Managing Financial Risk: A Guide to Derivative Products, Financial Engineering, and Value Maximization [Hardcover]

Charles W. Smithson (Author), Clifford W., Jr. Smith (Author), D. Skyes Wilford (Author)

Book Description

Publication Date: February 1995

As worldwide markets evolve, companies face a varied continuum of financial risks. The authors provide a system for evaluating these risks and offer techniques and strategies for maximizing the value of a firm in the face of risk. Presents an in-depth evaluation of various risk management products, including forwards, futures, swaps, options, and hybrid securities--as well as a "building block" approach to implementing these products in your firm.

Editorial Reviews

From the Back Cover

The established leading authority in Risk Management--completely updated. For years, financial executives and risk managers have recognized Charles Smithson's Managing Financial Risk as the authoritative source for comprehensive coverage of risk management products. While other books may touch on specific strategies and products, Managing Financial Risk stands alone in exploring derivaties and risk management from all angles, providing trusted guidance to both the sell and the buy sides. Managing Financial Risk, 3rd Edition, updates and expands this indispensable resource. Combining a comprehensive explanation of forwards, futures, swaps, options, and hybrid securities with the latest technologies for effectively managing financial risk, this authoritative and insightful edition now includes: a look at recent innovations in the risk management marketplace, including electricity derivatives and featuring credit derivatives--the newest of the risk management products; explanation of implementing a risk management program; new coverage on the effective use of risk management by institutional investors and financial institutions; an expanded discussion of the way a dealer measures and manages the credit and market risk associated with derivatives--a discussion that includes a clear expositon of "value-at-risk." --This text refers to an out of print or unavailable edition of this title.

About the Author

Charles Smithson is a managing director and head of the CIBC School of Financial Products. In addition to his work in the private sector, Mr. Smithson has held positions in academe and the U.S. Government. He served as a member of the Working Group for the widely recognized Groups of Thirty Derivatives Project and currently serves on the boards of directors of the International Swaps and Derivatives Association (ISDA) and the International Association of Financial Engineers. Mr. Smithson has written articles for academic journals on subjects ranging from labor market discrimination to product liability to financial engineering. His other books include The Doomsday Myth, Managerial Economics, The Economics of Mineral Extraction, and The Handbook of Financial Engineering. --This text refers to an out of print or unavailable edition of this title.

Product Details

• Hardcover: 586 pages
• Publisher: Irwin Professional Pub; Revised edition (February 1995)
• Language: English
• ISBN-10: 0786304405
• ISBN-13: 978-0786304400
• Product Dimensions: 9.4 x 7.4 x 1.2 inches
• Shipping Weight: 2.6 pounds
• Average Customer Review: 3.0 out of 5 stars  See all reviews (9 customer reviews)
• Amazon Best Sellers Rank: #3,012,933 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

9 of 10 people found the following review helpful:

4.0 out of 5 stars Great "Big Picture" book on Financial Risk, September 2, 2000

By 

Franco Arda (Palo Alto, CA) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: Managing Financial Risk: A Guide to Derivative Products, Financial Engineering, and Value Maximization (Hardcover)

We used this book in an MBA Financial Risk course. I think it' a fantastic book for everyone who want to get a big picutre of derivatives applied to financial risk management. It's a great basic book in order to proceed futher studies in topics like Value at Risk. Smithson amd Smith done a great job in covering many subjects in one book. You learn about the basics of derivatives, numerical methods, engineering products, and handling risk for financial and non financial companies.

6 of 6 people found the following review helpful:

5.0 out of 5 stars Very much better than some people might think!, November 30, 2005

By 

Nicholas Warren (New York, NY USA) - See all my reviews
(REAL NAME)   

This review is from: Managing Financial Risk: A Guide to Derivative Products, Financial Engineering, and Value Maximization (Hardcover)

For those of you who may not be aware, Charles Smithson is the "father" of the building-block approach to making derivatives understandable, showing a linked, family-tree approach, rather than each explaining each one separately with no clear connections. He is both a top practitioner with many years of senior-level experience, as well as an academic for more theoretical work.

I am amazed at some of the negative reviews. I can only think that is because there aren't enough partial differential equations and complex pricing/hedging models (there really aren't any, but that doesn't make this a simplistic book). I also teach finance at the Masters level, as well as teaching practical applications of derivatives to various bank clients.

In my oppinion, this is the single best book on derivatives for non-specialists that I have seen (and I have seen most of the derivatives books around). Even people on the trading floor would benefit from the clear forest-for-the-trees approach. This is not an easy book, though it doesn't require any more than school algebra (with the exeption of one chapter on option pricing, contributed by Cliff Smith and, even there, the calculus could be skipped over lightly). This book will give the reader a very good understanding of the most important aspects of derivatives and their applications. This is something that is often woefully lacking in banks, where the focus is on the minutiae of quantitative models, treated almost as an exercise in math, without a very clear understanding of the finance that the math is there to model. The treatment is broad and balanced, from pure product knowledge to issuer applications to investor applications and to banks managing their own market risk. This breadth is very rare in derivatives books.

My only criticisms are that there are some mistakes (as in most technical books that are not textbooks, benefiting from the review of many students, if you look hard enough for them) and there is insufficient emphasis now on credit derivatives and the management of credit risk, though I feel sure Charles Smithson will address that in the next edition - he has written a separate book "Credit Portfolio Management."

Perhaps someone should take up the offer of a free copy from a previous reviewer - a real "free lunch." I highly recommend this book to relative beginners, as well as to experienced practitioners who want more breadth.

14 of 18 people found the following review helpful:

1.0 out of 5 stars Caveat Emptor, October 3, 2001

By 

Carey E. Harris "Grant Harris" (LANE COVE, NSW Australia) - See all my reviews
(REAL NAME)   

This review is from: Managing Financial Risk: A Guide to Derivative Products, Financial Engineering, and Value Maximization (Hardcover)

I also use this book as part of the Masters course in Sydney and I cannot remember the last time I picked it up to read as I have better things to do with my time than try and work through the glaring errors in formulae, graphs and general commentary. The presentation is verbose and circumlocutory and to add to the frustration often wrong. I feel obliged to warn potential buyers not to make the same mistake that I have. Gallitz on Financial Engineering is a far more interesting and accurate text and for the rigours of applied financial maths Mastering financial calculations teaches you more in 200 pages than Smithson could in a lifetime of trying to improve on this first edition. If anyone would like my copy of Smithson I'm happy to give it away for fear further sales may encourage McGraw Hill to continue publishing the book.