Название: An Intuitive Introduction to Finance and Derivatives: Concepts, Terminology and Models
Автор: Alex Backwell
Издательство: Springer
Серия: Springer Texts in Business and Economics
Год: 2023
Язык: английский
Формат: pdf (true), epub, mobi
Размер: 10.2 MB

This book gives a self-contained, intuitive overview of some of the most important topics of finance, such as investment risk, market pricing and market efficiency, arbitrage, hedging, and the pricing and application of financial derivatives. It provides a first-principles introduction to the relevant material and concepts, emphasising intuition. Financial terminology, and the understanding implicit therein, is carefully introduced. The books starts with finance in the most general terms, and gradually specialises to investment theory and then derivatives. This book is tailor-made for readers new to finance, such as graduate students entering or interested in finance, or financial practitioners moving to a more quantitative role.

Finance is about money. The word ‘finance’ shares roots with words such as ‘finish’ and ‘finalise’, because, in order to raise money, one usually has to agree to return it somehow, finishing or finalising the arrangement. Finance is about such arrangements. If you have money, you can spend it; this has to do with money, of course, but is not really financial. You could invest your money, meaning that you forgo spending it, and rather do something with it that is likely to give you more money in the future. This is definitely a financial action. Your investment can be described as an asset, something from which future benefits are expected, whereas the party that has taken your money now has a liability, an obligation to pass future benefits to you.

Finance is about money, but specifically about assets and liabilities—investing money in assets, raising money by creating liabilities—and managing them over time. A business might make money from selling a certain product and probably needs to spend money to make this happen, but this is known as the business’s operations, not its finances. The finances are about how it gets the money to operate in the first place and how it rewards whoever puts up that money (or capital).

Finance, especially in this text, can refer to the study of these activities (raising and investing money), rather than the activities themselves. Finance, in this academic sense, seeks to understand these activities and the overall system in which they occur, often with some degree of abstraction. The specific ways in which people and organisations raise and invest money may or may not be interesting or important to know, but the principles or concepts behind these specifics are certainly of interest to academic finance.

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