Customer Reviews

Finance in a Nutshell: A no-nonsense companion to the tools and techniques of finance

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This is a terrific book that I wish had been available when I was taking my finance courses in b-school. The core topics in finance are well known and fairly standardized. However, students just learning can find the subject a bit counterintuitive and bewildering, no matter how normalized it becomes with familiarity. This book would be a great supplement for students struggling through huge textbooks and trying to get a handle on the basics. Of course, they should have the basic math required to execute these formulae or it won't be very helpful.

Another group that will benefit greatly from a handbook like this are people whose job is focused in an area that uses a narrow portion of the subject matter, but occasionally need or want to refresh themselves in matters not part of their everyday work. Picking this book off the shelf and reading a few pages on the relevant topic will put you right back in the swing of things.

The book has thirty clearly focused chapters that are broadly organized into four parts: Risk and Return, Valuation, Other Important Topics (such as NPV, IRR, Real Options, Corporations and Value Creation, Options, Futures and Forwards, and Currencies), and Statistical Background. Another really nice feature of the book is that, where relevant, the author includes material to help you implement the chapter material in Excel. Using spreadsheets is the way to go in finance, and this material is most useful. However, it is basic information and there are other books to help you with advanced topics and Excel. There are also a few problems provided in each chapter for you to work through and develop more intuition on the subject matter.

The author writes clearly, has chosen good intuitive symbols for the equations, and is clear where there are differences of opinion, problems with certain models, and cautions the reader on certain aspects of investment (such as currencies). Yes, this is NOT a substitute for more in depth reading on these topics, but it is a wonderful handbook and great for a quick refresher.

I am quite happy to have this on my finance shelf.

I approached this book with mixed feelings of suspicion and doubt. One question stood at first, how will anyone cover all subjects in finance in a single book with fewer than 400 pages ? I thought I'd get a book filled with old concepts of finance and no depth in discussions and on top of that accompanied by a minuscule font to fit the 400 pages!

To my surprise the book was amazingly concise, coherent and well structured. Mr. Estrada accomplished a difficult task in managing to write a well-balanced book which unites major theories in finance and its application (with emphasis on the latter). In fact, the author goes the extra mile in explaining how different point of views of a single model leads to different results. (i.e. CAPM and how investors approach it).

The book is divided into 4 parts.

Part 1: Risk and Return - ( 12 chapters ). Subjects covered include: Risk Adjusted, Diversification, Portfolios, Systematic risk, CAPM, Optimal portfolios.

Part 2 Valuation - ( 8 Chapters ). Subjects covered include: WACC, Reverse valuation, Market risk and Default risk, Duration and Convexity.

Part 3 Other Important Topics - ( 6 Chapters ). Subjects covered include: Real Options, Currencies, Options, Futures and Forwards, NPV, IRR.

Part 4 Statistical Background.- (4 Chapters ). Subjects covered include: Normality, Non-Normality, Regression analysis.


Pros:
*Short and independent chapters
*The consistent level of discussion. (leaning towards practicality rather than academic)
*The Problems section
*The Humorous style of Mr. Estrada which cracked the intensity of some chapters (two thumbs up for that)




Cons:

*Some tables and models are referenced in other chapters which requires flipping back and forth between chapters. And sometimes you end up reading the whole chapter, however I think this is a small price to pay for self-contained chapters.

*Part 3 which covers the futures and options could have been expanded a bit.

*The excel sheet (solution for the challenge problems at the end of each chapter) do not contain the formulas, only the numbers. Which misses the whole point of excel (it's all about formulas!) However if you followed the book you shouldn't face any problems it would just be a bit time-consuming.



Overall it's a great book with excellent presentation. nonetheless, it IS a nutshell which plainly means it does not cover topics as same as a book with 800 pages dedicated for a single subject.


I'd recommend this book for anyone interested in the subject from professional to students.

I hope that any of my finance professors find and read this review at least until I finish my MBA. :) Why? Well because this book fills a lot of gaps that most finance books or finance professors never fill. Finance can be a scary subject but with this book is like discovering the myth behind the terrible Wizard of OZ. Remember the movie?

This author really knows how to transform the most complex subject into a pleasurable walk in the park. This book is a perfect complement for your "academic" textbook. When the "academic" textbook fails to clear out the jargon, this book disentangles the mess made up by the "academic tone". If you are studying a BBA or an MBA in Finances this book fits perfectly beside the large and boring class "tome". With this book you will really learn about finances. Sorry Profs...