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Financial Modeling, 3rd Edition
 
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Financial Modeling, 3rd Edition [Hardcover]

Simon Benninga (Author)
4.8 out of 5 stars  See all reviews (19 customer reviews)

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Editorial Reviews

Review

"I've learned a great deal from the first two editions of Simon Benninga's Financial Modeling, and the Third Edition offers both new topics and updated coverage of topics from earlier editions. The book gives clear, well-illustrated instructions for using Excel software to solve finance problems, ranging from basic to highly sophisticated, in both corporate finance and investments. The many excellent examples draw on actual company data, and the book gives useful tips on obtaining current data from the Internet. Financial Modeling is an outstanding resource for finance professionals, instructors and students. As with earlier editions, I plan to keep my copy close at hand."
Robert A. Taggart, Professor of Finance, Carroll School of Management, Boston College

"Financial Modeling by Simon Benninga is an outstanding resource for teaching the essentials of finance to both undergraduates and masters students. It is comprehensive, lucid, and a highly useful resource in every financial modeler's toolkit."
Richard W. Roll, Professor of Management, and Japan Alumni Chair in International Finance, UCLA

"The new edition of Simon Begginga's Financial Modeling is a comprehensive and effective learning-by-doing tool in motivating users and making easily accessible the concepts of modern corporate finance, investments, and derivatives. In the real world of finance, its clear step-by-step approach empowers the practitioner to search the Internet for financial data, build programs to analyze them, and make sound financial decisions. I strongly recommend it to the finance student and practitioner alike."
George Constantinides, Leo Melamed Professor of Finance, The University of Chicago Graduate School of Business

Product Description

Too often, finance courses stop short of making a connection between textbook finance and the problems of real-world business. Financial Modeling bridges this gap between theory and practice by providing a nuts-and-bolts guide to solving common financial models with spreadsheets. Simon Benninga takes the reader step by step through each model, showing how it can be solved using Microsoft Excel.

The long-awaited third edition of this standard text maintains the "cookbook" features and Excel dependence that have made the first and second editions so popular. It also offers significant new material, with new chapters covering such topics as bank valuation, the Black-Litterman approach to portfolio optimization, Monte Carlo methods and their applications to option pricing, and using array functions and formulas. Other chapters, including those on basic financial calculations, portfolio models, calculating the variance-covariance matrix, and generating random numbers, have been revised, with many offering substantially new and improved material. Other areas covered include financial statement modeling, leasing, standard portfolio problems, value at risk (VaR), real options, duration and immunization, and term structure modeling. Technical chapters treat such topics as data tables, matrices, the Gauss-Seidel method, and tips for using Excel. The last section of the text covers the Visual Basic for Applications (VBA) techniques needed for the book. The accompanying CD contains Excel worksheets and solutions to end-of-chapter exercises.

Praise for the previous editions:

"Benninga has a clear writing style and uses numerous illustrations, which make this book one of the best texts on using Excel for finance that I've seen."
Ed McCarthy, Ticker Magazine

"The author describes this as a 'cookbook' and that is a good analogy.... Its breadth is extensive, covering simple present valuing and cost of capital ... to the likes of real options and early exercise of American-style options.... A worthwhile acquisition."
Paul Dentskevitch, Risk Magazine

"Financial Modeling is highly-recommended to readers who are interested in an introduction to basic, traditional approaches to financial modeling and analysis, as well as to those who want to learn more about applying spreadsheet software to financial analysis."
Edward Weiss, Journal of Computational Intelligence in Finance

"Financial Modeling belongs on the desk of every finance professional. Its no-nonsense, hands-on approach makes it an indispensable tool."
Hal R. Varian, Dean, School of Information Management and Systems, University of California, Berkeley

"This is applied finance theory for the professional at its best. As a student, I and countless others learnt the intricacies of Lotus and financial theory from Professor Benninga's first book—Numerical Techniques in Finance. Now, as a professional, I do not have to 're-invent the wheel' in Excel. An invaluable guide. A must for all financial analysts."
Vikas Nath, Global Strategist, Emerging Equity Markets, Union Bank of Switzerland, London

Product Details

  • Hardcover: 1168 pages
  • Publisher: The MIT Press; 3 edition (February 29, 2008)
  • Language: English
  • ISBN-10: 0262026287
  • ISBN-13: 978-0262026284
  • Product Dimensions: 9.3 x 7.2 x 1.9 inches
  • Shipping Weight: 4 pounds (View shipping rates and policies)
  • Average Customer Review: 4.8 out of 5 stars  See all reviews (19 customer reviews)
  • Amazon Bestsellers Rank: #6,424 in Books (See Top 100 in Books)
    #48 in  Books > Business & Investing > Finance

More About the Author

Simon Benninga
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What Do Customers Ultimately Buy After Viewing This Item?

Financial Modeling, 3rd Edition
80% buy the item featured on this page:
Financial Modeling, 3rd Edition 4.8 out of 5 stars (19)
$61.94
Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions (Wiley Finance)
8% buy
Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions (Wiley Finance) 4.9 out of 5 stars (34)
$50.40
Principles of Finance with Excel: Includes CD
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Principles of Finance with Excel: Includes CD 4.6 out of 5 stars (47)
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Customer Reviews

19 Reviews
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Average Customer Review
4.8 out of 5 stars (19 customer reviews)
 
 
 
 
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63 of 69 people found the following review helpful:
5.0 out of 5 stars the single most useful book for finance students and professionals ever published, February 20, 2008
This review is from: Financial Modeling, 3rd Edition (Hardcover)
Simon Benninga's 3rd Edition of Financial Modelling with Excel is the single most useful book for finance students and professionals ever published and continues to offer an outstanding reference and textbook for students and practitioners of applied finance.

For further information, please use the "Look Inside" feature and examine the Table of Contents carefully, because I will emphasize selected portions.

It is difficult to overstate how useful and practical and helpful this work is for a wide audience and Financial Modelling is the single finance book I recommend for everyone after they have taken (or read themselves) Introductory Finance.

For those looking for "one-stop-shopping" for models that resemble those of professional financial analysts then there is no better value than Benninga's FM3.

Benninga's FM3 is a coal-face work for those who must make financial decisions using models. There are further specialist texts in topics covered here (credit modelling, portfolio construction, option pricing), but the models in FM3 are the first advanced models applied to loans, bonds, options, and equity portfolios. Master these and then specialized texts are easier to digest.

"Cookbook" metaphors are too strong and do not do this work justice, for Financial Modelling 3rd (FM3) is not a mere collection of recipes but rather topical introduction, explanation, and then direct technique.

If we can make a comparison with a "cookbook" then FM3 falls somewhere between "The Joy of Cooking" and "Mastering the Art of French Cooking." "Joy" combines chapters on technique, ingredients, and tools with dense pages of endless recipes, whereas "Mastering" emphasises technique and a few well-selected recipes.

The welcome new chapters cover bank valuation, the Black-Litterman approach to portfolio optimization, and Monte Carlo methods and applications to option pricing, and the previous 2nd edition's small chapter on using array functions and formulas has been expanded. The chapter on data downloads from YAHOO is also welcome, especially for those on a budget.

There is a single significant flaw in the work, which is excusable and redeemable. Far too often the discounting in the chapters is done over a flat interest rate curve. While the term structure of interest rates is covered, and historical term structures and parallel shifts and steepening and flattening is covered in isolation in a thorough chapter and with wonderful data files, the necessity and explicit connection of discounting from an appropriate yield curve is left implied and only mentioned in a few exercises. I would have preferred a "round up" chapter where each of the subjects treated (bond discounting, portfolio expected returns, options, etc.) under a yield curve with advanced models. Sure BLOOMBERG and REUTERS have these sort of things (often incorrectly) programmed, but students need to learn explicitly about them and do the exercise themselves to comprehend the importance of curve discounting.

The CD attached in the back of the book is alone worth the price, with over two score of models that are practical and adaptable for students and professionals alike. The files are stored and separated according to chapters and subject matter. Each file has logical progression of the concepts advanced in the book, and each separate sheet either stands alone or appropriately links to data and models on other sheets, so editing for your own purposes is a breeze.

For those who want to train themselves in Finance (not "personal finance") then I suggest reading Copeland, Weston, & Shastri's Financial Theory and Corporate Policy (4th Edition) and Brealey, Myers, and Marcus's "Corporate Finance" and "Investments" followed by working through FM3. Such a course would give any self-disciplined person the equivalent of a Masters of Science in Finance.

Full disclosure: I am thanked in the "Acknowledgements" for providing a few helpful comments on the second edition.
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37 of 40 people found the following review helpful:
5.0 out of 5 stars Quick Tip, April 12, 2008
This review is from: Financial Modeling, 3rd Edition (Hardcover)
Rather then comment extensively on the content of the book (as others have done rather well), I felt like I would pass this tip (which I wish I had known to prevent frustration). I feel that anyone without a working knowledge of Visual Basic, and manuevering around Excel should obtain the skill set with the well written technical sections. I would suggest starting with part VI introduction to Visual Basic (chapters 36-41) then moving on to Technical Consideration (chapters 29-35) and THEN moving onto the substantial matter of the first 4 parts. This will help keep you from getting frustrated while interacting with the software and allow you to focus on the concepts. Again this is only for individuals without a working knowledge of the platforms, if you do possess those skills then the above recommendation is a moot point.
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17 of 19 people found the following review helpful:
5.0 out of 5 stars superlative treatment of finance, February 15, 2008
By A. Ali "Harkonnen" (Minneapolis, MN USA) - See all my reviews
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This review is from: Financial Modeling, 3rd Edition (Hardcover)
This book is nonpareil: there's nothing presently on the market that can compare in coverage, lucidity, and pedagogical skill. This is a must-have for both MBA and MFE students. For portfolio theory, option theory, and the use of (naive) Monte Carlo methods for pricing exotic options, this book should be the first port of call. Also included in portfolio theory is an intelligible treatment of the Black-Litterman model -- the first I've seen that's clear to understand -- given with spreadsheet models (this alone justifies the price of the book). Eveything is done using Excel, and the last 300+ pages give a clear exposition of various features of this spreadsheet program, including macros and VBA.
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Most Recent Customer Reviews

5.0 out of 5 stars A must for anyone in the finance field!
This book is just a bible for anyone interested in finance, it serves two purposes at one time, teaches you financial concepts and teaches you how to do it on ms excel, highly... Read more
Published 1 month ago by JASS

4.0 out of 5 stars Defacto Desk Reference
I purchased this book as a companion to another excellent book on Valuation by Prof. Damodaran. While the latter is a thorough non-nonsense exposition on the principles of asset... Read more
Published 1 month ago by B. Prasad

5.0 out of 5 stars Kiwi Neil's impression
I first borrowed Simon Benninga's book from a Professional Library, but was so impressed I decided to buy it via Amazon.. Read more
Published 4 months ago by Neil Fitzjames

4.0 out of 5 stars Excellent... as always a little bit (sometimes way off) over the MKT price
New, Fast excellent... Only comment Amazon price I little bit over the market price. Besides, wonderful.
Published 5 months ago by Luis

4.0 out of 5 stars Solid and Technical
I was looking for a detailed book on financial modeling that would provide adaptable formulas and ideas. Read more
Published 11 months ago by Marguerite A. Mcafee

4.0 out of 5 stars Great
It's the best book i know for the moment in english (there is a better one in french...) in this area. I bought 4 other books that are in the trash now and i keep this one.
Published 11 months ago by V. Isoz

5.0 out of 5 stars Excellent introductory financial modeling book
There are different levels of financial modeling, and this book is excellent for the novice modeler. Read more
Published 13 months ago by C. Ang

5.0 out of 5 stars Financial Modeling, 3rd Edition - Benninga
Benninga has managed to produce a manuscript that fully qualifies as both an excellent and easily-read text book as well as an outstanding reference manual. Read more
Published 17 months ago by George Crowell

5.0 out of 5 stars A good detailed book on Financial Modeling
This was recommended by a friend, and it was worth it. A good detailed book on financial modeling that can help anyone get started and understand the subject better.
Published 20 months ago by Essa A. Bohijji

5.0 out of 5 stars The best book out there for financial modeling using Excel
Professor Benninga's "Financial Modeling" is the best and most comprehensive book on financial modeling with excel available. Read more
Published 20 months ago by Saurav

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