Description
Book SynopsisExplore the deadly elegance of finance''s hidden powerhouse The Money Formula takes you inside the engine room of the global economy to explore the little-understood world of quantitative finance, and show how the future of our economy rests on the backs of this all-but-impenetrable industry. Written not from a post-crisis perspective but from a preventative point of view this book traces the development of financial derivatives from bonds to credit default swaps, and shows how mathematical formulas went beyond pricing to expand their use to the point where they dwarfed the real economy. You''ll learn how the deadly allure of their ice-cold beauty has misled generations of economists and investors, and how continued reliance on these formulas can either assist future economic development, or send the global economy into the financial equivalent of a cardiac arrest.
Rather than rehash tales of post-crisis fallout, this book focuses on preventing the next one
Trade Review
"Anyone interested in investment theory (and that should be everyone working in financial services) would find it worth reading." (International Investment, June 2017)
"Irrevent and fun, it is at the same time very rigorous in explaining how soem fairly basic mathematics has hijacked the world of finance." (Marketing Moving, June 2017)
“a great description of what has happened, a thorough explanation of what is currently going on, and a solid argument for what should be done in the future.” (Significance, April 2018)
Table of ContentsAcknowledgements ix
About the Authors xi
Introduction xiii
Chapter 1 Early Models 1
Chapter 2 Going Random 15
Chapter 3 Risk Management 35
Chapter 4 Market Makers 61
Chapter 5 Deriving Derivatives 83
Chapter 6 What Quants Do 109
Chapter 7 The Rewrite 135
Chapter 8 No Laws, Only Toys 149
Chapter 9 How to Abuse the System 169
Chapter 10 Systemic Threat 189
Epilogue: Keep it Simple 207
Bibliography 227
Index 237
