Computational Finance by Argimiro Arratia is an excellent book that provides a concise review of the fundamental principles of finance and their applications in computational finance. The book is a useful resource for students and professionals interested in learning about financial instruments, investment strategies, portfolio management, and asset pricing.
The book is divided into nine chapters, which cover a wide range of topics related to computational finance. Each chapter provides an overview of the key concepts and techniques in a clear and concise manner. The author uses a variety of examples and case studies to illustrate the applications of computational finance in real-world situations.
Chapter 1: Financial Securities
The first chapter provides an introduction to financial securities, including bonds, stocks, options, futures, and derivatives. The author explains the characteristics of each type of financial security and their role in financial markets. The chapter also introduces the concept of risk and return and the tradeoff between them.
Chapter 2: Financial Markets
Chapter 2 provides an overview of financial markets, including stock markets, bond markets, and derivatives markets. The author explains the mechanics of these markets and their role in the global economy. The chapter also discusses the different types of market participants, such as individual investors, institutional investors, and market makers.
Chapter 3: Investment Strategies
Chapter 3 provides an introduction to investment strategies, including value investing, growth investing, income investing, and index investing. The author explains the advantages and disadvantages of each strategy and provides examples of how they can be applied in different market conditions.
Chapter 4: Portfolio Management
Chapter 4 focuses on portfolio management, including asset allocation, diversification, and risk management. The author explains how to construct a well-diversified portfolio and manage risk through the use of various financial instruments.
Chapter 5: Asset Pricing
Chapter 5 provides an overview of asset pricing models, including the Capital Asset Pricing Model (CAPM), the Arbitrage Pricing Theory (APT), and the Fama-French Three-Factor Model. The author explains the assumptions and limitations of each model and their applications in asset pricing.
Chapter 6: Stock Markets
This section is on stock markets, including the composition and regulations of some stock markets, part of the lingo used by investors, and some important concepts of finance and paradigms for asset pricing.
Chapter 7: Options Chapter
7 provides an introduction to options, including call and put options, option pricing models, and option trading strategies. The author explains the advantages and disadvantages of using options in investment portfolios.
Chapter 8: Stock Options
Chapter 8 focuses on stock options and their applications in investment portfolios. The author explains the mechanics of stock options and how they can be used to manage risk and enhance returns.
Chapter 9: Advanced Topics
Chapter 9 covers some advanced topics in computational finance, including algorithmic trading, high-frequency trading, and machine learning in finance. The author explains the advantages and disadvantages of these techniques and their applications in financial markets.
Overall, Computational Finance by Argimiro Arratia is an excellent book that provides a concise and comprehensive overview of the key concepts and techniques in finance and their applications in computational finance. The book is easy to read and understand, and the author uses a variety of examples and case studies to illustrate the concepts. The book is a valuable resource for students and professionals interested in learning about financial instruments, investment strategies, portfolio management, and asset pricing.