Paul Wilmott Introduces Quantitative Finance

Book Preface

In this book I present classical quantitative finance. The book is suitable for students on advanced undergraduate finance and derivatives courses, MBA courses, and graduate courses that are mainly taught, as opposed to ones that are based on research. The text is quite self-contained, with, I hope, helpful sidebars (Time Out’) covering the more mathematical aspects of the subject for those who feel a little bit uncomfortable. Little prior knowledge is assumed, other than basic calculus, even stochastic calculus is explained here in a simple, accessible way.

By the end of the book you should know enough quantitative finance to understand most derivative contracts, to converse knowledgeably about the subject at dinner parties, to land a job on Wall Street, and to pass your exams.

The structure of the book is quite logical. Markets are introduced, followed by the necessary math and then the two are melded together. The technical complexity is never that great, nor need it be. The last three chapters are on the numerical methods you will need for pricing. In the more advanced subjects, such as credit risk, the mathematics is kept to a minimum. Also, plenty of the chapters can be read without reference to the mathematics at all. The structure, mathematical content, intuition, etc., are based on many years’ teaching at universities and on the Certificate in Quantitative Finance, and training bank personnel at all levels.

The accompanying CD contains spreadsheets and Visual Basic programs implementing many of the techniques described in the text. The CD icon will be seen throughout the book, indicating material to be found on the CD, naturally. There is also a full list of its contents at the end of the book.

You can also find an Instructors Manual at www.wiley.com/go/pwiqf2 containing answers to the end-of-chapter questions in this book. The questions are, in general, of a mathematical nature but suited to a wide range of financial courses.

This book is a shortened version of Paul Wilmott on Quantitative Finance, second edition. It’s also more affordable than the ‘full’ version. However, I hope that you’ll eventually upgrade, perhaps when you go on to more advanced, research-based studies, or take that job on The Street.

PWOQF is, I am told, a standard text within the banking industry, but in Paul Wilmott Introduces Quantitative Finance I have specifically the university student in mind.

The differences between the university and the full versions are outlined at the end of the book. And to help you make the leap, we’ve included a form for you to upgrade, giving you a nice discount. Roughly speaking, the full version includes a great deal of non-classical, more modern approaches to quantitative finance, including several non-probabilistic models. There are more mathematical techniques for valuing exotic options and more markets are covered. The numerical methods are described in more detail.