Mastering Financial Mathematics in Microsoft Excel

Alastair Day has worked in the finance industry for 20 years in treasury and marketing functions. In 1990 he established Systematic Finance as a consultancy and financial lessor concentrating on the computer and communications industries. Alastair has a degree in Economics and German from London University, an MBA from the Open University Business School, and is an associate lecturer in corporate finance with the OUBS. He is the successful author of several books including Mastering financial Modelling, Mastering Risk Modelling and The Financial Director's Guide to Purchasing Leasing published by the Financial Times Prentice Hall and a range of software products. In addition, he develops and presents public and in-house courses on a range of topics including financial modelling, leasing, credit and cash flow analysis, and other corporate finance topics.

Acknowledgements About the Author Conventions Overview Warranty and disclaimer 1 Introduction Overview Common Excel errors Systematic design method Auditing Summary 2 Basic financial arithmetic Simple interest Compound interest Nominal and effective rates Continuous discounting Conversions and comparisons Exercise Summary 3 Cash flows Net present value Internal rate of return XNPV and XIRR XNPV periodic example Modified internal rate of return Exercise Summary 4 Bonds calculations Description Cash flows Zero coupons Yield Yield to call Price and yield relationship Yield curve pricing Other yield measures Yield measures Exercise Summary 5 Bonds risks Risks Duration Convexity Comparison Exercise Summary 6 Floating rate securities Floating rates Characteristics of interest rate securities Yield evaluation Coupon stripping Exercise Summary 7 Amortization and depreciation Amortization Full amortization Delayed payments Sum of digits Straight line and declining balance depreciation UK declining balance method Double declining balance depreciation French depreciation Exercise Summary 8 Swaps Definitions How swaps save money Advantages of swaps Terminating interest rate swaps Implicit credit risk Worked single currency swap Valuation Cross currency swap Worked example Swaptions Exercise Summary 9 Forward interest rates Definitions Example forward rates Hedging principles Forward rate agreement Yield curves Exercise Summary 10 Futures Futures market Terminology Benefits Clearinghouse operation Bond futures Hedging mechanisms Hedging example one Hedging example two Exercise Summary 11 Foreign exchange Risk Spot rates Longer dates Equivalence Comparisons and arbitrage Exercise Summary 12 Options Description Terminology Underlying asset Call options Put options Example Covered call Insurance using a stock and a long put Pricing models Black Scholes model Call put parity Greeks Binomial models Comparison to Black Scholes Exercise Summary 13 Real options Real options Black Scholes model Binomial model Exercise Summary 14 Valuation Valuation methods Assets Market methods Multi-period dividend discount models Free cash flow valuation Adjusted present value Economic profit Exercise Summary 15 Leasing Economics of leasing Interest rates Classification Amortization Accounting Settlements Lessor evaluation Lessee evaluation Exercise Summary 16 Basic statistics Methods Descriptive statistics Probability distributions Sampling/Central Limit Theorem Hypothesis testing Correlation and regression LINEST function Exercise Summary Appendix Index