Customer Reviews

Theory of Financial Decision Making

5 star:		(4)
4 star:		(1)
3 star:		(1)
2 star:		(0)
1 star:		(1)

 

 

The books presents traditional finance economics. It is a very good and a classical book. But it is not easy to read because of its terrible, old-fashioned notation and writing.

It is plenty of examples and gives a very good intuition. So I'd say it is good because it teaches traditional finance since the beginning in a way one can understand finance and the underlying math.

Clearly, the book needs a revision to put it into the modern language of financial economics as well as to add the results (and models) that have been published in papers in the last 20 years.

As I said, without a revision, reading the book is not enough to allow one to understand modern papers published in the field. As a result, after reading it you will not be able to say you know finance. But without knowing what the book is about, you will not be also able to say you know finance. Of course you can consult other sources, but even with the terrible notation, it is a pleasure to read, for instance, chapter 2 (Arbitrage), chapter 4 (mean-variance portfolio analysis) or chapter 11 (discrete-time intertemporal portfolio selection).

This book is very good. It contains broad contents. Of course, it's not sufficient for a financial economist -impossible for a single book. It contains asset pricing theories from discrete-time models to continuous-time models,and from two-period models to intertemporal models. For a beginner, starting with Huang and Litzenberger is a better idea. Need introduction to continuous-time finance? Neftci is good, Merton is good, and Dothan is for advanced.

The book lives up to the title. It assumes that you're comfortable with multivariate calculus and linear algebra, including things like using Lagrange's method to find extrema of functions. If you're looking for a less precise treatment, _Investments_ by Brodie et al. might be a better choice, but if you need the math, it's all here.

This book is possibly the worst textbook I have ever read. The notation is unwieldy, the explanations are unclear and there is very little to help your intuition. This, by the way, is not because of the mathematical or technical content which goes no deeper than introductory stochastic calculus and control. Even if it were a good text, however, it would urgently need revising. The material is rooted firmly in the 70's and 80's with almost no emphasis whatsover on the martinagle represntation of asset prices.

It is unfortunate that asset pricing books get outdated fairly quickly, but this is one of the best books out there. For those who are serious about finance, you have to get your hands on a copy of this book. When I bought this from Amazon, it seemed like a classic text being that the pages were yellowish in color already. However, the content of the book is very well written and covers all the major topics in asset pricing - even continuous-time finance.

The content of this book is good and the discussion quite good as well. However - and this is an extremely important point - PLEASE do something about the horrible notation in future editions!!

Ingersoll has done an exceptional job of presenting the theory of financial economics, from risk and stochastic dominance to dynamic portfolio optimization and continuous-time finance. The mathematics is clear and concise. The economic intuition shines through.