FINANCIAL MODELING
3^rd Edition

Simon Benninga

MIT Press

Financial Modeling includes CD-ROM with all spreadsheets and problem solutions

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Reviewer comments for third edition:

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, University of Chicago Graduate School of Business

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, UCLA

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

Table of Contents

Note: All the chapters in Financial Modeling, 3^rd edition have been somewhat revised or changed from parallel chapters in previous editions.
The table of contents below indicates major changes/revisions and new chapters.

Corporate finance models

Chapter 1                   Basic financial calculations
Chapter 2                   Calculating the cost of capital Chapter 3                  Financial statement modelingChapter 4               Building a financial model: PPG Corporation
Chapter 5                   Bank valuation
Chapter 6                   Financial analysis of leasing
Chapter 7                   Financial analysis of leveraged leases

Portfolio models

Chapter 8                   Introduction to portfolio models
Chapter 9                   Efficient portfolios without short sales
Chapter 10                 Calculating the variance-covariance
                                                matrix
Chapter 11                 Estimating betas and the
                                                security market line
Chapter 12                 Efficient portfolios without short sales
Chapter 13                 Black-Litterman approach to
                                                portfolio optimization
Chapter 14                 Event studies
Chapter 15                 Value at risk

Option-pricing models

Chapter 16                 Introduction to options
Chapter 17                 Binomial option pricing
Chapter 18                 The lognormal distribution
Chapter 19                 The Black-Scholes model
Chapter 20                 Option Greeks
Chapter 21                 Portfolio insurance
Chapter 22                 Introduction to Monte Carlo methods
Chapter 23                 Using Monte Carlo for option pricing
Chapter 24                 Real options

Bonds

Chapter 25                 Duration
Chapter 26                 Immunization strategies
Chapter 27                 Modeling the term structure
Chapter 28                 Calculating default-adjusted
                                    expected bond returns

Technical chapters

Chapter 29                 Generating random numbers
Chapter 30                 Data tables
Chapter 31                 Matrices
Chapter 32                 Gauss-Seidel method
Chapter 33                 Excel functions
Chapter 34                 Array functions and array formulas
Chapter 35                 Excel hints

Introduction to VBA (written by Benjamin Czaczkes)

Chapter 36                 User-defined functions with VBA
Chapter 37                 Types and loops
Chapter 38                 Macros and user interaction
Chapter 39                 Arrays in VBA
Chapter 40                 Objects and add-ins
Chapter 41                 Information from the Web

Additional materials: I have started a page where I post some additional materials

Typos: I will post known typos. At each printing existing/known typos will be corrected. Current list can be downloaded here.

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