- Hardcover: 1168 pages
- Publisher: The MIT Press; third edition edition (January 8, 2008)
- Language: English
- ISBN-10: 0262026287
- ISBN-13: 978-0262026284
- Product Dimensions: 7 x 1.6 x 9 inches
- Shipping Weight: 3.8 pounds
- Average Customer Review: 152 customer reviews
- Amazon Best Sellers Rank: #179,459 in Books (See Top 100 in Books)
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Financial Modeling third edition Edition
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"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
"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(Robert Taggert)
"The new edition of Simon Benninga'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(George M. Constantinides)
For the 2nd Edition: "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
For the 2nd Edition: "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
For the 2nd Edition: " 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
For the 2nd Edition: "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
"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
"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
About the Author
Simon Benninga is Professor of Finance and Director of the Sofaer International MBA program at the Faculty of Management at Tel-Aviv University. For many years he was a Visiting Professor at the Wharton School of the University of Pennsylvania.
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Truly great book.
For further information, please use the "Look Inside" feature and examine the Table of Contents carefully, as I will emphasize selected portions.
First, caveats: Benninga characterizes himself as an author of a “cookbook” and I only partially agree. Like the very best cookbooks by brilliant chef teachers such as Julia Child, FM4 is a pedagogical masterpiece because it is excellent for “learning by doing” that makes concepts real to practitioners and students. "Cookbook" metaphors are therefore too strong and do not do this work justice, for FM4 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 FM4 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" emphasizes technique and a few well-selected recipes.
In addition, a caveat is that the work does explicitly use Excel for explanations. Increasingly in Masters of Science in Finance coursework models are directly coded in Matlab or the children of C or R, or at banks’ or financial service firms’ proprietary systems are used. The use of the ubiquitous Excel may at first appear to trivialize what is accomplished in this work, but it ironically does not. Certainly in a small shop Excel will be the first tool, and this work’s models will therefore be directly useful. In large more complex shops where proprietary or internal systems are custom platforms, the exact same things made explicit and simple in this book with Excel will be occurring under the hood of that enormous machine. Therefore: if you work through this book and understand the models here that are executed in Excel you will understand what is going on in the silicon beast you are attached to on a proprietary trading desk. Under the hood is this same stuff, just on a different platform.
Benninga's FM4 is explicitly for those who must make financial decisions using models. There are further specialist texts in topics covered here (credit modeling, portfolio construction, option pricing, etc.), but the models in FM4 are the first advanced models applied to leases, loans, bonds, options, and equity portfolios. Master these and then specialized texts are easier to digest.
What is new? Benninga has chosen to start the work with an introduction to the tools used repeatedly throughout the text: data tables, getformula, etc. Basic Financial Calculations follows, and then the meaty chapters of previous editions on corporate valuation, WACC, valuation, pro-forma modeling, leasing, portfolios, efficient portfolios, variance-covariance matrix, beta estimation and the security market line, constrained portfolios, the Black-Litterman approach to portfolio optimization, and Monte Carlo methods and applications to option pricing and other topics, and the previous 2nd and 3rd edition's small chapter on using array functions and formulas has been expanded. The portion on data downloads from YAHOO is also welcome, especially for those on a budget. Sadly, the stand-alone chapter on bank valuation from the 3rd edition is now missing.
There is a single flaw in the work, which is excusable and redeemable. Often the discounting in the chapters is done over a flat interest rate curve to make the example explicit and clear. The material on the term structure of interest rates is covered and expanded, and historical term structures and parallel shifts and steepening and flattening is covered in isolation in thorough chapters and with wonderful data files. The necessity and explicit connection of discounting from an appropriate yield curve is often left implied and only mentioned in a few exercises. I would have preferred that each chapter where discounting a time series was necessary ended with a small section showing explicit valuation under a yield curve with advanced models. BLOOMBERG and REUTERS have these sort of things (often incorrectly) programmed, but students must learn explicitly about and do exercises themselves to comprehend the importance of curve discounting.
I preferred the old CD-ROM that came with the 1,2nd, and 3rd editions of the book, but I am showing my age. The downloadable models that accompany the text are alone worth the price, with over three score of models that are practical and adaptable for students and professionals alike. They are easy and straightforward to download, but do demand a stable optical or T1 line when doing so. The files are sorted 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 FM4. Such a course would give any self-disciplined person the equivalent of a Master’s of Science in Finance.
The appropriately sized typeface is clear crisp Times Roman printed on off-white-touch-of-cream paper, so it is perfect under incandescent, florescent, or natural light and has no glare nor causes eye fatigue.
Full disclosure: Professor Benninga and I correspond by e-mail, and I have taught in graduate and undergraduate and executive programs using the previous editions of this work since 1998, and am thanked in the acknowledgements of some editions for pointing to typographical errors. He has been unfailingly supportive to my work and my students, a mensch and a tzadik.
Purchase this book now for a brighter financial future. - “Bachelier” Paris, September 2014.
The book is quite practical using excel for modeling. It is relatively easy to follow.
However, the book is missing some intuition and explanations.
Also, it does not discuss much about the subjective choices in financial modeling (see Damodaran's books).
Still this book is a very practical book.
After reading several theoretical books on portfolio optimization, option pricing and volatility, and linear algebra, I found Financial Modeling to be a very practical start for implementing the theory and developing more sophisticated models.
Benninga's explanations are very clear and intuitive. He provides a wide range of easily implementable Excel-based tools for creating efficient portfolios, insurance and arbitrage programs, option prices, and real time stock returns and co-variances to mention just a few.
Unlike others, this author has produced seemingly error-free text - particularly when he references details of his spreadsheets and Visual Basic code. Same goes for his accompanying CD and spreadsheet models. And that boosts confidence that his overall presentation is just as thorough.
Excellent resource and practical guide. Helps in gaining a more consistent edge in today's volatile markets.
The book is more of a desk reference and crystallizes key concepts and practical tips very well. I strongly recommend this for any current or aspiring finance professional.