Handbook of Finance: Financial Markets and Instruments

Preface

Over the past two decades, financial professionals have had available to them excellent reference books on specialty areas in finance. There are handbooks on corporate financial management, financial instruments, portfolio strategies, structured finance, capital budgeting, derivatives, and the list goes on. But to truly understand financial markets throughout the world, it is necessary to understand how financial decision makers—such as corporate treasurers, chief financial officers, portfolio managers, traders, and security analysts—make decisions and the tools that they employ in doing so. From that perspective, the idea for this handbook was conceived.

Finance is the application of economic principles and concepts to business decision making and problem solving. The field of finance can be considered to comprise three broad categories: financial markets and instruments, financial management, and investment management.

The field of financial markets and instruments deals with the role of financial markets in an economy, the structure and organization of financial markets, the efficiency of markets, the role of the various players in financial markets (i.e., governments, regulators, financial institutions, investment banks and securities firms, and institutional and retail investors), and the determinants of asset pricing and interest rates.

Financial management, sometimes referred to as business finance, is the specialized field in finance that is concerned primarily with ...