Financial Modeling by SIMON BENNINGA

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About the book

This book explains how to implement financial models in Excel, which, like its previous editions, guides readers through each step of the process. It includes basic and advanced models in various aspects of corporate finance, such as bonds, options, and portfolio management. These aspects are explained through Excel spreadsheets. Its detailed explanation and application of Excel establish it as an ultimate guide to financial modeling.

Review

This book uses a direct-to-the-point approach to financial modeling, which makes it recommendable for those interested in learning the basic and traditional approach to financial modeling. It works for readers who are curious to learn about the application of spreadsheets to financial analysis.

It serves as a guide to financial modelers in utilizing Excel to solve financial problems. Efficient and practical, this book provides an organized category of topics for efficiency.

About the Author

Simon Benninga was a former Professor of Finance and also Director of the Sofaer International MBA Program in the Department of Management at Tel-Aviv University. He was also a visiting professor at the Wharton School of the University of Pennsylvania.

Table of Contents

Preface

Before All Else

CORPORATE FINANCE AND VALUATION

  1. Basic Financial Calculations
  2. Corporate Valuation Overview
  3. Calculating the Weighted Average Cost of Capital (WACC)
  4. Valuation Based on the Consolidated Statement of Cash Flows
  5. Pro Forma Financial Statement Modeling
  6. Building a Pro Forma Model: The Case of Caterpillar
  7. Financial Analysis of Learning

PORTFOLIO MODELS

  1. Portfolio Models – Introduction
  2. Calculating Efficient Portfolios
  3. Calculating the Variance-Covariance Matrix
  4. Estimating Betas and the Security Market Line
  5. Efficient Portfolios Without Short Sales
  6. The Black-Litterman Approach to Portfolio Optimization
  7. Event Studies

VALUATION OF OPTIONS

  1. Introduction to Options
  2. The Binomial Option Pricing Model
  3. The Black-Scholes Model
  4. Option Greeks
  5. Real Options

VALUING BONDS

  1. Duration
  2. Immunization Strategies
  3.  Modeling the Term Structure
  4. Calculating Default-Adjusted Expected Bond Returns

MONTE CARLO METHODS

  1. Generating and Using Random Numbers
  2. An Introduction to Monte Carlo Methods
  3. Simulating Stock Prices
  4. Monte Carlo Simulations for Investments
  5. Value at Risk (VaR)
  6. Simulating Options and Option Strategies
  7. Using Monte Carlo Methods for Option Pricing

EXCEL TECHNIQUES

  1. Data Tables
  2. Matrices
  3. Excel Functions
  4. Array Functions
  5. Some Excel Hints

VISUAL BASIC FOR APPLICATIONS (VBA)

  1. User-Defined Functions with VBA
  2. Variables and Arrays
  3. Subroutines and User Interaction
  4. Objects and Add-Ins

Selected References

Index