Finance: A Quantitative Introduction
By providing a solid theoretical basis, this book introduces modern finance to readers, including students in science and technology, who already have a good foundation in quantitative skills. It combines the classical, decision-oriented approach and the traditional organization of corporate finance books with a quantitative approach that is particularly well suited to students with backgrounds in engineering and the natural sciences. This combination makes finance much more transparent and accessible than the definition-theorem-proof pattern that is common in mathematics and financial economics. The book's main emphasis is on investments in real assets and the real options attached to them, but it also includes extensive discussion of topics such as portfolio theory, market efficiency, capital structure and derivatives pricing. Finance equips readers as future managers with the financial literacy necessary either to evaluate investment projects themselves or to engage critically with the analysis of financial managers. Supplementary material is available at www.cambridge.org/wijst.
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Fundamental concepts and techniques
Modern portfolio theory
Capital structure and dividends
Valuing levered projects
Option pricing in discrete time
Option pricing in continuous time
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abnormal returns analysis arbitrage assets average bank binomial Black and Scholes bonds calculate call option capital structure CAPM cash ﬂows cent coefﬁcients contracts convenience yield cost of capital debt debtholders default deﬁned derivative discount rate diversiﬁcation dividends earnings equity example excess returns exchange exercise price expected return Figure ﬁnance ﬁnancial markets ﬁnd ﬁrm ﬁrm value ﬁrm’s ﬁrst ﬁxed ﬂexibility forward contract funds future gives hedge increase indifference curves investment investors Lattice leverage loan managers market efﬁciency maturity million node opportunity option delta option prices option value payment payoff pecking order theory period position present value proﬁt proﬁtable project value put option PV(X ratio real options rebalanced reﬂected relation risk risk-free interest rate risk-neutral probabilities risky securities sell shareholders shares short selling speciﬁc stock price strategy Table tax shields theory trade-off theory trading underlying variables variance volatility WACC zero