Perry H.Beaumont - Financial Engineering Principles

Stock, bonds, cash...the investment mind is often programmed. The reality is that most investors think in terms of single asset classes, and allocate money to them accordingly. The unique contribution of First Principles: An Investor's Guide to Building Bridges Across Financial Products is that, for the first time, a single unified valuation approach is available to use for all financial products. This book shows you how to focus on the dynamics of processes and interrelationships of different investment choices, providing the reader with a financial toolbox to equips any investor with the knowledge to de-construct and value any financial product, making it a must if you're a portfolio manager or an individual investors interested in building the optimal portfolio.

From the Inside Flap

The world of finance today is not necessarily a more complex place, though it has experienced a profound evolution over just the past few years. A major step toward understanding this new world is to embrace the notion of how similar financial products truly are, rather than hold on to the outdated belief of how they are so different. Financial Engineering Principles is an invaluable resource that can help you do just this.

The unique aspect of Financial Engineering Principles is that, for the first time, a single unified valuation approach is used to build bridges across fundamental financial relationships. This book clearly shows investors how to focus on the dynamics of processes and interrelationships of different investment choices–rather than concerning themselves with the stale definitional and static concepts that have permeated this field.

Divided into two information-packed parts, Financial Engineering Principles provides you with the financial tools and knowledge necessary to deconstruct and value any financial product that may evolve. First you will be introduced to the top layer of this new methodology, namely products (equities, bonds, currencies), cash flows (spot, forwards and futures, options), and credit (from the perspective of products, cash flows, and issuers).

In the second half of this comprehensive guide–after the groundwork has been laid in part one–you will receive an executive education on the implications for investment-making decisions. Through discussions and explanations of financial engineering (product creation, portfolio construction, strategy development), risk management (quantifying, allocating, managing), and market environment (tax, legal, regulatory), Financial Engineering Principles develops a framework that will help investors and portfolio managers better evaluate market opportunities and use specific trading strategies to build more efficient portfolios.

Financial Engineering Principles provides an innovative way to think about market linkages and synergies, and sketches a practical blueprint that both students and practitioners can use for a variety of applications. Whether you’re a portfolio manager interested in creating optimal portfolios or an individual investor looking to enhance your current as well as future position in the markets, Financial Engineering Principles provides a simple yet powerful introduction to analyzing and identifying value in any financial product–and shows you a better way to invest.

From the Back Cover

"Quite simply, he’s done it again. Building upon his previous writings from the fixed income markets, Beaumont has successfully applied his practical hands-on style to bring us a fresh cross-market perspective of bonds, equities, and currencies. Financial Engineering Principles now occupies that portion of my bookshelf reserved for texts with long shelf-life and little dust." –Steve Oristaglio Senior Managing Director, Co-head of Investments, Putnam

"This book provides a sophisticated understanding of finance, using commonsense explanations that do not depend on obscure jargon or advanced-level mathematics." –Martin Fridson Publisher, Leverage World

"Beaumont challenges us to rethink the standard tools that we use to analyze asset allocation and financial markets. The result of the challenge is to help us deal with financial innovation in new and interesting ways." –Bruce Brittain Global Relative Value Product Manager, PIMCO

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