This book provides an innovative, integrated, and methodical approachto understanding complex financial models, integrating topics usuallypresented separately into a comprehensive whole. The book bringstogether financial models and high-level mathematics, reviewing themathematical background necessary for understanding these modelsorganically and in context.

It begins with underlying assumptions and progresses logically throughincreasingly complex models to operative conclusions. Readers who havemastered the material will gain the tools needed to put theory intopractice and incorporate financial models into real-life investment,financial, and business scenarios. Modern finance's most bothersomeshortcoming is that the two basic models for building an optimalinvestment portfolio, Markowitz's mean-variance model and Sharpe andTreynor's Capital Asset Pricing Model (CAPM), fall short when we try toapply them using Excel Solver. This book explores these two models indetail, and for the first time in a textbook the Black-Litterman modelfor building an optimal portfolio constructed from a small number ofassets (developed at Goldman Sachs) is thoroughly presented. Themodel's integration of personal views and its application using Exceltemplates are demonstrated. The book also offers innovativepresentations of the Modigliani--Miller model and the Consumption-BasedCapital Asset Pricing Model (CCAPM). Problems at the end of eachchapter invite the reader to put the models into immediate use.Fundamental Models in Financial Theory is suitable for classroom use oras a reference for finance practitioners.


Hardcover: 504 pagesPublisher: The MIT Press; 1 edition (March 27, 2014)Language: EnglishISBN-10: 0262026678ISBN-13: 978-0262026673                                                                                        Product Dimensions:         9.1 x 6.1 x 1.2 inches    Shipping Weight: 1.7 poundshttp://www.amazon.com/Fundamental-Models-Financial-Theory-Doron/dp/0262026678/ref=sr_1_1?ie=UTF8&qid=1400412910&sr=8-1&keywords=Fundamental+Models+in+Financial+Theory+by+Doron+Peleg