FT Guide to Understanding Finance: A No-Nonsense Companion to Financial Tools and Techniques (Financial Times)

‘Whilst there are a number of books that purport to offer a quick reference for business professionals, this is the only one that really manages to do this in an effective way. Valerio Potì, Director of the MSc in Finance and Capital Markets Program, Dublin City University Business School  

‘This is corporate finance served in bite-sized and digestible portions.  Elroy Dimson, Emeritus Professor of Finance, London Business School

‘Javier Estrada is to be commended for translating deep economic ideas into terms that are immediately usable, compelling and valuable.  Robert F. Bruner, Dean of Darden Business School, University of Virginia

Whether you are an executive or a student, beginner or expert, this book is designed to explain and illustrate the working essentials of finance with clarity and speed.

The Financial Times Guide to Understanding Finance deliberately combines essential theory with real-world application, using short, focused chapters to help you find what you need and implement right away.

Originally published as Finance in a Nutshell, this new edition includes:

• Full coverage of risk and return including CAPM, the three-factor model and risk-adjusted returns 
• Stocks and bonds including versions of the DCF model, reverse valuation, relative valuation and issues related to fixed-income securities, pricing and  sources of risk
• Case studies and examples from companies such as Apple, Merrill Lynch, Microsoft, Berkshire Hathaway and Johnson & Johnson
• Accompanying Excel spreadsheets of all the calculations and formulas at www.pearsoned.co.uk/estrada

This desktop companion deliberately combines essential theory with real-world application, using short, focused chapters to help you find what you need and implement it right away. www.pearsoned.co.uk/estrada

‘Whilst there are a number of books that purport to offer a quick reference for business professionals, this is the only one that really manages to do this in an effective way. Valerio Potì, Director of the MSc in Finance and Capital Markets Program, Dublin City University Business School 

‘This is corporate finance served in bite-sized and digestible portions. Elroy Dimson, Emeritus Professor of Finance, London Business School

‘Javier Estrada is to be commended for translating deep economic ideas into terms that are immediately usable, compelling and valuable.  Robert F. Bruner, Dean of Darden Business School, University of Virginia

Whether you are an executive or a student, beginner or expert, this book is designed to explain and illustrate the working essentials of finance with clarity and speed.

The Financial Times Guide to Understanding Finance deliberately combines essential theory with real-world application, using short, focused chapters to help you find what you need and implement right away.

Originally published as Finance in a Nutshell, this new edition includes:

• Full coverage of risk and return including CAPM, the three-factor model and risk-adjusted returns 
• Stocks and bonds including versions of the DCF model, reverse valuation, relative valuation and issues related to fixed-income securities, pricing and  sources of risk
• Case studies and examples from companies such as Apple, Merrill Lynch, Microsoft, Berkshire Hathaway and Johnson & Johnson
• Accompanying Excel spreadsheets of all the calculations and formulas at www.pearsoned.co.uk/estrada

Preface to the second edition 

Preface to the first edition                     

PART I: RISK AND RETURN                                                                                    

1          Returns (I): Basic concepts                                                                                   

2          Returns (II): Mean returns                                                                                  

3          Risk (I): Total risk                                                                                              

4          Risk and return (I): Portfolios                                                                              

5          Risk (II): Diversification                                                                                      

6          Risk (III): Systematic risk                                                                                   

7          Risk and return (II): The CAPM and the cost of capital                                        

8          Risk and return (III): The three-factor model                                                        

9          Risk (IV): Downside risk                                                                                    

10         Risk and return (IV): Risk-adjusted returns                                                         

11         Risk and return (V): Portfolio optimization                                                          

12         Risk and return (VI): The long term                                                                   

PART II: VALUATION                                                                                           

13         Stocks (I): The dividend discount model                                                              

14         Stocks (II): The WACC model                                                                          

15         Stocks (III): Other DCF models                                                                        

16         Stocks (IV): Reverse valuation                                                                          

17         Stocks (V): Relative valuation                                                                            

18         Bonds (I): Prices and yields                                                                               

19         Bonds (II): Default risk and market risk                                                             

20         Bonds (III): Duration and convexity                                                                   

PART III: OTHER IMPORTANT TOPICS                                                           

21         NPV and IRR                                                                                                  

22         Real options                                                                                                     

23         Corporate value creation                                                                                   

24         Options                                                                                                            

25         Futures and forwards                                                                                        

26         Currencies                                                                                                       

PART IV: STATISTICAL BACKGROUND                                                           

27         Stats (I): Summary statistics                                                                              

28         Stats (II): Normality                                                                                          

29         Stats (III): Non-normality                                                                                  

30         Stats (IV): Regression analysis                                                                          

Index