This book provides simple introduction to quantitative finance for students and junior quants who want to approach the typical industry problems with practical but rigorous ambition. It shows a simple link between theoretical technicalities and practical solutions. Mathematical aspects are discussed from a practitioner perspective, with a deep focus on practical implications, favoring the intuition and the imagination. In addition, the new post-crisis paradigms, like multi-curves, x-value adjustments (xVA) and Counterparty Credit Risk are also discussed in a very simple framework. Finally, real world data and numerical simulations are compared in order to provide a reader with a simple and handy insight on the actual model performances.

Stochastic Finance provides an introduction to mathematical finance that is unparalleled in its accessibility. Through classroom testing, the authors have identified common pain points for students, and their approach takes great care to help the reader to overcome these difficulties and to foster understanding where comparable texts often do not. Written for advanced undergraduate students, and making use of numerous detailed examples to illustrate key concepts, this text provides all the mathematical foundations necessary to model transactions in the world of finance. A first course in probability is the only necessary background. The book begins with the discrete binomial model and the finite market model, followed by the continuous Black-Scholes model. It studies the pricing of European options by combining financial concepts such as arbitrage and self-financing trading strategies with probabilistic tools such as sigma algebras, martingales and stochastic integration. All these concepts are introduced in a relaxed and user-friendly fashion.

Build essential foundations around the derivatives market for your future career in finance with the definitive guide on the subject. Options, Futures, and Other Derivatives, Global Edition, 11th edition by John Hull, is an industry-leading text and consistent best-seller known as 'The Bible' to Business and Economics professionals. Ideal for students studying Business, Economics, and Financial Engineering and Mathematics, this edition gives you a modern look at the derivatives market by incorporating the industry's hottest topics, such as securitisation and credit crisis, bridging the gap between theory and practice. Written with the knowledge of how Maths can be a key challenge for this course, the text adopts a simple language that makes learning approachable, providing a clear explanation of ideas throughout the text. The latest edition covers the most recent regulations and trends, including the Black-Scholes-Merton formulas, overnight indexed swaps, and the valuation of commodity derivatives. Key features include: Tables, charts, examples, and market data discussions, reflecting current market conditions. A delicate balance between theory and practice with the use of mathematics, adding numerical examples for added clarity. Useful practice-focused resources to help students overcome learning obstacles. End-of-chapter problems reflecting contemporary key ideas to support your understanding of the topics based on the new reference rates. Whether you need an introductory guide to derivatives to support your existing knowledge in algebra and probability distributions, or useful study content to advance your understanding of stochastic processes, this must-have textbook will support your learning and understanding from theory to practice.

This publication shows detailed national accounts estimates for over 200 countries and areas for the reporting years 2008 to 2019. National data for each country and area are presented in separate chapters using uniform table headings and classifications recommended in the United Nations System of National Accounts (SNA). A summary of the conceptual framework of the SNA and definitions of important terms are also included in this publication. Other statistical information covered includes gross domestic product, national income, savings, private and government consumption, and transactions of institutional sector

Since the financial crisis of 2008/09, the world's major central banks have been struggling to return their economies to higher growth and to reach their inflation targets. This concise book analyzes the importance of central bank policies for the economy, and specifically investigates the reasons why they have failed to steer inflation as desired. The author, the Chief Economist at Allianz SE, argues that, in an environment of great uncertainty concerning the pass-through of monetary stimulus to the economy, central banks should not focus too narrowly on inflation targets, but should increasingly take the side effects of their actions into account. In particular, he contends that they must seek to minimize the risk of financial booms and busts in order to maximize long-term growth and prosperity. Building on existing research and contributing to the current debate, the book offers a valuable reference guide and food for thought for policymakers, professionals and students alike.

Among the major innovations in the financial markets have been interest rate swaps and swapations, instruments which entail having an arrangement to barter differently structured payment flows for a particular period of time. These instruments have furnished portfolio and risk managers and corporate treasurers with a better tool for controlling interest rate risk. "Valuation of Interest Rate Swaps and Swapations" explains how interest rate swaps are valued and the factors that affect their value-an ideal way to manage interest or income payments. Various valuations approaches and models are covered, with special end-of-chapter questions and solutions included.

A global banking risk management guide geared toward the practitioner Financial Risk Management presents an in-depth look at banking risk on a global scale, including comprehensive examination of the U.S. Comprehensive Capital Analysis and Review, and the European Banking Authority stress tests. Written by the leaders of global banking risk products and management at SAS, this book provides the most up-to-date information and expert insight into real risk management. The discussion begins with an overview of methods for computing and managing a variety of risk, then moves into a review of the economic foundation of modern risk management and the growing importance of model risk management. Market risk, portfolio credit risk, counterparty credit risk, liquidity risk, profitability analysis, stress testing, and others are dissected and examined, arming you with the strategies you need to construct a robust risk management system. The book takes readers through a journey from basic market risk analysis to major recent advances in all financial risk disciplines seen in the banking industry. The quantitative methodologies are developed with ample business case discussions and examples illustrating how they are used in practice. Chapters devoted to firmwide risk and stress testing cross reference the different methodologies developed for the specific risk areas and explain how they work together at firmwide level. Since risk regulations have driven a lot of the recent practices, the book also relates to the current global regulations in the financial risk areas. Risk management is one of the fastest growing segments of the banking industry, fueled by banks' fundamental intermediary role in the global economy and the industry's profit-driven increase in risk-seeking behavior. This book is the product of the authors' experience in developing and implementing risk analytics in banks around the globe, giving you a comprehensive, quantitative-oriented risk management guide specifically for the practitioner. * Compute and manage market, credit, asset, and liability risk * Perform macroeconomic stress testing and act on the results * Get up to date on regulatory practices and model risk management * Examine the structure and construction of financial risk systems * Delve into funds transfer pricing, profitability analysis, and more Quantitative capability is increasing with lightning speed, both methodologically and technologically. Risk professionals must keep pace with the changes, and exploit every tool at their disposal. Financial Risk Management is the practitioner's guide to anticipating, mitigating, and preventing risk in the modern banking industry.

The global halal industry is likely to grow to between three and four trillion US dollars in the next five years, from the current estimated two trillion, backed by a continued demand from both Muslims and non-Muslims for halal products. Realising the importance of the halal industry to the global community, the Academy of Contemporary Islamic Studies (ACIS), the Universiti Teknologi MARA Malaysia (UiTM) and Sultan Sharif Ali Islamic University (UNISSA) Brunei have organised the 4th International Halal Conference (INHAC) 2019 under the theme "Enhancing Halal Sustainability'. This book contains selected papers presented at INHAC 2019. It addresses halal-related issues that are applicable to various industries and explores a variety of contemporary and emerging issues. It covers aspects of halal food safety, related services such as tourism and hospitality, the halal industry - including aspects of business ethics, policies and practices, quality assurance, compliance and Shariah governance Issues, as well as halal research and educational development. Highlighting findings from both scientific and social research studies, it enhances the discussion on the halal industry (both in Malaysia and internationally), and serves as an invitation to engage in more advanced research on the global halal industry.

This book provides a concise analysis of behavioural biases and their implications for financial decision making. The book is written in the normative tradition, arguing strongly for the superiority of behavioural finance with respect to explaining observed phenomena in financial markets. It offers some unique features, including a discussion of the issue of conspiracy theory and how behavioural biases lead to belief in conspiracy theories. Lingering belief in the principles of neoclassical finance is attributed in part to the doctrine of publish or perish, which dominates contemporary academia. The offshoots of behavioural finance are discussed in detail, including ecological finance, environmental finance, social finance, experimental finance, neurofinance, and emotional finance. A comprehensive discussion of narcissism is presented where it is demonstrated that narcissistic behaviour is prevalent in the finance industry and that it led to the eruption of the global financial crisis.

This book is devoted to problems of stochastic control and stopping that are time inconsistent in the sense that they do not admit a Bellman optimality principle. These problems are cast in a game-theoretic framework, with the focus on subgame-perfect Nash equilibrium strategies. The general theory is illustrated with a number of finance applications.In dynamic choice problems, time inconsistency is the rule rather than the exception. Indeed, as Robert H. Strotz pointed out in his seminal 1955 paper, relaxing the widely used ad hoc assumption of exponential discounting gives rise to time inconsistency. Other famous examples of time inconsistency include mean-variance portfolio choice and prospect theory in a dynamic context. For such models, the very concept of optimality becomes problematic, as the decision maker's preferences change over time in a temporally inconsistent way. In this book, a time-inconsistent problem is viewed as a non-cooperative game between the agent's current and future selves, with the objective of finding intrapersonal equilibria in the game-theoretic sense. A range of finance applications are provided, including problems with non-exponential discounting, mean-variance objective, time-inconsistent linear quadratic regulator, probability distortion, and market equilibrium with time-inconsistent preferences. Time-Inconsistent Control Theory with Finance Applications offers the first comprehensive treatment of time-inconsistent control and stopping problems, in both continuous and discrete time, and in the context of finance applications. Intended for researchers and graduate students in the fields of finance and economics, it includes a review of the standard time-consistent results, bibliographical notes, as well as detailed examples showcasing time inconsistency problems. For the reader unacquainted with standard arbitrage theory, an appendix provides a toolbox of material needed for the book.

This book on counting statistics presents a novel copula-based approach to counting dependent random events. It combines clustering, combinatorics-based algorithms and dependence structure in order to tackle and simplify complex problems, without disregarding the hierarchy of or interconnections between the relevant variables. These problems typically arise in real-world applications and computations involving big data in finance, insurance and banking, where experts are confronted with counting variables in monitoring random events. In this new approach, combinatorial distributions of random events are the core element. In order to deal with the high-dimensional features of the problem, the combinatorial techniques are used together with a clustering approach, where groups of variables sharing common characteristics and similarities are identified and the dependence structure within groups is taken into account. The original problems can then be modeled using new classes of copulas, referred to here as clusterized copulas, which are essentially based on preliminary groupings of variables depending on suitable characteristics and hierarchical aspects. The book includes examples and real-world data applications, with a special focus on financial applications, where the new algorithms' performance is compared to alternative approaches and further analyzed. Given its scope, the book will be of interest to master students, PhD students and researchers whose work involves or can benefit from the innovative methodologies put forward here. It will also stimulate the empirical use of new approaches among professionals and practitioners in finance, insurance and banking.

This proceedings volume presents current research and innovative solutions into capital markets, particularly in Poland. Featuring contributions presented at the 10th Capital Market Effective Investments (CMEI 2018) conference held in Miedzyzdroje, Poland, this book explores the future of capital markets in Poland as well as comparing it with the capital markets of other developed regions around the world. Divided into four parts, the enclosed papers provide a background into the theoretical foundations of capital market investments, explores different approaches-both classical and contemporary-to investment decision making, analyzes the behaviors of investors using experimental economics and behavioral finance, and explores practical issues related to financial market investments, including real case studies. In addition, each part of the book begins with an introductory chapter written by thematic editors that provides an outline of the subject area and a summary of the papers presented.

A rare analytical look at the financial crisis using simple analysis

The economic crisis that began in 2008 revealed the numerous problems in our financial system, from the way mortgage loans were produced to the way Wall Street banks leveraged themselves. Curiously enough, however, most of the reasons for the banking collapse are very similar to the reasons that Long-Term Capital Management (LTCM), the largest hedge fund to date, collapsed in 1998. "The Crisis of Crowding" looks at LTCM in greater detail, with new information, for a more accurate perspective, examining how the subsequent hedge funds started by Meriwether and former partners were destroyed again by the lapse of judgement in allowing Lehman Brothers to fail.

Covering the lessons that were ignored during LTCM's collapse but eventually connected to the financial crisis of 2008, the book presents a series of lessons for hedge funds and financial markets, including touching upon the circle of greed from homeowners to real estate agents to politicians to Wall Street.Guides the reader through the real story of Long-Term Capital Management with accurate descriptions, previously unpublished data, and interviewsDescribes the lessons that hedge funds, as well as the market, should have learned from LTCM's collapseExplores how the financial crisis and LTCM are a global phenomena rooted in failures to account for risk in crowded spaces with leverageExplains why quantitative finance is essential for every financial institution from risk management to valuation modeling to algorithmic tradingIs filled with simple quantitative analysis about the financial crisis, from the Quant Crisis of 2007 to the failure of Lehman Brothers to the Flash Crash of 2010

A unique blend of storytelling and sound quantitative analysis, "The Crisis of Crowding" is one of the first books to offer an analytical look at the financial crisis rather than just an account of what happened. Also included are a layman's guide to the Dodd-Frank rules and what it means for the future, as well as an evaluation of the Fed's reaction to the crisis, QE1, QE2, and QE3.

This book presents the building blocks of Islamic economics as meso-science, offering an in-depth study of the Qur'anic worldview of the monotheistic unity of knowledge, which is the universal and unique message of Tawhid in the Qur'an. This primal ontological premise is formalised in an analytical approach that introduces and unpacks the philosophical concepts of ontology, epistemology, and phenomenology in relation to the Tawhidi methodological worldview. The analysis of Qur'anic logical consistency is then cast in a phenomenological perspective by applying the complete model of the unity of knowledge of the Qur'an in a specific study of the Tawhidi methodological approach to Islamic financial-economic theory. In doing so, it tackles the problems of meso-economics given its socio-scientific holism in world affairs. It hones in on the results of the symbiotic modulation of evolutionary learning processes in the world system of the unity of knowledge and its material embedding across knowledge, and knowledge-induced space and time dimensions. The author poses that Shari'ah is only partial in its scope, and excludes an analytical methodological worldview. Shari'ah is thus cast in the midst of a meso-socio-scientific absence of any appertaining methodology. The book is a landmark work in the conceptual and applied understanding of Tawhid as the methodological worldview of the monotheistic unity of knowledge in the meso-socio-scientific realm of 'everything', particularised to Islamic economics. Adopting an inter-disciplinary view integrating various fields, it challenges pervasive Western academic and institutional thinking in terms of economics. It will be of interest to students and researchers in Islamic economics, religious theory, Islamic philosophy, development studies, and finance.

This book is about labor income share, which measures the share of national income paid in wages. The global share of income going towards labor is declining, which suggests a more unequal distribution of income. This has sparked debates about fair distribution of personal incomes among academics and policymakers alike. This book joins the discussion by bringing together recent developments in theoretical and empirical research on labor income share and novel insights on the measurement of the labor income share. The aim of this book is to help design policies to reduce inequality and provide useful knowledge to academics, policymakers from government agencies, policy aides in research institutions and think tanks, and broader audiences from public and private organizations.

Wealth inequality has been not only rising at unsustainable pace but also dissociated from income inequality because of the fact that wealth is increasing without concomitant increase in savings and productive capital. Compelling evidence indicates that capital gains and other economic rents are mainly responsible for wealth inequality and its divergence from income inequality. The main argument of the book is that interest-based debt contracts are one of the drivers of wealth inequality through creating disproportional economic rents for the asset-rich. The book also introduces the idea of risk-sharing asset-based redistribution, which is a novel and viable policy proposal, as an effective redistribution tool to address the wealth inequality problem. Furthermore, a large-scale stock-flow consistent macroeconomic model, which is step by step constructed in the book, sheds light on the formation of wealth inequality in a debt-based economy and on the prospective benefits of implementing risk-sharing asset-based redistribution policy tools compared to traditional redistribution policy options. The research presented in this book is novel in many respects and first of its kind in the Islamic economics and finance literature.

Students and business owners alike are sure to find that this 3-panel (6-page) guide is an invaluable source of comprehensive, up-to-date information regarding key financial principles and methodologies, as well as the formulas and equations that apply to them. Easy-to-use icons help users go right to the equations and formulas they need to learn, and call out helpful tips to use, common pitfalls to avoid, and critical points to remember.

This book brings together conceptual and empirical analyses of the causes and consequences of changing business-government relations in China since the 1990s, against the backdrop of the country's increased integration with the global political economy. More specifically, it provides an interdisciplinary account of how the dominant patterns of interactions between state actors, firms and business organizations have changed across regions and industries, and how the changing varieties of these patterns have interacted with the evolution of key market institutions in China. The contributors to this edited volume posit that business-government relations comprise a key linchpin that defines the Chinese political economy and calibrates the character of its constitutive institutional arrangements.

This book provides researchers and scholars with a comprehensive and up-to-date analysis of earnings management theory and literature. While it raises new questions for future research, the book can be also helpful to other parties who rely on financial reporting in making decisions like regulators, policy makers, shareholders, investors, and gatekeepers e.g., auditors and analysts. The book summarizes the existing literature and provides insight into new areas of research such as the differences between earnings management, fraud, earnings quality, impression management, and expectation management; the trade-off between earnings management activities; the special measures of earnings management; and the classification of earnings management motives based on a comprehensive theoretical framework.

This book stresses the psychological perspective in explaining financial behavior. Traditionally, financial behaviors such as saving, spending, and investing have been explained using demographic and economic factors such as income and product pricing. The consequence of this way of thinking is that financial institutions view their clients mostly from the perspective of their income. By taking a psychological approach, this book stresses the perspective of consumers confronted with a quickly changing financial world: the changing of financial offers and products (savings, investments, loans), the changing of payment methods (from cash to cheques, cards and mobile payments), the accessibility and temptation of goods, and the changing of insurance and pension systems. The Psychology of Financial Consumer Behavior provides insight into the thought processes of consumers in a variety of financial topics. Coverage includes perceptions of wealth, the pleasure or pain of spending, cashless transactions, saving and investing, loans, planning for the future, taxes, and financial education. The book holds appeal for researchers, professionals, and students in economics, psychology, economic psychology, marketing and consumer science, or anyone interested in financial behaviors.