Financial Engineering: Tools and Techniques to Manage Financial Risk

by Lawrence Galitz

Financial Engineering is about using financial instruments to reduce or eliminate risk, or to restructure a financial exposure to improve its characteristics. This book shows how to apply the latest techniques by managing financial risks of all kind. The book carefully explains the tools of financial engineering and defines each instrument in depth. It describes the markets on which they are traded, and clearly illustrates how each product is priced and hedged. All applications are illustrated with fully-worked practical examples, and recommended tactics and techniques are "tested" by demonstrating the results with recent historical data. The book provides a solid understanding of the underlying theory as well as a clear demonstration of effective practice. The clearly defines all the tools used in financial engineering* caefully explains instruments such as FRAs, financial futures, options, currency and interest-rate swaps, caps, floors, collars, corridors, swaptions, IRGs, SAFE's and many others* covers advanced products like barrier options, diff swaps, multi-factor and path-dependent options, leveraged floaters and other structured products* considers exactly how each one is used in practice* shows ways in which financial engineering techniques can be applied to manage risks in currencies, interest rates,equities and commodities.

496 pages, Hardcover

First published February 1, 1995