel in non-trading jobs, and people outside of the financial services industry trying to gain a view into what drives dealers in today’s highly integrated marketplace. A committed reader is guaranteed to leave with a deep understanding of all current issues.

"This is an excellent introduction to the financial markets by an author with a strong academic approach and practical insights from trading experience. At a time when the proliferation of financial instruments and the increased use of sophisticated mathematics in their analysis, makes an introduction to financial markets intimidating to most, this book is very useful. It provides an insight into the core concepts across markets and uses mathematics at an accessible level. It equips readers to understand the fundamentals of markets, valuation and trading. I would highly recommend it to anyone looking to understand the essentials of successfully trading, structuring or using the entire range of financial instruments available today."
—Varun Gosain, Principal, Constellation Capital Management, New York

"Robert Dubil, drawing from his extensive prior trading experience, has made a significant contribution by writing an easy to understand book about the complex world of today’s financial markets, using basic mathematical concepts.  The book is filled with insights and real life examples about how traders approach the market and is required reading for anyone with an interest in understanding markets or a career in trading."
—George Handjinicolaou, Partner, Etolian Capital, New York

"This book provides an excellent guide to the current state of the financial markets. It combines academic rigour with the author’s practical experience of the financial sector, giving both students and practitioners an insight into the arbitrage pricing mechanism."
—Zenji Nakamura, Managing Director, Europe Fixed Income Division, Nomura International plc, London ... Read more

Reviews (1)

Financial Management of Healthcare Organizations
This text proved an invaluable guide to the subject of hospital finances. This was a subject I was not particularly interested in, and the book surprised me. It is readable and clear. The logic flows smoothly. There are plenty of examples, illustrating assorted principles. After reading several books on the topic of hospital finances, this one stands out for its clarity. ... Read more

Book Description

Test Your Knowledge with the Ideal Companion Workbook to the #1 Guide to Corporate Valuation!

This professional workbook and study guide is the ideal complement to the bestselling Valuation, the definitive guide to measuring, managing, and maximizing a company’s value. The Valuation Workbook allows you to self-test your knowledge before putting it to work in real-world situations. A clearly organized parallel volume to Valuation, the Workbook:

• Walks you through the text, chapter by chapter
• Tests your comprehension and calculation skills with multiple choice questions and problems that help you practice applying the principles in the book
• Covers multibusiness, dot.com, bank, and insurance company valuation, as well as the ins and outs of valuing cyclical companies and option pricing methods

Along with a complete answer key, the Workbook also covers such essentials as what drives value creation, value metrics, M&As and joint ventures, valuation frameworks, how to analyze historical information, estimating the cost of capital and continuing value, forecasting performance, and calculating results. Brief chapter summaries reinforce major points.

The Valuation Workbook makes Valuation a more valuable business reference than ever before.

Please visit us at www.WileyValuation.com

WileyValuation.com is a premier Web site devoted to all things valuation. At this unique online community for financial professionals, you will enjoy the following features:

• New information on valuation topics and links to key valuation sites
• Valuation message boards and chats
• Downloadable valuation spreadsheets

Reviews (2)

Excellent Companion!
This workbook is a great companion to the bestselling Valuation book by McKinsey. A well organized resource that includes exercises and Q&A. The basic principle allows you to self-test your information and knowledge base. Understanding the valuation process can be challenging at times. This workbook is a great tool to help guide you through the process. I also use it as a quick reference problem solver.

Don't bother--save your money!
I had given 5 stars to "Valuation," but I feel that this workbook is practically useless for its price. The problems in this book are not very challenging; they merely require echoed answers instead of questions providing in-depth analysis. Common questions include: "Name three issues in valuating X company" or "Name three reasons why X is preferred over B." These are simple questions one could easily answer by taking copious notes. I had expected much more challenging questions from the workbook, but I was sorely disappointed. My advice: Buy "Valuation" but avoid buying this book. ... Read more

Book Description

In this bestselling classic of financial management, G. Bennett Stewart, III, raises and answers these provocative questions:

• Do dividends matter?
• Are earnings per share really accurate measures of corporate performance?
• What is the engine that really drives share prices?

More than that, Stewart lays the foundation for EVA^r, the financial management and incentive system now in place at nearly 300 companies around the world, and which is rapidly becoming the global standard for corporate governance.

Managers, confused about what investors really want, often find it difficult to reach informed decisions regarding business strategy, acquisitions and divestitures, financial structure, dividend policy, and executive compensation. But now an EVA^r -based revolution is providing a practical framework that managers can use to build a premium-valued company. At the forefront of this revolution is the consulting firm of Stern Stewart & Co., of which G. Bennett Stewart, III, author of The Quest for Value, is senior partner and cofounder.

The Quest for Value is written for senior management, key operating people, and planning and financial staff. This bible of financial management will assist managers in goal setting, resource allocation, strategy development, valuation of acquisitions, financial policy setting, incentive compensation planning, and building shareholder value.

The Quest for Value cuts sharply through the myths that to this day misinform corporate strategists in their pursuit of shareholder value. Laying waste to inaccurate yet widely used methods of performance, Stewart demonstrates how the Stern Stewart EVA^r approach not only creates greater shareholder value but also provides a powerful framework for the broadest range of corporate decision making.

Reviews (18)

Interesting, well-written and useful but.....
Stewart has crafted an engaging treatment of Economic Value Added (EVA) which is accessible to both financial professionals and "lay-investors" alike. The material is highly readable and the case examples serve well to illustrate important concepts. (One criticism: Stewart should receive 40 lashes with a wet noodle for failing to provide an index in an 800 page quasi-academic book).

EVA was Stewart's contribution (in 1991) to the Shareholder Value framework originally introduced by Alfred Rappaport of Northwestern University. This theoretical framework emphasizes the imperative of adding shareholder value via the undertaking of specific financial and investment decisions at the corporate level and measuring that value with a metric similar to discounted cash flow analysis. EVA is Stern-Stewart's metric.

After reading the Motley Fools rave review above, I would issue one caveat to all of those "fools" who think they have found the holy grail to selecting winning stocks: EVA has been around for a long time (the theoretical work precedes THE QUEST FOR VALUE by decades) and is well-integrated into investment management methodologies. There have been several studies which demonstrate that selecting stocks based on EVA or even changes in EVA will not produce excessive returns for investors (See Damodaran). Thus, the real "value" of THE QUEST FOR VALUE for private investors is to focus attention on the importance of economic measures of value and to point out the limitations of accounting valuation measures like earnings and earnings growth.

Relatively little new or noteworthy
Many of the concepts in this book have been described and used by successful investors such as Graham in the 30s, Buffett's adaptation of Graham's ideas in the 70s and 80s, and the more recent breed of Intrinsic Value-driven investors who garner wide respect today. New terms are introduced with great fanfare when they often are simple rearrangements of well-known formulas (taking the inverse of a ratio somehow gives you a radically new insight?). It seemed to me that the major contribution of the author is a new set of acronyms.

Claims about how failing companies turned around into successes because they adopted EVA are not sufficiently supported. Those turnarounds could have happened for any of many other reasons. The claims would be believable if they were well supported with facts and deeper analysis. As they are, they detract from the overall quality of the book and raise questions about other claims made in it. At times the author's tone is condescending, as if we can all assume his statements don't need proof!!

The book could function as a fair reference but as most other reviewers have noted, there is no index, and the table of contents is about half a page! This is particularly difficult because the discussions of important concepts are somewhat spread about in the book.

On the positive side, the author's focus on return on capital is good and the reasoning well stated and easy to understand. By the same token, his discussions of what provides true value to the investor (and business manager) is good. But these are not very original. Either the book should have been about one-fourth as long, or the examples the author used to justify EVA should have been much more thoroughly developed.

A Valuable Investment
In not possessing a Finance or Accounting background, I have found it extrememly difficult to find a book that can guide me from the very basics of corporate valuation through to the complexities inevitable in any such subject.

However I would urge any potential customer (either financially astute or a beginner like myself) who is genuinely interested in Value, to look no further than "The Quest for Value".

The key resides in the style (fully informative yet at times conversational / humuorous), the content (rich in depth and explanation) and finally the extensive case studies and "war stories" that bring Valuation fully to life.

You dont have to be an accountant or corporate finance practioner to understand and apply the fundamental principles of EVA - in fact as the author sometimes alludes to, not possessing this background is perhaps a distinct advantage.

Investing in this Quest with Stern Stewart as my guide has helped me enormously.

Maybe it is the key of the ¿value¿ and ¿investment¿.
After getting my MBA 1995, I have read so many books discussing about value and investment, I recommend, however, that The Quest For Value is the one you must read. The reasons:

First, few books put the two topics (value, investment) in one theoretical system. Even the books or articles about "value investment" can be separated into two categories: these about "investment art", talking about, or written by investment experts (who's names on the Money Master and New Money Master); the other about the "valuation scientific methods". People talked about value investment ideas by totally separated way, the art, or the science.

Second, too many books discuss value investment by this way: "it is the one... (maybe earning, or cash flow, or working capital,) but..., or, if....,". So the investor become a boxer, who need professional speed and energy to quickly switch his positions and punch among the keep coming "but", "if" from either accounting or reality. Contrary to my boxer's inspiration, my best friend in business school told me: "Warren Buffett must have one secret point he never told anybody". I think the secret he means is what is "one dollar", and what is "forty cents", if buy low sell high is the plan. Haven't our two foolish business school students told you everything about the "modern" market efficiency and inefficiency theories?! I know value investment masters will feel sad for this kind of coming value investment young villagers. Anyway, besides the "professional strong" and the "superstition power" from the point of ours, is there a rational point to support the leverage of investment art.

The third, value investment is always about two aspects: the business and the management. From Fillip Fish's buy and hold sticky strategy to Peter Lnych's traveling and talking around the world, to Warren Buffet's appreciation: "he (the CEO) is this kind of person, you can marry your daughter to him", investment is about to invest, or to marry with, the management team. But, we need the handsome's picture.

The Fourth, what kind of morality standards fits Wall Street's social position. Probably, people don't have time to talk about good or bad, when the regulation of a game is win or loss. However, if you are playing NBA, your morality, personality, even image are kind of money at least, aren't they? Even you just doing exercise in your backyard, at least don't forget another possibility: win-win.

If you have this kind of questions, you must read this book. The author's capital efficiency view and five categories of business accordingly put the "value" and the "investment" two topics into one system to discuss.

And, The Economic Value Added (EVA) investment method is independent from the any accounting system. The accounting system as a standard record of business activities is only an object of study, criticize or judgment for investment decision but not a constriction of decision mine field. Contrary to "but" "if" talking, this book puts everything on this way: it is the one (EVA), so you should....

Additionally, to look for a good management maybe, for investor, can become to create of good management teams. This topic you can read EVA and Value-Based Management by Mr. Young and O'Byrne for further study.

Finally, the meaning of investment probably is not just NBA's win or loss. It is about to add or to damage (or even worse, to steal maybe) the social wealth according to EVA theory.

Interesting? Plus the author's good logic and good case study! The only lack of this book to me is that the Capitan Case only has one. After finishing the Capitan Case at the end of the book, I wish there were other four cases for the other four categories of business accordingly (If you know where I can read that, please let me know...).

There already been so many, so different opinions about this book on this site. While, if investment is art, according to Peter Lynch, or is a project, according to Charles Ellis, then any theory or method is just a kind of tool or weapon. So it will depend on the person, so it will depend on everything. I myself start the second reading after the first. I am going back to Main China pretty soon to do Investment Banking business, probably focus on LBO, and I will keep reading this book, talking about this book, and trying to imply this book. I think that I owe amzon.com a customer's view since I have got so much helps from others' views, so I recommend this book to you: If you have been so patient to read my view to here, you need read that book. Good Luck :)

A Practical Reference
I found this book to be a great reference book for the EVA system. I would caution readers that this book is probably better as a reference for those who have taken the Stern Stewart seminars on EVA than as a stand-alone volume.

Nevertheless, Stewart does a good job, in my opinion, of laying out the EVA framework and provides some good real-world examples of how EVA is used by companies to manage their financial affairs. ... Read more

Book Description

This practical, real-world guide gives investors all the tools they need to make wise decisions when weighing the value and potential of investment properties. Written for old pros as well as novice investors, this friendly, straightforward guide walks readers step by step through every stage of property analysis. Whether you’re buying or selling, investing in big commercial properties or single-family rentals, you’ll find expert guidance and handy resources on every aspect of real estate finance, including:

• Proven, effective valuation techniques
• Finance tips for all different kinds of property
• How various financing strategies affect investments
• Structuring financial instruments, including leverage, debt, equity, and partnerships
• Measurements and ratios for investment performance, including capitalization rates and gross rent multiplier ratios
• Future and present value analysis
• How the appraisal process works
• Primary appraisal methods–replacement cost, sales comparison, and income capitalization–and how to know which one to use
• How to understand financial statements, including income, balance, and cash flow
• Case studies for single-family rentals, multifamily conversions, apartment complexes, and commercial office space
• A detailed glossary of important real estate terminology

Book Description

The Ultimate Accountants’ Reference offers a single-source tool of best practices and control systems related to accounting regulations for all aspects of financial statements, accounting management reports, and management of the accounting department.The perfect daily answer book for the practicing accountant, it also addresses financing options, risk management, mergers and acquisitions, and taxation topics.

This revised and updated edition of Accounting Reference Desktop offers a concentrated, everyday reference manual to help financial professionals become much more efficient in researching accounting topics.New features of this improved resource tool include:

• Up-to-date information on GAAP, IRS regulations, and new SEC regulations
• New material on leases and options
• More examples than the previous edition
• The latest coverage of control systems, including twice as many controls as the previous edition
• Double the amount of journal entries as the previous edition

Accountants, accounting managers, and finance personnel will turn to The Ultimate Accountants’ Reference time and again for quick, reliable answers to everyday issues. ... Read more

Book Description

Reviews (2)

Highly recommended
If you are looking for a comprehensive book that explains and analyses quantitative portfolio optimisation and asset allocation, then this is probably the one for you. The author has clearly taken a lot of time to lay out the subject in a logical and easily understandable way, despite the fact that the subject matter is very complex. Having read this book, you'll be able to apply quantitative portfolio analysis and optimisation techniques yourself, and the book's final part on risk management - which includes chapters on active risk management, monte carlo simulations and extreme value thery - is a must for anyone in need of more adcanced risk management skills. Only draw back is its somewhat technical nature, but since the most technical stuff is in the appendices, the reader can skip it without major problems. An excellent and very accesible book.

Great practical guide
Whenever I buy a book I try to look for ones that have a strong practical aim. This is definitely such a book. It starts off with a fair amount of theory, which is required to fully appreciate it, but then moves into very practical territory with lots of real life problems and situations. This book is one of those A-Z books that ties all the treads together, but spiced up with practical applications in almost every chapter. Definitely worth reading if you need to understand the mechanics of quantitative portfolio optimisation and risk management. ... Read more

Book Description

Praise for Quantitative Methods in Derivatives Pricing

"Tavella’s text is ideal for a course on computational methods in finance. I cannot think of a better book for the purpose. The writing is clear and intuitive. The marriage of mathematical methods and financial applications is just right for a first course on the topic, especially with the excellent working examples for Monte Carlo and finite-difference methods."
–Darrell Duffie, Professor of Finance
Stanford University

"This is a masterful and detailed survey of the fundamental tools and techniques available to financial engineers."
–Francis Longstaff, Professor of Finance, UCLA

"Quantitative Methods in Derivatives Pricing is a valuable addition to the books available to the beginning graduate student or practitioner. As well as containing a nice treatment of the theoretical principles of modern financial derivatives, it is the first to stress the fundamentals of the wide variety of computational algorithms used for pricing and hedging. Unlike many of its competitors, it is succinct and clearly written."
–M. A. H. Dempster, Professor of Finance and Director
Centre for Financial Research, Cambridge University

"This textbook provides a superb introduction to quantitative derivative pricing techniques that is a must read for MFE students. Domingo Tavella develops a uniform framework for derivative valuation in terms of computing expectations. He then analyzes the pricing theory and practice using simulation and finite differences. Readers will find unique insights into implementation issues associated with these state-of-the-art pricing techniques."
–Joshua Rosenberg, Associate Editor, Journal of Computational Finance ... Read more

Reviews (7)

Introduction to Computational Finance
This book covers the formulas describing the mathematics of derivatives, and is reminiscent of Paul Willmott's approach. It introduces the basic concepts in a fairly comprehensive. You may wish supplements on practical applications and descriptions of current products. For example, I bought and recommend "Credit Derivatives" by Tavakoli, since I was looking for material on this subject, and this book didn't give any description of the types of products. Schonbucher's book on "Credit Derivatives Pricing Models" is essential when you've moved beyond introductory books.

Derivatives Pricing
The limitations of the models in practical applications could be better discussed, but this is a solid reference book.

The proof is in the reading!
Over 100 students in Berkeley's Master's in Financial Engineering Program have so far successfully mastered state-of-the-art derivatives pricing using the material in this textbook. In "The proof of the pudding is in the eating" test, this book earns an A+.

John O'Brien, Executive Director MFE Program, U.C. Berkeley

Excellent Reference for Computational Finance
This is an excellent introduction book on computational finance. It covers Monte Carlo simulation for pricing and scenario generations and finite difference methods very well. I really like the part on Monte Carlo simulation with various variance reduction techniques such as Brownian Bridge.

The author not only presents the methodologies, but he also tells the readers their limitations. This book is also a good resource for basics of stochastic processes most commonly needed in practice. I think the book is beneficial both to practitioners and students who really wants to consider financial engineering as a career.

Excellent resource
Whether you're a practitioner or a student, this text is great. It is succinctly written, covering everything from fundamental theories then leading into practical applications. While it is not for the mentally flaccid, if your sharp enough, you'll find it very useful. ... Read more

Book Description

Turn financial statements into powerful allies in your decision making

Whether you're an investor, creditor, consultant, regulator, manager-or an employee concerned about your company's well-being and the stability of your job-the ability to successfully interpret and analyze financial statements gives you a leg up in today's rough-and-tumble marketplace. Analysis of Financial Statements, Fifth Edition, by Leopold A. Bernstein and John J. Wild, gives you every practical, up-to-date method for making the data in financial statements clear and meaningful. You get analytical tools that range from computation of ratio and cash flow measures to earnings prediction and valuation as you learn how to reconstruct the economic reality embedded in financial statements. User-friendly and engaging, this hands-on classic is loaded with graphs, charts, and tables, so you can see how topics relate to the business practices of actual companies. A concluding comprehensive case analysis of the Campbell Soup Company gives shape and color to the author's step-by-step lessons.

Reviews (2)

Informative, but hard to read
I did not finish this book because it is written in a very academic and hard to grasp language. Authors, please make your sentences a little shorter and simpler, the book is very boring and verbose! However, I must give credit to the authors for including almost all of the tools one will need for analysis of financial statements.

Each edition of this book just gets better and better!
I have bought every edition of this book, and it just keeps getting better and better. As a 25 year veteran of corporate finance, I continue to use this book myself on a regular basis and to recommend it to less experienced employees who are still developing their expertise. Every finance library should have this book. ... Read more

Book Description

An authoritative text on cost of capital for both the nonprofessional and the valuation expert–now revised and expanded

In endeavoring to practice sound corporate finance, there is perhaps nothing so critical, nor slippery, as cost of capital estimation. The second edition of Cost of Capital: Estimation and Applications combines a state-of-the-art treatise on cost of capital estimation with an accessible introduction for the nonprofessional.

This comprehensive yet usable guide begins with an exposition of basic concepts understandable to the lay person and proceeds gradually from simple applications to the more complex procedures commonly found in the marketplace. New features of the revised and expanded Second Edition include chapters on Economic Value Added (EVA) and reconciling cost of capital in the income approach with valuation multiples in the market approach, as well as expanded coverage of cost of capital in the courts and handling discounts for marketability. Cost of Capital remains an incomparable resource for all parties interested in effective business valuation. ... Read more

Reviews (3)

Best Valuation Tool Available
Pratt took his many years of valuation experience and put it in this one book. The book reviews the theory and practice of how to derive a discount rate for use in a DCF. At present, it's the best book in print for appraisers.

For valuation of nonpublic companies - A good read!
The valuation profession has exploded among CPAs, CBAs and others who attend a few seminars and then undertake to do this complicated work. Many end up doing a shabby job, because they do not understand basic concepts of cost of capital. The understanding of aspiring business appraisers will grow from reading this book, as (I believe) mine did.

This book is NOT written by an academician (although I think I recall that Shannon has a PhD in finance). A fair example of an academician's work, reflecting a different approach and serving different needs, is Bradford Cornell's fine work on the equity risk premium.

Pratt has authored several classic books on business valuation. He has valued thousands and testified in US Tax Court, state courts and federal courts across the country. He continues to speak to business appraisers across the country. This book summarizes issues he knows need to be better understood by those of us who consult with closely held businesses.

This is a short book and an easy read, but packed with good information for those who want to better understand the cost of capital in the context of valuing small businesses.

101 Fudge Factors For Those Ignorant of Risk Neutral Pricing
This book should be titled "I do not know how to price all risks when valuing companies so here are 101 fudge factor guesses I use instead". This is the wrong way to value companies and is inconsistent with financial asset pricing theory. Look elsewhere for better resources. ... Read more

Book Description

Reviews basic principles and presents techniques for evaluating and making decisions about investments and the acquisition of capital projects in industry and the private sector. Provides management and control techniques for construction of facilities or installation and operation of machinery and equipment. Covers sensitivity analysis and methods for ranking projects. Discusses the limitations of various methods. Explains how to carry out economic studies for the proper allocation of capital spending. ... Read more

Reviews (2)

Excellent Concepts
While there is no disagreeing that this book is written at an advanced level, it does clearly present key concepts that are often difficult to understand apart from each other. I used a newer version of this book in Merino's class, and it really is the best book in its class.

Some of the more complex topics like multi-attribute analysis and risk management are presented well. After-tax analysis is not presented in as much depth as I would have liked, but after going through the examples the topic becomes clear.

Overall this book is excellent. It is a must read for those aspiring to go into management or get an MBA one day.

This book does not live up to its name!
Having used the book in the course taught by Merino, I have noticed that the examples given at the end of each chapter are erroneous in nature. Many a time, I have found that the book lacks the basic elements of engineering economics. This book is definitely not for undergraduates. ... Read more

Book Description

A comprehensive reference and training guide for financial risk management

Risk professionals looking to earn the Financial Risk Manager (FRM™) certification, corporate training programs, professors, and graduate students all rely on one book for the most comprehensive and up-to-date information on financial risk management–the Financial Risk Manager Handbook. Presented in a clear and consistent fashion, this completely updated Second Edition is the best way to prepare for the Financial Risk Manager (FRM) exam and has become the core text for risk management training programs worldwide.

This definitive guide supports candidates studying for GARP’s annual FRM exam and prepares you to assess and control risk in today’s rapidly changing financial world. Financial Risk Manager Handbook, Second Edition summarizes the core body of knowledge for financial risk managers, covering such topics as quantitative methods, capital markets, as well as credit, operational, market, and integrated risk management. It also discusses relevant regulatory, legal, and accounting issues essential to risk professionals.

The FRM is recognized as the world’s most prestigious global certification program–created to measure a financial risk manager’s capabilities. With the FRM exam fast becoming an essential requirement for risk managers around the world, the Financial Risk Manager Handbook, Second Edition focuses on practical financial risk management techniques and solutions that are emphasized on the test–and essential in the real world. Questions from previous exams are explained through tutorials so that you may prepare yourself or your employees for this comprehensive exam and for the risk management scenarios you will face at some point in your career. ... Read more

Reviews (1)

Disappointing
This book is billed as the "official reference book for GARP's FRM certification program" and "ideal for self instruction and in-house training".

Unfortunately, it falls short on both scores. It is definitely not a book for someone with a basic level of knowledge. Nor does it really seem to be written for the intermediate risk manager/practitioner.

Dr. Jorion undertook a rather ambitious and perhaps thankless task with this book. The subject is quite extensive. There is probably no one person with all the required in-depth knowledge to write the entire book. So there were bound to be areas of weakness. It also appears that he had scant assistance with the book, which placed an enormous burden on him.

As well, the book lacks a consistent pedagogical focus. It is not pitched to the basic student or to the intermediate level practitioner but seems to wander between the two. And therefore is probably not an ideal text for either audience.

If it is intended as a textbook for in-house training or preparation for the FRM exam, then it should be written at a much more basic level with careful ordering of the presentation of the material and fuller explanations rather than the text's at times elliptical and terse ones. For an example of a shortcoming in presentation, in the section on option pricing, the book discusses the Merton derivation (for income generating "underlyings") of the Black Scholes model and then presents a detailed example of the Black Scholes model. It would be more helpful to reverse the order and go from the simpler to the more complex.

Other areas for improvement are the section on statistics, probability, etc. These are at the heart of modern risk management. Sometimes the descriptions seem too terse to convey the material. The tables on the "moments" could be improved by including the denominator to show the exact formula for their calculation.

Notwithstanding the above, there is some very good material in the book - thematic comments on risk management and interactions between various risks and instruments. This "big picture" analysis is good. The discussion of "moments" is well organized though there is a shortcoming in the tables - the denominators are missing and so the student doesn't see the exact formula for each. However, as outlined above, without more detail and more structured presentation, the book's utility for the basic level student is diminished.

One would expect to see more evidence of a strong editor's hand from a book published under Wiley Finance imprint. It is a little acknowledged fact that most authors rely on an editor to catch mistakes and to ensure that the book stays on message. The author's task is even more daunting when preparing such a technical book. And the editor's role then even more critical.

There are some obvious errors in the book. For example, missing information in the sample question 11.4 on page 254. Poor spacing in the answer key to that question on page 260- where the square root of time and the 99% standard deviation factors are conflated. As well, the explanation of the solution could have been expanded to explain exactly what these factors represented and why they were used. This is very important in a basic training book. Also there are several extraneous words between two sentences on the top of page 291. These and others not mentioned here seem to be obvious catches.

Since the subject matter is so extensive and since this is a GARP official publication, GARP should consider enlisting several authors, each of whom could address areas of his/her expertise. Dr. Jorion then could serve as the senior author - providing the logical architecture to link sections together and highlight critical dependencies and linkages. That would improve the book materially. ... Read more

Book Description

The first book devoted exclusively to modern advanced corporate finance, this volume provides a comprehensive exploration of theoretical and empirical literature on corporate financial policies and strategies—particularly those of U.S. nonfinancial firms—defined in rational, economic terms. Throughout, Cases in Point show theory in relation to financial decisions made by specific firms; and Real-World Focus highlights numerous articles from the financial press, providing insights from practitioners' points of view.Empirical Perspectives On The Financial Characteristics Of Publicly Traded U.S. Nonfinancial Firms. Valuation And Financing Decisions In An Ideal Capital Market. Separation Of Ownership And Control, Principal-Agent Conflicts, And Financial Policies. Information Asymmetry And The Markets For Corporate Securities. The Roles Of Government, Securities Markets, Financial Institutions, Ownership Structure, Board Oversight, And Contract Devices. The Leverage Decision. Analyses Of The Firm And The Valuation Of Equity And Debt. Industry Analysis And Financial Policies And Strategies. The Firm's Environment, Governance, Strategy, Operations, And Financial Structure. Market Efficiency, Event Studies, Cost Of Equity Capital, And Equity Valuation. Corporate Bonds: Terms, Issuance, And Valuation. Private Equity And Venture Capital. Initial Public Offerings Of Stock. Managing Internal Equity And Seasoned Equity Offerings. Dividend Policy And Stock Repurchases. Corporate Liabilities: Strategic Selections Of Lenders And Contract Terms. Mergers, Acquisitions, Takeovers, And Buyouts. Financial Distress And Restructuring. Debt Restructuring, Being Acquired, Bankruptcy, Reorganization, And Liquidation. Organizational Architecture, Risk Management, And Security Design.For CEOs and CFOs of corporations, senior lending officers at commercial banks, and senior officers and analysts at investment banks. ... Read more

Reviews (1)

Mistitled?
This is a most interesting and instructive textbook, but I am not entirely clear just what its intended audience might be; I suspect it may be mistitled. From my perspective, the title "Advanced Corporate Finance" suggests some fairly heavy duty mathematics. In fact, there is nothing here of that sort; indeed the level of math is no higher and perhaps lower than you would find in a standard "basic finance text.

What we have here instead is a very helpful collection/summary of material on the institutional framework of corporate finance -- the kind of stuff you might wish your students knew before they ever started the technical part. Short of that, it has another good use: it's what you might call a "bottom drawer" book, i.e., one of the books the professor keeps in the bottom drawer to deploy for classroom examples -- thereby garnering an undeserved reputation for breadth of knowledge. This can only be bad news for the publishers: it means they sell only one copy rather than a whole classroom full of copies.

I can only conclude that the publishers understand their own business better than I understand their business: maybe there is a market for whole classrooms full of copies, and more power to them if they find it. Meanwhile, I cherish my bottom drawer copy and I look forward to many more occasions when I can stun and astonish with the authors' good help. ... Read more

Book Description

Few decisions made by today's organization are as highly visible, as expensive, and as long-lasting as the ones it makes about its physical facilities and properties. Because downsizing, out-sourcing, and networking have transformed organizational boundaries, and because advances in telecommunications and "virtuality" are changing almost everything about how companies occupy space, managers in every area of business are being forced to radically rethink the physical aspects of their companies.

In Strategy and Place, real estate strategy expert Martha O'Mara presents a framework for making strategic decisions about how organizations should occupy space when they are no longer tied to a specific place by the physical tools of work. In this groundbreaking work, based on cutting-edge research at companies such as Digital Equipment Corporation, Pacific Bell, Lever Brothers, Merrill Lynch, and Fidelity Investments, O'Mara presents a much-needed guide for thinking strategically about corporate real estate and facilities management and how to implement the right strategic plan once it's been formulated.

Strategy and Place outlines three main approaches to real estate and facilities management decision-making: Incrementalism, in which only short-term commitments to space are made and capital expenditures are kept to a minimum; Standardization, where control over design and management procedures is rigidly maintained through centralized decision-making; and Value-Based planning, in which organizational values and corporate culture are integral parts of all design-related decisions, and procedures are flexible enough to meet the needs of the individual parts of the organization. In this clearly written and insightful work, O'Mara explains the advantages and disadvantages of each approach and shows how to apply them appropriately. ... Read more

Reviews (2)

case studies without the strategy
This really isnt very helpful. Just sloppy steps, theory free, derived from some fast dated case studies, revealing nothing.

Places do matter - read this book!
I am a facility planning consultant and have looked at practically every book about aligning the built environment with business needs."Strategy and Place" will be the one book I will be recommending to my clientsbecause of its broad and deep coverage of the strategic and organizationalissues which impact facility decision making.O'Mara clearly describes thenumerous ways in which facility resources enhance organizational vitality. Its most significant contribution is a description how businessuncertainity impacts decision making. A must read for anyone who has a partin formulating facility strategies. ... Read more

Book Description

The first and only guide of its kind to offer nonprofit executives help with the vital task of cash flow management!

Murray Dropkin--an expert in the field of nonprofit accounting and author of The Budget-Building Book for Nonprofits--reveals how to create an effective plan for cash flow management. This unprecedented guide offers you nuts-and-bolts suggestions for using this plan to develop successful strategies for the day-to-day and long-term financial planning of any nonprofit organization. Filled with to-do lists, sample forms, worksheets, schedules, policies and procedures, and checklists, The Cash Flow Management Book for Nonprofits is a fundamental financial management toolkit for nonprofit managers and board members.

... Read more

Download Description

In 2000, when The Informant was published, few would’ve imagined that a story about price fixing at Archer Daniels Midland could be as un–put–downable as the best crime fiction. Yet critics—and consumers—agreed: The New York Times reporter Kurt Eichenwald had taken the stuff of dry business reporting and turned it into an unparalleled page–turner. With Conspiracy of Fools, Eichenwald has done it again.

Say the name “Enron” and most people believe they’ve heard all about the story that imperiled a presidency, destroyed a marketplace, and changed Washington and Wall Street forever. But in the hands of Kurt Eichenwald, the players we think we know and the business practices we think have been exposed are transformed into entirely new—and entirely gripping—material. The cast includes but is not limited to George W. Bush, Dick Cheney, Paul O’Neill, Harvey Pitt, Colin Powell, Gray Davis, Arnold Schwarzenegger, Alan Greenspan, Ken Lay, Andy Fastow, Jeff Skilling, Bill Clinton, Rupert Murdoch, and Michael Eisner. Providing a you–are–there glimpse behind closed doors in the executive suites of the Enron Corporation, the Texas governor’s mansion, the Justice Department, and even the Oval Office, Conspiracy of Fools is an all–true financial and political thriller of cinematic proportions.

Reviews (53)

strange brew
This is the book counterpart of a video reconstruction.As best I can tell from the extensive endnotes, the author did a phenomenal research job, and then (from my point of view) turned his work into fiction.Instead of presenting us with the facts (fascinating in themselves) the author presents everything "through the eyes" of the participants, pretenting to be in their thoughts, and using quotation marks with the abandon of a novelist.We all know that this is just plain made up, but by using this form of presentation, the author blurs the distinction between fact and fiction.He DOESN'T know what these people were thinking, and making it up implies that he does; requiring me to search the footnotes at the end of each sentence -- what is true and what is made up? For example, on the first page we follow Ken Lay's thoughts as he is driven to work -- the footnote shows us the source for what kind of car it was -- but of course no reference for Lay's thoughts (and even if Lay had said what he was thinking, we have know knowledge that he told the truth).Accordingly, although the book is entertaining, I demote it to a "2" for horrendously bad journalistic practice.

The End of an Empire
I'm certain that all of us like to read a good book. One filled with intrigue, deceit, back-stabbing, illegal acts, social issues, fear, egos, greed, scandals,etc.

All the ingredients of an interesting novel. Only it's not. It is the true story ofENRON's humble pipeline beginnings to its bankruptcy and the saga of a hidden but eventually disclosed paper trail.

The book---"Conspiracy of Fools" by Kurt Eichenwald.

Notwithstanding the complicated financial transactions involved, it is written in a fast moving manner by a winning New York Times writer

If you get one book this summer, this is it!
Everyone knows the Enron scandal.The directors of the corporation have been depicted as nothing less than caricatures of corporate greed and the company itself a cliche of managers run amok.

This book ends all that.It brings dimension and personality to everyone involved and does justice to the events that transpire in a very evenhanded way.The "fly on the wall" narrative and the incredulous attitude of the author constantly ask the question we all wanted to ask right from the start: "What were they thinking?"Even moreso, a corollary becomes "Why did everyone else just let it happen?"Hard to believe, but the problems of Enron could have been predicted back in the early 90s.

This is a top-notch book and worth every penny.Its not particularly difficult to comprehend (the dialogue and complex schemes are broken down for laymen to understand), and believe it or not, its a quick read. Once it absorbs you, you just won't put it down.

Reads like a thriller
I read this book in three days.I have a two year old to chase around, so that tells you just how much time I devoted to finishing it.COF reads like a thriller.I kept waiting for the bad guys to get caught and became more and more incredulous that it took so long.

COF does an excellent job of showing what a dangerous combination greed, hubris and ignorance is and how prevelant it is in corporate America.Throw in a dash of politics and you have a national scandal.

Eichenwald does a good job of showing us all the nuances of what happened at the executive level of Enron, but I was disapointed that we never got to see any of it from the perspective of the thousands of employees that woke up one morning without jobs or retirement funds.We also never see the impact of Enron's fall on the varous companies and local governments that invested so heavily in them.

My last "complaint" is a silly one.There were no pictures of the principals featured in the book, which is pretty standard for non-fiction stories.I wanted to know what Lay, Skilling and the rest looked like so I could put faces with names.

Overall, well worth the read if you want some suspense and/or an insight into just what went wrong at Enron.

The BEST book I have read in years
I never thought I would like to read an Enron book, but my father really pushed this on me. I LOVED it. This is the best book I have read in years, certainly since A Civil Action. It is thrilling, unbelievable, captivating. I am up late writing this because the book kept me up until 3 and now I am having trouble not thinking about it. Unlike other books of this type, the research is incredible. Anyone who reads it has to thumb through the footnotes, and see all of the documents and other information that Eichenwald pulled together. A fabulous reporter and a spectacular writer all add up to a great book. ... Read more

Book Description

Praise for The EVA Challenge

"The EVA Challenge provides helpful insights for both the beginner and the advanced EVA practitioner. Its real-life examples illustrate how the practical application of shareholder value orientation can align the goals of all organizational levels, motivate management by linking comp