Finance and accounting Books

Book SynopsisRobust management of liquidity risk within the changing regulatory framework Liquidity Management applies current risk management theory, techniques, and processes to liquidity risk control and management to help organizations prepare in case of future economic crisis and changing regulatory framework.Table of ContentsAcknowledgements xi Introductory Note xiii Chapter 1 Funding and Market Liquidity 1 1.1 Liquidity in the Financial Markets 1 1.1.1 Definition of funding and liquidity risks 4 1.2 Managing Liquidity Risk 9 1.2.1 Liquidity risk’s framework 9 1.2.2 Chief Risk Officer’s role 15 1.3 Regulatory Frameworks 15 1.3.1 Total net cash outflows 21 1.3.2 Long-term funding requirements 22 1.3.3 Banks’ funding 23 1.3.4 Funding through securitization 26 1.3.5 Behavioural changes of customers or investors 28 1.3.6 Payment systems 29 1.3.7 Correspondent and custody activities 30 1.3.8 Accounting treatment and liquidity 31 1.3.9 Diversification of funding sources 31 1.3.10 Rating agency approaches to internal methodologies 32 1.3.11 Transparency to the market 32 1.3.12 Contingency plans 33 Chapter 2 Short-Term Funding 37 2.1 Cash Flow Ladder 37 2.1.1 Contractual cash flows 40 2.1.2 Rules for mapping flows on the maturity ladder 42 2.1.3 Flows without contractual certainty 42 2.1.4 Unexpected cash flows 43 2.1.5 Funds available for refinancing 44 2.1.6 Funds transferability 44 2.1.7 Total ladder calculation 44 2.2 Liquidity Coverage Ratio 45 2.2.1 Regulatory prescriptions 45 2.2.2 Liquid assets available for refinancing 46 2.2.3 Total net cash outflows in the upcoming month 51 2.3 Liquidity Risk Indicators 58 2.3.1 Using indicators 59 2.3.2 Testing indicators 60 2.3.3 Government bond yield curves and cross-spreads 61 2.3.4 Credit default swap levels 61 2.3.5 Foreign exchange cross-values 61 2.3.6 Central bank refinancing 62 2.3.7 Crisis indicators 62 2.3.8 Risk aversion indexes 65 2.4 Intraday Liquidity Risk 66 2.4.1 Intraday liquidity management 67 2.4.2 Cooperative mechanism 71 2.4.3 Analysing the possible impact of the stressed scenario on intraday liquidity risk 73 2.4.4 Haircuts to pledges 75 2.4.5 Monitoring requirements 76 2.4.6 Structural and intraday liquidity needs 76 2.4.7 Payment systems’ liquidity saving features 78 2.4.8 Intraday liquidity risk in the case of Lehman Brothers 79 2.4.9 Some intraday liquidity monitoring indicators 80 2.4.10 Intraday liquidity stress scenarios 82 2.5 Funding Concentration 83 2.5.1 Significant counterparties 85 2.5.2 Significant instruments/products 86 2.5.3 Significant currencies 86 2.5.4 Time buckets 87 2.6 Measuring Asset Liquidity 87 2.6.1 Standard liquidity ratio 89 2.6.2 Determining implied spread 90 Chapter 3 Long-Term Balance 93 3.1 Structural Funding 94 3.1.1 Determining the available funding 95 3.1.2 Required stable funding for assets 97 3.2 Customer Deposit Modelling 99 3.2.1 Regulatory approaches on deposit stability 103 3.2.2 Depositor behaviours 104 3.2.3 Modelling assumptions and impacts on funding costs 106 3.2.4 Dynamic regression models 109 3.3 Stress Testing and Scenario Analysis 111 3.3.1 Using stress testing to improve banks’ own risk governance 112 3.3.2 Liquidity stress testing rationale 113 3.3.3 Improving controls 117 3.3.4 Stress testing methodology 117 3.3.5 Reverse stress testing 118 3.3.6 Scenario analysis 119 3.3.7 Internal capital and stress testing 122 Chapter 4 Liquidity Value At Risk 123 4.1 Market Liquidity Effects 123 4.1.1 Market volatility 124 4.2 Market Liquidity Value At Risk 124 4.3 VaR Liquidation-Adjusted 133 4.3.1 Exogenous and endogenous liquidity risk in the VaR model 137 4.3.2 Liquidity risk horizons 138 4.4 Cash Flows At Risk 140 Chapter 5 Control Framework 143 5.1 Governance Principles 143 5.2 Control Processes 148 5.2.1 Functions in charge of liquidity risk management and control 150 5.2.2 Risk committees 151 5.2.3 Coordinating liquidity management 152 5.2.4 Liquidity risk monitoring function 153 5.2.5 Addressing documentation-related liquidity risks 154 5.3 Monitoring Liquidity Exposure 155 5.3.1 Available assets for refinancing 156 5.3.2 Funding concentration 157 5.3.3 Liquidity coverage ratio and NSFR in the various currencies 157 5.3.4 Market-related monitoring tools 158 5.3.5 Overall market information 158 5.3.6 Information on the financial sector 159 5.3.7 Company-specific information 160 5.3.8 Recommendations on the monitoring process 160 5.3.9 Reporting frequency and distribution 160 5.4 Setting Liquidity Risk Limits 161 5.4.1 Limit setting and review 162 5.4.2 Reporting and escalation procedures 163 5.4.3 Internal rules on limit setting and management 164 5.5 Contingency Liquidity Plan 164 5.5.1 Outlining the contingency funding plans 167 5.5.2 Internal procedures for CFP 168 Chapter 6 Conclusions 169 6.1 Funding Liquidity 169 6.2 Profitability Impact of Larger Counterbalancing Asset Stocks 170 6.3 Pricing and Liquidity 171 6.4 Lessons Learnt 171 Bibliography 173 Index 181

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Book SynopsisA comprehensive guide to understanding and assimilating into dim sum bond markets The expansive growth of the dim sum bond market in the last five years has peaked investor interest and inspired companies to seek out investing opportunities that negate China''s capital controls. In a four-pronged approach, Dim Sum Bonds examines the development of the dim sum bond market and its role in China''s RMB internationalization policy, characteristics of dim sum bonds and its market, investors'' investment objectives and the investment performance of dim sum bonds, motivations of issuers, and underwriters'' roles in the dim sum bond market. You will familiarize yourself with every aspect of the dim sum bond market from an issuer, an investor, and an underwriter''s perspective. Academics, financial advisors, investment bankers, underwriters, investors, and policy makers should not be without this informative and detailed guide to the offshore market central to China''s internatTable of ContentsPreface xi Acknowledgments xvi List of Acronyms and Key Terms xvii Chapter 1 New Market—Developments, Opportunities, and Challenges 1 1.1 Introduction 1 1.2 Overview of the Dim Sum Bond Market 6 1.3 Policies Supporting the Growth of Offshore Renminbi 8 Chapter 2 Offshore RMB-Denominated Bonds—Dim Sum Bonds 21 2.1 Definition 21 2.2 Bond Issue Characteristics 24 2.3 Conclusion 46 Chapter 3 Issuers 49 3.1 Issuers 50 3.2 Classification of Issuers by Type of Organization 52 3.3 Classification of Issuers by Industry 60 3.4 Classification of Issuers by Domicile and by Deal Nationality 63 3.5 Motivations behind Issuers 67 3.6 Conclusion 75 Chapter 4 Investors 79 4.1 Investor Type and Mix 80 4.2 Motivation 82 4.3 Risk/Return Analysis 86 4.4 Conclusion 98 Chapter 5 Investment Banks and the Dim Sum Bond Issuing Process 101 5.1 Dim Sum Bond Issuing Process 101 5.2 Primary Issues 104 5.3 Bookrunner/Manager Rankings 116 5.4 Bond Issuing Fees 118 5.5 Retail versus Institutional Tranches 118 5.6 Conclusion 119 Chapter 6 Case Studies of Landmark Issues 121 6.1 Landmark Issues 121 6.2 Case 1: The First Dim Sum Bond and the First Chinese Financial Institution Issuer—China Development Bank (and the First 15-Year and 20-Year Bonds) 126 6.3 Case 2: The First Dim Sum Bond Issued by a China-Incorporated Foreign Bank—The Bank of East Asia (China) Limited 131 6.4 Case 3: The First Dim Sum Bond Issued by the Chinese Central Government 135 6.5 Case 4: The First Dim Sum Bond Issued by a Foreign Multinational Corporation—McDonald’s Corporation 137 6.6 Case 5: The First Dim Sum Bonds Issued by a Supranational Agency—Asian Development Bank (and the First 10-Year Dim Sum Bond) 142 6.7 Case 6: The First Dim Sum Bonds Issued by a Chinese Company, Incorporated Outside Mainland China and Listed in Hong Kong (Red-Chip Corporation)—Sinotruk (Hong Kong) Limited 145 6.8 Case 7: The First Mainland Chinese Corporation Listed in Hong Kong (H-share) Issuer of Dim Sum Bonds—Beijing Capital Land Ltd. 149 6.9 Case 8: The First PRC-listed (A-Share) Issuer of Dim Sum Bonds—Gemdale Corporation 153 6.10 Conclusion 157 Chapter 7 Conclusion 159 7.1 Review and Preview of the Development and Growth of the Dim Sum Bond Market 159 7.2 Market Participants 166 7.3 Ongoing Developments Affecting the Dim Sum Bond Market 174 7.4 Final Remarks 176 About the Authors 179 Index 181

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Book SynopsisMerger arbitrage is one of the most commonly used strategies but paradoxically one of the least known. This book describes how to implement this strategy, located at the crossroad of corporate finance and asset management, and where its risks lie through numerous topical examples.Table of ContentsForeword by Michael Zaoui xiii Acknowledgements xix About the Authors xxi Introduction xxiii PART I THE ARBITRAGE PROCESS 1 1 The Role of the Market in Mergers and Acquisitions 3 1.1 Structural Changes to the Financial Markets 4 1.2 Changes to M&A Practice 7 1.3 Market Evaluation of M&A 9 1.3.1 The price offered to shareholders of the target company 9 1.3.2 Structure – the key to evaluating an offer 9 1.4 Types of Synergies and Waves of M&A 11 1.4.1 Justification for transactions 11 1.4.1.1 Better efficiency 11 1.4.1.2 Obtaining market power 12 1.4.1.3 Acquiring specific resources 13 1.4.1.4 Benefiting from the intellectual property of the target company 13 1.4.1.5 Hindering the progress of a troublesome competitor 13 1.4.1.6 Blocking new entrants to a sector 14 1.4.2 Waves of M&A 14 Case Study: The Alcan/Pechiney Deal 18 2 The Different Types of Transactions 33 2.1 Types of Transactions 33 2.1.1 Cash transactions 33 2.1.2 All-share transactions 39 2.1.3 Mixed cash-and-share transactions 46 2.1.4 Collars 53 2.2 The Choice of Payment Method 57 3 Risk and Return Factors 59 3.1 The Different Outcomes 59 3.1.1 The transaction is completed 59 3.1.1.1 The probability of success 59 3.1.1.2 Risks of failure 60 3.1.2 The transaction fails 65 3.1.2.1 Estimating failure 66 3.1.2.2 Estimating potential losses 66 3.1.3 The transaction is completed at a price lower than the initial offer 70 3.1.4 Rival bids and bidding wars 70 3.2 M&A Timetable 73 3.2.1 Timetable considerations according to offer type 73 3.2.1.1 Takeovers 73 3.2.1.2 The unique case of tender offers 75 3.2.1.3 Mergers 76 3.2.2 Sector differences 77 4 The Merger Arbitrage Strategy 81 4.1 The Long-Term Profitability of the Strategy 81 4.2 The Factors that Influence Returns 82 4.3 The Different Approaches to the Strategy Developed by Specialist Managers 85 4.3.1 The deal’s risk zone 86 4.3.2 The use of leverage 87 4.3.3 The use of options or bonds 87 4.3.4 Investment portfolio analysis 89 4.3.5 Portfolio concentration 89 4.3.6 The role of trading 90 4.3.7 Classifications 90 4.4 The Conclusions of Academic Studies 91 4.4.1 Studies on the returns generated by merger arbitrage strategies 92 4.4.2 The role of arbitrageurs in the execution of M&A transactions 94 4.4.3 Other characteristics of merger arbitrage strategies 96 PART II ANALYZING THE RISK OF FAILURE 97 5 Financing Risk 99 5.1 The Different Financing Methods 99 5.1.1 Revolving credit 101 5.1.2 Bridge loan 102 5.1.3 Term loan 102 5.1.4 Syndicated loan 105 5.1.5 Mezzanine loans 106 5.1.6 The bond market 107 5.1.7 Contingent value rights (CVRs) 110 5.2 The Legal Security of the Financing 111 5.2.1 The UK legal framework 111 5.2.2 The US legal framework 113 5.2.3 The European legal framework in general 121 Case Study: The Dow Chemical/Rohm & Haas Deal 122 6 Competition Risk 129 6.1 Origins and Regulatory Framework of Competition Law 129 6.1.1 United States 129 6.1.2 Europe 132 6.2 Competent Authorities and Approval Process 133 6.2.1 United States 133 6.2.2 Europe 137 6.2.3 China 140 6.3 Competition Remedies 143 6.4 Country Differences in Evaluation 145 6.5 The Allocation of Competition Risk between the Parties 151 Case Study: The Oracle/Sun Deal 153 7 Legal Aspects of Merger Agreements 159 7.1 The Different Documents 159 7.2 Structure of a Merger Agreement 161 7.3 MAC Clauses 162 7.3.1 A negative definition of the MAC clause 164 7.3.2 MAC clauses and court decisions 165 7.3.3 MAC clauses and private-equity transactions 167 7.3.4 Why these clauses? 168 7.4 Other Legal Clauses 171 7.4.1 Go-shop clause 171 7.4.2 Break-up-fee clause 175 7.4.3 Matching-rights clause 176 7.4.4 Specific-performance clause 178 7.4.5 Dissenters’-rights clause 180 8 Other Risks 183 8.1 Administrative Authorizations 183 8.1.1 United States 183 8.1.1.1 The role of the CFIUS 183 8.1.1.2 Sector authorities 185 8.1.1.3 PSCs 187 8.1.2 Canada 187 8.1.3 Europe 190 8.2 Political Risk 190 8.3 Natural-Disaster Risk 193 8.4 The Risk of Fraud or False Accounting 195 PART III SPECIFIC TRANSACTIONS 197 9 Hostile Transactions 199 9.1 A General Overview of Hostile Transactions 199 9.1.1 Profile of the target company 200 9.1.2 The different parties involved in hostile offers 201 9.1.2.1 The buyer 201 9.1.2.2 The target company and its constituent parts 201 9.1.2.3 Other potential buyers 202 9.1.2.4 Arbitrageurs 203 9.1.3 The offer strategies 203 9.1.3.1 Direct purchase on the market 203 9.1.3.2 Tender offer 204 9.1.3.3 Directly approaching the board of directors 204 9.1.3.4 Proxy contest 205 9.1.3.5 Legal battle 205 9.1.4 The matter of price 206 9.2 Regulatory Frameworks for Hostile Offers and How They Differ in Different Countries 208 9.3 Defense Mechanisms 211 9.3.1 Preventive measures 211 9.3.1.1 Staggered vs unstaggered boards 211 9.3.1.2 Fair-price provision 212 9.3.1.3 Supermajority provision 213 9.3.1.4 Dual-class recapitalization 213 9.3.1.5 Golden parachutes 213 9.3.1.6 Employee stock ownership plans 214 9.3.1.7 Poison pill 214 9.3.2 Mechanisms adopted during an offer 215 9.3.2.1 The crown jewel defense 215 9.3.2.2 Litigation 216 9.3.2.3 Just say no 217 9.3.2.4 Countertender offer: Pac-Man 218 9.3.2.5 Asset restructuring 219 9.3.2.6 White knight and white squire 219 9.3.2.7 Going-private transaction/LBO 220 9.3.2.8 Greenmailing 220 9.4 Regulatory Differences in Different Countries 220 9.4.1 The UK 221 9.4.2 Continental Europe 223 Case Study: The Sanofi/Genzyme Deal 229 10 Leveraged Buyouts 239 10.1 Main Characteristics of LBOs 239 10.1.1 Principles 239 10.1.2 The different parties 242 10.1.2.1 The target company 242 10.1.2.2 The investment funds 242 10.1.2.3 The banks 244 10.1.2.4 The management 244 10.1.3 Exit opportunities 245 10.2 A Brief History of Private Equity 245 10.2.1 Emergence and growth of private equity 246 10.2.2 The explosion of private equity 247 10.3 How LBOs Affect Arbitrage 248 10.3.1 The reasons for the transaction 248 10.3.2 Financing 249 10.3.3 Competition risk 249 10.3.4 Agreement terminology and the use of reverse termination fees 250 10.3.5 Management and a potential conflict of interests 250 Case Study: LBO as an Arbitrage Opportunity: Del Monte Foods 251 Conclusion 257 Glossary 259 References 265 Index 271

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Book SynopsisReflecting the fast pace and ever-evolving nature of the financial industry, the Handbook of High-Frequency Trading and Modeling in Finance details how high-frequency analysis presents new systematic approaches to implementing quantitative activities with high-frequency financial data. Introducing new and established mathematical foundations necessary to analyze realistic market models and scenarios, the handbook begins with a presentation of the dynamics and complexity of futures and derivatives markets as well as a portfolio optimization problem using quantum computers. Subsequently, the handbook addresses estimating complex model parameters using high-frequency data. Finally, the handbook focuses on the links between models used in financial markets and models used in other research areas such as geophysics, fossil records, and earthquake studies. The Handbook of High-Frequency Trading and Modeling in Finance also features: Contributions by well-knownTable of ContentsNotes on Contributors xiii Preface xv 1 Trends and Trades 1Michael Carlisle, Olympia Hadjiliadis, and Ioannis Stamos 1.1 Introduction 1 1.2 A trend-based trading strategy 3 1.2.1 Signaling and trends 3 1.2.2 Gain over a subperiod 5 1.3 CUSUM timing 7 1.3.1 Cusum process and stopping time 7 1.3.2 A CUSUM timing scheme 10 1.3.3 US treasury notes, CUSUM timing 11 1.4 Example: Random walk on ticks 12 1.4.1 Random walk expected gain over a subperiod 15 1.4.2 Simple random walk, CUSUM timing 18 1.4.3 Lazy simple random walk, cusum timing 21 1.5 CUSUM strategy Monte Carlo 24 1.6 The effect of the threshold parameter 27 1.7 Conclusions and future work 39 Appendix: Tables 40 References 47 2 Gaussian Inequalities and Tranche Sensitivities 51Claas Becker and Ambar N. Sengupta 2.1 Introduction 51 2.2 The tranche loss function 52 2.3 A sensitivity identity 54 2.4 Correlation sensitivities 55 Acknowledgment 58 References 58 3 A Nonlinear Lead Lag Dependence Analysis of Energy Futures: Oil, Coal, and Natural Gas 61Germán G. Creamer and Bernardo Creamer 3.1 Introduction 61 3.1.1 Causality analysis 62 3.2 Data 64 3.3 Estimation techniques 64 3.4 Results 65 3.5 Discussion 67 3.6 Conclusions 69 Acknowledgments 69 References 70 4 Portfolio Optimization: Applications in Quantum Computing 73Michael Marzec 4.1 Introduction 73 4.2 Background 75 4.2.1 Portfolios and optimization 76 4.2.2 Algorithmic complexity 77 4.2.3 Performance 78 4.2.4 Ising model 79 4.2.5 Adiabatic quantum computing 79 4.3 The models 80 4.3.1 Financial model 81 4.3.2 Graph-theoretic combinatorial optimization models 82 4.3.3 Ising and Qubo models 83 4.3.4 Mixed models 84 4.4 Methods 84 4.4.1 Model implementation 85 4.4.2 Input data 85 4.4.3 Mean-variance calculations 85 4.4.4 Implementing the risk measure 86 4.4.5 Implementation mapping 86 4.5 Results 88 4.5.1 The simple correlation model 88 4.5.2 The restricted minimum-risk model 91 4.5.3 The WMIS minimum-risk, max return model 94 4.6 Discussion 95 4.6.1 Hardware limitations 97 4.6.2 Model limitations 97 4.6.3 Implementation limitations 98 4.6.4 Future research 98 4.7 Conclusion 100 Acknowledgments 100 Appendix 4.A: WMIS Matlab Code 100 References 103 5 Estimation Procedure for Regime Switching Stochastic Volatility Model and Its Applications 107Ionut Florescu and Forrest Levin 5.1 Introduction 107 5.1.1 The original motivation 108 5.1.2 The model and the problem 108 5.1.3 A brief historical note 109 5.2 The methodology 110 5.2.1 Obtaining filtered empirical distributions at t1,…, tT 110 5.2.2 Obtaining the parameters of the Markov chain 112 5.3 Results obtained applying the model to real data 113 5.3.1 Part i: financial applications 113 5.3.2 Part ii: physical data application. temperature data 119 5.3.3 Part iii: analysis of seismometer readings during an earthquake 121 5.3.4 Analysis of the earthquake signal: beginning 123 5.3.5 Analysis: during the earthquake 125 5.3.6 Analysis: end of the earthquake signal, aftershocks 127 5.4 Conclusion 127 5.A Theoretical results and empirical testing 128 5.A.1 How does the particle filter work? 128 5.A.2 Theoretical results about convergence and parameter estimates 129 5.A.3 Markov chain parameter estimates 131 5.A.4 Empirical testing 132 5.A.5 A list of supplementary documents 133 References 133 6 Detecting Jumps in High-Frequency Prices Under Stochastic Volatility: A Review and a Data-Driven Approach 137Ping-Chen Tsai and Mark B. Shackleton 6.1 Introduction 137 6.2 Review on the intraday jump tests 140 6.2.1 Realized volatility measure and the BNS tests 140 6.2.2 The ABD and LM tests 142 6.3 A data-driven testing procedure 146 6.3.1 Spy data and microstructure noise 146 6.3.2 A generalized testing procedure 149 6.4 Simulation study 153 6.4.1 Model specification 153 6.4.2 Simulation results 158 6.5 Empirical results 161 6.5.1 Results on the backward-looking test 162 6.5.2 Results on the interpolated test 165 6.6 Conclusion 165 Acknowledgments 166 Appendix 6.A: Least-square estimation of HAR-MA (2) model for log(BP) of SPY 167 Appendix 6.B: Estimation of ARMA (2, 1) model for log(BP) of SPY 168 Appendix 6.C: Minimized loss function loss(𝜌1, 𝜌2) for SV2FJ_2𝜌 model, SPY 169 Appendix 6.D.1: Calibration of 𝜉 under SV2FJ_2𝜌 model at 2-min frequency, E[Nt] = 0.08 170 Appendix 6.D.2: Calibration of 𝜉 under SV2FJ_2𝜌 model at 2-min frequency, E[Nt] = 0.40 171 Appendix 6.D.3: Calibration of 𝜉 under SV2FJ_2𝜌 model at 5-min frequency, E[Nt] = 0.08 172 Appendix 6.D.4: Calibration of 𝜉 under SV2FJ_2𝜌 Model at 5-min frequency, E[Nt] = 0.40 173 Appendix 6.D.5: Calibration of 𝜉 under SV2FJ_2𝜌 model at 10-min frequency, E[Nt] = 0.08 174 Appendix 6.D.6: Calibration of 𝜉 under SV2FJ_2𝜌 model at 10-min frequency, E[Nt] = 0.40 175 References 175 7 Hawkes Processes and Their Applications to High-Frequency Data Modeling 183Baron Law and Frederi G. Viens 7.1 Introduction 183 7.2 Point processes 184 7.3 Hawkes processes 186 7.3.1 Branching structure representation 188 7.3.2 Stationarity 188 7.3.3 Convergence 189 7.4 Statistical inference of Hawkes processes 191 7.4.1 Simulation 191 7.4.2 Estimation 194 7.4.3 Hypothesis testing 197 7.5 Applications of Hawkes processes 198 7.5.1 Modeling order arrivals 199 7.5.2 Modeling price jumps 200 7.5.3 Modeling jump-diffusion 205 7.5.4 Measuring endogeneity (Reflexivity) 205 Appendix 7.A: Point Processes 207 7.A.1 Definition 207 7.A.2 Moments 208 7.A.3 Marked point processes 209 7.A.4 Stochastic intensity 209 7.A.5 Random time change 211 Appendix 7.B: A Brief History of Hawkes processes 211 References 212 8 Multifractal Random Walk Driven by a Hermite Process 221Alexis Fauth and Ciprian A. Tudor 8.1 Introduction 221 8.2 Preliminaries 224 8.2.1 Fractional brownian motion and hermite processes 224 8.2.2 Wiener integrals with respect to the hermite process 226 8.2.3 Infinitely divisible cascading noise 229 8.3 Multifractal random walk driven by a Hermite process 231 8.3.1 Definition and existence 231 8.3.2 Properties of the hermite multifractal random walk 233 8.4 Financial applications 234 8.4.1 Simulation of the Hmrw 235 8.4.2 Financial statistics 241 8.5 Concluding remarks 243 References 247 9 Interpolating Techniques and Nonparametric Regression Methods Applied to Geophysical and Financial Data Analysis 251K. Basu and Maria C. Mariani 9.1 Introduction 251 9.2 Nonparametric regression models 253 9.2.1 Local polynomial regression 255 9.2.2 Lowess/loess method 257 9.2.3 Numerical applications 259 9.3 Interpolation methods 271 9.3.1 Nearest-neighbor interpolation 271 9.3.2 Bilinear interpolation 272 9.3.3 Bicubic interpolation 276 9.3.4 Biharmonic interpolation 277 9.3.5 Thin plate splines 282 9.3.6 Numerical applications 285 9.4 Conclusion 287 Acknowledgments 292 References 292 10 Study of Volatility Structures in Geophysics and Finance Using Garch Models 295Maria C. Mariani, F. Biney, and I. SenGupta 10.1 Introduction 295 10.2 Short memory models 297 10.2.1 ARMA(p,q) model 297 10.2.2 GARCH(p,q) model 297 10.2.3 IGARCH(1,1) model 298 10.3 Long memory models 298 10.3.1 ARFIMA(p,d,q) model 299 10.3.2 ARFIMA(p,d,q)-GARCH(r,s) 299 10.3.3 Intermediate memory process 300 10.3.4 Figarch model 300 10.4 Detection and estimation of long memory 302 10.4.1 Augmented dickey–fuller test(ADF test) 302 10.4.2 KPSS test 303 10.4.3 Whittle method 304 10.5 Data collection, analysis, and result 306 10.5.1 Analysis on dow Jones index (DJIA) returns 306 10.5.2 Model selection and specification: conditional mean 306 10.5.3 Conditional mean model (returns) 309 10.5.4 Model diagnostics: ARMA(2, 2) 309 10.5.5 Test for ARCH effect 311 10.5.6 Model selection and specification: Conditional variance 313 10.5.7 Standardized residuals test 314 10.5.8 Model diagnostics 314 10.5.9 Returns and variance equation 315 10.5.10 standardized residuals test 317 10.5.11 Model diagnostic of conditional returns with conditional variance 318 10.5.12 One-step ahead prediction of last 10 observations 330 10.5.13 Analysis on high-frequency, earthquake, and explosives series 330 10.6 Discussion and conclusion 335 References 337 11 Scale Invariance and Lévy Models Applied to Earthquakes and Financial High-Frequency Data 341M. P. Beccar-Varela, Ionut Florescu, and I. SenGupta 11.1 Introduction 341 11.2 Governing equations for the deterministic model 342 11.2.1 Application to geophysical (earthquake data) 343 11.2.2 Results 344 11.3 L´evy flights and application to geophysics 345 11.3.1 Truncated L´evy flight distribution 353 11.3.2 Results 356 11.4 Application to the high-frequency market data 360 11.4.1 Methodology 360 11.4.2 Results 361 11.5 Brief program code description 362 11.6 Conclusion 364 11.A Appendix 366 11.A.1 Stable distributions 366 11.A.2 Characterization of stable distributions 367 References 368 12 Analysis of Generic Diversity in the Fossil Record, Earthquake Series, and High-Frequency Financial Data 371M. P. Beccar Varela, F. Biney, Maria C. Mariani, I. SenGupta, M. Shpak, and P. Bezdek 12.1 Introduction 371 12.2 Statistical preliminaries and results 373 12.2.1 Sum of exponential random variables with different parameters 374 12.3 Statistical and numerical analysis 377 12.4 Analysis with Lévy distribution 380 12.4.1 Characterization of Stable Distributions 383 12.4.2 Truncated Lévy flight (TLF) distribution 384 12.4.3 Data analysis with TLF distribution 389 12.4.4 Sum of Lévy random variables with different parameters 390 12.5 Analysis of the Stock Indices, high-frequency (tick) data, and explosive series 394 12.6 Results and discussion 409 Acknowledgments 421 12.A Appendix A—Big ‘O’ notation 421 References 422 Index 425

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Book SynopsisA detailed, multi-disciplinary approach to investment analytics Portfolio Construction and Analytics provides an up-to-date understanding of the analytic investment process for students and professionals alike.Table of ContentsPreface xix About the Authors xxv Acknowledgments xxvii CHAPTER 1 Introduction to Portfolio Management and Analytics 1 1.1 Asset Classes and the Asset Allocation Decision 1 1.2 The Portfolio Management Process 4 1.2.1 Setting the Investment Objectives 4 1.2.2 Developing and Implementing a Portfolio Strategy 6 1.2.3 Monitoring the Portfolio 8 1.2.4 Adjusting the Portfolio 9 1.3 Traditional versus Quantitative Asset Management 9 1.4 Overview of Portfolio Analytics 10 1.4.1 Market Analytics 12 1.4.2 Financial Screening 15 1.4.3 Asset Allocation Models 16 1.4.4 Strategy Testing and Evaluating Portfolio Performance 17 1.4.5 Systems for Portfolio Analytics 20 1.5 Outline of Topics Covered in the Book 22 PART ONE Statistical Models of Risk and Uncertainty CHAPTER 2 Random Variables, Probability Distributions, and Important Statistical Concepts 31 2.1 What Is a Probability Distribution? 31 2.2 The Bernoulli Probability Distribution and Probability Mass Functions 32 2.3 The Binomial Probability Distribution and Discrete Distributions 34 2.4 The Normal Distribution and Probability Density Functions 38 2.5 The Concept of Cumulative Probability 41 2.6 Describing Distributions 44 2.6.1 Measures of Central Tendency 44 2.6.2 Measures of Risk 47 2.6.3 Skew 54 2.6.4 Kurtosis 55 2.7 Dependence between Two Random Variables: Covariance and Correlation 55 2.8 Sums of Random Variables 57 2.9 Joint Probability Distributions and Conditional Probability 61 2.10 Copulas 64 2.11 From Probability Theory to Statistical Measurement: Probability Distributions and Sampling 66 2.11.1 Central Limit Theorem 70 2.11.2 Confidence Intervals 71 2.11.3 Bootstrapping 72 2.11.4 Hypothesis Testing 73 CHAPTER 3 Important Probability Distributions 77 3.1 Examples of Probability Distributions 79 3.1.1 Notation Used in Describing Continuous Probability Distributions 79 3.1.2 Discrete and Continuous Uniform Distributions 80 3.1.3 Student’s t Distribution 82 3.1.4 Lognormal Distribution 83 3.1.5 Poisson Distribution 85 3.1.6 Exponential Distribution 87 3.1.7 Chi-Square Distribution 88 3.1.8 Gamma Distribution 90 3.1.9 Beta Distribution 90 3.2 Modeling Financial Return Distributions 91 3.2.1 Elliptical Distributions 92 3.2.2 Stable Paretian Distributions 94 3.2.3 Generalized Lambda Distribution 96 3.3 Modeling Tails of Financial Return Distributions 98 3.3.1 Generalized Extreme Value Distribution 98 3.3.2 Generalized Pareto Distribution 99 3.3.3 Extreme Value Models 101 CHAPTER 4 Statistical Estimation Models 106 4.1 Commonly Used Return Estimation Models 106 4.2 Regression Analysis 108 4.2.1 A Simple Regression Example 109 4.2.2 Regression Applications in the Investment Management Process 114 4.3 Factor Analysis 116 4.4 Principal Components Analysis 118 4.5 Autoregressive Conditional Heteroscedastic Models 125 PART TWO Simulation and Optimization Modeling CHAPTER 5 Simulation Modeling 133 5.1 Monte Carlo Simulation: A Simple Example 133 5.1.1 Selecting Probability Distributions for the Inputs 135 5.1.2 Interpreting Monte Carlo Simulation Output 137 5.2 Why Use Simulation? 140 5.2.1 Multiple Input Variables and Compounding Distributions 141 5.2.2 Incorporating Correlations 142 5.2.3 Evaluating Decisions 144 5.3 How Many Scenarios? 147 5.4 Random Number Generation 149 CHAPTER 6 Optimization Modeling 151 6.1 Optimization Formulations 152 6.1.1 Minimization versus Maximization 154 6.1.2 Local versus Global Optima 155 6.1.3 Multiple Objectives 156 6.2 Important Types of Optimization Problems 157 6.2.1 Convex Programming 157 6.2.2 Linear Programming 158 6.2.3 Quadratic Programming 159 6.2.4 Second-Order Cone Programming 160 6.2.5 Integer and Mixed Integer Programming 161 6.3 A Simple Optimization Problem Formulation Example: Portfolio Allocation 161 6.4 Optimization Algorithms 166 6.5 Optimization Software 168 6.6 A Software Implementation Example 170 6.6.1 Optimization with Excel Solver 171 6.6.2 Solution to the Portfolio Allocation Example 175 CHAPTER 7 Optimization under Uncertainty 180 7.1 Dynamic Programming 181 7.2 Stochastic Programming 183 7.2.1 Multistage Models 184 7.2.2 Mean-Risk Stochastic Models 189 7.2.3 Chance-Constrained Models 191 7.3 Robust Optimization 194 PART THREE Portfolio Theory CHAPTER 8 Asset Diversification 203 8.1 The Case for Diversification 204 8.2 The Classical Mean-Variance Optimization Framework 208 8.3 Efficient Frontiers 212 8.4 Alternative Formulations of the Classical Mean-Variance Optimization Problem 215 8.4.1 Expected Return Formulation 215 8.4.2 Risk Aversion Formulation 215 8.5 The Capital Market Line 216 8.6 Expected Utility Theory 220 8.6.1 Quadratic Utility Function 221 8.6.2 Linear Utility Function 223 8.6.3 Exponential Utility Function 224 8.6.4 Power Utility Function 224 8.6.5 Logarithmic Utility Function 224 8.7 Diversification Redefined 226 CHAPTER 9 Factor Models 232 9.1 Factor Models in the Financial Economics Literature 233 9.2 Mean-Variance Optimization with Factor Models 236 9.3 Factor Selection in Practice 239 9.4 Factor Models for Alpha Construction 243 9.5 Factor Models for Risk Estimation 245 9.5.1 Macroeconomic Factor Models 245 9.5.2 Fundamental Factor Models 246 9.5.3 Statistical Factor Models 248 9.5.4 Hybrid Factor Models 250 9.5.5 Selecting the "Right" Factor Model 250 9.6 Data Management and Quality Issues 251 9.6.1 Data Alignment 252 9.6.2 Survival Bias 253 9.6.3 Look-Ahead Bias 253 9.6.4 Data Snooping 254 9.7 Risk Decomposition, Risk Attribution, and Performance Attribution 254 9.8 Factor Investing 256 CHAPTER 10 Benchmarks and the Use of Tracking Error in Portfolio Construction 260 10.1 Tracking Error versus Alpha: Calculation and Interpretation 261 10.2 Forward-Looking versus Backward-Looking Tracking Error 264 10.3 Tracking Error and Information Ratio 265 10.4 Predicted Tracking Error Calculation 265 10.4.1 Variance-Covariance Method for Tracking Error Calculation 266 10.4.2 Tracking Error Calculation Based on a Multifactor Model 266 10.5 Benchmarks and Indexes 268 10.5.1 Market Indexes 268 10.5.2 Noncapitalization Weighted Indexes 270 10.6 Smart Beta Investing 272 PART FOUR Equity Portfolio Management CHAPTER 11 Advances in Quantitative Equity Portfolio Management 281 11.1 Portfolio Constraints Commonly Used in Practice 282 11.1.1 Long-Only (No-Short-Selling) Constraints 283 11.1.2 Holding Constraints 283 11.1.3 Turnover Constraints 284 11.1.4 Factor Constraints 284 11.1.5 Cardinality Constraints 286 11.1.6 Minimum Holding and Transaction Size Constraints 287 11.1.7 Round Lot Constraints 288 11.1.8 Tracking Error Constraints 290 11.1.9 Soft Constraints 291 11.1.10 Misalignment Caused by Constraints 291 11.2 Portfolio Optimization with Tail Risk Measures 291 11.2.1 Portfolio Value-at-Risk Optimization 292 11.2.2 Portfolio Conditional Value-at-Risk Optimization 294 11.3 Incorporating Transaction Costs 297 11.3.1 Linear Transaction Costs 299 11.3.2 Piecewise-Linear Transaction Costs 300 11.3.3 Quadratic Transaction Costs 302 11.3.4 Fixed Transaction Costs 302 11.3.5 Market Impact Costs 303 11.4 Multiaccount Optimization 304 11.5 Incorporating Taxes 308 11.6 Robust Parameter Estimation 312 11.7 Portfolio Resampling 314 11.8 Robust Portfolio Optimization 317 CHAPTER 12 Factor-Based Equity Portfolio Construction and Performance Evaluation 325 12.1 Equity Factors Used in Practice 325 12.1.1 Fundamental Factors 326 12.1.2 Macroeconomic Factors 327 12.1.3 Technical Factors 327 12.1.4 Additional Factors 327 12.2 Stock Screens 328 12.3 Portfolio Selection 331 12.3.1 Ad-Hoc Portfolio Selection 331 12.3.2 Stratification 332 12.3.3 Factor Exposure Targeting 333 12.4 Risk Decomposition 334 12.5 Stress Testing 343 12.6 Portfolio Performance Evaluation 346 12.7 Risk Forecasts and Simulation 350 PART FIVE Fixed Income Portfolio Management CHAPTER 13 Fundamentals of Fixed Income Portfolio Management 361 13.1 Fixed Income Instruments and Major Sectors of the Bond Market 361 13.1.1 Treasury Securities 362 13.1.2 Federal Agency Securities 363 13.1.3 Corporate Bonds 363 13.1.4 Municipal Bonds 364 13.1.5 Structured Products 364 13.2 Features of Fixed Income Securities 365 13.2.1 Term to Maturity and Maturity 365 13.2.2 Par Value 366 13.2.3 Coupon Rate 366 13.2.4 Bond Valuation and Yield 367 13.2.5 Provisions for Paying Off Bonds 368 13.2.6 Bondholder Option Provisions 370 13.3 Major Risks Associated with Investing in Bonds 371 13.3.1 Interest Rate Risk 371 13.3.2 Call and Prepayment Risk 372 13.3.3 Credit Risk 373 13.3.4 Liquidity Risk 374 13.4 Fixed Income Analytics 375 13.4.1 Measuring Interest Rate Risk 375 13.4.2 Measuring Spread Risk 383 13.4.3 Measuring Credit Risk 384 13.4.4 Estimating Fixed Income Portfolio Risk Using Simulation 384 13.5 The Spectrum of Fixed Income Portfolio Strategies 386 13.5.1 Pure Bond Indexing Strategy 387 13.5.2 Enhanced Indexing/Primary Factor Matching 388 13.5.3 Enhanced Indexing/Minor Factor Mismatches 389 13.5.4 Active Management/Larger Factor Mismatches 389 13.5.5 Active Management/Full-Blown Active 390 13.5.6 Smart Beta Strategies for Fixed Income Portfolios 390 13.6 Value-Added Fixed Income Strategies 391 13.6.1 Interest Rate Expectations Strategies 391 13.6.2 Yield Curve Strategies 392 13.6.3 Inter- and Intra-sector Allocation Strategies 393 13.6.4 Individual Security Selection Strategies 394 CHAPTER 14 Factor-Based Fixed Income Portfolio Construction and Evaluation 398 14.1 Fixed Income Factors Used in Practice 398 14.1.1 Term Structure Factors 399 14.1.2 Credit Spread Factors 400 14.1.3 Currency Factors 401 14.1.4 Emerging Market Factors 401 14.1.5 Volatility Factors 402 14.1.6 Prepayment Factors 402 14.2 Portfolio Selection 402 14.2.1 Stratification Approach 403 14.2.2 Optimization Approach 405 14.2.3 Portfolio Rebalancing 408 14.3 Risk Decomposition 410 CHAPTER 15 Constructing Liability-Driven Portfolios 420 15.1 Risks Associated with Liabilities 421 15.1.1 Interest Rate Risk 421 15.1.2 Inflation Risk 422 15.1.3 Longevity Risk 423 15.2 Liability-Driven Strategies of Life Insurance Companies 423 15.2.1 Immunization 424 15.2.2 Advanced Optimization Approaches 435 15.2.3 Constructing Replicating Portfolios 437 15.3 Liability-Driven Strategies of Defined Benefit Pension Funds 438 15.3.1 High-Grade Bond Portfolio Solution 439 15.3.2 Including Other Assets 442 15.3.3 Advanced Modeling Strategies 443 PART SIX Derivatives and Their Application to Portfolio Management CHAPTER 16 Basics of Financial Derivatives 449 16.1 Overview of the Use of Derivatives in Portfolio Management 449 16.2 Forward and Futures Contracts 451 16.2.1 Risk and Return of Forward/Futures Position 453 16.2.2 Leveraging Aspect of Futures 453 16.2.3 Pricing of Futures and Forward Contracts 454 16.3 Options 459 16.3.1 Risk and Return Characteristics of Options 460 16.3.2 Option Pricing Models 470 16.4 Swaps 485 16.4.1 Interest Rate Swaps 485 16.4.2 Equity Swaps 486 16.4.3 Credit Default Swaps 487 CHAPTER 17 Using Derivatives in Equity Portfolio Management 490 17.1 Stock Index Futures and Portfolio Management Applications 490 17.1.1 Basic Features of Stock Index Futures 490 17.1.2 Theoretical Price of a Stock Index Futures Contract 491 17.1.3 Portfolio Management Strategies with Stock Index Futures 494 17.2 Equity Options and Portfolio Management Applications 504 17.2.1 Types of Equity Options 504 17.2.2 Equity Portfolio Management Strategies with Options 506 17.3 Equity Swaps 511 CHAPTER 18 Using Derivatives in Fixed Income Portfolio Management 515 18.1 Controlling Interest Rate Risk Using Treasury Futures 515 18.1.1 Strategies for Controlling Interest Rate Risk with Treasury Futures 518 18.1.2 Pricing of Treasury Futures 520 18.2 Controlling Interest Rate Risk Using Treasury Futures Options 521 18.2.1 Strategies for Controlling Interest Rate Risk Using Treasury Futures Options 524 18.2.2 Pricing Models for Treasury Futures Options 526 18.3 Controlling Interest Rate Risk Using Interest Rate Swaps 527 18.3.1 Strategies for Controlling Interest Rate Risk Using Interest Rate Swaps 528 18.3.2 Pricing of Interest Rate Swaps 530 18.4 Controlling Credit Risk with Credit Default Swaps 532 18.4.1 Strategies for Controlling Credit Risk with Credit Default Swaps 534 18.4.2 General Principles for Valuing a Single-Name Credit Default Swap 535 Appendix: Basic Linear Algebra Concepts 541 References 549 Index 563

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Book SynopsisSuitable for those who are looking for an investment approach that has stood the test of time - during both bull and bear markets - and is easy enough to learn, whether you're an expert or aspiring investor, this book is filled with in-depth insights and expert advice. It can help you grow your assets in any market.Table of ContentsAcknowledgments vii Part I Learn the Point and Figure Methodology Chapter 1 Introduction 3 Chapter 2 Point and Figure Fundamentals 29 Chapter 3 Chart Patterns 61 Chapter 4 Foundations of Relative Strength 105 Chapter 5 Advanced Relative Strength Concepts 145 Chapter 6 Primary Market Indicators for Gauging Risk 183 Chapter 7 Secondary Market Indicators 223 Chapter 8 Sector Rotation Tools 247 Part II The Point and Figure Methodology—A Complete Analysis Tool Chapter 9 Fixed-Income Indicators 275 Chapter 10 Utilizing the Exchange-Traded Fund Market 291 Chapter 11 Evaluating the Commodity Market for Opportunities 319 Chapter 12 Trading Options Using Point and Figure 349 Part III Apply the Point and Figure Methodology to Your Investment Process Chapter 13 Portfolio Construction and Management 369 About the Web Site 379 Index 381

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Book SynopsisIntroducing a revolutionary new quantitative approach to hybrid securities valuation and risk management To an equity trader they are shares. For the trader at the fixed income desk, they are bonds (after all, they pay coupons, so what''s the problem?). They are hybrid securities. Neither equity nor debt, they possess characteristics of both, and carry unique risks that cannot be ignored, but are often woefully misunderstood. The first and only book of its kind, The Handbook of Hybrid Securities dispels the many myths and misconceptions about hybrid securities and arms you with a quantitative, practical approach to dealing with them from a valuation and risk management point of view. Describes a unique, quantitative approach to hybrid valuation and risk management that uses new structural and multi-factor models Provides strategies for the full range of hybrid asset classes, including convertible bonds, preferreds, trust preferreds, contingent coTrade Review“The Handbook of Hybrid Debt Securities is a modern state-of-the-art textbook in the field of hybrid debt instruments. It succeeds in combining a comprehensive introduction to the basic concepts of such securities with sophisticated modeling and valuation techniques.” (Financial Markets and Portfolio Management, February 2016) Table of ContentsReading this Book xv Acknowledgments xvii 1 Hybrid Assets 1 1.1 Introduction 1 1.2 Hybrid Capital 1 1.3 Preferreds 3 1.4 Convertible Bonds 5 1.5 Contingent Convertibles 7 1.6 Other Types of Hybrid Debt 7 1.6.1 Hybrid Bank Capital 7 1.6.2 Hybrid Corporate Capital 13 1.6.3 Toggle Bonds 14 1.7 Regulation 15 1.7.1 Making Failures Less Likely 15 1.7.2 Making Failures Less Disruptive 15 1.8 Bail-In Capital 16 1.9 Risk and Rating 17 1.9.1 Risk 17 1.9.2 Rating 18 1.10 Conclusion 18 2 Convertible Bonds 19 2.1 Introduction 19 2.2 Anatomy of a Convertible Bond 22 2.2.1 Final Payoff 22 2.2.2 Price Graph 22 2.2.3 Quotation of a Convertible Bond 23 2.2.4 Bond Floor (B F) 25 2.2.5 Parity 27 2.2.6 Convexity 27 2.2.7 Optional Conversion 33 2.2.8 Forced Conversion 35 2.2.9 Mandatory Conversion 35 2.3 Convertible Bond Arbitrage 37 2.3.1 Components of Risk 37 2.3.2 Delta 42 2.3.3 Delta Hedging 45 2.3.4 Different Notions of Delta 45 2.3.5 Greeks 46 2.4 Standard Features 47 2.4.1 Issuer Call 47 2.4.2 Put 50 2.4.3 Coupons 53 2.4.4 Dividends 56 2.5 Additional Features 58 2.5.1 Dividend Protection 58 2.5.2 Take-Over Protection 59 2.5.3 Refixes 60 2.6 Other Convertible Bond Types 62 2.6.1 Exchangeables 62 2.6.2 Synthetic Convertibles 63 2.6.3 Cross-Currency Convertibles 64 2.6.4 Reverse Convertibles 66 2.6.5 Convertible Preferreds 67 2.6.6 Make-Whole 67 2.6.7 Contingent Conversion 67 2.6.8 Convertible Bond Option 68 2.7 Convertible Bond Terminology 68 2.7.1 144a 68 2.7.2 Fixed-Income Metrics 68 2.8 Convertible Bond Market 73 2.8.1 Market Participants 73 2.8.2 Investors 74 2.9 Conclusion 76 3 Contingent Convertibles (CoCos) 77 3.1 Introduction 77 3.2 Definition 78 3.3 Anatomy 79 3.3.1 Loss-Absorption Mechanism 79 3.3.2 Trigger 83 3.3.3 Host Instrument 86 3.4 CoCos and Convertible Bonds 87 3.4.1 Forced vs. Optional Conversion 87 3.4.2 Negative vs. Positive Convexity 88 3.4.3 Limited vs. Unlimited Upside 89 3.4.4 Similarity to Reverse Convertibles 89 3.5 CoCos and Regulations 89 3.5.1 Introduction 89 3.5.2 Basel Framework 90 3.5.3 Basel I 91 3.5.4 Basel II 92 3.5.5 Basel III 93 3.5.6 Cocos in Basel III 101 3.5.7 High and Low-Trigger CoCos 104 3.6 Ranking in the Balance Sheet 106 3.7 Alternative Structures 106 3.8 Contingent Capital: Pro and Contra 107 3.8.1 Advantages 107 3.8.2 Disadvantages 107 3.8.3 Conclusion 110 4 Corporate Hybrids 113 4.1 Introduction 113 4.2 Issuer of Hybrid Debt 113 4.3 Investing in Hybrid Debt 114 4.4 Structure of a Corporate Hybrid Bond 115 4.4.1 Coupons 115 4.4.2 Replacement Capital Covenant 118 4.4.3 Issuer Calls 119 4.5 View of Rating Agencies 121 4.6 Risk in Hybrid Bonds 122 4.6.1 Subordination Risk 122 4.6.2 Deferral Risk 122 4.6.3 Extension Risk 122 4.7 Convexity in Hybrid Bonds 122 4.7.1 Case Study: Henkel 5.375% 2104 122 4.7.2 Duration Dynamics 126 4.8 Equity Character of Hybrid Bonds 126 5 Bail-In Bonds 127 5.1 Introduction 127 5.2 Definition 128 5.3 Resolution Regime 129 5.3.1 Resolution Tools 130 5.3.2 Timetable 130 5.4 Case Studies 133 5.4.1 Bail-In of Senior Bonds 133 5.4.2 Saving Lehman Brothers 134 5.5 Consequences of Bail-In 136 5.5.1 Higher Funding Costs 136 5.5.2 Higher GDP 136 5.5.3 Availability of Bail-In Bonds 136 5.5.4 Paying Bankers in Bail-In Bonds 136 5.6 Conclusion 137 6 Modeling Hybrids: An Introduction 139 6.1 Introduction 139 6.2 Heuristic Approaches 140 6.2.1 Corporate Hybrids: Yield of a Callable Bond 140 6.2.2 Convertible Bonds: Break Even 142 6.3 Building Models 143 6.3.1 Introduction 143 6.3.2 Martingales 145 6.3.3 Model Map 146 6.3.4 Cheapness 147 6.4 How Many Factors? 149 6.5 Sensitivity Analysis 152 6.5.1 Introduction 152 6.5.2 Non-linear Model 153 7 Modeling Hybrids: Stochastic Processes 159 7.1 Introduction 159 7.2 Probability Density Functions 159 7.2.1 Introduction 159 7.2.2 Normal Distribution 160 7.2.3 Lognormal Distribution 161 7.2.4 Exponential Distribution 162 7.2.5 Poisson Distribution 163 7.3 Brownian Motion 164 7.4 Ito Process 165 7.4.1 Introduction 165 7.4.2 Ito’s Lemma 166 7.4.3 Share Prices as Geometric Brownian Motion 169 7.5 Poisson Process 172 7.5.1 Definition 172 7.5.2 Advanced Poisson Processes 174 7.5.3 Conclusion 176 8 Modeling Hybrids: Risk Neutrality 177 8.1 Introduction 177 8.2 Closed-Form Solution 180 8.2.1 Introduction 180 8.2.2 Black–Scholes Solution 182 8.2.3 Solving the Black–Scholes Equation 183 8.2.4 Case Study: Reverse Convertible 184 8.3 Tree-Based Methods 186 8.3.1 Introduction 186 8.3.2 Framework 187 8.3.3 Geometry of the Trinomial Tree 189 8.3.4 Modeling Share Prices on a Trinomial Tree 193 8.3.5 European Options on a Trinomial Tree 199 8.3.6 American Options 200 8.3.7 Bermudan Options: Imposing a Particular Time Slice 203 8.4 Finite Difference Technique 204 8.5 Monte Carlo 205 8.5.1 Introduction 205 8.5.2 Generating Random Numbers 206 9 Modeling Hybrids: Advanced Issues 211 9.1 Tail Risk in Hybrids 211 9.2 Jump Diffusion 212 9.2.1 Introduction 212 9.2.2 Share Price Process with Jump to Default 214 9.2.3 Trinomial Trees with Jump to Default 217 9.2.4 Pricing Convertible Bonds with Jump Diffusion 221 9.2.5 Lost in Translation 226 9.3 Correlation 227 9.3.1 Correlation Risk in Hybrids 227 9.3.2 Definition 228 9.3.3 Correlating Wiener Processes 229 9.3.4 Cholesky Factorization 230 9.3.5 Cholesky Example 233 9.3.6 Correlating Events 234 9.3.7 Using Equity Correlation 235 9.3.8 Case Study: Correlated Defaults 237 9.3.9 Case Study: Asset Correlation vs. Default Correlation 238 9.4 Structural Models 240 9.5 Conclusion 242 10 Modeling Hybrids: Handling Credit 243 10.1 Credit Spread 243 10.1.1 Definition 243 10.1.2 Working with Credit Spreads 244 10.1.3 Option-Adjusted Spread 246 10.2 Default Intensity 246 10.2.1 Introduction 246 10.3 Credit Default Swaps 248 10.3.1 Definition 248 10.3.2 Example of a CDS Curve 250 10.3.3 Availability of CDS Data 250 10.3.4 Premium and Credit Leg 251 10.3.5 Valuation 252 10.3.6 Rule of Thumb 255 10.3.7 Market Convention 256 10.3.8 Case Study: Implied Default Probability 257 10.4 Credit Triangle 259 10.4.1 Definition 259 10.4.2 Case Study 260 10.4.3 The Big Picture 263 10.5 Stochastic Credit 263 11 Constant Elasticity of Variance 267 11.1 From Black–Scholes to CEV 267 11.1.1 Introduction 267 11.1.2 Leverage Effect 268 11.1.3 Link with Black–Scholes 269 11.2 Historical Parameter Estimation 270 11.3 Valuation: Analytical Solution 274 11.3.1 Moving Away from Black–Scholes 274 11.3.2 Semi-Closed-Form Formula 275 11.3.3 Numerical Example 276 11.4 Valuation: Trinomial Trees for CEV 277 11.4.1 American Options 277 11.4.2 Trinomial Trees for CEV 277 11.4.3 Numerical Example 279 11.5 Jump-Extended CEV Process 283 11.5.1 Introduction 283 11.5.2 JDCEV-Generated Skew 284 11.5.3 Convertible Bonds Priced under JDCEV 284 11.6 Case Study: Pricing Mandatories with CEV 286 11.6.1 Mandatory Conversion 286 11.6.2 Numerical Example 287 11.7 Case Study: Pricing Convertibles with a Reset 288 11.7.1 Refixing the Conversion Price 288 11.7.2 Involvement of CEV 291 11.7.3 Numerical Example 292 11.8 Calibration of CEV 295 11.8.1 Introduction 295 11.8.2 Local or Global Calibration 296 11.8.3 Calibrating CEV: Step by Step 296 12 Pricing Contingent Debt 301 12.1 Introduction 301 12.2 Credit Derivatives Method 302 12.2.1 Introduction 302 12.2.2 Loss 302 12.2.3 Trigger Intensity (λ Trigger) 303 12.2.4 CoCo Spread Calculation Example 305 12.2.5 Case Study: Lloyds Contingent Convertibles 305 12.3 Equity Derivatives Method 307 12.3.1 Introduction 307 12.3.2 Step 1: Zero-Coupon CoCo 308 12.3.3 Step 2: Adding Coupons 309 12.3.4 Numerical Example 311 12.3.5 Case Study: Lloyds Contingent Convertibles 313 12.3.6 Case Study: Tier 1 and Tier 2 CoCos 316 12.4 Coupon Deferral 317 12.5 Using Lattice Models 321 12.6 Linking Credit to Equity 323 12.6.1 Introduction 323 12.6.2 Hedging Credit Through Equity 326 12.6.3 Credit Elasticity 326 12.7 CoCos with Upside: CoCoCo 329 12.7.1 Downside Balanced with Upside 329 12.7.2 Numerical Example 330 12.8 Adding Stochastic Credit 333 12.8.1 Two-Factor Model 333 12.8.2 Monte Carlo Method 335 12.8.3 Pricing CoCos in a Two-Factor Model 337 12.8.4 Case Study 338 12.9 Avoiding Death Spirals 339 12.10 Appendix: Pricing Contingent Debt on a Trinomial Tree 341 12.10.1 Generalized Procedure 341 12.10.2 Positioning Nodes on the Trigger 343 12.10.3 Solving the CoCo Price 345 13 Multi-Factor Models for Hybrids 347 13.1 Introduction 347 13.2 Early Exercise 348 13.3 American Monte Carlo 352 13.3.1 Longstaff and Schwartz (LS) Technique 352 13.3.2 Convergence 356 13.3.3 Example: Longstaff and Schwartz (LS) Step by Step 356 13.3.4 Adding Calls and Puts 362 13.4 Multi-Factor Models 364 13.4.1 Adding Stochastic Interest Rates 364 13.4.2 Equity–Interest Rate Correlation 365 13.4.3 Adapting Longstaff and Schwartz (LS) 366 13.4.4 Convertible Bond under Stochastic Interest Rates 367 13.4.5 Adding Investor Put 371 13.5 Conclusion 371 References 373 Index 381

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Book SynopsisA process-driven approach to investment management that lets you achieve the same high gains as the most successful portfolio managers, but at half the cost What do you pay for when you hire a portfolio manager? Is it his or her unique experience and expertise, a set of specialized analytical skills possessed by only a few? The truth, according to industry insider Jacques Lussier, is that, despite their often grandiose claims, most successful investment managers, themselves, can''t properly explain their successes. In this book Lussier argues convincingly that most of the gains achieved by professional portfolio managers can be accounted for not by special knowledge or arcane analytical methodologies, but proper portfolio management processes whether they are aware of this or not. More importantly, Lussier lays out a formal process-oriented approach proven to consistently garner most of the excess gains generated by traditional analysis-intensive approaches, but at a fractio

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Book SynopsisCanada's bestselling author on real estate draws back the curtain on real estate investing Investing in real estate has often been viewed as the poor second cousin to the stock and bond markets.Table of ContentsForeword vii Acknowledgements xiii Introduction xvii Chapter One Why Invest in Real Estate? 1 Chapter Two My Early Years as an Investor 45 Chapter Three Design a Portfolio to Weather the Inevitable Storms 71 Chapter Four Building the Team 103 Chapter Five The Investor Mentality 131 Chapter Six Riding the Cycle to Long-Term Sustainable Wealth 157 Chapter Seven Why Do You Really and Truly Want to Invest in Real Estate? 185 Chapter Eight Is Real Estate Investing Part of Your Journey? 201 About the Author 223

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Book SynopsisA top-notch resource for anyone who wants to break into the demanding world of investment banking For undergraduates and MBA students, this book offers the perfect preparation for the demanding and rigorous investment banking recruitment process. It features an overview of investment banking and careers in the field, followed by chapters on the core accounting and finance skills that make up the necessary framework for success as a junior investment banker. The book then moves on to address the kind of specific technical interview and recruiting questions that students will encounter in the job search process, making this the ideal resource for anyone who wants to enter the field. The ideal test prep resource for undergraduates and MBA students trying to break into investment banking Based on author Andrew Gutmann''s proprietary 24 to 30-hour course Features powerful learning tools, including sample interview questions and answers and online resTable of ContentsIntroduction xi Overview of the Book xii Who is the Book For? xiii Structure of the Book xiii Acknowledgments xix Chapter 1 Introduction to Investment Banking 1 Overview of an Investment Bank 2 Overview of Investment Banking 7 The Life of an Investment Banker 22 Frequently Asked Questions 47 Chapter 2 Accounting Overview 55 Introduction to Accounting 56 The Income Statement 58 The Balance Sheet 69 The Statement of Cash Flows 83 Integrating the Three Financial Statements 88 End-of-Chapter Questions 99 Chapter 3 Finance Overview 101 The Financial System 102 Principles of Finance 107 Introduction to Corporate Finance 114 Valuing Securities 130 End-of-Chapter Questions 145 Chapter 4 Financial Statement Analysis 147 Sources of Financial Information 148 Financial Statement Analysis 158 Analyzing Different Time Periods 169 “Normalizing” the Financials 174 End-of-Chapter Questions 177 Chapter 5 Valuation 179 Introduction to Valuation 180 Comparable Company Methodology 194 Precedent Transaction Methodology 210 Discounted Cash Flow (DCF) Analysis 219 Valuation Conclusions 238 End-of-Chapter Questions 245 Chapter 6 Financial Modeling 247 Overview of an Integrated Cash Flow Model 248 Building an Integrated Cash Flow Model 262 End-of-Chapter Questions 292 Chapter 7 Mergers and Acquisitions 293 M&A Overview 293 The M&A Process 302 M&A Analysis 310 End-of-Chapter Questions 322 Chapter 8 Leveraged Buyouts 323 Overview of LBOs 324 LBO Modeling 331 LBO Conclusions: Do We Do the Deal? 347 End-of-Chapter Questions 348 Chapter 9 Recruiting, Interviewing, and Landing the Job 349 What are Investment Banks Looking For? 350 The Recruiting Process 354 Resumes and Cover Letters 360 Networking and Informational Interviews 368 Interviewing 375 Receiving an Offer and Being a Banker 398 Conclusions 403 Further Reading 405 About the Author 407 About the Website 409 Index 411

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Book SynopsisA groundbreaking book on the growing trend of crowdfunding Crowdfunding has gained considerable traction over the last few years. By combining the Internet/social media with equity-based financing, it is poised to usher in a new asset class that will change how early stage and small business financing transactions are consummated. Author Steven Dresner, Founder and CEO ofDealflow.com, understands the nuances of how crowdfunding can help companies gain much needed access to capital, and now he shares those insights with you. Engaging and informative, this book will serve the needs of a global audience comprising entrepreneurs, financiers, and other professionals. It skillfully addresses the market dynamics that are catapulting crowdfunding into the mainstream and explores essential issues ranging from planning an online campaign, post-transaction management, and business planning to securities law and tax issues. Puts the business of crowdfunding in perspeTable of ContentsAcknowledgments ix Introduction xi Part I. The Business of Crowdfunding 1 Chapter 1 Crowdfunding: A Historical Perspective 3 Jason Best and Sherwood Neiss Chapter 2 Understanding the “Crowd” 15 Karen Kerrigan Chapter 3 A Statistical View of Crowdfunding 31 Carl Esposti Chapter 4 Current Market Dynamics 47 Andrew Dix and Charles Luzar Part II. Preparing for your Crowdfunding campaign 81 Chapter 5 Business Planning in Preparation for a Crowdfunding Campaign 83 David Feldman Chapter 6 Protecting Your Intellectual Property 97 Michael J. Allan and Tremayne M. Norris Chapter 7 Understanding Your Investor Options 111 Reginald Chambers Chapter 8 Communicating with Your Investors or “Backers” 127 Joy Schoffler Chapter 9 Alternatives to Crowdfunding 145 David R. Burton Part III. Understanding the Framework of Rules and Regulations 163 Chapter 10 The Legal Aspects of Crowdfunding and U.S. Law 165 Joan MacLeod Heminway Chapter 11 Crowdfunding Laws Based on Global Jurisdiction 199 Jeff Lynn and Kristof De Buysere Chapter 12 Living with the New Reg D and Its Impact on Pitch Events and Demo Days 213 Kiran Lingam, Trent Dykes, and Megan Muir Afterword 227 About the Author 233 About the Contributors 235 Author’s Disclaimer 241 Index 243

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Book SynopsisWINNER, Business: Personal Finance/Investing, 2015 USA Best Book AwardsFINALIST, Business: Reference, 2015 USA Best Book AwardsInvestor Behavior provides readers with a comprehensive understanding and the latest research in the area of behavioral finance and investor decision making. Blending contributions from noted academics and experienced practitioners, this 30-chapter book will provide investment professionals with insights on how to understand and manage client behavior; a framework for interpreting financial market activity; and an in-depth understanding of this important new field of investment research. The book should also be of interest to academics, investors, and students. The book will cover the major principles of investor psychology, including heuristics, bounded rationality, regret theory, mental accounting, framing, prospect theory, and loss aversion. Specific sections of the book will delve into the role of persoTrade Review“Baker and Ricciardi have done an excellent job of soliciting articles that blend academic research with real-world applications that can be used by financial planners. Investor Behavior is an excellent book for anyone who wishes to detour from the beaten path of behavioral finance and to implement what has been learned about investor psychology to better understand traders and assist clients.” — Financial Analysts JournalTable of ContentsAcknowledgments xv Part One Foundations of Investor Behavior Chapter 1 Investor Behavior: An Overview 3H. Kent Baker and Victor Ricciardi Introduction 3 Organization of the Book 11 Summary 20 References 21 About the Authors 23 Chapter 2 Traditional and Behavioral Finance 25Lucy F. Ackert Introduction 25 Traditional Finance 26 Behavioral Finance 31 Summary 39 Discussion Questions 39 References 39 About the Author 41 Chapter 3 Behavioral Economics, Thinking Processes, Decision-Making, and Investment Behavior 43Morris Altman Introduction 43 Behavioral Economics, Heuristics, and Decision-Making 44 Investment Heuristics and Investing in Financial Assets 45 The Trust Heuristic and Decision-Making 48 Other Critical Decision-Making Heuristics 49 Rational Investor Decision-Making in a World of Complex Information 56 Summary 58 Discussion Questions 59 References 59 About the Author 61 Part two Personal Finance Issues Chapter 4 Financial Literacy and Education 65Michael S. Finke and Sandra J. Huston Introduction 65 Examples of Financial Literacy Measures 68 Financial Literacy and Behavior 71 Financial Literacy Education 75 Summary 77 Discussion Questions 78 References 78 About the Authors 81 Chapter 5 Household Investment Decisions 83Vicki L. Bogan Introduction 83 Financial Market Participation 83 Market Friction Effects on Household Investment Behavior 85 The Effects of Behavioral Biases on Household Investment Behavior 87 Summary 93 Discussion Questions 94 References 94 About the Author 98 Chapter 6 Personality Traits 99Lucia Fung and Robert B. Durand Introduction 99 A Structural Model of Personality 100 Risk-Taking Behavior 103 Overconfidence 104 Personality and Gender 105 Personality as a Guide for Investors 107 Summary 108 Discussion Questions 109 References 109 About the Authors 114 Chapter 7 Demographic and Socioeconomic Factors of Investors 117James Farrell Introduction 117 Literature Review 118 Case Study: The Florida Department of Education Employees 122 Summary 131 Discussion Questions 132 References 133 About the Author 134 Chapter 8 The Effect of Religion on Financial and Investing Decisions 135Walid Mansour and Mouna Jlassi Introduction 135 Religions and Economic Factors: Dependence or Bifurcation? 136 Religion and Individual Investing Behavior 138 Summary 147 Discussion Questions 147 References 147 About the Authors 151 Chapter 9 Money and Happiness: Implications for Investor Behavior 153Jing Jian Xiao Introduction 153 Can Money Buy Happiness? 154 Can Happiness Buy Money? 162 Implications for Investor Behavior 164 Summary 165 Discussion Questions 165 References 166 About the Author 169 Chapter 10 Motivation and Satisfaction 171Lewis J. Altfest Introduction 171 Classical Economic Motivation 171 Behavioral Economic Motivation 173 Maslow’s Hierarchy of Needs 175 Criticism of Maslow’s Hierarchy of Needs 177 Higher Level Motivation 179 Humanism 181 Maslow and Investment Management 182 Personal Finance Integration 183 Summary 185 Discussion Questions 186 References 187 About the Author 188 Part Three Financial Planning Concepts Chapter 11 Policy-Based Financial Planning: Decision Rules for a Changing World 191Dave Yeske and Elissa Buie Introduction 191 Managing Behavioral Biases in the Financial Planning Engagement 194 A Process for Developing Financial Planning Policies 195 Applicability of Financial Planning Policies 199 Policy-Based Financial Planning: The Strategic Perspective 201 Example of Policies Derived through Stochastic Modeling 202 Sample Case Applications 203 Summary 205 Discussion Questions 206 References 206 About the Authors 207 Chapter 12 Financial Counseling and Coaching 209John E. Grable and Kristy L. Archuleta Introduction 209 Financial Counseling: A Historical Perspective 210 Theoretical Approaches: A Financial Counseling Perspective 215 Financial Counseling in the Twenty-First Century 221 Summary 223 Discussion Questions 224 References 225 About the Authors 226 Chapter 13 Financial Therapy: De-Biasing and Client Behaviors 227Joseph W. Goetz and Jerry E. Gale Introduction 227 What Is Financial Therapy? 229 Brief History of Financial Therapy 231 Theoretical Foundations for Financial Therapy 232 The Practice of Financial Therapy 237 Future Research and Practice 240 Summary 240 Discussion Questions 241 References 241 About the Authors 243 Chapter 14 Transpersonal Economics 245Renée M. Snow Introduction 245 Historical and Spiritual Overview of Money 248 The Western Eco/House 252 An Alternative Perspective 254 The Open Eco in Financial Planning 256 Summary 260 Discussion Questions 261 References 261 About the Author 264 Chapter 15 Advising the Behavioral Investor: Lessons from the Real World 265Gregg S. Fisher Introduction 265 Risk, Return, and the Investor: A Complex Relationship 266 Investments with People Problems 269 The Impact of Investor Behavior on Portfolios 272 How Advisors Can Help the Behavioral Investor 275 Turning Bias into Benefit: How to Profit from Investor Behavior 278 Summary 281 Discussion Questions 281 References 282 Disclosure 283 About the Author 283 Chapter 16 Retirement Planning: Contributions from the Field of Behavioral Finance and Economics 285James A. Howard and Rassoul Yazdipour Introduction 285 A Life Cycle Financial Planning and Wealth Management Model 286 Demographic and Macroeconomic Context 287 Biases, Heuristics, and Framing Effects on Retirement Planning 288 Hyperbolic Discounting 291 The Role of the Brain in Financial Decision-Making 293 Financial Decision-Making Quality and Age 295 The Role of Self-Awareness and Self-Control 296 Trust and Retirement Saving and Planning: The Basics 297 Trust and Retirement Saving and Planning: The Decision 298 Trust-Based Implications for Retirement Saving and Planning 299 Discussion Questions 302 References 303 About the Authors 305 Chapter 17 Knowing Your Numbers: A Scorecard Approach to Improved Medical and Financial Outcomes 307Talya Miron-Shatz and Stephanie Gati Introduction 307 The Need for Better Control of Chronic Diseases 309 The Scorecard Approach 310 Target Population and Advantages 311 Content of the Take Care Scorecard 311 Considerations for Health and Financial Literacy Scorecards 313 Limitations 318 Implications for Financial Literacy 318 Summary 319 Discussion Questions 320 References 320 About the Authors 324 Acknowledgment 324 Part Four Investor Psychology Chapter 18 Risk Perception and Risk Tolerance 327Victor Ricciardi and Douglas Rice Introduction 327 Risk Perception 328 The Relationship between Risk Perception and Risk Tolerance 329 An Overview of Risk Tolerance 329 Measurement of Risk Tolerance 332 The Role of Emotion in Risk Perception and Risk Tolerance 334 Risk-Taking Behavior: The Influence of Market Moods, Business Cycles, and Economic Shocks 336 Unresolved Issues in the Risk Domain 340 Summary 341 Discussion Questions 342 References 342 About the Authors 345 Chapter 19 Emotions in the Financial Markets 347Richard Fairchild Introduction 347 Behavioral Finance and Prospect Theory 348 Emotions 350 Emotions in the Financial Markets 351 Emotional Finance and Unconscious Emotions 353 Emotional Corporate Finance—A Formal Model 356 Summary 360 Discussion Questions 361 References 361 About the Author 364 Chapter 20 Human Psychology and Market Seasonality 365Lisa A. Kramer Introduction 365 Moods, Emotions, and Sentiment 366 Weather, Mood, and Markets 366 Daylight, Mood, and Markets 367 Daylight Saving Time Changes, Mood, and Markets 373 Elation, Deflation, and Markets 374 Summary 376 Discussion Questions 377 References 377 About the Authorr 380 Chapter 21 Neurofinance 381Richard L. Peterson Introduction 381 Neuroscience Primer 382 Research Methods 385 The Neuroscience of Financial Decision-Making 387 The Implications of Neurofinance Research for Practitioners 395 Summary 397 Discussion Questions 398 References 398 About the Author 401 Chapter 22 Diversification and Asset Allocation Puzzles 403Dimitris Georgarakos Introduction 403 Household Stock Market Participation 404 Changes in Household Portfolios across Time 407 Differences in Household Portfolios across Countries 408 Portfolio Diversification 410 Household Stock Trading Behavior 412 Summary 415 Discussion Questions 416 References 416 About the Author 420 Chapter 23 Behavioral Portfolio Theory and Investment Management 421Erick W. Rengifo, Rossen Trendafilov, and Emanuela Trifan Introduction 421 Prospect Theory and Expected Utility Theory 421 Safety-First Portfolio Theory 426 SP/A Theory 427 Behavioral Portfolio Theory 430 Behavioral Asset Pricing Model 432 The BAPM, CAPM, and Three-Factor Model 432 Summary 435 Discussion Questions 435 References 435 About the Authors 438 Chapter 24 Post-Crisis Investor Behavior: Experience Matters 439Joseph V. Rizzi Introduction 439 Behavioral Finance Framework 440 History Dependent Risk Tolerance: The Collective Memory Hypothesis 446 Summary 452 Discussion Questions 453 References 453 About the Author 455 Part five Trading and Investing Psychology and Strategies Chapter 25 The Psychology of Trading and Investing 459Julia Pitters and Thomas Oberlechner Introduction 459 Personality Variables 461 Affect and Cognition 463 News, Rumors, and Market Mood 470 Summary 471 Discussion Questions 471 References 472 About the Authors 476 Chapter 26 The Surprising Real World of Traders’ Psychology 477Denise K. Shull, Ken Celiano, and Andrew Menaker Introduction 477 What Science Reveals about How People Think 478 I Need to Be a Hero Again 485 The Heart of a Quant 487 Summary 489 Discussion Questions 490 References 490 About the Authors 493 Chapter 27 Trading and Investment Strategies in Behavioral Finance 495John M. Longo Introduction 495 Distinction between Trading and Investment Strategies 496 Active versus Passive Investment Strategies and Behavioral Finance 496 Average Investors Suffer from Behavioral Biases 498 Problems with Traditional Investment Strategies 499 Short-Term Behaviorally Based Trading Strategies 503 Long-Term Behaviorally Based Investment Strategies 508 Current and Future Trends in Behavioral Finance Strategies 509 Summary 510 Discussion Questions 511 References 511 About the Author 512 Part Six Special Investment Topics Chapter 28 Ethical and Socially Responsible Investing 515Julia M. Puaschunder Introduction 515 Socially Responsible Investment 515 Historical Emergence 517 International Differences 520 Institutional Harmonization of FSR 523 SRI in the Post 2008−2009 World Financial Crisis Era of Globalization 524 Summary 525 Discussion Questions 527 References 527 About the Author 532 Chapter 29 Mutual Funds and Individual Investors: Advertising and Behavioral Issues 533John A. Haslem Introduction 533 Advertising and Performance 534 Advertising, Expenses, and Flows 535 Advertising, Emotions, and Choice 536 Behavioral Persuasion In Advertising and Choice 539 Education, Financial Knowledge, and Choice 540 Emotions, Behavior, and Choice 542 Emotions, Behavioral Finance, and Choice 543 Financial Literacy and Active Management 544 Price and Performance Sensitivity and Repricing 546 Sentiment Contrarian Behavior and Actual Performance 548 Summary 550 Discussion Questions 552 References 552 About the Author 553 Chapter 30 Real Estate Investment Decision-Making in Behavioral Finance 555Eli Beracha and Hilla Skiba Introduction 555 The Real Estate Market and the General Economy 556 Real Estate Market and Financial Market 556 Inefficiencies and the Real Estate Markets 557 Observed Inefficiencies in Real Estate Markets 563 Summary 569 Discussion Questions 569 References 570 About the Authors 572 Answers to the Discussion Questions 573 Index 615

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Book SynopsisHow short sellers profit from disasters that afflict individuals, markets, and nations The Most Dangerous Trade serves up tales from the dark side of the world marketplace to reveal how traders profit from the failure and, often, the financial ruin of others.Trade Review“…a good guide to the red flags that the most successful short sellers look for in companies…..at its best it crackles with the fun of a private detective novel…” (Financial Times, September 2015)Table of ContentsPreface vii Chapter 1 Ackman: The Activist Grandstander 1 Chapter 2 Asensio: Exile on Third Avenue 27 Chapter 3 Chanos: Connoisseur of Chaos 51 Chapter 4 Einhorn: Contrarian at the Gates 87 Chapter 5 Block: Playing the China Hand 125 Chapter 6 Fleckenstein: Strategies and Tactics 153 Chapter 7 Kass: Nader’s Raider Hits the Street 177 Chapter 8 Tice: Truth Squad Leader 203 Chapter 9 Pellegrini: Behind the Great Subprime Bet 227 Chapter 10 Cohodes: Force of Nature, Market Casualty 257 About the Author 297 Index 299

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Book SynopsisTable of ContentsForeword by A.G. MALLIARIS, Loyola University, Chicago xi Main Notations xiii Introduction xv PART I THE DETERMINISTIC ENVIRONMENT 1 Prior to the Yield Curve: Spot and Forward Rates 3 2 The Term Structure or Yield Curve 13 3 Spot Instruments 23 4 Equities and Stock Indexes 47 5 Forward Instruments 75 6 Swaps 91 7 Futures 119 PART II THE PROBABILISTIC ENVIRONMENT 8 The Basis of Stochastic Calculus 147 9 Other Financial Models: From ARMA to the GARCH Family 165 10 Option Pricing in General 175 11 Options on Specific Underlyings and Exotic Options 209 12 Volatility and Volatility Derivatives 237 13 Credit Derivatives 257 14 Market Performance and Risk Measures 275 15 Beyond the Gaussian Hypothesis: Potential Troubles with Derivatives Valuation 303 Bibliography 319 Index 323

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Book SynopsisAn accessible guide to identifying and profiting from financial market trends Profiting from long-term trends is the most common path to success for traders. The challenge is recognizing the emergence of a trend and determining where to enter and exit the market. No body is more familiar with this situation than author Tina Logan. Now, in Profiting from Market Trends, she shares here extensive insights in this area with you. Divided into four comprehensive parts?trend development, change in trend direction, reading the market, and profiting from technical analysis?this reliable resource skillfully describes how to identify the emergence of a new trend; quantify the strength of the trend; identify signals that confirm the trend or warn that the trend may be ending; and place trades to profit from trends. Written in an easy to understand and engaging style, Profiting from Market Trends effectively addresses how to apply the information provided to make monTable of ContentsPreface vii Acknowledgments xiii Part I Trend Development 1 Chapter 1 Introduction to Trend Analysis 3 Chapter 2 Trend Direction 9 Chapter 3 Trend Duration 27 Chapter 4 Trend Interruptions 59 Chapter 5 Early Trend Reversal Warnings 93 Chapter 6 Later Trend Reversal Warnings 119 Part II Putting Trend Analysis to Work 143 Chapter 7 The Broad Market 145 Chapter 8 Bull Markets 163 Chapter 9 Bear Markets 183 Chapter 10 Monitoring the Market Trends 195 Chapter 11 Current Bull Market–Case Study 229 Chapter 12 Conclusion 271 Bibliography 275 About the Author 277 Index 279

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Book SynopsisA comprehensive guide to financial planning and venture fundraising for tech entrepreneurs As technology progresses, impacting our daily lives in more and greater ways, technology start-ups come and go at a dizzying pace. There are plenty of opportunities out there for anyone with a great idea, but it takes much more than a great idea to make your tech start-up a success. In addition to creativity and new ideas, being a successful tech entrepreneur requires strategic decision-making in terms of business planning, financial planning, negotiations, and corporate governance. This book serves as a thought-provoking guide that helps tech entrepreneurs avoid the dangers inherent in business start-ups in general and the treacherous realm of venture capital in particular. This book is the ideal reference for anyone who wants to overcome the challenges of running a start-up from incubation to exit. Excellent advice for tech entrepreneurs written in layman''s terms<Trade Review"The book should be an eye-opener for aspiring and new technology entrepreneurs and can help you navigate the dangerous waters known as venture capital. Even better, Shelters has over fifteen years of entrepreneurial experience as a founder, co-founder as well as an advisor to numerous United States-based and Asia-based startups." --YoungUpstarts.comTable of ContentsPreface xiii Acknowledgments xvii CHAPTER 1 Finance for Start-Ups 101 1 Fundraising Stages 1 Prefunding Period 2 Seed Funding Stage 3 Series A Funding Stage 3 Series B Funding Stage 5 Risk/Return 5 Types of Funding 7 Private Equity 7 Debt Funding 8 Alternative Types of Funding 9 Public Funding 12 Incubator/Accelerator Programs 13 Capital Structure 13 Intellectual Property 17 Valuation 19 Asset-Based Valuation Models 20 Pro Forma-Based Valuation Models 20 Comparable-Based Valuation Models 21 Strategic-Based Valuation 22 Exit Strategy 23 Summary 24 CHAPTER 2 Know Your Investors 27 KYI #1: Their Primary Objective Is to Make Money 27 KYI #2: There Are Many Types of Investors, Each with Different Expectations and Capabilities 30 Types of Investors 30 Investment Criteria 35 KYI #3: Prospective Investors Are Looking for Success Traits 37 Skin in the Game 38 Innovation 39 Defined Target Market 39 Value Proposition 40 Commercial Viability 41 Risk Mitigation Factors 42 Burn Rates 43 Strength of Management 43 Use of Funds 44 Traction 45 KYI #4: Money Is Not Enough 47 Know the Space 48 Nonfinancial Advantages 49 Alignment of Interests 49 Issues of Control 51 Summary 56 CHAPTER 3 Business Planning from a Strategic Financial Perspective 57 Value of a Business Plan 57 Composition of a Business Plan 59 Executive Summary 60 Defined Problem and Solution 61 Product/Service 63 Value Proposition 63 Marketing Plan 65 Management Team 72 Strategic Partners 74 Operational and Expansion Plan 76 Company Objectives 78 Current Positioning and Traction 80 Risk Factors 81 Financials 84 Exit Strategy 90 Business Plan Customization 91 Marketing Plan 91 Operational and Expansion Plan 92 Company Objectives 92 Financials 93 Exit Strategy 93 Business Plan Rudiments 94 Summary 95 CHAPTER 4 Financial Planning for Maximizing Returns 97 Importance of Having a Financial Plan 98 Assistance in Overall Business Planning 99 Ensuring the Health and Integrity of Capital Structure 101 Determining Sufficient Funding Amounts 101 Securing Funding in a Timely Manner 102 Securing Funds on the Most Favorable Terms 104 Determining Appropriate Responses to New Challenges and Opportunities 104 Instilling Discipline and Maintain Focus 105 Maximizing ROI upon Execution of Exit Strategy 106 Formulating a Financial Strategy 106 Financial Objectives 108 FREE 108 FREE Measurement Tools 109 Financial Plan Composition 120 Rules of Thumb 121 Summary 122 CHAPTER 5 Successful Fundraising 125 Planning Funding Presentations 125 Prospectus Materials 127 Executive Summary 127 Business Plan 127 Funding Proposal 128 Private Placement Memorandum 129 Shareholder Letter 130 Technology Brief 131 Demonstrations 131 Market Trends and Research Report 131 Other Miscellaneous Prospectus Materials 132 Different Types of Presentations 133 Elevator Pitch 134 Lobby (PowerPoint) Pitch 135 Conference Room Pitch (Formal Presentation) 135 Summary 140 CHAPTER 6 Becoming a Formidable Negotiator 143 Prenegotiations 144 Letter of Intent 144 Nondisclosure Agreement 144 KYI Research and Inquiries 145 Leverage 146 Negotiating Capital 149 Due Diligence 149 Due Diligence Checklist 149 Due Diligence Response 149 Actual Negotiations 150 Term Sheet 150 Negotiation Approaches 150 Best Practices and Tactics 151 Points of Negotiation (Terms) 153 Have a Negotiating Plan 168 Concluding Negotiations 174 Successful Conclusion of Negotiations 174 Unsuccessful Conclusion to Negotiations 174 Negotiation Postmortem 175 Summary 175 CHAPTER 7 Establishing an Investment-Grade Organization 179 Corporate Governance 180 Attributes 180 Benefits of Good Corporate Governance 181 Corporate Governance Best Practices 182 Corporate Governance Structures 182 Ethical Behaviors 189 Stakeholder Relations 194 Summary 199 CHAPTER 8 Financial Decision Making for Optimal Performance 201 Financial Decision-Making Process 202 Practicing Sound Corporate Governance 202 Understanding Existing and Potential Decision-Making Dynamics 203 Managing Financial Expectations 206 Financial Decision-Making Structures 208 Establishing Appropriate Decision-Making Bodies and Procedures 209 Allocating Decision-Making Authority and Responsibilities 212 Placing Individual Decision Makers on Appropriate Decision-Making Bodies 216 Financial Decision Making in Practice 219 Strategic Financial Planning/Fundraising 219 Budgeting 221 Operational (Day-to-Day) Financial Decision Making 222 Financial Dealings with External Parties 224 Exiting 228 Summary 232 Afterword 235 APPENDIX A Sample Financial Plan 237 APPENDIX B Sample Funding Proposal 241 APPENDIX C Dictums of Entrepreneurial Finance 245 Glossary 251 About the Author 271 About the Website 273 Index 275

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Book SynopsisA wealth of international case studies illustrating current issues and emerging best practices in enterprise risk management Despite enterprise risk management''s relative newness as a recognized business discipline, the marketplace is replete with guides and references for ERM practitioners. Yet, until now, few case studies illustrating ERM in action have appeared in the literature. One reason for this is that, until recently, there were many disparate, even conflicting definitions of what, exactly ERM is and, more importantly, how organizations can use it to utmost advantage. With efforts underway, internationally, to mandate ERM and to standardize ERM standards and practices, the need has never been greater for an authoritative resource offering risk management professionals authoritative coverage of the full array of contemporary ERM issues and challenges. Written by two recognized international thought leaders in the field, ERM-Enterprise Risk Management prTable of ContentsContributor List vii About the Editors ix Acknowledgements x Introduction xi ISO 31000 and Guide 73: 2009 Select Terms and Their Definitions xvii Part I Erm Articles 1 1 Establishing the Internal and External Contexts 3 1.1 Managing Risks to Enable Strategy 3 Jean-Paul Louisot and Christopher Mandel 1.2 Strategy, Constraint, Risk Management and the Value Chain 12 Christopher Ketcham and Kevin W. Knight 1.3 The Risk of Group Decision Making within Organizations: A Synthesis 19 Daniel A. Gaus 2 Risk Assessment 41 2.1 Risk Quantification: Cornerstone for Rational Risk Management 41 Jean-Paul Louisot, Laurent Condamin and Patrick Naim 2.2 Brief Overview of Cindynics 48 Georges-Yves Kervern and Jean-Paul Louisot 2.3 Risk Assessment or Exposure Diagnostic 56 Jean-Paul Louisot 2.4 Managing the Collection of Relevant Data for an ERM Program: The Importance of Efficient and Neutral Questionnaires 84 Sophie Gaultier-Gaillard 2.5 Enterprise Risk Analytics Systems 96 Richard Connelly and Jean-Paul Louisot 2.6 Emerging Enterprise Risks Facing the US Healthcare Industry 103 Robert L. Snyder 3 Select and Implement the Appropriate Risk Management Technique 109 3.1 Risk to Reputation 109 Sophie Gaultier-Gaillard, Jean-Paul Louisot and Jenny Rayner 3.2 Disturbance Management 123 Jean-Paul Louisot 4 Monitor Results and Revise 135 4.1 Business Ethics and Risk Management 135 Marc Ronez 4.2 Governance, Risk, Compliance: The New Paradigm of Risk Management 146 Jean-Paul Louisot 5 Communicate and Consult 155 5.1 Communication as a Risk Mitigation Tool 155 Jean-Paul Louisot Part II Case Studies 163 6 Case Study Protocol 165 7 Case Study: Risk Management Implementation in China 167 Duojia (Doug) Lu 8 Case Study: Agreeing Upon the Scope of the Project and the Job of the ERM Risk Manager 187 Christopher Ketcham 9 Case Study: Wellcome Trust 191 Fiona Davidge Interviewed by Jean-Paul Louisot 10 Case Study: Large Health Insurer in the US 199 Anonymous Interviewed by Christopher Ketcham 11 Case Study: Three Steps for Bringing Risk Management Back in House 217 Renee Reimer Interviewed by Christopher Ketcham 12 Case Study: University of California 229 Grace Crickette Interviewed by Christopher Ketcham 13 Case Study: Managing Risk at the OPAC du Rhône 241 Samiha Viand Interviewed by Jean-Paul Louisot ERM References for Practitioners 249 Further Reading 253 Index 255

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Book SynopsisThe Tax Translator offers much needed advice and guidance on tax compliance for institutions of higher learning College and university officials often are unaware of their institutions'' tax obligations. Especially for institutions without designated tax compliance officers, the consequences of such ignorance can devastating. Based on its author''s decades of experiences as a tax manager at three universities, this handbook was written for all university staff involved with tax compliancefrom the account clerk in the Accounts Payable Department, up through vice presidents, controllers, treasurers and directors. Steve Hoffman explains the core principles and practices that inform current tax policy and develops a framework for building a system for effective tax compliance, reporting and filing. Satisfies the urgent demand for timely, authoritative advice and guidance on a area of increasing concern for colleges and universities Sheds new light on the imTable of ContentsPreface xiii Acknowledgments xxi About the Author xxiii 1 Awareness 1 Defining Tax Exempt 1 The Six Steps of Tax Compliance 2 The Five Things You Need to Do First 4 Task 1: Look at Management 4 Task 2: Assess the Current State of Your Tax Compliance Program 5 Task 3: Develop a Team Approach 7 Getting a Hold on the Process 7 The IRS Is Paying Attention 9 Why You Should Care 12 Task 4: Assess Your Risk 13 Task 5: Review IRS Communications 17 Open Them! 17 Statistics on Tax Staff 19 The Different Kinds of Tax 20 Employment Tax: The First Tax to Know about Because It’s the Largest One for Your University 20 Unrelated Business Income Tax (UBIT): Not a Distant Cousin Tax but a Close Relative to You Tax 21 Sales Tax: It Is Close to Home 21 Excise, or Exercise-Your-Checkbook Tax 22 Borrowed Money Can Mean Tax, Too 22 Overseas (International) Tax 22 In Summary: Build Your Village 24 2 Identification 25 Steps in Identifying Your Needs 26 Independent Contractors 27 Unrelated Business Income Tax (And What Does Macaroni Have to Do With It?) 30 UBIT Applies to All and Can Be Necessary 31 It’s Okay to Have Unrelated Business Income 32 The IRS Cares about UBIT 32 The Three Tests for UBIT 34 The Trade, or Business, Test 35 Regularly Carried on Test 36 The Not Substantially Related Test 37 Advertising Is Always Subject to UBIT 40 Things You Generally Don’t Have to Worry About: Common Exceptions to UBIT 40 Convenience Exception 41 Go Ahead, Ask Around: The UBIT Questionnaire on Campus 41 Allowable Deductions from UBIT 43 Allocating Expenses: The IRS Hasn’t Clarified 43 Unrelated Debt-Financed Income: Got a Bonded Building? 45 Research as UBIT 45 Foreign Students: The IRS Calls Them Nonresident Aliens 46 Sales Tax 48 Identifying Sales Tax Savings in Other States 50 Employment Tax and Fringe Benefits 50 Excise Tax 52 Overseas and International Tax 53 In Summary 54 3 Compliance 55 Policies 56 Enforcing Policies 58 Give Them the Right Tools for the Job 60 Centralize the Tax Responsibilities 63 Keep Tax at the Forefront of Your Mind 64 Fringe Benefits 67 No Additional Cost Services 68 Qualified Employee Discounts 69 Working Condition Fringes 69 De Minimis Fringes 70 Qualified Transportation Fringes 71 Examples of Common Fringe Benefits 72 University-Owned Automobiles 72 University-Owned Airplanes 73 Professional Dues, Publications, and Meetings 73 Travel and Entertainment Expense Reimbursements 73 Supper Money and Taxi Fares 74 Gifts and Awards 74 Athletic Facilities 74 Spousal Travel 75 Free or Discounted Theater or Athletic Tickets 75 Club Memberships 76 Domestic Partners 77 Leave Donation or Sharing Programs 77 Cell Phones 77 In Summary 78 4 Reporting 81 Questions About Reporting Tax Obligations, Answered 81 When are the Tax Deposits and Tax Forms Due? 82 Who Is Preparing the Tax Forms? 82 How Do You Know They Are Done? 83 How Do You Learn about Lapses of Reporting? 83 When Reporting Begins 84 Payments to Human Research Subjects 85 Getting People Used to Thinking About Taxes 86 The Tax Calendar 87 In Summary 89 5 Monitoring 91 Policies And Procedures 92 Consistency and Ease of Use 93 Provide Multiple Paths to Information 94 Simulated Audit 98 Your Tax Manager Position 99 In Summary 100 6 Tax Nirvana 103 The Land of “ahh . . . ” 103 You Can Finally Rest 104 Passing the Baton to You 105 The Tax Pyramid Compliance Program Steps, Simplified 106 Awareness Simplified 107 Identification Simplified 107 Compliance Simplified 108 Monitoring Simplified 108 Reporting Simplified 108 Tax Nirvana Simplified 108 In Summary 109 7 Your Audit Defense 111 Building An Audit Defense 111 Setting the Tone 112 Types of Audits 114 Before the Audit 115 During the Audit 116 After an Audit 122 You Don’t Have to Go It Alone 125 Hire a Tax Manager 125 Centralize All Tax Reporting Functions to the Extent You Can 125 Monitor and Control Tax Compliance at Your University 126 Getting Your Bearings 126 Concluding Remarks 129 Appendix 131 What a VP Wants from a Tax Manager 131 A Knowledgeable Tax Staff That Understands Laws and Regulations as They Apply to Higher Education 132 A Tax Staff That Understands They Work for the University, Not the IRS 132 A Tax Staff with a Calm Approach 133 A Tax Staff That Solves Problems Creatively 133 A Tax Staff with Personal Detachment 134 A Tax Staff Willing to Work with Others to Achieve Reasonable Results in a Tax Issue 134 A Tax Staff Willing to Accept Risk 135 A Tax Staff That Knows the CEO/CFO Is in Charge 135 A Tax Translator Guide to UBIT Determination 137 UBIT Compliance Checklist 160 Unrelated Business Income 160 Description of Activity 162 General 162 Advertising and Sponsorship 163 Services 164 Products 165 Rental Arrangements 165 Rental of Property 165 Foreign Activities 166 Foreign Accounts 166 Foreign Offices 167 Foreign Grants 167 Foreign Employees 167 Investments in Foreign Entities 168 Other State Activities 168 Commercially Sponsored Research 168 Partnerships and Joint Ventures 169 Activities/Expenditures 169 Political 169 Definition 169 Lobbying 169 Definition 170 University of Central Florida UBIT Questionnaire 172 University of Notre Dame UBIT Questionnaire 175 Index 177

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Book SynopsisBalancing both technical proficiency and ethical sensibility, Accounting Ethics provides a decision model approach to accounting, aiding both student comprehension and supporting the instructor in emphasizing the key elements of the decision process that shapes the technically and ethically competent professional accountant.Table of ContentsPreface ix Acknowledgments xi Part I Purpose, Background, and Approach 1 Chapter 1 The Technical and Ethical Responsibilities in Accounting 3 Accounting, Ethics Reform, and You 3 A Brief History of Accounting Ethics in Higher Education 7 The Authors’ Perspective 9 Accounting Education: Training for Competency and Moral Philosophy as a Resource 13 Accounting Theory and Ethics 15 Accounting Discourse: Knowledge Production and Communication 17 Accounting as Practice: The Realization of Internal Goods and Virtues 20 Chapter Review Questions 23 References 24 Chapter 2 Decision Making in Accounting 26 The General Nature of Decisions and Decision Making in Accounting 27 Making a Decision Under Conditions of Uncertainty 28 The Learning of Technical Competency in the Classroom and Mentored Work Experience 29 The Goal of Accounting: The Production of Financial Reports for Various Stakeholders 30 A Working Definition of Ethics 36 Utilitarianism 39 Deontology 40 Virtue Ethics 41 Social Contract Theory 43 A Decision Model for Accounting Ethics 45 Outline of the Book 53 Chapter Review Questions 55 References 55 Part II A Decision Model for Accounting Ethics 57 Chapter 3 Defining the Problem – From an Accounting and an Ethical Point of View 59 Introduction 60 Problem-Definition: Finding and Formulating the Problem 61 The Accounting Problem and the Ethical Problem 63 Finding the Problem in Accounting Ethics 68 Formulating the Problem in Accounting Ethics 73 Summary 77 Chapter Review Questions 78 Cases 78 Chapter 4 Accounting Standards for Financial Statements: Resources for Decision Making 81 The Objective of Financial Statements 82 Using Rules for Financial Statement as a Resource to Make Accounting Decisions 83 The Conceptual Framework 84 The Financial Statements 85 Accounting Rules for Recording Transactions and Valuing Accounts 88 Quality of Information 92 Ethical Issues Associated with the Profit or Loss Statement and the Statement of Financial Position 93 Fraud and Ethics 101 Chapter Review Questions 104 Cases 104 Chapter 5 Moral Philosophy and Ethical Reasoning: Resources for Decision Making 116 Toward an Ethical Framework in Accounting Practice 117 Using Moral Philosophy Principles as a Resource to Make Accounting Decisions 119 The Philosophical Traditions, Duties, and Virtues 120 The Elements of Moral Philosophy Embedded in Accounting Practice: Utilitarianism 121 Summary 123 The Elements of Moral Philosophy Embedded in Accounting: Deontology 124 The Deontological View of Human Nature: Reason, Freedom, and Autonomy 125 Virtue Ethics and Accounting 133 Chapter Review Questions 143 Cases 144 References 149 Chapter 6 Professional Ethics as a Resource for Decision Making 151 Accounting and Professional Ethics 152 Professional Ethics as a Resource to Make Accounting Decisions 152 Accounting as a Profession 153 Professional Ethics 156 Codes of Ethics as Tools for Decision Making 159 The Code of Ethics for Professional Accountants 160 Using Professional Ethics in Decision Making in Accounting 166 Summary 169 Review Questions 170 Cases 170 Chapter 7 Stakeholders in Accounting Ethics: Pressures and Conflicts of Interest 178 Accounting and Stakeholders 179 Stakeholders and their Influence on Accounting Decisions 180 Characteristics of Stakeholders 182 Classifying Stakeholders in Practice 185 Pressures on the Accountant in the Decision-Making Process 189 Conflicts of Interest 190 Summary 193 Chapter Review Questions 194 Cases 194 Cash Fraud 195 Long-Term Debt Fraud 196 Misappropriation of Assets 196 The Auditors 196 References 202 Chapter 8 Generating and Assessing Decision Alternatives: Practical Wisdom and Action 203 Introduction 204 Reflections on Our Decision Model 205 Year-End Adjusting Process, Adjusting Entries, Bad Debt Expense Estimates 206 A Violation of Accounting Standards? But Not an Ethical Problem? 213 Internal Controls and Embezzlement 215 To Bribe or Not to Bribe: That is the Question 216 Reflections on Case Analysis: Practical Wisdom and Deliberative Judgment 221 Human Motivation and Behavior: Incentives and Support for Ethical Action 224 Chapter Review Questions 225 Cases 225 References 232 Part III Accounting in Society 233 Chapter 9 Auditing Ethics 235 The Role and Responsibilities of the Auditor 235 Values, Standards, and Virtues in the Professional Codes of Conduct 236 Audit Judgment 242 Appendix 260 Chapter Review Questions 263 Cases 263 References 269 Chapter 10 The Accountant in Society: Deciding for Ethical Action 270 Chapter Themes 271 The Individual Accountant: Making Ethical Decisions 271 The Social Context for the Accountant’s Decision Making: The Ethical Domain 272 The Moral Structure of Accounting: Economic Events and Accounting Discourse 274 The Perception that Accounting is Only a Technical Craft, But Not an Ethical Practice 276 Professionalism in Social Context 277 The Accountant and the Profession in the Market and Society 279 The Mixed Good of Accounting Discourse: Market Values and Accounting Ethics 283 Market Values and Accounting Values: The Social Domain of Accounting Ethics 284 Market Values and the Function of Accounting 285 Social Contract Theory 288 Corporate Social Responsibility 291 Chapter Review Questions 293 References 294 Index 297

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Book SynopsisEasy-to-follow guidelines from a pro for simplifying your investments, protecting yourself from the investment sharks and achieving financial freedom Drawing on his years as an investor for leading banks in the U.S. and Asia, Philip Cheng delivers down-to-earth strategies guaranteed to make you shark-proof while you optimize investment returns. Statistics show that only 20% of small investors ever come close to achieving their investment goals. The other 80% get eaten alive by investment sharksinvestment advisors, fund managers and other hucksters out to line their pockets with your hard-earned cash. Motivated by a sense of fair play, Cheng resolved to write an investor''s survival guide in which he''d share everything he''s learned in his years as a successful professional investor. The result is Taming the Money Sharks. The easy-to-follow guidelines you''ll find in this book will help you navigate the shark-infested waters of the investment world, all the way to theTable of ContentsAcknowledgments xiii Preface xv Author’s Disclaimer xix Chapter 1 Stop the Bleeding Should You Continue to Invest by Striking While the Iron Is Hot? 1 A. Chasing a Hot Stock 3 B. Chasing a Hot Trend 8 C. Maxim No. 1: Don’t Rush into Buying, and Avoid Further Bleeding 11 Chapter 2 Select an Industry to Increase Probability of Profitable Investments Apply Expertise from Work or Personal Interest 19 A. Basic Knowledge 20 B. Choosing an Industry to Invest In 25 C. Industry Characteristics 41 D. Maxim No. 2: Profit from One Chosen Industry or a Selected Few Industries 44 Chapter 3 Wise Use of Information Resources Should You Follow Hot Tips? 49 A. Listen to a Friend or Relative 50 B. Listen to a Stock Guru 54 C. Listen to a Stock Analyst 56 D. Listen to an Investment Advisor 59 E. Listen to a Large Investor (Possible Shark) 61 F. Maxim No. 3: Reference External Inputs but Stay Focused 65 Chapter 4 Decide on Company Values and Buy–Sell Prices Should You Trust a Company with Your Money? 73 A. Relevant Company Historical Facts 74 B. Most Basic Financials 84 C. Five Key Indicators 86 D. Don’t Be Blind to a Company’s Personality 98 E. Deciding on Buy–Sell Prices 100 F. Maxim No. 4: Trust but Verify 103 Chapter 5 Simple and Effective Portfolio Strategies Do You Want a Windfall Profit or a Systematic Win? 111 A. Portfolio Planning Guidelines 112 B. Core versus Satellite Portfolio 115 C. Portfolio Risk Management 122 D. Maxim No. 5: Manage and Accept Portfolio Risks 132 Chapter 6 Capitalize on Policy Directions Are Policies Your Friends? 145 A. Are Policies Fair? 146 B. Policy Directions 147 C. Maxim No. 6: Profit from Policies and Trends 153 Chapter 7 Loving an Investment or Loving to Make Money Falling in Love 157 A. Is “Love” Forever? 158 B. All-or-Nothing Thinking 160 C. Love a Person? Invest for Love? 162 D. Maxim No. 7: Emotions and Investment Don’t Mix 166 Chapter 8 Fully Enjoy Your Profits from Stocks Rich and Healthy or Rich with Pain 171 A. Manage Your Investment Lifestyle and Health Simultaneously 172 B. Swap Poor Health for Big Money 173 C. Investment Emotions That Are Detrimental to Our Health 175 D. Investment Flowchart 179 E. Maxim No. 8: Maintain Health and Wealth 180 Appendix A: Basic Technical Analysis 183 Appendix B: Deciding on Buy Prices 189 Appendix C: Deciding on Sell Prices 195 Appendix D: Strategy for Investing in High-Dividend (HD) Stocks 201 About the Author 207 Index 209

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Book SynopsisThis new book seeks to navigate the reader through the complexities of CVA, DVA and FVA. Modelling frameworks for these three quantities are discussed in detail including the very latest developments in FVA and OIS discounting. The book covers simple analytic models through to complex multi-asset class Monte Carlo engines.Table of ContentsList of Tables xvii List of Figures xxi Acknowledgements xxv CHAPTER 1 Introduction: The Valuation of Derivative Portfolios 1 1.1 What this book is about 1 1.2 Prices and Values 4 1.2.1 Before the Fall... 4 1.2.2 The Post-Crisis World... 5 1.3 Trade Economics in Derivative Pricing 6 1.3.1 The Components of a Price 6 1.3.2 Risk-Neutral Valuation 8 1.3.3 Hedging and Management Costs 11 1.3.4 Credit Risk: CVA/DVA 11 1.3.5 FVA 13 1.3.6 Regulatory Capital and KVA 14 1.4 Post-Crisis Derivative Valuation or How I Learned to Stop Worrying and Love FVA 16 1.4.1 The FVA Debate and the Assault on Black-Scholes-Merton 16 1.4.2 Different Values for Different Purposes 19 1.4.3 Summary: The Valuation Paradigm Shift 21 1.5 Reading this Book 21 PART ONE CVA and DVA: Counterparty Credit Risk and Credit Valuation Adjustment CHAPTER 2 Introducing Counterparty Risk 25 2.1 Defining Counterparty Risk 25 2.1.1 Wrong-way and Right-way Risk 27 2.2 CVA and DVA: Credit Valuation Adjustment and Debit Valuation Adjustment Defined 27 2.3 The Default Process 28 2.3.1 Example Default: The Collapse of Lehman Brothers 30 2.4 Credit Risk Mitigants 30 2.4.1 Netting 30 2.4.2 Collateral/Security 31 2.4.3 Central Clearing and Margin 34 2.4.4 Capital 35 2.4.5 Break Clauses 35 2.4.6 Buying Protection 37 CHAPTER 3 CVA and DVA: Credit and Debit Valuation Adjustment Models 39 3.1 Introduction 39 3.1.1 Close-out and CVA 40 3.2 Unilateral CVA Model 42 3.2.1 Unilateral CVA by Expectation 42 3.2.2 Unilateral CVA by Replication 43 3.3 Bilateral CVA Model: CVA and DVA 48 3.3.1 Bilateral CVA by Expectation 48 3.3.2 Bilateral CVA by Replication 50 3.3.3 DVA and Controversy 53 3.4 Modelling Dependence between Counterparties 55 3.4.1 Gaussian Copula Model 55 3.4.2 Other Copula Models 56 3.5 Components of a CVA Calculation Engine 57 3.5.1 Monte Carlo Simulation 57 3.5.2 Trade Valuation and Approximations 57 3.5.3 Expected Exposure Calculation 59 3.5.4 Credit Integration 59 3.6 Counterparty Level CVA vs. Trade Level CVA 59 3.6.1 Incremental CVA 60 3.6.2 Allocated CVA 60 3.7 Recovery Rate/Loss-Given-Default Assumptions 63 CHAPTER 4 CDS and Default Probabilities 65 4.1 Survival Probabilities and CVA 65 4.2 Historical versus Implied Survival Probabilities 66 4.3 Credit Default Swap Valuation 67 4.3.1 Credit Default Swaps 67 4.3.2 Premium Leg 69 4.3.3 Protection Leg 71 4.3.4 CDS Value and Breakeven Spread 72 4.4 Bootstrapping the Survival Probability Function 72 4.4.1 Upfront Payments 74 4.4.2 Choice of Hazard Rate Function and CVA: CVA Carry 75 4.4.3 Calibration Problems 76 4.5 CDS and Capital Relief 77 4.6 Liquid and Illiquid Counterparties 78 4.6.1 Mapping to Representative CDS 79 4.6.2 Mapping to Baskets and Indices 80 4.6.3 Cross-sectional Maps 81 CHAPTER 5 Analytic Models for CVA and DVA 83 5.1 Analytic CVA Formulae 83 5.2 Interest Rate Swaps 84 5.2.1 Unilateral CVA 84 5.2.2 Bilateral CVA 86 5.3 Options: Interest Rate Caplets and Floorlets 86 5.4 FX Forwards 88 CHAPTER 6 Modelling Credit Mitigants 91 6.1 Credit Mitigants 91 6.2 Close-out Netting 91 6.3 Break Clauses 93 6.3.1 Mandatory Break Clauses 93 6.3.2 Optional Break Clauses 93 6.4 Variation Margin and CSA Agreements 97 6.4.1 Simple Model: Modifying the Payout Function 97 6.4.2 Modelling Collateral Directly 99 6.4.3 Lookback Method 101 6.4.4 Modelling Downgrade Triggers in CSA Agreements 102 6.5 Non-financial Security and the Default Waterfall 107 CHAPTER 7 Wrong-way and Right-way Risk for CVA 109 7.1 Introduction: Wrong-way and Right-way Risks 109 7.1.1 Modelling Wrong-way Risk and CVA 110 7.2 Distributional Models of Wrong-way/Right-way Risk 111 7.2.1 Simple Model: Increased Exposure 111 7.2.2 Copula Models 111 7.2.3 Linear Models and Discrete Models 114 7.3 A Generalised Discrete Approach to Wrong-way Risk 116 7.4 Stochastic Credit Models of Wrong-way/Right-way Risk 118 7.4.1 Sovereign Wrong-way Risk 119 7.5 Wrong-way/Right-way Risk and DVA 119 PART TWO FVA: Funding Valuation Adjustment CHAPTER 8 The Discount Curve 123 8.1 Introduction 123 8.2 A Single Curve World 123 8.3 Curve Interpolation and Smooth Curves 126 8.4 Cross-currency Basis 127 8.5 Multi-curve and Tenor Basis 128 8.6 OIS and CSA Discounting 129 8.6.1 OIS as the Risk-free Rate 129 8.6.2 OIS and CSA Discounting 131 8.6.3 Multi-currency Collateral and the Collateral Option 134 8.7 Conclusions: Discounting 138 CHAPTER 9 Funding Costs: Funding Valuation Adjustment (FVA) 139 9.1 Explaining Funding Costs 139 9.1.1 What is FVA? 139 9.1.2 General Principle of Funding Costs 145 9.2 First Generation FVA: Discount Models 145 9.3 Double Counting and DVA 146 9.4 Second Generation FVA: Exposure Models 147 9.4.1 The Burgard-Kjaer Semi-Replication Model 148 9.5 Residual FVA and CSAs 160 9.6 Asymmetry 161 9.6.1 Case 1: Corporate vs. Bank Asymmetry 161 9.6.2 Case 2: Bank vs. Bank Asymmetry 162 9.7 Risk Neutrality, Capital and the Modigliani-Miller Theorem 162 9.7.1 No Market-wide Risk-neutral Measure 162 9.7.2 Consequences 165 9.7.3 The Modigliani-Miller Theorem 165 9.8 Wrong-way/Right-way Risk and FVA 166 CHAPTER 10 Other Sources of Funding Costs: CCPs and MVA 167 10.1 Other Sources of Funding Costs 167 10.1.1 Central Counterparty Funding Costs 167 10.1.2 Bilateral Initial Margin 170 10.1.3 Rating Agency Volatility Buffers and Overcollateralisation 170 10.1.4 Liquidity Buffers 170 10.2 MVA: Margin Valuation Adjustment by Replication 171 10.2.1 Semi-replication with no Shortfall on Default 174 10.3 Calculating MVA Efficiently 175 10.3.1 Sizing the Problem 175 10.3.2 Aside: Longstaff-Schwartz for Valuations and Expected Exposures 176 10.3.3 Calculating VaR inside a Monte Carlo 179 10.3.4 Case Study: Swap Portfolios 182 10.3.5 Adapting LSAC to VaR under Delta-Gamma Approximation 184 10.4 Conclusions on MVA 184 CHAPTER 11 The Funding Curve 187 11.1 Sources for the Funding Curve 187 11.1.1 Term Funding 188 11.1.2 Rolling Funding 188 11.2 Internal Funding Curves 188 11.2.1 Bank CDS Spread 188 11.2.2 Bank Bond Spread 189 11.2.3 Bank Bond-CDS Basis 189 11.2.4 Bank Treasury Transfer Price 190 11.2.5 Funding Strategy Approaches 190 11.3 External Funding Curves and Accounting 191 11.4 Multi-currency/Multi-asset Funding 192 PART THREE KVA: Capital Valuation Adjustment and Regulation CHAPTER 12 Regulation: the Basel II and Basel III Frameworks 195 12.1 Introducing the Regulatory Capital Framework 195 12.1.1 Economic Capital 196 12.1.2 The Development of the Basel Framework 196 12.1.3 Pillar I: Capital Types and Choices 201 12.2 Market Risk 202 12.2.1 Trading Book and Banking Book 202 12.2.2 Standardised Method 202 12.2.3 Internal Model Method (IMM) 204 12.3 Counterparty Credit Risk 205 12.3.1 Weight Calculation 205 12.3.2 EAD Calculation 206 12.3.3 Internal Model Method (IMM) 208 12.4 CVA Capital 209 12.4.1 Standardised 209 12.4.2 Advanced 211 12.5 Other Sources of Regulatory Capital 213 12.5.1 Incremental Risk Charge (IRC) 213 12.5.2 Leverage Ratio 213 12.6 Forthcoming Regulation with Pricing Impact 214 12.6.1 Fundamental Review of the Trading Book 214 12.6.2 Revised Standardised Approach to Credit Risk 218 12.6.3 Bilateral Initial Margin 220 12.6.4 Prudent Valuation 220 12.6.5 EMIR and Frontloading 224 CHAPTER 13 KVA: Capital Valuation Adjustment 227 13.1 Introduction: Capital Costs in Pricing 227 13.1.1 Capital, Funding and Default 227 13.2 Extending Semi-replication to Include Capital 228 13.3 The Cost of Capital 232 13.4 KVA for Market Risk, Counterparty Credit Risk and CVA Regulatory Capital 232 13.4.1 Standardised Approaches 232 13.4.2 IMM Approaches 233 13.5 The Size of KVA 233 13.6 Conclusion: KVA 237 CHAPTER 14 CVA Risk Warehousing and Tax Valuation Adjustment (TVA) 239 14.1 Risk Warehousing XVA 239 14.2 Taxation 239 14.3 CVA Hedging and Regulatory Capital 240 14.4 Warehousing CVA Risk and Double Semi-Replication 240 CHAPTER 15 Portfolio KVA and the Leverage Ratio 247 15.1 The Need for a Portfolio Level Model 247 15.2 Portfolio Level Semi-replication 248 15.3 Capital Allocation 254 15.3.1 Market Risk 255 15.3.2 Counterparty Credit Risk (CCR) 255 15.3.3 CVA Capital 255 15.3.4 Leverage Ratio 256 15.3.5 Capital Allocation and Uniqueness 257 15.4 Cost of Capital to the Business 257 15.5 Portfolio KVA 258 15.6 Calculating Portfolio KVA by Regression 258 PART FOUR XVA Implementation CHAPTER 16 Hybrid Monte Carlo Models for XVA: Building a Model for the Expected-Exposure Engine 263 16.1 Introduction 263 16.1.1 Implementing XVA 263 16.1.2 XVA and Monte Carlo 263 16.1.3 XVA and Models 264 16.1.4 A Roadmap to XVA Hybrid Monte Carlo 267 16.2 Choosing the Calibration: Historical versus Implied 268 16.2.1 The Case for Historical Calibration 268 16.2.2 The Case for Market Implied Calibration 281 16.3 The Choice of Interest Rate Modelling Framework 285 16.3.1 Interest Rate Models (for XVA) 286 16.3.2 The Heath-Jarrow-Morton (HJM) Framework and Models of the Short Rate 286 16.3.3 The Brace-Gaterak-Musiela (BGM) or Market Model Framework 305 16.3.4 Choice of Numeraire 313 16.3.5 Multi-curve: Tenor and Cross-currency Basis 314 16.3.6 Close-out and the Choice of Discount Curve 318 16.4 FX and Cross-currency Models 319 16.4.1 A Multi-currency Generalised Hull-White Model 320 16.4.2 The Triangle Rule and Options on the FX Cross 322 16.4.3 Models with FX Volatility Smiles 324 16.5 Inflation 327 16.5.1 The Jarrow-Yildirim Model (using Hull-White Dynamics) 327 16.5.2 Other Approaches 336 16.6 Equities 337 16.6.1 A Simple Log-normal Model 337 16.6.2 Dividends 339 16.6.3 Indices and Baskets 339 16.6.4 Managing Correlations 340 16.6.5 Skew: Local Volatility and Other Models 340 16.7 Commodities 342 16.7.1 Precious Metals 342 16.7.2 Forward-based Commodities 342 16.7.3 Electricity and Spark Spreads 347 16.8 Credit 348 16.8.1 A Simple Gaussian Model 349 16.8.2 JCIR++ 350 16.8.3 Other Credit Models, Wrong-way Risk Models and Credit Correlation 351 CHAPTER 17 Monte Carlo Implementation 353 17.1 Introduction 353 17.2 Errors in Monte Carlo 353 17.2.1 Discretisation Errors 354 17.2.2 Random Errors 357 17.3 Random Numbers 359 17.3.1 Pseudo-random Number Generators 359 17.3.2 Quasi-random Number Generators 364 17.3.3 Generating Normal Samples 369 17.4 Correlation 372 17.4.1 Correlation Matrix Regularisation 372 17.4.2 Inducing Correlation 373 17.5 Path Generation 375 17.5.1 Forward Induction 375 17.5.2 Backward Induction 375 CHAPTER 18 Monte Carlo Variance Reduction and Performance Enhancements 377 18.1 Introduction 377 18.2 Classic Methods 377 18.2.1 Antithetics 377 18.2.2 Control Variates 378 18.3 Orthogonalisation 379 18.4 Portfolio Compression 381 18.5 Conclusion: Making it Go Faster! 382 CHAPTER 19 Valuation Models for Use with Monte Carlo Exposure Engines 383 19.1 Valuation Models 383 19.1.1 Consistent or Inconsistent Valuation? 384 19.1.2 Performance Constraints 384 19.1.3 The Case for XVA Valuation Consistent with Trade Level Valuations 385 19.1.4 The Case for Consistent XVA Dynamics 386 19.1.5 Simulated Market Data and Valuation Model Compatibility 387 19.1.6 Valuation Differences as a KPI 387 19.1.7 Scaling 387 19.2 Implied Volatility Modelling 388 19.2.1 Deterministic Models 388 19.2.2 Stochastic Models 389 19.3 State Variable-based Valuation Techniques 389 19.3.1 Grid Interpolation 390 19.3.2 Longstaff-Schwartz 391 CHAPTER 20 Building the Technological Infrastructure 393 20.1 Introduction 393 20.2 System Components 393 20.2.1 Input Data 394 20.2.2 Calculation 401 20.2.3 Reporting 405 20.3 Hardware 405 20.3.1 CPU 406 20.3.2 GPU and GPGPU 406 20.3.3 Intel® Xeon PhiTM 407 20.3.4 FPGA 408 20.3.5 Supercomputers 408 20.4 Software 408 20.4.1 Roles and Responsibilities 409 20.4.2 Development and Project Management Practice 410 20.4.3 Language Choice 415 20.4.4 CPU Languages 416 20.4.5 GPU Languages 417 20.4.6 Scripting and Payout Languages 418 20.4.7 Distributed Computing and Parallelism 418 20.5 Conclusion 421 PART FIVE Managing XVA CHAPTER 21 Calculating XVA Sensitivities 425 21.1 XVA Sensitivities 425 21.1.1 Defining the Sensitivities 425 21.1.2 Jacobians and Hessians 426 21.1.3 Theta, Time Decay and Carry 427 21.1.4 The Explain 431 21.2 Finite Difference Approximation 434 21.2.1 Estimating Sensitivities 434 21.2.2 Recalibration? 435 21.2.3 Exercise Boundaries and Sensitivities 436 21.3 Pathwise Derivatives and Algorithmic Differentiation 437 21.3.1 Preliminaries: The Pathwise Method 438 21.3.2 Adjoints 440 21.3.3 Adjoint Algorithmic Differentiation 442 21.3.4 Hybrid Approaches and Longstaff-Schwartz 443 21.4 Scenarios and Stress Tests 445 CHAPTER 22 Managing XVA 447 22.1 Introduction 447 22.2 Organisational Design 448 22.2.1 Separate XVA Functions 448 22.2.2 Central XVA 451 22.3 XVA, Treasury and Portfolio Management 453 22.3.1 Treasury 453 22.3.2 Loan Portfolio Management 454 22.4 Active XVA Management 454 22.4.1 Market Risks 455 22.4.2 Counterparty Credit Risk Hedging 457 22.4.3 Hedging DVA? 458 22.4.4 Hedging FVA 459 22.4.5 Managing and Hedging Capital 459 22.4.6 Managing Collateral and MVA 460 22.5 Passive XVA Management 460 22.6 Internal Charging for XVA 460 22.6.1 Payment Structures 461 22.6.2 The Charging Process 461 22.7 Managing Default and Distress 462 PART SIX The Future CHAPTER 23 The Future of Derivatives? 465 23.1 Reflecting on the Years of Change... 465 23.2 The Market in the Future 465 23.2.1 Products 466 23.2.2 CCPs, Clearing and MVA 466 23.2.3 Regulation, Capital and KVA 467 23.2.4 Computation, Automation and eTrading 467 23.2.5 Future Models and Future XVA 468 Bibliography 469 Index 489

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Book SynopsisReleased to the public for the first time, writings by the incomparable Barton Biggs Long considered one of the best brains on Wall Street, Barton Biggs acquired the stature of a legend within his lifetime. Among his many coups, he accurately called the rise and fall of the dot-com market, and was an energetic promoter of emerging markets, including China, well before American businesses began flocking thereand he made vast fortunes for his clients, in the process. But, as this fascinating book confirms, it wasn''t Biggs''s genius as a market analyst and hedge fund manager alone that made him special. The product of a keen and broad-ranging intellect in full command of his subjectsand the English languagethe letters compiled in this volume leave no doubt that Barton Biggs was one of the most interesting observers of Wall Street, the financial world, and the human comedy, ever to set pen to paper. Released from Morgan Stanley''s archives and made public foTable of ContentsIntroduction xi Section 1: What’s Old is New Again 1 Section 1A: Market History and the Long View 3 In Search of History and a Word Processor That Works 3 Kondratieff and the Long Cycle 5 The Phony War 9 Ancient History 12 History, Market Deaths, and the Cult of the Equity 16 Section 1B: Fire and Ice 21 The Fire and Ice Debate 21 Ice Creeps On 26 A World Lit Only by Fire? 29 Section 1C: Bubbles and Panics 33 Manias, Panics, Crashes 33 Tulipomania 36 Anarchy 39 Life on the Good Ship Swine 43 The New New Thing 46 When? 50 Section 1D: Wars and Rumors of War 55 The Last Supper 55 The Beam That Broke the Camel’s Back 59 Bioterrorism and the Case for Higher P/E Ratios? 61 Section 1E: Geopolitics 65 Popcorn and the Decline of the West 65 Diary of Mikhail S. Gorbachev—Sunday, May 4, 1986 69 Close-Up 72 Diary of Mikhail Gorbachev, May 1987 75 The Diary of Deng Xiaoping: Wistful and Wishful Musings 78 Bottomless Pits and Nuts with Missiles 81 Diary of Saddam Hussein 83 Islamic Fundamentalism 86 Section 2: Economics and Investing 91 Section 2A: Economics and Policy 95 The Evolution of the Supply Side 95 The Tax Cut Misconception 98 Running the Movie of the Seventies Backward 100 The Piper Must Still Be Paid 103 The Old President with the Right Intuitions 116 What Kind of People are We? 119 Emerging Markets are Only for the Brave 122 Section 2B: Investment Discipline & Tactics 127 Discipline and Reading 127 How to Lose the Winner’s Game 130 You Gotta Believe 133 Section 2C: Market Psychology and Investing Philosophy 135 Contrarianism 135 Electronic War Rooms and Lying in the Sun 140 God is a Mathematician? The Fibonacci Numbers 143 Beware of Linear Thinkers: Chaos on the Upside 146 How George Soros Makes Money: The Theory He Says Guides Him 148 The Horse Whisperers 151 Mr. Market is a Manic-Depressive 155 Section 2D: Alternative Investments 159 Filthy Lucre 159 The Bull Market in Art: Mania or Magnificent Obsession? 162 Jewelry is a Girl’s Best Friend 165 Section 2E: Market Predictions 169 First Class on the Titanic 169 “It’s a Bull Market, You Know . . .” 171 Beware the Conventional Wisdom . . . 175 Dear Diary: Up with Which I Have to Put 177 Praise the Lord and Pass the Ammunition 180 “Even Monkeys Fall from Trees” 183 Big Fish Do Not Live in Small Ponds 188 Section 3: The Global View 193 Section 3A: China and Hong Kong 197 Buy Hong Kong 197 Own Hong Kong Big 201 More on China 204 China: “The New Emperors” and the Risk/Reward Equation 208 How Fast is China Really Growing? 212 China Tales 215 A China Traveler’s Tales 218 China Cooling, Us Heating 221 Section 3B: India 225 India Tilts to the Right and the Stock Market Explodes 225 India for the 1990s 228 Great Expectations 231 India: You Have to Go There to Understand 234 Section 3C: Japan 237 More on Japan 237 Long Trips 240 Japan Inc. Wants a Higher Yen 242 Japan Bought High and Will Sell Low 245 Section 3D: Europe, Middle East, Africa 249 In the Eye of the Storm 249 You Gotta Own Some Germany 253 Militant Fundamentalism Spoils the Middle East Story 256 Section 3E: Latin America 259 South America for the Nineties 259 No More Siestas 263 Argentina: The Magic Show 268 Buy Mexico and Brazil 271 Case Study: Peru 275 Mexico Will Make It 278 Mexico: Virtuous or Vicious Circle? 282 Brazil: An Act of Faith 286 Section 3F: East Asia 289 The Best-Managed Country in the World 289 Korea: Fat Premiums, Thin Pickings 293 Camelot 296 Letter from Myanmar 299 Victory Has a Thousand Fathers 302 Section 3G: Emerging Markets Roundup 307 A Bigger, Faster World 307 Jewel in the Portfolio 311 Section 4: Characters and Culture 315 Section 4A: Lunches with Luminaries 317 Investment Alchemy 317 Lunch with the Global Investor 321 Vanity Fair 325 Heroine Worship 327 Poker Games on the Titanic and Sir John 330 Section 4B: Jim the Trigger 333 The Summer of 83 333 The Trigger Comes Back for Lunch 336 U3 or “Many Shall Be Restored That are Now Fallen and . . .” 339 The Trigger Finds an Arb 341 The Trigger Comes to Lunch 344 Investment Life Its Own Self 347 A Country of His Own 350 Talking Technology with Jim the Trigger 354 Section 5: Travelogues 359 Africa 361 The Idaho High Country 364 Making a New High on Your Own Time 367 Stretching the Mid-Life Envelope 370 Japanese Landscapes 373 The Snows of Kilimanjaro 377 Pitfalls in Tokyo, Sand Traps in Colorado 381 Section 6: Books and Letters 385 Section 6A: Book Reviews 387 “Groupthink” and What to Do about It 387 Captain Money and the Golden Girl Ponzi 391 The Alchemy of Finance 395 I Wish We Didn’t Have to Play for George Steinbrenner 398 Noise and Babble 401 Section 6B: Biggs’s Reading List 405 Too Much to Read 405 “Books, We Know, are a Substantial World . . .” 408

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Book SynopsisThe revised and updated edition of the book that changed the way you think about trading In the Second Edition of this groundbreaking book by star trader Jeff Greenblatt, he continues to shares his hard-won lessons on what it takes to be a professional trader, while detailing his proven techniques for mastering market timing.Table of ContentsForeword ix Preface xiii Acknowledgments xix Chapter 1 Underlying Structure of Markets 1 Chapter 2 Elliott Waves 25 Chapter 3 Rotation 45 Chapter 4 Candlesticks 67 Chapter 5 Divergences 87 Chapter 6 Volume Studies and Moving Averages 115 Chapter 7 Fibonacci Price Projections 137 Chapter 8 Advanced Projection Techniques 159 Chapter 9 Forex 201 Chapter 10 Squaring of Price and Time 215 Chapter 11 Andrews Pitchforks Crash Course 235 Chapter 12 Square of 9 247 Chapter 13 Psychology 269 Chapter 14 Market Psychology/Sentiment 307 Chapter 15 Building the Bridge 333 Chapter 16 Conclusion 375 Bibliography 389 Author’s Disclaimer 391 About the Author 393 Index 395

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Book SynopsisDetailed tools and techniques for developing efficiency and effectiveness in forensic accounting Using Analytics to Detect Possible Fraud: Tools and Techniques is a practical overview of the first stage of forensic accounting, providing a common source of analytical techniques used for both efficiency and effectiveness in forensic accounting investigations. The book is written clearly so that those who do not have advanced mathematical skills will be able to understand the analytical tests and use the tests in a forensic accounting setting. It also includes case studies and visual techniques providing practical application of the analytical tests discussed. Shows how to develop both efficiency and effectiveness in forensic accounting Provides information in such a way that non-practitioners can easily understand Written in plain language: advanced mathematical skills are not required Features actual case studies using analyticalTable of ContentsPreface xi Acknowledgments xv Chapter 1: Overview of the Companies 1 The Four Companies 2 Company 1 2 Company 2 5 Company 3 8 Company 4 10 Summary 16 Chapter 2: The “Norm” and the “Forensic” Preliminary Analytics: Basics Everyone Should Know 19 Liquidity Ratios 20 Working Capital 21 Working Capital Index 21 Working Capital Turnover 22 Current Ratio 22 Case Studies: Liquidity Ratios 22 Profitability Ratios 25 Gross Profit 26 Gross Profit Margin 26 Stock Sales 26 Return on Equity 27 Case Studies: Profitability Ratios 27 Company 1 31 Horizontal Analysis 36 Company 1 36 Company 2 43 Company 3 50 Company 4 61 Vertical Analysis 66 Company 1 66 Company 2 70 Company 3 73 Company 4 79 Summary 79 Chapter 3: The Importance of Cash Flows and Cash Flow Statements 83 Cash Flows and Net Income 85 Company 1 87 Company 2 89 Company 3 92 Company 4 97 Other Cash Flow Techniques 100 Company 1 101 Company 2 104 Company 3 107 Company 4 114 Summary 117 Chapter 4: The Beneish M-Score Model 119 Company 1 124 Company 2 133 Company 3 143 Indices of the Primary Government 145 Indices of the Governmental Funds 151 Company 4 158 Summary 166 Notes 170 Chapter 5: The Accruals 171 Dechow–Dichev Accrual Quality 173 The Four Companies: Dechow–Dichev Model 175 Sloan’s Accruals 184 The Four Companies: Sloan’s Model 185 Jones Nondiscretionary Accruals 191 The Four Companies: Jones Model 192 Summary 196 Notes 198 Chapter 6: Analysis Techniques Using Historical Financial Statements and Other Company Information 199 The Piotroski F-Score Model 200 Company 1 203 Company 2 205 Company 3 207 Company 4 212 Lev–Thiagarajan’s 12 Signals 215 Company 1 220 Company 2 222 Company 3 225 Company 4 230 Summary 233 Notes 235 Chapter 7: Benford's Law, and Yes—Even Statistics 237 Benford’s Law 239 Company 1 243 Company 2 249 Company 3 255 Company 4 267 Simple Statistics 272 Company 1 277 Company 2 281 Company 3 284 Company 4 289 Summary 290 Note 292 Chapter 8: Grading the Four Companies 293 Company 1 294 Company 2 302 Company 3 310 Company 4 320 Summary 326 Bibliography 329 About the Author 331 Index 333

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Book SynopsisAfter two decades of evolution and transformation, London had become one of the most open and cosmopolitan cities in the world. The success of the 2012 Olympics set a high water-mark in the visible success of thecity, while its influence and soft power increased inthe global systems of trade, capital, culture, knowledge, and communications. The Making of a World City: London 1991 - 2021 sets out in clear detail both the catalysts that have enabled London to succeed and also the qualities and underlying values that are at play: London''s openness and self-confidence, its inventiveness, influence, and its entrepreneurial zeal. London's organic, unplanned, incremental character, without a ruling design code or guiding master plan, proves to be more flexible than any planned city can be. Cities are high on national and regional agendas as we all try to understand the impact of global urbanisation and the re-urbanisation of the developed world. If we can explain London''s sTrade Review“The Making of a World City: London 1991 to 2021, by leading global cities expert and Centre for London Associate Greg Clark, which is published this month, seeks to remedy this by considering how London got where it is today, and setting out the challenges still facing us.” (Centre for London, 10 December 2014)Table of ContentsAbout the Author ix Foreword by Martin Simmons xi Preface by Rosemary Feenan and Robert Gordon Clark xiii Acknowledgements xv Section I London in 1991 – Setting the scene 1 Introduction: Honor Chapman and London:World City 3 2 London prior to 1991: The back story 11 Planning for a new world city 12 The rise of finance and a new rationale for post-industrial London 13 A hiatus of government 16 The LDDC and a new era of pragmatism 16 3 The 1991 London:World City report and its message about London 19 Old rivals, new rivals 22 An agenda for metropolitan governance 24 Brand new: The promotion of London 26 The future knowledge economy 29 Section II The evolution of London, 1991 to 2015 4 The internationalisation of London’s economy 35 Internationalisation of London’s labour force 39 The global financial crisis and after 43 5 Leadership, governance and policy 47 1997 and a new direction for metropolitan government 52 The London Plan: A global city strategy 56 London boroughs 59 Promoting London 60 London’s governance today 66 6 Re-investment and urban regeneration 69 Cultural revitalisation of the South Bank: Lambeth, Southwark and Greenwich 72 New regeneration powers from 2000 74 Regeneration in perspective 77 From de-industrial to post-industrial: Building a new experience for markets, leisure and commerce 80 7 Corporate hub, officemarket and real estate 87 The rise and rise of tall buildings 88 The diffusion of London’s office geography 89 The transformative impact of foreign capital 93 8 Homes and housing in London 99 Consensus but complacency in the 1990s 100 The London Plan and a new agenda for housing 101 London’s housing predicament: Prospects and solutions 107 9 London’s evolving infrastructure platform 111 The impact of TfL and citywide government on transport 113 From incrementalism to integration? 117 Section III London today and in the future 10 World cities today 121 Measuring world cities in 2015 125 Emerging world cities 128 Insights from benchmarks about short- and long-term city success 132 11 London in the next decade: Implications of the rise of other world cities 135 Finance and business: Global leadership in a new context 138 Culture, diversity and destination 143 Higher education, technology and new sectors 145 Sustainability and liveability: Aspiration or reality? 149 Infrastructure, housing and skills 151 12 Investment in London: Challenges and solutions 159 London’s relationship with the UK 160 London’s constrained investment scene 162 The financial and investment capacity of London’s five principal rivals 166 London’s fiscal position in perspective 169 13 Eight imperatives for London 175 14 Lessons from London for other cities 187 Appendix 195 Bibliography 197 Index 219

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Book SynopsisA CPA exam guide written specifically for international students The US CPA qualification exam is the most popular professional accounting qualification not just in the United States, but around the world as well.Table of ContentsIntroduction 1 Chapter 1 Why CPA? 5 What Is CPA? 5 Five Reasons to Become a CPA 6 Five More Reasons to Become a CPA for International Candidates 9 What Are You Waiting For? 12 Chapter 2 What Is the CPA Exam? 13 Exam Coverage 13 Exam Schedule and Location 15 Exam Qualifications 16 Exam?]Taking Strategy 18 Exam Design and Navigation 20 After the Exam 22 Chapter 3 How to Get Qualified 25 An Overview 25 The Educational Requirements 26 The Experience Requirements 33 Citizenship and Residency Requirements 36 Taking Advantage of the Differences 37 Taking the Exam at International Sites: The Pros and Cons 47 CPA Exam Qualification Quiz 48 Final Thoughts 50 Chapter 4 Getting Ready 51 Budgeting 51 Submitting the Application 53 Scheduling the Exam 55 Travel and Accommodation 57 What to Bring on Exam Day 59 What to Expect at the Prometric Center 61 What to Expect after the Exam 63 Are You Ready? 63 Chapter 5 Creating a Study Plan 65 But I Can t Afford to Plan. I Am So Busy! 65 Step 1: Aim to Complete the Exam within One Year 66 Step 2: Settle on the Sequence 66 Step 3: Estimate the Time Required for Study 67 Step 4: Plan to Complete Each Section in One Quarter 69 Step 5: Write It Down! 72 Chapter 6 How to Become More Efficient and Effective 73 Create 25 Hours in a Day 73 Transform Your Stress into Strength 78 Let s Move On! 83 Chapter 7 Study Tips and Exam-Taking Strategies 85 Study Tips 85 Exam-Taking Strategies 95 Chapter 8 How to Overcome the Fear of Task-Based Simulations 99 Study Tips 100 Exam-Taking Strategies 101 Chapter 9 How to Ace the Written Communication Tasks 105 What Are the Examiners Looking For? 105 Seven Tips for Writing Success 106 Seven Steps to Creating a Great Piece of Business Writing 108 Chapter 10 Audit and Attestation (AUD) 113 What Does AUD Cover? 113 Pass Rate History and Trend 114 Study Tips 115 Exam?]Taking Strategies 117 Presenting the Outline 118 Module 1: Professional Responsibilities 118 Module 2: Engagement Planning and Assessing Risks 119 Module 3: Understanding Internal Control and Assessing Control Risk 121 Module 4: Responding to Risk Assessment 124 Module 5: Reporting 126 Module 6: Accounting and Review Services 127 Module 7: Audit Sampling 129 Module 8: Auditing with Technology 130 Reader s Sharing 130 Chapter 11 Financial Accounting and Reporting (FAR) 133 What Does FAR Cover? 133 Passing Rate History and Trend 134 Study and Exam?]Taking Tips 134 Presenting the Outline 136 Module 9: Basic Theory and Financial Reporting 136 Module 10: Inventory 138 Module 11: Fixed Assets 140 Module 12: Monetary Current Assets and Current Liabilities 142 Module 13: Present Value 143 Module 14: Deferred Taxes 145 Module 15: Stockholders Equity 146 Module 16: Investments 148 Module 17: Statement of Cash Flows 150 Module 18: Business Combinations and Consolidations 151 Module 19: Derivative Instruments and Hedging Activities 153 Module 20: Miscellaneous 154 Module 21: Government (State and Local) Accounting 155 Module 22: Not?]for?]Profit Accounting 157 Readers Sharing 158 Chapter 12 Regulation (REG) 161 What Does REG Cover? 161 Passing Rate History and Trend 162 Study and Exam?]Taking Tips 162 Presenting the Outline 163 Module 23: Professional and Legal Responsibilities 163 Module 24: Federal Securities Acts 166 Module 25: Business Structure 168 Module 26: Contracts 169 Module 27: Sales 171 Module 28: Commercial Paper 172 Module 29: Secured Transactions 174 Module 30: Bankruptcy 176 Module 31: Debtor?]Creditor Relationships 178 Module 32: Agency 180 Module 33: Regulation of Business Employment, Environment, and Antitrust 181 Module 34: Property 184 Module 35: Individual Taxation 185 Module 36: Transactions in Property 188 Module 37: Partnership Taxation 189 Module 38: Corporate Taxation 191 Module 39: Other Taxation Topics 191 Reader s Sharing 192 Chapter 13 Business Environment and Concepts (BEC) 193 Passing Rate History and Trend 193 Study and Exam?]Taking Tips 194 Presenting the Outline 196 Module 40: Corporate Governance, Internal Control, and Enterprise Risk Management 196 Module 41: Information Technology 198 Module 42: Economics, Strategy, and Globalization 200 Module 43: Financial Risk Management and Capital Budgeting 202 Module 44: Financial Management 204 Module 45: Performance Measures 205 Module 46: Cost Measurement 206 Module 47: Planning, Control, and Analysis 208 Reader s Sharing 211 Chapter 14 What If I Fail? 213 Perform a Self?]Evaluation 213 Review the Diagnostic Report 216 Recharge and Get Back the Momentum 216 The CPA Exam Is Not Rocket Science 217 Chapter 15 Final Words 219 Appendix A Countdown Plans 221 Appendix B Packing for the Exam Trip 223 Glossary 225 Acknowledgments 229 About the Author 231 Index 233

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Book SynopsisAs part of Deloitte Consulting, one of the largest mergers and acquisitions (M&A) consulting practice in the world, this title reveals in M&A Information Technology Best Practices how companies can effectively and efficiently address the IT aspects of mergers, acquisitions, and divestitures.Table of ContentsPreface xv Acknowledgments xix Part I Introduction Chapter 1 Introduction to the IT Aspects of Mergers, Acquisitions, and Divestitures 3 Varun Joshi and Saurav Sharma Role of IT in M&A 4 Due Diligence 6 Integration/Separation Planning 8 Integration/Separation Execution 16 Wrapping It Up 20 Chapter 2 The Role of IT in Mergers and Acquisitions 23 Peter Blatman and Eugene Lukac Quest to Capture Synergies 24 Capturing the Benefits 26 Wrapping It Up 32 Chapter 3 Aligning Business and IT Strategy during Mergers, Acquisitions, and Divestitures 35 Jason Asper and Wes Protsman The Business-Aligned Integration Model 36 Enterprise Blueprint and IT Alignment 38 IT’s Role in Functional Blueprinting 39 Decision Making and Business Alignment 43 Business Alignment in Due Diligence 43 Wrapping It Up 44 Chapter 4 Mergers and Acquisitions IT Strategy, Approach, and Governance: IT and Its Customers 47 Chris DeBeer and Michael H. Moore Strategy 48 Approach 49 Governance 50 Finance 51 Operations 54 Human Resources 57 Information Technology 60 Wrapping It Up 66 Part II Information Technology’s Role in Mergers, Acquisitions, and Divestitures Chapter 5 IT Due Diligence Leading Practices 69 Mark Andrews and David Sternberg Objectives and Complexities of IT Due Diligence 70 Areas of Investigation 72 Proprietary or Product Technology–Driven Due Diligence 76 Impact of Transaction Type on the Due Diligence Investigation 77 Investigation for Strategic Buyers versus Financial Buyers 78 Considerations of Planning IT Due Diligence 79 Considerations of Conducting IT Due Diligence 82 Considerations of Finalizing IT Due Diligence 86 Tying Due Diligence to the Next Steps in the Post-Merger Process 88 Wrapping It Up 88 Chapter 6 IT Infrastructure Aspects of Mergers, Acquisitions, and Divestitures 91 Rick Kupcunas, Mike Trisko, Jeffry Sprengel, and Mushtaque Heera IT Infrastructure Blueprinting 91 IT Infrastructure Planning 93 IT Infrastructure Dependencies 100 Wrapping It Up 102 Chapter 7 M&A IT and Synergies 105 Jim Boland, Ronald Goldberg, Colin Hartnett, Sunil Rai, and Stephen Ronan IT’s Role and Contribution to Synergy Capture 105 Synergy Capture and Benefits Tracking during the Merger, Acquisition, and Divestiture Lifecycle 120 Wrapping It Up 135 Chapter 8 Supporting Business Objectives with M&A-Aware Enterprise Architecture 137 Pavel Krumkachev, Shalva Nolen, Nitin Prabhakar, and Rajat Sharma Sources of IT-Related Synergies during M&A 137 Post-Merger IT Integration Planning: The Model Makes the Difference 139 M&A-Aware Enterprise Architecture Models 139 Divestitures and the Enterprise Architecture Frameworks 143 Wrapping It Up 144 Chapter 9 The Importance of a Tested IT Strategy and Approach for Mergers, Acquisitions, and Divestitures 145 Pavel Krumkachev, Shalva Nolen, Nitin Prabhakar, and Rajat Sharma M&A IT Organization and Strategy 145 A Tested and Repeatable Approach for IT Integrations 149 A Tested and Repeatable Approach for IT Divestitures 152 Wrapping It Up 155 Chapter 10 Cloud Considerations for M&A IT Architecture 157 Mike Brown Understanding Cloud Solutions 157 Types of Cloud Solutions 158 Cloud Solution: Potential Benefits 158 Opportunity during Post-M&A Integration 158 Cloud Solutions for Post-M&A Plug-and-Play IT Frameworks 159 Determining Suitability for Cloud Solutions 160 Assessing Cloud Migration Timing 160 Establishing a Cloud Strategy 162 Evaluating Cloud Providers 163 Cloud Solution Success Factors 164 Wrapping It Up 165 Chapter 11 Data Implications of Mergers and Acquisitions 167 Sascha Elsing Criticality of Data Management in M&A Transactions 167 Data Governance and Organizational Considerations 167 Data Confidentiality, Privacy, Security, and Risk Management 168 Data Archiving Requirements 168 Data Management Road Map 169 Customer Data Considerations 172 Wrapping It Up 173 Chapter 12 Using M&A to Streamline the Applications Portfolio 175 Colin Whiteneck, Joydeep Mukherjee, Ted Veterano, and Venky Iyer Overview of an Applications Rationalization Program 178 Achieving Cost Synergies through Applications Rationalization 178 Achieving Operational Synergies through Applications Rationalization 182 Technology and Cost Impact in a Divestiture Event 188 Emerging Trends 193 Best Practices for Applications Rationalization in an M&A Scenario 194 Wrapping It Up 198 Chapter 13 Third-Party Contracts in M&A: Identifying and Managing Common Implications 199 Christine McKay, Joseph Joy, Ramkumar Jayaraman, and Ninad Deshmukh Challenges Inherent in Different Types of M&A Transactions 200 Typical Realities 200 Primary Challenges 204 Tackling Challenges 206 Program Management 215 Wrapping It Up 217 Case Studies 218 Lessons Learned 221 Chapter 14 M&A IT Architecture and Infrastructure: Developing and Delivering Transition Services Agreements 225 Olivier May and Kevin Charles Plan Early and Resource Appropriately 227 Foster Deal Team and Business Collaboration to Document Appropriately 229 Price Services Conservatively 231 Establish a Practical Governance Approach 235 Plan Exits and Remove Stranded Costs 247 Wrapping It Up 250 Chapter 15 Day 1 Implications for IT Functions 253 Sejal Gala and Sandeep Dasharath Top Day 1 Priorities for IT 253 Wrapping It Up 263 Chapter 16 Transition Services Agreement (TSA)—Untangling the Web 265 Simon Singh, Nikhil Uppal, and Jennie Miller Key Considerations for Drafting an Effective TSA 267 Structuring the TSA 270 Managing TSAs 271 Governance of TSA Services through a Parallel Structure 273 Rationale for Accelerated Exit of a TSA 278 Key Considerations for TSA Exit 279 Wrapping It Up 281 Chapter 17 IT Risk, Security, and Controls in M&A: Identifying and Managing Common Considerations 283 David Caruso, Kelly Moynihan, John Clark, Jamie Fox, Joseph Joy, and Scott Kaufman Understanding the IT Risk, Security, and Controls Current State 283 Practices for Managing IT Risk, Security, and Control Considerations 293 Wrapping It Up 301 Part III The People Aspects of Mergers, Acquisitions, and Divestitures Chapter 18 The Role of the CIO in Mergers, Acquisitions, and Divestitures 305 Irwin Goverman The Double-Duty Role 305 The Internal Role 307 The External Role 314 Some Lessons Learned 317 Wrapping It Up 320 Chapter 19 The Role of CFO 321 Rich Rorem, Trevear Thomas, Nnamdi Lowrie, Heith Rothman, Venkat Swaminathan, Chelsea Gorr, Jenny Xu, and Mia Velasquez Strategist Face 324 Catalyst Face 329 Operator Face 332 Steward Face 338 Wrapping It Up 341 Chapter 20 Managing the People Side of IT M&A 345 Tammie Potvin, Don Miller, Suseela Kadiyala, Michael Proppe, Sarah Hindley, and Laurel Vickers Key Priority: Communicating for Impact 346 Merger Stages 348 Effective M&A Communication 351 Key Priority: Defining the Future-State IT Organization 352 Steps in M&A Organization Design 353 Key Priority: Assessing and Selecting IT Talent 358 Key Priority: Managing Change 363 Start with Your Leadership Team 363 Transition Employees 366 Consider Cultural Implications 367 Assess Integration Progress 369 Wrapping It Up 370 Chapter 21 Planning for Business Process Changes Impacting Information Technology 373 Blair Kin Pre-Day 1 Planning 373 Day 1 Integration Imperatives 376 Long-Term Integration Requirements 380 Wrapping It Up 388 Part IV M&A IT Project Governance, Testing, and Business Intelligence Chapter 22 Integration Management Office Best Practices 393 David Lake and Mauro Schiavon Roles and Responsibilities 393 Key Activities 395 Sample IMO Templates and Deliverables 398 Managing the Deal 398 Wrapping It Up 403 Chapter 23 IT Program Governance during the Deal 405 John Uccello Establish Governance Model 405 Establish the Program Management Office 408 Execute the Plan 413 Wrapping It Up 415 Chapter 24 Important Role of Data in an M&A Transaction 417 Lynda Gibson, Anil Tondavadi, and Chris Vu Current Challenges and Lost Opportunities 418 Top 10 Ways to Use Information Management to Improve M&A 419 Wrapping It Up 438 Chapter 25 Overview of Testing 439 Angela Mattix Types of Testing 439 Testing Functions and Tools 443 Test Preparation Activities 444 Timing of Testing 446 Wrapping It Up 448 Part V Conclusion Chapter 26 Why Mergers, Acquisitions, and Divestitures Fail, and Considerations to Help Avoid a Similar Fate 451 Nikhil Menon M&A Risks 452 Common Pitfalls 453 Critical Success Factors 455 Wrapping It Up 457 Chapter 27 M&A IT Key Success Factors 459 Nadia Orawski and Luke Bates Key Success Factors 459 Wrapping It Up 461 Chapter 28 M&A IT, Summing It All Up 463 Habeeb Dihu, Nadia Orawski, Justin Calvin, Luke Bates, Bryce Metro, and Eric Niederhelman Best Practices 464 Best Practices to Be Considered Prior to the Deal 464 M&A IT Strategy, Approach, and Governance Best Practices 467 M&A IT Security and Privacy Implications Best Practices 472 M&A IT and Synergies Best Practices 473 M&A IT Contracts Best Practices 473 M&A IT Organizational Implications Best Practices 475 Best Practices to Consider in Order to Execute the Deal 477 Lessons Learned 478 Wrapping It Up 479 Appendix A M&A IT Playbook Overview 493 Joseph Joy, Shalva Nolen, Simon Singh, and Nikhil Uppal Appendix B Sample M&A IT Checklists 509 Shalva Nolen, Sreekanth Gopinathan, and Devi Aradada Appendix C M&A IT Sample Case Studies 521 Manish Laad, Abhishek Mathur, and Prasanna Rajappa About the Editor 531 About the Website 533 Index 535

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Book SynopsisReal case studies on insurance fraud written by real fraud examiners Insurance Fraud Casebook is a one-of-a-kind collection consisting of actual cases written by fraud examiners out in the field. These cases were hand selected from hundreds of submissions and together form a comprehensive picture of the many types of insurance fraudhow they are investigated, across industries and throughout the world. Entertaining and enlightening, the cases cover every type of insurance fraud, from medical fraud to counterfeiting. Each case outlines how the fraud was engineered, how it was investigated, and how perpetrators were brought to justice Written for fraud examiners, auditors, and insurance auditors Other titles by Wells: Fraud Fighter and Corporate Fraud Handbook, Third Edition Edited by Dr. Joseph T. Wells, the founder and Chairman of the Association of Certified Fraud Examiners (ACFE), the world''s leading anti-frTable of ContentsPreface ix Insurance Fraud Classification System xiii Chapter 1 Needles in a Paystack 1Charles Piper Chapter 2 The Good Doctor and Insurance Consultant 11Michael King Chapter 3 Greasing the Wheels in the Oil Business 21Abdulrazaq Al-Morjan Chapter 4 Living the Dream, Keeping Up the Lie 31Andries J. Brummer Chapter 5 Extinguishing an Arson Fraud 39Barry Zalma Chapter 6 Weakest Link in the Chain 47Angela Bisasor Chapter 7 Everyone Gets Hurt: A Study in Workers’ Compensation Fraud 57Michael Sputo Chapter 8 The Hazards of Doing Business with Friends 67Bill Maloney Chapter 9 There’s Gold in Them Thar Malls! 75Carl Knudson Chapter 10 Damsel in Diamonds 83Michael Skrypek Chapter 11 Operation Give and Go 93Edward P. Buttimore Chapter 12 An Inspection Is Worth a Thousand Photos 103Ed Madge Chapter 13 The Danger of Trusting Too Much 113Joe Bonk Chapter 14 The Twin Cities Machine 121Bob Weir Chapter 15 With Friends Like These . . . 131John Fifarek Chapter 16 All the Buzz 139Dalene Bartholomew Chapter 17 Getting Rich from the Elderly 149John R. Holley Chapter 18 Transparent Greed 159Joseph Licandro Chapter 19 Fault of Fortune 169Jyoti Khetarpal Chapter 20 Going Blind to Fraud 179Karen Wright Chapter 21 Going Against the Cartel 191Loftin C. Woodiel Chapter 22 Falling Prey to Online Charms 199Tina Hancock Chapter 23 Big Bills in Little Cuba 209Mark Starinsky Chapter 24 Rushing an Insurance Claim 217Peter Parillo Chapter 25 Ignorance Is Bliss, While It Lasts 229Rebecca Busch Chapter 26 The Name Game 239William D. Meader Chapter 27 Woo, Wed, Insure, Murder 249William P. Hight Chapter 28 Mystery Shopping for Fraud 259Stephen Pedneault Index 269

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Book SynopsisPresents a multitude of topics relevant to the quantitative finance community by combining the best of the theory with the usefulness of applications Written by accomplished teachers and researchers in the field, this book presents quantitative finance theory through applications to specific practical problems and comes with accompanying coding techniques in R and MATLAB, and some generic pseudo-algorithms to modern finance. It also offers over 300 examples and exercises that are appropriate for the beginning student as well as the practitioner in the field. The Quantitative Finance book is divided into four parts. Part One begins by providing readers with the theoretical backdrop needed from probability and stochastic processes. We also present some useful finance concepts used throughout the book. In part two of the book we present the classical Black-Scholes-Merton model in a uniquely accessible and understandable way. Implied volatility as well as local volatility surfaces are aTable of ContentsList of Figures xv List of Tables xvii Part I Stochastic Processes and Finance 1 1 Stochastic Processes 3 1.1 Introduction 3 1.2 General Characteristics of Stochastic Processes 4 1.2.1 The Index Set I 4 1.2.2 The State Space S 4 1.2.3 Adaptiveness, Filtration, and Standard Filtration 5 1.2.4 Pathwise Realizations 7 1.2.5 The Finite Dimensional Distribution of Stochastic Processes 8 1.2.6 Independent Components 9 1.2.7 Stationary Process 9 1.2.8 Stationary and Independent Increments 10 1.3 Variation and Quadratic Variation of Stochastic Processes 11 1.4 Other More Specific Properties 13 1.5 Examples of Stochastic Processes 14 1.5.1 The Bernoulli Process (Simple Random Walk) 14 1.5.2 The Brownian Motion (Wiener Process) 17 1.6 Borel—Cantelli Lemmas 19 1.7 Central Limit Theorem 20 1.8 Stochastic Differential Equation 20 1.9 Stochastic Integral 21 1.9.1 Properties of the Stochastic Integral 22 1.10 Maximization and Parameter Calibration of Stochastic Processes 22 1.10.1 Approximation of the Likelihood Function (Pseudo Maximum Likelihood Estimation) 24 1.10.2 Ozaki Method 24 1.10.3 Shoji-Ozaki Method 25 1.10.4 Kessler Method 25 1.11 Quadrature Methods 26 1.11.1 Rectangle Rule: (n = 1) (Darboux Sums) 27 1.11.2 Midpoint Rule 28 1.11.3 Trapezoid Rule 28 1.11.4 Simpson’s Rule 28 1.12 Problems 29 2 Basics of Finance 33 2.1 Introduction 33 2.2 Arbitrage 33 2.3 Options 35 2.3.1 Vanilla Options 35 2.3.2 Put–Call Parity 36 2.4 Hedging 39 2.5 Modeling Return of Stocks 40 2.6 Continuous Time Model 41 2.6.1 Itô’s Lemma 42 2.7 Problems 45 Part II Quantitative Finance in Practice 47 3 Some Models Used in Quantitative Finance 49 3.1 Introduction 49 3.2 Assumptions for the Black–Scholes–Merton Derivation 49 3.3 The B-S Model 50 3.4 Some Remarks on the B-S Model 58 3.4.1 Remark 1 58 3.4.2 Remark 2 58 3.5 Heston Model 60 3.5.1 Heston PDE Derivation 61 3.6 The Cox–Ingersoll–Ross (CIR) Model 63 3.7 Stochastic 𝛼, 𝛽, 𝜌 (SABR) Model 64 3.7.1 SABR Implied Volatility 64 3.8 Methods for Finding Roots of Functions: Implied Volatility 65 3.8.1 Introduction 65 3.8.2 The Bisection Method 65 3.8.3 The Newton’s Method 66 3.8.4 Secant Method 67 3.8.5 Computation of Implied Volatility Using the Newton’s Method 68 3.9 Some Remarks of Implied Volatility (Put–Call Parity) 69 3.10 Hedging Using Volatility 70 3.11 Functional Approximation Methods 73 3.11.1 Local Volatility Model 74 3.11.2 Dupire’s Equation 74 3.11.3 Spline Approximation 77 3.11.4 Numerical Solution Techniques 78 3.11.5 Pricing Surface 79 3.12 Problems 79 4 Solving Partial Differential Equations 83 4.1 Introduction 83 4.2 Useful Definitions and Types of PDEs 83 4.2.1 Types of PDEs (2-D) 83 4.2.2 Boundary Conditions (BC) for PDEs 84 4.3 Functional Spaces Useful for PDEs 85 4.4 Separation of Variables 88 4.5 Moment-Generating Laplace Transform 91 4.5.1 Numeric Inversion for Laplace Transform 92 4.5.2 Fourier Series Approximation Method 93 4.6 Application of the Laplace Transform to the Black–Scholes PDE 96 4.7 Problems 99 5 Wavelets and Fourier Transforms 101 5.1 Introduction 101 5.2 Dynamic Fourier Analysis 101 5.2.1 Tapering 102 5.2.2 Estimation of Spectral Density with Daniell Kernel 103 5.2.3 Discrete Fourier Transform 104 5.2.4 The Fast Fourier Transform (FFT) Method 106 5.3 Wavelets Theory 109 5.3.1 Definition 109 5.3.2 Wavelets and Time Series 110 5.4 Examples of Discrete Wavelets Transforms (DWT) 112 5.4.1 Haar Wavelets 112 5.4.2 Daubechies Wavelets 115 5.5 Application of Wavelets Transform 116 5.5.1 Finance 116 5.5.2 Modeling and Forecasting 117 5.5.3 Image Compression 117 5.5.4 Seismic Signals 117 5.5.5 Damage Detection in Frame Structures 118 5.6 Problems 118 6 Tree Methods 121 6.1 Introduction 121 6.2 Tree Methods: the Binomial Tree 122 6.2.1 One-Step Binomial Tree 122 6.2.2 Using the Tree to Price a European Option 125 6.2.3 Using the Tree to Price an American Option 126 6.2.4 Using the Tree to Price Any Path-Dependent Option 127 6.2.5 Using the Tree for Computing Hedge Sensitivities: the Greeks 128 6.2.6 Further Discussion on the American Option Pricing 128 6.2.7 A Parenthesis: the Brownian Motion as a Limit of Simple Random Walk 132 6.3 Tree Methods for Dividend-Paying Assets 135 6.3.1 Options on Assets Paying a Continuous Dividend 135 6.3.2 Options on Assets Paying a Known Discrete Proportional Dividend 136 6.3.3 Options on Assets Paying a Known Discrete Cash Dividend 136 6.3.4 Tree for Known (Deterministic) Time-Varying Volatility 137 6.4 Pricing Path-Dependent Options: Barrier Options 139 6.5 Trinomial Tree Method and Other Considerations 140 6.6 Markov Process 143 6.6.1 Transition Function 143 6.7 Basic Elements of Operators and Semigroup Theory 146 6.7.1 Infinitesimal Operator of Semigroup 150 6.7.2 Feller Semigroup 151 6.8 General Diffusion Process 152 6.8.1 Example: Derivation of Option Pricing PDE 155 6.9 A General Diffusion Approximation Method 156 6.10 Particle Filter Construction 159 6.11 Quadrinomial Tree Approximation 163 6.11.1 Construction of the One-Period Model 164 6.11.2 Construction of the Multiperiod Model: Option Valuation 170 6.12 Problems 173 7 Approximating PDEs 177 7.1 Introduction 177 7.2 The Explicit Finite Difference Method 179 7.2.1 Stability and Convergence 180 7.3 The Implicit Finite Difference Method 180 7.3.1 Stability and Convergence 182 7.4 The Crank–Nicolson Finite Difference Method 183 7.4.1 Stability and Convergence 183 7.5 A Discussion About the Necessary Number of Nodes in the Schemes 184 7.5.1 Explicit Finite Difference Method 184 7.5.2 Implicit Finite Difference Method 185 7.5.3 Crank–Nicolson Finite Difference Method 185 7.6 Solution of a Tridiagonal System 186 7.6.1 Inverting the Tridiagonal Matrix 186 7.6.2 Algorithm for Solving a Tridiagonal System 187 7.7 Heston PDE 188 7.7.1 Boundary Conditions 189 7.7.2 Derivative Approximation for Nonuniform Grid 190 7.8 Methods for Free Boundary Problems 191 7.8.1 American Option Valuations 192 7.8.2 Free Boundary Problem 192 7.8.3 Linear Complementarity Problem (LCP) 193 7.8.4 The Obstacle Problem 196 7.9 Methods for Pricing American Options 199 7.10 Problems 201 8 Approximating Stochastic Processes 203 8.1 Introduction 203 8.2 Plain Vanilla Monte Carlo Method 203 8.3 Approximation of Integrals Using the Monte Carlo Method 205 8.4 Variance Reduction 205 8.4.1 Antithetic Variates 205 8.4.2 Control Variates 206 8.5 American Option Pricing with Monte Carlo Simulation 208 8.5.1 Introduction 209 8.5.2 Martingale Optimization 210 8.5.3 Least Squares Monte Carlo (LSM) 210 8.6 Nonstandard Monte Carlo Methods 216 8.6.1 Sequential Monte Carlo (SMC) Method 216 8.6.2 Markov Chain Monte Carlo (MCMC) Method 217 8.7 Generating One-Dimensional Random Variables by Inverting the cdf 218 8.8 Generating One-Dimensional Normal Random Variables 220 8.8.1 The Box–Muller Method 221 8.8.2 The Polar Rejection Method 222 8.9 Generating Random Variables: Rejection Sampling Method 224 8.9.1 Marsaglia’s Ziggurat Method 226 8.10 Generating Random Variables: Importance Sampling 236 8.10.1 Sampling Importance Resampling 240 8.10.2 Adaptive Importance Sampling 241 8.11 Problems 242 9 Stochastic Differential Equations 245 9.1 Introduction 245 9.2 The Construction of the Stochastic Integral 246 9.2.1 Itô Integral Construction 249 9.2.2 An Illustrative Example 251 9.3 Properties of the Stochastic Integral 253 9.4 Itô Lemma 254 9.5 Stochastic Differential Equations (SDEs) 257 9.5.1 Solution Methods for SDEs 259 9.6 Examples of Stochastic Differential Equations 260 9.6.1 An Analysis of Cox–Ingersoll–Ross (CIR)-Type Models 263 9.6.2 Moments Calculation for the CIR Model 265 9.6.3 Interpretation of the Formulas for Moments 267 9.6.4 Parameter Estimation for the CIR Model 267 9.7 Linear Systems of SDEs 268 9.8 Some Relationship Between SDEs and Partial Differential Equations (PDEs) 271 9.9 Euler Method for Approximating SDEs 273 9.10 Random Vectors: Moments and Distributions 277 9.10.1 The Dirichlet Distribution 279 9.10.2 Multivariate Normal Distribution 280 9.11 Generating Multivariate (Gaussian) Distributions with Prescribed Covariance Structure 281 9.11.1 Generating Gaussian Vectors 281 9.12 Problems 283 Part III Advanced Models for Underlying Assets 287 10 Stochastic Volatility Models 289 10.1 Introduction 289 10.2 Stochastic Volatility 289 10.3 Types of Continuous Time SV Models 290 10.3.1 Constant Elasticity of Variance (CEV) Models 291 10.3.2 Hull–White Model 292 10.3.3 The Stochastic Alpha Beta Rho (SABR) Model 293 10.3.4 Scott Model 294 10.3.5 Stein and Stein Model 295 10.3.6 Heston Model 295 10.4 Derivation of Formulae Used: Mean-Reverting Processes 296 10.4.1 Moment Analysis for CIR Type Processes 299 10.5 Problems 301 11 Jump Diffusion Models 303 11.1 Introduction 303 11.2 The Poisson Process (Jumps) 303 11.3 The Compound Poisson Process 304 11.4 The Black–Scholes Models with Jumps 305 11.5 Solutions to Partial-Integral Differential Systems 310 11.5.1 Suitability of the Stochastic Model Postulated 311 11.5.2 Regime-Switching Jump Diffusion Model 312 11.5.3 The Option Pricing Problem 313 11.5.4 The General PIDE System 314 11.6 Problems 322 12 General Lévy Processes 325 12.1 Introduction and Definitions 325 12.2 Lévy Processes 325 12.3 Examples of Lévy Processes 329 12.3.1 The Gamma Process 329 12.3.2 Inverse Gaussian Process 330 12.3.3 Exponential Lévy Models 330 12.4 Subordination of Lévy Processes 331 12.5 Rescaled Range Analysis (Hurst Analysis) and Detrended Fluctuation Analysis (DFA) 332 12.5.1 Rescaled Range Analysis (Hurst Analysis) 332 12.5.2 Detrended Fluctuation Analysis 334 12.5.3 Stationarity and Unit Root Test 335 12.6 Problems 336 13 Generalized Lévy Processes, Long Range Correlations, and Memory Effects 337 13.1 Introduction 337 13.1.1 Stable Distributions 337 13.2 The Lévy Flight Models 339 13.2.1 Background 339 13.2.2 Kurtosis 343 13.2.3 Self-Similarity 345 13.2.4 The H - 𝛼 Relationship for the Truncated Lévy Flight 346 13.3 Sum of Lévy Stochastic Variables with Different Parameters 347 13.3.1 Sum of Exponential Random Variables with Different Parameters 348 13.3.2 Sum of Lévy Random Variables with Different Parameters 351 13.4 Examples and Applications 352 13.4.1 Truncated Lévy Models Applied to Financial Indices 352 13.4.2 Detrended Fluctuation Analysis (DFA) and Rescaled Range Analysis Applied to Financial Indices 357 13.5 Problems 362 14 Approximating General Derivative Prices 365 14.1 Introduction 365 14.2 Statement of the Problem 368 14.3 A General Parabolic Integro-Differential Problem 370 14.3.1 Schaefer’s Fixed Point Theorem 371 14.4 Solutions in Bounded Domains 372 14.5 Construction of the Solution in the Whole Domain 385 14.6 Problems 386 15 Solutions to Complex Models Arising in the Pricing of Financial Options 389 15.1 Introduction 389 15.2 Option Pricing with Transaction Costs and Stochastic Volatility 389 15.3 Option Price Valuation in the Geometric Brownian Motion Case with Transaction Costs 390 15.4 Stochastic Volatility Model with Transaction Costs 392 15.5 The PDE Derivation When the Volatility is a Traded Asset 393 15.5.1 The Nonlinear PDE 395 15.5.2 Derivation of the Option Value PDEs in Arbitrage Free and Complete Markets 397 15.6 Problems 400 16 Factor and Copulas Models 403 16.1 Introduction 403 16.2 Factor Models 403 16.2.1 Cross-Sectional Regression 404 16.2.2 Expected Return 406 16.2.3 Macroeconomic Factor Models 407 16.2.4 Fundamental Factor Models 408 16.2.5 Statistical Factor Models 408 16.3 Copula Models 409 16.3.1 Families of Copulas 411 16.4 Problems 412 Part IV Fixed Income Securities and Derivatives 413 17 Models for the Bond Market 415 17.1 Introduction and Notations 415 17.2 Notations 415 17.3 Caps and Swaps 417 17.4 Valuation of Basic Instruments: Zero Coupon and Vanilla Options on Zero Coupon 419 17.4.1 Black Model 419 17.4.2 Short Rate Models 420 17.5 Term Structure Consistent Models 422 17.6 Inverting the Yield Curve 426 17.6.1 Affine Term Structure 427 17.7 Problems 428 18 Exchange Traded Funds (ETFs), Credit Default Swap (CDS), and Securitization 431 18.1 Introduction 431 18.2 Exchange Traded Funds (ETFs) 431 18.2.1 Index ETFs 432 18.2.2 Stock ETFs 433 18.2.3 Bond ETFs 433 18.2.4 Commodity ETFs 433 18.2.5 Currency ETFs 434 18.2.6 Inverse ETFs 435 18.2.7 Leverage ETFs 435 18.3 Credit Default Swap (CDS) 436 18.3.1 Example of Credit Default Swap 437 18.3.2 Valuation 437 18.3.3 Recovery Rate Estimates 439 18.3.4 Binary Credit Default Swaps 439 18.3.5 Basket Credit Default Swaps 439 18.4 Mortgage Backed Securities (MBS) 440 18.5 Collateralized Debt Obligation (CDO) 441 18.5.1 Collateralized Mortgage Obligations (CMO) 441 18.5.2 Collateralized Loan Obligations (CLO) 442 18.5.3 Collateralized Bond Obligations (CBO) 442 18.6 Problems 443 Bibliography 445 Index 459

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Book SynopsisA hands-on guide to applied equity analysis and portfolio management From asset allocation to modeling the intrinsic value of a stock, Applied Equity Analysis and Portfolio Management + Online Video Course offers readers a solid foundation in the practice of fundamental analysis using the same tools and techniques as professional investors. Filled with real-world illustrations and hands-on applications, Professor Weigand''s learning system takes a rigorous, empirical approach to topics such as analyzing the macro-finance environment, sector rotation, financial analysis and valuation, assessing a company''s competitive position, and reporting the performance of a stock portfolio. Unlike typical books on this subjectwhich feature chapters to read and exercises to completethis resource allows readers to actively participate in the learning experience by completing writing exercises and manipulating interactive spreadsheets that illustrate the principles beinTable of ContentsPreface ix Acknowledgments xv Chapter 1 Perspectives on Active and Passive Money Management 1 Terminology: Investors, Investment Vehicles, Risk, and Return 1 The Top-Down Fundamental Analysis Process 3 The Record of Professional Money Managers 8 Market Efficiency, Behavioral Finance, and Adaptive Expectations 10 Additional Perspectives on Investing 18 Professional Investment Policy Statements 26 Summary 30 Questions 30 Answers to Selected Questions 32 References 33 Notes 34 Chapter 2 Analyzing the Macro-Finance Environment 35 Economic Analysis: The First Step of a Top-Down Fundamental Process 35 Data Considerations: Nominal and Real-Time Series 41 National Income, Corporate Profits, and Job Creation 41 Leading Economic Indicators 43 Coincident Economic Indicators 54 Lagging Economic Indicators 58 Supplemental Economic Indicators 64 Summary 67 Questions 67 References 69 Notes 69 Chapter 3 Valuation, Expected Returns, and the Dividend Discount Model 71 Finance Principle 1: Valuation 71 Finance Principle 2: Value and Expected Returns 77 Summary 88 Questions and Problems 88 Answers to Selected Questions and Problems 93 Reference 96 Note 96 Chapter 4 Historical Performance Analysis 97 Getting Started 98 Historical Stock Returns 100 Growth in Revenues, Profits, and Dividends 101 Gross, Operating, and Net Profit Margins 108 Relative Valuation 111 Liquidity and Debt 115 Profitability: ROA and ROE 118 NOPAT, Total Invested Capital, Free Cash Flow, and ROIC 122 Value Creation: Cost of Capital, EVA, MVA, and Intrinsic Value 127 Using Diffusion Indexes to Summarize Performance Analysis 134 Summary: Historical Performance Analysis 136 Appendix: United Technologies’ Financial Statement Highlights, 2009–2012 136 Questions 138 Answers to Selected Questions 139 References 142 Notes 142 Chapter 5 Financial Statement Forecasting, Financial Analysis, and Valuation 143 The Income Statement Forecast Worksheet 144 The Percent-of-Sales Forecasting Method 144 Forecasting MCD’s Income Statement 145 Forecasting MCD’s Balance Sheet 153 Pro Forma Analysis: MCD 159 Intrinsic Value Modeling 164 Financial Fitness and Probability of Bankruptcy Scorecards 170 Summary 171 Case Study 5.1: Two Perspectives on Valuation Analysis: The Curious Case of Amazon, Inc. 172 Questions 175 References 208 Notes 208 Chapter 6 Analyzing Company Strategy and Identifying Catalysts 209 Sources of Information 212 Unique Capabilities Lead to Sustainable Competitive Advantage 212 Getting Started: Analyzing Strategy and Competitive Advantage 216 Porter’s Five Forces Model 223 SWOT Analysis 229 Catalysts 232 Summary 232 Questions 233 Answers to Selected Questions 233 References 234 Chapter 7 Portfolio Risk and Performance Attribution 235 Foundations: Risk and Expected Return 236 Statistical Representations of Macroeconomic and Firm-Specific Risk 240 Extending the Mean-Variance Framework: Beta 249 Performance Attribution: Sector Weights, Dividend Yield, Beta, and Style 255 Multifactor Models 262 Summary 266 Questions and Problems 267 Answers to Selected Questions and Problems 271 References 279 Notes 279 Appendix The Time Value of Money and the Basics of Valuation 281 Basic Terminology 282 The Basic Future Value Tool 282 The Basic Present Value Tool 285 Perpetuities 292 Calculating Average Annual Compound Rates of Return 293 Integrated Problems Featuring Multiple TVM Tools 293 Solving for the Number of Periods 294 More on the EAR-to-APR Conversion 295 Arithmetic versus Geometric Averages 296 Questions and Problems 298 Answers to Selected Questions and Problems 302 About the Online Video Course 309 About the Author 311 Index 313

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Book SynopsisManufacturing and Managing Customer-Driven Derivatives Manufacturing and Managing Customer-Driven Derivatives sheds light on customer-driven derivative products and their manufacturing process, which can prove a complicated topic for even experienced financial practitioners.Table of ContentsPreface xiii Acknowledgments xv About the Author xvii PART I Overview of Customer-driven Derivative Business 1 CHAPTER 1 Evolving Derivative Business Environment 3 Customer-driven Derivative Product Categories 3 Lessons in Derivatives and Crises 4 Regulations Affecting Derivative Business 7 Structured Derivative Products Geographic Features 11 CHAPTER 2 Pillars in Structured Derivative Business 21 Derivative Business Value Chain 21 Model and Product Development Process 22 Product Issuance and Wrappers 31 Product Distribution 35 CHAPTER 3 Financial Risk Management, Basel III and Beyond 39 Risk Measures and Financial Rule Books 39 Basel III Technical Requirements 41 Internal Model Method (IMM) 48 Beyond Basel III 55 PART II Equity Derivatives 59 CHAPTER 4 Equity Derivatives Market Features 61 Equity Index Underlyings 61 Discrete Dividends 61 Option Settlement Delay 68 Quanto Effect 70 Future Versus Forward 72 Implied Volatility Surface 74 CHAPTER 5 Black–Scholes Paradigm 87 Basic Modelling Framework 87 Asian Options 93 Basket Options 100 Dividend Futures and Options 103 American Options 106 Barrier Options 110 Lookback and Hindsight Options 113 Volatility Smile/Skew Dynamics Impact on Hedging 117 CHAPTER 6 Local Volatility Framework 123 Local Volatility Stripper 123 Local Volatility PDE Solver 127 Local Volatility Monte Carlo 132 Local Volatility to Implied Volatility 138 Practical Issues With Local Volatility 142 CHAPTER 7 Stochastic Local Volatility Framework 145 Stochastic Volatility Models 145 SLV Model Formulation 147 SLV Numerical Implementation 150 SLV Numerical Results 154 SLV in Practice 161 CHAPTER 8 Equity-Linked Structured Products 163 General Payoff Category 163 Features of Important Structured Product Categories 168 Barrier Reverse Convertibles 183 Constant Proportion Portfolio Insurance (CPPI) 187 Risks During Retail Issuance Period 193 CHAPTER 9 Basket Option Analysis 197 Basket Option Risks 197 Copula Pricing Models 198 Historic Basket Volatility Surfaces 213 Implied Basket Volatility Surfaces 217 Copula Applications 224 PART III Interest Rate Derivatives 227 CHAPTER 10 Multi-Curve Environment and Yield Curve Stripping 229 Multi-Curve Environment 229 Yield Curve Stripping 237 Collateral Impacts 248 Multi-Curve Multi-Facet Reality 252 CHAPTER 11 Vanilla Interest Rate Options 255 Martingale Pricing Principle 255 Cap/Floor 258 European Swaption and SABR 274 Risk Sensitivities 286 CHAPTER 12 Practical Interest Rate Derivative Models 293 Key Model Categories 293 Linear Gauss–Markov Model 295 Libor Market Model 303 Extended Cheyette Model 312 Local Volatility Model 318 CHAPTER 13 CMS Replication and CMS Spread Options 343 CMS Convexity 343 CMS Replication 344 CMS Calibration 350 CMS Spread Option Pricing Framework 356 Copula Pricing with Full Market Marginal Distributions 362 CHAPTER 14 Interest Rate Derivative Products 375 Product Design and Product Risks 375 Bermudan Swaption 381 Callable Products 387 Other Important Products 392 PART IV Real-Life Options and Derivatives 399 CHAPTER 15 Long-dated FX Volatility and Hybrid Risks 401 FX Volatility Surface 401 Extrapolating FX Volatility Term Structure to Long End 403 Extrapolating FX Volatility Smile to Long End 407 Hybrid Optionality 410 PRDC Hybrid Risks 413 CHAPTER 16 Portfolio CVA: Efficient Numerical Techniques 419 CVA Valuation Implementation Framework 420 Numerical Techniques in Portfolio CVA Valuation 420 Grid Monte Carlo for CVA 422 GMC Implementation Example 425 GMC in Practice 432 CHAPTER 17 Contingent Convertibles (CoCo) 435 CoCo Features 435 CoCo Categories 436 CoCo Risk Factors 438 Indirect Modelling Approaches 439 Direct Modelling Approaches 442 CHAPTER 18 Variable Annuity Products 451 Key VA Product Types 453 Major Risk Factors in VA Products 456 Hybrid Pricing Models for VA Products 458 Practicalities of Handling Long-dated VA Products 466 Importance of Understanding VA Risks 469 CHAPTER 19 Interest Rate Optionality in Fixed-Rate Mortgage 473 Prepayment Optionality 473 Prepayment Risk Characteristics 479 Early Redemption Charge 486 Applying Option-Based Prepayment Technique 488 CHAPTER 20 Real Estate Derivatives 491 Equity Release Scheme and Related Derivatives 491 Mortality in Derivatives Pricing 492 Reversion Derivatives Products 497 Real Estate Portfolio Derivatives 501 Property-Linked Roll-Up Mortgage 507 HPI Retail Products 512 APPENDIX A: PRODUCT OF TWO CALLS 515 Decomposition 515 Three Key Integrals 516 Analytical Formula 518 BIBLIOGRAPHY 521 INDEX 531

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Book Synopsis

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Book SynopsisWhy did the financial crisis happen? Why did no one see it coming? And how did our banks lose so much of our money? What's being done to sort out the banking industry? And will it work? These are the questions that industry experts Adrian Docherty and Franck Viort cover in Better Banking.Trade Review...an easily digestible insight into the complex, technical world of banking regulation. (economia, February 2014)Table of ContentsAcknowledgements xi 1 Introduction 1 1.1 Overview and Objectives 1 1.2 Quick Start Guide to Banking Concepts and Regulation 4 2 The Global Financial Crisis 7 2.1 From Deregulation to dotcom Crash 7 2.2 The Seeds of a Crisis 9 2.3 “Why Didn’t Anyone See This Coming?” 14 2.4 The Beginnings of a Crisis 17 2.5 The Crisis Intensifies 20 2.6 Meltdown: The Lehman Bankruptcy 21 2.7 Massive Intervention Internationally 23 2.8 Sovereign Crises 29 2.9 Aftershocks and Skeletons in the Cupboard 32 2.10 Who is to Blame? 34 3 Methodologies and Foundations 37 3.1 How do Banks Make or Lose Money? 37 3.2 What’s a Bank Worth? Key Issues in Accounting for Banks 41 3.3 What is Risk? 47 3.4 What is an RWA? 55 3.5 What is Capital? 61 3.6 What are Liquidity and Funding? 68 3.7 What is a Derivative? 84 3.8 Mark-to-Market and Procyclicality 90 3.9 Role of Regulation, Supervision and Support 96 3.10 Ratings Agencies and Credit Ratings 101 3.11 Analysts, Investors and Financial Communication 109 4 Regulation of the Banking Industry 113 4.1 The Relevance of Bank Regulation and Supervision 113 4.2 Regulation and Supervision of the Banking Industry Prior to “Basel I” 113 4.3 The Basel Capital Accord aka “Basel I” 117 4.4 Basel II 122 4.5 Basel III 141 4.6 Resolution Regimes 163 4.7 Other Current Regulatory Workstreams 171 5 Case Studies 175 5.1 RBS 176 5.2 Dexia 179 5.3 HBOS 184 5.4 HSBC 189 5.5 Bear Stearns 192 5.6 Merrill Lynch 196 5.7 AIG 200 5.8 JP Morgan 207 5.9 Barclays 213 5.10 UBS 217 5.11 Northern Rock 221 5.12 Bankia-BFA 223 5.13 Australia 228 5.14 Canada 233 5.15 Summary of “Lessons Learned” from the Case Studies 236 6 Objectives and Design Principles 239 6.1 Free Market versus State Capitalism 240 6.2 Are There Alternatives to Banks? 242 6.3 Benefi ts and Limitations of Finance 250 6.4 How Much Risk Can We Tolerate? 251 6.5 The Role of Regulation and Supervision 254 6.6 The Role of “the Market” 256 6.7 Conclusions: Proposed Objectives and Design Criteria 258 7 A Blueprint for “Basel IV” 259 7.1 Risk Management 261 7.2 The Guardian Angel 269 7.3 Human Capital 275 7.4 Governance 287 7.5 Capital 291 7.6 Liquidity and Funding 299 7.7 The “Pillar 2” Mindset 303 7.8 Glasnost: Market Discipline and “Pillar 3” 311 7.9 Industry Structure 313 8 Challenges 327 8.1 Industry Entrenchment 327 8.2 Human Behaviour 329 8.3 Performance Management for Good Risk Management 332 8.4 Timing 333 8.5 A Positive Challenge: Technological and Social Progress 333 9 What Next? A Call to Arms 335 Glossary & Jargon Lookup 339 Disclaimer Regarding Excerpts from S&P Materials 349 Index 351

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Book SynopsisThe basic skills for becoming a successful trader from a master of the game Written by Fausto Pugliese (founder and CEO of Cyber Trading University) this must-have resource offers a hands-on guide to learning the ins and outs of active trading. How to Beat the Market Makers at Their Own Game gives professionals, as well as those relatively new to investing, a behind-the-scenes look at the inner workings of the marketplace and a comprehensive overview of basic trading techniques. The book explains how to apply the trading strategies of acclaimed trader Fausto Pugliese. Step by step the author covers the most common market maker setups, shows how to identify market maker traps, and most importantly, reveals how to follow the direction of the lead market maker in an individual stock. Throughout the book, Pugliese puts the spotlight on Level II quotes to help investors understand how market makers drive prices and manipulate the market. This handy resource is filleTable of ContentsAbout the Author ix Introduction 1 Chapter 1 The Direct Connection 5 Chapter 2 The Stock Markets 11 Chapter 3 Going to the Next Level 15 Chapter 4 It’s a Matter of Execution 19 Chapter 5 Picking Tradable Stocks, Part I 27 Chapter 6 Picking Tradable Stocks, Part II 37 Chapter 7 Time and Sales 49 Chapter 8 Ignorance Is Bliss 53 Chapter 9 Finding the Ax 59 Chapter 10 Charting a Course 65 Chapter 11 Watching the Trends 71 Chapter 12 Making a Game Plan 81 Chapter 13 Your Trading Day 85 Chapter 14 Trading Rules of the Road 93 Chapter 15 How to Be a Successful Trader 103 Chapter 16 The Best Trading Tools 121 Afterword 131 Index 133

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Book SynopsisAn up-close look at the fixed income market and what lies ahead Interweaving compelling, and often amusing, anecdotes from author Simon Lack''s distinguished thirty-year career as a professional investor with hard economic data, this engaging book skillfully reveals why Bonds Are Not Forever. Along the way, it provides investors with a coherent framework for understanding the future of the fixed income markets and, more importantly, answering the question, Where should I invest tomorrow? Bonds Are Not Forever chronicles the steady decline in interest rates from their peak in the 1980s and the concurrent drop in inflation during that period. Lack explains how those two factors spurred a dramatic growth in borrowing among both governments and individuals. Along the way, Lack describes how a financial industry meant to provide capital needed to drive productivity and economic growth became disconnected from Main Street and explores the grave economic, sociaTable of ContentsPreface xi Acknowledgments xiii Chapter 1 From High School to Wall Street—The Bull Market Begins 1 Inflation Memories As Bad as It Gets 4 Trading in Gilts 5 The Old Class Structure 8 A Nineteenth-Century Market 11 Finance Starts to Grow 12 Is Finance Good? 16 Investing after the Bubble 20 Chapter 2 A Brief History of Debt 23 Interest Rates in Ancient Times 23 Medieval Credit 26 The Beginnings of Modern-Day Finance 28 Borrowing Reaches the Mass Market 31 Student Debt 39 Big Borrowers in History 43 What We Owe Now 45 Chapter 3 Derivatives Growth 51 Welcome to New York 52 Early Derivatives Growth 56 Swaps Take Off 61 Size Isn’t Everything 65 Derivatives Reach Omaha 67 Norwegian Wood 69 Chapter 4 Bond Market Inefficiencies for Retail 73 A Simple Market Model Stocks Are Fairer than Bonds 76 Why Change Is Slow 79 Structured Notes 81 The Internet Threatens the Swaps Oligopoly 84 Municipal Bonds 87 Chapter 5 Trading Derivatives 93 Before Banks Were Exciting Computers and Swaps 96 Should Banks Innovate? 97 Growth in Innovation 99 Volcker’s Problem 102 Bring Me Clients with a Problem 103 Derivatives Missteps 105 Trading by the Book 107 An Options Book Blows Up 110 Chapter 6 Politics 115 Government-Controlled Investing Why Should We Worry? 116 Who Says There Is a Problem? 120 Look to the Future 128 Looking Ahead 129 Monetization—A Thought Experiment 133 Imperial Overstretch 136 More Debt Means More Banking 141 Chapter 7 Managing Risk 1990–1998 143 Risk-Oriented Market Making Traders and Risk 145 Why Traders Are Bad at Budgeting 147 The Growth of Global Trading 149 Managing Obscure Basic Risks 152 What’s the Social Purpose? 155 Wall Street Fuels the Debt Growth 156 Chapter 8 Inflation 165 A Brief History Germany’s Defining Economic Experience 167 Inflation Today 170 The Fed’s Huge Mistake 174 You Can’t Spend Quality Improvements 177 What Critics Say 181 Measuring What They Can, Not What Counts 183 Chapter 9 Bonds Are Not Forever 189 Putting It All Together Wall Street Built It 192 Make Your Own Bond 195 High Dividend, Low Beta 198 Hedged Dividend Capture 201 Master Limited Partnerships (MLPs) 202 Deep Value Equities 205 Debt Is Bad 205 Bonds Are Not Forever 207 References 209 Glossary 215 About the Author 219 Index 221

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Book SynopsisMaster Traders provides access to top traders and their unique approaches to analyzing the markets and managing risk. The contributors, including leading hedge fund managers, technical analysts, and top traders, discuss the new and provocative methods they use to tame today's highly volatile and unpredictable markets.Table of ContentsForeword by Steve Shobin ix Preface xi Acknowledgments xvii INTRODUCTION: Trader Evolution and the Keys to Success 1 Greg Collins PART I Technical Analysis CHAPTER 1 Playing with Fear and Arrogance 13 Jeff deGraaf CHAPTER 2 Sector Analysis: Tools of the Trade 27 Frank Barbera CHAPTER 3 Evaluating Probabilities to Improve Profitability 60 Kevin Tuttle CHAPTER 4 The Secret Science of Price and Volume 87 Tim Ord PART II Fundamental Analysis CHAPTER 5 The Keys to Biotech Investing 109 David Miller CHAPTER 6 Investigative Investing: Themes and Methods for Uncovering Value 122 Kai-Teh Tao PART III Sentiment CHAPTER 7 The Secret Messages of Equity and Options Markets 139 Fari Hamzei CHAPTER 8 Trading Seasonality 158 Phil Erlanger PART IV Derivatives CHAPTER 9 Volatility and Its Importance to Option Investors 183 Alex Jacobson CHAPTER 10 A New Options Game: The Market Taker 205 Jon “Doctor J” Najarian PART V Trading Size CHAPTER 11 Making Sense of Market Moves: Using Technical and Fundamental Analysis Together223 Jeffrey Spotts CHAPTER 12 New World Trading of Old World Markets: European Derivatives 242 Timothy Corliss CHAPTER 13 Options Applications to Pairs Trading 263 Dennis Leontyev EPILOGUE: Beyond the Horizon 284 Fari Hamzei About the Author 292 About the Contributors 293 Index 296

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Book SynopsisAn indispensable resource for every financial service professionals developing an IPS The Investment Policy Statement (IPS) is one of the most critical documents fiduciaries must draft. For years, ERISA and other industry regulations have governed the guidelines all fiduciaries must comply with when drafting one.Table of ContentsForeword by Don Trone 11 Section One: Why Plan Sponsors and All Fiduciaries Need a Formal Process for Writing Their Investment Policy Statement Chapter 1 Erisa and the Challenge of Fiduciary Responsibility 17 Writing an Investment Policy 17 What is a Fiduciary? 18 Fiduciary Liability 19 Chapter 2 Your Fiduciary Responsibilities and Liabilities Under Erisa 21 Five Fiduciary Responsibilities 21 Fiduciary’s Personal Liability 22 A Fiduciary’s Primary Role is to Manage the Process 23 Chapter 3 What is an Investment Policy Statement and What are the Benefits? 25 Risk Management 25 Monitor Investments 26 Summary 27 Chapter 4 Utilize the “Safe Harbor” Provisions Provided by Erisa 29 Prudent Experts 29 Five Recognized “Safe Harbor” Rules 29 Chapter 5 Complying with Erisa Section 404(c) 31 Section Two: How to Get Started and Steps to Formalize the Process Chapter 6 Assembling the Documentation 35 Chapter 7 Steps to Formalize The Process 37 Step 1: Decide on Plan Goals, Objectives, and Strategies 37 Step 2: Decide on Strategy for Managing Risk 37 Step 3: Determine the Risk Tolerance of the PSTEPlan 38 Step 4: Set Forth Guidelines for Asset Classes 39 Step 5: Implement an Asset-Allocation Policy 39 Step 6: Mutual Funds Recommendations 39 Step 7: Delegate Investment Management Responsibility 40 Step 8: Investment Monitoring and Reporting 40 Section Three: The Template IPS Chapter 8 Sample IPS Templates 43 Two Distinct IPS Samples 43 Organization of Templates 43 Chapter 9 Sample IPS Template #1: For Participant-Directed 401(k) That Intends to Comply with ERISA Section 404(c) 45 Step 1 Executive Summary and Background 45 Step 2 Purpose of the Investment Policy Statement 46 Step 3 Duties and Responsibilities 48 Step 4 Asset Class Guidelines 50 Step 5 Investment Manager Selection 52 Step 6 Monitoring the Investment Managers 53 Step 7 Controlling and Accounting for Investment Expenses 55 Step 8 Investment Policy Review and Monitoring 56 Chapter 10 Sample IPS Template #2: For High-Net-Worth Individual Setting Up a Family Trust 57 Executive Summary 58 Part I—Purpose 59 Part II—Investment Management Objectives 59 Part III— Roles and Responsibilities 60 Part IV— Investment Manager Selection 61 Part V— Investment Monitoring and Review 63 Part VI— Manager Termination 65 Part VII— Additional Provisions (optional) 65 Conclusion Message to Plan Sponsors 67 Glossary 69 Appendix: The Firm Profile 77 About the Author 79

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Book SynopsisA detailed guide to financial market performance during financial crises With the financial markets seemingly careening from one crisis to another, it''s vital for today's investors and traders to have an historical perspective on market performance during times of great turmoil. In this book, Tim Knight provides an exhaustive analysis of financial market behavior prior, during, and following tumultuous events since 1600. Making copious use of charts and basic technical analysis, Knight demonstrates how external shocks tend to create extreme reactions in the financial markets and how these predictable reactions provide opportunities for investors and traders to profit. Knight traverses five centuries of financial market history, from Tulipmania in the 1600s to the contemporary sovereign debt crisis. He looks at each event from the prism of the financial markets, examining the market climate prior to the event, during the event, and following the event. DrTable of ContentsPreface ix Chapter 1 Tulip Madness 1 Chapter 2 The Mississippi Scheme 9 Chapter 3 The South Sea Bubble 29 Chapter 4 American Revolution in the Colonies 37 Chapter 5 The Panic of 1837 49 Chapter 6 California Gold 63 Chapter 7 The American Civil War 75 Chapter 8 The Panic of 1893 97 Chapter 9 The Rich Man’s Panic of 1907 113 Chapter 10 Billion-Dollar Bread—The Weimar Hyperinflation 131 Chapter 11 The Roaring Twenties 145 Chapter 12 The Great Depression 157 Chapter 13 Postwar Prosperity 189 Chapter 14 Energy, Politics, and War 199 Chapter 15 Precious Metals and the Destruction of a Billionaire 219 Chapter 16 Latin American Debt Crisis 245 Chapter 17 The Reagan Revolution and Crash 255 Chapter 18 The Rising and Setting Sun of Japan 269 Chapter 19 The Savings and Loan Debacle 295 Chapter 20 Fall of the Soviet Union 309 Chapter 21 The Asian Contagion 321 Chapter 22 Russian Crisis of 1998 339 Chapter 23 Captured by the Net 353 Chapter 24 The Great Recession 415 Chapter 25 History in the Making 443 About the Author 449 Index 451

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Book SynopsisThe Upside of Aging: How Long Life Is Changing the World of Health, Work, Innovation, Policy and Purpose explores a titanic shift that will alter every aspect of human existence, from the jobs we hold to the products we buy to the medical care we receive - an aging revolution underway across America and the world.Table of ContentsForeword xiMichael Milken Preface: Aging and Change—A New Day is Coming xixPaul H. Irving Acknowledgments xxiii Introduction: The Rise of a Mature World: By the Numbers xxvPaul H. Irving and Anusuya Chatterjee Part One: Opportunities and Innovations 1 Chapter 1: Our Aging Population—It May Just Save Us All 3Laura L. Carstensen Longevity is Here to Stay 5 The Future of Aging Societies 7 Senior Moments 8 The Power of the Aging Brain 11 Motivation, the Aging Brain’s Secret Weapon 14 Tapping a Rich Resource 16 Notes 16 Chapter 2: Personalized Aging: One Size Doesn’t Fit All 19Pinchas Cohen Personalizing Medicine 23 Genomics: Sci-Fi No Longer 24 Nutrition and Genes 25 To Diet or Not? 26 A Field in Its Infancy 27 Let’s Prove It 28 To Run or Walk? 29 Supplemental Jury Out 30 Looking Good, Feeling Good 30 Conclusion 31 Notes 32 Chapter 3: The Bold New World of Healthy Aging 35Freda Lewis-Hall The Mother of All Confluences 36 A Data and Diagnosis Revolution 37 Our New Guardian Angels 39 A Golden Age of Medicines 42 The New World of Vaccines 43 Never Too Old—For Surgery 44 Is That My Liver on the Printer? 45 The Wild Card: Tackling Alzheimer’s 46 We Have Met the Solution, and It is Us 47 Eight Days a Week—Only the Start 48 Notes 48 Chapter 4: Disruptive Demography: The New Business of Old Age 51Joseph F. Coughlin Demographic Transition and the New Face of Old Age 52 Mapping New Markets in an Aging Society 53 Supporting People as They Age 56 Enabling Independence 57 New Lifestyles of the Mature Adult 58 The Boomers’ Social Impact 61 Conclusion 61 Notes 62 Chapter 5: A Longevity Market Emerges 63Ken Dychtwald The Age Wave Marketplace 64 What, Me—Old? 66 I Am Not My Age 68 Targeting Self-Perception 68 Show Them Something New 69 The New Look of Longevity 71 Aging and Experiences: Doing, Not Owning 71 Comfort Matters 73 The Psychology of Security and Safety 75 Accommodating the Aging Body 76 The Age Wave Marketplace: What’s Next? 77 Fitting the New Form 80 Notes 80 Chapter 6: The New Global Economy, through an Aging Lens 83Michael W. Hodin Peril or Promise? 84 Global Strides Toward Aging’s Upside 86 It’s Just Good Business 87 Creating Age-Friendly Workplaces 92 Embracing the Window of Opportunity 94 Notes 95 Part Two: A Changing Landscape 97 Chapter 7: Encore: Mapping the Route to Second Acts 99Marc Freedman Rethinking the Patio Life 100 A New Stage of Life 101 A Gap Year for Grown-Ups 104 Highest Education 105 Paying for the Encore 106 The Freedom to Work 108 Capitalizing on the Upside 110 Notes 111 Chapter 8: The Mature Workforce: Profiting from All Abilities 113Jody Heymann A Shaky Foundation 114 Revisiting Perceptions and Biases 116 Deflating Age Discrimination 117 Laying the Foundation 119 Reaping the Economic Gains 121 A Zero-Sum Game or an Intergenerational Win? 122 A Rejuvenated Workforce 124 The Space-Program Effect 125 Notes 126 Chapter 9: Boomer Philanthropists: A Golden Age of Civil Society 131Susan Raymond Philanthropy as Leadership 132 Older and Kinder 133 A Golden Age of Civil Society 135 The Rising Role of Women 137 Philanthropy and Ethnicity 139 Reinforcing the Golden Age 140 Conclusion 142 Notes 143 Chapter 10: A City for All Ages 145Henry Cisneros Demography and Urban Destiny 146 Aging in America’s Cities 147 Aging and the Living Environment 148 Fostering Independent Urban Lives 149 Building the City for All Ages 150 A Strategy for Human Service Needs 154 Conclusion 161 Notes 162 Chapter 11: Aging and Learning: The Future University 163Steven Knapp Universities in the New World of Aging 165 The Study of Aging 166 Back to School 168 Learning from Older Teachers and Scholars 172 Conclusion 175 Notes 175 Part Three: Perspectives and Possibilities 177 Chapter 12: Aging in a Majority–Minority Nation 179Fernando M. Torres-Gil The Great Challenge 181 The Political Tempest 184 A Journey of Ethnicity and Aging 185 Boomers and Latinos—Demographic Destiny 186 A Symbiotic Convergence 188 The Common Ground 190 Shifting Political Winds and Alliances 192 Notes 192 Chapter 13: Healthy Ageing and Well-Being in Britain and the World 195Baroness Sally Greengross Ageing in Britain 197 Increased Pressure on a Fragile NHS 198 Conquering Alzheimer’s Disease 199 Advancing Age-Friendly Environments 201 Eliminating Ageism 203 Conclusion 205 Notes 205 Chapter 14: Financial Security: Longevity Changes Everything 209Dan Houston The New Retirement 211 Off Track 211 A Foundation for Success 213 The Way Forward 214 The Final Challenge 222 Notes 222 Chapter 15: New Transitions: A Changing Journey of Life and Health 225Philip A. Pizzo The Life Continuum 227 Knowing When to Change 228 Timing a Transition 229 Health Opens Options 232 Contemplating Transformation 233 A New Kind of Sabbatical 234 Reaching for the Upside 236 Notes 236 Chapter 16: Life Reimagined: The Second Aging Revolution 237A. Barry Rand The Changes behind the Change 239 The First Aging Revolution 241 Redefining the “Golden Years” 242 Reimagining Life 244 What is Next? 247 Notes 248 About the Editor 251 About the Authors 253 Index 265

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Book SynopsisThe conventional portfolio is prone to frequent and potentially devastating losses because it is NOT balanced to different economic outcomes. In contrast, a truly balanced portfolio can help investors reduce risk and more reliably achieve their objectives. This simple fact would surprise most investors, from beginners to professionals. Investment consultant Alex Shahidi puts his 15 years of experience advising the most sophisticated investors in the world and managing multi-billion dollar portfolios to work in this important resource for investors. You will better understand why nearly every portfolio is poorly balanced and how to view the crucial asset allocation decision from a deeper, more thoughtful perspective. The concepts presented are simple, intuitive and easy to implement for every investor. Author Alex Shahidi will walk you through the logic behind the balanced portfolio framework and provide step-by-step instructions on how to build a truly balanced portfolio. No book haTable of ContentsForeword Bill Lee ix Acknowledgments xi About the Author xiii Introduction 1 Chapter 1 The Economic Machine: Why Being Balanced is So Important Today 5 Chapter 2 Your Portfolio is Not Well Balanced 19 Chapter 3 The Fundamental Drivers of Asset Class Returns 29 Chapter 4 Viewing Stocks through a Balanced Portfolio Lens 49 Chapter 5 The High Value of Low-Yielding Treasuries within the Balanced Portfolio Framework 69 Chapter 6 Why TIPS are Critical to Maintaining Balance (Despite Their Low Yield) 89 Chapter 7 Owning Commodities in a Balanced Portfolio 101 Chapter 8 Even More Balance: Introduction to Other Asset Classes 115 Chapter 9 How to Build a Balanced Portfolio: Conceptual Framework 127 Chapter 10 How to Build a Balanced Portfolio: The Step-by-Step Process 143 Chapter 11 The Balanced Portfolio: Historical Returns 155 Chapter 12 Implementation Strategies: Putting Theory into Practice 181 Chapter 13 Conclusion 195 About the Website 197 Index 199

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Book SynopsisDeliver increased value by embedding quality into internal audit activities Internal Audit Quality: Developing a Quality Assurance and Improvement Program is a comprehensive and authoritative guide to better practice internal auditing. Written by a global expert in audit quality, this guide is the first to provide complete coverage of the elements that comprise an effective internal audit quality assurance and improvement program. Readers will find practical solutions for monitoring and measuring internal audit performance drawn from The IIA''s International Standards for the Professional Practice of Internal Auditing, and complemented by advice and case studies from leading audit practitioners from five different continents. Major corporate and financial collapses over the past decade have challenged the value of internal audit. With an increased focus on internal audit''s role in good governance, management is increasingly demanding that internal audit providTable of ContentsPreface xiii Acknowledgments xix PART I INTERNAL AUDIT AND QUALITY CHAPTER 1 The Various Faces of Internal Audit 3 History 3 The Institute of Internal Auditors 4 Types of Internal Audit Functions 5 Internal Auditing in Different Sectors and Organizations 5 Internal Audit Standards 8 Conclusion 11 References 11 CHAPTER 2 Quality, Performance, and Value 13 Understanding Quality, Performance, and Value 13 Quality Management Systems: Deming, Juran, and TQM 14 Models for Measuring Performance 18 Conclusion 21 References 21 PART II DEVELOPING THE QUALITY ASSURANCE AND IMPROVEMENT PROGRAM CHAPTER 3 Developing a Quality Framework 25 The Link between Quality, Performance, and Value 25 Drivers of Quality 26 A Structured Approach to Quality 30 Developing Performance Measures for Internal Audit 32 Responsibility for Internal Audit Quality 37 Creating a Quality Assurance and Improvement Program 41 Reporting on Quality 43 Questions about the Quality Framework 44 Conclusion 45 References 45 CHAPTER 4 Internally Assessing Quality 47 Ongoing Internal Monitoring and Maturity Models 47 Processes for Embedding Quality 51 Periodic Internal Assessments: Health Checks 53 Client Satisfaction 56 Benchmarking the Internal Audit Function 57 Questions about Internal Assessments 59 Conclusion 60 References 60 CHAPTER 5 Externally Assessing Quality 61 What Is an External Assessment? 61 Why Have an External Assessment? 62 Types of Assessments 64 Questions about External Assessments 70 Conclusion 71 References 71 PART III INTERNAL AUDIT GOVERNANCE STRUCTURES CHAPTER 6 Internal Audit Strategy and Planning 75 Strategic Planning as a Key Input of the Internal Audit Function 75 Vision 78 Internal Audit’s Value Proposition 78 Planning to Deliver Value 85 Assessing Risks Associated with the Internal Audit Function 86 Resource Planning 87 Business Continuity Planning 89 Questions about the Internal Audit Function’s Strategy and Planning Processes 90 Conclusion 92 References 92 CHAPTER 7 Areas of Responsibility and Nature of Work 95 Types of Engagements 95 Assurance 97 Consulting 103 Nature of Work 106 Audit Support Activities 117 Questions about the Internal Audit Function’s Areas of Responsibility and Nature of Work 118 Conclusion 120 References 120 CHAPTER 8 Internal Audit Charter 123 Internal Audit Mandate and Purpose 123 Strategic Context 124 Structure and Position 124 Independence 128 Authority 131 Internal Audit Charter 133 Questions about the Quality of the Internal Audit Charter 135 Conclusion 137 References 137 PART IV INTERNAL AUDIT STAFFING CHAPTER 9 Internal Audit Staffing 141 Overview of the Staffing Element 142 Capability Planning for the Internal Audit Workforce 142 Flexible Work Practices 149 Recruitment and Retention 151 Service Delivery Models 155 Role of the Chief Audit Executive 163 Questions about the Quality of Internal Audit Staffing Practices 165 Conclusion 167 References 168 CHAPTER 10 Managing and Measuring Staff Performance 169 Professional Attributes 169 Performance Management Processes 172 Team Development 174 Individual Professional Development 177 Professional Membership and Involvement 180 Questions about the Quality of Internal Audit Staff Development Processes 180 Conclusion 183 References 184 PART V INTERNAL AUDIT PROFESSIONAL PRACTICES CHAPTER 11 Internal Audit Professional Practice 187 Elements of Internal Audit Professional Practice 187 Stages in the Internal Audit Process 190 Internal Audit Policies and Procedures 190 Questions about Internal Audit Policies and Procedures 199 Conclusion 200 References 201 CHAPTER 12 Annual Audit Planning 203 Value-Added Planning 203 Applying an Objectives-Based Approach to Audit Planning 204 Understanding the Organization’s Business 204 Applying a Risk-Based Approach to Audit Planning 205 Auditable Areas and the Audit Universe 211 Assurance Mapping 213 Resource Allocation 217 Annual Audit Plan Formats 219 Communication and Approval 220 Questions about Annual Audit Planning 221 Conclusion 223 References 223 CHAPTER 13 Planning the Engagement 225 Purpose of Engagement Planning 225 Client Engagement 227 Objectives, Criteria, and Scope 229 Environmental Scanning 234 Aligning Engagements to Key Risks 234 Methodology 237 Resourcing and Milestones 244 Assessing Risks to the Audit Engagement 245 Approval of the Engagement Plan 246 Questions about Planning the Engagement 247 Conclusion 248 References 248 CHAPTER 14 Performing the Engagement 249 Audit Evidence 249 Interviews 252 Analyzing Information Collected 255 Engagement Findings 257 Efficient Fieldwork 260 Management and Supervision 260 Working Papers 262 Questions about Performing the Engagement 264 Conclusion 265 References 266 CHAPTER 15 Communication and Influence 267 Understanding Stakeholder Needs 267 Communication versus Influence 271 Engagement Communications 276 Follow-Up 288 Communicating the Acceptance of Risk 290 Questions about Communication and Influence 290 Conclusion 293 References 293 CHAPTER 16 Knowledge Management and Marketing 295 Knowledge Management 295 Marketing 298 Questions about Knowledge Management and Marketing 303 Conclusion 304 References 304 CHAPTER 17 Quality and the Small Audit Shop 305 What Is a Small Audit Shop? 305 Delivering Value in a Small Audit Shop 305 Quality Challenges for Small Audit Shops Related to Governance Structures 307 Quality Challenges for Small Audit Shops Related to Staffing 309 Quality Challenges for Small Audit Shops Related to Professional Practices 311 Conclusion 315 References 315 Appendix A International Standards for the Professional Practice of Internal Auditing 317 Appendix B List of Quality Questions 323 Appendix C List of Key Performance Indicators 345 Glossary 351 About the Author 365 Index 367

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Book SynopsisDiscover how to remove behavioral bias from your investment decisions For many financial professionals and individual investors, behavioral bias is the largest single factor behind poor investment decisions. The same instincts that our brains employ to keep us alive all too often work against us in the world of finance and investments. Investing Psychology + Website explores several different types of behavioral bias, which pulls back the curtain on any illusions you have about yourself and your investing abilities. This practical investment guide explains that conventional financial wisdom is often nothing more than myth, and provides a detailed roadmap for overcoming behavioral bias. Offers an overview of how our brain perceives realities of the financial world at large and how human nature impacts even our most basic financial decisions Explores several different types of behavioral bias, which pulls back the curtain on any illusions youTable of ContentsPreface xiii CHAPTER 1 Sensory Finance 1 Beating the Bias Blind Spot 1 Illusory Pattern Recognition 4 Superstitious Pigeons—and Investors 6 The Super Bowl Effect: If It Looks Too Good to Be True, It Is 9 Your Financial Horoscope: Forecasting and the Barnum Effect 10 Uncertainty: The Unknown Unknowns 12 Illusion of Control 13 Stocks Aren’t Snakes 15 Herding 16 Availability 19 Assuming the Serial Position 21 Hot Hands 23 Financial Memory Syndrome 25 Attention! 27 The Problem with Linda 29 Representation 31 The Seven Key Takeaways 33 Notes 34 CHAPTER 2 Self-Image and Self-Worth 37 The Introspection Illusion 37 Blind Spot Bias, Revisited 39 Rose-Colored Investing 40 Past and Present Failures 41 Depressed but Wealthy 43 Disposed to Lose Money 44 Loss Aversion 45 Anchored 46 Two Strangers 48 Hindsight’s Not So Wonderful 50 Deferral to Authority 51 Emotion 52 Black Swans 54 Dirty Money, Mental Accounting 55 A Faint Whisper of Emotion 56 Psychologically Numbed 57 Martha Stewart’s Biases 58 Retrospective 60 Annual Returns 60 Nudged 61 Mindfulness 62 The Seven Key Takeaways 65 Notes 66 CHAPTER 3 Situational Finance 69 Disposition vs. Situation 69 Beauty Is in the Eye of the Investor 70 Angels or Demons? 71 Merely Familiar 73 Lemming Time 74 Story Time 76 Wise Crowds? 78 Adaptive Markets 79 George Soros’s Refl exivity 81 Grow Old Quickly 82 Speaking Ill 83 The Power of Persuasion 85 SAD Investors 86 Sell in May . . . 87 The Mystery of the Vanishing Anomalies 89 Tweet and Invest 90 Fire! 92 The Rise of the Machines 93 The Seven Key Takeaways 94 Notes 95 CHAPTER 4 Social Finance 99 Conform—or Die 99 Groupthink 100 Motivated Reasoning 101 Polarized 103 A Personal Mission Statement: Social Identity and Beyond 104 Gaming the System 106 You’ve Been Framed 108 Behavioral Portfolios 110 Dividend Dilemmas 112 The Language of Lucre 113 Embedded Investing 114 Financial Theory of Mind 116 Trust Me, Reciprocally . . . 118 Akerlof’s Lemons 119 The Peacock’s Tail 122 Facebooked 123 Be Kind to an Old Person 124 The Seven Key Takeaways 126 Notes 127 CHAPTER 5 Professional Bias 131 Mutual Fund Madness 131 Is Passive Persuasive? 133 Losing to the Dark Side 134 Forecasting—The Butterfl y Effect 136 Forecaster Bias 138 Feminine Finance 140 Trading on a High 141 Marriage and Money 142 Muddled Modelers 144 CEO Pay—Because They’re Worth It? 145 Corporate Madness 146 Buyback Brouhaha 148 Oh No, IPO 149 Your 6 Percent Self-Infl icted Trading Tax 150 Expert Opinion? 151 Avoid the Sharpshooters 153 The Seven Key Takeaways 154 Notes 154 CHAPTER 6 Debiasing 159 Numbers, Numbers, Numbers 159 Losing Momentum 160 Mean Reversion 162 Short Shift 163 Diworsification 165 Disconfirm, Disconfi rm 167 Reverse Polarization 168 Expected Value 170 Investing in the Rearview Mirror 172 Living with Uncertainty 174 Sunk by the Titanic Effect 175 Changing Your Mind 177 Love Your Kids, Not Your Stocks 178 Cognitive Repairs 180 Satisficing 181 The Seven Key Takeaways 182 Notes 183 CHAPTER 7 Good Enough Investing 187 #1: The Rule of Seven 187 #2: Homo Sapiens, Tool Maker 188 #3: Meta-Methods 189 #4: Be Skeptical 189 #5: Don’t Trust Yourself 190 #6: Self-Control Is Key 191 #7: Get Feedback 191 A Behavioral Investing Framework 192 Step #1: Making It Personal 193 Step #2: Build an Investing Checklist 195 Step #3: Write It Down 196 Step #4: Diarize Reviews 197 Step #5: Get Feedback 198 Step #6: Do Autopsies 199 Step #7: Update Adaptively 200 The Worst Offenders 201 Tools 203 The Mechanics of Investing 204 The Seven Key Takeaways 206 Notes 207 CHAPTER 8 A Few Myths More 209 Myth 1: Money Makes Us Happy 210 Myth 2: Everyone Can Be a Good Investor 211 Myth 3: Numbers Don’t Matter 212 Myth 4: Financial Education Can Make You a Good Investor 213 Myth 5: I Won’t Panic 214 Myth 6: Debt Doesn’t Matter 215 Myth 7: I Can Get 7 Percent a Year from Markets 216 Myth 8: Infl ation Doesn’t Matter 217 Myth 9: Everyone Has Some Good Investing Ideas, Sometime 217 Myth 10: I Don’t Need to Track My Results 218 The Seven Key Takeaways 219 Notes 219 CHAPTER 9 The Final Roundup 221 Notes 224 About the Companion Website 227 About the Author 229 Index 231

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Book SynopsisArms you with an arsenal of advanced investing techniques for everything from stocks and futures to options and exchange-traded funds. This title helps you find out how to trade on the FOREX market, evaluate annuities, choose the right commodities, and buy into hedge funds.Table of ContentsIntroduction 1 Book I: Getting Started with High-Powered Investing 5 Chapter 1: What Every Investor Should Know 7 Chapter 2: Playing the Market: Stocks and Bonds 21 Chapter 3: Getting to Know Mutual Funds and ETFs 47 Chapter 4: All about Annuities 73 Book II: Futures and Options 87 Chapter 1: Futures and Options Fundamentals 89 Chapter 2: Being a Savvy Futures and Options Trader 107 Chapter 3: Basic Trading Strategies 121 Chapter 4: Advanced Speculation Strategies 135 Book III: Commodities 155 Chapter 1: Getting an Overview of Commodities 157 Chapter 2: Adding Commodities to Your Portfolio 171 Chapter 3: The Power House: Making Money in Energy 183 Chapter 4: Pedal to the Metal: Investing in Metals 203 Chapter 5: Down on the Farm: Trading Agricultural Products 219 Book IV: Foreign Currency Trading 231 Chapter 1: Your Forex Need-to-Know Guide 233 Chapter 2: Major and Minor Currency Pairs 255 Chapter 3: Gathering and Interpreting Economic Data 279 Chapter 4: Advice for Successful Forex Trading 293 Chapter 5: Putting Your Trading Plan in Action 305 Book V: Hedge Funds 319 Chapter 1: Getting the 411 on Hedge Funds 321 Chapter 2: Taking the Plunge with Hedge Funds 337 Chapter 3: A Potpourri of Hedge Fund Strategies 353 Chapter 4: Evaluating Hedge Fund Performance 373 Book VI: Emerging Markets 385 Chapter 1: Introducing Emerging Market Investing 387 Chapter 2: A Guided Tour through the World’s Emerging Markets 403 Chapter 3: Picking Bonds, Stocks, and Mutual Funds in Emerging Markets 419 Chapter 4: High Finance in Emerging Markets 435 Book VII: Value Investing 445 Chapter 1: An Introduction to Value Investing 447 Chapter 2: A Value Investor’s Guide to Financial Statements 457 Chapter 3: Using Ratios as a Valuation Tool 479 Chapter 4: Valuing a Business 491 Book VIII: Socially Responsible Investing 517 Chapter 1: Making Your Investments Match Your Values 519 Chapter 2: The Socially Responsible Enterprise: Evaluating Companies 527 Chapter 3: Introducing the Islamic Capital Market 545 Chapter 4: Managing Assets in Islamic Investments 557 Book IX: Crowdfund Investing 573 Chapter 1: Getting the Lowdown on Crowdfund Investing 575 Chapter 2: Evaluating Crowdfund Investing Opportunities 583 Chapter 3: Committing Your Capital and Adding Value 595 Book X: Technical Analysis 615 Chapter 1: Wrapping Your Brain around Technical Analysis 617 Chapter 2: Bars and Bar Reading 633 Chapter 3: Charting the Market with Candlesticks 649 Chapter 4: Seeing Patterns and Drawing Trendlines 659 Chapter 5: Transforming Techniques into Trades 675 Index 693

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Book SynopsisA thorough explanation of how family enterprises work The family enterprise, whether an operating business, a family office, or both, is the backbone of the US and international economies. These enterprises cut across industries and geographies and can be first-generation entrepreneurial companies or multi-generational businesses with family offices. This book offers a foundation in and understanding of how family enterprises work, including working definitions and the key characteristics of family enterprises, as well as useful concepts for working with and in family enterprises, either as a professional or as a family member. Written by the experts at the Family Firm Institute, a global network of professionals, educators, researchers, and owners of family enterprises An ideal resource for professionals in law, finance, management, and behavioral science, family office and fund managers, and others interested in an multidisciplinary approach to this fiTable of ContentsAcknowledgments ix Family Enterprise: Understanding Families in Business and Families of Wealth xi Chapter 1 Defining Family Enterprise 1 Definition 1 2 Definition 2 2 Definition 3 2 Definition 4 2 Definition 5 2 Family Business Review article: “From Longevity of Firms to Transgenerational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation” 4 Assessment Test 1 37 Chapter 2 Classic Systems of a Family Enterprise 39 The Family System 40 The Ownership System 41 The Enterprise System 42 Assessment Test 2 43 Chapter 3 Representative Governance Systems in Family Enterprises 45 Enterprise Governance 46 Family Governance: Family Council 48 Owner Governance: Ownership Forum 49 Assessment Test 3 50 Chapter 4 Key Characteristics of Family Enterprises 53 Characteristics 53 Challenges 54 Comparison of Family Systems and Enterprise Systems 55 Assessment Test 4 57 Chapter 5 Concepts in Family Enterprise Study 59 Systems Thinking: A Very Brief History 59 Systems Thinking: The Individual in the System 60 Relevant Systems Concepts: Triangles, Scapegoat(ing), Homeostasis, Boundaries 61 Content and Process 63 Family Business Review article: “Using the Process/Content Framework: Guidelines for the Content Expert” 65 Assessment Test 5 77 Chapter 6 Theoretical Frameworks in Family Enterprises 81 The Three-Circle Model 83 The Developmental Model 87 The Balance Point Model 88 Assessment Test 6 89 Chapter 7 Core Professions Working With Family Enterprises 93 Differing Perceptual Filters 95 Understand the Differences Among the Core Professions 96 Assessment Test 7 99 Chapter 8 Multidisciplinary Professional Teams 101 Types of Teams 101 Challenges Teams Face 102 Family Business Review article: “The Effects of Goal Orientation and Client Feedback on the Adaptive Behaviors of Family Enterprise Advisors” 103 Assessment Test 8 138 Chapter 9 Applying What You Have Learned 141 Case 1 141 Case 2 142 Case 3 142 Glossary 145 Suggested Readings From Family Business Review: Journal of the Family Firm Institute 153 About the Website 155 About The Family Firm Institute, Inc. 157 About the Authors 159 Index 161

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Book SynopsisA proven survival guide for these economically rocky, debt-ridden times Millions of people suffer financial hardship due to job loss and a variety of other factors.Table of ContentsINTRODUCTION ix Chapter ONE The Path That Led You Here 1 Who the Heck Are the Joneses, and Why Are You Trying to Keep Up with Them? 4 Adding to the Cart 7 Emotional Buying 10 Buying What You Can’t Maintain 12 The Influence of Advertising 14 Chapter TWO Start to Become Empowered 23 Crafting a Budget 26 Examples of Budget Sheets 27 Worksheets for Expenses 28 Fixed Expenses 28 Flexible Expenses 32 Discretionary Expenses 34 Time to Calculate 37 The Frugal Philosophy 39 Chapter THREE Discovering a New Outlook on Life and Money 47 Identify Your Values: Work, Friends, and Family 50 The Value of Money 61 The Value of Living for Tomorrow 64 Chapter FOUR Staying on the Right Path 67 Find a Hobby 70 A Life without Credit Cards 78 Differentiating Needs from Wants 82 Chapter FIVE Teach Your Children Well 109 Talk to Your Kids about Money 112 Kids and Values 118 Prepare Your Teenagers 121 Chapter SIX Introduction to Banking 129 Choosing a Bank 133 Credit Unions 135 Types of Accounts 136 What Is a Check? 137 How to Open an Account 139 Electronic Banking 139 Types of Loans 141 Investing Your Money 144 Mutual Funds 146 Chapter SEVEN Continuing on Your Financial Freedom Quest 149 Find Your Green 153 It’s Time to Step Out on Your Own 160 GLOSSARY 163 ABOUT THE AUTHOR 173 INDEX 176

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