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15 of 16 people found the following review helpful:
5.0 out of 5 stars
Nimble and Suitably Detailed Handling of a Complex Topic!, August 18, 2000
This review is from: Pricing Convertible Bonds (Hardcover)
Once the individual investor begins to grasp the complexity of convertible bonds, it beats me as to why he or she would not be inclined to give up the entire enterprise altogether. And this book is so chock full of a convertible maven's essential vitamins and minerals that, after the first reading at least, this investment arena will seem utterly Pyrrhic to a neophyte. Sadly, the book is dense enough that a newcomer is likely to miss its nimble, understated handling of a maddeningly complex topic. It is only after perusing the other available literature on convertibles that Kevin Connolly's competent, intelligent handling dawns on you. Then you see this text as a high-end stereo system amongst crude boom boxes! Although Connolly writes under the pretext the reader knows next to nothing about the convertible, or even senior debt and common equity instruments, the book may not be the optimal starting point to understand convertibles. For the American reader, there is also the matter that the examples are in pounds sterling, and not in dollars. But the text provides a terrific point-of-entry for the investor who is left wanting by crude convertible pricing models which fail to adequately account for subtler, but critical, details such as embedded long-put options, refix clauses, and what one ought to do with probability issues. The implicit theme of the book is "every convertible is a different animal...accept it and get nimble enough to competently deal with the instrument's intricacies." The reader is well served --with the theme, the non-condescending explanation, and the tools Connolly offers to deal competently and confidently with convertible complexities.
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11 of 11 people found the following review helpful:
2.0 out of 5 stars
It's a start..., June 4, 1999
This review is from: Pricing Convertible Bonds (Hardcover)
If you are a beginner to the area then this book could be of some use to you. However, for the more experienced practitioner it is limited in its usefulness. The phrase "beyond the scope of this book" becomes too repetitive whenever the interesting and challenging topics are mentioned. And it is precisely these modeling areas that differentiate the convertible bond from the more trivial option pricing problems that are covered well in other books. This lack of detail in the meatier areas is the biggest disappointment of the book. Generally it is well written and presents the issues clearly - just not enough of the issues that really matter.
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9 of 10 people found the following review helpful:
4.0 out of 5 stars
Useful, practical, essential, but MORE Please!, August 15, 2001
This review is from: Pricing Convertible Bonds (Hardcover)
Connolly has written a useful, practical book for those who are attempting to price these (increasingly) complex instruments. For more abstract or academic treatments of the topic, seek other sources and the innumerable academic journals of quant finance. But for a nut-work gotta-price-this-bugger-cause-my-boss-asked-me-to-and-Im-the-quant-guy-in-the-shop this guide, while not strictly a cookbook, is indispensable. Although it begins at a relatively basic level, it clearly and concisely explains every technique from the simple (y = mx + b) and then step-by-step ratchets up to the Excel-samuri level (MIN and MAX tests after multiple operations of option pricing trees (bi-nomial and tri-nomial)). I limited my rating to four stars, however, because Connolly only mentions in passing the available (expensive) software-house products that do many of the same things his example spreadsheets do. Fin software needs critics, and I can think of no one better placed than the author to examine them and give front-line quant analysts his views. In addition, like most worker bees, I try never to reinvent the wheel (programming in C++ and VB or anything else for this kinda thing is undiluted soul-destroying tedium), but at the same time want to thoroughly check out the foundational theory and techniques someone applied before I risk my career on someone elses work. In this case, a good list of the academic sources and current financial literature on the topic would have been a useful and welcome addition to this slender volume. I suppose a final criticism is that we have all seen the exponential growth of credit derivatives in the past few years. Connollys next edition will need to address the topic of credit derivatives in relation to convertible bonds, as their use in combination with CBs provides alternate hedging, investment, and speculative strategies not explicitly considered in this book.
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